BILL ANALYSIS Ó AB 2446 Page 1 Date of Hearing: April 19, 2016 ASSEMBLY COMMITTEE ON JUDICIARY Mark Stone, Chair AB 2446 (Gordon) - As Amended March 17, 2016 SUBJECT: State Water Resources Control Board: judicial review KEY ISSUE: Should the statutes governing challenges to orders and decisions of state AND REGIONAL water Boards be clarified in order to prevent persons subject to such orders from delaying proceedings or seeking judicial review prior to the exhaustion of admInistrative remedies? SYNOPSIS Under California's Porter-Cologne Water Quality Act, the State Water Resources Control Board (State Board) and nine regional water boards are charged with protecting the quality of the state's waters. Enacted in 1969, the Porter-Cologne Act has not only been important in protecting California waters, but the general approach, and even specific provisions, of the Porter-Cologne Act became a model for the federal Clean Water Act of 1972. The most important tools that state and regional boards use to protect water quality include issuing (or refusing to issue) discharge permits, issuing clean up and abatement orders to any person who causes or permits waste to be discharged into state water, and issuing cease and desist orders to address violations, or threatened violations, of waste discharges. According to the author, this measure will enhance AB 2446 Page 2 the ability of the water boards to protect water supplies and mitigate environmental damage by addressing ambiguities in existing law that have been used to delay or prematurely challenge water board proceedings, decisions, and orders. AB 2446 does so by amending provisions that establish rules and procedures for challenging the decisions of the state and regional water boards. The author contends that the bill is primarily a clarification of existing law, insofar as it requires the exhaustion of administrative remedies before a party can go to court for a writ of mandate, seeking to undo a board decision. The bill is sponsored by the State Water Board and supported by the Sierra Club. It is opposed (or opposed unless amended) by a coalition of farm groups, the Association of California Water Agencies, and two district water agencies. What the author and sponsor see as changes that eliminate delay and allow the administrative process to proceed, the opponents see as a denial of due process and their right to seek judicial remedies. Both the author and some of the opponents have indicated to the Committee that there may be areas of compromise on some points, especially on those related to the intersection of state and federal law. However, these issues were raised too late for the Committee to fully analyze the issues and consider possible amendments. The Committee may wish to encourage the author, if the bill moves out of this Committee, to continue working with all interested parties: farm groups, water agencies, and environmentalists. SUMMARY: Seeks to expand the authority of the State Water Resources Control Board (State Water Board), and to a lesser extent regional water boards, to issue or not issue a stay pending board proceedings, prohibit certain judicial challenges to water board decisions until after the administrative process has run its course, and clarify two specified evidentiary requirements. Specifically, this bill: 1)Expands a provision of existing law that authorizes the State Water Board, in response to a petition to review an order of a AB 2446 Page 3 regional water board, to stay the effect of a decision or order of a state or regional water board, to additionally allow the State Water Board to stay an order or decision issued under authority delegated to an officer or employee of the State Water Board, as specified. Authorizes an aggrieved party, within 30 days of any order of the State Board issuing or denying a stay, to file with the superior court a petition for writ of mandate. Specifies that if the State Water Board or the superior court grants a stay, the stay shall be made effective as of the effective date of the decision or order. 2)Provides that no legal or equitable process shall issue in any proceeding in any court against the State Water Board, a regional board, or any officer of a state or regional board, to review, prevent, or enjoin any adjudicative proceeding under the Porter-Cologne Act. Except for a petition for writ of mandate, as authorized in Water Code Section 13321, no legal or equitable process shall issue in any proceeding in any court against the state board or regional board to review, prevent, or enjoin a decision or order by a state or regional water board before a decision or order has been issued and the procedures for administrative review of that decision or order have been exhausted. 3)Specifies that in any civil action brought pursuant to the Porter-Cologne Act in which a regional water board or the State Water Board seeks an injunction or restraining order, it shall not be necessary to allege or prove that irreparable harm will occur should the temporary restraining order, preliminary injunction, or permanent injunction not be issued. 4)Provides that for any order or decision of the State Water Board under the Safe Water Drinking Act, if no aggrieved party petitions for a writ of mandate within the 30-day period authorized by the Act, the decision or order of the State AB 2446 Page 4 Water Board is not subject to review by any court. Specifies that in every case that comes before the court under this provision, the court shall exercise its independent judgment on the evidence. EXISTING LAW: 1)Provides, under the Porter-Cologne Water Quality Control Act, that within 30 days of any action or failure to act by a regional water board, an aggrieved person may petition the State Water Board to review that action or failure to act. Authorizes the State Water Board, in the case of such review and upon notice and hearing, if hearing is requested, to stay in whole or in part the effect of the decision and order of a regional board of the State Water Board. (Water Code Sections 13320 and 13321.) 2)Authorizes an aggrieved party, not later than 30 days from service of a copy of a decision or order issued by the State Water Board, to file in superior court a petition for a writ of mandate for review of the decision or order. Specifies that an aggrieved party must file a petition for reconsideration with the State Water Board to exhaust that party's administrative remedies only if the initial decision or order is issued under authority delegated to an officer or employee of the State Water Board and the State Water Board by regulation has authorized a petition for reconsideration. Specifies that the party aggrieved by the decision of the State Water Board may obtain a review of the decision or order of a regional water board by filing in superior court a petition for writ of mandate not later than 30 days from the date on which the State Water Board denies review. (Water Code Section 13330 (a)-(b).) 3)Provides that if no aggrieved party petitions for a writ of AB 2446 Page 5 mandate within the time provided by 2) above, a decision or order of the state board shall not be subject to review by any court. (Water Code Section 13330 (d).) 4)Provides that every civil action brought under the provisions of the Porter-Cologne Water Quality Control Act at the request of the regional board or the state board shall be brought by the Attorney General in the name of the people of the state of California and any of those actions relating to the same discharge may be joined or consolidated. (Water Code Section 13361 (a).) 5)Provides that in any civil action brought under the provisions of the Porter-Cologne Water Quality Control Act, for an injunction or temporary restraining order, it shall not be necessary to allege or prove that irreparable harm will occur if the injunction or restraining order is issued. (Water Code Section 13361 (c).) 6)Requires the State Water Board, under the California Safe Water Drinking Act, to administer provisions in the Health & Safety Code that regulate drinking water. To carry out this responsibility, existing law requires the State Water Board to appoint a deputy director to oversee issuance and enforcement of public water system permits and authorizes the deputy director to issue orders directing corrective actions if the conditions of any permit, regulation, or standard is violated. Authorizes a party aggrieved by any order, within 30 day after service of a copy of the order, to file in superior court a petition for a writ of mandate to review the order. Specifies, however, that failure to file an action shall not preclude a party from challenging the reasonableness or validity of a decision or order in any judicial proceeding brought to enforce the decision or order. (Health & Safety Code Section 116700 (a).) AB 2446 Page 6 7)Provides that in any action challenging an order or decision, the evidence before the court shall consist of all relevant evidence that, in the judgment of the court, should be considered to effectuate and implement the provisions of the Safe Drinking Water Act. In every case, the court shall exercise its independent judgment on the evidence. (Health & Safety Code Section 116700 (b).) FISCAL EFFECT: As currently in print this bill is keyed fiscal. COMMENTS: Under the Porter-Cologne Water Quality Control Act, the State Water Resources Control Board (State Water Board) has ultimate authority to regulate water quality in the state. Porter-Cologne also established nine regional water boards to oversee water quality on a day-to-day and regional basis. Among the key tools available to the state and regional water boards are the power to issue or deny water discharge permits, issue clean-up and cease and desist orders to polluters, and issue stays against harmful conduct and discharges while a matter is pending before the board. This bill deals primarily with the ability of persons subject to such orders to challenge those orders. Existing law sets out prescribed procedures and timelines that the state and regional water boards must conform to, including noticing hearings, making decisions, and issuing orders designed to protect water quality. Existing law also sets forth procedures and timelines that persons aggrieved by an order or decision must conform to when challenging those orders and decisions. According to the author and sponsor, most of the changes proposed in this bill are clarifying in nature. The author, for example, contends that this bill will mainly address "ambiguities" in existing law that have allowed "dischargers . . . to impede or delay hearings on proposed pollution control AB 2446 Page 7 actions by going to court before the State Water Board or a Regional Water Board has actually taken an action," and in some cases dischargers have allegedly obtained injunctions that prohibit the water boards from even holding hearings. Exhausting Administrative Remedies or Denying Due Process? According to background material provided by the author and sponsor, one of the more vexing problems water boards sometimes face is the efforts of dischargers and polluters to delay board proceedings, both state and regional, and to seek injunctions and court orders overturning or staying a board order even before the administrative process runs its course. That is, under existing law, a state or regional water board has the authority to issue or deny waste discharge permits and to take actions against those who violate the conditions of the permit or other laws or regulations. For example, if a regional water board issues an order to halt a permittee from discharging waste, the person aggrieved - the person subject to the order - may file a petition with the State Water Board for "reconsideration" of a board's decision. Only after the administrative process is complete, would the aggrieved party be permitted to seek a court order. However, the sponsor, the State Water Board, contends that some dischargers have exploited "ambiguities" in existing law to seek injunctions that delay board proceedings or seek judicial review to overturn a board decision. This bill would clarify what is seemingly implied in existing law, and is generally true of most administrative actions: a party who is unhappy with a board decision must wait for the board to actually take action before attempting to challenge the board's decision by recourse to any available administrative proceeding, such as a petition for review, reconsideration, a hearing, and other administrative adjudication that is necessary before going to the courts for relief. For the author and sponsor, these administrative procedures were established for a reason: to seek a resolution before resorting to the courts and AB 2446 Page 8 to ensure that any potentially harmful conduct is stayed during the administrative process. Opponents, on the other hand, accuse the bill of "circumscribing judicial review." However, it should be noted that none of the provisions eliminate anyone's right to judicial review. Rather, the bill simply requires what is usually the case in administrative law: all administrative remedies must be exhausted before a party may turn to the courts. If the allegations of the author and sponsor are correct, some aggrieved dischargers are turning to the courts even before a board has issued an order or decision, let alone using the administrative process to challenge the order or decision. In at least one case, according to the sponsor, a discharger sought to obtain an injunction to prevent the board from even holding a hearing. "Shall Not be Subject to Review": One example of the disagreement between the sponsor and opponents of the bill concerns the novelty, or lack of thereof, of the language the bill would add to the California Safe Drinking Water Act (Health & Safety Code Section 116700) stating that if no aggrieved party petitions for a writ of mandate within the prescribed 30-day period, the decision or order "shall not be subject to review by any court." Opponents of the bill suggest that this amounts to a denial of due process by precluding anyone who has not filed a petition for a writ of mandate from obtaining judicial review. The sponsors, on the other hand, contend that this is not a new restriction, but merely a simple clarification of what is necessarily implied in the provision that authorizes an aggrieved party to file a petition for writ of mandate within 30 days of service of the order. The 30-day time limit would have no meaning if the aggrieved party could seek judicial review of the board's decision or order after that time period. Moreover, the sponsor correctly points to a parallel provision in the Porter-Cologne Act that contains both a requirement that the petition for writ be filed within 30 days of service and the express language that says if the petition is not filed within the prescribed time period the decision or order "shall not be AB 2446 Page 9 subject to review by any court." The sponsor contends that this brings consistency to the parallel provisions in Health & Safety Code and Water Code, so that both say that failure to file a petition for writ of mandate to review an action of the State Water Board within the prescribed period means that the order or decision will not be subject to court review. This express reinforcement is necessary, the sponsor contends, in order to clear up any ambiguity in that section of the Health & Safety Code and avoid the potential that someone will challenge an earlier permitting decision during a subsequent enforcement proceeding for violations of that permit. Concerns about "401 Certificates" and the Interaction of Federal and State Law: The water boards (state and regional) regulate all pollutants and discharges that may affect the quality of either surface water or groundwater. Any person proposing to discharge waste within a region must file a report of waste discharge with the appropriate regional board. No discharge may take place until the regional board issues either "waste discharge requirements" (i.e. a permit and any conditions attached to it), or a waiver of those requirements. Under the auspices of the U.S. Environmental Protection Agency, the State Water Board and regional water boards also grant National Pollutant Discharge Elimination System (NPDES) permits required by the federal Clean Water Act for "point-source" discharges. (A "point source" discharge means any confined conveyance, such as pipe, ditch, or other conduit, from which pollutants may enter into a stream or other body of water; it is distinct from storm water discharges and return flows from irrigated agriculture.) The state and regional water boards, therefore, issue NPDES permits for "point-source" discharges, and "water discharge requirement" permits for all other discharges. Adding a further layer of state-federal complexity, the Federal Energy Regulation Commission (FERC) cannot issue a new license for a hydroelectric project pursuant to Section 401 of the federal Clean Water Act until a state water board issues a "401 AB 2446 Page 10 certificate" affirming that the new license will comply with the state's water quality requirements. The interaction between state and federal permitting requirements, and the changes proposed by this bill, has caused concern for some regional water agencies. For example, the Association of California Water Agencies (ACWA) and a regional water agency argue that applicants for hydroelectric plants could be adversely and unintentionally affected by the provisions of this bill. The certificates often require plants to take actions - such as creating fish passages at dams or maintaining streamflow for whitewater recreation - that are not directly or significantly related to issues of water quality. Because state law allows the State Water Board to issue a 401 certificate for a hydroelectric project without a public proceeding, the only way that a licensee may obtain public consideration of a certificate occurs is if the State Water Board considers a petition for reconsideration, but existing law does not set any time limit for the State Water Board to act on a petition for reconsideration. These agencies contend that limiting their ability to petition and obtain a timely decision from the State Water Board may limit their ability to comply with FERC requirements. As the ACWA puts it, "a hydroelectric licensee needs the opportunity to go to court immediately upon receiving a [401 certificate] so that it can seek to maintain the status quo pending reconsideration." These agencies, therefore, would prefer an amendment creating a carve-out for hydroelectric projects and 401 certificates. However, the issue of the "401 certificates" was raised too late for the Committee to fully consider the need for, or likely effect of, such an amendment. Nor is it entirely clear to the Committee counsel if this is a concern with existing law or with the specific amendments proposed by this bill, or if the provisions of this bill will make an existing problem worse. However, the author, sponsor, and the ACWA have all indicated to the Committee that there may be a compromise that could address everyone's respective concerns, but there was not time to work out those amendments in time for this hearing. AB 2446 Page 11 Evidentiary Changes Proposed by this Bill: Finally, this bill potentially proposes two evidentiary changes, both of which, according to the sponsor, are largely clarifying in nature, but one of which opponents see as substantive. First, under an existing provision of the Safe Drinking Water Act, when a review of the State Water Board action comes before the court, "the evidence before the court shall consist of all relevant evidence that, in the judgment of the court, should be considered to effectuate and implement the provisions [of the Safe Drinking Water Act]. In every case, the court shall exercise its independent judgment on the evidence." (Health & Safety Code Section 116700 (b).) This bill would delete everything except the final sentence: "In every case, the court shall exercise its independent judgment on the evidence." The so-called "independent judgment" standard of review, which is both the existing standard and the standard proposed by this bill, is usually contrasted with the "substantial evidence" standard of judicial review when a court considers a petition for a writ of administrative mandate. Generally speaking, under the "substantial evidence" rule, the court is more deferential to the findings of the agency, asking only if the decision was reasonable in light of the evidence before it. However, the "independent judgment" rule is much less deferential to the agency, allowing the court to use its "independent judgement on the evidence." (See e.g. Code of Civil Procedure 1094.5 (c).) This bill makes it clear that the independent judgment rule is the appropriate standard with a clear simple statement. It should be noted that the sponsor is adopting a standard which is contrary to its interest. As an agency subject to review by the courts, it would naturally prefer the more deferential "substantial evidence" standard. Thus, the opposition's criticism of this amendment, as though it were some sort of power play to enhance the State Water Board's authority, is curious to say the least. The farm group coalition letter claims that by eliminating the reference to "all relevant AB 2446 Page 12 evidence" this will have the effect of "restricting the court's review to what the state administrative agencies alone deem relevant." But this is precisely what the "independent judgment" rule does not allow. The impact of the other evidentiary change also depends upon whether one sees it as a clarification or a departure from existing law. As a general rule, a key requirement for obtaining an injunction is to show that without the injunction, the party seeking the injunction will suffer "irreparable harm." However, the Porter-Cologne Act creates an exception to this general rule, providing that in any civil action brought under the Act in which a temporary restraining order or an injunction is sought, "it shall not be necessary to allege or prove at any stage of the proceeding that irreparable damage will occur should the temporary restraining order, preliminary injunction, or permanent injunction not be issued." (Water Code Section 13361 (c).) Although the passive construction of the language in this provision does not make it who does not need to prove irreparable harm, the sponsor contends that this section was intended and has been construed to mean that the water boards do not need to show irreparable harm when they enjoin a harmful or potentially harmful contamination of the water supply. But the sponsor contends that "due to ambiguities in existing law," this section "could be misinterpreted to provide that a party seeking an injunction against the Water Boards need not prove irreparable harm." This bill would clarify that only when "a regional board or the state water board" seeks an injunction is a showing of irreparable harm not required. Because the sponsor states that this could be so interpreted, it is not entirely clear if it ever has been so interpreted. The Committee counsel could not find any case law bearing on the question of whether the exemption from showing irreparable harm belonged only to the water boards, or to any party who sought an injunction or restraining order under the Act. However, it is certainly quite reasonable to assume that the existing law intended to only excuse the boards from the irreparable harm requirement. The boards, after all, are charged with protecting the state's water AB 2446 Page 13 from harm by preventing contamination; to require the boards to prove irreparable harm before it could issue an injunction to prevent harm would make no sense. Considerations Should the Bill Move Forward: As noted, the letters of opposition on this measure arrived late to the Committee and, as such, the opposition concerns may not have received as much consideration as would otherwise have been the case. Nonetheless, some of the points raised by opponents and groups expressing concern may be worthy of consideration. Most notably, the ACWA and some of its member water agencies have concerns about the bill's impact on the ability of hydroelectric projects to obtain necessary "401 certificates" to comply with federal laws and regulations. It appears that the author, sponsor, and ACWA, and at least one regional agency have engaged in discussions about how this issue may be addressed. ARGUMENTS IN SUPPORT: According to the State Water Board, the sponsor, AB 2466 will "clarify the procedures for administrative and judicial review of . . . actions taken by the State Water Board and Regional Water Boards (collectively referred to as the Water Boards.)" The State Water Board argues that this measure will "result in increased program efficiency by reducing ambiguities in statute that result in premature legal challenges and substantial delays in the Water Boards' abilities to take necessary and appropriate actions to protect water quality." The State Water Board also argues that the provisions of this bill will clarify the intent of existing law. For example, it claims that a provision in existing law which provides that the boards need not show irreparable harm in seeking an injunction or a restraining order does not mean that a party seeking an injunction against the boards is excused from showing irreparable harm. Finally, the State Water Board argues that this will also clarify that a party wishing to challenge a board cannot seek judicial review before a board has taken action and the required administrative review process has been exhausted. AB 2446 Page 14 The Sierra Club supports this bill because it will prohibit "polluters from using the courts to get around Water Board stays that stop pollution while the case is pending at the Water Board." According to Sierra Club, "when a polluter is found by the Board, the Board's stay to prevent further problems can be lifted by a court, allowing pollution to continue." ARGUMENTS IN OPPOSITION: A coalition of farm groups, including the California Farm Bureau and the Western Growers Association, oppose this bill because it "would significantly expand the [State Water Board's] authority and discretion by circumscribing judicial review of that authority." Specifically, the opposition points to the following provisions of the bill: (1) the provision which says that "if no aggrieved party petitions a writ of mandate within 30 days after service of a copy of an order or decision by [the State Water Board]," then the decision or order of the board shall not be subject to review by any court; (2) the provision that would eliminate the requirement that a court consider "all relevant evidence" relating to the board's order; (3) the elimination of Water Code Section 13321 (c), which opponents contend would require a permittee to comply with requirements of an administrative order "even though they are being timely challenged through a judicial process;" (4) the absence of a time limit for the State Water Board to make a decision on an application for a stay; (5) and more generally the provisions that would allow state and regional water boards to delay a decision on a stay while preventing the applicant from seeking a stay from the court, which the opponents believe denies due process and "punishes the permittee by having to comply with requirements despite a timely challenge that may be successful." The Association of California Water Agencies (ACWA) opposes this bill primarily because it will adversely and unintentionally affect water agency activities involving federal regulations. In particular, ACWA notes that some of its member water agencies are licensed by the Federal Energy Regulatory Commission (FERC) AB 2446 Page 15 which requires a water quality certificate (a "401 certificate") from the State Water Board in order to obtain a new or renew an existing license to operate a hydroelectric project. State law allows the State Water Board to issue a 401 certificate for a hydroelectric project without a public proceeding, thus the only way that a licensee may obtain public consideration of a certificate occurs if the State Water Board considers a petition for reconsideration, but existing law does not set any time limit for the State Water Board to act on a petition for reconsideration. "Therefore," ACWA contends, "a hydroelectric licensee needs the opportunity to go to court immediately upon receiving the Executive Director's Section 401 certificate so that it can seek to maintain the status quo pending reconsideration of that certificate by the State Water Board itself." The letter of "concern" submitted by the Yuba County Water Agency raises the same issue. REGISTERED SUPPORT / OPPOSITION: Support State Water Resources Control Board (sponsor) Sierra Club Opposition Association of California Egg Farmers AB 2446 Page 16 Association of California Water Agencies California Farm Bureau Federation California Grain & Feed Association California Seed Association El Dorado Irrigation District (unless amended) Western Growers Association Concerns Yuba County Water Agency Analysis Prepared by:Thomas Clark / JUD. / (916) 319-2334 AB 2446 Page 17