Stop SB221 and Its Limitation on Fines for Polluters

From Patricia Lee:
Sunday morning I caught an interview on KNME with State Senator Stuart Ingles (R) of Portales.  He is the sponsor of SB221.  Pasted below is the text of the Act along with the Fiscal Impact Report.  Please contact your state senators and urge them to vote NO on this bill.  (Click to to find your senator.) Not only does it curb pollution sanctions currently in place aimed at protecting our environment, it also takes potential monies out of the state's coffers.  Many polluters would find it easier and cheaper to pay a fine capped at $250,000 than to clean up their act.

This bill is bad for our environment and it's bad for our finances.  If we don't make the polluters pay for the damage they do, ultimately the taxpayers will pay.

Thanks.

SB 221 Proposed by Sen. Stuart Ingles (R)
AN ACT RELATING TO THE ENVIRONMENT; PROVIDING LIMITATIONS ON THE ADMINISTRATIVE IMPOSITION OF CERTAIN CIVIL PENALTIES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. A new section of the Environmental Improvement Act is enacted to read:

     "[NEW MATERIAL] CIVIL PENALTIES--LIMITATIONS ON THE ADMINISTRATIVE IMPOSITION.--Except as otherwise provided, no order issued by the secretary under the Environmental Improvement Act, Air Quality Control Act, Hazardous Waste Act, Radiation Protection Act and Solid Waste Act may assess a total civil penalty in excess of two hundred fifty thousand dollars ($250,000) or assess a penalty for violations that occurred more than twenty-four months prior to the initiation of the administrative action."

     Section 2. A new section of the Water Quality Act is enacted to read:

     "[NEW MATERIAL] CIVIL PENALTIES--LIMITATIONS ON THE ADMINISTRATIVE IMPOSITION.--No compliance order issued by a constituent agency under the Water Quality Act may assess a total civil penalty in excess of two hundred fifty thousand dollars ($250,000) or assess a penalty for violations that occurred more than twenty-four months prior to the initiation of the administrative action."

F I S C A L  I M P A C T  R E P O R T

SPONSOR Ingle DATE TYPED 1/26/05 HB SHORT TITLE Environmental Civil Penalties Limits  SB 221  ANALYST Hadwiger  APPROPRIATION (in $000s)  Appropriation Contained Estimated Additional Impact Recurring or Non-Rec Fund Affected FY05 FY06  See Narrative  (Parenthesis ( ) Indicate Expenditure Decreases)  SOURCES OF INFORMATION  LFC Files  Responses Received From  New Mexico Department of Environment (NMED)  Energy, Minerals and Natural Resources Department (EMNRD)

SUMMARY  Synopsis of Bill
Senate Bill 221 would enact a new section of the Environmental Improvement Act that would  cap civil penalties from orders issued by the secretary of the New Mexico Department of Envi- ronment (NMED) under the Environmental Improvement Act, Air Quality Control Act, Hazard- ous Waste Act, Radiation Protection Act and Solid Waste Act at $250,000 and would prohibit  imposition of any penalty for violations that occurred more than 24 months prior to the initiation  of the administrative action. The same limitations would be imposed on compliance orders is- sued by a constituent agency under the Water Quality Act.

Significant Issues
The penalties that would be capped by SB221 have been particularly critical in NMED’s efforts  to enforce environmental quality standards against federal facilities such as Los Alamos National  Laboratory, Sandia National Laboratories, and the Waste Isolation Pilot Project. Beyond these  venues, the higher penalties have been imposed relatively infrequently and only against flagrant  violators of environmental standards. This bill would likely undercut NMED’s enforcement ef- forts with regard to these violators.

NMED indicated three major concerns with SB221. First, NMED indicated that penalties should  be proportionate to the violation. When penalties are capped, the most egregious polluters might  fight it cost-beneficial to pay the penalty rather than remediate the pollution. A crucial compo- nent of any deterrence program is ensuring that penalties are commensurate with the impact of a  violator’s actions and his economic or other gain. The penalty caps in SB221 would be benefi- cial only to the worst violators of environmental standards in the state.  Second, NMED indicated concern that the two-year statute of limitations would encourage the  worst polluters – those who repeatedly defy the law and damage resources – to continue to pol- lute with near impunity, as their past sins would be forgiven after two years. SB221 could pro- vide an incentive for polluters to conceal the incident for at least two years until NMED would  be prohibited from penalized them. NMED was concerned that this statute of limitations might  also create an unlevel playing field, whereby businesses that comply with environmental regula- tions would suffer a competitive disadvantage against violators. EMNRD shared this concern,  indicating the limitation period provided in the bill apparently would run from the occurrence of  the violation, not from its discovery by the agency. This would provide for operators an incen- tive not to report releases in hopes of delaying discovery until after the two-year limitation pe- riod.

Finally, NMED was concerned that passage of SB221 would cause the federal government to  assume control of environmental enforcement in some areas, due to inconsistency between fed- eral regulations and state laws. Many New Mexico environmental enforcement programs are  delegated from the federal government, contingent upon the state enforcing standards compara- ble to federal laws and regulations. The agency indicated that weakening these penalties might  result in the federal government reassuming administration of the programs due to state noncom- pliance with federal regulations.

NMED indicates that agency seldom levies penalties in excess of $250,000. NMED’s penalty  assessments are governed by policies that define the ways penalties are calculated, and are in  concert with policies adopted by the U.S. Environmental Protection Agency (EPA). These poli- cies also require the State to consider repeat offenders, even when a past violation is more than 2  years old. Some entities – particularly federal facilities – are found to have the same violations  year after year. In the case of the federal government – an entity with virtually limitless means  (and lawyers) – a $250,000 penalty barely registers, hardly serving as a deterrent to bureaucrats  in Washington, D.C. For the federal government, SB221 is nothing less than a bailout.

PERFORMANCE IMPLICATIONS 
NMED indicates that numerous performance measures would be negatively affected by adoption  of SB221, because the agency would not be able to conduct timely and appropriate enforcement.  For example, one of the Air Quality Bureau’s (AQB) performance measures for the upcoming  fiscal year targets corrective action to mitigate violations. The AQB’s goal is to have 95% of in- spected facilities take prompt action to correct violations. SB221 would likely reduce the effec- tiveness of this measure by inhibiting NMED’s ability to assess substantial civil penalties to “bad  actors” and repeat or egregious violators. Similarly, the Hazardous Waste Bureau tracks a per- formance measure (percent of deliverables under executed consent orders that were acted upon  in a timely manner) to assess the pace of cleanup activities conducted at New Mexico’s national  laboratories. Enforcement of the consent orders that govern these cleanups relies on a robust  statutory framework. SB221 removes the primary incentive for the U.S. Department of Energy  and its contractors to conduct their field activities in a timely manner.

FISCAL IMPLICATIONS 
SB221 would potentially have a significant impact on general fund revenues. According to  NMED, the Air Quality Bureau collected $1 million per year in over the last three years from  penalties that would be capped under this proposal. NMED was not able to identify the amount  of penalties that exceeded the threshold proposed in this bill.

TECHNICAL ISSUES 
EMNRD indicated the phrase “initiation of administrative action” is not defined. An agency  would have to assume that it means the time of issuance of formal proceedings to assess a pen- alty, not the time of initiation of investigation. Hence the bill would make it necessary in some  instance for an agency to issue a compliance order or application for penalties without full investigation, in order to avoid being precluded by the two-year limitation provision.  EMNRD also noted it is not clear to what the $250,000 limit applies. As written, it is a limit on  the amount of penalty that can be assessed in any one order. The intention presumably is to limit  the total amount of the penalty for any one continuing violation, and perhaps for multiple viola- tions arising from a particular incident. As the bill is written, however, this intent could arguably  be avoided by issuance of multiple orders.