California Code of Regulations › Title 14 - Natural Resources › Division 5 - San Francisco Bay Conservation and Development Commission › Appendices › Appendix J - Administrative Civil Penalty Policy

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
INTRODUCTION
This policy addresses the assessment of administrative civil
				  penalties. Government Code Section
				  66641.5(e)
				  authorizes the Commission to impose on any person or entity an administrative
				  civil penalty of between ten dollars ($10) and two thousand dollars ($2000),
				  for each day in which the violation occurs or persists, up to a maximum of
				  thirty thousand dollars ($30,000) for a single violation. Government Code
				  Section
				  66641.9
				  sets forth the factors to be considered by the Commission in determining the
				  amount of administrative civil liability.
Administrative civil penalties are an important part of the
				  Commission's enforcement authority. Civil penalties deter noncompliance and
				  help to ensure a level playing field so that violators do not obtain an
				  economic advantage over others who have made the investments necessary to
				  comply.
This policy consists of two parts: (1) Part I, Penalty
				  Calculation Methodology; and (2) Part II, Supplement Environmental Projects.
				  The goal of this policy is to promote the enforcement goals of consistency,
				  transparency, fairness, and the deterrence of noncompliance.
By using the methodology and considering the factors set
				  forth in Part I of this policy, the Executive Director will be able to
				  recommend and the Commission will be able to establish fair civil penalties in
				  accordance with the statutory criteria in Government Code Section
				  66641.9.
While the consistent application of this policy is important
				  in ensuring fairness, it is equally important that the policy allow for
				  adjustments as appropriate to reflect legitimate differences among similar
				  violations. In establishing penalties, comparisons to prior cases could be
				  relevant but are not required and there is no need to analyze why the penalty
				  amounts in other actions may differ.
The Executive Director shall apply Part I of this policy in
				  proposing an administrative civil penalty amount for all violations in a
				  complaint for administrative civil liability and the Commission shall apply
				  Part I of this policy in establishing an administrative civil penalty amount
				  for all violations in an order setting administrative civil liability. This
				  policy does not apply to violations that are resolved using the standardized
				  fines process set forth in Sections
				  11386-11391 of the Commission's
				  regulations. Standardized fine amounts are established in those regulations
				  based on the type of violation and are determined based on the time that it
				  takes to correct the violation.
Part II of this Policy establishes guidelines and
				  requirements for Supplemental Environmental Projects. A supplemental
				  environmental project is an environmentally beneficial project that a violator
				  agrees to undertake and complete voluntarily in partial resolution of an
				  enforcement action, which the violator is not otherwise legally required to
				  perform and for which the Commission agrees to offset a portion of the monetary
				  administrative civil penalty that would otherwise apply as a result of the
				  violation(s).
I. PENALTY CALCULATION METHODOLGY
A summary of the penalty calculation methodology is provided
				  below, followed by a more complete discussion of each step.
Step 1 - Determine the total initial base penalty amount for
				  each violation by evaluating: (a) the gravity of harm of the violation; and (b)
				  the extent of deviation from the requirement at issue. Based on those
				  evaluations, use Table 1 to determine the initial base penalty amount for the
				  violation. Multiply the initial base penalty amount by the number of days that
				  the violation has persisted to determine the total initial base penalty for the
				  violation.
Steps 2, 3, and 4 - Adjustments specific to the violator. The
				  following additional factors shall be considered for potential adjustment of
				  the total initial base penalty for each violation: Step 2, the violator's
				  degree of culpability for the violation; Step 3, any history of violations by
				  the violator; Step 4, any voluntary removal or resolution efforts and
				  cooperation by the violator.
Step 5 - Determine total base penalty amount by calculating
				  the sum for all violations of the total initial base penalty amount for each
				  violation (
i.e.
, the initial base penalty amount for the
				  violation multiplied by the number of days of violation) multiplied for each
				  violation by the percentages of any adjustments for the violator's culpability,
				  history of violations, and voluntary efforts to resolve the violation.
Step 6 - Consider adjustment of the total base penalty amount
				  based on additional factors and determine the final penalty amount. Depending
				  on the available information, the Executive Director may recommend adjusting or
				  the Commission may adjust the total base penalty amount based on consideration
				  of the following factors: (a) any economic benefit to the violator; (b) the
				  violator's ability to pay or continue in business; (c) costs to the State in
				  pursuing the enforcement action; (d) other factors as justice may require. The
				  final penalty amount shall be determined by making any appropriate adjustments
				  to the total base penalty amount based on consideration of these additional
				  factors.
Step 1 - Determine the total initial base penalty for each
				  violation.
The initial base penalty for each violation is determined by
				  evaluating: (a) the gravity of the harm to the Bay's resources or public
				  access; and (b) the extent of deviation from the applicable requirements of the
				  law or permit at issue. Based on these evaluations, Table 1 below is used to
				  determine the initial base penalty for the violation. The initial base penalty
				  amount is multiplied by the number of days that the violation has persisted to
				  determine the total initial base penalty for the violation.
(a) Gravity of harm.
This penalty calculation methodology applies to two types of
				  violations: (1) physical violations (
i.e.
, unauthorized fill,
				  use, or activity or failure to perform work, construct improvements, or provide
				  public access as required by a Commission permit); and (2) paper violations
				  (
i.e.
, failure to submit a document as required by law or a
				  Commission permit). For physical violations, gravity of harm is determined
				  using a scoring system to quantify consideration of six factors. For paper
				  violations, gravity of harm is determined based on the type of document.
(1) Physical violations.
For physical violations, gravity of harm is determined using
				  a six-factor scoring system to quantify: (1) habitat value; (2) durability; (3)
				  toxicity; (4) size; (5) nature of violation; and (6) visibility. Because actual
				  harm is not always apparent or quantifiable due to untimely reporting,
				  inadequate monitoring, and/or other practical limitations, potential harm can
				  be used to determine gravity of harm.
The Commission has jurisdiction over different geographical
				  areas (
i.e.
, San Francisco Bay, the shoreline band, salt
				  ponds, managed wetlands, certain waterways, and Suisun Marsh). If a violation
				  occurs in or impacts more than one area of the Commission's jurisdiction, the
				  violation shall be scored for each applicable area and the highest score shall
				  be used to determine gravity of harm.
Factor 1 - Habitat Value.
Evaluation of habitat value considers the physical and
				  biological resources at the location of a violation based on scientific
				  assessment of the affected habitat(s).
Score
1 Open Bay; previously degraded aquatic habitat; salt pond;
				  upland area with limited to no habitat value; upland area in agricultural,
				  industrial, commercial, or residential use.
2 Fringe marsh; mud flats; subtidal marsh; intertidal zone,
				  beach; upland area with moderate habitat value; upland area adjacent to open
				  space or park land that are impacted by the violation; vacant or graded
				  undeveloped land.
3 Tidal or brackish marsh; aquatic area containing eel grass;
				  aquatic area providing habitat for listed endangered species; high-quality
				  aquatic habitat or adjacent to high-quality habitat; managed wetlands; certain
				  waterways; riparian zones; land containing trees; upland area providing habitat
				  for listed endangered species; high-quality upland habitat or adjacent to
				  high-quality upland habitat.
Factor 2 - Durability.
Evaluation of durability considers the duration of the
				  violation.
Score
1 Transitory or easily removed fill, activity, use, or
				  construction in Bay, tidal marsh, managed wetlands, or other aquatic habitat;
				  dredging; temporary or single events or uses in an upland area or impacting
				  existing or required public access.
2 Unpermitted moored boat or other structure in Bay, tidal
				  marsh, managed wetlands, or other aquatic habitat; unpermitted live-aboard or
				  anchor-out boat; portable, temporary, or easily removed or remediated activity,
				  use, or construction in an upland area; temporary or easily removed
				  unauthorized restrictions or limitations on existing or required public
				  access.
3 Permanent or long-lasting activity, use, or construction in
				  Bay, tidal marsh, managed wetlands, or other aquatic habitat (including but not
				  limited to solid fill, water control structure, moorings, pilings); permanent
				  or long-lasting activity, use, or construction in an upland area; failure to
				  provide required public access or public access improvements; permanent closure
				  of public access area or amenities or removal of public access improvements;
				  failure to maintain public access improvements as required by a permit;
				  unpermitted lot split.
Factor 3 - Toxicity (Destructiveness).
Evaluation of toxicity considers the characteristics of the
				  fill, activity, use, dredging and dredged material disposal, or construction
				  and the hazards or risks of damage to human health, plants, wildlife, or other
				  biological resources based on scientific assessment of the potential toxic
				  effects of the violation.
Score
1 No or low human health or safety hazards; no or low
				  ecosystem hazards to fish, other aquatic organisms, or other wildlife.
2 Medium human health or safety hazards; medium ecosystem
				  hazards to fish, other aquatic organisms, or other wildlife.
3 High human health or safety hazards; high ecosystem hazards
				  to fish, other aquatic organisms, or other wildlife.
Factor 4 - Size.
Evaluation of size considers the square footage, volume, and
				  locations affected by the violation.
Score
1 Bay fill or shoreline fill, use, activity, or construction
				  of less than 250 square feet in extent or less than 100 cubic feet in volume,
				  and the violation is limited to a single location.
2 Bay fill or shoreline fill, use, activity, or construction
				  of between 251 to 1,000 square feet in extent or between 101 and 300 cubic feet
				  in volume, and the violation is limited to no more than three locations.
3 Bay fill or shoreline fill, use, activity, or construction
				  greater than 1,000 square feet in extent or greater than 300 cubic feet in
				  volume, and the violation affects four or more locations or extends throughout
				  a site or property.
Factor 5 - Nature of Violation.
Evaluation of nature of the violation considers whether the
				  activity, use, or construction constituting the violation can be resolved by
				  compliance with an existing Commission permit or can be resolved by being
				  authorized by a Commission permit or permit amendment.
Score
1 Violation can be resolved by compliance with an existing
				  permit, coverage under an abbreviated regionwide or regionwide permit, plan
				  approval, time extension, or a revised work-window authorization. Examples
				  include: a floating single-boat dock; disposal of yard waste; failure to
				  complete an activity, use, or construction in the manner authorized under an
				  existing permit; failure to provide required public access improvements or make
				  required public access available to the public; failure to maintain public
				  access improvements as required by a permit.
2 Violation can be resolved by issuance of an amendment to an
				  existing permit or issuance of a new administrative or major permit. Examples
				  include: installation of mooring balls in the Bay; placement of fill in the Bay
				  for a water-oriented use; new activity, use, or construction at a marina or in
				  the shoreline band; new levee construction; levee repair; new activity, use, or
				  construction in an existing or required public access area that can be
				  authorized (
e.g
., utilities, trash receptacles, outdoor
				  dining); expansion of existing development in Suisun Marsh.
3 Violation cannot be permitted in a manner consistent with
				  the Commission's laws and policies. Examples include: placement of
				  un-engineered or contaminated fill in the Bay or other aquatic area; placement
				  of fill in the Bay for a non-water-oriented use; dredging of tidal marsh or
				  dredging at any location outside of an authorized work window; new activity,
				  use, or construction in an existing or required public access area that cannot
				  be authorized (
e.g.
, installation of a fence or gate blocking
				  access or construction of a structure); commercial use of public park land;
				  construction or installation of new development in Suisun Marsh that is
				  inconsistent with the Suisun Marsh Protection Plan or the Suisun Marsh Local
				  Protection Program.
Factor 6 - Visibility.
Evaluation of visibility considers the conspicuousness of the
				  violation.
Score
1 Violation not highly visible to the public; low number of
				  viewers of violation or of users impacted by violation. No or few public
				  reports of the violation. Violation at or adjacent to an industrial
				  development, office park, residential area, or public access area that is not
				  intensively used.
2 Violation highly visible to the public; high number of
				  viewers of violation or of users impacted by violation. Multiple public reports
				  of the violation. Violation at or adjacent to commercial or retail use
				  (
e.g
., restaurant, bar, shopping area, public plaza), ferry
				  terminal, tourist destination, water attraction, or public access area that is
				  intensively used.
Final Gravity of Harm Score and Categorization of Gravity of
				  Harm.
The scores for each of the six factors are added to produce a
				  final gravity of harm score for the violation and to categorize the violation's
				  gravity of harm as "Major," "Moderate," or "Minor." The minimum score is 6 and
				  the maximum score is 17. The categorization of a violation's gravity of harm as
				  major, moderate, or minor is used in the "Gravity of Harm" axis in Table 1 to
				  determine the initial base penalty amount for the violation.
(1) Major--This category is for violations involving a high
				  level of actual harm or high level of potential for harm to the Bay's resources
				  or public access. Physical violations that receive a gravity of harm score of
				  14 or higher are considered major.
(2) Moderate--This category is for violations involving a
				  moderate potential for harm or moderate level of actual harm to the Bay's
				  resources or public access. Physical violations that receive a gravity of harm
				  score between 10 and 13 are considered moderate.
(3) Minor--This category is for violations involving minor or
				  minimal threats to the Bay's resources and public access. Physical violations
				  that receive a gravity of harm score of 9 or lower are considered minor.
(2) Paper Violations.
The gravity of harm of violations involving a failure to
				  submit required documentation will be categorized as "Moderate" or "Minor" in
				  accordance with the definitions set forth below. No paper violations will be
				  categorized as "Major." The categorization of a violation's gravity of harm as
				  moderate or minor is used in the "Gravity of Harm" axis in Table 1 for
				  determining the initial base penalty amount for the violation.
The failure to submit any of the following as required by a
				  Commission permit will be considered to be moderate violations: (1) Property
				  interest; (2) Post-dredge surveys; (3) Owners' association Conditions,
				  Covenants and Restrictions; (4) Monitoring or mitigation plans or reports; (5)
				  Descriptive material concerning emergency work authorized by an emergency
				  permit; (6) Construction plans for plan review and approval; (7) As-built
				  construction plans; (8) Recorded legal instruments to dedicate public access,
				  open space, or view corridor areas; (9) Special event reports; (10) Flood
				  reports and adaptation plans; (11) Executed originals of permits.
The failure to submit any of the following as required by a
				  Commission permit will be considered minor violations: (1) Foundation layout
				  inspections; (2) Annual live-aboard documentation; (3) Permit assignments; (4)
				  Certificates of contractor review; (5) Notices of completion; (6) Recorded
				  permits.
For any documentation required by a Commission permit that is
				  not listed above, the Executive Director or the Commission will refer to the
				  lists and reference the category used for similar documents.
(b) Extent of deviation from applicable requirement.
For both physical violations and paper violations, the
				  deviation from applicable requirement reflects the extent to which the
				  violation deviates from the specific requirement of law (statute or regulation)
				  or a term or condition of a Commission permit. The categories of a violation's
				  extent of deviation from an applicable requirement are as follows:
(1) Major--This category is for violations that deviate from
				  the requirement to such an extent that the requirement is completely ignored
				  and none of its provisions are complied with.
(2) Moderate--This category is for violations that deviate
				  from the requirement but still comply with some of the most important
				  requirements.
(3) Minor--This category is for violations that deviate to a
				  minor degree from the requirement, in circumstances where the requirement
				  functions nearly as intended, but not as well as if the entirety of the
				  requirement had been met.
The categorization of a violation's extent of deviation from
				  an applicable requirement as major, moderate, or minor is used in the "Extent
				  of Deviation from Legal Requirement" axis in Table 1 to determine the initial
				  base penalty amount for the violation.
For a single requirement, the range of potential deviation
				  will vary, depending on the requirement at issue. For example, if a permittee
				  completely fails to provide the public access improvements required by a
				  permit, the deviation would be major. If the permittee provides most of the
				  required public access improvements but significant elements are omitted, the
				  deviation would be moderate. If the permittee provides substantially all the
				  required public access improvements with only one or two minor elements
				  missing, the deviation would be minor. Similarly, failure to submit a proposed
				  legal instrument to dedicate a public access area to Commission counsel for
				  review and approval would be a major deviation; failure to resolve any concerns
				  raised by Commission counsel on a proposed legal instrument so that an approved
				  legal instrument may be recorded would be a moderate deviation; failure to
				  timely record the approved legal instrument would be a minor deviation.
(c) Use Table 1 to determine the initial base penalty
				  amount.
Based on the evaluations of gravity of harm and extent of
				  deviation from the applicable requirement, use the matrix shown in Table 1
				  below, which is based on the statutory penalty range of between $10 and $2,000
				  per day per violation, to determine the initial base penalty amount for each
				  violation. The Executive Director shall recommend or Commission shall determine
				  the initial base penalty amount from the range provided in the matrix that
				  corresponds to the appropriate gravity of harm and extent of deviation
				  categories based on the facts and circumstances of each individual
				  violation.
Table 1
Extent of Deviation from Legal
				  Requirement
MAJOR
MODERATE
MINOR
Gravity
MAJOR
$1600-2000
$1200-1599
$500-1199
of
MODERATE
$1200-1600
$800-1199
$250-799
Harm
MINOR
$800-1200
$250-799
$10-249
(d) Determine the total initial base penalty for each
				  violation.
After determining the initial base penalty amount using Table
				  1, that amount shall be multiplied by the number of days that the violation has
				  persisted to determine the total initial base penalty for the violation.
				  Consistent with Government Code Section
				  66641.5(e),
				  the total initial base penalty for a single violation shall not exceed
				  $30,000.
Steps 2, 3, and 4 - Adjustments specific to the
				  violator.
The Executive Director or the Commission shall consider the
				  following additional factors specific to the violator for potential additional
				  adjustments of the total initial base penalty amount for each violation: Step
				  2, the violator's degree of culpability; Step 3, any history of violations by
				  the violator; and Step 4, any voluntary removal or resolution efforts and
				  cooperation by the violator. Not all factors will apply to every violator or
				  violation.
Step 2 - Degree of culpability.
Consider whether to adjust the total initial base penalty
				  amount upward or downward by as much as 25% based on the violator's degree of
				  culpability prior to or when engaging in the violation. In assessing degree of
				  culpability, the Executive Director or the Commission shall consider:
(1) Whether the violator knew or should have known that the
				  conduct violated a requirement;
(2) Whether the violator knew or should have known of any
				  hazards associated with the conduct; and
(3) Whether the violator took precautions to avoid the event
				  that led to the violation.
An upward adjustment, by as much as 25%, shall be made for
				  intentional or grossly negligent violations. An intentional violation exists
				  when the violation is committed knowingly, deliberately or willfully, and
				  intentional conduct, including situations where the violator intended to engage
				  in the actions that constitute a violation, justifies a high adjustment. Gross
				  negligence arises when a violator acted with extreme carelessness and
				  deliberate disregard for the harms involved.
A downward adjustment, by as much as 25%, shall be made for
				  accidental violations or situations where there is evidence the violation was
				  outside of the violator's control and the violator took measures that exceeded
				  the standard of care expected of a reasonably prudent person to avoid or
				  minimize a violation. Violations that are the result of accidents or
				  inadvertent omissions warrant a downward adjustment.
No adjustment shall be made when a violator is determined to
				  have acted as a reasonable and prudent person would have. No adjustment will be
				  made for the violator's degree of culpability, or for the considerations listed
				  in Steps 3 and 4, below, if the adjustment would increase the total base
				  penalty above $30,000 for a single violation.
Step 3 - History of violations.
The total initial base penalty shall be adjusted upward, by
				  as much as 10%, for a history of prior violations within the past five years.
				  An upward adjustment of 10% is mandatory for prior violations of the same
				  permit term or instances involving the same or substantially similar
				  unauthorized activities within the past five years.
Because entities are expected to comply with the law, the
				  Executive Director or the Commission will not adjust the total initial base
				  penalty downward where the violator has no prior history of violations.
Step 4 - Voluntary removal or resolution efforts and efforts
				  to cooperate.
The Executive Director or the Commission shall consider
				  whether to adjust the total initial base penalty upward or downward based on
				  the violator's cooperation and resolution efforts.
Penalties shall be adjusted downward, by as much as 25%,
				  where a violator has taken extraordinary actions to cooperate with an
				  investigation in a timely manner and has engaged in exceptional efforts to
				  voluntarily resolve or mitigate the impacts of the unauthorized conduct.
The Executive Director or the Commission shall adjust the
				  total initial base penalty upward, by as much as 25%, in situations where a
				  violator has delayed compliance or created obstacles to achieving compliance,
				  including but not limited to interfering with the removal or resolution of the
				  violation. An upward adjustment, up to 25%, shall be appropriate where the
				  violator's removal and resolution efforts have fallen below what would
				  reasonably be expected as a response.
No adjustment shall be made when a violator is determined to
				  have responded to a violation or cooperated with Commission staff as a
				  reasonable and prudent person would have.
Step 5 - Determine the total base penalty amount for all
				  violations.
The total base penalty amount will be determined by
				  calculating the sum for all violations of the total initial base penalty amount
				  for each violation (
i.e.
, the initial base penalty amount for
				  the violation multiplied by the number of days of violation) multiplied for
				  each violation by the percentages of any adjustments for the violator's
				  culpability, history of violations, and voluntary efforts to resolve the
				  violation.
Step 6 - Consider adjustment of the total base penalty amount
				  based on additional factors and determine the final penalty amount.
Depending on the available information, including any
				  evidence or arguments submitted by Commission staff, the violator, or the
				  public, the Executive Director may recommend adjusting or the Commission may
				  adjust the total base penalty amount for all violations based on consideration
				  of the following additional factors: (a) any economic benefit to the violator;
				  (b) the violator's ability to pay or continue in business; (c) costs to the
				  state in pursuing the enforcement action; (d) other factors as justice may
				  require.
When relevant information is available, the Executive
				  Director or Commission shall consider each of these factors, but the Commission
				  is not required to adjust a penalty in any particular manner, percentage, or
				  amount based on any or all of them. When the total base penalty amount is
				  adjusted based on consideration of any of these factors, specific findings as
				  to the applicable factors shall be proposed by the Executive Director and made
				  by the Commission.
(a) Economic benefit.
To further the enforcement goals of deterrence of violations
				  and fairness, it is important that civil penalties be established in an amount
				  that ensures that entities that voluntarily incur the costs of regulatory
				  compliance are not placed at a competitive disadvantage in comparison to
				  entities that fail to comply. If sufficient information is available to
				  determine or reasonably estimate economic benefit, it is also important that
				  penalties be set at an amount that exceeds any economic benefit that the
				  violator gains from such violation(s) so that penalties are not viewed simply
				  as a cost of doing business.
Economic benefit
is any monetary savings or
				  gain derived from the activity or failure to act that constitutes the
				  violation. This includes costs that the violator has avoided through
				  noncompliance, including for example, the savings derived from failing to
				  provide public access improvements, prepare a required report, or complete a
				  required study.
If sufficient information is available to determine or
				  reasonably estimate the economic benefit to the violator of a violation (or
				  related violations) or the failure to comply with an applicable requirement,
				  the Commission shall seek to recapture the economic benefit as part of the
				  civil penalty. If sufficient information is available, the economic benefit
				  shall be compared to the total initial base penalty amount for each violation
				  for which economic benefit information is available, and if the total initial
				  base penalty amount is less than the determined or estimated economic benefit,
				  the total initial base penalty amount for that violation (or related
				  violations) shall be set at a sum that is 10% higher than the economic benefit
				  amount to ensure that civil penalties are not construed as a cost of doing
				  business and are assessed at an amount sufficient to deter future violations.
				  Penalties for each violation shall never be set at an amount that exceeds the
				  statutory maximum of $30,000 per violation.
In many cases, there will not be sufficient information to
				  determine the economic benefit of a violation, or it will be difficult or
				  infeasible to calculate the precise economic benefit amount. Where economic
				  benefit is presumed to be smaller than the total initial base penalty amount
				  for a violation, the value of performing a calculation will be minimal. For
				  cases where, at a minimum, an approximate calculation of economic benefit is
				  warranted, depending on the available information, the calculation shall
				  include:
(1) Deferred costs, representing savings from delaying
				  expenditures that should have been made sooner to comply with an applicable
				  requirement or prevent the violation (
e.g
., investments in
				  public access amenities or studies);
(2) Avoided costs, representing costs that the violator
				  should have incurred, but did not incur, to avoid the unauthorized conduct or
				  noncompliance.
When sufficient information is available, the economic
				  benefit calculation shall include periodic costs, including recurring costs
				  that would be associated with operating and maintaining required improvements
				  or equipment. The calculation shall also include capital costs for upgrades or
				  improvements or equipment.
(b) Ability to pay/ability to continue in business.
In determining civil penalty amounts, the Commission shall
				  consider a violator's ability to pay and the effect of the penalty on the
				  violator's ability to continue in business. However, because information
				  relevant to these considerations is exclusively in the possession and control
				  of the violator, the potential inability to pay or a potential effect on the
				  violator's ability to continue in business shall be considered only if the
				  violator raises these issues as a defense to a complaint for administrative
				  civil liability in the submitted statements of defense.
When ability to pay and/or ability to continue in business is
				  raised as a defense, a violator shall submit factual information and supporting
				  documentation to enable staff or the Commission to evaluate the violator's
				  financial condition and any reduction of the civil penalty amount that may be
				  appropriate. Relevant supporting documentation that a violator should provide
				  includes, but may not be limited to, audited financial statements and reports
				  (or if not audited, then those that are the basis of tax returns or regulatory
				  filings), balance sheets, profit and loss statements, statements of net worth,
				  annual budgets, bond prospectuses, and tax returns, including supporting forms
				  and schedules as may be applicable. Before submitting this information, the
				  violator shall redact (cover or blackout) all personal information, including
				  social security or taxpayer identification number, driver's license/state
				  identification number, financial account number and any other private,
				  non-public personal information, including a residential address, personal
				  telephone number, or personal email address.
Depending on the information submitted by the violator, the
				  assessment of ability to pay or effect on ability to continue in business may
				  consider cash flow, real estate, personal property and other tangible assets,
				  and other pertinent information.
The Commission is under no obligation to ensure that a
				  violator has the ability to pay or continue in business. Rather, the Commission
				  is obligated to consider these factors when imposing administrative civil
				  penalties. Therefore, when a violator demonstrates a limited ability to pay or
				  that there would be a substantial adverse effect on ability to continue in
				  business after payment of the calculated civil penalty amount, the Commission
				  shall consider whether a reduction in the civil penalty amount is warranted or
				  whether an extended payment schedule and/or installment payments may be
				  appropriate.
(c) Cost to the state in pursuing the enforcement
				  action.
When feasible to do so, the Commission shall consider
				  including the costs of investigating and pursuing an enforcement action as part
				  of the civil penalty amount. If the Executive Director includes costs of
				  investigating or pursuing an enforcement action in a complaint for
				  administrative civil liability, the costs will be itemized by documenting the
				  work performed, the time spent on the task, and the hourly rate for each staff
				  member involved. Investigation and enforcement costs may be included for staff
				  (including attorney staff) work beginning when a violation is discovered and
				  continuing until issuance of a complaint. Staff (including attorney staff)
				  costs shall not be included for any investigation or enforcement work
				  undertaken regarding the allegations set forth in a complaint after it is
				  issued. Attorney staff costs and other staff costs incurred to prepare for and
				  attend an enforcement hearing shall not be included in the civil penalty
				  amount.
(d) Other factors as justice may require.
If the Commission determines that the penalty amount
				  calculated using the preceding factors is inappropriate, it shall adjust the
				  civil penalty amount for "such other matters as justice may require," but only
				  if specific findings are made to justify this adjustment.
See
Government Code §
									66641.9(a).
				  Examples of circumstances warranting an adjustment under this factor
				  are:
(1) The violator identifies and provides relevant information
				  not considered under the other criteria listed in this policy.
(2) Consideration of environmental justice issues indicates
				  that the penalty amount would have a disproportionate impact on a disadvantaged
				  group or would be insufficient to provide substantial justice to a
				  disadvantaged group.
(3) The calculated penalty amount is substantially
				  disproportionate to the penalty assessment for similar violations made in the
				  recent past using this policy.
(e) Final Penalty Amount.
The final penalty amount shall be the total base penalty
				  amount for all violations as modified by any appropriate adjustments based on
				  consideration of the additional factors identified above in this Step 6,
				  provided the final penalty amount for each violation shall not exceed the
				  statutory minimum of $30,000 per violation.
The administrative record must indicate how the Commission
				  arrived at the final penalty amount. Where the Commission adjusts the final
				  penalty amount proposed by the Executive Director in the complaint for
				  administrative civil liability, the record should clearly reflect the
				  Commission's evidentiary and policy considerations underlying the adjustments,
				  as those considerations may not be reflected in the complaint or the Executive
				  Director's recommended enforcement decision.
II. SUPPLEMENTAL ENVIRONMENTAL PROJECTS
A. Introduction.
A Supplemental Environmental Project (SEP) is an
				  environmentally beneficial project that a violator agrees to undertake and
				  complete voluntarily in partial resolution of an enforcement action, which the
				  violator is not otherwise legally required to perform and for which the
				  Commission agrees to offset a portion of the monetary administrative civil
				  penalty that would otherwise apply as a result of the violation(s). Any SEP
				  shall be performed either directly by a violator or by a third-party other than
				  the violator using funds provided by the violator.
The Commission has broad discretion to settle enforcement
				  actions, including discretion to include a SEP as a part of a stipulated order
				  setting administrative civil liability or a settlement agreement. While SEPs
				  may be useful in the resolution of enforcement actions, the funding of SEPs is
				  not a primary goal of the Commission's enforcement program, nor is it necessary
				  that a SEP always be included in the resolution of an enforcement action that
				  assesses a monetary administrative civil penalty. The decision whether to
				  accept a proposed SEP, and the amount or percentage of a total administrative
				  civil penalty that may be offset by a SEP, is within the Commission's sole
				  discretion and shall depend on the specific facts of a particular case.
This SEP policy is intended for use by the Commission's
				  enforcement staff, enforcement committee, and the Commission in settling
				  enforcement cases administratively and does not create any rights or benefits,
				  substantive or procedural, enforceable by a party against the Commission, its
				  staff, or any person. This SEP policy is not intended to be binding on the
				  Commission or violators, or on courts in any judicial enforcement
				  proceeding.
B. SEP Guidelines.
The following guidelines apply to SEPs:
1. A SEP shall have an adequate nexus to the Commission's
				  statutory mandate to protect the Bay's resources and ensure public access to
				  the Bay and its shoreline. There shall also be an adequate nexus between the
				  nature or location of the violation(s) at issue and the nature or the location
				  of the SEP.
2. The Commission has identified the following four
				  categories of projects which may qualify as a SEP: (1) Removal of Bay fill; (2)
				  Enhancement of the Bay's resources, including habitat restoration or shoreline
				  resiliency and adaptation to sea level rise; (3) Cleanup or abatement of
				  pollution or contamination; and (4) Enhancement of existing public access to
				  the Bay or its shoreline. A SEP may fall into more than one category.
3. The amount of the penalty to be offset by a SEP shall not
				  exceed 50% of the total administrative civil penalty amount that the violator
				  is required to pay for the violation(s).
4. The Commission shall never compromise the stringency or
				  timeliness of a regulatory requirement in exchange for a SEP. Performance of a
				  SEP does not alter a violator's obligation to remedy a violation expeditiously
				  and return to compliance or to comply with all applicable regulatory
				  obligations.
5. A SEP cannot be used to satisfy the Commission's or
				  another government agency's statutory or regulatory requirements, or to satisfy
				  the violator's regulatory or permit obligation to perform a particular
				  activity.
6. A SEP shall not directly financially benefit the
				  Commission's functions, its staff, or family members of Commission
				  staff.
7. A SEP shall be enforceable against a violator pursuant to
				  a stipulated order setting administrative civil liability or a settlement
				  agreement.
8. The Commission establishes the following preferences for a
				  SEP: (a) a project with a geographic nexus (
i.e.
, a project
				  located in the same general area in which the violation(s) occurred); or (b) a
				  project benefitting a vulnerable or disadvantaged community that is located in,
				  adjacent to, or in close proximity to the same general area in which the
				  violation(s) occurred.
9. The following are examples of projects that are not
				  acceptable as SEPs: (a) projects that would benefit the violator or a property
				  owned or controlled by the violator; (b) cash or in-kind donations to community
				  groups, environmental organizations, state/local/federal entities, or any other
				  third-party that are not directed towards a specific, approved project; (c)
				  cash or in-kind contributions to environmental research, studies, assessments,
				  or monitoring programs that are not directed toward a specific, approved
				  project; and (d) general public educational or public environmental awareness
				  projects.
C. Requirements for Stipulated Orders or Settlement
				  Agreements Authorizing a SEP.
A SEP shall be enforceable through a stipulated order setting
				  administrative civil liability or a settlement agreement. The order or
				  agreement shall:
1. Accurately and completely describe the SEP, including a
				  project description or scope of work, budget, schedule, and any relevant
				  supporting materials, and provide reliable, measurable, and objective means to
				  verify timely completion.
2. Address how the SEP will comply with the California
				  Environmental Quality Act (CEQA), and incorporate any CEQA requirements into
				  the time schedule for the SEP.
3. Require that all SEP funds shall be expended, and the SEP
				  completed, within 36 months of Commission adoption of the order or agreement,
				  unless the Executive Director grants an extension for good cause shown as to
				  why the project has been delayed.
4. Require a written acknowledgment by either the violator or
				  third-party performing the SEP that any funds intended for the SEP, including
				  all funds received by any third-party from the violator, shall be spent in
				  accordance with the terms of the order or agreement on the specific, defined
				  project.
5. Require the violator or third-party performing the SEP to
				  provide the Commission with a full accounting of project expenditures. The
				  violator or third-party performing the SEP shall agree to an audit of its SEP
				  expenditures if requested by the Commission.
6. State that the SEP penalty offset amount that will be
				  satisfied by performing the SEP shall be treated as a suspended administrative
				  civil penalty, and that if the SEP is not fully implemented in accordance with
				  the terms of the order or agreement, the Commission shall be entitled to
				  recover the full amount of the suspended administrative civil penalty. Upon
				  written demand by or on behalf of the Commission, the violator shall within 30
				  days pay the suspended administrative civil penalty amount to the Bay Fill
				  Clean-up and Abatement Fund. Full payment of the suspended administrative civil
				  penalty amount shall be in addition to any other applicable remedies for
				  noncompliance with the terms of the order or agreement.
7. Require periodic reporting (quarterly reporting at a
				  minimum) on agreed upon SEP performance milestones by the violator or
				  third-party performing the SEP so that the Commission is able to monitor the
				  timely and successful completion of the SEP.
8. Require the violator or third-party performing the SEP to
				  provide a final completion report to the Commission certifying completion of
				  the SEP in accordance with the terms of the order or agreement. The Commission
				  shall review the SEP documentation and if it concurs with the certification
				  shall provide the violator with a statement indicating that the SEP has been
				  completed in accordance with the terms of the order or agreement and that any
				  remaining suspended administrative civil penalty amount is waived.
9. Require that whenever the violator or third-party
				  performing the SEP publicizes the SEP or results of the SEP, it shall state in
				  a prominent manner that the project is being (or has been) undertaken as part
				  of the resolution of a Commission enforcement action.
1. New
				  appendix J filed 6-7-2022; operative 10-1-2022 (Register 2022, No. 23). For
				  prior history, see Register 2021, No. 1.
Note: Authority cited: Section
					 66632(f),
					 Government Code; and Section
					 29201(e),
					 Public Resources Code. Reference: Sections
					 11415.60,
					 66641.5(e)
					 and
					 66641.6,
					 Government Code; and Sections
					 29610
					 and
					 29611,
					 Public Resources Code.