Filed 12/19/17

                              CERTIFIED FOR PUBLICATION



             IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                               THIRD APPELLATE DISTRICT
                                          (Sacramento)
                                               ----




DEPARTMENT OF FINANCE et al.,                                       C070357

                 Plaintiffs and Respondents,                 (Super. Ct. No. 34-2010-
                                                            80000604-CU-WM-GDS)
        v.

COMMISSION ON STATE MANDATES,

                 Defendant;

COUNTY OF SAN DIEGO et al.,

                 Real Parties in Interest and Appellants.




     APPEAL from a judgment of the Superior Court of Sacramento County, Allen
Sumner, Judge. Reversed with directions.

      Thomas E. Montgomery, County Counsel, Timothy M. Barry, Chief Deputy,
James R. O’Day, Senior Deputy, Office of the County Counsel, County of San Diego;
Best Best & Krieger, Shawn Hagerty; and Lounsbery Ferguson Altona & Peak, Helen
Holmes Peak for Real Parties in Interest and Appellants.




                                                1
      Shanda M. Beltran and Andrew W. Henderson for Building Industry Legal
Defense Foundation as Amicus Curiae on behalf of Real Parties in Interest and
Appellants.

       Somach Simmons & Dunn, Theresa A. Dunham, and Nicholas A. Jacobs for the
California Stormwater Quality Association as Amicus Curiae on behalf of Real Parties in
Interest and Appellants.

       Morrison & Foerster and Robert L. Falk for Santa Clara Valley Urban Runoff
Pollution Prevention Program as Amicus Curiae on behalf of Real Parties in Interest and
Appellants.

       Pamela J. Walls, County Counsel, Karin Watts-Bazan, Principal Deputy County
Counsel, Office of the County Counsel, County of Riverside, for Riverside County Flood
Control and Water Conservation District and County of Riverside as Amici Curiae on
behalf of Real Parties in Interest and Appellants.

      Meyers Nave Riback Silver & Watson and Gregory J. Newmark for Alameda
Countywide Clean Water Program as Amicus Curiae on behalf of Real Parties in Interest
and Appellants.

       Kamala D. Harris and Xavier Becerra, Attorneys General, Douglas J. Woods,
Senior Assistant Attorney General, Peter K. Southworth, Nelson R. Richards, and
Kathleen A. Lynch, Deputy Attorneys General, for Plaintiffs and Respondents.

       No appearance for Defendant.




       The California Constitution requires the state to provide a subvention of funds to
compensate local governments for the costs of a new program or higher level of service
the state mandates. (Cal. Const., art. XIII B, § 6 (section 6). Subvention is not available
if the state imposes a requirement that is mandated by the federal government, unless the
state order mandates costs that exceed those incurred under the federal mandate. (Gov.
Code, § 17556, subd. (c).) The Commission on State Mandates (the Commission)
adjudicates claims for subvention.



                                             2
       In Department of Finance v. Commission on State Mandates (2016) 1 Cal.5th 749
(Department of Finance), the California Supreme Court upheld a Commission ruling that
certain conditions a regional water quality control board imposed on a storm water
discharge permit issued under federal and state law required subvention and were not
federal mandates. The high court found no federal law, regulation, or administrative case
authority expressly required the conditions. It ruled the federal requirement that the
permit reduce pollution impacts to the “maximum extent practicable” was not a federal
mandate, but rather vested the regional board with discretion to choose which conditions
to impose to meet the standard. The permit conditions resulting from the exercise of that
choice were state mandates.
       In this appeal, we face the same issue. The parties and the permit conditions are
different, but the legal issue is the same—whether the Commission correctly determined
that conditions imposed on a federal and state storm water permit by a regional water
quality control board are state mandates. The Commission reached its decision by
applying the standard the Supreme Court later adopted in Department of Finance. The
trial court, reviewing the case before Department of Finance was issued, concluded the
Commission had applied the wrong standard, and it remanded the matter to the
Commission for further proceedings.
       Following the analytical regime established by Department of Finance, we reverse
the trial court’s judgment. We conclude the Commission applied the correct standard and
the permit requirements are state mandates. We reach this conclusion on the same
grounds the high court in Department of Finance reached its conclusion. No federal law,
regulation, or administrative case authority expressly required the conditions. The
requirement to reduce pollution impacts to the “maximum extent practicable” was not a
federal mandate, but instead vested the regional board with discretion to choose which
conditions to impose to meet the standard. The permit conditions resulting from the
exercise of that choice in this instance were state mandates.

                                             3
       We remand the matter so the trial court may consider other issues the parties
raised in their pleadings but the court did not address.
                                     BACKGROUND
       In Department of Finance, the Supreme Court explained the storm water discharge
permitting system and the constitutional reimbursement system in detail. We quote from
the opinion at length:
       A.     The storm water discharge permitting system
       “The Operators’ municipal storm sewer systems discharge both waste and
pollutants.[1] State law controls ‘waste’ discharges. (Wat. Code, § 13265.) Federal law
regulates discharges of ‘pollutant[s].’ (33 U.S.C. § 1311(a).) Both state and later-
enacted federal law require a permit to operate such systems.
       “California’s Porter-Cologne Water Quality Control Act (Porter-Cologne Act or
the Act; Wat. Code, § 13000 et seq.) was enacted in 1969. It established the State Water
Resources Control Board (State Board), along with nine regional water quality control
boards, and gave those agencies ‘primary responsibility for the coordination and control
of water quality.’ (Wat. Code, § 13001; see City of Burbank v. State Water Resources
Control Bd. (2005) 35 Cal.4th 613, 619 (City of Burbank).) The State Board establishes
statewide policy. The regional boards formulate and adopt water quality control plans
and issue permits governing the discharge of waste. (Building Industry Assn. of San
Diego County v. State Water Resources Control Bd. (2004) 124 Cal.App.4th 866, 875
(Building Industry).)




1       “The systems at issue here are ‘municipal separate storm sewer systems,’
sometimes referred to by the acronym ‘MS4.’ (40 C.F.R. § 122.26(b)(19) (2001) [].) A
‘[m]unicipal separate storm sewer’ is a system owned or operated by a public agency
with jurisdiction over disposal of waste and designed or used for collecting or conveying
storm water. (40 C.F.R. § 122.26(b)(8) (2001) [].) Unless otherwise indicated, all further
citations to the Code of Federal Regulations are to the 2001 version.”

                                              4
       “The Porter-Cologne Act requires any person discharging, or proposing to
discharge, waste that could affect the quality of state waters to file a report with the
appropriate regional board. (Wat. Code, § 13260, subd. (a)(1).) The regional board then
‘shall prescribe requirements as to the nature’ of the discharge, implementing any
applicable water quality control plans. (Wat. Code, § 13263, subd. (a).) The Operators
must follow all requirements set by the Regional Board. (Wat. Code, §§ 13264, 13265.)
       “The federal Clean Water Act (the CWA; 33 U.S.C. § 1251 et seq.) was enacted in
1972, and also established a permitting system. The CWA is a comprehensive water
quality statute designed to restore and maintain the chemical, physical, and biological
integrity of the nation’s waters. (City of Burbank, supra, 35 Cal.4th at p. 620.) The
CWA prohibits pollutant discharges unless they comply with (1) a permit (see 33 U.S.C.
§§ 1328, 1342, 1344); (2) established effluent limitations or standards (see 33 U.S.C.
§§ 1312, 1317); or (3) established national standards of performance (see 33 U.S.C.
§ 1316). (33 U.S.C. § 1311(a).) The CWA allows any state to adopt and enforce its own
water quality standards and limitations, so long as those standards and limitations are not
‘less stringent’ than those in effect under the CWA. (33 U.S.C. § 1370.)
       “The CWA created the National Pollutant Discharge Elimination System
(NPDES), authorizing the Environmental Protection Agency (EPA) to issue a permit for
any pollutant discharge that will satisfy all requirements established by the CWA or the
EPA Administrator. (33 U.S.C. § 1342(a)(1), (2).) The federal system notwithstanding,
a state may administer its own permitting system if authorized by the EPA.[2] If the EPA
concludes a state has adequate authority to administer its proposed program, it must grant



2      “For a state to acquire permitting authority, the governor must give the EPA a
‘description of the program [the state] proposes to establish,’ and the attorney general
must affirm that the laws of the state ‘provide adequate authority to carry out the
described program.’ (33 U.S.C. § 1342(b).)”


                                              5
approval (33 U.S.C. § 1342(b)) and suspend its own issuance of permits (33 U.S.C. §
1342(c)(1)).[3]
       “California was the first state authorized to issue its own pollutant discharge
permits. (People ex rel. State Water Resources Control Bd. v. Environmental Protection
Agency (9th Cir. 1975) 511 F.2d 963, 970, fn. 11, revd. on other grounds in EPA v. State
Water Resources Control Board (1976) 426 U.S. 200 [48 L.Ed.2d 578].) Shortly after
the CWA’s enactment, the Legislature amended the Porter-Cologne Act, adding chapter
5.5 (Wat. Code, § 13370 et seq.) to authorize state issuance of permits (Wat. Code, §
13370, subd. (c)). The Legislature explained the amendment was ‘in the interest of the
people of the state, in order to avoid direct regulation by the federal government of
persons already subject to regulation under state law pursuant to [the Porter-Cologne
Act].’ (Ibid.) The Legislature provided that chapter 5.5 be ‘construed to ensure
consistency’ with the CWA. (Wat. Code, § 13372, subd. (a).) It directed that state and
regional boards issue waste discharge requirements ‘ensur[ing] compliance with all
applicable provisions of the [CWA] . . . together with any more stringent effluent
standards or limitations necessary to implement water quality control plans, or for the
protection of beneficial uses, or to prevent nuisance.’ (Wat. Code, § 13377, italics
added.)[4] To align the state and federal permitting systems, the legislation provided that
the term ‘ “waste discharge requirements” ’ under the Act was equivalent to the term
‘ “permits” ’ under the CWA. (Wat. Code, § 13374.) Accordingly, California’s
permitting system now regulates discharges under both state and federal law.


3      “The EPA may withdraw approval of a state’s program (33 U.S.C. § 1342(c)(3)),
and also retains some supervisory authority: States must inform the EPA of all permit
applications received and of any action related to the consideration of a submitted
application (33 U.S.C. § 1342(d)(1)).”

4       The federal CWA does not prevent states from imposing any permit requirements
that are more stringent than the CWA requires. (33 U.S.C. § 1370.)

                                             6
(WaterKeepers Northern California v. State Water Resources Control Bd. (2002) 102
Cal.App.4th 1448, 1452; accord, Building Industry, supra, 124 Cal.App.4th at p. 875.)
       “In 1987, Congress amended the CWA to clarify that a permit is required for any
discharge from a municipal storm sewer system serving a population of 100,000 or more.
(33 U.S.C. § 1342(p)(2)(C), (D).) Under those amendments, a permit may be issued
either on a system- or jurisdiction-wide basis, must effectively prohibit non-stormwater
discharges into the storm sewers, and must ‘require controls to reduce the discharge of
pollutants to the maximum extent practicable.’ (33 U.S.C. § 1342(p)(3)(B), italics
added.) The phrase ‘maximum extent practicable’ is not further defined. How that
phrase is applied, and by whom, are important aspects of this case.
       “EPA regulations specify the information to be included in a permit application.
(See 40 C.F.R. § 122.26(d)(1)(i)-(vi), (2)(i)-(viii).) Among other things, an applicant
must set out a proposed management program that includes management practices;
control techniques; and system, design, and engineering methods to reduce the discharge
of pollutants to the maximum extent practicable. (40 C.F.R. § 122.26(d)(2)(iv).) The
permit-issuing agency has discretion to determine which practices, whether or not
proposed by the applicant, will be imposed as conditions. (Ibid.)” (Department of
Finance, supra, 1 Cal.5th at pp. 755-757, original italics.)5
       B.     The permit before us
       In 2007, the Regional Water Quality Control Board, San Diego Region (the San
Diego Regional Board), issued a permit to real parties in interest and appellants, the
County of San Diego and the cities located in the county (the “permittees” or




5      Using the Porter-Cologne Act’s name for a permit application, the NPDES permit
application in California is referred to as a Report of Waste Discharge.

                                              7
“copermittees”).6 The permit was actually a renewal of an NPDES permit first issued in
1990 and renewed in 2001. The San Diego Regional Board stated the new permit
“specifies requirements necessary for the Copermittees to reduce the discharge of
pollutants in urban runoff to the maximum extent practicable (MEP).” The San Diego
Regional Board found that although the permittees had generally been implementing the
management programs required in the 2001 permit, “urban runoff discharges continue to
cause or contribute to violations of water quality standards. This [permit] contains new
or modified requirements that are necessary to improve Copermittees’ efforts to reduce
the discharge of pollutants in urban runoff to the MEP and achieve water quality
standards.”
       The permit requires the permittees to implement various programs to manage their
urban runoff that were not required in the 2001 permit. It requires the permittees to
implement programs in their own jurisdictions. It requires the permittees in each
watershed to collaborate to implement programs to manage runoff from that watershed,
and it requires all of the permittees in the region to collaborate to implement programs to
manage regional runoff. The permit also requires the permittees to assess the
effectiveness of their programs and collaborate in their efforts.
       The specific permit requirements involved in this case require the permittees to do
the following:
       (1)    As part of their jurisdictional management programs:
              (a)    Sweep streets at certain times, depending on the amount of debris
they generate, and report the number of curb miles swept and tons of material collected;




6      Real parties in interest and appellants are the County of San Diego and the Cities
of Carlsbad, Chula Vista, Coronado, Del Mar, El Cajon, Encinitas, Escondido, Imperial
Beach, La Mesa, Lemon Grove, National City, Oceanside, Poway, San Diego, San
Marcos, Santee, Solana Beach, and Vista.

                                              8
              (b)     Inspect, maintain, and clean catch basins, storm drain inlets, and
other storm water conveyances at specified times and report on those activities;
              (c)     Collaboratively develop and individually implement a
hydromodification management plan to manage increases in runoff discharge rates and
durations;7
              (d)     Collectively update the best management practices requirements
listed in their local Standard Urban Storm Water Mitigation Plans (SUSMP’s) and add
low impact development best management practices for new real property development
and redevelopment;
              (e)     Individually implement an education program using all media to
inform target communities about municipal separate storm sewer systems (MS4’s) and
impacts of urban runoff, and to change the communities’ behavior and reduce pollutant
releases to MS4’s;
       (2)    As part of their watershed management programs, collaboratively develop
and implement watershed water quality activities and education activities within
established schedules and by means of frequent regularly scheduled meetings;
       (3)    As part of their regional management programs:
              (a)     Collaboratively develop and implement a regional urban runoff
management program to reduce the discharge of pollutants from MS4’s to the maximum
extent practicable;
              (b)     Collaboratively develop and implement a regional education
program focused on residential sources of pollutants;




7      Hydromodification is the “change in the natural watershed hydrologic processes
and runoff characteristics . . . caused by urbanization or other land use changes that result
in increased stream flows and sediment transport.”

                                              9
        (4)   Annually assess the effectiveness of the jurisdictional, watershed, and
regional urban runoff management programs, and collaboratively develop a long-term
effectiveness assessment to assess the effectiveness of all of the urban runoff
management programs; and
        (5)   Jointly execute a memorandum of understanding, joint powers authority, or
other formal agreement that defines the permittees’ responsibilities under the permit and
establishes a management structure, standards for conducting meetings, guidelines for
workgroups, and a process to address permittees’ noncompliance with the formal
agreement.
        The permittees estimated complying with these conditions would cost them more
than $66 million over the life of the permit.
        C.    Reimbursement for state mandates
        “[W]hen the Legislature or a state agency requires a local government to provide a
new program or higher level of service, the state must ‘reimburse that local government
for the costs of the program or increased level of service.’ (Cal. Const., art. XIII B, § 6,
subd. (a) (hereafter, section 6).)[8]” (Department of Finance, supra, 1 Cal.5th at pp 758-
759.)
        “Voters added article XIII B to the California Constitution in 1979. Also known
as the ‘ “Gann limit,” ’ it ‘restricts the amounts state and local governments may
appropriate and spend each year from the “proceeds of taxes.” ’ (City of Sacramento v.
State of California (1990) 50 Cal.3d 51, 58-59 (City of Sacramento).) ‘Article XIII B is
to be distinguished from article XIII A, which was adopted as Proposition 13 at the June


8      “ ‘ “Costs mandated by the state” means any increased costs which a local agency
or school district is required to incur . . . as a result of any statute enacted on or after
January 1, 1975, or any executive order implementing any statute enacted on or after
January 1, 1975, which mandates a new program or higher level of service of an existing
program within the meaning of Section 6 of Article XIII B of the California
Constitution.’ (Gov. Code, § 17514.)”

                                                10
1978 election. Article XIII A imposes a direct constitutional limit on state and local
power to adopt and levy taxes. Articles XIII A and XIII B work in tandem, together
restricting California governments’ power both to levy and to spend for public purposes.’
(Id. at p. 59, fn. 1.)
        “The ‘concern which prompted the inclusion of section 6 in article XIII B was the
perceived attempt by the state to enact legislation or adopt administrative orders creating
programs to be administered by local agencies, thereby transferring to those agencies the
fiscal responsibility for providing services which the state believed should be extended to
the public.’ (County of Los Angeles v. State of California (1987) 43 Cal.3d 46, 56.) The
reimbursement provision in section 6 was included in recognition of the fact ‘that articles
XIII A and XIII B severely restrict the taxing and spending powers of local
governments.’ (County of San Diego v. State of California (1997) 15 Cal.4th 68, 81
(County of San Diego).) The purpose of section 6 is to prevent ‘the state from shifting
financial responsibility for carrying out governmental functions to local agencies, which
are “ill equipped” to assume increased financial responsibilities because of the taxing and
spending limitations that articles XIII A and XIII B impose.’ (County of San Diego, at p.
81.) Thus, with certain exceptions, section 6 ‘requires the state “to pay for any new
governmental programs, or for higher levels of service under existing programs, that it
imposes upon local governmental agencies.” ’ (County of San Diego, at p. 81.)”
(Department of Finance, supra, 1 Cal.5th at pp. 762-763, original italics.)
        A significant exception to section 6’s subvention requirement is at issue here.
Under that exception, “reimbursement is not required if ‘[t]he statute or executive order
imposes a requirement that is mandated by a federal law or regulation and results in costs
mandated by the federal government, unless the statute or executive order mandates costs
that exceed the mandate in that federal law or regulation.’ (Gov. Code, § 17556, subd.
(c).)



                                             11
      “The Legislature has enacted comprehensive procedures for the resolution of
reimbursement claims (Gov. Code, § 17500 et seq.) and created the Commission to
adjudicate them (Gov. Code, §§ 17525, 17551). It also established ‘a test-claim
procedure to expeditiously resolve disputes affecting multiple agencies.’ (Kinlaw v. State
of California (1991) 54 Cal.3d 326, 331 (Kinlaw).)
      “The first reimbursement claim filed with the Commission is called a test claim.
(Gov. Code, § 17521.) The Commission must hold a public hearing, at which the
Department of Finance (the Department), the claimant, and any other affected department
or agency may present evidence. (Gov. Code, §§ 17551, 17553.) The Commission then
determines ‘whether a state mandate exists and, if so, the amount to be reimbursed.’
(Kinlaw, supra, 54 Cal.3d at p. 332.) The Commission’s decision is reviewable by writ
of mandate. (Gov. Code, § 17559.)” (Department of Finance, supra, 1 Cal.5th at pp.
758-759.)
      D.        The test claim and the writ petition
      In 2008, the permittees filed a test claim with the Commission. They contended
the permit requirements mentioned above constituted new or modified requirements that
were compensable state mandates under section 6. The State, the San Diego Regional
Board and the Department of Finance (collectively the “State”) claimed the requirements
were not compensable because they were mandated by the federal CWA’s NPDES permit
requirements.
      In 2010, the Commission ruled all of the targeted requirements were state
mandates and not federal mandates. The Commission found the requirements were not
federal mandates because they were not expressly specified in, or they exceeded the
scope of, federal regulations. The Commission determined the permittees were entitled
to subvention by the state for all of the requirements except two. The Commission ruled
the requirements to develop a hydromodification plan and to include low impact



                                              12
development practices in the SUSMP’s were not entitled to subvention because the
permittees had authority to impose fees to recover the costs of those requirements.
       The State petitioned the trial court for a writ of administrative mandate. It
contended the Commission erred because the permit requirements are federal mandates
and are not a new program or higher level of service. It also contended the Commission
erred in concluding the County of San Diego did not have fee authority to pay for all of
the permit conditions.
       The County of San Diego filed a cross-petition for writ of mandate to challenge
the Commission’s decision that the conditions requiring a hydromodification plan and
low impact development practices were not reimbursable.
       The trial court granted the State’s petition in part and issued a writ of mandate. It
concluded the Commission applied an incorrect standard when it determined the permit
conditions were not federal mandates. It held the Commission was required to determine
whether any of the permit requirements exceeded the “maximum extent practicable”
standard imposed by the CWA. “The Commission never undertook this inquiry,” the
court stated. “Instead, it simply asked whether the permit conditions are expressly
specified in federal regulations or guidelines. This is not the test. The fact that a permit
condition is not specified in a federal regulation or guideline does not determine whether
the condition is ‘practicable,’ and thus required by federal law. The mere fact that a
permit condition is not promulgated as a federal regulation does not mean it exceeds the
federal standard.”
       The trial court remanded the matter to the Commission to reconsider its decision
in light of the court’s ruling. The court did not address the fee issues raised by the
petition and cross-petition.




                                             13
       The permittees appeal from the trial court’s judgment.9 10
                                      DISCUSSION
                                             I
                                    Standard of Review
       While this appeal was pending, the Supreme Court issued Department of Finance.
There, the high court had to answer the same question we must answer: are certain
requirements imposed by the San Diego Regional Board in an NPDES permit federal
mandates and not reimbursable state mandates? Although the high court reviewed
conditions different from those before us, it established the law we must apply to resolve
this appeal.11
       As to the standard of review, “[t]he question whether a statute or executive order
imposes a mandate is a question of law. [(City of San Jose v. State of California (1996)
45 Cal.App.4th 1802, 1810.)] Thus, we review the entire record before the Commission,
which includes references to federal and state statutes and regulations, as well as
evidence of other permits and the parties’ obligations under those permits, and




9      The permittees request we take judicial notice of the NPDES permit the San Diego
Regional Board issued to them in 2013 that allegedly contains less specific conditions.
The State requests we take judicial notice of an NPDES permit issued by the EPA in
2011 to the District of Columbia that includes a condition similar to one above. We deny
both of these requests. Neither document was before the Commission or the trial court at
the time those bodies ruled in this matter, and no exceptional circumstances justify
deviating from that rule. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th
434, 444, fn. 3.) The State has also requested we take judicial notice of the NPDES
permit at issue in Department of Finance pursuant to subdivisions (c) and (d) of Evidence
Code section 452. We grant that request.
10     Building Industry Legal Defense Foundation and the California Stormwater
Quality Association, et al., filed amicus curiae briefs in support of the permittees.
11     At our request, the parties briefed the effect of Department of Finance on this
appeal.

                                             14
independently determine whether it supports the Commission’s conclusion that the
conditions here were not federal mandates. (Ibid.)” (Department of Finance, supra,
1 Cal.5th at p. 762.) To do this, we must determine “whether federal statutory,
administrative, or case law imposed, or compelled the [San Diego] Regional Board to
impose, the challenged requirements on the [permittees].” (Id. p. 767.)
                                             II
                                         Analysis
       Under the test announced in Department of Finance, we conclude federal law did
not compel imposition of the permit requirements, and they are subject to subvention
under section 6. This is because the requirement to reduce pollutants to the “maximum
extent practicable” was not a federal mandate for purposes of section 6. Rather, it vested
the San Diego Regional Board with discretion to choose how the permittees must meet
that standard, and the exercise of that discretion resulted in imposing a state mandate.
We also find no federal law, regulation, or administrative case authority that, under the
test provided by Department of Finance, expressly required the conditions the San Diego
Regional Board imposed.
       A.     The Department of Finance decision
       We first describe Department of Finance, its context, its holding, and its analysis.
Prior to its Department of Finance decision, the California Supreme Court declared in
City of Sacramento, supra, 50 Cal.3d 51 that “certain regulatory standards imposed by
the federal government under ‘cooperative federalism’ schemes” are federal mandates
and not reimbursable under section 6. (Id. at pp. 73-74.) In that case, the court held
federal legislation requiring local governments to provide unemployment insurance
protection to their employees was a federal mandate. It was a federal mandate because
failing to extend the protection would have resulted in the state’s businesses facing
additional unemployment taxation and penalties by both state and federal governments.
(Id. at p. 74.) “[T]he state simply did what was necessary to avoid certain and severe

                                             15
federal penalties upon its resident businesses. The alternatives were so far beyond the
realm of practical reality that they left the state ‘without discretion’ to depart from federal
standards.” (Ibid.)
       The City of Sacramento court refused to announce a “final test” for determining
whether a requirement imposed under a cooperative federal-state program was a federal
mandate. (City of Sacramento, supra, 50 Cal.3d at p. 76.) Instead, it required courts to
determine whether a requirement was a federal mandate on a case-by-case basis. It
stated: “Given the variety of cooperative federal-state-local programs, we here attempt
no final test for ‘mandatory’ versus ‘optional’ compliance with federal law. A
determination in each case must depend on such factors as the nature and purpose of the
federal program; whether its design suggests an intent to coerce; when state and/or local
participation began; the penalties, if any, assessed for withdrawal or refusal to participate
or comply; and any other legal and practical consequences of nonparticipation,
noncompliance, or withdrawal. Always, the courts and the Commission must respect the
governing principle of article XIII B, section 9, subd. (b) [of the California Constitution]:
neither state nor local agencies may escape their spending limits when their participation
in federal programs is truly voluntary.” (City of Sacramento, supra, at p. 76.)
       In Department of Finance, the Supreme Court changed course and announced a
test for determining whether a requirement imposed on a permit under a cooperative
federal-state program is a federal mandate. To determine whether a requirement imposed
under the CWA and state law on an NPDES permit is a federal mandate, a court applies
the following test: “If federal law compels the state to impose, or itself imposes, a
requirement, that requirement is a federal mandate. On the other hand, if federal law
gives the state discretion whether to impose a particular implementing requirement, and
the state exercises its discretion to impose the requirement by virtue of a ‘true choice,’ the
requirement is not federally mandated.” (Department of Finance, supra, 1 Cal.5th at p.
765.) If the state in opposition to the petition contends its requirements are federal

                                              16
mandates, it has the burden to establish the requirements are in fact mandated by federal
law. (Id. at p. 769.)
       In Department of Finance, the high court held conditions imposed on an NPDES
permit issued by the Regional Water Quality Control Board, Los Angeles Region (the
Los Angeles Regional Board), to Los Angeles County and various cities were not federal
mandates and were subject to subvention under section 6. The permit conditions required
the permittees to install and maintain trash receptacles at transit stops, and to inspect
certain commercial and industrial facilities and construction sites. (Department of
Finance, supra, 1 Cal.5th at p. 755.) The Commission determined each of the conditions
was a compensable state mandate, and the Supreme Court, reversing the Court of Appeal,
upheld the Commission’s decision.
       The high court ruled federal law did not compel the conditions to be imposed. The
court stated: “It is clear federal law did not compel the [Los Angeles] Regional Board to
impose these particular requirements. There was no evidence the state was compelled to
administer its own permitting system rather than allowing the EPA do so under the CWA.
(33 U.S.C. § 1342(a).) . . . [T]he state chose to administer its own program, finding it
was ‘in the interest of the people of the state, in order to avoid direct regulation by the
federal government of persons already subject to regulation’ under state law. (Wat.
Code, § 13370, subd. (c), italics added.) Moreover, the [Los Angeles] Regional Board
was not required by federal law to impose any specific permit conditions. The federal
CWA broadly directed the board to issue permits with conditions designed to reduce
pollutant discharges to the maximum extent practicable. But the EPA’s regulations gave
the board discretion to determine which specific controls were necessary to meet that
standard. (40 C.F.R. § 122.26(d)(2)(iv).) This case is distinguishable from City of
Sacramento, supra, 50 Cal.3d 51, where the state risked the loss of subsidies and tax
credits for all its resident businesses if it failed to comply with federal legislation. Here,
the State was not compelled by federal law to impose any particular requirement.

                                              17
Instead, . . . the [Los Angeles] Regional Board had discretion to fashion requirements
which it determined would meet the CWA’s maximum extent practicable standard.”
(Department of Finance, supra, 1 Cal.5th at pp. 767-768, original italics.)
       The State contended the Commission decided the existence of a federal mandate
on grounds that were too rigid. It argued the Commission should have accounted for the
flexibility in the CWA’s regulatory scheme and the “maximum extent practicable”
standard. It also should have deferred to the terms of the permit as the best expression of
what federal law required in that instance since the terms were based on the agencies’
scientific, technical, and experiential knowledge.
       The Supreme Court rejected both arguments. The court stated: “We disagree that
the Permit itself demonstrates what conditions would have been imposed had the EPA
granted the Permit. In issuing the Permit, the [Los Angeles] Regional Board was
implementing both state and federal law and was authorized to include conditions more
exacting than federal law required. (City of Burbank, supra, 35 Cal.4th at pp. 627-628.)
It is simply not the case that, because a condition was in the Permit, it was, ipso facto,
required by federal law.
       “We also disagree that the Commission should have deferred to the [Los Angeles]
Regional Board’s conclusion that the challenged requirements were federally mandated.
That determination is largely a question of law. Had the [Los Angeles] Regional Board
found, when imposing the disputed permit conditions, that those conditions were the only
means by which the maximum extent practicable standard could be implemented,
deference to the board’s expertise in reaching that finding would be appropriate. The
board’s legal authority to administer the CWA and its technical experience in water
quality control would call on sister agencies as well as courts to defer to that finding. The
State, however, provides no authority for the proposition that, absent such a finding, the
Commission should defer to a state agency as to whether requirements were state or
federally mandated. Certainly, in a trial court action challenging the board’s authority to

                                             18
impose specific permit conditions, the board’s findings regarding what conditions
satisfied the federal standard would be entitled to deference. (See, e.g., City of Rancho
Cucamonga v. Regional Water Quality Control Bd. (2006) 135 Cal.App.4th 1377, 1384,
citing Fukuda v. City of Angels (1999) 20 Cal.4th 805, 817-818.) Resolution of those
questions would bring into play the particular technical expertise possessed by members
of the regional board. In those circumstances, the party challenging the board’s decision
would have the burden of demonstrating its findings were not supported by substantial
evidence or that the board otherwise abused its discretion. (Rancho Cucamonga, at p.
1387; Building Industry, supra, 124 Cal.App.4th at pp. 888-889.)
       “Reimbursement proceedings before the Commission are different. The question
here was not whether the [Los Angeles] Regional Board had authority to impose the
challenged requirements. It did. The narrow question here was who will pay for them.
In answering that legal question, the Commission applied California’s constitutional,
statutory, and common law to the single issue of reimbursement. In the context of these
proceedings, the State has the burden to show the challenged conditions were mandated
by federal law.” (Department of Finance, supra, 1 Cal.5th at pp. 768-769, fn. omitted,
original italics.)
       Addressing the permit’s specific requirements, the Supreme Court determined they
were not mandated by federal law but instead were imposed pursuant to the State’s
discretion. Regarding the site inspection requirements, the court found neither the
CWA’s “maximum extent practicable” standard, the CWA itself, nor the EPA regulations
“expressly required” the inspection conditions. (Department of Finance, supra, 1 Cal.5th
at p. 770.) The court also determined that in this instance, state and federal law required
the Los Angeles Regional Board to conduct the inspections. By exercising its discretion
and shifting responsibility for the inspections onto the permittees as a condition of the
permit, the Los Angeles Regional Board imposed a state mandate. (Id. at pp. 770-771.)



                                             19
       The State argued the inspection requirements were federal mandates because EPA
regulations contemplated that some kind of operator inspections would be required. The
court was not persuaded: “That the EPA regulations contemplated some form of
inspections . . . does not mean that federal law required the scope and detail of
inspections required by the Permit conditions.” (Department of Finance, supra, 1 Cal.5th
at p. 771, fn. omitted.)
       As for the trash receptacle requirement, the Supreme Court agreed with the
Commission that it was not a federal mandate because neither the CWA nor the federal
regulation cited by the state “explicitly required” the installation and maintenance of trash
receptacles. (Department of Finance, supra, 1 Cal.5th at p. 771.)
       The State argued the condition was mandated by the EPA regulations that required
the permittees to include in their application a description of practices for operating roads
and procedures for reducing the impact of discharges from MS4’s. The Supreme Court
rejected this argument: “While the Operators were required to include a description of
practices and procedures in their permit application, the issuing agency has discretion
whether to make those practices conditions of the permit. (40 C.F.R. § 122.26(d)(2)(iv).)
No regulation cited by the State required trash receptacles at transit stops.” (Department
of Finance, supra, 1 Cal.5th at pp. 771-772.)
       In addition, the court found evidence the EPA had issued NPDES permits in other
cities that did not require trash receptacles at transit stops. “The fact the EPA itself had
issued permits in other cities, but did not include the trash receptacle condition,
undermines the argument that the requirement was federally mandated.” (Department of
Finance, supra, 1 Cal.5th at p. 772.)
       B.     Applying Department of Finance to this appeal
       Having reviewed Department of Finance, we now turn to apply its ruling and
analysis to the permit requirements before us. Again, our task is two-fold. We must
determine first whether the CWA, its regulations and guidelines, and any other evidence

                                              20
of federal mandate such as similar permits issued by the EPA, required each condition. If
they did, we conclude the requirement is a federal mandate and not entitled to subvention
under section 6. Second, if the condition was not “expressly required” by federal law but
was instead imposed pursuant to the State’s discretion, we conclude the requirement is
not federally mandated and subvention is required. The State has the burden to establish
the requirements were imposed by federal law. It has not met its burden here.
              1.     The “maximum extent practicable” standard
       The State contends the permit requirements were federal mandates because it had
no discretion but to impose conditions that satisfied the “maximum extent practicable”
standard. We disagree with the state’s interpretation of its discretion. The “maximum
extent practicable” standard by its nature is discretionary and does not by itself impose a
federal mandate for purposes of section 6. Before Department of Finance was issued, the
State argued here that the Clean Water Act’s “maximum extent practicable” standard was
a federal mandate because it is flexible and contemplates that specific measures will be
implemented to meet the unique requirements of any particular waterway and water
quality. Department of Finance rejected this argument for purposes of subvention under
section 6. “The federal CWA broadly directed the board to issue permits with conditions
designed to reduce pollutant discharges to the maximum extent practicable. But the
EPA’s regulations gave the board discretion to determine which specific controls were
necessary to meet that standard. (40 C.F.R. § 122.26(d)(2)(iv).)” (Department of
Finance, supra, 1 Cal.5th at pp. 767-768.)
       There is no dispute the CWA and its regulations grant the San Diego Regional
Board discretion to meet the “maximum extent practicable” standard. The CWA requires
NPDES permits for MS4’s to “require controls to reduce the discharge of pollutants to
the maximum extent practicable, including management practices, control techniques and
system, design and engineering methods, and such other provisions as the Administrator



                                             21
or the State determines appropriate for the control of such pollutants.” (33 U.S.C.S.
§ 1342(p)(3)(B)(iii), italics added.)
       EPA regulations also describe the discretion the State will exercise to meet the
“maximum extent practicable” standard. The regulations require a permit application by
an MS4 to propose a management program. This program “shall include a
comprehensive planning process which involves public participation and where necessary
intergovernmental coordination, to reduce the discharge of pollutants to the maximum
extent practicable using management practices, control techniques and system, design
and engineering methods, and such other provisions which are appropriate. . . . Proposed
programs will be considered by the Director when developing permit conditions to reduce
pollutants in discharges to the maximum extent practicable.” (40 C.F.R. § 122.26
(d)(2)(iv), italics added.) This regulation implies the San Diego Regional Board has wide
discretion to determine how best to condition the permit in order to meet the “maximum
extent practicable” standard.
       Yet the State argues the San Diego Regional Board really did not exercise
discretion in imposing the challenged requirements. It contends the Supreme Court in
Department of Finance did not look for differences between federal law and the terms of
the permit. Rather, the court allegedly searched the record to see if the Los Angeles
Regional Board exercised a true choice in imposing permit conditions or if it instead
imposed requirements necessary to satisfy federal law. Applying that test here, the State
asserts the San Diego Regional Board in this case did not exercise a true choice in
imposing any of the permit requirements because it was required to impose requirements
that satisfied the “maximum extent practicable” standard. Indeed, the San Diego
Regional Board here made a finding its requirements were “necessary” in order to reduce
pollutant discharge to the maximum extent practicable, a finding the Los Angeles
Regional Board in Department of Finance did not expressly make.



                                            22
       The State also contends the San Diego Regional Board did not make a true choice
because the permittees in their permit application proposed methods of compliance, and
the San Diego Regional Board made modifications “so those methods would achieve the
federal standard.” The State asserts the permit requirements were not state mandates
because they were based on the proposals in the application, “not the [San Diego]
Regional Board’s preferences for how the copermittees should comply.”
       The State misconstrues Department of Finance in numerous respects. First, the
Supreme Court did in fact look for differences between federal law and the terms of the
permit to determine if the condition was a federal mandate. The high court stated that, to
be a federal mandate for purposes of section 6, the federal law or regulation must
“expressly” or “explicitly” require the specific condition imposed in the permit.
(Department of Finance, supra, 1 Cal.5th at pp. 770-771.)
       Second, the Supreme Court found the “maximum extent practicable” did not
preclude the State from making a choice; rather, it gave the State discretion to make a
choice. “The federal CWA broadly directed the board to issue permits with conditions
designed to reduce pollutant discharges to the maximum extent practicable. But the
EPA’s regulations gave the board discretion to determine which specific controls were
necessary to meet that standard. (40 C.F.R. § 122.26(d)(2)(iv).)” (Department of
Finance, supra, 1 Cal.5th at pp. 767-768.) As the high court stated, except where a
regional board finds the conditions are the only means by which the “maximum extent
practicable” standard can be met, the State exercises a true choice by determining what
controls are necessary to meet the standard. (Id. at p. 768.)
       That the San Diego Regional Board found the permit requirements were
“necessary” to meet the standard establishes only that the San Diego Regional Board
exercised its discretion. Nowhere did the San Diego Regional Board find its conditions
were the only means by which the permittees could meet the standard. Its use of the
word “necessary” did not equate to finding the permit requirement was the only means of

                                             23
meeting the standard. “It is simply not the case that, because a condition was in the
Permit, it was, ipso facto, required by federal law.” (Department of Finance, supra, 1
Cal.5th at p. 768.)
       The use of the word “necessary” also does not distinguish this case from
Department of Finance. By law, a regional board cannot issue an NPDES permit to
MS4’s without finding it has imposed conditions “necessary to carry out the provisions of
[the Clean Water Act].” (33 U.S.C. § 1342(a)(1).) That requirement includes imposing
conditions necessary to meet the “maximum extent practicable” standard, and the
regional board in Department of Finance found the conditions it imposed had done so.
The Los Angeles Regional Board stated: “This permit is intended to develop, achieve,
and implement a timely, comprehensive, cost-effective storm water pollution control
program to reduce the discharge of pollutants in storm water to the Maximum Extent
Practicable (MEP) from the permitted areas in the County of Los Angeles to the waters of
the U.S. subject to the Permittees’ jurisdiction.” It further stated: “[T]his Order requires
that the [Storm Water Quality Management Plan] specify BMPs [best management
practices] that will be implemented to reduce the discharge of pollutants in storm water to
the maximum extent practicable.”
       Third, the Supreme Court in Department of Finance rejected the State’s argument
that the permit application somehow limited a board’s discretion or denied it a true
choice. “While the Operators were required to include a description of practices and
procedures in their permit application, the issuing agency has discretion whether to make
those practices conditions of the permit. (40 C.F.R. § 122.26(d)(2)(iv).)” (Department of
Finance, supra, 1 Cal.5th at pp. 771-772.)
       The State had a true choice and exercised its discretion in determining and
imposing the conditions it concluded were necessary to reduce storm water pollutants to
the maximum extent practicable. Because the State exercised this discretion, the permit
requirements it imposed were not federal mandates.

                                             24
              2.     No express demand by federal law
       The State contends federal law nonetheless required the conditions it imposed. It
relies on regulations broadly describing what must be included in an NPDES permit
application by an MS4 instead of express mandates directing the San Diego Regional
Board to impose the requirements it imposed. To be a federal mandate for purposes of
section 6, however, the federal law or regulation must “expressly” or “explicitly” require
the condition imposed in the permit. (Department of Finance, supra, 1 Cal.5th at pp.
770-771.) This is the standard the Commission applied and found the State’s claims
unwarranted. We do as well. The State cites to no law, regulation, or EPA case authority
presented to the Commission or the trial court that expressly required any of the
challenged permit requirements. We briefly review the requirements.
                     a.     Street sweeping and cleaning storm water conveyances
       The State contends the requirements for street sweeping and cleaning of the storm
sewer system are federal mandates because EPA regulations required the permittees to
describe in their permit application their practices for operating and maintaining streets
and procedures for reducing the impact of discharges from storm sewer systems. (40
C.F.R. § 122.26(d)(2)(iv)(A)(3).) This regulation does not expressly require the scope
and detail of street sweeping and facility maintenance the permit imposes. Because the
State imposed those specific requirements, they are not federal mandates and must be
compensated under section 6.
       The permit requires the permittees to sweep streets a certain number of times
depending on how much trash and debris they generate. Streets that consistently generate
the highest volume of trash must be swept at least twice per month. Streets that generate
moderate volumes of trash must be swept at least monthly, and those that generate low
volumes of trash must be swept at least annually. Permittees must annually report the
total distance of curb miles swept and the tons of material collected.



                                             25
       The permit also requires the permittees to implement a schedule of maintenance
activities for their storm sewer systems and facilities, such as catch basins, storm drain
inlets, open channels, and the like. At a minimum, the permittees must inspect all
facilities at least annually and must inspect facilities that receive high volumes of trash at
least once a year between May 1 and September 30. The permit requires any catch basin
or storm drain inlet that has accumulated trash greater than 33 percent of its design
capacity to be cleaned in a timely manner. Any facility designed to be self-cleaning must
be cleaned immediately of any accumulated trash. The permittees must keep records of
their maintenance and cleaning activities.
       We see nothing in the regulation requiring permittees to describe in their
application their street and facility maintenance practices a mandate to impose the
specific requirements actually imposed in the permit.
                     b.      Hydromodification plan
       The State claims the requirement to develop a hydromodification plan (HMP)
arises from EPA regulations requiring the permit applicant to include in its application a
description of planning procedures to develop and enforce controls “to reduce the
discharge of pollutants from [MS4’s] which receive discharges from areas of new
development and significant redevelopment.” (40 C.F.R. § 122.26(d)(2)(iv)(A)(2).) The
permit requires the HMP to establish standards of runoff flow for channel segments that
receive runoff from new development. It must require development projects to
implement control measures so that the flows from the completed project generally do
not exceed the flows before the project was built. The HMP must include other
performance criteria as well as a description of how the permittees will incorporate the
HMP requirements into their local approval process.
       The regulation cited by the State does not require an HMP. Nor does it restrict the
San Diego Regional Board from exercising its discretion to require a specific type of plan
to address the impacts from new development. The San Diego Regional Board

                                              26
admittedly exercised its discretion on this condition. It determined the permittees’
application was insufficient and it required them to collaborate to develop an HMP. The
requirement is thus a state mandate subject to subvention.
                     c.     Low impact development practices in the SUSMP
       The State relies upon the same regulation to support the low impact development
requirements as it did for the HMP. (40 C.F.R. § 122.26(d)(2)(iv)(A)(2).) The permit
requires the permittees to implement specified low impact development best management
practices at most new development and redevelopment projects. These practices include
designing the projects to drain runoff into previous areas on site and using permeable
surfaces for low traffic areas. The practices also require projects to conserve natural
areas and minimize the project’s impervious footprint where feasible.
       The permit also requires the permittees to develop a model SUSMP to establish
low impact development best management practices that meet or exceed the requirements
just mentioned. The model must include siting, design, and maintenance criteria for each
low impact development best management practice listed in the model SUSMP. Again,
nothing in the application regulation required the San Diego Regional Board to impose
these specific requirements. As a result, they are state mandates subject to section 6.
                     d.     Jurisdictional and regional education programs
       The State claims regulations requiring the permittees to describe in their permit
application the educational programs they will conduct to increase the public’s
knowledge of storm water pollution imposed a federal mandate. (40 C.F.R. §
122.26(d)(2)(iv)(A)(6), (B)(6), (D)(4).) The regulations require the application to include
descriptions of proposed educational activities to reduce pollutants associated with the
application of pesticides, herbicides and fertilizer (40 C.F.R. § 122.26(d)(2)(iv)(A)(6)), to
facilitate the proper management and disposal of used oil and toxic materials (40 C.F.R.
§ 122.26(d)(2)(iv)(B)(6)), and to reduce pollutants in storm runoff from construction
sites. (40 C.F.R. § 122.26(d)(2)(iv)(D)(4).)

                                               27
       The permit requires each permittee to do much more. Each must implement an
education program using all media as appropriate to “measurably increase” the
knowledge of MS4’s, impacts of urban runoff, and potential best management practices,
and to “measurably change” people’s behaviors. The program must address at a
minimum five target communities: municipal departments and personnel; construction
site owners and developers; industrial owners and operators; commercial owners and
operators; and the residential community, the general public, and school children. The
program must educate each target community where appropriate on a number of specified
topics. It must educate them on federal, state, and local water quality laws and
regulations, including the storm water discharge permitting system. It must address
general runoff concepts, such as the impacts of urban runoff on receiving waters, the
distinctions between MS4’s and sanitary sewers, types of best management practices,
water quality impacts associated with urbanization, and non-storm water discharge
prohibitions. It must discuss specific best management practices for such activities as
good housekeeping, proper waste disposal, methods to reduce the impacts from
residential and charity car washing, non-storm water disposal alternatives, preventive
maintenance, and equipment and vehicle maintenance and repair. The program must also
address public reporting mechanisms, illicit discharge detection, dechlorination
techniques, integrated pest management, the benefits of native vegetation, water
conservation, alternative materials and designs to maintain peak runoff values, traffic
reduction, and alternative fuel use. The permit also requires additional specific topics to
be addressed that are relevant to each particular target community.
       The San Diego Regional Board imposed an educational program and a list of
topics that surpasses what the regulations required the permittees to propose in their
application. Nothing in the regulations required the San Diego Regional Board to impose
the educational requirements in the scope and detail it did. As a result, they are state
mandates subject to section 6.

                                             28
                     e.      Regional and watershed urban runoff management programs
       To claim the requirements to develop regional and watershed urban runoff
management programs are federal mandates, the State relies on the regulation requiring
permit applications to propose a management program as part of their application. The
regulation authorizes the applicants to propose a program that imposes controls beyond a
single jurisdiction: “Proposed programs may impose controls on a systemwide basis, a
watershed basis, a jurisdiction basis, or on individual outfalls.” (40 C.F.R. §
122.26(d)(2)(iv), italics added.)
       The permit requires the permittees to collaborate, develop, and implement
watershed and regional urban runoff management programs. As part of the watershed
management program, the permittees must, among other things, annually assess the water
quality of receiving waters and identify the water quality problems attributable to MS4
discharges. They must develop and implement a list of water quality activities and
education activities and submit the list for approval by the San Diego Regional Board.
The permit describes what information must be included on the list for each activity, and
it requires the permittees to implement each of them.
       The permit requires the permittees, as part of developing a regional management
program, to implement a residential education program as described above, develop
standardized fiscal analysis of the programs in their jurisdictions, and facilitate the
assessment of the jurisdictional, watershed, and regional programs’ effectiveness.
       The regulation relied upon by the State does not mandate any of these watershed
and regional management requirements. It clearly leaves to the San Diego Regional
Board the discretion to require controls on a systemwide, watershed, or jurisdictional
basis. The State exercised that discretion in imposing the controls it imposed. They thus
are state mandates subject to section 6.




                                              29
                     f.     Program effectiveness assessments
       Federal regulations require a permit application to include, as part of assessing the
effectiveness of controls, “[e]stimated reductions in loadings of pollutants from
discharges of municipal storm sewer constituents from municipal storm sewer systems
expected as the result of the municipal storm water quality management program. The
assessment shall also identify known impacts of storm water controls on ground water.”
(40 C.F.R. § 122.26(d)(2)(v).)
       The regulations also require the operator of an MS4 to submit a status report
annually. The report must include: “(1) The status of implementing the components of
the storm water management program that are established as permit conditions; [¶] (2)
Proposed changes to the storm water management programs that are established as permit
conditions[;] [¶] (3) Revisions, if necessary, to the assessment of controls and the fiscal
analysis reported in the permit application[;] [¶] (4) A summary of data, including
monitoring data, that is accumulated throughout the reporting year; [¶] (5) Annual
expenditures and budget for year following each annual report; [¶] (6) A summary
describing the number and nature of enforcement actions, inspections, and public
education programs; [and] [¶] (7) Identification of water quality improvements or
degradation[.]” (40 C.F.R. § 122.42(c).)
       The State contends these regulations mandated the San Diego Regional Board to
impose the assessment requirements the permit contains, but the permit imposes
additional obligations. The permit requires the permittees to assess, among other things,
the effectiveness of each significant jurisdictional activity or best management practice
and each watershed water quality activity and the implementation of the jurisdictional
and watershed runoff management plans. They must identify and utilize “measureable
targeted outcomes, assessment measures, and assessment methods” for each of these
items. They must utilize certain predefined “outcome levels” to assess the effectiveness



                                             30
of each of the items. They must also collaborate to develop a long-term effectiveness
assessment based on the same outcome levels.
       While the regulations required estimated reductions in the amount of pollutants
and a report on the status of implementing controls and their effectiveness, the San Diego
Regional Board exercised its discretion to mandate how and to what degree of specificity
those assessments would occur. The regulations did not require the San Diego Regional
Board to impose the assessment systems and procedures it actually imposed.
Accordingly, those systems and procedures are state mandates subject to section 6.
                     g.     Permittee collaboration
       EPA regulations require the permittees, as part of their application, to show they
have legal authority, either by statute, ordinance, or contract, to control through
interagency agreements among themselves the contribution of pollutants from a portion
of the municipal system to another portion in a different jurisdiction. (40 C.F.R. §
122.26(d)(2)(i)(D).) The State claims this regulation mandated the San Diego Regional
Board to require the permittees to collaborate and, in particular, execute an agreement
that establishes a management structure. Under the terms of the permit, the management
structure must, among other things, define the permittees’ responsibilities; promote
consistency, development, and implementation of regional activities; establish standards
for conducting meetings, making decisions and sharing costs; and establish a process for
addressing noncompliance with the agreement.
       The EPA regulation did not impose on the San Diego Regional Board a mandate
to define the terms and organization of a management structure that would allow the
permittees to control pollutants that cross borders. The regulation required the San Diego
Regional Board to assure itself the permittees had the authority to address runoff
pollution regionally, but it did not require the San Diego Regional Board to define how
the permittees would organize themselves to do so. The conditions of the San Diego



                                             31
Regional Board went beyond what was federally required, and are thus state mandates
subject to section 6.
       In short, there is no federal law, regulation, or administrative case authority that
expressly mandated the San Diego Regional Board to impose any of the challenged
requirements discussed above. As a result, their imposition are state mandates, and
section 6 requires the State to provide subvention to reimburse the permittees for the
costs of complying with the requirements.
                                       DISPOSITION
       The judgment is reversed. The matter is remanded to the trial court for further
proceedings consistent with this opinion. Costs on appeal are awarded to real parties in
interest and appellants. (Cal. Rules of Court, rule 8.278(a).)



                                                         NICHOLSON             , J.



We concur:



      BLEASE                , Acting P. J.




      BUTZ                  , J.




                                             32
