Jim McCammon DTSC February 15, 2007 Determining Penalties for Hazardous Waste Violations.
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Transcript of Jim McCammon DTSC February 15, 2007 Determining Penalties for Hazardous Waste Violations.
HSC, Section 25404.1.1(a)
• Authorizes UPAs to issue administrative orders and assess penalties for violations of Health and Safety Code Chapter 6.5, 6.7, and 6.95.
• Only Chapter 6.5, hazardous waste, has an established matrix with dollar values
HSC, Section 25404.1.1(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 666272.60
Applies to violations of H&SC Chapter 6.5. hazardous waste.
Does not apply to corrected Minor Violations, as defined by H&SC §25117.6(a).
Penalties must be consistent with other penalties issued for the same violations.
Assessment of Administrative Penalties-overview
Section 66272.61
The penalty shall not exceed the statutory maximum.
(The statutory maximum is established by H&SC §25189 and §25198.2. It is $25,000 per violation per day.)
Assessment of Administrative Penalties-overview
Section 66272.62--Determining the Initial Penalty:
• Potential for Harm
• Extent of Deviation
• Determination of Initial Penalty Matrix.
Assessment of Administrative Penalties-overview
Section 66272.63--Initial penalty adjustment
• Intent
• Economic Benefit
• Statutory Maximum
Assessment of Administrative Penalties-overview
Section 66272.64--Multiple ViolationsA 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 66272.64 (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 66272.65--Multiday Violations.
• Continuous violations, not intermittent
• Penalty for first day calculated per §66272.62
• Remaining days 2% of first day penalty.
Assessment of Administrative Penalties-overview
Section 66272.66--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 §25117.6]– Not knowing, willful, or intentional– No economic benefit to violator– Not chronic, or committed by recalcitrant violator
• No enforcement [§25187.8]– 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 [§25187.8(g)(2)]
Assessment of Administrative Penalties-overview
Section 66272.67--Base Penalty
The base penalty is the penalty determined for each violation by sections 66272.62-66272.66.
The total base penalty is the sum of all the base penalties for all violations
Assessment of Administrative Penalties-overview
Section 66272.68--Adjustments to the Total Base Penalty
• Cooperation
• Prophylactic Effect
• Compliance History
• Ability to Pay
Assessment of Administrative Penalties-overview
Section 66272.69--Final Penalty
“The final penalty consists of the total base penalty . . . with any adjustments made pursuant to . . . Section 66272.68.”
“The final penalty shall not exceed the statutory maximum.”
##
Citation
Violation
Potential for Harm
Extent of Deviation
# of Times Violation Occurred
Statutory Maximum
Initial Penalty
Intent
Factor
Base
Penalty
Additional Amounts
for Multiday
Violations
Economic
Benefit
1
2
3
4
5
6
7
8
9
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 1citation, description of violation
# Citation Violation
1 T22, CCR § 66264.176
Respondent stored three drums of ignitable wastes within 50 feet of the property line
2 T22, CCR § 66264.177(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 §66272.62(b)(5)]
• Failure to have required plans, such as waste analysis plans, or to use manifests, is not a “record keeping” violation.
Worksheet, Step 2potential for harm
Violation Potential 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 3extent of deviation
Violation Extent 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 4statutory 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. 25189 and 25189.2.– “. . . 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§66272.62(d)
Extent of Deviation
Potential for Harm
Major Moderate Minimal
Major
25,000
(22,000)
20,000
20,000
(17,500)
15,000
15,000
(10,500)
6,000
Moderate
20,000
(17,500)
15,000
15,000
(10,500)
6,000
6,000
(4,000)
2,000
Minimal
15,000
(10,500)
6,000
6,000
(4,000)
2,000
2,000
(1,000)
0
Worksheet, Step 5initial penalty
Violation Potential 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 Factor Circumstance
Downward Adjustment of 100 percent Violation 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 adjustment Violation 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 6adjustment for intent
Violation Intent 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 Moderate 1 $25,000 $10,500 1 $10,500 n/a None
2
Major Major 1 $25,000 $22,500 1 22,500 n/a None
Total $33,000 0
Simple Penalty CalculationTotal Base Penalty
Adjustments to Total Base Penalty
• Cooperation
• Prophylactic Effect
• Compliance History
• Ability to Pay
Adjustment for Cooperation
Degree of Cooperation
Adjustment Factor Circumstance
Extraordinary Downward adjustment of up to 25 percent
Violator exceeded minimum requirements in returning to compliance or returned to compliance faster than requested.
Good Faith No adjustment Violator demonstrated a cooperative effort.
Recalcitrance Upward 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 Penaltycooperation
Cooperation Prophylactic Effect
Compliance History
Ability to Pay
Respondent returned to compliance faster than requested
Adjustment: - 25% Adjustment: Adjustment: 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.”
“pro•phy•lac•tic 2: tending to prevent or ward off: preventative.”
Adjustments to the Base Penaltyprophylactic effect
Cooperation Prophylactic Effect
Compliance History
Ability to Pay
Respondent returned to compliance faster than requested
none
Adjustment: - 25% Adjustment: 0% Adjustment: Adjustment:
Adjustment for Compliance History
• Reduction of 5% for previous inspections without violations up to 10%.
• 15% reduction for current ISO 14001 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 Penaltycompliance history
Cooperation Prophylactic Effect
Compliance History
Ability to Pay
Respondent returned to compliance faster than requested
none Inspection 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 Penaltyability to pay
Cooperation Prophylactic Effect
Compliance History
Ability to Pay
Respondent returned to compliance faster than requested
none Inspection 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 -$8,250Prophylactic Effect $ 0Compliance 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 ViolationsViolations not independent
Violation Potential for Harm Extent of Deviation Number 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 ViolationsViolations not independent
Initial Penalty Intent Factor Base Penalty
$17,500 1.5 $26,250
Multiple ViolationsViolations occurring at different times
Violation Potential for Harm Extent of Deviation Number 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 ViolationsViolations occurring at different times
Initial Penalty Intent Factor Base Penalty
$17,500 1.5 $26,250
Multiday Violations
• The initial penalty for the first day of violation shall be determined as provided in Sections 66272.62 and 66272.63.
• 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
Violation Potential 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 Major 570 days 9/21/04-4/14/06
$14,250,000 $22,500
Multiday ViolationsOne approach
Violation Initial 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 ViolationsAn alternative approach
Violation Initial 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 $152,930 9/04-1/06, >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
12/06-4/06. 16-23 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 200 + 99 + 134 = 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: http://www.dtsc.ca.gov/LawsRegsPolicies /Policies/HazardousWaste/upload/HWMP_GuidanceDocument_EconomicBenefitNoncompliance.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
• 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)
Violation Economic 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)
Violation Economic Benefit
Using an unregistered hauler to transport hazardous waste 9/14/05, 1/906, 7/1/06
3 trips @ $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 drums @ $400 each = $9200. $9200 @ 5%/yr = $460.
Total = $4900 + $460 = $5,360
Total Base Penalty
# Violation Harm Deviation Stat. Max.
Base Penalty
Multi-Day Penalty
Economic Benefit
1-3
Training Mod. Major $200K $26,250 n/a $1,610
4 Storage Major Major 14.25M 152,930 $130,430 2,100
5 Trans-porting w/o registra-tion
Mod Major 75K 26,250 n/a 5,360
Total 205,430 9,070
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.