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. 38, September 20, 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

(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.