Harm Worksheet

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					 Determining Penalties for
Hazardous Waste Violations

        Jim McCammon
             DTSC
       February 15, 2007
   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 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 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   Extent of   # of        Statutory   Initial   Intent     Base     Additional   Economic
#                             Harm         Deviation   Times       Maximum     Penalty   Factor   Penalty   Amounts for    Benefit
                                                       Violation                                             Multiday
                                                       Occurred                                              Violations

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 1
             citation, description of violation

#        Citation                      Violation


1   T22, CCR §           Respondent stored three drums
    66264.176            of ignitable wastes within 50 feet
                         of the property line
2   T22, CCR §           Failure to separate incompatibles,
    66264.177(c)         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 2
                    potential for harm

        Violation            Potential for Harm


Respondent stored three      Moderate: drums in
drums of ignitable           good condition, no fuel
wastes within 50 feet of     or sources of ignition
the property line            nearby.
Failure to separate          Major: potential threat
incompatibles, waste         from mixing cyanide and
acid stored with cyanide     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

        Violation             Extent of Deviation


Respondent stored three Moderate: Three drums
drums of ignitable       out of 15 in storage area
wastes within 50 feet of stored improperly.
the property line

Failure to separate           Major: Requirement to
incompatibles, waste          separate incompatibles
acid stored with cyanide      completely ignored.
              Worksheet, Step 4
                    statutory maximum

        Violation          # of Times   Statutory
                            Violation   Maximum
                           Occurred
Respondent stored             one           $25,000
three drums of ignitable
wastes within 50 feet of
the property line


Failure to separate           one           $25,000
incompatibles, waste
acid stored with cyanide
           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                     Potential for Harm
Deviation
               Major             Moderate          Minimal

               25,000              20,000           15,000
 Major        (22,000)            (17,500)         (10,500)
               20,000              15,000           6,000
               20,000              15,000           6,000
Moderate      (17,500)            (10,500)         (4,000)
               15,000              6,000            2,000
               15,000               6,000           2,000
Minimal       (10,500)             (4,000)         (1,000)
               6,000                2,000             0
                 Worksheet, Step 5
                             initial penalty

Violation                 Potential for         Extent of       Initial
                          Harm                  Deviation       Penalty
Respondent stored         Moderate: drums       Moderate:       $10,500
three drums of            in good condition,    Three drums
ignitable wastes within   no fuel or sources    out of 15 in
50 feet of the property   of ignition nearby.   storage area
line                                            stored
                                                improperly
Failure to separate       Major: potential      Major:          $22,500
incompatibles, waste      threat from           Requirement
acid stored with          mixing cyanide        to separate
cyanide                   and acid very         incompatibles
                          high, employees       completely
                          at risk.              ignored.
    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       Violation was a result of intentional
percent                              failure to comply
            Worksheet, Step 6
                 adjustment for intent

             Violation                   Intent Factor


Respondent stored three drums of               1
ignitable wastes within 50 feet of
the property line

Failure to separate incompatibles,             1
waste acid stored with cyanide
          Adjustments for
         Economic Benefit
• Increase the initial penalty by the
  amount of economic benefit gained.
• Includes:
  - Avoided costs.
  - Delayed costs.
  - Increased profits.
  - Avoided interest.
                Simple Penalty Calculation
                   Total Base Penalty
                            No. of
#   Potential   Extent of   times       Statutory   Initial   Intent Base       Multiday   Economic
    for Harm    Deviation   violation   Maximum     Penalty   Factor Penalty    amounts    Benefit
                            occurred
    Moderate    Moderate    1           $25,000     $10,500 1        $10,500    n/a        None
1




    Major       Major       1           $25,000     $22,500 1        22,500     n/a        None
2




                                                                Total $33,000                 0
    Adjustments to Total Base Penalty
•   Cooperation
•   Prophylactic Effect
•   Compliance History
•   Ability to Pay
        Adjustment for Cooperation
Degree of                           Adjustment Factor      Circumstance
Cooperation
Extraordinary                       Downward adjustment    Violator exceeded minimum
                                                           requirements in returning to
                                    of up to 25 percent    compliance or returned to
                                                           compliance faster than
                                                           requested.

Good Faith                          No adjustment          Violator demonstrated a
                                                           cooperative effort.

Recalcitrance                       Upward adjustment of   Violator failed to cooperate,
                                                           delayed compliance, created
                                    up to 25 percent       unnecessary obstacles to
                                                           achieving compliance, or the
                                                           compliance submittal failed to
                                                           meet requirements.

Refusal                             Upward adjustment of   Violator intentionally failed to
                                                           return to compliance or to allow
(This does not include refusal to   50 to 100 percent      clean-up operations to take
allow inspections.)                                        place.
   Adjustments to the Base Penalty
                               cooperation
Cooperation         Prophylactic     Compliance    Ability to Pay
                    Effect           History

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 Penalty
                           prophylactic effect
Cooperation         Prophylactic     Compliance    Ability to Pay
                    Effect           History

Respondent          none
returned to
compliance faster
than requested




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 Penalty
                           compliance history
Cooperation         Prophylactic    Compliance           Ability to Pay
                    Effect          History

Respondent          none            Inspection in 2004
returned to                         found no
compliance faster                   violations
than requested




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
Cooperation         Prophylactic      Compliance          Ability to Pay
                    Effect            History

Respondent          none              Inspection in 2004 No information
returned to                           found no           available
compliance faster                     violations
than requested




Adjustment: - 25% Adjustment: 0%      Adjustment: -5% -   Adjustment: 0%
-$8,250                               $1,650
             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
Violation           Potential for Harm      Extent of Deviation   Number of    Statutory
                                                                  days         Maximum
                                                                  violation
                                                                  occurred
Failure to train   Moderate: Waste is       Major:                 At least     $25,000
employees who      not highly hazardous     Requirement has          one
manage             or mobile, is properly   been completely       employee
hazardous waste    labeled and              ignored for 2 years
                   containerized, is
Failure to provide produced at a                                    At least      6x
annual reviews     relatively low rate                            two annual   $25,000 =
of training, at    (about 2                                        trainings   $150,000
least 3            drums/month)                                       for 3
employees                                                         employees
Failure to                                                            1         $25,000
maintain training
records
                  Multiple Violations
                   Violations not independent
Initial Penalty        Intent Factor    Base Penalty

       $17,500                  1.5             $26,250
                      Multiple Violations
                   Violations occurring at different times
Violation           Potential for Harm      Extent of Deviation   Number of   Statutory
                                                                  days        Maximum
                                                                  violation
                                                                  occurred
Transporting        Moderate: Waste not     Major:                  3 days     $75,000
hazardous waste     highly hazardous, not   Requirement to
without             very mobile,            use registered
registration        moderate amounts;       hauler completely
9/14/05, 1/9/06,    transporter did not     ignored
7/1/06              have hazardous
                    waste insurance.
             Multiple Violations
        Violations 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   Extent of   Number     Statutory     Initial
                   for Harm    Deviation   of Days    Maximum       Penalty
Storage without    Major       Major       570 days   $14,250,000   $22,500
authorization 23                           9/21/04-
drums of waste                             4/14/06
etchant with
210,000 ppm Cu,
143,000 ppm Pb,
25,000 ppm Zn
              Multiday Violations
                         One approach
Violation          Initial   Base      Additional Amounts for
                   Penalty   Penalty   Multiday Violations
Storage without    $22,500   $278,550 $22,500 x .02 = $450
authorization 23                      $450 x 569 days =
drums of waste                        $256,050
etchant with
210,000 ppm Cu,
143,000 ppm Pb,
25,000 ppm Zn
               Multiday Violations
                    An alternative approach
Violation           Initial    Base      Additional Amounts for
                    Penalty    Penalty   Multiday Violations
Storage without      $22,500   $152,930 9/04-1/06, >6 drums,
authorization 23                        Min/Maj. 121 days. $4000 x
drums of waste                          .02 = $80. $80 x 121 days =
etchant with 210,000                    $9680
ppm Cu, 143,000                         1/06-12/06, 6-15 drums,
ppm Pb, 25,000 ppm                      Mod/Maj. 345 days.
Zn                                      $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
  Jan.--- (200 days) ---June
                  May---(99 days)---Aug.
                             July---(135 days)---Nov.
                Days in continuous violation



Total violation time 330 days.
(Not 200 + 99 + 134 = 433 days.)
               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_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)
           Violation                         Economic Benefit

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

Using an unregistered hauler 3 trips @ $700/trip = $2100
to transport hazardous waste
9/14/05, 1/906, 7/1/06

Storage without authorization   Avoided costs of missed shipment
23 drums of waste etchant       dates:
with                            9/04,12/04, 3/05, 6/05, 9/05, 12/05, 3/05
210,000 ppm Cu,                 7 shipments x $700 = $4900
143,000 ppm Pb,
25,000 ppm Zn                   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.    Base      Multi-Day   Economic
#                                    Max.     Penalty   Penalty     Benefit
1-   Training    Mod.    Major       $200K    $26,250   n/a         $1,610
3

4    Storage     Major   Major       14.25M   152,930   $130,430    2,100


5    Trans-      Mod     Major       75K      26,250    n/a         5,360
     porting
     w/o
     registra-
     tion

                                        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.

				
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