The California Supreme Court has issued its long-awaited opinion in City of Burbank v. State Water Resources Control Board, No. S119248, 05 C.D.O.S. 2861 (Cal. Sup. Ct. April 4, 2005).  The Court held that Regional Water Quality Control Boards, when issuing wastewater discharge permits, may not consider economic factors to justify an imposition of pollutant restrictions that are less stringent than those required by federal law.  Specifically, dischargers that are subject to National Pollutant Discharge Elimination System ("NPDES") permits can no longer argue that the Regional Board staff is required by the California Water Code to conduct an affirmative assessment of the economic and housing impacts of the permit requirements being imposed, unless those requirements arise from "more stringent" provisions of state law.

Background

The Supreme Court considered the interplay between federal and state schemes for regulating the discharge of treated wastewater.  The federal Clean Water Act ("CWA") mandates that wastewater dischargers meet both technology-based effluent limitations as well as more stringent water quality-based effluent limitations, which are applicable if necessary to achieve state water quality standards.  Under the CWA, each state is permitted to formulate and enforce its own water quality laws, with the caveat that a state’s requirements must not be "less stringent" than those established under the CWA.  California water law is governed by the Porter-Cologne Water Quality Control Act (the "Water Code").  Under the Water Code, Regional Boards adopt water quality control plans, called "Basin Plans," for areas within their region.  Basin Plans often set forth state water quality standards as well as permitting requirements and related guidance. 

The Court’s Analysis

The dischargers in City of Burbank argued that the Regional Board failed to comply with two sections of the California Water Code, Sections 13241 and 13263, because it did not consider the economic burden that would be imposed on them by the issuance of more stringent effluent limitation requirements for their discharged wastewater.  The Supreme Court noted that, though the cited sections of the Water Code do indeed state that Regional Boards should consider economic factors when setting effluent limitations in waste discharge requirements, any such permits issued by the Regional Boards must "meet the federal standards set by federal law," regardless of cost.  The Court reasoned that this is mandated both by language in the California Water Code itself (Section 13377), as well as by the Supremacy Clause of the U.S. Constitution.  Therefore, the Court concluded that Regional Boards may not consider economic factors when establishing NPDES permit requirements if to do so would result in restrictions less stringent than those mandated by federal law.

Implications

The result of the State Supreme Court’s holding is that now, as a matter of law, economic factors may only be relevant when the State adopts water quality standards, and generally cannot be considered at the NPDES permitting stage.  However, if certain permit requirements are proposed to be imposed pursuant to California, rather than federal law, and they are more stringent than what federal law requires, economic factors may appropriately be considered during permit adoption proceedings. 

As a practical matter, given the mandates of the CWA with regard to wastewater, dischargers will need to look to opportunities to make their economic and housing impact arguments at stages of the regulatory process where water quality standards are at issue.  This could arguably be at the stage of total maximum daily load ("TMDL") development, if part of the TMDL process involves a de facto adoption of a new water quality standard.

Though the Supreme Court’s decision only considered wastewater discharges, it may also have important implications with regard to stormwater permitting.  The CWA mandates municipal stormwater controls only to the Maximum Extent Practicable ("MEP") level, and unlike the case for wastewater, it makes the imposition of "beyond-MEP" requirements a matter of discretion for state permit writers.  Thus, in California, a municipality might still be able to argue that Sections 13241 and 13263 of the Water Code require that economic and housing impact considerations need to be addressed by Regional Boards when municipal stormwater permit requirements are being imposed on a water quality, rather than an MEP, basis (such as will likely be the case for TMDL-driven requirements).

Morrison & Foerster, LLP, has successfully counseled businesses and municipalities on wastewater and stormwater issues for more than 15 years.  We have also defended and prosecuted cases involving water quality standard setting and NPDES permitting under both the CWA and the California Water Code.  For further assistance, please contact Robert Falk in San Francisco at (415) 268-6294 (rfalk@mofo.com) or Peter Hsiao in Los Angeles at (213) 892-5731 (phsiao@mofo.com).