R317-1-8. Penalty Criteria for Civil Settlement Negotiations

  8.1 Introduction. Section 19-5-115 of the Water Quality Act provides for penalties of up to $10,000 per day for violations of the act or any permit, rule, or order adopted under it and up to $25,000 per day for willful violations. Because the law does not provide for assessment of administrative penalties, the Attorney General initiates legal proceedings to recover penalties where appropriate.

  8.2 Purpose And Applicability. These criteria outline the principles used by the State in civil settlement negotiations with water pollution sources for violations of the UWPCA and/or any permit, rule or order adopted under it. It is designed to be used as a logical basis to determine a reasonable and appropriate penalty for all types of violations to promote a more swift resolution of environmental problems and enforcement actions.

  To guide settlement negotiations on the penalty issue, the following principles apply: (1) penalties should be based on the nature and extent of the violation; (2) penalties should at a minimum, recover the economic benefit of noncompliance; (3) penalties should be large enough to deter noncompliance; and (4) penalties should be consistent in an effort to provide fair and equitable treatment of the regulated community.

  In determining whether a civil penalty should be sought, the State will consider the magnitude of the violations; the degree of actual environmental harm or the potential for such harm created by the violation(s); response and/or investigative costs incurred by the State or others; any economic advantage the violator may have gained through noncompliance; recidivism of the violator; good faith efforts of the violator; ability of the violator to pay; and the possible deterrent effect of a penalty to prevent future violations.

  8.3 Penalty Calculation Methodology. The statutory maximum penalty should first be calculated, for comparison purposes, to determine the potential maximum penalty liability of the violator. The penalty which the State seeks in settlement may not exceed this statutory maximum amount.

  The civil penalty figure for settlement purposes should then be calculated based on the following formula: CIVIL PENALTY = PENALTY + ADJUSTMENTS - ECONOMIC AND LEGAL CONSIDERATIONS

  PENALTY: Violations are grouped into four main penalty categories based upon the nature and severity of the violation. A penalty range is associated with each category. The following factors will be taken into account to determine where the penalty amount will fall within each range:

  A. History of compliance or noncompliance. History of noncompliance includes consideration of previous violations and degree of recidivism.

  B. Degree of willfulness and/or negligence. Factors to be considered include how much control the violator had over and the foreseeability of the events constituting the violation, whether the violator made or could have made reasonable efforts to prevent the violation, whether the violator knew of the legal requirements which were violated, and degree of recalcitrance.

  C. Good faith efforts to comply. Good faith takes into account the openness in dealing with the violations, promptness in correction of problems, and the degree of cooperation with the State.

  Category A - $7,000 to $10,000 per day. Violations with high impact on public health and the environment to include:

  1. Discharges which result in documented public health effects and/or significant environmental damage.

  2. Any type of violation not mentioned above severe enough to warrant a penalty assessment under category A.

  Category B - $2,000 to $7,000 per day. Major violations of the Utah Water Pollution Control Act, associated regulations, permits or orders to include:

  1. Discharges which likely caused or potentially would cause (undocumented) public health effects or significant environmental damage.

  2. Creation of a serious hazard to public health or the environment.

  3. Illegal discharges containing significant quantities or concentrations of toxic or hazardous materials.

  4. Any type of violation not mentioned previously which warrants a penalty assessment under Category B.

  Category C - $500 to $2,000 per day. Violations of the Utah Water Pollution Control Act, associated regulations, permits or orders to include:

  1. Significant excursion of permit effluent limits.

  2. Substantial non-compliance with the requirements of a compliance schedule.

  3. Substantial non-compliance with monitoring and reporting requirements.

  4. Illegal discharge containing significant quantities or concentrations of non toxic or non hazardous materials.

  5. Any type of violation not mentioned previously which warrants a penalty assessment under Category C.

  Category D - up to $500 per day. Minor violations of the Utah Water Pollution Control Act, associated regulations, permits or orders to include:

  1. Minor excursion of permit effluent limits.

  2. Minor violations of compliance schedule requirements.

  3. Minor violations of reporting requirements.

  4. Illegal discharges not covered in Categories A, B and C.

  5. Any type of violations not mentioned previously which warrants a penalty assessment under category D.

  ADJUSTMENTS: The civil penalty shall be calculated by adding the following adjustments to the penalty amount determined above: 1) economic benefit gained as a result of non-compliance; 2) investigative costs incurred by the State and/or other governmental levels; 3) documented monetary costs associated with environmental damage.

  ECONOMIC AND LEGAL CONSIDERATIONS: An adjustment downward may be made or a delayed payment schedule may be used based on a documented inability of the violator to pay. Also, an adjustment downward may be made in consideration of the potential for protracted litigation, an attempt to ascertain the maximum penalty the court is likely to award, and/or the strength of the case.

  8.4 Mitigation Projects. In some exceptional cases, it may be appropriate to allow the reduction of the penalty assessment in recognition of the violator's good faith undertaking of an environmentally beneficial mitigation project. The following criteria should be used in determining the eligibility of such projects:

  A. The project must be in addition to all regulatory compliance obligations;

  B. The project preferably should closely address the environmental effects of the violation;

  C. The actual cost to the violator, after consideration of tax benefits, must reflect a deterrent effect;

  D. The project must primarily benefit the environment rather than benefit the violator;

  E. The project must be judicially enforceable;

  F. The project must not generate positive public perception for violations of the law.

  8.5 Intent Of Criteria/Information Requests. The criteria and procedures in this section are intended solely for the guidance of the State. They are not intended, and cannot be relied upon to create any rights, substantive or procedural, enforceable by any party in litigation with the State.

  8.6 Expedited Settlement Offer (ESO). Only enforcement cases classified as Category C or Category D violations may qualify for an ESO in lieu of the penalty process found in Subsection R317-1-8.3 Penalty Calculation Methodology. Except in cases where recidivism has been established by a pattern of non-compliance, an ESO may be used when violations are readily identifiable, readily correctable, and do not cause significant harm to human health or the environment.

  A. A violator is not compelled to sign an ESO. If the violator does not sign the ESO, then the penalty will be recalculated according to Subsection R317-1-8.3.

  B. The violator has 30 days total from receipt of the ESO to sign and return the ESO to the division. If the violator signs the ESO, then the violator must comply with its conditions within 15 days after receipt of the final ESO signed by the director, or as otherwise designated in the ESO. If the violator signs the ESO they agree to waive:

  1. the right to contest the findings and specified penalty amount;

  2. the opportunity for an administrative hearing pursuant to Section 19-1-301; and

  3. the opportunity for judicial review.

  C. Deficiency Form. A deficiency form is used to list the violations and corresponding penalties. Multiple violations at a site are totaled providing a final penalty commensurate with the extent of non-compliance. Penalties developed for the list of program violations on the deficiency form should be estimated at about 60% of the penalty as calculated in Subsection R317-1-8.3.