jim mccammon dtsc february 15, 2007 determining penalties for hazardous waste violations

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.


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.)


Section 66272.62--Determining the Initial Penalty:

• Potential for Harm

• Extent of Deviation

• Determination of Initial Penalty Matrix.


Section 66272.63--Initial penalty adjustment

• Intent

• Economic Benefit

• Statutory Maximum


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.


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.


Section 66272.65--Multiday Violations.

• Continuous violations, not intermittent

• Penalty for first day calculated per §66272.62

• Remaining days 2% of first day penalty.


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)]


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


Section 66272.68--Adjustments to the Total Base Penalty

• Cooperation

• Prophylactic Effect

• Compliance History

• Ability to Pay


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


Moderate: drums in good condition, no fuel or sources of ignition nearby.


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


Moderate: Three drums out of 15 in storage area stored improperly.


Major: Requirement to separate incompatibles completely ignored.

Worksheet, Step 4statutory maximum

Violation # of Times Violation

Occurred

Statutory Maximum


one $25,000


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


Extent of Deviation

Initial Penalty


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


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


1


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


Compliance History

Ability to Pay


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


Compliance History

Ability to Pay


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


Compliance History

Ability to Pay


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


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


$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


$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

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)

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.

jim mccammon dtsc february 15, 2007 determining penalties for hazardous waste violations

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