1. Vincent Mendes, R.E.H.S. Supervising Environmental Health Specialist Fresno County Environmental Health Division February 15, 2007 Penalty Calculations For Non-Hazardous Waste Administrative Actions

2. Do you have an Enforcement Plan? What is your enforcement approach? What is your enforcement approach? Notice to comply/violation Notice to comply/violation Second notice? Second notice? Other options – Other options – DA, DA, County Counsel, County Counsel, Small Claims Small Claims Goal(s) of enforcement- Goal(s) of enforcement- Compliance first Compliance first Penalty first Penalty first Both Both

3. Enforcement Philosophy Factors POLICIES POLICIES PROCEDURES PROCEDURES POLITICS POLITICS PERSPECTIVE PERSPECTIVE

4. The Law: HSC Section 25404.1.1(a) Authorizes the CUPA to assess penalties for each program that is subject to the Administrative Enforcement Order (AEO) process Authorizes the CUPA to assess penalties for each program that is subject to the Administrative Enforcement Order (AEO) process Only HW has a penalty matrix established in state regulations Only HW has a penalty matrix established in state regulations

5. Authority for AEO’s 25404.1.1. (a) If the unified program agency determines that a person has committed.. a violation of any law, regulation, permit,.. the UPA is authorized to enforce or implement pursuant to this chapter, the UPA may issue an administrative enforcement order …: 25404.1.1. (a) If the unified program agency determines that a person has committed.. a violation of any law, regulation, permit,.. the UPA is authorized to enforce or implement pursuant to this chapter, the UPA may issue an administrative enforcement order …: (1) Except as provided in paragraph (5), if the order is for a violation of Chapter 6.5 (commencing with Section 25100), (Hazardous Waste) (1) Except as provided in paragraph (5), if the order is for a violation of Chapter 6.5 (commencing with Section 25100), (Hazardous Waste) (2) If the order is for a violation of Chapter 6.7 (commencing with Section 25280) (UST) (2) If the order is for a violation of Chapter 6.7 (commencing with Section 25280) (UST) (3) If the order is for a violation of Article 1 (commencing with Section 25500) of Chapter 6.95, (Business Plans) (3) If the order is for a violation of Article 1 (commencing with Section 25500) of Chapter 6.95, (Business Plans) (4) If the order is for a violation of Article 2 (commencing with Section 25531) of Chapter 6.95, (CalARP) (4) If the order is for a violation of Article 2 (commencing with Section 25531) of Chapter 6.95, (CalARP) (5) If the order is for a violation of Section 25270.5, (AGT/ SPCC) (5) If the order is for a violation of Section 25270.5, (AGT/ SPCC)

6. Statue Penalty Amounts (per day per violation) Statue Penalty Amounts (per day per violation) Haz Waste- up to $25,000 Haz Waste- up to $25,000 SPCC- up to $5,000 SPCC- up to $5,000 up to $10,000 for second or repeat violations up to $10,000 for second or repeat violations UST- minimum $500 to $5,000, UST- minimum $500 to $5,000, up to $10,000 for monitoring systems or leak detection tampering up to $10,000 for monitoring systems or leak detection tampering

7. Statue Penalty Amounts (per day per violation) Statue Penalty Amounts (per day per violation) BP submittal $2,000 BP submittal $2,000 Raises to $5,000 if knowingly done after prior notice Raises to $5,000 if knowingly done after prior notice Section 25507 - $25,000 for failure to report a release (cannot issue AEO) Section 25507 - $25,000 for failure to report a release (cannot issue AEO) Cal/ARP $2,000 Cal/ARP $2,000 Raises to $25,000 if knowingly done after notice Raises to $25,000 if knowingly done after notice

8. AEO Authority in 6.95 25514.5. (a) Notwithstanding Section 25514, any business that violates this article is liable to an administering agency for an administrative penalty, in an amount which shall be set by the governing body of the administering agency, but not greater than two thousand dollars ($2,000) for each day in which the violation occurs. 25514.5. (a) Notwithstanding Section 25514, any business that violates this article is liable to an administering agency for an administrative penalty, in an amount which shall be set by the governing body of the administering agency, but not greater than two thousand dollars ($2,000) for each day in which the violation occurs. If the violation results in, or significantly contributes to, an emergency, including a fire or health or medical problem requiring toxicological, health, or medical consultation, the business shall also be assessed the full cost of the county, city, fire district, … emergency response, as well as the cost of cleaning up and disposing of the hazardous materials, or acutely hazardous materials. If the violation results in, or significantly contributes to, an emergency, including a fire or health or medical problem requiring toxicological, health, or medical consultation, the business shall also be assessed the full cost of the county, city, fire district, … emergency response, as well as the cost of cleaning up and disposing of the hazardous materials, or acutely hazardous materials.

9. 25514 cont. (b) Notwithstanding Section 25514, any business that knowingly violates this article after reasonable notice of the violation is liable for an administrative penalty, in an amount which shall be set by the governing body of the administering agency, but not greater than five thousand dollars ($5,000) for each day in which the violation occurs. (b) Notwithstanding Section 25514, any business that knowingly violates this article after reasonable notice of the violation is liable for an administrative penalty, in an amount which shall be set by the governing body of the administering agency, but not greater than five thousand dollars ($5,000) for each day in which the violation occurs. (c) When an administering agency issues an enforcement order or assesses an administrative penalty, or both, for a violation of this article, the administering agency shall utilize the administrative enforcement procedures specified in Sections 25404.1.1 and 25404.1.2.

10. The 25514 hurdle “in an amount which shall be set by the governing body of the administering agency,” “in an amount which shall be set by the governing body of the administering agency,” Is this an issue for your CUPA? Is this an issue for your CUPA? Each AEO for 6.95 violations must be approved by their governing body Each AEO for 6.95 violations must be approved by their governing body Have the governing body approve a penalty matrix/enforcement plan Have the governing body approve a penalty matrix/enforcement plan

11. Business Plan Penalty Matrix ACTUAL/POTEN HARM EXTENT OF DEVIATION MajorModerateMinimal Major Maximum $2,000 ($5,000) ($5,000) Average $1,600 ($4,000) ($4,000) Minimum $1,200 ($3,000) ($3,000)$1,200($3,000)$1,000($2,500)$800($2,000)$800($2,000)$600($1,500)$400($1,000) Moderate Maximum $1,200 ($3,000) ($3,000) Average $1,000 ($2,500) Minimum $800 ($2,000) ($2,000)$800($2,000)$600($1,500)$400($1,000)$400($1,000)$300($750)$200($500) Minimal Maximum $800 ($2,000) ($2,000) Average $600 ($1,500) ($1,500) Minimum $400 ($1,000) ($1,000)$400($1,000)$300($750)$200($500)$200($500)$100($250)$0($0)

12. UST Penalty Matrix ACTUAL OR POTENTIAL HARM EXTENT OF DEVIATION MajorModerateMinimal Major Maximum $5,000 Average $4,000 Minimum $3,000 $3,000 $2,500 $2,000 $1,500 $1,000 Moderate Maximum $3,000 Average $2,500 Minimum $2,000 $2,000 $1,500 $1,000 $750 $500 Minimal Maximum $2,000 Average $1,500 Minimum $1,000 $1,000 $750 $500

13. CalARP Penalty Matrix ACTUAL OR POTENTIAL HARM EXTENT OF DEVIATION MajorModerateMinimal Major Maximum $2,000 ($25,000) Average $1,600 ($20,000) Minimum $1,200 ($15,000) $1,200 ($15,000) $1,000 ($12,500) $800 ($10,000) $800 ($10,000) $600 ($7,500) $400 ($5,000) Moderate Maximum $1,200 ($15,000) Average $1,000 ($12,500) Minimum $800 ($10,000) $800 ($10,000) $600 ($7,500) $400 ($5,000) $400 ($5,000) $300 ($3,750) $200 ($2,500) Minimal Maximum $800 ($10,000) Average $600 ($7,500) Minimum $400 ($5,000) $400 ($5,000) $300 ($3,750) $200 ($2,500) $200 ($2,500) $100 ($1,250) $0 ($0)

14. HSC Section 25404.1.1(b) When setting an AEO penalty, the UPA shall consider: Nature, circumstances, extent & gravity of violation Nature, circumstances, extent & gravity of violation Violator’s past and present efforts to prevent, abate, or clean up Violator’s past and present efforts to prevent, abate, or clean up Violator’s ability to pay Violator’s ability to pay The deterrent effect the penalty has on both the violator and the regulated community The deterrent effect the penalty has on both the violator and the regulated community

15. Suggested Steps to Set an AEO Penalty What is the violation (s) What is the violation (s) How many occurrences of each violation How many occurrences of each violation Apply statutory penalty factors Apply statutory penalty factors Come up with penalty amount Come up with penalty amount

16. What is the violation? What statute or regulation section What statute or regulation section What is the penalty range in the statute? What is the penalty range in the statute? Violation Classification Violation Classification

17. How many occurrences of the violation? More than one violation on the same day? More than one violation on the same day? Example Raised sensors in UST system Example Raised sensors in UST system The same violation on more than one day? The same violation on more than one day? Example: Failed to complete ELD/designated operator Example: Failed to complete ELD/designated operator The same violation at more than one location? The same violation at more than one location? in the same facility? in the same facility? in a different facility (same owner)? in a different facility (same owner)?

18. Multi Day Violation Do you have good evidence? If multi day violations - are you sure you have evidence for the days other than the day you observed the violation? If multi day violations - are you sure you have evidence for the days other than the day you observed the violation? Example – Failed to submit HMBP - How long have they been in business? Example – Failed to submit HMBP - How long have they been in business?Vs. Raised sensor in UST system – When was it raised? By who? (does it matter by who?) Raised sensor in UST system – When was it raised? By who? (does it matter by who?)

19. Is the Penalty too high? Multiple violations can result in very high penalty amounts Multiple violations can result in very high penalty amounts Can either set a high one day penalty or a low daily penalty (or justify your penalty by using both methods to determine your number) Can either set a high one day penalty or a low daily penalty (or justify your penalty by using both methods to determine your number)

20. Possible adjustment for multiple violations (from haz waste matrix) A single initial penalty may be assessed when: A single initial penalty may be assessed 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.

21. One time vs. ongoing violations One time vs. ongoing violations Failure to submit a report (one day violation?) Failure to submit a report (one day violation?) Failure to train (one day, but per employee) Failure to train (one day, but per employee) Operating without a permit (everyday is a violation) Operating without a permit (everyday is a violation) Operating without a designated operator (everyday is a violation) Operating without a designated operator (everyday is a violation)

22. Penalty Factors : Nature & Extent of the Violation How important is this requirement? How important is this requirement? Is it a new requirement? Is it a new requirement? Degree of deviation from the requirement Degree of deviation from the requirement

23. Nature, circumstances, extent & gravity of violation Failed to submit a HMBP Who has deviated more? Who has greater potential for harm? Does one HMBP facility deserve a higher penalty than the other?

24. Penalty Factors: “circumstances of the violation” Penalty Factors: “circumstances of the violation” Effort to comply before & after violation Effort to comply before & after violation Cooperation Cooperation Known or should have known Known or should have known Any previous/current problems with regulatory agencies Any previous/current problems with regulatory agencies Changes/unique circumstances Changes/unique circumstances

25. “Nature of the violation” includes Economic Benefit Compliance costs money Compliance costs money To be aware of the regulatory requirements To be aware of the regulatory requirements To stay current on regulatory requirements To stay current on regulatory requirements Capital costs (equipment, testing, O&M) Capital costs (equipment, testing, O&M) Staff costs (employees, training) Staff costs (employees, training) Delays required to be in compliance before you start a new activity or product Delays required to be in compliance before you start a new activity or product

26. What Is Not Economic Benefit? Economic Benefit does not include Accounting for ability to continue in business Accounting for ability to continue in business Don’t discount costs the violator incurred in correcting the violation or cleanup Don’t discount costs the violator incurred in correcting the violation or cleanup

27. What to Consider in Determining Economic Benefit Time value of money Time value of money Project/design alternatives Project/design alternatives Equipment costs - capital, shipping, installation, taxes, labor Equipment costs - capital, shipping, installation, taxes, labor Developed procedures Developed procedures

28. What to Consider (continued) Labor costs Labor costs  Training What was required? What additional training was needed?

29. Economic Benefit Steps  Determine what should have been done  When and/or how often  Estimate the type and cost of the actions, distinguish  delayed costs  avoided costs  Consider other economic benefits (e.g. continued production, early entry to market)

30. Avoided costs vs. Delayed costs Avoided costs (EB is time value of money) Avoided costs (EB is time value of money) Not filing BP for two years Not filing BP for two years Delayed costs (EB is the total cost +) Delayed costs (EB is the total cost +) Employee training Employee training Equipment upgrade Equipment upgrade

31. What you will hear–” I didn’t make any money”! Net profit is only a part of economic benefit Net profit is only a part of economic benefit Economic benefit = Economic benefit = business did not spend money and was supposed to business did not spend money and was supposed to business gained advantage by non compliance business gained advantage by non compliance

32. Factor: Violator’s Ability to Pay May be used to adjust upward or downward the penalty that would otherwise be imposed May be used to adjust upward or downward the penalty that would otherwise be imposed You do not have to adjust to keep the violator in business You do not have to adjust to keep the violator in business Some businesses cannot stay in biz and comply with the law Some businesses cannot stay in biz and comply with the law Gov’t cannot subsidize violators Gov’t cannot subsidize violators

33. Ability to Pay The statute requires you “consider” ability to pay; NOT that you adjust the penalty so the violator can pay it and stay in businesses. The statute requires you “consider” ability to pay; NOT that you adjust the penalty so the violator can pay it and stay in businesses. Does not requires that UPA figure out what the violator can pay Does not requires that UPA figure out what the violator can pay It’s a very broad concept It’s a very broad concept

34. Factor: past and present efforts to prevent, abate, or clean up Training programs? Training programs? Is compliance encouraged? Is compliance encouraged? Do they go “beyond compliance” in other areas? Do they go “beyond compliance” in other areas?

35. Factor: Deterrent effect of the penalty on the violator Compliance costs money Compliance costs money Deterrent effect on the violator Deterrent effect on the violator Economic benefit factors here also Economic benefit factors here also

36. Factor: Deterrent effect of the penalty on the regulated community “The Ripple Affect” Is the penalty you want others to pay? Is the penalty you want others to pay? You must be able to articulate and defend this penalty in future AEOs You must be able to articulate and defend this penalty in future AEOs Are you being fair to those who are in compliance? Are you being fair to those who are in compliance?

37. Another factor for the penalty (unwritten factor) How are you issuing the AEO? How are you issuing the AEO? Unilateral Unilateral Draft AEO Draft AEO Stipulation and Order to be offered Stipulation and Order to be offered Show Cause Show Cause Consent order Consent order

38. Remember to KISS the AEO process KEEP KEEP IT IT SOMEWHAT SOMEWHAT SIMPLE SIMPLE

39. Have a plan and you’ll get through it all Any questions?