Originally posted at the Public Policy Institute of California.
By Brian Gray.
The California Supreme Court recently decided a case that could have profound consequences for the state’s efforts to protect water quality. The case reveals the challenges California faces in keeping polluted runoff out of waterways and coasts.
The court ruled that the state must reimburse Los Angeles and 83 other Southern California cities for certain costs of complying with a stormwater permit issued by the Los Angeles Regional Water Quality Control Board. Stormwater permits are part of the regulatory system created by the federal Clean Water Act and its California counterpart, the Porter-Cologne Act, to protect water quality. These laws regulate discharges of pollutants into the state’s rivers, bays, and estuaries, as well as the Pacific Ocean.
In this case, the permit directed the local governments to comply with a variety of conditions to clean up their stormwater discharges. The governments objected to two of them. The first required inspections of some commercial and industrial facilities and construction sites, as contaminated runoff from these areas can impair water quality. The second ordered the governments to install trash receptacles at transit stops to minimize trash washing into storm drains.
At issue is who should pay for implementing the programs. Constitutional reforms enacted by California voters in 1978 (Proposition 13) and 1996 (Proposition 218) place significant constraints on the ability of local governments to levy taxes and fees. Stormwater programs are particularly difficult to fund. New fees typically require a two-thirds vote of local residents. This can be an especially tough sell for stormwater improvements, because the reductions in pollution mostly benefit communities downstream. Because stormwater compliance lacks a steady funding source, it is one of California’s “fiscal orphans,” with an annual funding gap of $500–800 million.
In recognition of the constraints on local public finances introduced by Proposition 13, the voters amended the California Constitution in 1979 to compel the state to reimburse local governments for the costs of complying with new programs or higher levels of service required by state statute or regulation. The law makes an exception for programs or services mandated by federal law.
The Supreme Court held that the contested stormwater permit conditions were state policy choices of how to implement the Clean Water Act, but were not themselves federal mandates. Therefore, the state must pay for the costs of their implementation. All three of Governor Brown’s appointees dissented, arguing that the majority gave insufficient deference to the regional board’s determination that these conditions were the best means of achieving the federal pollution control directives.
The consequences of the court’s decision are uncertain. State reimbursement of a portion of permit costs would make stormwater improvements more affordable for local governments and their taxpayers. Yet, by shifting funding responsibility to the state, the decision assigns regional stormwater improvement costs to all California taxpayers, regardless of their contribution to stormwater discharges and pollution. With annual funding costs in excess of half a billion dollars, it is unclear whether the legislature would be willing to allocate sufficient funds to cover these costs.
Perhaps the greatest concern, though, is that the decision will deter the regional boards from imposing permit conditions not specifically required by federal law. This could have major consequences for stormwater management in California because most of the Clean Water Act’s stormwater directives are written in general terms. Therefore, it is likely that the decision will require the state to reimburse local governments for almost all specific regulatory mandates needed to implement the federal law.
For example, although the act requires stormwater dischargers to use “management practices” and “control techniques” to reduce pollutants “to the maximum extent practicable,” it neither defines those actions nor sets specific discharge limitations. Rather, federal law expressly delegates these decisions to the regional boards, which under the court’s decision makes their costs reimbursable to local governments.
If the legislature does not allocate sufficient funding to cover these costs, or if the regional boards issue permits without the specific conditions needed to achieve the federal mandates, California risks losing its authority to administer federal stormwater permitting. That means the EPA would assume permitting responsibility. Ironically, the EPA would be unconstrained by California’s prohibition against unfunded mandates and would have the power to impose all stormwater permit costs on local governments.
The Supreme Court’s effort to reconcile the realities of modern water quality protection with California’s unique constitutional fiscal constraints will likely generate more questions than answers. Yet, it is essential that the improvements needed to modernize California’s stormwater systems be adequately funded. We must hope that the court’s precarious balancing of the responsibilities of the state and local governments to pay for these improvements does not undermine the shared goal of protecting the quality of California’s waters.