R655-14-14. Procedures For Determining Administrative Penalties, Enforcement Costs and Water Replacement

(1) An administrative fine shall not exceed the maximum amounts established by statute at Subsection 73-2-26 (1), as such may be amended.

(2) For violations per Subsections 73-2-25(2)(a)(i) through (vii), the following procedures shall be employed:

(a) Administrative Fines: This penalty shall be based primarily on the actual economic benefit estimated to result or potentially to result from the violation. The economic benefit may come in the form of a direct economic benefit as income derived directly from the unlawful activity or it may come in the form of avoided costs that would otherwise be incurred in order to comply with a specific statute, rule, notice or order from the State Engineer. The administrative fine assessment procedure used (direct economic benefit or avoided costs) will be that which produces the greater fine. In order to implement the punitive intent of this penalty, a multiplier is to be calculated and applied to the estimated actual direct economic benefit or avoided costs.

(i) "Direct Economic Benefit" Initial Administrative Fine Calculations. The initial administrative fine shall be calculated in the following manner:

(A) The daily economic benefit is equal to the gross income that is or could potentially be realized from the violation (without regard for production costs, taxes, etc.) divided by the number of days of violation. For water right violations, the daily economic benefit is calculated using the gross income through a full period of beneficial use, divided by the number of days in the period of beneficial use.

(B) The daily administrative fine is equal to the product of the daily economic benefit and the multiplier to be calculated as described in paragraph (iii) below.

(C) The initial administrative fine is equal to the product of the daily administrative fine and the number of days of continuing violation to the date the IO is issued, but shall not exceed the product of the highest calculated total realized economic benefit and the penalty multiplier.

(D) The total initial administrative fine will have a maximum value of four times the direct economic benefit or the statutory maximum fine, whichever is less.

(ii) The multiplier for penalties based on direct economic benefit shall be calculated utilizing the following statutory considerations. (Statutorily required considerations relative to the quantity of water taken and the gravity and impact of the violation are accommodated in the calculations of the economic "benefit" and "injury.")

(A) Whether the violation was committed knowingly or unknowingly;

(B) The economic injury to others;

(C) The length of time over which the violation has occurred; and

(D) The violator's efforts to comply.

(iii) The penalty multiplier is the sum of the points calculated using Table 1:

TABLE 1

DIRECT ECONOMIC BENEFIT PENALTY MULTIPLIER

CONSIDERATION / CRITERIA MULTIPLIER POINTS

Knowing or unknowing violation

  Knowing . . . . . . . . . . . . . . . . . . . . . .1.00

  Unknowing . . . . . . . . . . . . . . . . . . . . .0.00

Economic injury to others

  Greater than $15,000 . . . . . . . . . . . . 1.00

  $10,000 to $15,000 . . . . . . . . . . . . . . .0.75

  Less than $10,000 or injury is not measurable or

   there is no evidence others suffered economic

   injury . . . . . . . . . . . . . . . . . . . . . 0.50

Length of violation

  Three (3) or more years of violation . . . . . . . 1.00

  More than one (1), but less that three (3)

   years of violation . . . . . . . . . . . . . . . .0.75

  One (1) year or less of violation . . . . . . . . .0.50

Violator's efforts to comply prior to Initial Order

  Violator has made no efforts to comply . . . . . . 1.00

  Violator has made limited but ineffective

   efforts to comply . . . . . . . . . . . . . . . . 0.75

  Violator has made reasonable and partially

   effective efforts to comply . . . . . . . . . . . 0.50

  Violator fully complied prior to issuance

   of Initial Order . . . . . . . . . . . . . . . . 0.00

(iv) "Avoided Cost Economic Benefit" Initial Administrative Fine Calculation: In some cases, including but not limited to violations under Subsections 73-2-25 (2)(a) (iii) through (vii), an economic benefit may result from an avoided cost of compliance with a notice or order from the State Engineer, or from failure to obtain a necessary approval, permit or license. In the case of a failure to comply with a prior notice or order, the daily administrative fine commences with the day following the compliance date in the notice or order. In the event of a failure to obtain a necessary approval, permit or license, the period of violation is deemed to begin on the first day the unauthorized activity is commenced. The economic benefit and daily administrative fine for an "avoided cost economic benefit" shall be calculated in the following manner:

(A) The total realized economic benefit is equal to the highest calculated avoided costs of failing to implement specific actions required by a statute, rule, notice or order from the State Engineer.

(B) The daily administrative fine is equal to the product of $20 or 5% of the total realized economic benefit, whichever is greater, and the penalty multiplier to be calculated as described in paragraph (vi), below.

(C) The initial administrative fine is equal to the product of the daily administrative fine and the number of days of continuing violation preceding the date of the IO, but shall not exceed the product of the highest calculated total realized economic benefit and the penalty multiplier.

(D) The total initial administrative fine will have a maximum value of three times the economic benefit or the statutory maximum fine, whichever is less.

(v) The statutory considerations applicable to producing the multiplier for an avoided cost economic benefit are: (Statutorily required considerations relative to the quantity of water taken and the gravity and impact of the violation are accommodated in calculations of the economic "benefit" and "injury.").

(A) Whether the violation was committed knowingly or unknowingly;

(B) The economic injury to others; and

(C) The violator's efforts to comply.

(vi) The penalty multiplier is the sum of the points resulting from Table 2:

TABLE 2

AVOIDED COST ECONOMIC BENEFIT PENALTY MULTIPLIER

CONSIDERATION / CRITERIA MULTIPLIER POINTS

Knowing or unknowing violation

  Knowing. . . . . . . . . . . . . . . . . . . . .1.00

  Unknowing . . . . . . . . . . . . . . . . . . . 0.00

Economic injury to others

  Greater than $15,000. . . . . . . . . . . . .1.00

  $10,000 to $15,000 . . . . . . . . . . . . .0.75

  Less than $10,000 or injury is not measurable

   or there is no evidence others suffered

   economic injury . . . . . . . . . . . . . . . .0.50

Violator's efforts to comply prior to Initial Order

  Violator has made no efforts to comply . . . . .1.00

  Violator has made limited but ineffective

   efforts to comply . . . . . . . . . . . . . . .0.75

  Violator has made reasonable and partially

   effective efforts to comply . . . . . . . . . .0.50

  Violator fully complied prior to issuance

   of Initial Order . . . . . . . . . . . . . . . 0.00

(b) Replacement of Water: This penalty will be initially calculated as the product of 100% of the amount unlawfully taken and the penalty multiplier previously calculated, but not to exceed 200% of that unlawfully taken. If replacement of water unlawfully taken is deemed to be infeasible by the Enforcement Engineer or the Presiding Officer, this penalty will not be further considered.

(c) Reimbursement of Enforcement Costs: This penalty will be initially based on a standard requiring 100% reimbursement of the State Engineer's enforcement costs to the date of the IO.

(3) For violations related to unlawful natural stream channel alteration or dam safety regulations per Subsections 73-2-25(1)(a)(vi) and (vii), the following procedures shall be employed:

(a) Daily Administrative Fine: All enforcement activities for unlawful natural stream alteration or dam safety violations must statutorily result from violation of a prior notice or order. Statute provides for a daily administrative fine with the day following the compliance date in the notice/order being counted as the first day of violation. The calculated daily administrative fine would apply to violations continuing beyond the compliance date set forth in the notice or order. The economic benefit and daily administrative fine shall be calculated in the following manner:

(i) For stream alteration and dam safety violations, there may be a direct economic benefit, or there may be an avoided cost economic benefit deriving from:

(A) Initiating an activity without the benefit of proper permitting and/or,

(B) Failing to implement specific actions required by a notice, order or permit from the State Engineer.

(ii) The daily administrative fine is equal to the product of $20 or 5% of the total realized economic benefit, whichever is greater, and the multiplier to be calculated as described in paragraph (iii), below.

(iii) The penalty multiplier is calculated as the sum of the points from Table 3 or Table 4, as may be appropriate:

TABLE 3

STREAM ALTERATION PENALTY MULTIPLIER

CONSIDERATION / CRITERIA MULTIPLIER POINTS

Knowing or unknowing violation

  Knowing . . . . . . . . . . . . . . . . . . . . 1.00

  Unknowing . . . . . . . . . . . . . . . . . . . 0.00

Gravity of violation

  Natural stream environment harmed to

   significant levels not readily

   reversible by mitigation efforts . . . . . . . 1.00

  Natural stream environment harmed to moderate

  levels partially reversible by

   mitigation efforts . . . . . . . . . . . . . . 0.75

  Natural stream environment harmed to minor levels

  readily reversible by mitigation efforts. . .0.50

Violator's efforts to comply prior to Initial Order

  Violator has made no efforts to comply . . . . .1.00

  Violator has made no reasonable or effective

   efforts to comply . . . . . . . . . . . . . . .0.75

  Violator has made reasonable and partially

   effective efforts to comply . . . . . . . . . .0.50

  Violator achieved full compliance prior to

   issuance of Initial Order . . . . . . . . . . .0.00

TABLE 4

DAM SAFETY PENALTY MULTIPLIER

CONSIDERATION / CRITERIA MULTIPLIER POINTS

Knowing or unknowing violation

  Knowing . . . . . . . . . . . . . . . . . . . . 1.00

  Unknowing . . . . . . . . . . . . . . . . . . . 0.00

Gravity of violation

  Failure to comply with a notice or order for

   a high-hazard or moderate-hazard dam:

    1) Related to building, enlarging or

   substantially altering same without prior

   approval or authorization; OR

    2) Addressing an existing unsafe condition . .1.00

  Failure to comply with a notice or order for

   a high-hazard or moderate-hazard dam:

    1) Addressing a developing unsafe condition OR

    2) Requiring monitoring or critical dam

   performance indicators; OR

   Failure to prepare and file acceptable required

   operational documents, OR

   Failure to comply with a notice or order for

   a low-hazard dam related to building, enlarging

   or substantially altering same without prior

   authorization . . . . . . . . . . . . . . . . .0.75

  Failure to comply with a notice or order for

   a high-hazard or moderate-hazard dam related

   to routine operation or maintenance activities, OR

  Failure to comply with a notice or order for

   a low-hazard dam to address an existing or developing

   unsafe condition . . . . . . . . . . . . . . . 0.50

  Violator's efforts to comply prior to Initial Order

  Violator has made no efforts to comply . . . . .1.00

  Violator has made limited reasonable or

   effective efforts to comply . . . . . . . . . .0.75

  Violator has made reasonable and partially

   effective efforts to comply . . . . . . . . . .0.50

  Violator achieved full compliance prior to

   issuance of Initial Order . . . . . . . . . . .0.00

(iv) The total administrative fine shall not exceed the product of the highest calculated total realized economic benefit and the penalty multiplier.

(b) Reimbursement of Enforcement Costs is initially based on a standard requiring 100% reimbursement of the State Engineer's enforcement costs to the date of the Initial Order.

(4) For violations under Subsection 73-2-25(2)(a)(viii) related to failure to submit a report required by Section 73-3-25, the following procedures shall be employed:

(a) The daily administrative fine is equal to $5.00.

(b) The number of days of continuing violation commences 90 days after the day on which the well driller license lapses.

(c) The initial administrative fine is equal to the product of the daily administrative fine and the number of days of continuing violation to the date the IO is issued, up to a maximum fine of $200.

(d) The total administrative fine shall not exceed the product of the daily administrative fine and the number of days of continuing violation, up to a maximum fine of $200.

(e) Reimbursement of enforcement costs is initially based on a standard requiring 100% reimbursement of the State Engineer's enforcement costs to the date of the Initial Order.

(5) For violations under Subsection 73-2-25(2)(a)(ix) related to engaging in well drilling without a license required by Section 73-3-25, the following procedures shall be employed:

(a) The direct economic benefit is equal to the gross income that is or could potentially be realized (without regard for production costs, taxes, etc.) from engaging in well drilling (as defined herein) without a license.

(b) The total initial administrative fine is equal to the product of the direct economic benefit resulting from the violation and the penalty multiplier described in paragraph (c) below.

(c) The penalty multiplier is calculated as the sum of the points from Table 5.

TABLE 5

WELL DRILLING PENALTY MULTIPLIER

CONSIDERATION/ CRITERIA . . . MULTIPLIER POINTS

Knowing or unknowing violation

  Knowing . . . . . . . . . . . . . 1.50

  Unknowing . . . . . . . . . . . . 1.00

Gravity of Violation

  New well construction . . . . . . 1.00

  Deepening a well . . . . . . . . 0.80

  Renovating a well . . . . . . . . 0.60

  Abandoning a well . . . . . . . . 0.40

  Cleaning/developing a well . . . 0.20

(d) The total administrative fine shall not exceed the product of the direct economic benefit and the penalty multiplier.

(e) Reimbursement of enforcement costs is initially based on a standard requiring 100% reimbursement of the State Engineer's enforcement costs to the date of the Initial Order.

(6) Post-Initial Order penalty adjustments: Subsequent to issuance of the IO, the Presiding Officer may make adjustments to the initial administrative fine; the requirement for replacement of water unlawfully taken; requirements pertaining to violations of stream channel alteration or dam safety regulations; and/or the requirement for reimbursement of enforcement costs. Such adjustments may be based on one or more of the following considerations:

(a) Errors or Omissions in Calculation of an Initial Administrative Penalty: If shown by acceptable evidence or testimony that any fact used in calculation of the economic benefit, of the quantity of water unlawfully taken, or of the penalty multiplier was in error, or that a significant fact or group of facts was omitted from consideration, the Presiding Officer shall recalculate the initial administrative penalties taking consideration of the corrected or additional fact(s).

(b) Reduction in Penalty Multiplier: The penalty multiplier used in calculating the Initial Administrative Penalties may be reduced according to Table 6 on the basis of the respondent's efforts to comply after receiving the IO.

TABLE 6

PENALTY MULTIPLIER REDUCTION

CONSIDERATION / CRITERIA MULTIPLIER POINTS

Respondent's efforts to comply with

 the Initial Order

  Respondent has made extraordinary efforts

   to successfully achieve full and prompt

   compliance with the IO. . . . . . . . . . . . .1.00

  Respondent has made efforts to successfully

   achieve full and prompt compliance with the

   IO, but these efforts are not extraordinary . .0.50

  Respondent has made efforts that achieve full

   compliance with the IO, but the efforts were

   neither extraordinary nor prompt . . . . . . . 0.25

  Respondent has made no efforts to comply or has made efforts

  that fail to achieve full compliance with

  the IO . . . . . . . . . . . . . . . . . . . . .0.00

If the Presiding Officer determines that the penalty multiplier should be reduced according to the table above, the appropriate number of points will be subtracted from the penalty multiplier used in calculating the initial administrative penalty and the penalty will be re-calculated with the new multiplier.

(c) Failure to take reasonable and effective measures to achieve full and prompt compliance with the requirements of the IO will allow the daily administrative fines to continue to accrue as provided in rule at Subsection R655-14-12(4) until full compliance is achieved.

(d) Adjustments to recovery of enforcement costs:

(i) If shown by acceptable evidence or testimony that any expense incurred by the State Engineer and assessed for reimbursement resulted from activities not pertinent to the violation, the Presiding Officer may reduce that portion of the reimbursement requirement accordingly.

(ii) Pursuit of an enforcement action after issuance of the IO will continue to require the expenditure of varying amounts of staff time and may require acquisition and analysis of special data or information. Such costs may be added to the initial reimbursement requirement, specifically including all costs incurred that are unique to the enforcement action under consideration.

(e) Mitigating Factors: Other factors which the Presiding Officer may consider in amendment of initial penalties for incorporation into a Final Order or Consent Order may include, as appropriate:

(i) Ability to pay: This factor will be considered only if raised by a respondent and only if the respondent provides all necessary information to evaluate the claim. The burden to demonstrate inability to pay rests solely on the respondent. The Presiding Officer shall disregard this factor if a respondent fails to provide sufficient or persuasive financial information. If it is determined that a respondent cannot afford the full monetary penalties prescribed by this rule, or if it is determined that payment of all or a portion of the monetary penalties will preclude the respondent from achieving compliance or from carrying out remedial measures which are deemed more important than the deterrent effect of the monetary penalties, the following options may be considered by the Presiding Officer:

(A) A delayed payment schedule with full payment of monetary penalties to be made at a date not exceeding 180 days from the date the Final Judgment and Order is issued; or

(B) A direct reduction of the monetary penalties, which reduction is deemed by the Presiding Officer to be consistent with achieving the purposes of the enforcement action and the aims of equity and justice.

(C) A portion of the monetary penalties may be suspended with conditions as determined by the Presiding Officer, which suspension is deemed by the Presiding Officer to be consistent with achieving the purposes of the enforcement action and the aims of equity and justice. Failure by a respondent to adhere to the conditions of the suspension may result in an Order of reinstatement of any part of the suspended monetary penalties, which will be due and payable immediately upon reinstatement.