Administrative Penalty Assessment

PURPOSE: This rule establishes the procedures for issuance of administrative orders and assessment of administrative penalties. (1) General Provisions. (A) Pursuant to section 640.131, RSMo, and in addition to any other remedy provided by law, upon determination by the department that a provision of sections 640.100 to 640.140, RSMo, or a standard, limitation, order, rule, or regulation promulgated thereunder or a term or condition of any permit has been violated, the director may issue an order assessing an administrative penalty upon the violator. The amount of the administrative penalty shall be determined according to section (3) of this rule. In no event shall the penalty assessed per day of violation or the total penalty assessed per violation exceed the statutory maximums specified in subsection 640.131.2, RSMo, a summary of which is shown in the following table: Maximum Administrative Penalty Amounts (B) An administrative penalty shall not be imposed until the department has sought to resolve the violation(s) through conference, conciliation and persuasion and shall not be imposed for minor violations. If the violation is resolved through conference, conciliation and persuasion, no administrative penalty shall be assessed unless the violation has caused a risk to human health or to the environment, or has caused or has the potential to cause pollution or was knowingly committed. (C) An order assessing an administrative penalty shall be served upon the supplier of water or appropriate representative of the supplier of water through United States Postal Service certified mail, return receipt requested; a private courier or messenger service which provides verification of delivery; or by hand delivery to the residence or place of business of the supplier of water. An order assessing an administrative penalty shall be considered served if verified receipt is made by the supplier of water or an appropriate representative of the supplier of water. Rejection of or refusal to accept private courier service, messenger service, hand delivery or certified mail delivery of an order assessing an administrative penalty constitutes service of the order. (D) The director may at any time withdraw without prejudice any administrative order or administrative penalty. (E) An order assessing an administrative penalty shall describe the nature of the violation(s), the amount of the administrative penalty, and the basis of the penalty calculation. (F) The director may suspend a penalty in whole or in part when deemed appropriate. The director shall consider the following factors, as a minimum, in evaluating the appropriateness of suspended penalties: timeliness in response to violation(s), history of past violations, cooperative efforts towards compliance, severity of violation(s), relative risk to human health, and other extenuating circumstances. Penalties suspended under this provision may be reinstated if the violator fails to comply with all provisions of the administrative order or fails to remain in compliance for a period of one (1) year from the final compliance date of the administrative order. (G) An administrative penalty shall not be increased in those instances where department action, or failure to act, has caused a continuation of the violation that was a basis for the penalty. Sample collection and analysis by the department to verify the quality of the water, regardless of the analytical results, shall not be construed as department action that has caused continuation of the violation. Any administrative penalty shall be assessed within two (2) years following the department’s initial discovery of such alleged violation, or from the date the department in the exercise of ordinary diligence should have discovered such alleged violation. (2) Definitions. (A) Definitions for key words used in this rule may be found in 10 CSR 60-2.015. (B) Additional definitions specific to this rule are as follows: 1. Conference, conciliation, and persuasion. A process of verbal or written communications consisting of meetings, reports, correspondence, or telephone conferences between authorized representatives of the department and the alleged violator. The process shall, at a minimum, consist of one (1) offer to meet with the alleged violator tendered by the department. During any such meeting, the department and the alleged violator shall negotiate in good faith to eliminate the alleged violation and attempt to agree upon a plan to achieve compliance; 2. Gravity-based assessment. The degree of seriousness of a violation taking into consideration the risk to human health or the environment posed by violations of sections 640.100 to 640.140, RSMo, and associated rules and permits; 3. Major violation. A violation that poses or may pose a substantial risk to human health or to the environment, or has or may have a substantial adverse effect on the purposes of or procedures for implementing the law and associated rules or permits; 4. Minor violation. A violation that poses a small potential to harm the environment or human health or cause pollution, and was not knowingly committed; 5. Moderate violation. A violation that poses or may pose a significant risk to human health or to the environment, or has or may have a significant adverse effect on the purposes of or procedures for implementing the law and associated rules or permits; 6. Multiple violation penalty. The sum of individual administrative penalties assessed when two (2) or more violations are included in the same complaint or enforcement action; 7. Multi-day violation. A violation that has occurred on or continued for two (2) or more consecutive or nonconsecutive days; and 8. Potential for harm. The extent to which a violation poses a risk to human health or the environment or has a substantial adverse effect on the purposes of or procedures for implementing the law and associated rules or permits. (3) Determination of Penalties. In determining the amount of the administrative penalty, the department shall take into consideration all relevant circumstances, including, but not limited to, the harm which the violation causes or may cause, the violator’s previous compliance record, the nature and persistence of the violation, any corrective actions taken, the number of people served by the water system and any other factors which the department may reasonably deem relevant. The amount of an administrative penalty shall involve the application of a gravity-based 38%/,&:$7(5 6<67(06,=( RISHRSOHVHUYHG  0$;,0803(1$/7<$02817  $PRXQW3HU'D\3HU 9LRODWLRQ 7RWDO$PRXQW3HU 9LRODWLRQ /HVVWKDQ   WR   RUPRUH   assessment under subsection (3)(A) of this rule and may be adjusted within the selected penalty range as specified in subsection (3)(B) of this rule. Determination of the penalty may also involve additional factors for multiple violations (subsection (3)(C) of this rule) and multi-day violations (subsection (3)(D) of this rule). The resulting total penalty amount may be further adjusted as specified under subsection (3)(E) of this rule. (A) Gravity-Based Assessment. The gravity-based assessment is determined by evaluating the potential for harm posed by the violation and the number of people affected or potentially affected by the violation. 1. Potential for harm. The potential for harm associated with a violation is based on the extent to which the violation poses a risk to human health or the environment or has a substantial adverse effect on the purposes of or procedures for implementing the law and associated rules or permits. A. The risk of exposure is dependent on both the likelihood that humans or the environment may be exposed to contaminants and the degree of potential exposure. Penalties will reflect the probability the violation either did result in, or could have resulted in, release of contaminants to the environment or introduction of contaminants into a public water system, and the harm which did occur, or would have occurred, if the release to the environment or contamination of the water system had in fact occurred. B. Violations that have an adverse effect upon the purposes of the law or procedures for implementing the law and associated rules or permits may be grounds for assessment of penalties. C. The potential for harm shall be evaluated according to the following degrees of severity: (I) Major. Violations that pose a major potential for harm shall include, but not be limited to, the following: failure to act in an emergency situation; failure to comply with an order issued by the department; failure to meet disinfection requirements; failure to disinfect newly repaired water mains; failure to respond adequately to total water outages; failure to comply with maximum contaminant levels (MCLs) or treatment technique requirements; failure to issue public notice for acute MCL violations; and other violations that pose a direct impact or immediate threat to public health; (II) Moderate. Violations that pose a moderate potential for harm shall include, but not be limited to, the following: failure to issue public notice for violations other than acute MCL violations; failure to comply with monitoring requirements; failure to comply with lead and copper regulatory requirements other than treatment technique requirements; failure to maintain required minimum pressure in the water system; failure to obtain a construction permit or a permit to dispense water; failure to meet operator certification requirements; failure to meet construction standards; failure to meet operational requirements; failure to properly operate and maintain the water system; failure to comply with backflow prevention requirements; failure to meet the conditions of a compliance schedule developed under a bilateral compliance agreement, exemption, or variance; violations that do not meet the definition of “minor” violations; and other violations that pose a serious or long-term threat to public health; and (III) Minor. Violations that pose a minor potential for harm shall include, but not be limited to, the following: failure to maintain records, microbiological sample siting plans, emergency operations plans, or other required documents; failure to meet reporting requirements; failure to pay required fees; and other violations related to the management and administration of the system. 2. Number of people affected. The penalty amount is dependent on the size of the public water system, expressed in terms of the number of people who receive water from the public water system. 3. Gravity-based penalty assessment matrix. The matrix that follows is based on the potential for harm and the number of people affected or potentially affected, and is to be used to determine the gravity-based assessment portion of the administrative penalty. Potential for harm and size of public water system form the axes of the matrix. The matrix has nine cells, each containing a penalty range. For a particular violation, the appropriate penalty range (cell) is selected according to the size of the public water system and by determining the category (major, moderate, or minor) most appropriate for the potential for harm factor. The penalty amount is initially set at the midpoint of the selected penalty range, but may be adjusted within the penalty range, as specified in subsection (3)(B) of this rule, for the circumstances of a particular violation. The values shown in the matrix are expressed in terms of penalty amount per day of noncompliance for each violation. Gravity-Based Penalty Assessment Matrix (penalty range per day per violation) (B) Adjustments to the Penalty Amount Within the Selected Penalty Range. The department may add to or subtract from the amount of the penalty, within the selected penalty range of the matrix, after consideration of the following adjustment factors: 1. Good faith efforts to comply. The department may adjust a penalty amount downward, within the selected penalty range, if the violator adequately demonstrates good faith efforts. Good faith efforts include, but are not limited to, documentation that the violator has reported noncompliance or instituted measures to remedy the violation prior to detection by the department. However, good faith efforts to achieve compliance after agency detection are not grounds for decreasing the penalty amount; 2. Culpability. In cases of heightened culpability that do not meet the standard of criminal activity, the penalty may be increased at the department’s discretion, within the selected range of the matrix. Likewise, in cases where there is a demonstrable absence of culpability, the department may decrease the penalty. Lack of knowledge of the law or any associated rule or permit shall not be a basis for decreased culpability. The following criteria shall be used to determine culpability: A. How much control the violator had over the events constituting the violation; B. Whether the events constituting the violation were foreseeable; C. Whether the violator took reasonable precautions against the events constituting the violation; D. Whether the violator knew or should have known of the hazards associated with the conduct; and E. Whether the violator knew or should have known of the legal requirement that was violated (this shall be used only to increase a penalty, not to decrease it); and 3. History of noncompliance. When there has been a history of noncompliance with the law or any associated rule or permit, to a degree deemed significant due to frequency, similarity or seriousness of past violations, and considering the violator’s 3RWHQWLDOIRU +DUP 6L]HRI3XEOLF:DWHU6\VWHPQXPEHURISHRSOHVHUYHG /HVVWKDQ WR RUPRUH 0DMRU PLGSRLQW ±  ±  ±  0RGHUDWH PLGSRLQW       0LQRU    response to previous enforcement actions, the department may increase the administrative penalty, within the selected penalty range. No downward adjustment is allowed because of this factor. (C) Multiple Violation Penalty. Penalties for multiple violations may be determined when a violation is independent of or substantially different from any other violation. The director may order a separate administrative penalty for each violation as set forth in this rule. (D) Multi-Day Penalty. Penalties for multi-day violations may be determined when the director has concluded that a violation(s) has continued or occurred for more than one (1) day. Multi-day penalty assessments shall be determined by using the Gravity-Based Penalty Assessment Matrix in this section to determine the penalty amount per day per violation, and multiplying that amount by the number of days of noncompliance. The director may seek penalties for each day of noncompliance, not to exceed the statutory maximums specified in subsection 640.131.2, RSMo. (E) Adjustments to Total Penalty Amount. The department may add to or subtract from the total amount of the penalty, not to exceed the statutory maximums specified in subsection 640.131.2, RSMo, after consideration of the following adjustments: 1. Recalculation of penalty amount. If, after issuance of an order by the director, new information about a violation becomes available which indicates that the original penalty calculation may have been incorrect, it may be necessary to recalculate the penalty in light of the new information; 2. Ability to pay. When a violator has adequately documented that payment of all or a portion of the administrative penalty will preclude the violator from achieving compliance or from carrying out important remedial measures, the department may— A. Waive or suspend any portion or all of the administrative penalty; or B. Negotiate a delayed payment schedule, installment plan or penalty reductions with stipulated penalties. The department may require the supplier of water to submit documents to verify inability to pay, including, but not limited to: federal tax returns and financial statements, annual financial reports, and a list of assets with corresponding fair market values; and 3. Other adjustment factors. This rule allows for other penalty adjustments based on fairness and equity not mentioned in this rule which may arise on a case-by-case basis. (4) Payment of Penalty. The proceeds from any administrative penalty assessed in accordance with this rule shall be paid to the county treasurer of the county in which the violation(s) occurred for the use and benefit of the county public schools, in accordance with section 7 of article IX of the Missouri Constitution. An administrative penalty shall be paid within sixty (60) days from the date of issuance of the order assessing the penalty, unless appealed per section 621.250, RSMo. Any person who fails to pay an administrative penalty by the final due date shall be liable to the state for a surcharge of fifteen percent (15%) of the penalty plus ten percent (10%) per annum on any amounts owed. An action may be brought in the appropriate circuit court to collect any unpaid administrative penalty, and for attorney’s fees and costs incurred directly in the collection thereof. (5) Natural Resource Damages. Nothing in this rule shall be construed as satisfying any claims by the state or federal government for natural resource damages. AUTHORITY: sections 640.100 and 640.131, RSMo 2016.* Original rule filed July 1, 1999, effective March 30, 2000. Amended: Filed June 13, 2018, effective Feb. 28, 2019. *Original authority: 640.100, RSMo 1939, amended 1978, 1981, 1982, 1988, 1989, 1992, 1993, 1995, 1996, 1998, 1999, 2002, 2006, 2012, 2014 and 640.131, RSMo 1998.