DEPARTMENT OF FINANCE v. COMMISSION ON STATE MANDATES (COUNTY OF LOS ANGELES)

Respondents’ Answer Brief on the Merits

Cal.August 22, 2014

Jn the Supreme Court of the State of Caltfornta STATE DEPARTMENTOF FINANCEet al., Case No. $214855 Plaintiffs and Respondents, “ SUPREME COUR) COMMISSION ON STATE MANDATES, PLEEG Defendant and Respondent, AULA @ 704 COUNTY OF LOS ANGELESetal., FraRA Aags ight Real Parties in Interest and Appellants. euity Second Appellate District, Division One, Case No. B237153 Los Angeles County Superior Court, Case No. BS130730 Hon. AnnI. Jones, Judge ANSWERBRIEF ON THE MERITS KAMALA D. HARRIS Attorney General of California DOUGLASJ. WOODS Senior Assistant Attorney General TAMAR PACHTER Supervising Deputy Attorney General NELSON R. RICHARDS Deputy Attorney General State Bar No. 246996 455 Golden Gate Avenue, Suite 11000 San Francisco, CA 94102-7004 Telephone: (415) 703-5559 Fax: (415) 703-1234 Email: Nelson.Richards@doj.ca.gov Attorneys for Plaintiffs and Respondents California Department ofFinance, State Water Resources Control Board, and California Regional Water Quality Control Board, Los Angeles Region TABLE OF CONTENTS Page Trntroduction........ccccccscesssessessessseceseecesascesneesnsesesneesseessseecesseeseneeneenssnseenerenees 1 Legal Framework................ecesevesssesteceaaeesaeenaeceaaeesneseseceseaeseagerssensseasanessues 3 A. The Federal Clean Water Act and the Origin of the Maximum-Extent-Practicable Standard............... 3 1. State Implementation of the Federal NPDESPermitting Program .......c i csceeseeseseees 3 2. Developmentofthe Maximum-Extent- Practicable Standard for Issuance of | MS4 Permits ........:ccceccescesssesseseeessasssnsseeeeeeeees 5 B. The Porter-Cologne Act and California’s Implementation of the NPDES Permitting PLOQTAM.......sccsecseesesssescesesessecssenesscaeeneeesersesenesensenetieeeses 8 C. California Mandates Law..........cessccsssssessetseessenseeees 10 Summary Of Facts .....cccsceeesceesescessecescsenseseseeeecnerseeseeesersasenseesVeseeeseeaes 12 A. The Regional Board Issued an MS4 Permit............. 12 B. The Permittees Challenge the Permit... 13 C. The County and Cities File Test Claims with the COMMisSiONn..........ceceseceeeeeeereeeteenersetersensee 14 D. The Courts Reverse the Commission’s Decision ..... 17 Standard Of REViCW ......cccseeseceseeserseesnees sueeeaneeeseseneeeenetees seeesessnueeseveses 19 ALQUMEML....eee esceeneeeeserecseessessessecssesnecsesaeeaesnessaceesneecssearessersasssienessesneses 20 L. The Four Challenged Permit Requirements Are Federal Mandates............ssccsssccesseceessesesneeeseesseesesseessesnseeenenes 20 A. A Permit That Does Not Exceed the Federal | Maximum-Extent-Practicable Standard Does Not Impose a State Mandate. ........cccesseseesseeetenenens 20 B. Noneof the Four Challenged Requirements Causes the Permit to Exceed the Maximum- Extent-Practicable Standard..........ccccceecesccceseccceseceeees 22 C. TABLE OF CONTENTS Page (continued) 1. The Trash Receptacle Requirement Does Not Exceed the Maximum-Extent- Practicable Standard, ......... cc eecesseeseeseeeseeeees 23 2. The Inspection Requirements Do Not Exceed the Maximum-Extent-Practicable Standard. ......cccccccccesescsesecsscccsssesececesecsscensaveeess 24 The Regional Board’s Determination of What Federal Law Requires Is Entitled to Deference........25 1, Deference to the Regional Board’s Determination of What Federal Law Requires Is Appropriate in the MS4 Permitting Context... ccceecssessesesessersees 26 The Commission’s Failure to Defer to the Regional Board’s Decision Invited Legal Error and Inconsistent Resullts............. 28 Collateral Estoppel Should Ordinarily Bar Permittees from Relitigating Before the Commission Matters of Federal Law Fully Litigated and Finally Decided in the Permitting Process, 0.0...esses 30 Il. The County’s Arguments Misconstrue the Clean Water Act and Mandates Law. ........:ccssccsscessssesseesesssessesssessesessseeseas 32 A. The County Incorrectly Relies on Long Beach UNIfTC.eescccseceeseesensesesseneesceneeneenesseescseeseneesenennnsseeaes 33 B. The County Incorrectly Relies on Hayes... 36 C. The County Incorrectly Argues That the Commission’s Primary Jurisdiction to Adjudicate State Mandates Is Threatened by the. JUAQMENL. 20... ee eeeeeeeeeeseecneceneeneceeseaeseseeenessessesseeneeees 39 D. The Evidence on Which the County Relies Conclusion........... Does Not Support Its Argument That the Challenged Terms Exceeded the Federal Standard. .....ccccccccccccccsescesececevseecccuvevesecesceceenssevsecceeencs 40 sassseavesesaneesesuesenssenennececanenensavecesneeasessesssesseausonssasoeneatenssten 42 ii TABLE OF AUTHORITIES Page CASES American Coatings Association, Inc. v. South Coast Air Quality District . (2012) 54 Cal.4th 446 oceecenenseseeenecnenssersnesssserssesessescseeeeasesereseees 27 Arkansas v. Oklahoma | (1992) 503 U.S. 91 vo ccecceccsscreseeeeeeeereretsestsseresecessssssssaseessssssseeasenets 4 Building Industry Association ofSan Diego County v. State Water Resources Control Board (2004) 124 CalApp.4th 866.0... eccssssecsseressseneesessesseeesenseesenesspassim California School Boards Association v. Brown (2011) 192 Cal.App.4th 1507ose12,30 City ofBurbank v. State Water Resources Control Board (2005) 35 Cal.4th 613 wcecceeceeeersreeereetssersenseeesssesenseneees 4,9, 14, 34 City ofRancho Cucamonga v. Regional Water Quality Control Board — Santa Ana Region (2006) 135 Cal.App.4th 1377 weeveseeseeneentenssesenpeeeeee8, 10, 24, 38 City ofRichmond v. Commission on State Mandates (1998) 64 Cal.App.4th 1190...cessessee resneresessessessseenessssssenenees 19 City ofSacramento v. State ofCalifornia (1990) 50 Cal.3d SLiceeeeseectereseeneeeeressssstssesesssessestesesseteesenenes 18, 35 Communitiesfor a Better Environment v. State Water Resources Control Board (2003) 109 Cal.App.4th 1089occeseeseeeeterseseeeenseesiecessensseesees 6 County ofLos Angeles v. California (1987) 43 Cal.3d 46... ccccccesssecesnetescescessessessnescesseesssecsesssenensisassessacenees 20 County ofLos Angeles v. California State Water Resources Control Board (2006) 143 Cal.App.4th 985.0... cneseeeesseseseessesseessessesesseseseeeeeypassim ill TABLE OF AUTHORITIES (continued) Page County ofLos Angeles v. Commission on State Mandates (2007) 150 Cal.App.4th 898oeceecerseeereeneees saseesaceneeenecennereatens 15 | County ofLos Angeles v. Commission on State Mandates (Davis) (1995) 32 Cal.App.4th 805 occececeeesteeteeeeees 20, 21, 35, 40 County ofSan Diego v. State ofCalifornia (1997) 15 Cal4th 68 w..cceeseeccneeeeseesreneeteneseseessensseseesesensessiseseens 10, 19 Davey v. Southern Pac. Co. (1897) 116 Cal. 325cecececesesenessetecneeeseestecesscnersscesseneesssneesnees 19 Defenders of Wildlife v. Browner (9th Cir, 1999) 191 F.3d 1159eeecsceteeseeseenseeeeceseseseesersessseeeees 6 DepartmentofFinance v. Commission on State Mandates (Kern High SchoolDistrict) (2003) 30 Cal.4th 727.0...eeebuseeseeeaecaeensaseeeeceseeeeseeesseeseceatenseeens 10 Environmental Defense Center, Inc. v. United States Environmental Protection Agency (9th Cir. 2003) 344 F.3d 832icssssssersessenseseecssesecsesees 5, 6, 8, 36 Environmental Protection Agencyv. California ex rel. State Water Resources Control Board (1976) 426 U.S. 200 occceeesseesssescresteresseeeescneesnreesecneesens 3,5, 9, 36 Fukuda v. City ofAngels (1999) 20 Cal.4th 805 oo. eeceeceecssecseesesseeseensereeessesssestsesseesesses 27, 29 Hayes v. Commission on State Mandates (1992) 11 CalApp.4th 1564icicecesererteetesteeeeerenteesersesteenes passim In re: City ofIrving, Texas Municipal Separate Storm Sewer System (2001) 10 E.A.D. 11D eeeeeecteeseeeteereceecseeneesseeneeeneenes 7, 22, 36, 41 Long Beach Unified School District v. State ofCalifornia (1990) 225 Cal.App.3d 155 wo. cecssccsseesestreeseesteesteeseseceetesteeees passim iv TABLE OF AUTHORITIES (continued) Page Lucidov. Superior Court (1990) 51 Cal.3d 335 veceesceescssesressessecseesescseenscneseeneessseessessssseeees 31 Murray v. Alaska Airlines, Inc. (2010) 50 Cal.4th 860...ssecssesessersesseesssesensessesseseeeees 30, 31, 32 Natural Resources Defense Council, Inc. v. Costle (D.C. Cir. 1977) 568 F.2d 1369... cccsecssssseesseeeecsseeescseeeseeneeeneeaes 5, 6 Natural Resources Defense Council, Inc. v. United States Environmental Protection Agency (9th Cir. 1992) 966 F.2d 1292icscceecssseeeeesseeseeseereensenees 6, 7, 21 Redevelopment Agency ofthe City ofBerkeley v. City ofBerkeley (1978) 80 Cal.App.3d 158 vo. eeesessessessressessesenseseesneesseessesereneen 31 Safir v. Gibson (2d Cir. 1970) 432 F.2d 137 weeteeeaceeesaeneeneeeeeesenessaeeasenees 28 San Diego Unified School District v. Commission on State Mandates (2004) 33 Cal.4th 859oeeeeecssessscssseneseerereesenrenseses 10, 11, 20, 21 United California Bank v. Bottler | (1971) 16 Cal.App.3d 610...seuacasneeseeaeeseaseaceasessneenarsersonevaeeeate 31 Ward v. Taggart (1959) 51 Cal.2d 736... cececeesessesersscsseressssscssserenceneeeecsessaeeraeenes 19, 31 Yamaha Corporation ofAmerica v. State Board ofEqualization (1998) 19 Cal.4th Looecescseeseccseecseeesssessesesessrssesesesssssseceeeeenegs 27 TABLE OF AUTHORITIES (continued) Page STATUTES California Code of Regulations Title 2, § 1181.2, Subd. (8)... escscesseeseeseeeeeeteeteesersereereteerneetneneeeeees 11 Title 2, § 1181.2, SUD. (j) oe. eececceceeeeeeeeteeseeeeeneeeeeecseterseerererensenees 11 Title 2, § 1181.2, subd. (2) iceeeseeceeseeseereteeteetereeeetenseneereereneeeeeeees 11 Title 2, § 1183.1 cceccccceceesccteeeeeesesesensssessecsesesenenstenereneeesenenteeareneees 11 Title 2, § 1183.2, ....ccccccsecesceneceecsessecseesessessseeseeeeeesersetsenesaeesecenessenteas 11 Title 23, §§ 2050-2068 0... eeescssssscsseesesresersereecaeeeesersersessesesrssnseneenees 9 Title 23, §§ 2235.1-2235.2 ...eececseccseesessneeeeettetseteeeesesteeeerseenes 9, 36 Title 23, § 2235.2... cccccsscsccseceneceerseseneessseseesseaeeeaeeaeeneseesaeererseney 26, 36 Code of Civil Procedures § 1094.5, SUDA. (D) oeeee eesesssseseeeeseeseneceetetseneceecaenesesseeecsessnseerereeeey 19 Code of Federal Regulations, Title 40 . § 122.1(A)(2) vcecceccccesecsrereteessseeeesesseesesessseeenenessereeessesseersseenneeeereressens 36 § 122.25 vccccccesescssecesererctsescsersensesseeesseseeneneveseseerecesssseseeeeseussecerseney 36 § 122.26 vcccccccssescsseeeseecsesescecsnsesesecssesseeeneeseneersneeersesensnesercssserrarees 7,21 § 122.26(a)(3)(i) oeeeeesceesecessesesenserseseeseseeneretseneraceseseessessesenesseserenenenes 37 § 122.26(D)(4). .eeccccccccreressescnecsesessceeeesseneenererseeessssessressenesseeeserenesseaeees 7 § 122.26(D)(7). .cececeeccsssscsscsscseenseseeaeeseseceeees seceseseuecesseeseevsrseceesessaaeess 7 § 122.26(d)..ceeceecsecsecseesseeeseerserseens pececeeeessssuccceseceseeseuaeecssessatensseeeas 8, 36 § 122.26(A)(iV) .secscccsscssecsecsesecsecesecncsessescscseseeneseeneneensaseasisenenenneensesens 37 § 122.26(d)(2)(AV)(A)(3) scecreceerererestersresereeseenenenenesdenceseeeseeesesessneeeses 23 § 122.26(d)(2)(IV)(B)(1). .sceessessssesesessesesseceseceeseseseseneneenencesensseceneencens 24 § 122.26(d)(2)(AV)(C)CL). .eeeeccsecsesscreceeeessenenecnenseresssescnsseseesscesssesecnenes 24 § 122.26(d)(2)(iV)(D)(3). ..esscesseeseeeeeeneeeeteteeereeerersesenenersssereseetnenentees 25 § L231 (i) eeccscesesesecesetenesseseersesesecseseeseessesenenenecsenenssssessesesseserseveseeeees 4 § 123.1(c)oesecuaeceaccaccuascesseceeseceessccenessnuesseeeesneesseeessecsedassssnseseseeees 4 § 123.30 vcrccccccccscssscecessecececeesesesesscsesseeeseecsssnsesesseeasssessseeessesesesssaseeneeests 4 § 123.44 vcccccccseccseerceseneecsssessessssesecsseaeeneseeecnenersersersescsssecsesseenscasseesenens 4 § 124.3 eccccccssssesceccscssessessesessssceeseseneesessessnesseseneesessesesacaessesesssevesssnensees 4 § 124.6 vececcccccesesceecesceeseescsceessesecseeseesesessenreeeersenssnsessenesessesessseeseneneegs 4 § 124.8 vcccccescseseceeeeseceesessevscessesecseesesecnensesenersessenenscassersesesisecerisenegees 4 Vi. TABLE OF AUTHORITIES (continued) Page Government Code § 17500 oe eeeccescsecsscsscetseeesseeessaeeees cecssesacsceeesncesevsesausesesessaseseesas 11, 39 § 17516, SUD. (C) oo. eeeeeccetcereteeeentecesssereeeeseeseeeeeseeseenesseeeeeeeeneeateeee 15 § 17521 ecceccccscccsessesessecsccsecesseccenesseessecesecseessssseeessesesesseeneseessesseeneee 11 § 17533, SUDA. (A)(1).... ccc eeseessccsteesereeesecesessersceseatecsseseesersessteseeneees 11 § 17552 vecccccccccsessesssssesscesecsseecssseeaevsnessssenesssessseseeesaeeeeesseesensseseeseeates 39 § 17553, SUDA. (D) ccc eeeesccseeesceseeeseesersserseseeseeeseseaseeesseseeeseeseseeesnees 11 § 17556, SUDA.(C) vce ceccesceereeseesesesecenscsseetseesstesneeeeeseeasseeneens 10, 20 § 17559, SUD. (Db)... eeereetceeseeseessessersessesenesseeaeeseenersssseneeaeteesaees 11,19 § LTS 81 veecceccccccesstsecsecseceeceeesneceneeereeessssesessscseesseesageesseeees eevsseeaeeavens 12 § 17581, subd. (a).bacecseucsauauccuccsececeenssecenauceeescesseautensqansessesseesceenatsesess 30 United States Code, Title 33 § 1251(D) cece ceccsecsecsssseesseenecseessesseessssecesesseeseeeseneesssnessensssesessensaees 4 S LBL ceeesccsccsstecsseseecsscereccsresseceseessesssscsstesssssressaeesnesasssserseeesaneenees 37 § 1319eeecsccccsseccteesesceceteesseecneeescessesesecnsucesessecsaaeecsesesssasenseseennees 30 § 1B42(D).cc cccsesssscssceeeseesseceeecsressesscssensecesecseseessecessenesseseesseessesseneesgs 4 § 1342(D)(1) oc cceecccsceceeeseceeesneeseseseesensecesecseseseneseaeenecseseeseneessesseneeens 4 § 1342(D)(1)(B).. cc cccececccssccreceeeeeeesersesseensecsessesseesseeeecsssesseseessesseneeses 3 § 1342(b).ec cccsseccsecsceseceaeceeesseesesssersccesesesseeseaeeesaenssseesseneesees 26, 36 § 1342(D)...ceccccesscsscssceecesseesecneesesesesseseeessesseeseenecsesesssseeesseneesnesieaes 21 § 13420) ecccccscsssscssccsscseesecseeneeseslenserssssssessssesessecsaseasescssaeeesssrenerseaeens 5 § 1342(d) .ccccccccscscssccssssesesesesssssetenetseceeesensdeeeeuseaeessseeeeeseedeneeneecsnseaeenees 4 § 1342(i)... ee eeeeeeeneees ceuuanaacceuuuenanececesanseceveueeesevsaaeassesesseseneesseeaneesees 30 § 1342(K)..eeecseeeeeteesesseeceneeraeones ceveeessnnsssssececesesuessvsetsestseeeecesenseees 36 § 1342(p)...ccccccccsceccscescsrecteceecssossessessscnseeeseasesesseeeseaseseees 6, 26, 36, 37 § 1342(p)(3)(B)... ce cecceceeseesccrseerecescnseesseseensceesecensesseserstacerseeats 6, 21, 22 § 1342(p)(3)(B)(ii)... eceecesceecceseeseseteseeessesscssceecssesseaeseesserensssseseeseney 6,7 § 1342(p)(3)(B)(iii)... ec eececeeneeeeentecserecneesseesessesseeeeesseesssnensesees 22, 27 § 1365 vo eeceeesceteteeeeeesscuuuecancuccececceseestecceseseccseenceaucceaueeessasessennaneess 3, 30 § 1370 veccccccsccsessescsecsecssessccecseceaeeeeseesersessseeessesseseseeessseseereseessessenanenes 4 Water Code . § 13000 oo cecccccsccsssesccsecsecnecnecseceeseessessssssenseseeecseseressesseseneseeeeesees 8,9 § 13260 .oeccccccseccssscecesscssesesseesessessersesscssseseeaesessessesnesseessssiseessesserasieens 9 § 13263 oo ceccsccscecescsccsecseeseessccrsececesessessesseseeseeesensesesesnesseeseeeseceseaseese 14 § 1B24Dee ececeescssesecseeseeeseceeesnesssessessessecseeeeeeessesteessenesseersaseneseeeseey 14 § 13263, SUDA. (2) cccccccsscccsvescssecesssssssvesseeesssssssessesesesssnsseseeseesesceeseeeeen 9 Vii TABLE OF AUTHORITIES (continued) § 13320 ocecescccscesccerecssrceseeessesesssseetseeeeeeseesnssasensens § 13330...deseeeecasceatecsucunseensceceeseesacersaesenseesenses § 13330, Subd. (€) occeee eeceessessteeeeeeesetennensesseees § 13374 vcscscsccscesecsecseesseesessecsssesseareeeseatensensaees § 13377 veccccsccescesccceesscseceesscenecnssescessssscersessenessenees CONSTITUTIONAL PROVISIONS California Constitution Article XIII B, § 6.......ccccescssceesseseeseeesseeennesesersees Article XIII B, § 6, subd. (b) oo... eceeeeeeeeeennees Article XIII B, § 9...c.cccccsessesscesssesesesseseecenseeseeneees COURT RULES California Rules of Court Rule 8.532(b)(2)(A) .....ccceseeeenseeseeeseseeeceeeeneeeseeeneees OTHER AUTHORITIES 2 Pierce, Administrative Law Treatise (Sth ed. 2010) vill Page sevens eeaesseeseenacesseenes 32 seeeaeenseeseesnenaeenes 9, 32 seesseeeaseasonseeesseseones 27 eeeseeesseseenseeseseseeneens 9 eessensnees 9, 26, 28, 36 beeeeeesseersceersnes passim eeeeaeeseetseetnees 12, 30 seeeveneesaeeeseeeneeeeeners 10 eeeeesseeesneeetaeeetsneees 31 eeeenseesaseesecesenersuees 28 INTRODUCTION The California Regional Water Quality Control Board, Los Angeles Region,issued a sewer permit pursuantto its duty and authority under the federal Clean Water Act and United States Environmental Protection Agency (EPA)regulations. The Regional Board determined,as has every reviewing court, that the permit did not exceed the requirementsof federal law. Yet when discrete terms of the permit were later challenged before the -Commission on State Mandates, the Commission contradicted the legal conclusion of the Regional Board as well as the courts. The Commission held that the challenged permit terms exceeded the requirementsoffederal law and were therefore state mandates. Because the Commission erred in construing the requirements of federal law, the superior court issued a writ of mandate overruling the Commission’s decision. The Court of Appeal affirmed that determination, and Respondents now askthis Court to do the same. Underthe California Constitution, when the State requires that local governments provide a new program orhigherlevelof service, the State must reimbursethe costs of the mandated activity. (Cal. Const., art. XIII B, § 6.) The Constitution does not, however, require the State to pay for local government compliance with federal mandates. The permit issued by the Regional Boardis a federal mandate. It is required by federal law and does not exceed the requirements of federal law. The Clean Water Act forbids local governments from operating a municipal separate storm sewer system (MS4) without a permitthat implements the requirements of the Clean Water Act, includingcontrols designed to reduce the discharge of pollutants in stormwater to the “maximum extent practicable.” The permit, whether issued by the EPA or an authorized state agency acting in lieu of the EPA, must meetthe maximum-extent-practicable standard. Congress delegated to authorized permitting agencies the discretion to determine the particular combination of practices and controls that will meet this standard. This flexibility allows permitting agencies to effectively address the specific conditions in which different MS4s operate, which can vary widely. The permit defines how MS4operators must comply with the Clean Water Act andis enforceable in federal district court. Because the permit that the Regional Board issued here did not exceed the requirements of federal law,it is a federal mandate. The permit contains setof interrelated terms designed to work together to achievethe federal standard, the requirements of which must be construed pursuantto federal law. As the courts below found,the Commission did not properly construe the requirements of federal law. Federal law doesnotprescribe an approvedlist of controls from which the permitting agency must choosein drafting a permit; it leaves the choice of controls that will achieve the federal standard to the expertise of the permitting authority, subject to judicial review. Thus, the extent to which the permit or its terms meets or exceeds the federal maximum-extent- practicable standard cannot fairly be analyzed, as the Commission did, by determining whether discrete terms of the permit are themselves expressly prescribed by federal law. While a regional board may in some circumstances exceed federal permitting requirements and impose additional requirements under California’s Porter-Cologne Water Quality Control Act, the Regional Board found, and the courts that reviewed its decision agreed, that the permit here did not exceed federal requirements. The Appellants’ argumentsfail to provide grounds for reversal, and this Court should therefore affirm the judgment. LEGAL FRAMEWORK A. The Federal Clean Water Act and the Origin of the Maximum-Extent-Practicable Standard The federal government regulates water pollution through the Federal Water Pollution Control Act, commonly known as the Clean Water Act. (33 U.S.C. § 1251 et seq.) The act makes it unlawful to discharge pollutants into waters of the United States from any “point source”—apipe, ditch, or similar conveyance—withoutfirst obtaining a permit underthe National Pollutant Discharge Elimination System (NPDES). (d., §§ 1311, 1342, 1362(14).) A permit translates the act’s general requirements into specific obligations that allow a discharger to comply with the act. (See id., § 1342(k).) Put differently, the permit facilitates compliance with, and — enforcementof, the act by defining “a preponderance of a discharger’s obligations” under the act. (Environmental Protection Agency v. California ex rel. State Water Resources Control Board (1976) 426 U.S. 200, 205 (Environmental Protection Agency).) An NPDESpermit may be effective for up to five years. (33 U.S.C. § 1342(b)(1)(B).) Congress intended that compliance with the act would becomeincreasingly demanding as water quality and pollution-control techniques improved, anticipating that each new permit would contain more stringent standards than the last. (See 55 Fed.Reg. 48052 (Nov. 16, 1990); see also volume 3, Administrative Record (AR) page 3797.) Every condition within an NPDES permit is enforceable in federal court, under federal law. (See 33 U.S.C. § 1365.) Violating the permit subjects the permittee to civil suit and criminal penalties. (See id., §§ 1319, 1342(1).) 1. State Implementation of the Federal NPDES Permitting Program “The Clean Water Act anticipates a partnership between the States and the Federal Government, animated by a shared objective: ‘to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.’” (Arkansas v. Oklahoma (1992) 503 U.S. 91, 101, quoting 33 U.S.C. § 1251(a).) Although it charged the EPA with administering the NPDESpermitting program, Congress envisioned that states would assist in implementation of the program by issuing permits in lieu of the EPA. (See 33 U.S.C. §§ 1251(b), 1342(b).) | Regulations promulgated by the EPA implement the NPDESprogram, includingthe criteria that states must meet to obtain federal permitting authority. (See generally 40 C.F.R. parts 122 to 125.) In issuing permits, approved states must ensure that the permit complies with all applicable requirements of the Clean Water Act andits implementing regulations. (/d., § 122.4(a).) But federal law and regulations form a regulatory floor. States may impose morestringent or extensive permit requirements undertheir own laws. (33 U.S.C. § 1370; 40 C.F.R. § 123.1); City ofBurbankv. State Water Resources Control Board (2005) 35 Cal.4th 613, 627-628 (City ofBurbank) (holdingthat state-issued NPDES permits may impose requirements morestringent than federal law].) State permitting authority is also conditioned on compliance with general procedural requirements, like giving public notice ofdraft permits and allowing for the public to comment on them before they becomefinal. (See, e.g., 40 C.F.R. §§ 124.3, 124.6, 124.8.) State issuers must also follow certain additional requirements. (See 33 U.S.C. § 1342(b); 40 CER. § 123.1 et seq.) For example, states issuing NPDESpermits must have legal authority to carry out the permitting program and must provide for judicial review in state court of final approval or denial of permits. (See 33 U.S.C. § 1342(b)(1); 40 C.F.R. §§ 123.1(c), 123.30.) The EPA may review and veto a state-issued permit for failure to comply with the Clean Water Actor its implementing regulations. (See 33 U.S.C. § 1342(d); 40 C.F.R. § 123.44.) It also retains ultimate authority to rescind a state’s approval to issue NPDESpermits. (33 U.S.C. § 1342(c).) 2. Development of the Maximum-Extent-Practicable Standard for Issuance of MS4 Permits Congress instituted the NPDESpermitting program in a 1972 amendmentto the Clean Water Act. (See generally Environmental Protection Agency, supra, 426 U.S. at pp. 202-205.) Initially, the EPA exempted MS4 discharges from the act’s permitting requirements. (Building Industry Association ofSan Diego County v. State Water - Resources Control Board (2004) 124 Cal.App.4th 866, 873 (Building Industry).) An environmental group successfully challenged that decision before the D.C. Circuit, which rejected the EPA’s argumentthat the variable nature of stormwater pollution maderestrictions on the amount of pollutants, called “effluent limitations” in the act, infeasible. (Natural. Resources Defense Council, Inc. v. Costle (D.C. Cir. 1977) 568F.2d 1369, 1372-1373, 1377-1380.) The court held that the EPA Administrator did not have authority to exempt MS4s and ordered the EPA to promulgate regulations. (/d. at p. 1383.) Overthe next 15 years, the EPA attemptedto draft regulations that “reconcile[d] the statutory requirementofpoint source regulation with the practical problemsof regulating possibly millions of diverse point source discharges of storm water.” (Building Industry, supra, 124 Cal.App.4th at p. 874.) During that same period, stormwater cameto be seen as “one of the most significant sources of water pollution in the nation”becauseit carries “suspended metals, sediments, algae-promoting nutrients (nitrogen | and phosphorus), floatable trash, used motoroil, raw sewage, pesticides, and other toxic contaminants into streams, rivers, lakes, and estuaries across the United States.” (See Environmental Defense Center, Inc. v. United States Environmental Protection Agency (9th Cir. 2003) 344 F.3d 832, 840-841 (Environmental Defense Center).) In response to the EPA’s struggle to develop a workable regulatory scheme for MS4s,and in recognition of the environmental threat posed by stormwater, Congress passed the Water Quality Act of 1987. (See Natural Resources Defense Council, Inc. v. United States Environmental Protection Agency (9th Cir. 1992) 966 F.2d 1292, 1296 (Natural Resources Defense Council).) The act added section 402(p) to the Clean Water Act to address stormwater permitting. (See 33 U.S.C. § 1342(p).) The new MS4standard marked a shift away from the previous practice of requiring NPDESpermitteesto comply with numeric effluent limitations fixed by law or regulation. (Defenders of Wildlife v. Browner (9th Cir. 1999) 191 F.3d 1159, 1163, - 1165-1166.) Clean Water Act section 402(p)(3)(B) introduced a flexible permitting standard for MS4 permits. (See 33 U.S.C. § 1342(p)(3)(B).) Thatis, rather than adopting effluent limitations that would apply across the board to all MS4permittees or requiring immediate end-of-pipe compliance with water quality standards, Congress empoweredthe permitting authority—either the | EPAora state—to issue permits that respond to the unique circumstances of each MS4. (Building Industry, supra, 124 Cal.App.4th at p. 874; see also Communitiesfor a Better Environment v. State Water Resources Control Board (2003) 109 Cal.App.4th 1089, 1092-1094 [discussing effluent limitations and NPDES permitting generally].) Section 402(p)(3)(B)includes three discrete obligations for MS4 permits. First, permits for MS4 discharges must prohibit non-stormwater discharges into the MS4. (33 U.S.C. § 1342(p)(3)(B)(ii).) Second, permits for MS4 discharges must include “controls to reduce the discharge of pollutants to the maximum extentpracticable, including management practices, control techniques and system, design and engineering methods.” (Ibid.) Third, the permits for MS4 discharges “shall require . . . such other provisions as the Administrator or the State determines appropriate for the control of such pollutants.” (bid.) Collectively, these statutory requirements reflect the federal standard, although this case concerns only the maximum-extent-practicable standard. In 1990, the EPA adopted regulations implementing the new rule for large and medium MS4s. (See generally 55 Fed.Reg. 47990; Natural Resources Defense Council, supra, 966 F.2d at pp. 1296-1298.) Large MS4sserve populations of 250,000 or more, while medium MS4sserve populations between 100,000 and 250,000. (40 C.F.R. § 122.26(b)(4),(7).) The regulations, whichare codified at 40 C.F.R. § 122.26, implementthe Clean Water Act’s maximum-extent-practicable standard. Neither the act nor the EPA’s regulations, however, defines the maximum-extent- practicable standard. As the EPA’s notice of rulemaking explained, the maximum-extent-practicable standard represented Congress’s recognition that effectively regulating discharges from MS4s is a complex undertaking and that MS4 permit requirements “should be developedin a flexible mannerto allow site-specific permit conditions to reflect the wide range of impacts that can be associated with these discharges.” (55 Fed.Reg. at pp. 48037-48038.) Developing permits in a flexible mannerallowsthe agencies charged with drafting them to “tailor permits to the site-specific nature of MS4 discharges,” andit reflects Congress’s recognition that different permits may have different requirements. (See Jn re: City of Irving, Texas Municipal Separate Storm Sewer System (U.S. E.P.A. Environmental Appeals Board, July 16, 2001) 10 E.A.D. 111 [2001 WL 988723 at p. *6] (City ofIrving).) The “standard is a highly flexible concept that depends on balancing numerousfactors, including the particular control’s technical feasibility, cost, public acceptance, regulatory compliance, and effectiveness.” (Building Industry, supra, 124 Cal.App.4th at p. 889.) Under the EPA’s regulations, municipalities seeking permits to operate a large or medium MS4 must submit detailed applications, (See 40 C.F.R. § 122.26(d).) The applicant must propose a managementprogram to reduce the discharge of pollutants to the maximum extentpracticable using managementpractices, control techniques, system, design and engineering methods, and any other appropriate approaches. (/d., § 122.26(d)(2)(iv); see also 3 AR 3393.) As with any NPDES permit, although the applicant proposespermit provisionsthat it believes will comply with the Clean Water Act and EPA regulations,it is the permitting agency that ultimately “has discretion to decide whatpractices, techniques, methods and other provisions are appropriate and necessary to control the discharge of _ pollutants” to comply with federal law. (See City ofRancho Cucamongav. Regional Water Quality Control Board — Santa Ana Region (2006) 135 Cal.App.4th 1377, 1389 (Rancho Cucamonga), cf. Environmental Defense Center, supra, 344 F.3d at p. 856 [explaining that “stormwater management programsthat are designed by regulated parties must, in every instance, be subject to meaningful review by an appropriate regulating entity to ensure that each such program reducesthe discharge of pollutants to the maximum extent practicable’’].) | | B. The Porter-Cologne Act and California’s Implementation of the NPDES Permitting Program The California Legislature passed the Porter-Cologne Water Quality Control Act in 1969 to promote conservation,to attain the highest water quality reasonable, andto protect the public health, safety, and welfare. (Wat. Code, § 13000.) The act required the State Water Resources Control | Board (State Board) and nine regional boards(collectively, the Water Boards) to implement water law and policy. (/d., §§ 13100, 13140, 13200, 13201, 13240, 13241, 13243.) Shortly after Congress added the NPDES program to the federal Clean Water Act in 1972, the California Legislature determinedthat it was in the interest of the people to have the State issue NPDESpermits in lieu of the EPA,“to avoid direct regulation by the | federal governmentofpersons already subject toregulation understate law....” (See id., § 13370.) The Legislature added chapter 5.5 to the Porter-Cologne Act to achieve that goaland to align California law with federal law. (See id., § 13372.) In 1973, California becamethe first State to receive EPA approval to issue NPDESpermits. (See Environmental Protection Agency, supra, 426 U.S. at p. 209.) Under the Porter-Cologne Act, the Water Boards issue waste discharge requirements. (Wat. Code, § 13377.) Those requirements “are the equivalent of the NPDESpermits required by federal law.” (City of Burbank, supra, 35 Cal.4th at p. 621, citing Wat. Code, § 13374.) To obtain waste discharge requirements from the Water Boards, a discharger must submit a report of waste discharge, which is the equivalent of an NPDESpermit application. (See Wat. Code, §§ 13260, 13374.) The Water Boardsthen processthe application in accordance with federal NPDES permitting rules and procedures. (See Cal. Code Regs., tit. 23, §§ 2235.1- 2235.2.) After considering an applicant’s report of waste discharge, along with information learned before and during public hearings, the Water Boardsprescribe waste discharge requirements that constitute an NPDES permit. (See Wat. Code, § 13263, subd. (a).) Any “aggrieved person,” including the discharger, may petition the State Board for administrative review of the permit’s appropriateness and propriety. (Seeid., § 13320, subd. (c); Cal. Code Regs., tit. 23, §§ 2050-2068.) A party that disagrees with the State Board’s decision may challengeit in superior court by petition for administrative mandamus. (See Wat. Code, § 13330,citing Code Civ. Proc., § 1094.5.) These application and judicial-review procedures govern MS4 permits. (See, e.g., Rancho Cucamonga, supra, 135 Cal.App.4th at pp. 1381-1391 [reviewing challenge to an MS4 permit].) C. California Mandates Law California mandates law hasits origins in the late 1970’s, when Proposition 13 and Proposition 4 added articles XIII A and XIII to the California Constitution, limiting state and local governments’ taxing and spending powers. (Department ofFinance v. Commission on State Mandates (Kern High School District) (2003) 30 Cal.4th 727, 735.) Section 6 of article XIII B provides that “[w]henever the Legislature or any state agency mandates a new program orhigher level of service on any local government, the State shall provide a subvention of funds to reimbursethat local governmentfor the costs of the program or increased level of service wee? (Cal. Const., art. XIII B, § 6.) The section prohibits “the state from shifting financial responsibility for carrying out governmental functions to local agencies, which are ‘ill equipped’ to assumeincreased financial responsibilities because of the taxing and spending limitationsthat articles XIII A and XIII B impose.” (County of San Diego v. State ofCalifornia (1997) 15 Cal.4th 68, 81 (County ofSan Diego).) But when federal law requires local government entities to provide a new program or higher level of service, these subvention requirements do not apply. (See, e.g., San Diego Unified School District v. Commission on State Mandates (2004) 33 Cal.4th 859, 881, 888 (San Diego Unified).) The Constitution specifically excludes “[a]ppropriations required to comply with mandatesofthe . _. federal government.” (Cal. Const., art. XIII B, § 9.) Whenthe State implements a federal requirement througha statute or ~ executive order, it creates a state mandate only if “the statute or executive order mandatescosts that exceed”the federal requirement. (Gov. Code, § 17556, subd.(c).). | | Schooldistricts and local agencies may seek redress for an unfunded state mandate before the Commission, a quasi-judicial body that the 10 Legislature created to administer the statutory procedures implementing article XIII B, section 6. (See Gov. Code, § 17500.) The Commission uses _atest-claim procedure to adjudicate mandates claims. (See id., §§ 17521, 17553; Cal. Code Regs., tit. 2, § 1181.2, subd. (s).) A “test claim”is “the first claim filed with the commission alleging that a particular statute or executive order imposescosts mandated by the state... .” (Gov. Code, § 17521.) Though multiple claimants may join together in pursuing a Single test claim, the Commissionwill not hear duplicate claims, and Commission decisions apply statewide to similarly situated schooldistricts and local agencies. (See Cal. Code Regs., tit. 2, § 1183.1; San Diego Unified, supra, 33 Cal.4th at p. 872, fn. 10.) Thus, the test-claim “functions similarly to a class action and has been established to expeditiously resolve disputes affecting multiple agencies.” (Cal. Code Regs., tit. 2, § 1181.2, subd. (s).) Filing a test claim is the exclusive procedure for claiming and obtaining reimbursement for costs mandated by the State. (Gov. Code, | § 17552.) . A test claim must identify the sections of statutes or executive orders that purportedly impose a mandate, explain in detail how they create new costs, and include evidentiary support. (Gov. Code, § 17553, subd. (b): Cal. Code Regs., tit. 2, § 1183.1.) The Department of Finance and any other interested state agency or interested person may submit written comments on the test claim. (Cal. Code Regs., tit. 2, §§ 1183.2, 1181.2, subds. (j), (J); see also Gov. Code, § 17533, subd: (a)(1).) Either the claimantor the State may seek judicial review of a final Commission decision bypetition for administrative mandamus. (Gov. Code, § 17559, subd.(b), citing Code Civ. Proc., § 1094.5.) If a state mandate exists, and that mandate appliesto cities, counties, or special districts, the State may choose either to appropriate funds to reimburse the affected local governmententities, or to suspend the 11 operation of the mandate. (See Cal. Const., art. XIII B, § 6, subd. (b); Gov. Code, § 17581; California School Boards Association v. Brown (2011) 192 Cal.App.4th 1507, 1513-1514 [“with respect to a reimbursable mandate, for eachfiscal year, the Legislature is required to chooseto either fully fund _ the annual payment toward the arrearage or suspend the operation of the mandate”’].) SUMMARYOF FACTS A. The Regional Board Issued an MS4 Permit In February 2001, the County of Los Angeles, the Los Angeles County Flood Control District, and 84 incorporated cities within the flood control district applied for a renewal of their MS4 permit by submitting a report of waste discharge to the Regional Board. (See 3 AR 3663-3786.) | The Regional Board issued the permit later that year. (1 Clerk’s Transcript (CT) 24-95.) Among other provisions, the permit required the placement and maintenanceoftrash receptacles at transit stops, and inspections of various commercial, construction, and industrial facilities. At the time, 9.5 million people lived in the 3,100-square-mile area covered by the permit. (1 CT 31.) Thesix-part, 70-page permit was the result of a 10-month administrative process that generated an 80,000-page administrative record and included approximately 50 meetings between the Regional Board staff and interested parties. (3 CT 415; 1 CT 25.) . The Regional Board based the permit on the application, the Regional Board’s experience with implementation of the previous permit, then- current EPA guidance, and other information learned before and during the public hearing. The Regional Board determined that the permit was necessary to meet minimum federal requirements and implementthe federal maximum-extent-practicable standard: This permit, and the provisions herein, are intended to develop, achieve, and implement a timely, comprehensive, 12 cost-effective storm water pollution control program to reduce the dischargeofpollutants in storm water to the [maximum extent practicable] from the permitted areas in the County of Los Angeles to the waters of the State. (1 CT 48; see also 1 CT 32 [making similar statement]; 1 CT 82.) B. The Permittees Challenge the Permit _ The County of Los Angeles, Los Angeles County Flood Control District, and variouscities sought review of the permit, first before the State Board andthenin the courts by petition for administrative mandamus. (See 3 CT 408-431.) They raised several challenges, including an argumentthat the Regional Board exceededits authority “under the federal Clean Water Act and California’s Porter-Cologne Water Quality Act by imposing requirements that go beyond the ‘maximum extentpracticable’ (“MEP”) standard and/orthe Porter-Cologne Act’s ‘reasonably achievable’ standard.” (3 CT 413-414.) The superior court denied thepetition, ruling in part that “the administrative record contains significant evidence showingthat the terms of the Permit taken, as a whole, constitute the Regional Board’s definition of MEP”andthat “‘[t]here is significant evidencein the administrative recordthat the Regional Board lookedto both other states and jurisdictions, and conducted its own independent studies regarding various methods for compliance with MEP.” (3 CT 418- 419 & fn. 5.) The County and cities appealed, and the Court of Appeal affirmed. (County ofLos Angeles v. California State Water Resources Control Board (2006) 143 Cal.App.4th 985 (State Water Board) [complete opinion at 3 AR 3241-3268; unpublished portions at 3 AR 3257-3268].) An intervening developmentin the case law featured prominentlyin the County andcities’ argument on appeal. Within weeks ofthe trial court’s decision, this Court decided City ofBurbank, supra, 35 Cal.4th 613. (See 13 3 CT 412.) In that case, this Court reviewed NPDESpermits authorizing publicly owned water reclamationplants to discharge treated wastewater. (See City ofBurbank, supra, 35 Cal.4th at pp. 622-623.) Those permits were subject not to the flexible maximum-extent-practicable standard, but rather to end-of-pipe effluent limitations based upon standards developed by EPA. (See id. at pp. 620-621.) This Court held that a state-issued -NPDESpermit can exceed federal Clean Water Act requirements,butit also held that the board issuing a permit that exceeds federal requirements must take into accountthe considerations listed in Water Code sections 13263 and 13241, including economic considerations, for those requirements that exceed federal law. (See id. at pp. 626-629.) The County andcities argued that the permit issued by the Regional Board exceededthe requirements of the Clean Water Act and that because it did, City ofBurbank required the Regional Board to consider the economic effect of the permit, which the Regional Board had not done. (See State Water Board, supra, 143 Cal.App.4th 985 [unpublished section | G.3 at 3 AR 3259].) The Court of Appeal decided that argument had “no merit.” (/d. [unpublished section G.3 at 3 AR 3260].) The court denied rehearing, and this Court denied review on February 14, 2007. | C. The County andCities File Test Claims with the Commission In 2003, nine monthsafterfiling the petition for mandamusdirectly: challenging the permit in superior court, the County and several cities— Bellflower, Carson, Commerce, Covina, Downey, and Signal Hill—also filed test claims with the Commission. (See, e.g., 1 AR 19, 599.) The Commissioninitially refused to consider the claims because the then- -_ current version of Government Code section 175 16, subdivision (c), deprived it of authority to review Water Board orders. (See 1 AR 1153- 1171; 2 AR 1173-1200.) The County andcities (collectively, the County) 14 | challenged that statute’s constitutionality in superior court, which issued a writ of mandate instructing the Commission to considerthetest claims. The Court of Appeal affirmed. (County ofLos Angeles v. Commission on State Mandates (2007) 150 Cal.App.4th 898.) The Legislature later amendedsection 17516 to remove the language excluding Water Board orders from Commission review. (See Stats. 2010, ch. 288, § 1, p. 9.) The County and cities pursued four test claims. (See 2 AR 1535-1755; 2 AR 1757-1950; 2 AR 2259-2451; 3 AR 2479-2670.) The fourtest claims challenged four discrete provisions of the permit: e Part 4.F.5.c.3, which requires certain permittees to place and maintain trash receptaclesat all transit stops (1 CT 74; 2 AR 1540); e Part 4.C.2.a, which requires permittees to inspect restaurants, automotive service facilities, retail gasoline outlets, and automotive dealerships to verify that those businesses meetcertain criteria that prevent non-stormwater discharge, like restaurant grease, from entering the MS4 (1 CT 54-56; 2 AR 1762-1766); e Part 4.C.2.b, which requires inspection of certain industrial facilities to confirm that they are meeting several criteria, including implementing best managementpractices in compliance with county and municipal ordinances (1 CT 56, 87; 2 AR 1766-1769); and e Part 4.E, which requires inspections of certain constructionsites to ensure that the sites meet the permit’s minimum requirements, such as using best managementpractices to control erosion from slopes and channels (1 CT 67-70; 2 AR 2266-2267). The claimants contended that the specific permit provisions requiring commercial inspections, industrial inspections, and construction-site inspections, as well as the placement and maintenanceoftrash receptacles, imposed new programsorhigher levels of service on the permittees that were not required by the Clean Water Act and for which the permittees lacked funding authority. (See, e.g., 3 AR 2488-2497.) Given the 15 similarity and overlap amongthe fourtest claims, the Commission consolidated them. (See 5 AR 5681-5682.) After a hearing, it found that each ofthe four challenged permit provisions was not required by federal law. (5 AR 5603.) . The Commission did not review the record before the Regional Board, or analyze whether the permit exceeded the federal maximum-extent- practicable standard. Instead, it reasoned that because the Clean Water Act and its implementing regulations do not expressly require either trash receptacles at transit stops or inspections, these permit provisions exceeded the requirements of federal law. (See 5 AR 5584, 5590.) Relying on the Court of Appeal’s decision in Hayesv. Commission on State Mandates (1992) 11 Cal.App.4th 1564, 1593-1594 (Hayes), the Commission reasoned that, absent an express federal statutory or regulatory command,the State had freely chosen to imposethe trash receptacle requirement on the permittees. (See 5 AR 5584 & fn. 89.) It also reasoned that under the Court of Appeal’s decision in Long Beach Unified School Districtv. State ofCalifornia (1990) 225 Cal.App.3d 155, 173 (Long Beach Unified), the trash receptacle requirement amounted to a “specified action going beyond federal law.” (5 AR 5585 & fn. 92.) | 7 With regard to the inspection requirements, the Commission also reasonedthat neither the Clean Water Act norits implementing regulations require local agencies, as opposed to the State, to conduct such inspections. (See 5 AR 5595, 5601.) The Commission noted that the State Board has issued statewide NPDESpermits covering industrial facilities (GIASP) and construction facilities (GCASP) that the regional boards enforce. (See 5 AR 5594-5595, 5601; see also 3 AR 3579-3657 [GIASP]; 2 AR 2417- - 2444 [GCASP].) The Commission remarkedthat “[t]here is nothing in the federal statutes or regulations that would preventthe state (rather than the local agencies) from performing the inspections”of industrial facilities and 16 constructionssites, suggesting that because the Regional Board could chooseto perform the same inspections under the statewide permit, it was in excess of the requirements of federal law to impose similar requirements in the MS4 permit. (5 AR 5595, 5600.) It concludedthatthe State freely chose to imposethe industrial-facility and construction-site inspection requirements on the local agencies under Hayes. (See 5 AR 5595 & fn. 110, 5600 & fn. 120.) It also concluded that the construction-site inspection | requirement amountedto a “specified action[] going beyondthe federal requirementfor inspections ....” (5 AR 5600 & fn. 119.) Nevertheless, the Commission concluded that the three inspection provisions did not impose costs mandated by the State within the meaning of article XIII B, section 6 because the County and cities had fee authority to pay for the inspections. (See, e.g., 5 AR 5625.) It reached the opposite conclusion, however, with respectto the provision requiring installation and maintenanceoftrash receptacles, finding that it created a reimbursable state mandate. (See, e.g., 5 AR 5625.) D. The Courts Reverse the Commission’s Decision | The DepartmentofFinance and the Water Boardspetitioned for a writ of administrative mandamus challenging, amongotherthings, the Commission’s conclusion that the permit provisions at issue in the test claim were not required by federal law. (1 CT 11-22.) The superior court grantedthe petition, noting that the Commission’s “search for a comparable federal regulation as the pre-condition for finding a federal mandate utterly . ignores and misapplies the flexible regulatory standard inherentin the Clean Water Act.” (See 4 CT 679.) The superior court also determined that the “Commissionerred in isolating a specific requirement to conclude that the issued NPDESpermit wasa state mandate”andthat “[o]ne permit provision cannot exceed the ‘maximumextentpracticable’ standard imposed by the Clean Water Act where the permit as a whole does not.” (4 17 CT 680.) The County andsix cities appealed, and the Court of Appeal affirmed. | | The County’s primary theory on appeal wasthat thetrial court failed to properly apply Long Beach Unified and Hayes. (See Slip Op. 23-24, 26.) The County contended that the EPA’s regulations were specific in some areas and flexible in others and that, where the regulations wereflexible, the local agencies, as permittees, had discretion to identify and propose programsthat would satisfy the maximum-extent-practicable standard. (See Slip Op. 26.) By imposing specific requirements in the permit, the County argued, the Regional Board had imposed a state mandate. (See Slip Op.26.) The Court of Appealrejected that argument, explaining that “there is “no precise rule or formula for determining whether a cost imposed on a local governmentor agencyis a federal mandate.” (Slip Op. 27-28,citing City ofSacramento v. State ofCalifornia (1990) 50 Cal.3d 51, 76 (City of Sacramento).) The court concluded that the broad,flexible standard established by the Clean Water Act and the State’s role in implementing the act distinguished this case from Long Beach Unified and Hayes. (See Slip Op. 34.) The court noted that Congress intended the maximum-extent- practicable standard to accountfor the “practical realities” of regulating MS4sandthat Congress intendedit to be a highly flexible standard. (Slip Op. 31.) It also recognized that the Water Boardsact in lieu of the EPA when implementing federal NPDESpermitting standards. Against that analytical backdrop, the court took up the County’s objectionsto the four challenged permit provisions, recognizing at the outset the strong presumption of correctness and deference that agencies receive when acting within their area of expertise. (Slip Op. 35-36.) It affirmedthetrial court, holding that the trash-receptacle and inspection requirements implemented the Clean Water Act’s goal of reducing the 18 discharge of pollutants to the maximum extent practicable and thus constituted federal mandates. (Slip Op. 35-36.) The County petitionedfor, and this Court granted, review. | STANDARD OF REVIEW Courts may set aside Commission decisions that are legally erroneous or not supported by substantial evidence. (Gov. Code, § 17559, subd.(b); Code Civ. Proc., § 1094.5, subd. (b).) “The question of whether [a law] is a _ state-mandated program orhigherlevel of service underarticle XIII B, section 6 ofthe California Constitution is a question of law [that courts] review de novo.” (See City ofRichmond v. Commission on State Mandates (1998) 64 Cal.App.4th 1190, 1195.) This Court also independently reviews ‘legal conclusions as to the meaning and effect of constitutional and statutory provisions.” ([bid.; see also County ofSan Diego, supra, 15 Cal.4th at p. 109 [Where . . . a purely legal questionis at issue, courts exercise independent judgment,” quotation marks omitted].) Becausethis Court reviews judgments, not decisions, it may affirm on any groundsin the record. (See Davey v. Southern Pac. Co. (1897) 116 Cal. 325, 329.) That rule applies even where the parties did not advance the theory below, so long asit presents a question of law on the facts in the record. (Ward v. Taggart (1959) 51 Cal.2d 736, 742 (Ward).) 19 ARGUMENT I. THE FOUR CHALLENGED PERMIT REQUIREMENTS ARE FEDERAL MANDATES. The courts below correctly applied federal and state law in holding - that the permit andall its terms are not state mandates becausethey do not exceed the federal maximum-extent-practicable standard. This Court should affirm. -A. -A Permit That Does Not Exceed the Federal Maximum- Extent-Practicable Standard Does Not Imposea State Mandate. The permit andall its terms are federal mandates because they do not exceed the federal maximum-extent-practicable standard for issuance of an - MS4 permit. California mandates law “preclud[{es] a shift of financial responsibility for carrying out governmentalfunctions from the state to local agencies... .” (See County ofLos Angeles v. California (1987) 43 Cal.3d 46, 61, discussing Cal. Const., art. XIII B,§ 6.) Tt does not require the State to subsidize local government compliance with federal mandates. (See, e.g., Gov. Code, § 17556, subd. (c) [providing that executive orders implementing federal requirements are state mandates onlyif they “exceed the mandate in [the] federal law or regulation”’]; County ofLos Angelesv. Commission on State Mandates (Davis) (1995) 32 Cal.App.4th 805, 816 (Davis) {The courts have concludedthat no state mandateexistsif the requirementsor provisions ofa state statute are, nevertheless, required by federal law’’].) . ‘In San Diego Unified, this Court held that procedures used in discretionary expulsion proceedings “should be considered to have been adopted to implement a federal due process mandate” andthey therefore constituted nonreimbursable federal mandates. (See San Diego Unified, supra, 33 Cal.4th atp. 888.) This Court’s analysis followed the Court of 20 Appeal’s reasoning in Davis, supra, 32 Cal.App.4th 805. (San Diego Unified, supra, 33 Cal.4th at pp. 888-890.) In Davis, the court addressed a Penal Codestatute requiring counties to provide indigent criminal defendants with investigators and experts in addition to counsel, as required by the federal Constitution. (See Davis, supra, 32 Cal.App.4th at pp. 814- 815.) The court held that the Penal Code did not create a state mandate because it merely implemented a federal constitutional requirement. (/d. at ‘p. 816.) | Together, San Diego Unified and Davis recognize that the State may enforce the requirements of federal law without creating a reimbursable state mandate. In those cases, the courts examined state laws enacted to implement and makespecific otherwise broad federal constitutional ‘protections. The permit challenged here provides an even stronger case for a federal mandate, because the State is directly enforcing afederal law, in lieu of the EPA and subject to the same federal standards that govern the EPA whenit drafts NPDES permits. It is the Clean Water Act andits implementing regulations that require the State to issue permits for MS4 discharges that, at a minimum,include controls sufficient to reduce pollutant discharge to the maximum extent practicable. (See 33 US.C. § 1342(b), (p)(3)(B); 40 C.F.R. § 122.26.) That Congress has delegated authority to the permitting agencies— eitherthe EPA or state agencies—to determinethe specific controls or set of controls necessary to reduce pollutant discharges to the maximum extent practicable in the unique circumstances of each MS4 (see Natural Resources Defense Council, supra, 966 F.2d at p. 1296; Building Industry, supra, 124 Cal.App.4th at p. 874), does not change the analysis. A permit that requires controls to reduce pollutant discharges to the maximum extent practicable is a bedrock requirement of federal law, and federal law also _ requires the permitting agency to determine the controls that are necessary 21 to achieve that standard. Thus, where, as here, the permit does not exceed the maximum-extent-practicable standard, it imposes only a federal _. mandate that does not require a subvention of funds. B. None of the Four Challenged Requirements Causes the Permit to Exceed the Maximum-Extent-Practicable Standard. Congress intended the maximum-extent-practicable standard to be flexible: it did not prescribe a list of approved controls, and contemplated that permits would include site-specific terms to address the unique circumstances and threats posed by each MS4. (See 55 Fed.Reg. at pp. 48037-48038; City ofIrving, supra, 10 E.A.D. 111 [2001 WL 988723at p. *6].) That is, federal law contemplates that permits will include terms not expressly called for by the Clean Water Actorits implementing regulations. An agency that drafts a permit—either the EPAora state issuer—must use its expertise to determine the “controls [that will] reduce the discharge of pollutants to the maximum extent practicable... .” (See 33 U.S.C. § 1342(p)(3)(B)(iii).) The permit here was thus not simply authorized or permitted by federal law,it was requiredby the Clean Water Act. Under the Clean Water Act, the-permit, not the individual requirements must, at a minimum,include “controls to reduce the discharge © of pollutants to the maximum extent practicable... .” (33 U.S.C. § 1342(p)(3)(B).) The permittees must have an NPDESpermit to operate their MS4,andthat permit must implementthe standards required by the Clean Water Act. Each of the challenged terms is an elementof the stormwater pollution control program that carries out that federal standard. Considered individually or in combinationwithall the terms ofthe permit, those terms do not exceed, nor do they cause the permit to exceed, the requirements of federal law. 22 1. The Trash Receptacle Requirement Does Not Exceed the Maximum-Extent-Practicable Standard. Requiring the County to place trash receptacles at transit stops implements the maximum-extent-practicable standard. The EPA’s regulations identify “practices for operating and maintaining public streets, roads and highways and procedures for reducing the impact on receiving waters of discharges from municipal storm systems” as one methodfor reducing the discharge of pollutants to the maximum extentpracticable. (40 C.F.R. § 122.26(d)(2)(iv)(A)(3).) Requiring permittees to place trash — receptacles at transit stops falls within that requirement, as both the trial court and Court of Appeal recognized. (See 1 CT 74.) Thetrial court said that putting trash receptacles at transit stops was an “obvious remedy”for stormwaterpollution, noting that, “if litter and debris cannot be properly disposed-of by persons waiting at transit stops, the inevitable downstream result will be the introduction of pollutants into the streets and, thereafter, into the storm drains—leading inevitably to the discharge of pollutants into nearby waterways.” (4 CT 680.) Likewise, the Court of Appeal explained that “[t]rash receptacles are a simple method of keeping stormwater clean because they prevent trash and other debris from entering storm drains and entering the ocean andlocal rivers and drainage canals.” (Slip. Op. 35.) The EPAitself, in a 2008letter, opined that the permit’s trash-receptacle requirement fell within the maximum-extent-practicable standard. (See 3 AR 3798-3799.) And in its permit application, the County identified litter and debris on the streets as a source of pollution, and it suggested trash collection along or in improved open channels. (3 AR 3678.) 23 2. The Inspection Requirements Do Not Exceed the Maximum-Extent-Practicable Standard. Similarly, requiring inspections of certain commercial and industrial facilities and construction sites implements the maximum-extent- practicable standard. Inspections are necessary to effectively control the dischargeofpollutants in compliance with the Clean Water Act. “Federal law, either expressly or by implication, requires NPDES permittees to perform inspectionsforillicit discharge prevention and detection; landfills and other waste facilities; industrial facilities: construction sites; certifications of no discharge; non-storm water discharges; permit compliance; and local ordinance compliance.” (Rancho Cucamonga,supra, 135 Cal.App.4th at p. 1390.) Commercial-Facility Inspections. The EPA’s regulationscall for “inspections .. . to preventillicit discharges to the municipal storm sewer system ....” (40 C.F.R. § 122.26(d)(2)(iv)(B)(1).) The permit requires inspection of certain commercial facilities, like restaurants and car-service facilities, to make sure that those businessesare not discharging food waste and motoroil, for example, into storm drains. (See 1 CT 54-55.) Both the trial court and Court of Appeal recognized that these inspections fell within the federal standard. (See 4 CT 681; Slip Op. 35.) The EPA’s 2008letter says these inspections were “well within the scope” of the MS4 permitting regulation. (3 AR 3798.) And the County’s permit application recommended “visits” of automotive-service and food-service facilities similar to the inspections the permit ultimately required. (3 AR 3671.) Industrial-Facility Inspections. The EPA’s regulations call for permits to “[i]dentify priorities and procedures for inspections” of industrial facilities. (40 C.F.R. § 122.26(d)(2)(iv)(C)(1).) The permit implements that requirement by, for example, having the permittees inspect certain industrial facilities.to ensure the operators follow best management 24 practices for stormwater discharges and comply with additionalcontrols whenthefacility is in an environmentally sensitive area. (See 1 CT 56-67.) Thetrial and appellate court recognized thatthese provisions fell within the federal requirement. (See 4 CT 681; Slip Op. 35.) And, as with the commercial inspections, the EPA’s 2008 letter says the industrial inspections are well within the MS4 requirements. (See 3 AR 3798.) Even the County’s permit application recommendedan “industrial[] educational site visit program ....” (3 AR 3670-3671.) Construction-Site Inspections. The EPA’s regulationscall for permits to describe “procedures for identifying priorities for inspecting” construction sites. (40 C.F.R. § 122.26(d)(2)(iv)(D)(3).) The permit implements that requirement by requiring inspections to ensure that, among other things, sediment and construction-related materials, wastes, spills, or residues do not end up in the MS4. (See 4 CT 67-70.) As with the other inspection requirements, the trial and appellate courts recognized that the permit’s provisions fell within the federal standard. (See 4 CT 681; Slip Op. 35.) Though the EPA’s 2008 letter does not discuss the construction inspection requirement, an EPA guidance manual showsthat the EPA believes the MS4 permits should impose construction-inspection provisions. (See 3 AR 3394.) And the County’s own permit application recommended detailed construction-site requirements that included inspections. (3 AR 3672-3775.) C. The Regional Board’s Determination of What Federal Law Requires Is Entitled to Deference. Unlike the Regional Board, the Commission wasill-equipped to determinein the first instance whether the permit exceeded the federal standard for MS4 permits. It does not have the expertise of the Regional Board, nor did it have the record that was before the Regional Board. Accordingly, it should have deferred to the Regional Board’s determination 25 of what the Clean Water Act and EPA regulations require in a permit to operate the permittees’ MS4. This is especially importantin the context of MS4permits, which include interlocking components that collectively must reduce pollutants to the maximum extentpracticable. Congress and the EPA conferred discretion on the Water Boards to use their expertise to decide the combination of terms necessary for any given MS4 to comply with the Clean Water Act. Thesestate agenciesare authorized by federal and state law to interpret the requirements of the CleanWater Act and related EPA regulations, andto issue the permit. (See 33 U.S.C § 1342(b), (p); Wat. Code, § 13377; Cal. Code Regs., tit. 23, § 2235.2.) Here, the Regional Boarddrafted the permit after overseeing a 10- month administrative process that generated an 80,000-page administrative record and included approximately 50 meetings between the Regional Board staff and interested parties. (See 3 CT 415.) In the permit, the Regional Board specifically determined that the permit andits terms implemented a stormwater pollution control program to reduce the discharge ofpollutants in stormwater to the maximum extentpracticable. (See 1 CT 48.) Asthe expert in the Clean Water Act, the evolving science and technology ofpollution control, and the unique factual circumstances surrounding the County’s MS4, the Regional Board should receive deference in determining what federal law requires. 1. Deference to the Regional Board’s Determination of What Federal Law Requires Is Appropriate in the MS4 Permitting Context. - When an agency—either the EPA or a designated state agency such as the Regional Board—drafts a permit and developssite-specific requirements,it brings to bearits scientific, technical, and legal knowledge, as well as its experience with the success and failure of controls required in 26 a particular MS4, in determining the type and combination of “controls [that will] reduce the discharge of pollutants to the maximum extent practicable,” considering the unique circumstances andpollution threats posed by a particular applicant’s MS4. (See 33 U.S.C. § 1342(p)(3)(B)(ili).) The Court of Appeal properly recognized the specialized nature of the Regional Board’s permitting process, and cited both the presumption of regularity in official acts and the doctrine of deference to agency expertise. (See Slip Op.35, citing Evid. Code, § 664, Fukuda v. City ofAngels (1999) 20 Cal.4th 805, 812 (Fukuda).) It quoted this Court’s decision in Fukuda for the proposition that “considerable weight should be given to the findings of experienced administrative bodies madeafter a full and formal hearing, especially in cases involving technical andscientific evidence.” (Slip Op. 25, quoting Fukuda, supra, 20 Cal.4th at p. 812.) Fukuda held _that deference applies even where the courts exercise their independent judgment when reviewing the evidence. (Fukuda, supra, 20 Cal.4th at pp. 817-818; see also Wat. Code, § 13330, subd. (e).) Deference to an agencyis “fundamentally situational.” (Yamaha Corporation ofAmericav. State Board ofEqualization (1998) 19 Cal.4th 1, 12 [italics omitted].) An agency’s interpretation of a statute should receive deference where it has a comparative interpretive advantage stemming from its application of technical or scientific expertise to entwined issues offact, policy, and discretion. (/bid.; accord American Coatings Association, Inc. v. South Coast Air Quality District (2012) 54 Cal.4th 446, 475 [deferring, in a ‘rulemaking challenge,to air district’s expertise in categorizing pollutant sources undera statute requiring “best available retrofit technology” because the trade association making the challenge could neither point to an “objectively correct categorization”. of pollutant sources nor show that the district acted arbitrarily in creating its categories].) The Regional Board’s 27 expertise gives it a tremendous advantagein interpreting the requirements of federal law for each individual MS4. 2. The Commission’s Failure to Defer to the Regional Board’s Decision Invited Legal Error and Inconsistent Results. The Commission should have deferred to the Regional Board’s determination of the permit terms required by federal law. Generally speaking, “a] decision by an agency primarily qualified to determine a question is binding on another agency ....” (2 Pierce, Administrative Law Treatise (5th ed. 2010) § 13.4, p. 1145.) Judge Friendly, writing for the SecondCircuit, put a finer point on this principle, noting that where one agency has the expertise to pass on a matter and does so, “it would be quite unseemly for [another agency] to conclude thatits sister agency had been wrong on a fully litigated issue the decision of which Congress had confided to it....” (See Safir v. Gibson (2d Cir. 1970) 432 F.2d 137, 143.) Here, the Legislature has confided the determination of what the Clean Water Act and EPA regulations require to the Water Boards. (See, e.g., Wat. Code, § 13377.) The Commission,by contrast, is not qualified to and does not engage in the complex analysis that the Water Boards conduct _to determine the requirements of federal law for operation ofa particular MS4under the Clean Water Act. The Commission did not evaluate the permit application, the historical success and failure ofpollution controls, the current state of the science and technology ofpollution control, or the cost in determining the set of controls that would reducepollution to the maximum extent practicable. (See generally 5 AR 5581-5603.) Instead, ‘the Commission misinterpreted federal law and simply lookedto see whetherthe terms of the permit matched specific terms prescribed by federal law. (See, e.g., 5 AR 5585.) This was an inappropriate test for 28 determining whatis required to achieve the maximum-extent-practicable standard, which does not prescribe specific permit terms. Failure to give appropriate deference to the Regional Board creates a variety of problems. When the Commission disagrees with the Water Boards about what federal law requires, it sets up a second roundofjudicial review in which the burdenofproofis shifted to the Water Boards. On a | direct challenge to a permit, the “party challenging the scope of[the] permit ... has the burden of showing the [Water Boards] abused [their] discretion or [their] findings were unsupported bythe facts.” (Building Industry, supra, 124 Cal.App.4th at pp. 888-889.) Regional board determinationsare subject to a strong presumptionofcorrectness, and they receive deference in areas of policymaking and technical expertise. (See Fukuda, supra, 20 Cal.4th at pp. 812, 817; see also State Water Board, supra, 143 Cal.App.4th at p. 997 [“we defer to the regional board’s expertise in construing language whichis not clearly defined in statutes involving pollutant discharge into storm drain sewer systems”].) In the direct challenge to the permit, the County andcities argued that the Regional Board exceeded the requirements of the maximum-extent-practicable standard, an argument that the Court of Appeal squarely rejected. (See State Water Board, supra, 143 Cal.App.4th 985 [unpublished section G.3 at 3 AR 3259-3260].) But when the Water Boards challenge a Commission decision determining what federal law requires, the burden of proof arguably shifts to the Water Boards. If the Water Boards are not given.deference, they will be forced to affirmatively establish the correctness of their decision, and the party challenging the permit, as here, will argue thatit is the Commission’s - decision, not that of the Water Boards,that is entitled to deference and should be reviewed underthe substantial evidence standard. (See Appellants’ Opening Brief (AOB) 47-50.) 29 These concerns dovetail with fundamental principles favoring finality of agency andjudicial decisions. (See Murray v. Alaska Airlines, Inc. (2010) 50 Cal.4th 860, 868 (Murray).) It is inefficient for the parties to litigate twice,first in the permitting process and later in the mandates process, the issue of what federal law requires. And duplicative litigation could, as here, lead to inconsistent decisions and conflicting obligations under state and federal law. Understate law, a local governmentis not required to “implementor give effect to” any state mandate for which the State has not provided a subvention of funds. (Gov. Code, § 17581, subd.(a); see also Cal. Const., art. XIII B, § 6, subd. (b).) But under federal law, requirements in NPDESpermits can be enforced in civil and criminal actions in federal court. (See 33 U.S.C. §§ 1319, 1342@), 1365.) If the permit or one ofits terms is determined to be a state mandate and the Legislature chooses to suspend the operation of the mandate rather than reimburseits costs—as it, or the Governor, through the exercise of the line- item veto, is constitutionally authorized to do (see California School Boards Association v. Brown, supra, 192 Cal.App.4th at 1511-1512)—the permit andall its terms arguably remain no less enforceable, under federal law. 3. Collateral Estoppel Should Ordinarily Bar Permittees from Relitigating Before the Commission Matters of Federal Law Fully Litigated and Finally Decided in the Permitting Process. Even in the absence of deference, the related doctrines of collateral estoppel and judicial exhaustion should ordinarily limit local government’s _ ability to relitigate before the Commission the Water Boards’ final determinations of what federal law requires, and thus reducethe likelihood of interagency conflict and its adverse consequences. 30 Collateral estoppel precludesrelitigation of issues argued and decided in prior proceedings. (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341 (Lucido).) It applies to quasi-judicial agency decisions, just as it does to court decisions. (See Murray, supra, 50 Cal.4th at p. 867.) The requirements for collateral estoppel are met here: ' (1) the issue soughtto be precludedis identical to an issue actually litigated and necessarily decided in the earlier proceeding; (2) the earlier decision was final and on the merits; and (3) the party against whom preclusionis soughtis identical to the party to the former proceeding. (See Lucido, supra, 51 Cal.3d at p. 341.) The claimants to the Commission proceeding wereparties in the permitting proceedings (compare 5 AR 5557 & fn. 2, 3 AR 2480, | 2 AR 2260 with 3 CT 412-413, State Water Board, supra, 143 Cal.App.4th at p. 989 & fn. 1); the decision on the matter became final whenthis Court denied review of the Court of Appeal’s decision on February 14, 2007 (see Cal. Rules of Court, rule 8.532(b)(2)(A)); and the issue of whether the permit exceeds the requirements of federal law is identical to the issue of whether the Regional Board exceeded the requirements of the Clean Water ' In the courts below, Respondents arguedthatthelitigation directly challenging the permit had preclusive effect. (See Respondents’ Briefat pp. 33-34,filed on Oct. 26, 2012 in Case No. B237153; Petitioners’ MemorandumofPoints and Authorities in Support of Petitioner for Writ of Mandamusatpp. 22-23, filed on June 10, 2011 in Case No. BS130730.) They did not, however, frame the issue as one of collateral estoppel. Even if this argument weretreated as newly raised on review,this Court nonetheless would have discretion to considerit because it presents issues of law that can be resolved based on facts in the record and becauseit presents important public policy issues. (See Ward, supra, 51 Cal.2d at p. 742; see also Redevelopment Agency ofthe City ofBerkeley v. City of _ Berkeley (1978) 80 Cal.App.3d 158, 167 [applying doctrine of waiveris discretionary]; UnitedCalifornia Bank v. Bottler (1971) 16 Cal.App.3d 610, 616 [‘Since the [newly raised argument] is based upon public policy rather than private convenience, we cannot invoke any doctrine of waiver, but must face the issue and apply the limitation which the law imposes”].) 31 | Act, which wasactually litigated and necessarily decidedin the direct challenge to the Regional Board’s permitting decision. On appeal in that case, the County argued that the permit “imposes conditions more stringent than required by the Clean Water Act.” (State Water Board, supra, 143 Cal.App.4th 985 [unpublished section G.3 at 3 AR 3259].) The Court of Appealflatly rejected that argument, saying it had no merit. (See id. [unpublished section G.3 at 3 AR 3260].) The County had thusfully litigated whether the Regional Board exceeded the requirementsof federal law by the time the Commission issued its decision. In these circumstances, collateral estoppel should have barred the County from relitigating that question before the Commission.” II. “THE COUNTY’S ARGUMENTS MISCONSTRUE THE CLEAN WATER ACT AND MANDATESLAW. Noneof the County’s arguments overcomethe conclusion reached by the courts below that the permit andall its terms express a federal mandate. The County misapprehends the nature ofMS4 permits, the maximum- | extent-practicable standard, and the Regional Board’s permit authority under the Clean Water Act and EPA regulations. The County’s reliance on the Court of Appeal’s decision in Long Beach Unifiedis misplaced because the permit did not exceed the requirementsof federal law. Its reliance on the Court of Appeal’s decision in Hayes is misplaced because the permit did not pass any costs associated with the State’s compliance with federal > If a permittee chooses not to challenge a regional board’s determination of what federal law requires in the direct permit-review process, the doctrine ofjudicial exhaustion will still preclude it from relitigating that issue before the Commission. (See Murray, supra, 50 Cal.4th at p. 867 [judicial exhaustion recognizes that, out “respect for the administrative decisionmaking process requires,” parties to the process ‘complete it, “including exhausting any available judicial avenues for reversal of adverse findings”]; see also Wat. Code, §§ 13320, 13330.) 32 law to the permittees. Its argument that the Court of Appealfailed to give effect to the Commission’s exclusive primary jurisdiction misapprehends ' the Court of Appeal’s decision. And the evidence the County references does not support its argumentthat the permit exceeded the requirements of federal law. A. The County Incorrectly Relies on Long Beach Unified. The County mistakenly relies on Long Beach Unified, supra, 225 ~Cal.App.3d 155, to make two arguments: the County arguesfirst, that any permit term not expressly required by federal law exceeds the requirements of federal law and creates a state mandate; and second,that the Clean Water Act gives the discharger or permittee—rather than the regional board orthe EPA—discretion to determine the terms of the permit that will achieve the maximum-extent-practicable standard. (See AOB 31-35, 37-41.) The case does not support either argument. The decision in Long Beach Unified addressed California Department of Education regulations that directed certain schooldistricts to develop and adopt plansto alleviate and prevent racial and ethnic segregation. (Long Beach Unified, supra, 225 Cal.App.3d at pp. 164-165.) The State argued that the regulations did not constitute a new program orhigherlevel of service because the schooldistricts had a constitutional dutyto try to desegregate schools. (Jd. at p. 172.) The court disagreed, holding that the regulations exceeded federal constitutional and case-law desegregation | requirements. (/d. at p. 173.) Specifically, the court held that the State regulations “require specific action” that federal case law had previously only “suggested ... may be helpful.” (/bid., italics in original.) “[T]he point is that these steps are no longer merely being suggested as options which the local schooldistrict may wish to consider but are required acts.” (Ibid) 33 Long Beach Unified does not support the County’s argumentthat any permit requirementnot expressly required by the Clean Water Actorits implementing regulations exceeds the Regional Board’s federal permitting authority and creates a state mandate. (See, e.g., AOB 30-35.) This is because the court in Long Beach Unified was addressing state regulations that attempted to interpret and codify the requirements of federal law and which the court found imposed requirements in excess of federal law;it wasnot addressing a federal law that imposed flexible permitting standard requiring the State to exercise discretion to determine the terms necessary to comply with that standard. In Long Beach Unified,the State imposedits rules despite an evolving body of case law whose hallmark was courts “wary of requiring specific steps in advance of a demonstrated need for intervention.” (See Long Beach Unified, supra, 225 Cal.App.4th at p. 173.) By contrast, the Clean Water Act, which prohibits the discharge of all pollutants without a permit, presupposes a need for intervention by creating an elaborate regulatory scheme superintended by the EPA and implemented,in part, by states.” Ratherthan looking at the four challenged permit termsin the full complexity of federal law, the County skips the essential step of 7 determining what, exactly, federal law requires, and would have this Court adopt the Commission’s approach of simply comparingthetext of federal lawto thetext of the permit. The analysis that the County urges boils down to this: if a federal statute or regulation does not expressly require the > Noparty disputes that Water Boards mayuse their authority under the Porter-Cologne Act to impose requirements that exceed those ofthe Clean Water Act. (See City ofBurbank, supra, 35 Cal.4th at pp. 627-628.) But that has not occurred here, andis not likely to be a common occurrence in the context of MS4 permits, where the federal standard for MS4 permitting provides a broad federal mandate. 34 permit term at issue, and if the permit was written by a state permitting authority rather than the EPA, then the permit term is a state, not a federal, mandate. (See AOB 31-35; see also 5 AR 5576-5603.) The upshot of that reasoning,asthetrial court noted, is that “a permit requirement thatis merely practicable or easy (not even practicable to the maximum extent) would be a state mandateif the U.S. EPA failed to express the requirement as aregulation.” (See 4 CT 680.) That approach not only misconstrues federal law,it also misconstrues mandates law. When analyzing whethera particular requirementis a federal mandate, the question is not whether that requirement is imposed in any particular manner(e.g., “expressly’”), but rather whether it is genuinely imposed by federal law,or is instead a creation of state law. (See Davis, supra, 32 Cal.App.4th at p. 816 [“no state mandate exists if the requirementsor provisionsofa state statute are, nevertheless, required by ‘federal law”]; Long Beach Unified, supra, 225 Cal.App.3d at 173 [to constitute a federal mandate, the mandate must be required by federallaw, not merely suggested]; see also City ofSacramento, supra, 50 Cal.3d at p. 76 [recognizing that whether a cost imposed on a local agency constitutes a federal mandate requires consideration of the specific program and deciding not to attempt a “final test for ‘mandatory’ versus‘optional’ compliance with federal law’’].) The County’s second argumentin reliance on Long Beach Unified, that the operator of the MS4,rather than the Regional Board, has the discretion to determine how to comply with the maximum-extent- practicable standard, is also mistaken. (See AOB 37-41.) In California, only the Water Boards are authorized by the EPA to issue the MS4 permit. Underfederal law, although it may suggest permit terms sufficient to meet the maximum-extent-practicable standard, a permit application merely proposes methods for compliance. (See Cal. Code Regs., tit. 23, §§ 2235.1- 35 2235.2; 40 C.F.R. § 122.26(d).) The permitting agency may incorporate all or part of a permittee’s application into the permit; indeed, the permitting agency mayrely heavily on the application. (See City ofIrving, supra, 10 E.A.D. 111 [2001 WL 988723 at p. *8].) But the law charges the Water Boards, as EPA-approved permit issuers, with determining whatwill satisfy the maximum-extent-practicable standard. (See 33 U.S.C § 1342(b),(p); | Wat. Code, § 13377; Cal. Code Regs., tit. 23, § 2235.2; see also EnvironmentalDefense Center, supra, 344 F.3d at pp. 854-856 [remanding tule regarding small MS4operatorsto the EPA becauseit did not provide for agency review ofpermit applications and noting that “nothing prevents the operator of a small MS4 from misunderstanding or misrepresentingits own stormwater situation and proposing a set of minimum measures for itself that would reducedischarges by far less than the maximum extent practicable”’].) Unlike the schooldistricts in Long Beach Unified, which had discretion to choose the method adequate to comply with federal law, the County has no discretion under the Clean Water Act. It can comply in only one way: by adhering to the requirements of the permit. (See 33 U.S.C. § 1342(k); Environmental Protection Agency, supra, 426 U.S.at p. 205.) | | B. The County Incorrectly Relies on Hayes. The County’s reliance on Hayes to argue that the Regional Board shifted state inspection requirements to the County is similarly misplaced. (See AOB42-47.) The County’s argument again misconstrues federal law. - Underthe act and EPA regulations, the Regional Board’s MS4 permitting authority is coextensive with that of the federal government. (See, e.g., 40 C.F.R. §§ 122.1(a)(2), 122.5.) That principle has a necessary corollary: if the EPA could have drafted a permit or permit term tosatisfy the federal requirement that MS4 permits implement a program to reduce the discharge of pollutants to the maximum extent practicable, then that permit or permit - 36 term—whichnotonly defines a permittee’s compliance with the Clean Water Act but which also may form the basis for civil liability and criminal penalties under the act—must be a federal mandate. | Hayes is inapposite because the court did not interpret the Clean WaterActor its implementing regulations in that case. In Hayes, the State passed laws adopting the federal Education of the Handicapped Act and requiring school districts to provide special education services to pupils in need. (See Hayes, supra, 11 Cal.App.4th at pp. 1574-1575.) The court ruled that the distinction between what state and federal law required the schooldistricts to do was unclear, soit remandedthe casetothe trial court to determine whether the State was “freely choosing” to imposethe costsit incurred in complying with federal law on schooldistricts. (See id. at p. 1594.) Both the County and the Commission reasoned that the Regional Board passed costs to the County because neither the Clean Water Act nor the EPA regulations expressly required the challenged permit terms. (See AOB 42; 5 AR 5584, 5595, 5600.) But the State does not“freely choose” to imposespecific permit requirements as the court understood that idea in Hayes. While federal law confers discretion on the State to choose the permit terms that will meet federal standards, imposing thatstandard is not discretionary. Under the Clean Water Act,.all MS4 operators must have a permitthat, at a minimum, meets the maximum-extent-practicable standard. (33 U.S.C. § 1342(p); 40 C.F.R. § 122.26(a)(3)(i), (d)(iv).) They cannot discharge from their MS4sto waters of the United States without one. (See 33 U.S.C. § 1311.) The act thus requires all terms necessary to achieving its standard, and regardless of whether they are drafted by the EPA or a regional board acting in lieu of the EPA, the permit is a federal mandate. The County’s contention that the evidence supported the Commission’s conclusion that the State freely chose to shift costs 37 associated with industrial-facility and construction-site inspections to the Countyis similarly incorrect. (See 5 AR 5593-5595, 5601-5602.) This | evidence showsonly that the Water Boards perform permit inspections of certain industrial and construction sites to determine compliance with other, statewide permits. (3 AR 3601, 3640-3641; 2 AR 2423, 2436-2437.) On that basis, the Commission concluded—and the County here argues—that “nothing in the federal statutes or regulations . . . would prevent thestate, rather than the local agencies, from performing”the industrial and -_construction-site inspections required by the MS4 permit. (5 AR 5595, 5601; AOB 42-47.) But federal law can, and often does, require both state and local agencies to perform inspections. (See Rancho Cucamonga,supra, 135 Cal.App.4th at pp. 1389-1390 [holding that state andlocal inspection -_requirements were independently required by state and local federal permits].) The mere fact that the MS4 permit required the County to assure that industrial facilities and construction site owners had documentation also required by the statewide NPDESpermitsis not evidencethat the State wasrelievingitself of its own responsibility to check documentation. (See AOB44,alluding to 1 CT 58, 69.) Two separate NPDESpermits imposing related inspection requirements cannot create a state mandate under Hayes, because the State was not passing its costs to the County. These inspection requirements can each be required by federal law and can coexist, with the Water Boards havinginspection obligations and the County having ‘inspection obligations. 38 C. The County Incorrectly Argues That the Commission’s Primary Jurisdiction to Adjudicate State MandatesIs Threatened by the Judgment. The County contendsthat the Court of Appeal improperly substituted | its judgmentfor that of the Commission, which has “exclusive jurisdiction” to determine state mandate claims. (See AOB 23-26.) This jurisdiction is ‘not in question. (See generally Gov. Code, §§ 17500, 17552.) The County argues that the Commission should not defer to the Regional Board’s interpretation of the Clean Water Act and EPA regulations because to do so. would impairits jurisdiction to decide what a state mandate is. (AOB 24- 25.) This argument fails because the Regional Board did not—and could not—determine whetherthe challenged permit terms imposea state mandate; it decided only what federal law requires, and, as the courts held in the direct permit challenge, the Regional Board did not impose provisions that exceeded those requirements. While the Regional Board’s interpretation of what federal law requires may be binding on the County and on the Commission, it no more impinges on the Commission’s jurisdiction than does a decision of this Court or the U.S. Supreme Court construing the Clean Water Act. Alternatively, the County argues that the Commission madea factual, not legal, determination when it concludedthat the challenged permit requirements were not required by federal law. (See AOB 23-24.) Asa threshold matter, the Commission could not decide whether or not the permit exceeded federal law without properly construing federallaw. Indeed, thoughits analysis was incorrect, the Commission’s decision reflects legal analysis, not adjudication of facts. The portion of the Commission’s decision addressing what federal law requires consists almost entirely of comparing the text of the United States Code and Code of Federal Regulations to the permit’s text. (See 5 AR 5576-5603.) Unlike 39 the Regional Board, the Commission did not, for example, consider any scientific reports or address alternative pollution-fighting measures. It simply ruled that any permit term not expressly required by the Clean Water Act or its implementing regulations exceeded the act’s requirements. The County also compares the Regional Board’s final permitting decision to cases in which the Legislature has madefindings or declarations that a law it has enacted is not a state mandate in an attempt to foreclose a subvention obligation. (See AOB 25-26, citing California School Boards Association v. State (2009) 171 Cal.App.4th 1183, 1204, and Davis, supra, 32 Cal.App.4th at p. 819.) This analogy is inapt. Unlike a legislative declaration that a state law does not create a state mandate, the Regional Board’s final decision does not purport to determinethe ultimate constitutional issue of whether the permit imposes a new program or higher level of service. Moreover, the Regional Board’s determination that the permit did not exceed the requirements of the Clean Water Act is within the Regional Board’s specific area of expertise and was twice affirmed on judicial review. D. The Evidence on Which the County Relies Does Not SupportIts Argument That the Challenged Terms Exceeded the Federal Standard. The County references evidence to support its argument that the challenged permit requirements exceed the federal maximum-extent- practicable standard. (See AOB 30-31.) But the evidence it cites—an EPA stormwater program guidance manual, permits issued by the EPA in other states, earlier permits issued to the County of Los Angeles andcities therein, and a 2001 letter from the EPA about state-wide construction and industrial permits—does not support its argument. (See AOB 30-31.) The manual says that state permit issuers should not use it as a “script or checklist” and that it is not an “enforcement ‘how to.’” (3 AR 3393.) And even though 40 the manual doesnot prescribe specific conditions, it does give some examples of what permits should contain, one of whichis construction-site inspections: “EPA regulations require permittees to develop ‘procedures for site inspection and enforcement’ for addressing constructionactivities. MS4permitswill likely elaborate on this requirement in moredetail, such as by specifying a minimum frequencyfor inspection.” (3 AR 3394.) The County’s citation to other permits also does not support its position. Relying on EPA permits issued in other states ignores Congress’s intent that MS4 permits contain site specific requirements. (See 55 Fed.Reg. at pp. 48037-48038; City ofIrving, supra, 10 E.A.D. 111 [2001 WL 988723 at p. *6].) What the EPA required a permittee to do to reduce the MS4 dischargeof pollutants to the maximum extentpracticable in a moderately populated, landlocked area like Boise, Idaho, sayslittle about what the Regional Board could and should require a permittee to do to meet that standardin a littoral metropolis like Los Angeles, California. (See 4 AR 3893-3898.) Similarly, relying on earlier Los Angeles County MS4 permits ignores Congress’s intent that permits evolve over time as knowledgeis gained about stormwater and technology advances. (See 55 Fed.Reg.at p. 48052 (“The Permits for discharges from municipal separate storm sewer systems will be written to reflect changing conditions that result from program development and implementation and corresponding improvements in water quality”); 3 AR 3797 [“The EPA . . . expects stormwater permits to follow an iterative process whereby each successive permit becomes more refined, detailed, and expanded as needed, based on experience underthe previous permit”].) A permit condition’s novelty has no relevance to determining whetherthe condition or the permit meets or exceedsfederal law. 41 The County’s reliance on the 2001 EPAletter is also misguided. (See 4 AR 3878-3879.) The EPAsaid that the State had a duty to inspect commercial and industrial sites for compliance with a state permit. (See 4 AR 3878.) But that does not mean that federal law does not also require local governments to conduct inspections. The EPA confirmed that local- governmentpermittees may also be required to inspect and monitor commercial and industrial facilities. (See 4 AR 3878.) CONCLUSION For the foregoing reasons, Respondents respectfully request that this Court affirm the judgment. Dated: August 22, 2014 Respectfully submitted, KAMALAD.HARRIS Attorney General of California DOUGLASJ. WOODS Senior Assistant Attorney General NELSON R. RICHARDS Deputy Attorney General Attorneysfor Plaintiffs and Respondents California DepartmentofFinance, State Water Resources Control Board, and California Regional Water Quality Control Board, Los Angeles Region SA2013113906 41057398.doc 42 CERTIFICATE OF COMPLIANCE I certify that the attached AnswerBrief on the Merits uses a 13 point Times New Romanfont and contains 12,295 words. Dated:. August 22, 2014 KAMALA DAZARRIS f California NELSON R. RICHARDS Deputy Attorney General Attorneysfor Plaintiffs and Respondents California Department ofFinance, State Water Resources Control Board, and - California Regional Water Quality Control Board, Los Angeles Region DECLARATION OF SERVICE BY OVERNIGHT COURIER Case Name: Department of Finance v. Commission on State Mandates (County of Los Angeles) No.: 8214855 I declare: I am employedin the Office of the Attorney General, which is the office of a memberofthe California State Bar, at which member’s direction this service is made. I am 18 years of age or older and nota party to this matter; my business address is: 455 Golden Gate Avenue, Suite 11000, San Francisco, CA 94102-7004. On August 22, 2014, I served the attached ANSWERBRIEF ON THE MERITSbyplacing a true copy thereof enclosed in a sealed envelope with the Golden State Overnight (GSO), addressed as follows: Representing Real Parties in Interest Representing Real Party in Interest County ofLos Angeles, Cities ofBellfolower, City ofMonterey Park: Carson, Commerce, Covina, Downey, and Signal Hill: Christi Hogin Jenkins & Hogin LLP Howard Gest | Manhattan Towers David W. Burhenn 1230 Rosecrans Avenue, Suite 110 Burhenn & Gest, LLP Manhattan Beach, CA 90266 624 South Grand Avenue, Suite 2200 Los Angeles, CA 90017 Representing Real Parties in Interest Representing Respondent County ofLos Angeles: -| Commission on State Mandates: John F. Krattli Camille Shelton County Counsel Chief Legal Counsel Judith A. Fries Commission on State Mandates Office of the Los Angeles County Counsel 980 Ninth Street, Suite 300 500 West Temple Street, Room 653 Sacramento, CA 95814 Los Angeles, CA 90012 Representing City of Vernon: Representing Cities ofArtesia, Beverly Hills, Norwalk, Rancho Palo Verde, and Nicholas George Rodriguez Westlake Village: City Attorney Zaynah Moussa Norman A. Dupont City of Vernon . Ginetta L. Giovinco 4305 Santa Fe Avenue Richards, Watson & Gershon Vernon, CA 90058 355 South Grand Avenue, 40th Floor Los Angeles, CA 90071-3101 Clerk . Los Angeles County Superior Court 111 N. Hill Street Department 86 Los Angeles, CA 90012 Clerk, Court of Appeal Second Appellate District Ronald Reagan State Building 300 S. Spring Street, 2™ Floor North Tower Los Angeles, CA 90013 I declare under penalty of perjury underthe laws of the State of California the foregoing is true - and correct and that this declaration was executed on August 22, 2014, at San Francisco, California. M. Argarin Declarant $A2013113906 41057152.doe41057152.D0C