United States: California Court Orders Water Board Back To The Drawing Board With Hexavalent Chromium MCL

The Superior Court of California, Sacramento County, issued an order on May 5, 2017,1 requiring the California Water Resources Control Board (Water Board) to withdraw its controversial maximum contaminant level (MCL) for hexavalent chromium of 10 parts per billion (ppb) and establish a new MCL. An MCL is a limit on the amount of a contaminant that may be present in public drinking water. The lawsuit, filed by the California Manufacturers and Technology Association and the Solano County Taxpayers Association (together, Petitioners), alleged that the California Department of Public Health (CDPH) failed to adequately consider the economic feasibility of the MCL when adopting it. The court agreed with the Petitioners and ordered the Water Board to go back to the drawing board and issue a new MCL.

Hexavalent chromium is one form of the metallic element chromium. Chromium is a naturally occurring element in the environment, found in rocks, animals, plants, and volcanic dust and gases. The hexavalent form of chromium has been used in pigment manufacturing, metal plating, stainless steel production, leather tanning, and wood preservation. The State of California has identified hexavalent chromium as presenting human cancer risks when inhaled at high concentrations, and a 2008 study conducted by the National Toxicology Program found an increase in intestinal tumors in laboratory mice after ingestion of high levels of hexavalent chromium. The US Environmental Protection Agency has adopted an MCL for total chromium of 100 ppb, but the agency has not set an MCL for hexavalent chromium. California's MCL for total chromium is already stricter than the federal standard—set at 50 ppb.

The MCL for hexavalent chromium became effective on July 1, 2014, after CDPH proceeded through the rulemaking process under the California Administrative Procedures Act (APA) to adopt the MCL.2 The responsibility for issuing MCLs was subsequently transferred to the Water Board, and therefore the Water Board was tasked with defending the MCL in the litigation and will also be required to establish a new MCL.

California's Safe Drinking Water Act (SDWA) provides that all MCLs must be set at a level as close as feasible to the corresponding public health goal (PHG), taking into account factors of technological and economic feasibility. Identifying an appropriate MCL therefore "involves a balancing of public health concerns with questions of technological feasibility and cost."3

The public health goal for hexavalent chromium was set by the California Office of Environmental Health Hazard Assessment (OEHHA) at 0.02 ppb. The MCL for hexavalent chromium cannot exceed the 50 ppb MCL for total chromium. Therefore, CDPH had a range from 0.02 ppb to 50 ppb in which to consider a possible MCL. CDPH considered seven possible levels within this range (1, 5, 10, 15, 20, 25, and 30 ppb) before settling on 10 ppb as the MCL.

In evaluating the economic feasibility of an MCL, the SDWA requires consideration of "the costs of compliance to public water systems, customers, and other affected parties...including the cost per customer and aggregate cost of compliance, using best available technology."4 Further, the APA requires an agency adopting a regulation to consider its "potential for adverse economic impact on businesses and individuals."5

CDPH estimated the cost to water purveyors and customers of complying with the 10ppb MCL. Notably, CDPH's own cost estimates indicated that the MCL would result in significant increased costs. For example, CDPH estimated that water bills for customers of very large water systems would increase by an estimated $64 per year, and some customers of small water systems could see their bills increase by as much as $5,640 per year.

The court's order addressed CDPH's compliance with the requirements under both the SDWA and the APA. First, the court evaluated CDPH's economic feasibility analysis and found it lacking. The analysis merely estimated the cost of compliance with the seven possible MCLs, but failed to evaluate whether the cost of compliance of the 10ppb MCL was economically feasible. Even though the court described the cost estimates as thorough, it noted that CDPH's analysis did not take the next important step of evaluating whether it was economically feasible for water purveyors or customers to actually pay the estimated costs. The court concluded that this error warranted withdrawal of the MCL.

Although the SDWA does not define what "economic feasibility" means, the Water Board argued that the term is not synonymous with "affordable." The court responded by stating that "economically feasible has to mean something, and it is difficult to conceive of a definition that does not at least consider affordability."6 The Water Board did not offer its own definition, and the court addressed feasibility in terms of whether compliance with the MCL would be "affordable" and "economically possible," factors CDPH failed to consider. CDPH's failure to adequately analyze the economic feasibility of the MCL was the basis for the court's decision to order the Water Board to withdraw the MCL; however, the court also went on to address the other issues raised by the Petitioners.7

Second, the court addressed the Petitioners' challenge to CDPH's finding under the APA that the proposed MCL would have no significant adverse economic impact on California businesses. The Water Board argued that the APA excludes water purveyors from the definition of businesses, and therefore there was no requirement to consider whether the MCL would have a significant adverse impact on water purveyors. The Water Board also argued that there was no requirement to assess the impact on customers of water purveyors to satisfy the requirements of the APA. The court did not find that CDPH failed to comply with the APA in adopting the MCL. However, the court did direct the Water Board in setting a new MCL to consider the MCL's economic impact on businesses, including public water systems that are also for-profit businesses. In issuing a new MCL, the Water Board will also need to consider indirect impacts, based on new APA regulations issued after the original MCL was adopted.

Third, and finally, the court agreed with the Petitioners' argument that CDPH failed to adequately respond to public comments regarding the MCL's economic feasibility as required by the APA, although this was not the basis for striking down the MCL. This finding highlights the importance of submitting detailed comments, and those facing potential economic impacts should do so again in the next round of rulemaking.

The Water Board has several options in how to proceed in light of the order. First, the Water Board may challenge the court's decision through an appeal. The Water Board is likely to pursue an appeal if it perceives the ruling as problematic for the adoption of future MCLs or for future assessments of economic feasibility. Second, the Water Board may comply with the order by adopting a new MCL that it can show is economically feasible. Third, the Water Board may attempt to support the 10ppb MCL as economically feasible, addressing the deficiencies in evaluation that the court identified in its order.

Although the court held that CDPH failed to properly consider the economic feasibility of complying with the MCL, it expressly declined to decide whether the 10ppb MCL is economically feasible. The court did, however, express serious concerns as to economic feasibility at 10ppb and ordered the Water Board to issue a "new" MCL, implying that a less stringent MCL may be necessary to satisfy the statutory requirements. The court also declined to allow the 10ppb MCL to remain in place pending issuance of new regulations, out of a concern that doing so would "create an inexorable amount of momentum for the [Water Board] to simply readopt 10ppb without adequately considering its economic feasibility."8 Yet, the court did not foreclose the possibility that the Water Board could set the MCL at 10ppb again after "properly considering economic feasibility."9

The Water Board has publicly indicated only that it is reviewing the order and its possible impacts, and that it will take the agency some time to prepare a response.

Regardless of the manner in which the Water Board decides to proceed, in the interim the court's order provides much-needed relief for those entities facing the difficult and costly task of planning for compliance with the stringent MCL. When the new rulemaking process inevitably proceeds, and the Water Board considers how to set an economically feasible MCL, it will be important for all stakeholders to stay engaged in the process, especially those who potentially face an economic impact from the MCL.

The court's decision to strike down the MCL highlights the importance of providing detailed public comments in the rulemaking process, specifically with reference to economic feasibility. Going forward, the Water Board will be required to more closely consider not only the actual costs of compliance with its regulations, but the affordability of compliance. The Water Board's pending rulemaking on its proposed MCL for 1,2,3- Trichloropropane (1,2,3-TCP) will likely be the next opportunity to see whether the Water Board will undertake a bolstered economic feasibility analysis in the wake of the court's rejection of the hexavalent chromium MCL and in response to public comments on the proposed rulemaking.

Footnotes

1. California Manufacturers and Technology Association, et al. v. State Water Resources Control Board, No. 34-2014-80001850 (Super. Ct. Sacramento County) (May 5, 2017) (hereinafter, Order). The Order is available here.

2. After the regulation went into effect, the Legislature enacted a bill giving public water systems additional time to comply with the MCL under certain circumstances. S.B. 385 (2015); Health & Saf. Code § 116431.

3. In re Groundwater Cases, 154 Cal. App. 4th 659, 679 (2007).

4. Health & Saf. Code § 116365(b)(3).

5. Gov. Code §§ 11346.3, 11346.9(a)(3).

6. Order, at 12 (emphasis in original).

7. The court did not adopt the Petitioners' position that the analysis was flawed on the basis that the underlying public water systems monitoring data was inaccurate.

8. Order, at 30.

9. Order, at 14.

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