### COLORADO DEPARTMENT OF PUBLI C HEALTH AND ENVIRONMENT

FINAL AGENCY-WIDE POLICY ON SE TTLING ADMINISTRATIVE AND/OR

CIVIL PENALTIES AGAINST ELI GIBLE GOVERNMENTAL ENTITIES

______________ Signed

_______________________ ____ 5/9/08

____ Martha Rudolph, Director Date Environmental Programs

______________ Signed

________________________ ____ 5/9/08

_____ Paul Tourangeau, Director Date

Air Pollution Control Division

______________ Signed

__________________________ ____ 5/9/08

_____ Gary Baughman, Director Date

Hazardous Materials and Wa ste Management Division

______________ Signed

__________________________ ____ 5/9/08

_____ Steve Gunderson, Director Date Water Quality Control Division

### Colorado Department of Publ ic Health and Environment Revision Date: 5/5/08

Revision No.: 2 Subject: Agency-Wide Policy on Settlin g Administrative and/or Civil Penalties against Eligible Governmental Entities Page 2 of 4



### COLORADO DEPARTMENT OF PUBL IC HEALTH AND ENVIRONMENT

AGENCY-WIDE POLICY ON SETTLING ADMINISTRATIVE AND/OR CIVIL

PENALTIES AGAINST ELIGIB LE GOVERNMENTAL ENTITIES

I. INTRODUCTION

A. Definitions

“Eligible Governmental Entity” means a county, munici pality or eligible local governmental district.

“County” means those political, governmental or admini strative subdivisions of the State of Colorado listed

in Article 5 of Title 30 of the Colorado Revised Statutes.

"Municipality" means a city or town or a city or town incorporated pr ior to July 3, 1877, whether or not reorganized, and any city, town, or city and county that has chosen to adopt a home rule charter pursuant to the provisions of article XX of the state constitution (s ection 31-1-101(6), C.R.S.).

“Eligible Local Government District” is defined as a Special District, Ge neral Improvement District, Public Improvement District, or Metropolitan Sewage Disposal District that prov ides one or more of the following services: drinking water utilities, wa ste water utilities, solid waste dis posal or collection and transportation

of solid waste.

“Special District” means a quasi-municipal corpora tion and political subdivi sion organized or acting pursuant to Article 1 of Title 32, C.R.S.

“General Improvement District” m eans a quasi-municipal corporation a nd political subdivision organized or action pursuant 31-25-601 C.R.S.

“Public Improvement District” means a quasi-municipal corporation and political subdivision organized or action pursuant to the Colorado Public Improve ment District Act of 1968 (30-20-501 C.R.S.).

“Metropolitan Sewage Disposal District” means a district formed under 32-4-501 C.R.S.

“Department” means the Colorado Department of Public Health and Environment.

B. Purpose and Intent

This policy sets forth the department ’s approach to reaching settlement with eligible governmental entities for administrative and/or civil penalties.

Eligible governmental entities confr ont unique constraints in complying with environmental requirements:

• Public financing typically is more cumbersome th an for regulated entities in the private sector;

• Municipal functions can trigger large environmental obligations, which may overwhelm county or municipal tax bases; and

• Despite noncompliance, some services provided by an eligible governmental en tity are essential and must often continue to operate (e.g., provision of water and sewer service).

Despite the unique constraints typi cally experienced by eligible govern mental entities every eligible governmental entity is required to comply fully with the statutes and regulations administered by the

### Colorado Department of Publ ic Health and Environment Revision Date: 5/5/08

Revision No.: 2 Subject: Agency-Wide Policy on Settlin g Administrative and/or Civil Penalties against Eligible Governmental Entities Page 3 of 4

department, and will be regulated in a manner consistent with regulated entities in the private sector to the fullest extent possible. In recognition of the uni que constraints experienced by eligible governmental entities, this policy is intended to achieve statewide consistency in res ponding to noncompliance by eligible governmental entities by providi ng guidance to department staff.

C. Applicability and Legal Effect

This policy applies to all administrative enforcement actions against eligible gove rnmental entities within Colorado, regardless of whether the noncompliance wa s detected through a depa rtment inspection, report from the public, a self-report resulting from regulat ory or permit requirements, compliance assistance, environmental audit or documented, systematic due diligence, or otherwise self-disclosed.

As with any other regulated entity, eligible govern mental entities that have conducted a voluntary selfevaluation and discovered potential noncompliance issues , have the ability to us e the Environmental Audit Privilege and Immunity Law. (See “Policy Regard ing Implementation of the Colorado Environmental Audit Privilege and Immunity Law sections 13-25-126.5, 13-90-107, 25-1-114.5, and 25-1-114.6, C.R.S.”.)

This policy supplements the principles and presumptions in the “Colorado Department of Public Health and Environment Agency-wide Supplemental Environmenta l Projects Policy” and in each environmental division’s enforcement policies, and should be read in conjunction with these policies.

This policy does not apply to settlements of claims for stipulated or suspended pe nalties for violations of consent orders or other settlement agreement requirements.

II. ADMINISTRATIVE PENALTY CALCULATION AND SETTLEMENT

The department, through its Air Pollution Control Di vision, Water Quality Control Division, and Hazardous Materials and Waste Management Di vision, periodically conducts inspec tions of eligible governmental entities to determine compliance with environmental la ws. If any violations are discovered that are

considered serious violations or otherwise warrant the assessment of an administrative penalty, the department will assess a penalty that is consistent with those assessed against regulated entities in the private sector for violations of the same or similar requirements.

The department will not waive an administrative penalty simply because the regulated entity is an eligible governmental entity. However, the department, at its sole discretion, may exercise flexibility in settling administrative penalties against these entities as follows:

A. Penalty Calculation

As provided in each division’s penalty calculation po licies, department staff will calculate all upward adjustments to the penalty base numbers on the basis of all facts known about the violations (aggravating factors). The department will then calculate any dow nward adjustments based on relevant facts to mitigate the penalty (mitigating factors) and arrive at an appropriate final penalty amount.

B. Penalty Settlement

1. An eligible governmental entity may claim an inability to pay the full penalty, or claim other financial constraints. The burden is on the elig ible governmental entit y, in these cases, to

### Colorado Department of Publ ic Health and Environment Revision Date: 5/5/08

Revision No.: 2 Subject: Agency-Wide Policy on Settlin g Administrative and/or Civil Penalties against Eligible Governmental Entities Page 4 of 4

demonstrate why such constraints re sult in an inability to pay a fu ll penalty or significantly impede its ability to comply or perform a remedial meas ure. CDPHE will not accept claims of, or assume, financial constraints on an eligib le governmental entity without detailed substantiation from an eligible governmental entity official, normally the ch ief fiscal officer, with direct responsibility for that entity’s financial status. (See EPA’s M unipay Model for guidance on demonstration of an inability to pay.)

2. If an eligible governmental ent ity satisfactorily demonstrates an inability to pay the penalty, in whole or in part, department sta ff should first consider the use of an alternative payment plan to obtain an appropriate penalty prior to considering suspensi on or waiver of a penalty.

3. The department should consider whether implem entation of a supplemental environmental project by the eligible governmental entity is an appropriate mechanism with which to resolve some, or all, of the administrative penalty. Implementation of a supplemental environmental project shall be in accordance with the procedures and requirements set forth in the “Colorado Department of Public Health and Environment Agency-wide Suppl emental Environmental Projects Policy” ( www.cdphe.state.co.us/el/cross_media/seps.html ).

The department may resolve the entire admini strative penalty (including the economic benefit portion of the penalty) against an eligible gove rnmental entity through the completion of a SEP, provided that all of the followi ng conditions are satisfied. The eligible governmental entity:

i. Agrees to return to compliance promptly and remedy any adverse impacts of noncompliance within a reasonable period of time;

ii. Has not been found to have committed serious violations, which are defined as follows:

a) Violations that are prone to cause signi ficant impact to human health or to the environment; b) A pattern of violations that demonstrate management system s are not adequate to address environmental issues; or c) Convictions for violations of environmenta l laws or out-of-court settlements of formal charges of such criminal violations.

iii. Demonstrates a good faith intention to main tain future compliance with all applicable environmental requirements, includin g, but not limited to, conducting periodic compliance audits; and

iv. Agrees to investigate pollution preventi on, source reduction and resource conservation opportunities, and implement them, as establ ished to be feasible by the eligible governmental entity and agreed to by the department.

If an eligible governmental entity does not satisfy all of the conditions for mitigation described above, the department will not settle the entire pe nalty through a SEP, but may mitigate the penalty consistent with the degree to which the conditions ar e satisfied, and with the factors set forth in each division’s penalty policy.