lisa brown, cal/epa february 2007 penalty calculations for non-hazardous waste aeos
TRANSCRIPT
Lisa Brown, Cal/EPA
February 2007
Penalty Calculations For Non-Hazardous Waste AEOs
What is there when there isn’t a matrix?
The law Your judgment Examples from other programs and/or your
neighbors The AEO TAG Some UPAs have their own matrixes for non haz
waste programs
The Law: HSC Section 25404.1.1(a)
Authorizes UPAs 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 (see Mickey’s class)
AEO Penalty Amounts (per day per violation)
HW- up to $25,000
SPCC- up to $5,000 up to $10,000 for second or repeat
violations
UST- minimum $500 to $5,000, up to $10,000 for monitoring systems or
leak detection tampering
AEO Penalty Amounts (per day per violation)
BP & Inventory- $2,000, raises to $5-25,000 if knowingly done
after prior notice
Cal/ARP $2,000 raises to $25,000 if knowingly done after
notice
AEO penalties do NOT apply to….
Minor violations [defined in HSC 25404(a)(3)] Unless not corrected or not certified corrected
Violations of UFC
HSC Section 25404.1.1(b)When setting an AEO penalty, the UPA shall consider:
Nature, circumstances, extent & gravity of violation
Violator’s past and present efforts to prevent, abate, or clean up
Violator’s ability to pay The deterrent effect the penalty has on both
the violator and the regulated community
Suggested Steps to Set an AEO Penalty
Step 1 What is the violation (s) Step 2 How many occurrences of each violation Step 3 Apply statutory penalty factors Step 4 Come up with penalty amount Step 5 Repeat as needed
What is the violation?
What statute or regulation section What is the penalty range in the statute?
How many occurrences of the violation?
More than one violation on the same day?
Example 10 drums w/o lids The same violation on more than one day?
Example: 10 drums w/o lids for 2 weeks The same violation at more than one location?
in the same facility?
in a different facility (same owner)?
Evidence Check
If multi day violations—are you sure you have evidence for the days other that the day you observed the violation?
Problem Area
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)
Possible adjustment for multiple violations (from haz waste matrix)
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.
One time vs. ongoing violations
Failure to submit a report (one day violation?)
Failure to train (one day, but per E’ee) Operating without a permit (everyday is a
violation) Operating without a designated operator
(everyday is a violation)
Statutory Penalty Factors “Nature, circumstances, extent & gravity of violation”
Penalty Factors :Nature & Extent of the Violation
How important is this requirement? Is it a new requirement? Degree of deviation from the requirement
Penalty Factors: “circumstances of the violation”
Effort to comply before & after violation Cooperation Knew or should have known better Any previous/current problems with regulatory
agencies Changes/unique circumstances
“Nature of the violation” includes Economic Benefit
Compliance costs money To be aware of the regulatory requirements To stay current on regulatory requirements Capital costs (equipment, testing, O&M) Staff costs (employees, training) Delays required to be in compliance before
you start a new activity or product
What Is Not Economic Benefit?
Economic Benefit does not include Accounting for ability to continue in business Don’t discount costs the violator incurred in
correcting the violation or cleanup
What to Consider in Determining Economic Benefit Time value of money Project/design alternatives Equipment costs - capital, shipping,
installation, taxes, labor Developed procedures
What to Consider (continued)
Labor costs – supervision and O&M
Training• What was
required?• What additional
training was needed?
Economic Benefit Steps
Determine what should have been done When and/or how often Estimate the type and cost of the actions,
distinguishdelayed costsavoided costs
Consider other economic benefits (e.g. continued production, early entry to market)
Do NOT adjust for expenditures to abate the effects
Avoided costs vs. Delayed costs
Avoided costs (EB is time value of money) Not filing BP for two years
Delayed costs (EB is the total cost +) E’ee training Equipment upgrade
Example
UST upgrade deadline 1998 In 1998 UST contractors prices went higher
as the deadline approached So upgrading in 1999 cost less than in
1998 Non upgraded stations made money in 1999
when should not have been open Gas Slurpies, beer, cigarettes
Too complicated for an AEO?
What you will hear–” I didn’t make any money”!
Net profit is only a part of economic benefit Economic benefit =
you did not spend money you were supposed to
You gained advantage by non compliance
Factor: Violator’s Ability to Pay
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 biz Some businesses cannot stay in biz and
comply with the law Gov’t cannot subsidize violators
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.
Does not requires that UPA figure out what the violator can pay
It’s a very broad concept
Factor: past and present efforts to prevent, abate, or clean up
Training programs? Is compliance encouraged? Do they go “beyond compliance” in other areas?
Factor: Deterrent effect of the penalty on the violator
Compliance costs money Deterrent effect on the violator
Economic benefit factors here also
Factor: Deterrent effect of the penalty on the regulated community
Is the penalty you want others to pay? You must be able to articulate and defend
this penalty in future AEOs Are you being fair to those who are in
compliance?
Deterrence—An economist’s approach
Probability of violation being detected If detected, probability of enforcement If enforcement action taken, probability of penalty Discount rate (interest) Time between date of violation and payment of penalty
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Ex: Initial Penalty Matrix – UST
Major Moderate Minimal
Major Maxi $5,000Avg $4,000Min $3,000
$3,000$2,500$2,000
$2,000$1,500$1,000
Moderate Max $3,000Avg $2,500Min $2,000
$2,000$1,500$1,000
$1,000$750$500
Minimal Max $2,000Avg $1,500Min $1,000
$1,000$500$500
$500$500$500
Ex: Initial Penalty Matrix – Biz Plan (1st time violator)
Major Moderate Minimal
Major Max $2,000Avg. $1,750Min. $1,500
$1,750$1,500$1,250
$1,500$1,250$1,000
Moderate Max $1,500Avg $1,250Min $1,000
$1,250$1,000$750
$1,000$750$375
Minimal Max $1,000Avg $750Min $500
$750$500$375
$375$250$0
Caveat!
If you use a matrix it must be designed and you must consider the statutory factors