2008 Draft Update to the California State Water Resources Control Board’s Water Quality Enforcement Policy
February 4, 2008
Abigail Leah "Abby" Ramsden- San Francisco
Janelle M. Smith- San Francisco
The State Water Resources Control Board’s Enforcement Policy for its Water Quality Program has not been updated since February 2002. On January 8, 2008, the State Board issued a Draft Water Quality Enforcement Policy, which is to update the existing policy. A public workshop on the proposed enforcement policy is scheduled for February 20, 2008.
The proposed enforcement policy represents an important step by the State Board toward taking a firmer hand in imposing consistent enforcement policies across all regional boards. The primary goals of the enforcement policy include:
- creating a framework for identifying and investigating instances of noncompliance with the Porter-Cologne Water Quality Control Act
- prescribing enforcement actions that are appropriate in relation to the nature and severity of the violation
- prioritizing enforcement resources to achieve maximum environmental benefits
While in the past it has been common practice to address enforcement concerns on a case-by-case basis with individual regional boards, the proposed enforcement policy represents a new point of departure for structuring settlements and resolving enforcement disputes. This alert outlines the Draft Water Quality Enforcement Policy and highlights key changes from the 2002 version of the policy.
Enforcement and Compliance Framework
The policy outlines a framework designed to ensure “fair, firm and consistent regulation and enforcement” to ensure compliance and to prioritize violations. The framework requires the regional and State Boards to implement consistent and valid methods to determine compliance with enforceable orders and to initiate enforcement as soon as possible after discovery of a violation. Regional boards’ orders must be consistent except as appropriate for the specific circumstances related to the discharge and the boards must maintain examples of standard enforceable orders.
Unlike the 2002 version of the policy, the proposed framework also requires the boards to rate violations as either Class I, II or III based on set criteria (with Class I having the highest priority). This structure will allow the boards to more effectively utilize enforcement resources and to identify repeat offenders to help prioritize enforcement. Other factors relevant to enforcement priority include the magnitude of the violation, evidence of willful misconduct, the applicability of mandatory minimum penalty provisions, and the potential to abate the pollution. The policy encourages informal enforcement and stresses that formal enforcement actions should be reserved for the highest priority violations.
Standard compliance assurance activities include the review of self-monitoring reports, facility inspections, complaints and complaint investigations, and file review.
Enforcement Actions and Procedures
After setting forth a basic enforcement and compliance framework, the proposed policy goes on to outline the universe of informal and formal enforcement options available to the regional and State Boards. Informal enforcement actions are not defined by statute, and include oral enforcement actions, enforcement letters, and notice of violation letters – the most significant level of informal enforcement which should be used only when there has been an actual violation.
Formal enforcement actions are statutorily recognized actions to address a violation or threatened violation of water quality laws, regulations, policies or orders. Such actions include:
- notices to comply
- notices of stormwater noncompliance
- technical reports and investigations
- cleanup and abatement orders
- various types of time schedule orders (which require the discharger to submit a time schedule which sets forth the actions the discharger will take to address violations)
- cease and desist orders
- modification or rescission of waste discharge requirements
- administrative civil liabilities
The policy also notes that there are mandatory minimum penalties for some types of violations, and that the boards may refer violations to the State Attorney General for civil enforcement actions, or in extreme cases, to the appropriate county or city district attorney for criminal prosecution. Violations may also be referred to federal authorities.
The policy also highlights specific enforcement procedures for failure to pay fees or liabilities, and explains that boards should not deviate from these procedures unless there are extenuating circumstances that are documented in the discharger/facility record. The proposed policy updates these procedures from what was outlined in the 2002 version.
Changes to Specific Enforcement Procedures
A number of specific changes to enforcement procedures in the proposed policy are especially noteworthy. To begin, the proposed policy includes new detail concerning violations at federal facilities. For such violations, water boards must now issue a time schedule order pursuant to Section 13308. The order should prescribe a civil penalty based on the amount necessary to achieve future compliance for penalty actions at federal facilities (as opposed to an ACL up to $10,000 per day under the 2002 version). The policy also adds guidelines for non-penalty actions at U.S. Department of Defense facilities, which are governed by a 1992 Memorandum of Agreement that specifies a three-level dispute-resolution process.
The proposed policy also includes additional detail regarding the calculation of monetary assessments in Administrative Civil Liabilities (ACLs). This revised calculation method, including the denial of economic benefit to a violator, includes a strong policy statement: the goal is to “ensure that the monetary liability penalty serves as a deterrent to illegal activity. Such illegal activity can not be viewed by the discharger or the regulated community as an acceptable risk of doing business.”
To this end, the proposed policy now includes a more detailed calculation of the “base liability” amount for violations. This calculation incorporates the nature of the discharge liability and the resulting economic harms to beneficial uses of the receiving water. This amount is then adjusted by factors calculated based on the discharger’s conduct. Finally, it is adjusted by a calculation based on the economic benefit to the discharger from noncompliance and a consideration of what level of liability is necessary to deter other dischargers considering similar conduct. As before, the final ACL may be reduced by consideration of the discharger’s ability to pay and remain in business. Although the statutory maximum amount remains at $10,000 per day, the minimum liability amount now only applies in the case of mandatory minimum penalties under Water Code
Section 13385.
The proposed policy also includes additional detail regarding Supplemental Environmental Projects (SEPs). The policy clarifies the SEP’s purpose as an “adjunct” tool within the enforcement program, instead of being a primary goal of the program. While SEPs may form a part of settlement agreements, they may not become the basis or reason for bringing an enforcement action. The SEP policy now specifies that that there are two types of SEPs: payment SEPs and performance SEPs. Payment SEPs involve payment of funds to a third party; performance SEPs require ongoing performance of specific work on the discharger’s behalf. Third-party
entities who receive payment SEPs must be independent from both the discharger and the water board. The qualification criteria for SEPs have been modified to highlight that a SEP may not be proposed for a project that a discharger was already required to perform. Finally, the policy specifies the accounting treatment for SEPs and sets out procedural safeguards regarding imposition of SEPs.
The proposed policy briefly addresses Compliance Projects (CPs) as well, and specifies that CPs should only be considered in the context of mandatory minimum penalties, where authorized by statute. While the 2002 policy allowed the cost of returning to or maintaining compliance (the estimated cost of the CP) to be included in the ACL as an additional monetary assessment when the underlying problem causing a violation was not corrected, the 2008 version no longer allows this to occur under most circumstances. It states that “the costs of projects to bring a discharger or facility into compliance are not appropriate for consideration of a suspended liability in ACLs” unless provided for by statute. The appropriate method to compel compliance is through an enforcement order with injunctive terms such as a cleanup and abatement order (CAO), cease and desist order (CDO), or time schedule order.
Finally, while the 2002 policy merely encouraged discharger self-auditing and voluntary disclosure of violations, the proposed policy states that dischargers are “expected and/or required to report all violations … immediately upon [discovery],” in a format specified by the water boards. As before, voluntary disclosure of violations not otherwise required to be reported shall be considered by the water boards when determining an appropriate enforcement response.
New Developments
The proposed policy contains a new section concerning projects that enable a discharger to make capital or operational improvements beyond those required by law. These are called Enhanced Compliance Actions (ECAs). If a discharger agrees to implement such improvements, a portion of the settlement amount assessed as part of an enforcement action may be suspended.
The proposed policy sets out requirements for ECAs, such as clearly defined project goals in the ACL order, reporting requirements and treatment of suspended amounts after successful or unsuccessful completion of the ECA. The ACL order must clearly state that payment of a previously suspended amount (in the event of failure to complete the ECA) does not relieve a discharger from its independent obligation to take necessary actions to achieve compliance. Finally, the ECA scheme states that an ECA should not reduce a discharger’s monetary liability below the amount of economic benefit the discharger received from its unauthorized activity.
Conclusion
As described in this alert, the proposed policy represents a move toward consistent and diligent enforcement, with a focus on predictability and appropriate deterrence. The water board’s focus on these features should, going forward, create a fair and transparent enforcement scheme that will allow dischargers to operate and resolve disputes with increased confidence.
The revised policy remains a draft, pending submission of comments and the outcome of the workshop scheduled for February 20, 2008.
If you would like to make any comments or participate in the workshop, or for more information, email Abigail Ramsden or Janelle Smith at abigail.ramsden@hklaw.com or janelle.smith@hklaw.com, respectively, or call toll free, 1.888.688.8500.