Transcript AEO Penalty Calculation (Other than Hazardous Waste) How

Calculating Backwards to
Resolve AEO Penalty
Cases
Rod Lorang
Senior Deputy County Counsel
County of San Diego
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Calculating Forward
 Facts


on hand
Violations by type
Days in violation [adjusted]
 Statutory
penalty range
 Statutory penalty factors
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Problems
 A huge
penalty range
 A huge UST “minimum” penalty number



Unrealistic politically and for settlement
Disproportionate
Unnecessary for an effective program
 You
need to settle most cases
 You need to “be reasonable”
 You need to win if an order is appealed
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Your Goals
 Settle
the case; OR
 Win the hearing
AND
 Be legal
 Be fair
 Be consistent
 Be effective
4
Addressing Problems
 Find
some flexibility
 Create and communicate risk
 Get the facts
 Get the picture
 Resolve the real issues
 Pick your forum, then pull the trigger
 Negotiate
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Finding some flexibility:
level one / statutory factors

Ch. 6.11; H&S 25404.1.1(b)


“nature, circumstances, extent, and gravity of the
violation, the violator’s past and present efforts to
prevent, abate, or clean up conditions posing a threat
to the public health or safety or the environment, the
violator’s ability to pay the penalty, and the deterrent
effect that the imposition of the penalty would have on
the violator and the regulated community.”
Don’t overanalyze


Show “consideration,” retain discretion
Cf. other similar provisions
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Find some flexibility:
level two / endorsed by Lisa
 The

Same requirement on multiple days with no
intervening notice and cure opportunity
 The

(borrowed) “one error” option
Same requirement at multiple units at the
facility
 The

(borrowed) “one day” option
(borrowed) “same elements” option
Violations are not independent or substantially
distinguishable
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Find more flexibility:
Enforcement Discretion

Which violations do you choose to penalize?
 Remember your goals. What do you need?
 Select by significance? to educate? to deter?
 Maintain a focused case and focused
message
 “Same facts”
 Did one thing wrong but multiple violations
 Not the same as “same elements”
 Your litigation risks
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Create and communicate
risk to the operator
 Creating
risk is easy
 Note that:
 Settlement proposals do not limit a
potential unilateral order
 Violations omitted for settlement
purposes can come back
 “One day” offers can be for settlement
purposes only
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Risks to the operator
 Kicker:
what else could we prove if we did
discovery?
 UST
Kicker: ALJ must impose at least the
statutory minimum penalty for proven
violations
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… communicate risk
 Communication




is strategic
No smoke re critical potential add-ons
Must convey directly to the “client”
Must respect the role of the attorney
Have and show no fear re going to hearing
 To
be credible, you must also explain why
you are still willing to settle
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Get the facts
 Don’t
commit to a penalty position too
soon
 Meet and listen




Attitude and efforts pre-violation
Extenuating circumstances
Things (allegedly) said by your staff
Corrective efforts and attitude now
 Legal

issues
Always listen
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Get the facts
 Meet




and poke
Knowledge, negligence
Program deficiencies
• Staffing, training, resources
• Configurations
Decisions made
Days in violation
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Get the picture
 Are
they ready to comply?
 Are they on the right path to comply?
 (Hard to assess except face to face with
the right people)
Then ask yourself:
 How can this enforcement action best
contribute to future compliance?
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Resolve the Real Issues before
addressing penalty issues
 Your


real issues
Return to compliance
Robust program for compliance
 Operator’s



real issues (typical)
I’m not really a bad guy
You listened to me and are treating me fairly
My relationship with your agency will be o.k.
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Resolve the Real Issues
 Attorney’s





real issues:
I spotted and raised issues effectively
My client understands this decision
The agency position is legally defensible
The settlement does not damage my client’s
long term best interests
Sometimes, comparative penalties
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Pick your forum…
 How



will this case be resolved?
By the RP, or by an agent / attorney
Based on numbers? adherence to rules?
perceived equity? business considerations?
What are the RP’s internal communication or
approval requirements?
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Pick your forum
 What
forum for negotiations will work
best?



First meeting
More meetings
Written exchanges
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…then pull the trigger
 The
Number
 The Story


Note the issues, and issues already resolved
Explain the number
• Cover the statutory issues
• Address your audience
• Introduce or note the role of SEPs
 Specify
next steps for resolution
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The Numbers
 Target
figure, opening offer, order figure
 Calculate
a defensible range per facts,
statute, DTSC, etc.

All three figures should be in this range
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Target figure

Your sense of what will work in this case,

Any consistency constraints
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Opening Offer
 Adjust
the target figure with an allowance
for bargaining
 Depends on you and your dance partner
 As little as 20%?


Agreed consistency context
Good performance by RP
 As


much as 300%?
Big swing factors
Attorney negotiators
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Unilateral Order Penalty Figure
 Probably
not the same as your settlement
target figure
 Develop per Lisa and Vince
 Or, drop “one day” limitations
 Start with this in your pocket
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Negotiate
 You

can’t “lose” re the dollars
If you have an appropriate bottom line, and
are willing to issue a unilateral order if you
don’t get that amount, you will get at least
your bottom line.
 Winning
on dollars isn’t the goal
 SEPs are a great closer
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Additional Issues
 Consistency
and fairness
 Economic benefits under Ch. 6.11
 Is action by the “governing body” really a
precondition for Ch. 6.95 Article 1
(business plan) penalties?
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Consistency and Fairness
 Cases
are all different
 Cases are all multi-faceted
 Enforcement discretion is well-established
 10 times variation based on statutory
factors, e.g. “deterrent effect”
 Appellate risks are low
26
Economic Benefits under Ch. 6.11
 Not
obviously encompassed by “nature of
the violation”
 Your choice
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Economic Benefits under Ch. 6.11:
Pros
 “Level
playing field”
 In theory, objective
 In theory, eliminates the economic
incentive to violate
 Dispassionate, not vindictive
 We think it is fair; they should too
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Economic Benefits under Ch. 6.11:
Cons

Invites intractable disputes into the settlement
process
 Whether to do it
 How to do it
 Facts and parameters
 Not confined to “in the range” decisions
 A separate, inconsistent calculation model
 For Ch. 6.11, minimal legal relevance
 An interpretation of one factor, in a list of
discretionary factors
 Can’t override maximums, minimums, or
listed factors
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Economic Benefits under Ch. 6.11:
more cons
 Doomed


by imperfect implementation
Not all actors
No adjustment for expected values
 Distracting
to both sides
 Unnecessary

You probably don’t need it to justify your
numbers
30
Economic Benefits under Ch. 6.11:
Theoretical Cons
 Not
pricing the externalities from
violations, only the private market benefits
 Presumes optimal regulation
 Can’t get you to “optimal non-compliance”
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Ch. 6.95 Article 1, 25514.5
“set by the governing body”
 Is
action by the “governing body of the
administering agency” necessary to
impose these administrative penalties?
 25514.5 was originally enacted in the early
1990’s “to provide local agencies with an
alternative and effective means of
enforcing…”
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25514.5 continued
 Amended
as part of the big UST / CUPA
bill in 2002 (AB 2481)
 That bill was intended to provide for
uniform administrative enforcement of
CUPA programs
 25404.1.1(a)(3): “the violator shall be
subject to a penalty that is consistent with
the administrative penalty imposed
pursuant to Section 25514.5.”
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25514.5 “I think”
 Can
read 25514.5 as authorizing but not
requiring local bodies to set maximum
penalties
 CUPA applications are a sufficient
adoption of statutory penalties
 It would be prudent to arrange for clear
governing body action anyway
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