Jim McCammon DTSC February 15, 2007 Determining Penalties for Hazardous Waste Violations

HSC, Section (a) Authorizes UPAs to issue administrative orders and assess penalties for violations of Health and Safety Code Chapter 6.5, 6.7, and Only Chapter 6.5, hazardous waste, has an established matrix with dollar values

HSC, Section (b) – considerations for calculating a penalty : Nature, circumstances, extent & gravity of violation. Violator’s efforts to prevent, abate, or clean up conditions posing a threat to public health or the environment. Violator’s ability to pay. Prophylactic effect of the penalty.

Assessment of Administrative Penalties-overview Section Applies to violations of H&SC Chapter 6.5. hazardous waste. Does not apply to corrected Minor Violations, as defined by H&SC § (a). Penalties must be consistent with other penalties issued for the same violations.

Assessment of Administrative Penalties-overview Section The penalty shall not exceed the statutory maximum. (The statutory maximum is established by H&SC §25189 and § It is $25,000 per violation per day.)

Assessment of Administrative Penalties-overview Section Determining the Initial Penalty: Potential for Harm Extent of Deviation Determination of Initial Penalty Matrix.

Assessment of Administrative Penalties-overview Section Initial penalty adjustment Intent Economic Benefit Statutory Maximum

Assessment of Administrative Penalties-overview Section Multiple Violations A single initial penalty may be assessed for multiple violations, if: Violations of the same requirement at one or more locations at the same time. Violations of the same requirement at different times, unless facility has been notified and had time to correct violation.

Assessment of Administrative Penalties-overview Section (continued) Violations are not independent or are not substantially distinguishable Where there is economic benefit to be recovered, violations shall be cited separately.

Assessment of Administrative Penalties-overview Section Multiday Violations. Continuous violations, not intermittent Penalty for first day calculated per § Remaining days 2% of first day penalty.

Assessment of Administrative Penalties-overview Section Minor Penalties Where Minor Penalties are subject to penalties, they shall be calculated according to this Article. Failure to comply with Notice to Comply Agency determines that enforcement and penalty is warranted.

Minor Violations Class II violations [H&SC § ] –Not knowing, willful, or intentional –No economic benefit to violator –Not chronic, or committed by recalcitrant violator No enforcement [§ ] –Minor violation corrected at time of inspection –Minor violation corrected within time provided by Notice to Comply Agency may determine that circumstances warrant assessment of a civil penalty [§ (g)(2)]

Assessment of Administrative Penalties-overview Section Base Penalty The base penalty is the penalty determined for each violation by sections The total base penalty is the sum of all the base penalties for all violations

Assessment of Administrative Penalties-overview Section Adjustments to the Total Base Penalty Cooperation Prophylactic Effect Compliance History Ability to Pay

Assessment of Administrative Penalties-overview Section Final Penalty “The final penalty consists of the total base penalty... with any adjustments made pursuant to... Section ” “The final penalty shall not exceed the statutory maximum.”

# CitationViolationPotential for Harm Extent of Deviation # of Times Violation Occurred Statutory Maximum Initial Penalty Intent Factor Base Penalty Additional Amounts for Multiday Violations Economic Benefit TOTAL

Worksheet, Step 1 Assign a number for each violation Regulatory or Statutory Section Write a brief description of the violation –Nature and amount of waste –Conditions and circumstances of violation

Worksheet, Step 1 citation, description of violation #CitationViolation 1T22, CCR § Respondent stored three drums of ignitable wastes within 50 feet of the property line 2T22, CCR § (c) Failure to separate incompatibles, waste acid stored with cyanide

Worksheet, Step 2 Potential for Harm Major: the characteristics and amounts of waste present a major threat and the circumstances indicate a high potential for harm. Moderate: the characteristics and amount are not a major threat or the circumstances do not present a high potential for harm. Minimal: the threat presented by the characteristic and amount of waste, and by the circumstances of the violation is low.

Potential for Harm Factors The characteristics of the substance. The amount of the substance. The extent to which human life or health is threatened. The extent which animal life is threatened. The extent to which the environment is threatened.

Something to Note: “Record keeping” violations do not have a major potential for harm. “Record keeping” means only the requirement to record, retain, and make available, records [see § (b)(5)] Failure to have required plans, such as waste analysis plans, or to use manifests, is not a “record keeping” violation.

Worksheet, Step 2 potential for harm ViolationPotential for Harm Respondent stored three drums of ignitable wastes within 50 feet of the property line Moderate: drums in good condition, no fuel or sources of ignition nearby. Failure to separate incompatibles, waste acid stored with cyanide Major: potential threat from mixing cyanide and acid very high, employees at risk.

Worksheet, Step 3 Extent of Deviation Major: requirement is completely ignored, or the function of requirement is rendered ineffective Moderate: requirement functions to some extent, but not all important provisions are met. Minimal: requirement functions nearly as intended, but not as well as if all provisions were met.

Extent of Deviation Factors For requirements with more than one part, consider the extent of violation in terms of the more significant requirement. For a single requirement, the range of potential deviation may vary. For example: –Major: failure to have a contingency plan –Moderate: significant elements of plan are missing –Minimal: one or two minor elements missing

Worksheet, Step 3 extent of deviation ViolationExtent of Deviation Respondent stored three drums of ignitable wastes within 50 feet of the property line Moderate: Three drums out of 15 in storage area stored improperly. Failure to separate incompatibles, waste acid stored with cyanide Major: Requirement to separate incompatibles completely ignored.

Worksheet, Step 4 statutory maximum Violation# of Times Violation Occurred Statutory Maximum Respondent stored three drums of ignitable wastes within 50 feet of the property line one$25,000 Failure to separate incompatibles, waste acid stored with cyanide one$25,000

Statutory Maximum Based on H&SC sec and –“... shall be liable for a civil penalty not to exceed twenty-five thousand dollars ($25,000) for each separate violation or, for continuing violations, for each day that violation continues.”

Initial Penalty Matrix § (d) Extent of Deviation Potential for Harm MajorModerateMinimal Major 25,000 (22,000) 20,000 (17,500) 15,000 (10,500) 6,000 Moderate 20,000 (17,500) 15,000 (10,500) 6,000 (4,000) 2,000 Minimal 15,000 (10,500) 6,000 (4,000) 2,000 (1,000) 0

Worksheet, Step 5 initial penalty ViolationPotential for Harm Extent of Deviation Initial Penalty Respondent stored three drums of ignitable wastes within 50 feet of the property line Moderate: drums in good condition, no fuel or sources of ignition nearby. Moderate: Three drums out of 15 in storage area stored improperly $10,500 Failure to separate incompatibles, waste acid stored with cyanide Major: potential threat from mixing cyanide and acid very high, employees at risk. Major: Requirement to separate incompatibles completely ignored. $22,500

Adjustments to Initial Penalty Intent Economic Benefit Adjustments to Initial Penalty must not exceed the Statutory Maximum.

Adjustment for Intent Adjustment factors for Violator’s Intent Adjustment FactorCircumstance Downward Adjustment of 100 percentViolation was completely beyond the control of the violator Downward adjustment of 0 to 50 %Violations occurred despite good faith efforts to comply with regulations No adjustmentViolation included neither good faith efforts nor intentional failure to comply Upward adjustment of 50 to 100 percent Violation was a result of intentional failure to comply

Worksheet, Step 6 adjustment for intent ViolationIntent Factor Respondent stored three drums of ignitable wastes within 50 feet of the property line 1 Failure to separate incompatibles, waste acid stored with cyanide 1

Adjustments for Economic Benefit Increase the initial penalty by the amount of economic benefit gained. Includes: -Avoided costs. -Delayed costs. -Increased profits. -Avoided interest.

#Potential for Harm Extent of Deviation No. of times violation occurred Statutory Maximum Initial Penalty Intent Factor Base Penalty Multiday amounts Economic Benefit 1 Moderate 1$25,000$10,5001 n/aNone 2 Major 1$25,000$22,500122,500n/aNone Total$33,0000 Simple Penalty Calculation Total Base Penalty

Adjustments to Total Base Penalty Cooperation Prophylactic Effect Compliance History Ability to Pay

Adjustment for Cooperation Degree of Cooperation Adjustment FactorCircumstance ExtraordinaryDownward adjustment of up to 25 percent Violator exceeded minimum requirements in returning to compliance or returned to compliance faster than requested. Good FaithNo adjustment Violator demonstrated a cooperative effort. RecalcitranceUpward adjustment of up to 25 percent Violator failed to cooperate, delayed compliance, created unnecessary obstacles to achieving compliance, or the compliance submittal failed to meet requirements. Refusal (This does not include refusal to allow inspections.) Upward adjustment of 50 to 100 percent Violator intentionally failed to return to compliance or to allow clean-up operations to take place.

Adjustments to the Base Penalty cooperation CooperationProphylactic Effect Compliance History Ability to Pay Respondent returned to compliance faster than requested Adjustment: - 25%Adjustment:

Adjustment for Prophylactic Effect “The total base penalty may be adjusted upward or downward to ensure that the penalty is sufficient to provide a prophylactic effect on both the violator and the regulated community as a whole.” “prophylactic 2: tending to prevent or ward off: preventative.”

Adjustments to the Base Penalty prophylactic effect CooperationProphylactic Effect Compliance History Ability to Pay Respondent returned to compliance faster than requested none Adjustment: - 25%Adjustment: 0%Adjustment:

Adjustment for Compliance History Reduction of 5% for previous inspections without violations up to 10%. 15% reduction for current ISO certificate. Increase for violations in past 5 years up to 100% –Violations at same site receive more weight –Recent violations receive more weight –Same or similar violations receive more weight

Adjustments to the Base Penalty compliance history CooperationProphylactic Effect Compliance History Ability to Pay Respondent returned to compliance faster than requested noneInspection in 2004 found no violations Adjustment: - 25%Adjustment: 0%Adjustment: -5%Adjustment:

Adjustment for Ability to Pay Payment may be extended Penalty may be reduced No adjustment for ability to pay if: –Upward adjustment for failure to cooperate –Upward adjustment for compliance history. Note: Usually adequate financial information to make an ability to pay determination is not available at the time an administrative order is prepared.

Adjustments to the Base Penalty ability to pay CooperationProphylactic Effect Compliance History Ability to Pay Respondent returned to compliance faster than requested noneInspection in 2004 found no violations No information available Adjustment: - 25% -$8,250 Adjustment: 0%Adjustment: -5% - $1,650 Adjustment: 0%

Final Penalty Total Base Penalty $33,000 +/- Adjustments for: Cooperation -$8,250 Prophylactic Effect $ 0 Compliance History -$1,650 Ability to Pay $0 + Economic Benefit $0 = Final Penalty $26,400

Multiple Violations A single initial penalty may be assessed for multiple violations when: -The facility has violated the same requirement in different location (e.g., units) within the facility. -The facility has violated the same requirement on different days, unless the facility has been notified of the violation and has had sufficient time to correct the violation. -Violations that are not independent or are not substantially distinguishable.

Multiple Violations Violations not independent ViolationPotential for HarmExtent of DeviationNumber of days violation occurred Statutory Maximum Failure to train employees who manage hazardous waste Moderate: Waste is not highly hazardous or mobile, is properly labeled and containerized, is produced at a relatively low rate (about 2 drums/month) Major: Requirement has been completely ignored for 2 years At least one employee $25,000 Failure to provide annual reviews of training, at least 3 employees At least two annual trainings for 3 employees 6 x $25,000 = $150,000 Failure to maintain training records 1$25,000

Multiple Violations Violations not independent Initial PenaltyIntent FactorBase Penalty $17,5001.5$26,250

Multiple Violations Violations occurring at different times ViolationPotential for HarmExtent of DeviationNumber of days violation occurred Statutory Maximum Transporting hazardous waste without registration 9/14/05, 1/9/06, 7/1/06 Moderate: Waste not highly hazardous, not very mobile, moderate amounts; transporter did not have hazardous waste insurance. Major: Requirement to use registered hauler completely ignored 3 days$75,000

Multiple Violations Violations occurring at different times Initial PenaltyIntent FactorBase Penalty $17,5001.5$26,250

Multiday Violations The initial penalty for the first day of violation shall be determined as provided in Sections and Multiply the initial penalty by 2% –Then multiply by the number of days (less the first day) Add this number to the initial penalty

Multiday Violations ViolationPotential for Harm Extent of Deviation Number of Days Statutory Maximum Initial Penalty Storage without authorization 23 drums of waste etchant with 210,000 ppm Cu, 143,000 ppm Pb, 25,000 ppm Zn Major 570 days 9/21/04- 4/14/06 $14,250,000$22,500

Multiday Violations One approach ViolationInitial Penalty Base Penalty Additional Amounts for Multiday Violations Storage without authorization 23 drums of waste etchant with 210,000 ppm Cu, 143,000 ppm Pb, 25,000 ppm Zn $22,500$278,550$22,500 x.02 = $450 $450 x 569 days = $256,050

Multiday Violations An alternative approach ViolationInitial Penalty Base Penalty Additional Amounts for Multiday Violations Storage without authorization 23 drums of waste etchant with 210,000 ppm Cu, 143,000 ppm Pb, 25,000 ppm Zn $22,500$152,9309/04-1/06, >6 drums, Min/Maj. 121 days. $4000 x.02 = $80. $80 x 121 days = $9680 1/06-12/06, 6-15 drums, Mod/Maj. 345 days. $17,500 x.02 =$350. $350 x 345 = $120,750 12/06-4/ drums, Maj/Maj 104 days. $22,500 x.02 = $450. $450 x 104 days = $46,800 Total $130,430

Calculating overlapping violation days Days in continuous violation Total violation time 330 days. (Not = 433 days.) Jan.--- (200 days) ---June May--- (99 days) ---Aug. July--- (135 days) ---Nov.

Adjustments for Economic Benefit Increase the initial penalty by the amount of economic benefit gained. Includes: -Avoided costs. -Delayed costs. -Increased profits. -Avoided interest. DTSC policy Guidelines for Calculating the Economic Benefit of Noncompliance at: /Policies/HazardousWaste/upload/HWMP_GuidanceDocument_Econo micBenefitNoncompliance.pdf

Economic Benefit Avoided costs. Includes –Disposal costs for wastes illegally disposed of –Cost of insurance –Salaries for staff not hired –Failure to conduct testing or monitoring –Failure to use registered hauler –Failure to install equipment on units subsequently closed (e,g., containment, monitoring) –Avoided fees (for entities that operated regularly as hazardous waste facilities)

Economic Benefit The economic benefit of avoided costs is the total cost plus interest.

Economic Benefit Delayed costs, includes: –Unfunded or underfunded closure cost mechanisms –Delayed disposal or treatment costs –Failure to install equipment that will have to be installed eventually. The economic benefit of delayed costs is the interest on the amount during the period the costs were not paid.

Economic Benefit Increased Profits. Includes: –Additional volumes of waste handled –Additional types of waste received –Other additional business (e.g., offering to pick up hazardous waste as a benefit to customers paying for non-hazardous waste pick-up)

Economic Benefit Avoided Interest (applies to both delayed costs and avoided costs) –Violator receives interest on money that should have been spent on compliance –Violator does not have to pay interest on money that would have had to be borrowed to achieve compliance –Violator makes a profit, by reinvesting it, on money that should have been spent on compliance

Economic Benefit (examples) ViolationEconomic Benefit Failure to train employees who manage hazardous waste (facility manager) Training (California Compliance School) $530 3 days salary: $480 Total $1010 Failure to provide annual reviews of training, at least 3 employees, two years 3 staff x 4 hours x $25/hr = $300/yr Total for 2 years $600 Failure to maintain training records Negligible

Economic Benefit (examples) ViolationEconomic Benefit Using an unregistered hauler to transport hazardous waste 9/14/05, 1/906, 7/1/06 3 $700/trip = $2100 Storage without authorization 23 drums of waste etchant with 210,000 ppm Cu, 143,000 ppm Pb, 25,000 ppm Zn Avoided costs of missed shipment dates: 9/04,12/04, 3/05, 6/05, 9/05, 12/05, 3/05 7 shipments x $700 = $4900 Delayed costs of disposal 23 $400 each = $ %/yr = $460. Total = $ $460 = $5,360

Total Base Penalty # ViolationHarmDeviationStat. Max. Base Penalty Multi-Day Penalty Economic Benefit 1- 3 TrainingMod.Major$200K$26,250n/a$1,610 4StorageMajor 14.25M152,930$130,4302,100 5Trans- porting w/o registra- tion ModMajor75K26,250n/a5,360 Total205,4309,070

Final Penalty The final penalty consists of the total base penalty with any adjustments made. Base penalty $205,430 + Economic Benefit $9,070 = Final Penalty $214,500

Problems and Issues Statutory Maximum/Base Penalty. –Statutory Maximum refers only to the penalties for individual violations. Adjustments to the base penalty cannot raise the individual penalties above their statutory maxima. –Where this may be an issue, it is better to adjust each penalty separately, rather than calculate a Total Base Penalty.

Problems and Issues Economic Benefit –Economic Benefit is calculated as a discrete amount. –Adding Economic Benefit to the Initial Penalty causes it to increase by 2% for each day of continuous violation. –Adjustments to Base Penalty will increase Economic Benefit amount. –Best practice is to total the Economic Benefit separately and add it, with the other adjustments, at the end.