EPA-901/9-76-003d
ECONOMIC LAW
ENFORCEMENT
VOLUME IE
STRENGTHENING
ENVIRONMENTAL
LAW ENFORCEMENT:
ILLEGAL FILLING
The Judges, (detail American woodcut, 19th Century).
CONNECTICUT ENFORCEMENT PROJECT
1 U.S. ENVIRONMENTAL PROTECTION AGENCY
SEPTEMBER, 1975
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This report has been reviewed by EPA and
approved for publication. Approval does
not signify that the contents necessarily
reflect the views and policies of the
Environmental Protection Agency, nor does
mention of trade names or commercial pro-
ducts constitute endorsement or recommen-
dation for use.
Copies of this document are available in
limited quantities through the Connecticut
Department of Environmental Protection,
State Office Building, 165 Capitol Avenue,
Hartford, Connecticut, 06115.
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The Judges (detail)
John Andrew and Son (after W H. Drake)
American, 19th Century
Wood engraving
Courtesy Museum of Fine Arts, Boston. Ma.
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EP£-901/9-76-003d
ECONOMIC LAW
ENFORCEMENT
VOLUME IE
STRENGTHENING
ENVIRONMENTAL
LAW ENFORCEMENT:
ILLEGAL FILLING
Final Report Submitted Under Contract #M00103910
by: The Connecticut Enforcement Project
Department of Environmental Protection
Hartford, Connecticut 06115
to: The U.S. Environmental Protection Agency
Region I
Boston, Massachusetts 02203
September 1975
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CONTENTS
PART I.
USING ECONOMIC CIVIL ASSESSMENTS
1-1
PART II.
SURVEY OF COASTAL FILL AND STRUCTURES
VIOLATIONS
Chapter I Introduction
Chapter II Coastal Structures
Chapter III Coastal Fill
Chapter IV Conclusion
PART III. CALCULATING ECONOMIC REMEDIES
Chapter I Calculating Economic Assessments
Chapter II Determining the Cost of Compliance
Chapter III Handling Other Variables
PART IV.
CIVIL ASSESSMENT REGULATIONS
Section 22a-6b—411 - Failure to Apply for a Permit
to Place Coastal Fill
Section 22a-6b-412 Coastal Fill without a Permit
Section 22a-6b-413 Coastal Fill Not in Compliance
with the Terms of an Order or
Permit
PART V.
PART VI.
OPERATING MANUAL FOR THE APPLICATION OF
CIVIL ASSESSMENTS
THE IMPACT OF ECONOMIC CIVIL ASSESSMENTS ON
THE ADMINISTRATIVE COSTS OF ENFORCEMENT
II-l
II-3
II-4
II-7
11-11
III-l
III-2
III-9
111-21
IV-1
IV-2
IV-8
IV-18
V-l
VI-1
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PART I
USING ECONOMIC CIVIL ASSESSMENTS
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1-2
PART I
USING ECONOMIC CIVIL ASSESSMENTS
Coastal and tidal areas and navigable waters have long been
recognized as uniquely valuable resources. From the Roman begin-
nings of Connecticut's common law, their ownership has been held
by the sovereign in trust for common use. Private ownership does
not apply here. In recent years, moreover, the critical environ-
mental importance of much of this resource has come to be under-
stood.
One of Connecticut's first "environmental" laws was a 1963
act that prohibited filling below mean high tide without prior
approval by the state (§25-7d of the Connecticut General Statutes).
The General Assembly recognized that filling is an environment-
ally drastic and usually permanently harmful act. It also rec-
ognized, however, that, if done carefully and in the right types
of location, the economic benefits of filling can outweigh its
disadvantages. Consequently, the legislature charged the Water
Resources Commission with regulating coastal filling in the public
interest case by case. Today's descendant of the Commission, the
Water Resources Unit of the Department of Environmental Protection,
has inherited this responsibility for protecting the State's
coastal resources.
Those who wish to place fill in coastal areas are required
first to obtain the Department's review and approval. They must
apply for a permit, provide technical information necessary to
the review, and do only what is approved in a State permit. If
they are dissatisfied with the Department's conclusions, they can
appeal its rulings first in an administrative hearing and then
to the courts. This procedure both affords the Department the
opportunity to consider the issues involved in each case and
allows the public to make known its views on the proposed project.
The Department's efforts to protect the coast have been
largely ineffective to date. Forty-nine percent of all coastal
fills are illegal fills. People have not applied for permits.
Often they have specifically filled rapidly so as to leave the
State faced with a "fait accompli". The incentives to create
new waterfront land are great. The Department has not had the
tools to deal with such scofflaws who fill without permits or
who refuse to comply with orders to remove or modify illegal
fills. The Department has faced two alternatives:
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1-3
(1) It could refer the case to the Attorney General for
court prosecution, or
(2) It could attempt to nudge the regulatee into
compliance with threats or compromises.
Neither of these alternatives has worked. Going to court is slow,
expensive, and most uncertain; but the Assistant Attorneys General
to whom these cases are referred are not much more likely to be
able to persuade someone to remove an expensive and valuable fill
voluntarily without firm court backing than is the Department
staff. This backing has not been obtained. Although the Water
Resources Unit's Encroachment Line program has referred
approximately ten cases of illegal filling to the Attorney General
seeking removal during the last two years, not one fill has been
removed. With no credible threat of court action to support it,
the Department's attempts at jawboning have naturally been unsuc-
cessful .
The set of economic civil assessments authorized by the
regulations the Water Resources Unit is now proposing would
change this situation. They would allow the Unit to apply con-
crete, immediate incentives as large as any benefits of non-
compliance to induce prompt compliance.
This Part provides a brief overview of the Water Resources/
Connecticut Enforcement Project (CEP) Program: why it focuses
on commercial/institutional coastal filling, how the three regula-
tions would work, what safeguards are provided, who is subject
regulation, and what impact this new enforcement response will
have on the Water Resources Unit's administrative costs.
COMMERCIAL AND
INSTITUTIONAL FILL
The Water Resources Unit is applying the Department's
new economic enforcement tools narrowly at first. It will focus
on (1) illegal filling in coastal, tidal, and navigable waters
(not on inland or tidai wetlands) (2) by commercial/institutional
fillers (not individuals). However, the economic enforcement
tools developed for institutional filling along the coast can
be applied to any illegal fill, in water or on land.
The Water Resources Unit is focusing first on illegal
filling chiefly because, of the activities it regulates, filling
has the most permanent and (usually) the most seriously harmful
environmental impact. (Comparing current aerial photographs of
the coast with those taken thirty years ago shows a surprising
cumulative impact from the (usually illegal) filling that has
taken place over the intervening years). Moreover, the Depart-
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1-4
ment's standards for deciding what to do with such cases are
relatively clearly defined. (It is generally unfair to provide
tight enforcement of unclear standards; to do so invites abuse
of discretion and a consequent loss of public acceptance for
both the substantive regulation and the enforcement system.)
The Water Resources Unit is initially bearing down on coastal
filling for several reasons. The Unit is severely understaffed
and could not afford to proceed other than in small steps. The
statute establishing regulation in coastal areas has been through
the courts and is legally well accepted (unlike, e.g. the new
inland wetland laws). Finally, filling in coastal areas is
likely to be especially harmful environmentally.
By further limiting the scope of its initial economic
enforcement regulations to commercial/institutional fillers,
the Water Resources Unit is focusing its limited resources on
a small number of cases that cause most of the harm. Nine to
fourteen illegal institutional fills account for 89 percent of
the cubic yards of illegal fill placed along the Connecticut
coast each year.
Institutions Account for Nine-Tenths of All Illegal Fill
Individuals
Commercial/
Institutional
°0 of all
unperitu tted
fillers
% of cubic yards
of unperraitted
fill
Source: CEP Coastal Survey
The Department can realize significant environmental benefits
by focusing its limited enforcement resources on this small but
crucial group of violators.
TOOLS TO CONTROL
ILLEGAL FILLING
The Department's interdependent civil assessment regula-
tions for coastal fill will remove the very substantial economic
incentives that now discourage compliance with the law. Section
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411 will offset the savings a filler can obtain by ignoring the
requirement that he submit a permit application containing
technical data to the DEP before beginning any work. Section 412
would charge an illegal filler for all the benefits, including
the beneficial return from the land, which he derived from the
fill from the time of placement until the time of compliance,
except that assessments shall not include benefits derived more
than 2 years prior to detection. Section 413 would charge the
illegal filler for the same economic benefits as would Section
412 during whatever period a regulatee failed to comply with an
order to abate or modify an illegal fill or with the terms of
a permit for a fill.
Failure to Apply
(Section 411)
Because filling has such drastic, permanent consequences,
it is essential that the DEP be allowed to act before the first
truckload of fill comes anywhere near the water's edge. When
it becomes involved after the fill has been dumped, whatever
action the Department takes (1) will not be able to prevent the
substantial damage almost certainly already done and (2) will
impose much larger hardship on the company responsible for the
fill than similar requirements would before the fill was placed.
Filling before applying for a permit further frustrates the
Legislature's intent by excluding the public from the decision-
making process.
One reason that some regulatees may fill without applying
for a permit is the cost they must incur if they do apply. The
Water Resources Unit requires potential fillers to submit engineer-
ing plans and a topographic survey before issuing permits, so that
it may fully evaluate the proposed project. On the average, such
plans and surveys cost a regulatee eight hundred dollars per
case, eight hundred dollars he may prefer to invest in some other
fashion.
Section 411 would remove this incentive not to apply. It
would do so very simply — by charging delinquents $885, the
sum of the $800 a filler has saved by not applying for a permit
and an additional $85, a conservative estimate of the interest
the filler has saved on this $800 over a typical period of delay
between placing an unpermitted fill and detection. This $885
figure will be adjusted from time to time to reflect the impact
of inflation (or perhaps deflation) on the cost of applying for
a permit.
Regulatees could avoid the $800 charge entirely, if, within
20 days after receipt of a Section 411 Notice of Violation, a
company provides the Department the information it needs to de-
cide what to do about an illegal fill (and to calculate a Section
412 or 413 civil assessment, should either prove necessary), it
would have its 411 civil assessment lowered by $800 (See Section
411(g)f2). This is only fair because, in providing this informa-
tion, a company will have made the very expenditures it had avoided
earlier. The company would, however, still be assessed $85 to
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1-6
remove the benefit of having delayed this expenditure.
Filling Without A
Permit (Section 412)
Section 412 would counterbalance the other benefits a com-
pany would obtain by filling without first obtaining a permit.
First, and most important, it would charge the illegal filler an
amount equal to the imputed economic return he has realized from
the fill. This economic return would be assessed from either the
time the fill was initially placed or for two years, whichever is
the shorter period.
Section 412 would also charge those responsible for an
illegal fill for the value of having delayed paying for removing
it for however long the fill has been in place. (Since an un-
permitted coastal fill is legally a nuisance, its owner has a
duty to remove it as soon as it is placed.) If removing a fill
would cost $15,000, a company earning 10 percent on its invested
capital would save roughly $1,500 for each year it delayed re-
moval. This assessment would remove this incentive to delay.
In order to make 412 assessments which accurately reflect
the benefits non-complying regulatees have achieved, the Depart-
ment will have to determine the regulatee's savings from delaying
removal and his economic return from the land created by the
fill case-by-case. It can do this easily and with a fair degree
of precision with its present staff. When a Water Resources
Field Inspector detects an illegal fill, he will pace off its
dimensions and determine its composition. The Department's Land
Acquisition Unit will make or arrange for an appraisal of the
market value of the new illegal land created by the fill. Once
this information on the fill's dimensions, composition and market
value is available, the field inspector, using a simple economic
formula, can calculate a regulatee's civil assessment liability
in minutes.
Failure to Comply With
An Order (Section 413)
Regulatees who ignore orders or the limiting conditions of
a permit must be brought -into compliance. Their disregard under-
cuts voluntary compliance by others, mocks the regulatory pro-
cess, and is directly harmful to the public interest in the
environment. Section 413 of the proposed regulations is designed
to make sure Department orders (including Cease and Desist orders)
and permit conditions are not ignored.
The economic bases for the assessments authorized in this
regulation are almost .identical to those of Section 412: those res-
ponsible for illegal fill will be charged for (1) the economic re-f
turn attributable to the land created by the unpermitted fill during
any period of delay in complyzng with the order or permit, and
(2) the value of delaying whatever expenditures were called for
in the order or permit during the same period.
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SAFEGUARDS
These proposed regulations contain extensive safeguards
designed to protect the citizen from possible misuse of Depart-
mental discretion.
General
Safeguards
All three regulations are subject to the following basic
protections:
* Assessments are all determined according to
carefully defined, measurable and therefore
easily reviewable and correctible economic
criteria.
* The Commissioner always must consider various
grounds for mitigating an assessment. Subject
to a duty to explain decisions to mitigate, he
may always lower a civil assessment; he has,
however, no power to raise it above the level
determined by objective economic criteria.
* The Department carries the burden of proof,
and it must always follow the procedures de-
fined in the Connecticut Administrative Pro-
cedure Act and in its own Rules of Practice.
* All Department decisions are subject to judicial
review.
Particular
Protections
In addition to these across-the-board safeguards, these
regulations contain important additional protections.
The most important of these protections is the right guar-
anteed in both Section 412 and 413 to the reduction (and refund
with interest) of civil assessments that can be shown to have been
based on overestimates of the benefits of noncompliance. (Such a
guaranteed correction is not needed in Section 411 because its rel-
atively small flat rate assessment is based on the average cost
of applying for a permit in all cases; it is not fitted to the
economics of individual cases.)
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This correction procedure is quite simple. Once a company
has come into compliance, it can present (1) vouchers and re-
ceipts documenting whatever costs it has incurred and (2) alter-
native appraisals of the value of the fill. If the Commissioner
believes this evidence (and, once the company has complied with
his order, he will have little motive to be unreasonably suspic-
ious) , he can order the appropriate reduction and refund. If
the company is dissatisfied with his ruling, it has a right to
a reviewable hearing.
This correction procedure protects the citizen against
the risk that the Department might, by accident or design, assess
any organization more than the economic benefit it had gained by
not complying with the law. It ensures that the Department's
civil assessments are set by objective economic criteria, not by
anyone's subjective judgment.
There are other particular protections as well:
* As explained earlier, a company can avoid 90 percent
of the Section 411 assessment merely by providing
required information promptly.
* Liability under Section 412 is limited by
a grandfather clause that bars assessments
running prior to the effective date of these
regulations.
a maximum of two years of pre-detection
liability to assessment.
the fact that the Department cannot impose
Section 412 liability after the effective
date of an order or permit for the fill.
* If a company falls behind in its order schedule, it
can always reduce or eliminate its Section 413
liability by catching up.
THE COST SAVINGS OF
IMPROVED ENFORCEMENT
Improving the Department's coastal enforcement by adapting
its procedures to include the levying of civil assessments will
yield economic as well as environmental benefits. The average
administrative cost to the Department of processing its current
coastal filling caseload will be cut by 14 percent by the addi-
tion of civil assessments to its enforcement arsenal.
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Administrative Costa Per Case
$288
~ ~S2~47 ~1
Now
With CAs
Source: Interviews with Unit personnel, time loqs
and simulations '
Civil assessments should also lead to a significant savings
in average case processing time. For the same reasons that dollar
costs will decrease, the average amount of time that a fill case
remains pending before the Water Resources Unit should drop from
5.1 to somewhat less than 3 months, a more than 40 percent improve-
ment.
Time Per Case
5.1
Now
43%
2.9 i
With CAs
Source: Water Resources Permit and Violation Files,
interviews with Unit personnel
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This time saving is highly significant because restoration of
original bottom conditions becomes much more difficult if not
impossible after fill has been left in place for more than two
or three months.
More significantly, a CEP study of the effect of improved
enforcement in other settings suggests that the number of vio-
lators that must be processed will drop substantially. The
average decline in violations in this study was 72 percent. If
this decline occurred in the coastal filling area, there would
be a net decline in the cost of handling the current load of
such cases of 76 percent. Since the scofflaw rate among those
who fill is so unusually high, a 72 percent cut seems like a
reasonable expectation once an effective enforcement approach is
in place.
This cost savings is chiefly the result of two factors:
* When regulatees realize that any benefits they have
gained from continued non-compliance will be
denied them, they will be far less likely to
engage in the dilatory tactics that are now
so expensive to the Department;
* The Department's ability to mitigate all or part
of a regulatee's Section 411 and 412 assessments
gives it significant leverage in seeking to get
regulatees to agree to orders without forcing the
Department through costly negotiations, hearings, and
appeals.
CONCLUSION
These regulations should allow the DEP to protect the
state's coastal, tidal, and navigable waters effectively,
economically, and equitably. (They could also later easily be
extended to cover filling in inland and tidal wetlands and/or
filling anywhere by individuals as well as institutions.)
When faced with an enforcement problem in these areas now,
the Department must choose between jawboning and going to court.
Without a convincing and prompt follow-through, the former is
often ineffective. And going to court is too complex, severe,
slow, and uncertain a response to be a satisfactory alternative.
Economic civil assessments provide a workable intermediate
response. They provide just the right level of incentive, and
they do so promptly. They are demonstrably fair: they assess
violators only what they have gained from noncompliance. (In
the process they protect law-abiding companies against unfair
competition by scofflaw competitors.) The regulations' safe-
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guards ensure that those subject to regulation will be treated
fairly, and that they can always obtain review if they feel
aggrieved. The economic basis of the regulations ensures an
adequate but not excessive incentive, protects against possible
abuse of administrative discretion, and provides an objective
stand for review and correction.
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PART II
SURVEY OF COASTAL FILL AND STRUCTURES VIOLATIONS
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II-3
SURVEY OF COASTAL FILL AND STRUCTURES VIOLATIONS
I. INTRODUCTION
During the summer of 1974, the Comprehensive Enforcement Pro-
ject (CEP) conducted a study to determine the level and nature of
non-compliance with Connecticut's environmental laws by those re-
sponsible for structures (e.g. docks, breakwaters) and fills along
the Connecticut coastline. The Connecticut General Statutes en-
trust the regulation of coastal structures and fills to the Depart-
ment of Environmental Protection; authorize the Commissioner to
determine the exact location of the mean high water mark that forms
the boundary of the Department's jurisdiction; require those who
would build structures or place fill in the state's tidal, coastal
or navigable waters to obtain a permit to do so; and declare un-
permitted structures or fill to be public nuisances.* The purposes
of the study were to determine the exact nature of the enforcement
problems confronting the State along the coast in order to (1)
define what problems required priority attention and (2) help
guide the Department and the Connecticut Enforcement Project in
developing new enforcement tools specifically suited to these
problems.
The survey results indicate that improved regulation of coastal
filling by commercial and institutional regulatees could result
in substantial environmental benefits without imposing burdensome
costs on either the Department's seriously understaffed Water Resources
Unit, which administers the permit program for structures and
fill, or on the public. Illegal commercial/institutional fills are,
on the average, over ten times as large as those placed by individuals.
While fewer commercial fills lack permits than individuals fills,
they account for 89% of the total volume of illegal fill. Commercial
filling thus offers an excellent enforcement target, since a small
number of violators cause the bulk of the environmental damage.
Moreover, the nature of this damage from filling is much more severe
and permanent than the harm done by the other regulated activities.
It is primarily for this reason that the first set of civil assess-
ment regulations developed for the Water Resources program focuses
on unpermitted commercial and institutional fill.
The facts contained in this Part, and the analysis which
accompanies them, explain in more detail the reasons for choosing
commercial fill for the first Water Resources civil assessment
regulations. A description of methodology used in the study is
appended, as is a summary of the raw data from the survey.
Section 25-7 (b-e) of the Connecticut General Statutes.
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II. COASTAL STRUCTURES*
71% of the state's coastal structures are illegal. While
the rate of violation of both homeowners and institutional
regulatees is substantial, the problem is most acute among the
former. Over 80% of the individual homeowner structures sur-
veyed are in violation. On a statewide basis, these amount to
almost 5000 individual structures violations, and comprise 72%
of the total illegal structures. Furthermore, the bulk of the
environmental damage done by structures violations, as measured
by structure size is not concentrated among one group of regul-
atees, but is instead distributed in almost the same proportions
as the number of violations: the 72% of illegal structures placed
by private homeowners account for 68% of the total square footage
of illegal structures in the survey. With its limited staff and
resources, there is simply no way for the Water Resources Unit
to do more than chip away at this problem.
Not including fills.
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II-5
II - Coastal Structures
COASTAL STRUCTURES ARE A SUBSTANTIAL ENFORCEMENT PROBLEM
Percent of All Structures in Violation
40
Individual Others*
Homeowners
Source: CEP Coastal Survey.
* Including Com-Ticrcial and Institutional, Governmental,
and Homeowners' Association.
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II-6
II - Coastal Structures
INDIVIDUAL HOMEOWNERS ACCOUNT FOR
72 PERCENT OF ALL VIOLATION ...
Percent of All Structures in Violation
Homeowners
Commercial/
Institutional*
Source: CEP Coastal Survey.
* Including Homeowners' Associations.
. . . AND ALMOST 7 0 PERCENT OF THE TOTAL
NUMBER OF SQUARE FEET OF ILLEGAL
STRUCTURES .
Percent i Total Area of
Structures in Violation
•Homeowners
Commercial/
Institutional*
Source: CEP Coastal Survey.
Including Homeowners' Associations.
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II-7
III. COASTAL FILL
39% of the state's coastal fills do not have permits.
Individual homeowners are responsible for 57% of all illegal fills,
the remaining 43% having been placed by institutions. However,
commercial and institutional fill make up 89% of the volume of
illegal coastal fill. Furthermore, this 89% of all illegal fill
is placed by only a small percentage of commercial and instit-
utional fillers: 78% of all commercial/institutional fills
have permits. Thus, by focusing enforcement effort on the scoff-
law minority among institutional fillers, nine-tenths of the
environmental damage of filling could be checked.
Moreover; the 9-14 new unpermitted commercial/institutional
fills that are now placed each year represent a manageable
caseload.
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II-8
III - Coastal Pill
FILL VIOLATIONS ARE COMPARATIVELY FEW IN NUMBER.
Percent of All Coastal Violations
Fill
Structures
Source: CEP Coastal Survey,
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II-9
III - Coastal Fill
COMMERCIAL/INSTITUTIONAL FILLS ACCOUNT
FOR LESS THAN HALF OF ALL ILLEGAL FILLS ...
Percent o_£ Total Number
of Unpemitted Fills
Homeowners
Commercial/
Institutional*
Source: CEP Coastal Survey.
* Including Homeowners' Associations.
... BUT INSTITUTIONS ARE RESPONSIBLE
FOR NINE-TENTHS OF THE VOLUME OF ALL
ILLEGAL FILL.
Percent of Volume of Illegal Fill
Homeowners
.Commerc in] /
Institutional*
Source: CEP Coastal Survey.
* Including Homeowners' Associations.
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III - Coastal Fill
THUS, MOST OF THE ENVIRONMENTAL DAMAGE IS DONE BY A
MINORITY OF VIOLATORS.
Commercial/Institutional Violations as a Percentage of All Fillers
and of All Fills
Institutions Account for Nine-Tenths of All Illegal Fill
Individuals
Commercial/
Institutional
% of all
unpermitted
fillers
% of cubic yards
of unpermitted
fill
Source: CEP Coastal Survey
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11-11
IV. CONCLUSIONS
The results of the Coastal Survey summarized above contributed
importantly to the decision to focus the Comprehensive Enforcement
Project's efforts in the Water Resources Unit on the problem of
commercial filling. There are 20 structures, violations for each
illegal fill, and a minority of these fills account for 90% of the
physical volume of illegal fill. Moreover, the much smaller
number of illegal fills is almost certainly responsible for more
environmental damage than all the structures' users.
Other reasons also contributed to the decision:
* The understaffed Water Resources Unit could manage
the 9-14 new cases of illegal commercial fill that
occur annually. (With effective enforcement of the
law in this area for the first time, moreover, the
number of such cases can be expected to drop substan-
tially.) It could not possibly handle the thousands
of structures violations,
* The Department has relatively clear standards for
granting or denying applications for fill permits,
* Tools developed for coastal filling could, if they
proved successful, later be carried over to illegal
filling in tidal and inland wetlands.
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APPENDIX: COASTAL SURVEY METHODOLOGY
The data presented above is based on a sample of riverfront,
oceanfront, and harbor conditions. The sample consists of all
coastal structures and fills in Milford Township and Groton during
the summer of 1974. All structures and fills in the sample area
which had existed since 1939 were identified and presumed to be
legal, since the state first began regulating coastal encroachment
in that year. These structures and fills were then marked off on
aerial maps of the coast made in 1968. Then, all permits granted
subsequent to 1939 were entered onto the 1968 maps. Thus, when
the CEP study team spent several days inspecting the coast on foot
and by boat, they could easily identify fills and structures with-
out permits, since all those with permits had been previously
marked off on the maps. All the Milford structures and fills were
then measured to provide an index of their environmental impact.
The persons responsible for all structures and fills were identi-
fied for both towns so that classification and analysis could take
place.
The combination of the Milford and Groton data provides a
sample of sufficient size to provide a fair estimate of coastal
conditions statewide. The numbers presented in the text describing
the total State caseload (e.g., "5000 structures violations" and
"a dozen commercial fills per year") were arrived at by a process
of extrapolation. It was assumed that the relationship existing
between number of permits and number of violations in Milford and
Groton would exist throughout the state. Thus, after determining
the number of permitted structures and fills statewide, it was
possible to estimate how many other encroachments had been placed
without permits.
All numbers and percentages that were not whole numbers were
rounded to the lower number if the number in the third decimal
place was 4 or less, to the higher number if it were 6 or more.
If the third decimal place was occupied by a 5, rounding was al-
ways to the nearest even number.
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APPENDIX: COASTAL SURVEY DATA
MILFORD
Structures 220
Fills 14
Structures Violations 166
Fill Violations 9
Homeowner Structures 150
Homeowner Structures Violations 121
Homeowner Fills 5
Homeowner Fill Violations 5
Total Sq. Footage/Structures 221,246
Total Sq. Footage/Structures in Violation 138,188
Total Sq. Footage/Structures of Homeowners 117,441
Total Sq. Footage/Structures of Homeowners in Violation 79,576
Total Cu. Footage/Fills 963,850
Total Cu. Footage/Fills in Violation 386,350
Total Cu. Footage/Fills of Homeowners 43,350
Total Cu. Footage/Fills of Homeowners in Violation 43,350
GROTON
Structures
Fills
Structures Violations
Fill Violations
Homeowner Structures
Homeowner Structures Violations
Homeowner Fills
Homeowner Fill Violations
302
54
205
21
182
148
14
12
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PART III
CALCULATING ECONOMIC REMEDIES
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III-2
CHAPTER I
CALCULATING ECONOMIC ASSESSMENTS
The Department of Environmental Protection's civil assess-
ments for unpermitted coastal fill seek to eliminate the economic
benefits of illegally filling. Such benefits include:
* The value of the land created by the illegal
fill;
* Delaying the cost of removing the illegal fill;
* Avoiding the Water Resources Unit's permit process.
The two key illegal fill regulations, Section 22a-6b-412
and 413, are designed to counterbalance the first two of these
benefits. Both will vary widely from case to case. The benefit
a regulatee can realize from the land it has created will vary
according to the land's size, location, composition, surroundings
and zoning. Similarly, the savings a regulatee gains from delay-
ing the removal of an illegal fill depends upon a variety of
factors, including the total cost of removal and the price it
must pay to borrow money. Both benefits increase the longer the
unpermitted fill remains. Section 412 and 413 assessments, then,
must be carefully fitted to each situation.
Section 22a-6b-411 allows the Department to levy a monetary
assessment equal to the amount a regulatee typically saves if
it has not prepared and submitted a permit application before
filling. This assessment, the average of what the required
permit application cost a sample of regulatees, is a flat .charge
that does not vary from case to case.
A regulatee who is delinquent in removing an unpermitted
fill does not escape the expense of removing that fill. It
merely has postponed an expenditure that it had been obligated
to make some time in the past. (This interval will be called
the assessment period.) It is required to remove the fill now
or be liable for further assessment. Although it has saved the
amount that the necessary filling operation would have cost in
the past, plus accumulated interest, it still faces an expense
today. Its net saving is the difference between the two amounts.
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III-3
If these civil assessments are to be effective, they must
fully counterbalance the benefits of noncompliance. Section
411's assessment does this very simply. However, the assess-
ments authorized by Sections 412 and 413 have to be closely
tailored to the economics of each situation if they are to be
effective and equitable. This Chapter explains the procedure
that the Connecticut Enforcement Project (CEP) has developed to
help the Department calculate accurate assessments appropriate
to each illegal fill case easily and quickly. Subsequent
Chapters are devoted to explaining how the several variables
used in the formula are determined.
THE ASSESSMENT
FORMULA
Department staff are not required to make a series of
calculations in order to determine an accurate assessment. They
can use the following formula, either manually or with a desk
calculator.
Notation
Input Variables
AP = Assessment period, i.e., the period of delay,
in years.
CC = Annual cost of capital or discount rate, as a
decimal fraction.
CR = Today's cost of removal or modification, in
dollars.
BR = Annual beneficial return to the regulatee on
the land created, in dollars.
MV = Total current market value of the land created,
if the fill could be left in place.
RI - Annual rate of inflation, as a decimal fraction.
T = Effective U. S. income tax rate, as a decimal
fraction.
Output Variables
CA = Civil assessment per month, in dollars.
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III-4
Other Variables
CVBR = Compound value of BR over the assessment
period, in dollars.
CVCR = Compound value of the costs of removal
that should have been incurred at the
beginning of the Assessment Period, in
dollars.
Formula
The civil assessment is given by formula (1) below, with
the additional variables defined by equations (2), (3), and (4).
(These formulae are derived in the following section.)
CA = 1/12(AP)[ (CVCR - CR) + CVBR ] (1)
/i + cc\AP
CVCR = (1 - T) CR I ]_ + RI ) (2)
BR = (MV) (CC) (3)
,AP
CVBR = (1 - T) BR
Derivations
CA:
(1 + RI\r/l + CC\
^CC-RI I [\1 + RI/
The monthly CA is equal to the sum of the compounded
monthly savings from having delayed required removal costs plus
the qompounded monthly benefits derivable from the land created
by the fill. These average monthly benefits are calculated by
finding the regulatee's total benefits during the entire assess-
ment period (CVCR-CR and CVMR) and dividing each by the number
of months in the assessment period. The regulatee's net saving
on removal is the difference between the compounded value of
past removal cost and the cost of removal today. Thus, CVCR-
CR represents the regulatee's benefit from delayed removal.
CVBR represents the regulatee's benefit derivable from the land
plus interest on that amount over the assessment period. Thus,
CA = 1/12(AP)(CVCR-CR) + 1/12(AP) (CVBR)
Formula (1) above is an equivalent formula in which 1/12(AP) is dis-
tributed over the sum of CVCR and CVBR.
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III-5
CVCR:
Today's cost of removal is CR before payment of income tax.
Since removal costs are generally considered to be an expense
of doing business for Federal tax purposes, the regulatee may
deduct this expense from his gross income before computing his
tax liability. Each dollar of removal costs lowers the regulatee's
net income by T percent, where T is the effective U. S. income
tax rate. Thus, if T is .48 (i.e. 48 percent, the current
corporate tax rate), then a before-tax removal cost of $1 is
only 52 cents after-tax.
To find the current compound value, after tax, of the cost
of removal that should have been incurred at the beginning of
the assessment period, we first deflate (1-T) (CR) by the rate
of inflation dxiring the assessment period, and then bring the
resulting amount to present value by multiplying by the cost
of capital. Thus:
/ T \ AP AP
CVCR = CR (1-T) f ^ j (1+CC)
Formula (2) above is equivalent.
BR:
The Beneficial Return on the fill is simply the gross return
on an investment equivalent to the market value of the land.
Since the investment is generally in undeveloped land, deprecia-
tion need not be considered for tax purposes. Appreciation or
depreciation in value at the time of possible resale is handled
through an inflation factor in CVBR. Thus:
BR = (MV) (CC)
which is the same as the equation (3).
CVBR:
Today's annual gross value to the regulatee of the land
created is BR. This amount which the regulatee receives in rent,
use value, or speculative holding of the land increases his gross
income and thus his income tax liability now or in the future.
After paying tax at an effective rate of T, an additional income of
BR increases his after tax income by (1-T) BR. The compound value,
after tax, of the annual value of the land is found by compounding
and summing the values of the after tax income for each of the years
in the assessment period. The land's after tax value in each year is
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III-6
the current value, (1-T)(BR), deflated by an inflation factor
and multiplied by a compounding factor for the cost of capital.
Thus:
AP / \n-l
CVBR = £ (1-T) (BR) i±£S
n=l V1*'*1/
Where n is an index referencing a year in the assessment period
(working back from the present). Formula (4) above is equiv-
alent, based on the formula for the sun. of a geometric series.
DETERMINING
MAXIMUM ASSESSMENTS
For purposes of calculating maximum civil assessments (which
appear in the regulation assessment schedules), we assume the
following values:
* RI = .15 (i.e., 15%). The typical rate of inflation
has increased markedly over the last several
decades and construction and property rental
costs have experienced above average inflation.
* AP = 2 years. This is the maximum duration of
pre-detection benefit that the civil assessments
in the 412 regulation account for, and this is a
reasonable estimate of the possible duration of
post-detection delay.
* CC = .20 (i.e., 20%). Over the long run, the cost
of capital has usually exceeded the inflation rate
by about 5 percent to provide an adequate return and
to compensate investors for inflation.
* T = 0. Municipalities and non-profit institutions
have a zero income tax rate.
An Example: Derivation
of a Maximum Assessment
The following computations illustrate the calculation
of the civil assessment from Schedule A in Sections 22a-6b-412
and 413 which appears in the cell formed by the intersection of
the Market Value row "$500-10,000" and the Removal Cost column
"55001-10,000". Other input variables are set at the values
specified above.
CVCR = (l-.OO) 10,000 (l+.ZO) " = 10888.47 [by (2) ]
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III-7
BR = (50,000) (.20) = 10,000 [by (3)]
CVBR=(1=.00) 10,000 '1, lTT -l= 20434.78
.20-. 15 L\-LT--L3/ J [by (4)]
CA = 1/12(2) [(10,888.47 - 10,000.00) + 20434.78]
= 3553.88 [by (1)]
For this example the civil assessment would be $3553.88 for each
month in which the regulatee failed to comply with the statutory
permit requirement or with a Department order.
SETTING
INDIVIDUAL ASSESSMENTS
Individual assessments are determined using the same assess-
ment formulae as were used to fix the maximum assessment schedule.
However, the Department will use current real values for AP, CC,
CR, BR, RI and T.
* The Assessment Period (AP) will, (1) for Section 412,
be the actual period of past delay for which the
regulatee is liable, and (2) for Section 413, be
for however long the regulatee is not in compliance
with the terms of an order. The. AP should be rounded
to the nearest month, and the resulting period con-
verted into years with a decimal fraction if nec-
essary. For example, 1 year and 3 months becomes
1.25 years.
* The Cost of Capital (CC) will be set in most cases
as the marginal rate obtaining at the time for
persons similar to the regulatee (e.g., for
companies in the same industry). (See Chapter 3-)
* The Cost of Removal (CR) will be determined on a
case-by-case basis by Water Resources Unit per-
sonnel applying excavation industry data to the
particular circumstances, or else by outside
consultants. (See Chapter 2.)
* Benefit Derivable from the Land Created by the Fill
(BR) will be determined on a case-by-case basis by
Land Acquisition Unit appraisers or by outside con-
sultants. (See Chapter 3.)
* The Rate of Inflation (Deflation) (RI) will be de-
f ined as a rolling three year average of the annual rate
of price change based on the best available index.
(See Chapter 3. )
-------
* The U. S. Income Tax Rate (T) applicable to the
regulatee will be assumed to be 48 percent if the
regulatee is a corporation (with very limited ex-
ceptions) and zero percent if it is a non-profit
institution. The rate will vary if the source
is an individual or a partnership. (See Chapter
3.)
The following chapters discuss how the Water Resources
Unit will determine a regulatee's cost of compliance and how
the Unit will treat inflation, cost of capital and taxes in
calculating assessments.
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III-9
CHAPTER II
DETERMINING THE COST OF COMPLIANCE
The purpose of the Department's civil assessments is to
discourage noncompliance by taking away the regulatee's economic
benefit from remaining in violation. The Department must, there-
fore, determine the gain its regulatees derive from noncompliance.
A person who has filled illegally reaps two primary financial
benefits from his action.
First, regulatees ordered to remove a fill may realize
substantial savings by delaying the costs of removal. Consider
the case of a violator who delays for one year in removing a
fill he has placed illegally and must remove. By delaying
removal he can realize one year's return on the cost of re-
moval by investing the sum in an alternative and profitable
investment.
Example: Assume that the cost to the regulatee of
removing its fill was $30,000, and that
its cost of capital (the return typically
earned by the regulatee on funds available
to it) is 12 percent. Thus, its benefit
from delaying removal for 1 year, assuming
no inflation during that year, is 12 percent
of $30,000 or $3,600.
Second, regulatees benefit from the land they create
when they fill. The amount of this benefit will vary depending
on a variety of factors, including the size of the land created,
its location, the zoning restrictions that apply to it, the
value of adjoining and proximate lands, etc. This Land Value
benefit is always a factor in the regulatee's mind: had it not
believed it would benefit from placing the fill, it would not
have incurred the considerable expense of filling. The reg-
ulatee's desire to continue reaping economic benefits from this
land will also encourage it to delay removal for as long as
possible.
Regulatees who are ordered to remove their unpermitted
fills face substantial costs in doing so. Not only must the
regulatee spend a large sum of money to effect the excavation,
hauling and disposal of the fill material, but it loses the
benefit of the land it had created as well. This economic loss
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111-10
(referred to as the regulatee's Cost of Compliance) is equal
to the regulatee's Cost of Removal (what it must spend to
satisfy the Department's demands) plus its Land Value Benefit
(which it will lose when the land is removed).
The regulatee's Cost of Compliance is a necessary piece
of information for the Department's assessment calculus. Deter-
mining the cost of removing fill for an individual regulatee
requires a clear understanding of the mechanics of fill removal
and a knowledge of the variables which affect the cost of remov-
al. Determining the benefit a regulatee derives from the land
created by the illegal fill will usually require the services
of experienced land appraisers, either consultants or members
of the Land Acquisition staff. This Chapter explains (1) how
the Cost of Removal can be calculated quickly and easily, and
(2) how the Unit can obtain accurate and inexpensive appraisals
of a regulatee's Land Value Benefit.
COST OF REMOVAL
To determine the benefits of delaying removal (or modifica-
tion) of an illegal fill, the Department must know how much the
regulatee should have spent to comply. To determine what its
cost of removal is,one must first decide what each of the
following component costs are:
EC = Excavation Cost = The total cost to the regulatee
of excavating fill material (in dollars)
TC = Transport Cost = The total cost to the regulatee
of transporting its fill material from the fill
site to a dump site (in dollars)
DC = Disposal Cost - The total cost to the regulatee
of disposing of excavated fill (in dollars)
FC = Fixed Charges = The total cost to the regulatee
of mobTlization and demobilization of excavation
and grading equipment (in dollars)
P&OM = Profit and Overhead Margin = The percentage by
which contractors customarily inflate the sum
of EC, TC, DC, and FC in calculating their bill
to their customers (in percent )
This section first outlines how the Department should determine
what each of these costs is and then goes on to show how these
bits of information are used to calculate individual assessments,
EXCAVATING FILL
The first step in removing fill is to excavate it with some
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III-ll
type of earth-moving equipment such as a backhoe, dragline, or
bulldozer-loader .
The cost of excavating fill depends upon the following
variables:
V = Volume = The volume of the fill to be removed
(in cubic yards)
ERR = Equipment Rental Rate = The rental rate of the
excavating equipment and labor to be employed
(in dollars per day)
EER = Equipment Efficiency Rate = The average rate, of
speed at which the excavating equipment will
operate (in cubic yards per day)
Dividing the Equipment Rental Rate by the Equipment Efficiency
Rate will yield the cost per cubic yard of excavation. Multiply-
ing this by the total Volume yields the total cost of excavation.
Thus, the formula for the excavation cost of any fill removal is;
'„ \vj IERR) . . . . , .
= (m dollars)
Example: The Department orders the removal of 10,000
cubic yards of fill. The excavating equipment
to be employed is a 3/4 yd. dragline, which
rents for $360 per day, including labor, and
will operate at a speed of 280 cubic yards per
day.
V = 10,000
ERR = $360
EER = 280
(10,000) ($360) _
fcC - 2lfo $12,857
The per cubic yard cost of excavation is
$12,857 _
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111-12
TRANSPORTING
FILL
As the earth-moving equipment excavates the fill material,
it loads the material onto trucks which will transport the
material to some pre-determined dump site.
The cost of transporting fill depends upon the following
variables:
V = Volume = The volume of the fill material excavated
Tin cubic yards ).
EF = Expansion Factor = The percentage by which the
material expands in volume after it is excavated,
(in percent ).
D = Distance = The distance from the fill site to the
dump site (in miles).
TS = Truck Speed = The average speed of the trucks in
transit from the fill site to the dump site and
back (in miles per hour).
IT = Idle Time = The average amount of time per 8-hour
working day which a truck remains idle, either
waiting to be filled with excavated material or
to discharge its load at the dump site (in hours).
C = Capacity = The capacity of the trucks employed for
unexpanded material (in cubic yards).
TRR = Truck Rental Rate = The daily per truck rental of
the trucks and drivers to be employed (in dollars
per day).
From the above variables, the following factors can be
derived:
TTV = True Transported Volume = The volume of the fill
to be~transported~increased by the Expansion Factor.
TTV = (V) (1 + EF) (in cubic yards)
TT = Transport Time = The average amount of one eight-
hour working day which a truck spends in transit
between fill site and dump site*
TT = 8 - IT (in hours),
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111-13
MPD = Miles Per Day = The average distance traveled by a
truck between a fill site and dump site during an
eight hour working day.
MPD = (TT) (TS) (in miles)
TPD = Trips Per Day = The average number of round trips
one truck makes from fill site to dump site and
back in one eight hour working day •
= (in trips)
DVT = Daily Volume Transported = The average amount of
Fill material transported from the fill site to
the dump site per working day by the trucks.
DVT = (TPD) (C) (in cubic 'yards)
TD = Transport Days = The number of truck days* required
to complete the transporting of the excavated mater-
ial from the fill site to a dump site
TTV
rpr) = •*• •*•v
DVT
Multiplying the Truck Rental Rate by the Transport,Days
yields the total cost of transport.
Thus, the formula for the transport cost of any fill re-
moval is:
TC = (TD) (TRR)
ti
which expands to:
[(V) (1 + EF)]
r-
TC = (8 - IT) (TS) (C)
(2D)
[TRR]
* A "truck day" is one day's work by one truck. Thus, TD
equals the number of days it would take one truck of a
given capacity to complete the transport of the entire
fill. Almost all fill removal jobs will employ more than
one truck, but it is the number of truck days, not the
number of trucks employed per day which is significant in
the cost estimation formula.
-------
Derivation
111-14
TC
TC
TC
= (TD) (TRR)
TTV
DVT
_ (V) (1 4- EF)
TC =
DVT
_ (V) (1 + EF)
(TPD) (C)
(TRR)
[(V) (1 + EF)]
TC = (MPD)(C)
(2D)
[TRR]
[(V) (1 + EF)]
TC = (TT) (TS) (C) [TRR]
f251 J
[(V) (1 + EF)] "1
» TC =j (8 - IT) (TS) (CTI [TRR]
(2DT
Example: A fill with an in-place volume-of 10,000 cubic
yards which the Department has ordered removed
expands by 15 percent when it is excavated and
placed on three dump trucks with a capacity of
15 cubic yards each. These trucks, with drivers,
rent for $190 per day, and will travel the 5
miles between the fill site and dump site at an
average moving speed of 18 miles per hour. The
trucks will spend two hours of an eight hour
working day idle, during which time they are
loading and unloading excavated material.
V =
EF =
D =
TS =
IT =
C =
TRR =
10,000
.15
5
18
2
15
$190
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111-15
Thus,
TTV = (10,000) (1.15) = 11,500 cu. yd.
TT = 8 - 2 = 6 hrs.
MPD = (6) (18) = 108 miles
TPD = IT§) = 10*8 ll trips
DVT = (11)(15) = 165 cu. yds.
TD = H,500 .„ r
ID -jfg— = 69.6 70 days
Therefore,
TC = (70) ($190) = $13,300
The per cubic yard cost of fill transport is;
$13-300
10,000 9-L-JJ
DISPOSING OF
EXCAVATED FILL
Before the removal of fill gets underway, there must be a
plan for disposal of the excavated material. This decision will
determine the dump site, and in part determines the costs incurred
in fill removal, since the distance between fill site and dump
site is a key factor in the Transport Cost equation. There are
several options. The material may be sold, either to the con-
tractor who performs the removal operation or to some other
person, in which case the responsibility for its proper disposal
naturally passes to the new owner. If the person removing his
fill can find no one who will buy or take his excavated material
without charge, he will incur the additional expense of having to
employ more equipment at the dump site to spread out and smooth
over the excavated material. In rare instances, the person may
have to pay either an individual or a municipal solid waste dis-
posal site for the privilege of dumping his unwanted material.
Before the removal operation is performed, the Department's
Field Inspectors will have no way of knowing what is to become
of the excavated material. However, some assumptions about the
method and cost of disposal must be made in order to arrive at
a civil assessment amount. It will be assumed that the regulatee
will be unable to sell the material and that he will be required to
grade the material at the dump site, but that he will not have
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111-16
to pay a disposal fee. Making these assumptions will produce
high but reasonable estimates of removal costs. Since all civil
assessments will be reduced upon presentation of evidence that
the Department ' s estimate was too high once the regulatee has come
into compliance, such an estimate is acceptable.
Under these assumptions, the cost of disposing of excavated
fill depends upon the following variables:
TTV = True Transport Volume = The Volume of the excavated
fill increased by the Expansion Factor (in cubic
yards) .
GRR = Grading Rental Rate = The daily per machine rental
cost for the equipment and operators to be employed
(in dollars per day) .
GER = Grading Efficiency Rate = The average rate of speed '
at which the grading equipment will operate (in
cubic yards per day) .
Dividing the Grading Rental Rate by the Grading Efficiency
Rate will yield the cost per cubic yard of excavation. Multi-
plying this by the True Transported Volume yields the total cost
of disposal.
Thus, the formula for the disposal cost of any fill re-
moval is:
_ (TTV) (GRR) , . , n , .
~ - - - ~ {ln Collars)
Example: A fill with a True Transported Volume of 11,500
cubic yards has been removed in accordance with
the Department's order. The regulatee 's arrange-
ments for disposing of the material entail giv-
ing it to a third party free of charge and
grading the material at the third party's dump
site. This will be done by a bulldozer which
rents for $370 per day, including labor, and
which grades at a speed of 1000 cubic yards
per day.
TTV = 11,500
GRR = $370
GER = 1000
DC = (11.500) ($370)
c
1,000
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111-17
The per cubic yard cost of grading is
ESTIMATING
FIXED CHARGES
Fixed charges are the one-time costs for mobilizing and
demobilizing equipment. Every type and size of excavation
equipment has its own Fixed Charge. These fixed charges are
listed in
FC = Fixed Charges = The cost of mobilizing and
demobilizing excavating and grading equipment
(in dollars).
Example: The Department orders a regulatee to remove
his fill. Excavation will require the use of
a 1-1/2 cubic yard backhoe, the mobilization
and demobilization of which costs $175. Dis-
posal will include grading the excavated mater-
ial at the dump site by a 1-1/2 cubic yard
bulldozer, whose mobilization and demobili-
zation cost $50.
FC = $175 + $50 = $225
Fixed charges are not a function of the volume of material to
be removed.
ADDING THE PROFIT
AND OVERHEAD CHARGE
The excavation, transport, disposal and fixed charges
discussed above do not include any allowance for contractor
profit and overhead. Contractors customarily inflate their
charge for the four factors listed above by between 12 and
20 percent to account for overhead expenses (billing, records,
telephone, office rent, etc.) and profit.
P&OM = Profit and Overhead Margin = The percentage by
which contractors customarily inflate the sum of
EC, TC, DC and FC in calculating their bill to
their customers (in percent).
* This 10,000 figure is the in-place volume of the fill in
the example. Multiplying this by the 15 percent yields
the True Transported Volume, 11,500 cubic yards,
which is also the amount which must be graded.
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111-18
Example: A contractor performs a fill removal for a
customer. The total amount of the excavation,
transport, disposal and fixed charges of this
operation are $27,110. This contractor custom-
arily inflates his removal charges by 10 percent.
EC + TC + DC + FC = $27,110
The contractor will thus bill his customer for somewhere
in the vicinity of $30,000, since
(1.10) ($27,110) = $29,821 or $30,000
SUMMARY:
COST OF REMOVAL
Adding the Excavation Cost, the Transport Cost, the Disposal
Cost and the Fixed Charges, and increasing the resulting sum by
the Profit and Overhead Margin, yields the regulatee's Cost of
Removal.
CR = (1 + P&OM) (EC + TC + DC + FC) (in dollars)
Example: A regulatee who was ordered to remove his
fill by the Department incurs the following
costs:
EC = $12,857
TC = $13,300
DC = $ 4,255
FC = $ 225
The contractor who performs the removal operation charges on the
basis of a 10 percent Profit and Overhead Margin. The regulatee's
total cost of removal is thus
(1.10) ($12,857) + ($13,300) + ($4,255) + ($225)
= (1.10) ($30,637) = $33,700
$33 700
The per cubic yard cost of removal is IQ'QOQ = $3.37
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111-19
ACTUAL ASSESSMENTS
The amount of most civil assessments for illegal filling
will be determined before removal is effected. The Department
will therefore have to make assumptions about some of the fact-
ors in the cost of removal equation in order to set the violator's
initial liability.
The following assumptions will be made by the Department in
calculating the civil assessments:
Excavation Costs
and Disposal Costs
ERRs, EERs, GRRs, and GERs will be found in tables found
in a current industry cost information publication, such as
Building Cost Construction Data, published by the R. S. Means
Company of Duxbury, Massachusetts.
Transport
Costs
TRR = $195/day
C = 15 cu. yds.
TS = 18 mph
IT = 2 hrs. (or 25 percent of the working day)
D = 5 miles
Fixed
Charges
Fixed charges for various excavating and grading machines
are also available in industry publications such as Building
Cost Construction Data.,
Profit and
Overhead Margin
P&OM = 10%
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111-20
ADDITIONAL
INFORMATION
For detailed information concerning how to go about finding
an individual regulatee's Cost of Removal, see the chapter
entitled "Finding the Regulatee's Cost of Compliance" in the
Operating Manual for the Application of Civil Assessments.
LAND VALUE BENEFIT
Each month that a regulatee has an unpermitted fill in
place, he reaps a benefit from the land created by the fill.
This benefit represents the second, and in most cases much the
larger element in a regulatee's Cost of Compliance. A regu-
latee's Land Value Benefit is considered part of his Cost of
Compliance since he must, in effect, "pay" the amount of this
benefit when he comes into compliance with an order to remove .
the fill.
Under the civil assessment system, when an illegal fill
is detected, Water Resources Field Inspectors will examine the
fill to obtain information necessary to determine the regulatee's
Cost of Removal. They will also inform the Department's Land
Acquisition Unit of the fill's existence, and this Unit will
then make an appraisal of the Land Value Benefit, taking
into account the land's size, location, composition, zoning,
and likely appreciation. If Land Acquisition is unable to
make an estimate, the Water Resources Unit should obtain an
outside appraiser.
*************
A regulatee's Cost of Compliance is equal to the present
value of the sum of its benefits from delaying removal of the
fill and its benefits from the land created. It can be cal-
culated accurately and relatively easily using the above
formulae.
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111-21
CHAPTER III
HANDLING OTHER VARIABLES
INFLATION
Inflation affects both the cost of fill removal and the
value of the land created by a fill. The importance of in-
flation for estimating the cash flow of the costs of compliance
over a period of years should be obvious after the experience
of the last several years. Machinery and labor costs have
increased continuously, and the cost of fuel for excavation
equipment and hauling vehicles has skyrocketed. The value of
land, especially waterfront land, has also increased sharply.
Indexing Inflation
The economic assessment formula adjusts the estimated costs
of compliance cash flow for inflation. All the Department need
do is adjust the figure used as the assumed inflation (deflation)
rate each year to reflect the average experience of the previous
three years. A three-year rolling average is used to flatten
out sudden sharp shifts in the rate both to reduce sudden shifts
in assessment levels and because people making capital decisions
similarly "smooth" adjustments in their "inflation expectations."
The civil assessment regulations allow the Commissioner to
correlate the inflation rate used in the assessment calculus
with whatever index of price change he finds most appropriate.
The U. S. Bureau of Labor Statistics, although it compiles
cost indexes for hundreds of commodities, does not prepare a
fill removal cost index. An appropriate substitute can be found
in the Consumer Price Index (CPI) which combines the indexes
for commodities and services. The most convenient source for
the CPI is the Monthly Labor Review, available in the Government
Documents room of the State Library.
Calculating The
Rate of Inflation
The Consumer Price Indexes (All Items) from 1971 to 1974
yield the rate of inflation (RI) for use in the foriuila through-
out 1975. The figure is obtained by averaging the percent changes
from 1971-72, 1972-73 and 1973-74.
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111-22
ALL ITEMS
Percent
Index Change
6.8% = RI for 1975.
6.8%
USING THE
COST OF CAPITAL
One of the innovations of the Connecticut Enforcement Program
is the attempt to put the regulatory agency into the shoes of the
regulatee. Just as businessmen faced with environmental regulation
focus immediately on the cost of raising and using money to meet
environmental standards now and in the future, so must economic
civil assessments take the current and continuing costs of using
money into account.
Once the cost of compliance cash flow (which describes the
cash outlays that will be required in each year of control
programs) has been established, the economic assessment calculus
discounts it at the cost of capital rate appropriate to the
particular regulatee to a present value. If the cost of capital
is 10 percent, expenditures of $1100 a year from now would be
discounted to a present value of $1000 (i.e., 1100/ 1+ .10).
Such a discounting is necessary because ten dollars of
expense three years from now is less painful than ten dollars due
now. It is less painful because, over the three years one
retains that ten dollars, one can use it. If, for example, one
could earn one dollar in each of the three years one had to
invest the ten dollars, the net reduction in one's current _
worth attributable to this future expense is $7.51 [.10/(1+.10) 1«
Businessmen evaluating the costs of different investment
projects, including abatement projects, have to take the time
value of money into account. They are keenly aware that ten dollars
spent three years in the future entails considerably less cost than
ten dollars spent now. Similarly, ten dollars received (or saved
in taxes) three years hence is less valuable than such a savings
received immediately. They consider the total present value of a
project as its immediate costs plus future costs, reduced by a
discount factor equal to the time value of money.
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111-23
USING THE
COST OF CAPITAL
The cost of capital to a regulates is its marginal cost per
year of obtaining additional capital funds. For most businesses,
the cost of capital is the weighted average of the costs of debt
(e.g., bond issues or bank debt) and equity (e.g., sales of
common stock). If a company's capital is 50 percent debt with a
marginal cost of 10 percent and 50 percent equity with a current
cost of 20 percent, the company's cost of capital will be 15
percent.
The CEP formula uses a marginal cost of capital rate so that
the low interest costs on bonds sold twenty or thirty years ago
do not depress the rate so as to make it a misleading measure of
the current cost of money to the regulatee. The marginal cost of
capital rate also effectively reflects changes in the market price
of money of all sorts. When interest rates go up (and common
stock prices down), the marginal cost of capital will go up,
accurately reflecting the increased cost a regulatee will have
to pay for the resources required for the control project.
The cost of capital is the right discount factor to use
in the economic assessment calculus because (1) it is the cost
business must pay for its money and (2) it therefore represents
a minimum rate of return businessmen must obtain on their invest-
ments. A business will be able to earn at least this rate of
return on any resources available to it, which makes it the
proper discount rate for bringing future costs to present value.
The cost of capital is also a good measure of the opportunity
costs of investing in the pollution control. Not only are the
outlays required for such expenditures not recouped, but they
clearly generate no income above expenses. In the meantime, the
regulatee must pay its cost of capital rate to obtain the money
needed to pay for the expenditures. The civil assessment
formula discounts future costs by the cost of capital and includes
opportunity costs by using the cost of capital as the interest
rate in the amortization formula. The flat, monthly rate which
is thereby derived represents not only the dollar cost of control
but also an interest component which equals the minimum rate of
return available on the investment. The resulting civil assess-
ment thus offsets not only equipment and operating costs savings
due to noncompliance, but also the return on capital which would
be made by investment of these savings in a profitable venture.
COMPONENTS OF THE
COST OF CAPITAL
Since the cost of capital is the cost of raising or
borrowing money, it is natural that different people and businesses
have different costs of capital.
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111-24
Industry-wide
Costs of Capital
Although the cost of capital is a key tool used all the time
by businessmen and economists, it is hard to pin down exactly,
especially on a company-by-company basis, chiefly because of the
difficulty of measuring the cost of the equity component. If
equity is based on book value, distortions are possible for a
variety of accounting reasons, e.g., because assets purchased
long ago that have appreciated substantially may still be
carried at their original worth. Using market value avoids this
difficulty; in fact, the market adjusts equity values taking
future as well as current value into account. However, market
values (1) are not available for many potential regulatees, and
(2) are subject to sharp swings not entirely caused by facts
relevant to the particular case. The cost of capital of indi-
vidual companies is an issue in litigation periodically and the
result is virtually always a drawn-out, expensive and not clearly
resolved contest. Connecticut's CEP regulations avoid these
difficulties entirely by using industry average cost of capital
figures. This practice has several other, equally important
advantages.
* The Department's staff will not have to gather
financial data about each company and go through
a series of financial calculations (with which
most engineers are unfamiliar). Instead, the
staff will only have to decide to which industry
group the regulatee belongs and look up that
industry's cost of capital on a one-page table
maintained by the Department.
* The Department will not have to worry about
adjusting for temporary changes.
Moreover, the use of industry average data seems an acceptably
accurate surrogate measure of company cost of capital rates.
The CEP calculated the cost of capital for a large number of
Connecticut companies and found relatively small deviations
from the industry average figures. Furthermore, the courts
have traditionally approved the use of industry average cost
of capital figures in the regulation of individual companies.
The Department has now compiled industry-wide costs of
capital averages for each of the industrial groupings in
Connecticut. These averages were derived using the weighted
cost of capital methodology outline above, using data drawn
from such readily available and reliable sources as Standard
and Poors, Financial Dynamics, the Federal Trade Commission's
Quarterly Reports of Financial Data for Manufacturing Companies,
and the Internal Revenue Service's Corporation Income Tax Returns,
The current industry cost of capital figures are as follows:
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111-25
Cost of Capital For
Requested Industries
1. Other Durable Manufacturing Products 10.69 %
2. Lumber & Wood 10.69
3. Textile Apparel Products 10.79
4. Primary Metals 10.98
5. Leather Goods 11.17
6. Rubber & Misc. Plastics Products 11.28
7. Tobacco Manufacturers 11.28
8. Food & Kindred Products 11.46
9. Electrical & Electronic Equipment 11.57
10. Textile Mill Products 11.57
11. Stone, Clay & Glass Products 11.57
12. Printing and Publishing 11.67
13. Fabricated Metals 11.76
14. Petroleum and Coal Products 11.96
15. Other Non-Durable Manufacturers 11.96
16. Transportation Equipment 12.06
17. Furniture 12.26
18. Machinery, except Electrical 12.26
19. Instruments & Related Products 12.83
20. Marinas & Restaurants 14.76
FOR THE PURPOSES OF ASSESSMENT CALCULATION, USE THE COST OF
CAPITAL FOR THE INDUSTRY GROUPING MOST CLOSELY RELATED TO THE
SOURCE TO BE ASSESSED.
See Section B in Chapter VII of Part V below for more information,
Individual Costs
of Capital
Individuals too have a cost of capital, most frequently the
interest rate they must pay on money they borrow. Accordingly,
in instances where civil assessments are to be imposed against
individuals, the individual cost of capital will be the current
average interest rate on generally available personal loans.
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111-26
MAKING ADJUSTMENTS
FOR TAXES
One of the key pieces of information required to operate
the civil assessment formula is the regulatee's income tax
bracket. It is a workably accurate assumption for over 80
percent of all companies that this rate is 48 percent. However,
there are a few companies that will have lower tax rates. More-
over, most individuals and partnerships will be taxed at a lower
rate, and municipalities and non-profit institutions are not
subject to tax at all. For these cases the Department may wish
to adjust the formula's tax assumption.
A source that does not pay income tax would be subject
to a civil assessment for failing to remove fill roughly twice
that of persons who are taxed at the 48 percent rate, assuming
the Department decides to adjust the formula for differences in
tax rate. This is so because the process of fill removal gen-
erates a series of tax deductions. These tax benefits become
more significant the higher the source's tax is. Without adjust-
ment, the formula takes all these benefits into account auto-
matically, at the 48 percent income tax rate.
Whether and how the Department wants to go about adjust-
ing for differences in individual regulatee's tax rates depends
on whether it is dealing with corporations, individuals/partner-
ships, or non-profit institutions.
Corporations
The Department will not have to worry about adjusting for
individual income tax rates where corporations are concerned.
There are three types of corporations that may have low income
tax rates: (1) companies operating at a loss, (2) companies
that benefit from extraordinary tax deductions or credits,
notably depletion allowances, even though they are operating v
profitably and (3) very small companies.
Companies operating at a loss generally do not expect to
continue profitless for long. At such point as they eventually
do become profitable, they will be able to use the tax advantages
that accumulated during the period during which they were oper-
ating at a loss. Consequently, such companies will not alter
their evaluation of what a removal project will cost them after
tax significantly. Moreover, their calculations and the CEP
formula take into account the after-tax costs of any commitment
well into the future, and the normal businessman is most unlikely
to assume that he will be operating unprofitably continuously
for twenty years. In other words, the Department need not worry
about adjusting the formula for companies operating temporarily
at a loss.
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111-27
Companies with low tax rates because of extensive deduction
and credits other than for operating losses are, however, a more
serious problem. Special provisions in the tax laws, most notably
depletion allowances that benefit companies involved in extractive
activities, can largely or entirely eliminate a company's income
tax liability. U. S. Steel and Occidental Petroleum, for example,
pay negligible income taxes because of the tax cover such pro-
visions allow. Such companies will calculate the after tax cost
of a removal investment differently from most companies: they
will perceive such investments to be significantly more costly
than most companies. However, the situation is likely to be
relatively rare, especially given recent Congressional action to
reduce and eliminate the oil depletion allowances. Therefore,
unless the Department is dealing with an extractive industry,
the Department staff should probably not worry about such cases.
Very small companies will be taxed at significantly lower
rates, because the tax on corporations is graduated. This year
the rate is 20 percent for the first $25,000 of taxable income,
22 percent for the second $25,000 of taxable income, and 48
percent for taxable income in excess of $50,000. This schedule
of rates is effective for this year only. If it is not extended
or otherwise changed, the former schedule will apply. Those
rates are 22 percent for the first $25,000, 26 percent for the
second $25,000, and 48 percent thereafter. Where a corporation's
taxable income is sufficiently low that its overall tax rate
deviates substantially from 48 percent, the Department may well
want to reject the formula and to make its calculations based
on the specific facts of the case.
Individuals and
Partnerships
When the Department is dealing with individuals or partner-
ships it should initially assume a tax rate of 19 percent for
individuals (the approximate Connecticut average for household
heads in 1972) and 18 percent for partnerships (the approximate
Connecticut average for manufacturing partners in 1969). In
addition, given the wide range of effective tax rates paid by
such persons, the Department will want to adjust its tax assess-
ment formula from case to case. How it can do so at low cost
is outlined in the section immediately after the brief discussion
of non-profit institutions.
Non-Profit
Institutions
Non-profit institutions, e.g., municipalities, do not pay
income tax and therefore derive no tax benefits from whatever
capital or operating and maintenance expenses they incur, in
order to abate pollution. When dealing with such institutions,
the Department should adjust its civil assessment formula to
assume a zero tax rate.
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111-28
OBTAINING INDIVIDUAL
TAX RATES
When the Department decides it must obtain individual tax
rates in order to set accurate civil assessments, it can obtain
this information in two relatively simple ways:
* It can ask the regulatee to submit (1) its most recent
balance sheets and income statements if it is a business
and (2) its most recent income tax statement if the
regulatee is an individual. This statement is private
information, and can be obtained from the IRS only by a
state tax agency. However, since the civil assessment
regulations specifically provide that the Department can
require such information as it needs, the tax rate itself
may be obtainable. And since individuals whom the
Department subjects to civil assessments are likely to
be taxed at above average rates, the information will
probably be provided voluntarily. The civil assessment
regulations specifically provide that the Department can
require such information as it needs from regulatees,
specifically including financial information.
* For companies, especially publically held companies, this
information is a matter of public record and may be
found routinely in financial and investment publications
such as Moody's Industrial Reports, Standard and Poor,
or the Value Line Investment Survey.The first two of
these works are available in the Connecticut State Library.
ADJUSTING THE FORMULA FOR
CHANGES IN THE TAX LAWS
In applying civil assessments in individual cases, Depart-
ment staff will not have to research or work through the impact
of specific tax provisions. All this is handled automatically
by the formula. However, from time to time the provisions of
the tax laws are changed. Chapter 1 of Part III of this volume
of the CEP Final Report identifies exactly where such adjust-
ments should be made in the formula for each of the taxes that
may have to be adjusted.
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PART IV
PROPOSED CIVIL ASSESSMENT REGULATIONS
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IV-2
STATE OF CONNECTICUT
RULES AND REGULATIONS
OF
THE DEPARTMENT OF ENVIRONMENTAL PROTECTION
CONCERNING: ASSESSMENT OF CIVIL PENALTIES FOR
FAILURE TO APPLY FOR A PERMIT TO
PLACE COASTAL FILL.
Section 22a-6b-411(a). Title.
This section shall be known and may be cited as "Civil
Penalty Regulations: Failure to Apply for a Permit to Place
Coastal Fill."
Section 22a-6b-411(b). Definitions.
(1) "Civil penalties final order" means an order of the
Commissioner issued pursuant to Sections 22a-6b-101 and
22a-6b-411 of the Civil Penalty Regulations which has
become final by the passage of time or by the consent of
the regulatee to whom the order was issued or after
hearing.
(2) "Commissioner" means the Commissioner of the Department
of Environmental Protection.
(3) "Deflation" means the average decrease in prices measured
by changes in the Wholesale Price Index prepared by the
United States Department of Labor or such other index of
price changes as the Commissioner may determine is
appropriate.
(4) "Department" means the Department of Environmental
Protection.
(5) "Fill" means either (i) any solid or semi-solid sub-
stance, organic or inorganic, including but not limited
to soil, sediment, aggregate, land, rock, gravel, clay,
bog, vegetative material, mud, debris, sand, refuse, or
waste that is deposited, dumped or placed in the tidal,
coastal, or navigable waters of the state, or (ii) the
encroachment in tidal, coastal or navigable waters
resulting from the deposit, dumping or placement of such
substances.
(6) "Fill without a permit" means any fill for which a valid
certificate, license, or permit issued under Section 25-
7d of the Connecticut General Statutes has not been
secured from the Commissioner.
(7) "Inflation" means the average increase in prices measured
by the changes in the Wholesale Price Index prepared by
the United States Department of Labor or such other
index of price changes as the Commissioner may determine
is appropriate.
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IV-3
(8) "Person" means any individual, firm, partnership,
association, syndicate, organization, company, trust,
corporation, municipality, or any other legal entity,
public or private.
(9) "Regulatee" means any person, excluding individuals, (i)
who owns, leases, or manages real property (A) that has
been, is, or may become the location of a fill and/or
(B) is adjacent to tidal, coastal or navigable waters
that have been, are, or may become the location of a
fill or (ii) who places fill in the coastal, tidal, or
navigable waters of the state.
Section 22a-6b-411(c). Civil Penalties for Failure to Apply For a
Permit to FillI
Any regulatee who places or has placed a fill without a valid
certificate or permit issued by the Commissioner under
Section 25-7d of the Connecticut General Statutes and/or who
owns, leases, or manages real property adjacent to a fill
placed without a valid certificate or permit issued by the
Commissioner under Section 25-7d of the Connecticut General
Statutes shall be liable for a civil penalty for each such
act of placement and/or for each such fill to be assessed by
the Commissioner pursuant to Section 22a-6b-(a)(1) of the
Connecticut General Statutes and according to the procedures
prescribed in Sections 22a-6b-101 and 22a-6b-102 of the
Civil Penalty Regulations.
Section 22a-6b--411 (d) . Maximum Assessment for Failure to Apply for
a Permit.
(1) Schedule. Any regulatee who places or has placed a
fill without a permit, and/or who owns, leases, or
manages real property adjacent to a fill without a
permit may be assessed a civil penalty of eight hundred
and eighty-five (885) dollars for each such act of
placement and/or for each such fill.
(2) The amount listed in the above schedule is the average
cost to regulatees applying for a permit; it therefore
represents the economic advantage the typical regulatee
can expect from not applying for a permit.
(3) The Commissioner shall, upon written request, provide a
written explanation of how the amount in the above
schedule was determined.
(4) The Commissioner shall ensure that the dollar amount
assessed in particular cases shall have the same true
economic value as the dollar amount listed in the above
schedule had in 1975 by adjusting this dollar amount at
least every two years to compensate for the inflation
or deflation that has occurred since 1975 or the last
previous adjustment.
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IV-4
(5) In no case shall an assessment under 22a-6b-411(d)(1)
exceed $1,000 plus $100 for each day that fill without
a permit is maintained after the regulatee has received
a civil penalties final order.
(6) The Commissioner has determined that the remedies
provided by this schedule will insure immediate and
continued compliance and will protect (i) the public
health, safety, and welfare; (ii) the public trust in
the air, water, land and other natural resources of the
state; and (iii) the reasonable use of property.
Section 22a-6b-411 (e)_ . Determination of Amount in Individual Cases.
(1) In setting a civil penalty in a particular case, the
Commissioner shall consider all factors which he deems
relevant, including but not limited to those listed
below; and he may, as a result of considering these
factors, lower the civil penalty. The factors he shall
consider include:
(i) The amount of the assessment necessary to insure
immediate and continued compliance;
(ii) The character and degree of impact the fill with-
out a permit has on the public trust in the air,
water, and land and on the natural resources of
the state, especially any rare or unique natural
phenomena;
(iii) The character and degree of injury to, or inter-
ference with, public health, safety or welfare
which is caused or threatened to be caused by the
fill without a permit.
(iv) The conduct of the person incurring the civil
penalty in taking all feasible steps or procedures
necessary or appropriate to comply or to abate the
fill without a permit.
(v) Any prior violations by such person of statutes,
regulations, orders or permits administered,
adopted or issued by the Commissioner;
(vi) The economic and financial conditions of the
regulatee;
(vii) The character and degree of injury to, or inter-
ference with reasonable use of property which is
caused or threatened to be caused by the fill
without a permit.
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IV-5
Section 22a-6b-4ll(f). Enforcement Proceedings.
(1) Hearings•
(i) Any person in receipt of a notice of violation
issued pursuant to Section 22a-6b-101(a) of the Civil
Penalty Regulations may apply to the Commissioner for
a hearing pursuant to Section 22a-6b-101(b).
(ii) Such hearing shall be conducted by the Commissioner,
a Deputy Commissioner, or a hearing officer appointed
by the Commissioner. Such hearing shall be con-
ducted pursuant to Sections 4-177 to 4-185 of the
Connecticut General Statutes and to the Rules of
Practice of the Department.
(2) Appeals. Any person may appeal a civil penalties final
order of the Commissioner issued after a hearing to the
Superior Court for Hartford County within 30 days
pursuant to Section 22a-6b-(f) of the Connecticut
General Statutes.
Section 22a-6b-411 (g). Mitigation.
(1) General. The Commissioner may mitigate any civil
penalty upon such terms as he in his discretion deems
proper or necessary upon consideration of the factors
set forth in Sections 22a-6b-(b) and (c) of the Connecticut
General Statutes.
(2) Mitigation for Prompt Submission ofa Permit Appli-
cation or Information.
(i) The Commissioner shall mitigate the civil penalty
assessed under Section 22a-6b-411(d) to eighty-five
(85) dollars if the regulatee within twenty days
after receipt of a notice of violation issued
pursuant to Section 22a-6b-101(a) of the Civil
Penalties Regulations or a longer period if the
Commissioner allows but in no case longer than
ninety days after receipt of a notice of violation,
submits to the Department either a complete and
satisfactory permit application for the fill or
such information as the Commissioner may require to
help him determine what further action the Depart-
ment should take, including, but not limited to,
the area, volume, dimensions and composition of
the fill.
(ii) The Commissioner shall ensure that the dollar
amount assessed in particular cases shall have the
same true value as the dollar amount in Section
22a-6b-411(g)(2)(i) had in 1975 by adjusting this
dollar amount at least every two years to com-
pensate for the inflation or deflation that has
occurred since 1975 or the last previous adjust-
ment.
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IV-6
(3) Notice.
(i) The Commissioner shall maintain an up-to-date list
of every case in which he lowers a civil penalty
pursuant to Section 22a-6b-411 (e) or in which he
mitigates a civil penalty pursuant to Sections 22a-
6b-411(g)(l) and (2). Each listing shall state the
name and address of the regulatee, the amount of
the reduction, the amount of the penalty still to
be assessed, and the grounds for lowering or miti-
gation. The list shall be made available promptly
to any person requesting to see it.
(ii) An updated copy of the list shall be sent to
anyone requesting it.
(iii) The Commissioner shall also give notice of any
hearing to be held regarding cases where the
amount of the civil penalty may be an issue at
least ten days prior to the hearing either by
sending a written notice to all persons who have,
within the preceding twelve months, requested
copies of the list required in Section 411(g)(3)(i)
or by publishing a notice once in one or more
newspapers with general circulation in the town or
towns in which the fill is located.
Section 22a-6b-411(h). Request for Information by the Commissioner.
(1) The Commissioner may require the regulatee to provide
such additional information, including information
regarding costs, as he deems necessary to effectuate the
purposes of Section 22a-6b-411.
(2) Any person who files any statement, record or report
with the Commissioner containing false or misleading
information or other claims will be liable to criminal
prosecution for a Class A misdemeanor punishable by
imprisonment for a period of up to one year and a fine
of up to one thousand dollars ($1,000) for each violation
pursuant to Section 53a-157 of the Connecticut General
Statutes.
(3) Any information disclosing trade secrets and commercial
or financial information provided by a regulatee pur-
suant to this section will remain confidential if the
regulatee so requests in a letter sent by certified mail
or personal service to the Commissioner or the Director
of Water Resources, except that such information may be
disclosed to other officers, employees, or authorized
representatives of the State concerned with carrying out
these regulations or when relevant in any hearing
conducted under the authority of these regulations by
the Department or in any judicial proceeding, subject to
such safeguards as the hearing officer or presiding
judge may impose.
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IV-7
Section 22a-6b-411 (i). Collection.
(1) Payment of the civil penalties assessed under this
section may be required at such time or time intervals
as the Commissioner determines will most effectively
limit the Department's administrative costs and further
the objectives defined in Section 22a-6b-411(d)(6).
(2) The present value of the total civil penalty assessed,
calculated at the time the notice of violation is
issued, shall be held constant regardless of the timing
of its collection.
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IV-8
STATE OF CONNECTICUT
RULES AND REGULATIONS
OF
THE DEPARTMENT OF ENVIRONMENTAL PROTECTION
CONCERNING: ASSESSMENT OF CIVIL PENALTIES FOR
COASTAL FILL WITHOUT A PERMIT
Section 22a-6b-412(a). Title.
This section shall be known and may be cited as "Civil
Penalty Regulations: Coastal Fill Without a Permit."
Section 22a-6b-412(b). Definitions.
(1) "Benefit assessment period" means the period of time,
expressed in months or portions thereof, between
placement of fill by a regulatee without a valid permit
issued under the provisions of Sections 25-7b and 25-7d
of the General Statutes, or in violation of the con-
ditions of any such permit, and the date he comes under
a final order of the Commissioner, except that it does
not include any period before the date on which this
regulation becomes effective.
(2) "Beneficial return" means the net, after tax, rate of
return equal to the net, after tax, cost of capital of
either the regulatee or a class of similar persons on
an investment equivalent to the market value of the
fill or of land similar to the fill.
(3) "Civil penalties final order" means an order of the
Commissioner issued pursuant to Sections 22a-6b-101 and
22a-6b-412 of the Civil Penalty Regulations which has
become final by the passage of time or by the consent
of the regulatee to whom the order was issued or after
hearing.
(4) "Commissioner" means the Commissioner of the Department
of Environmental Protection.
(5) "Compliance timetable" means the schedule of dates in a
final order that determines when a regulatee must
complete specific compliance steps in order to come
into compliance with Sections 25-7b and 25-7d of the
General Statutes.
(6) "Cost of capital" means, as determined by the Com-
missioner, either: (i) the weighted average of the
marginal rates the Commissioner finds a regulatee or
class of regulatees typically must pay per year for
debt and owner's equity or (ii) the annual rate of
return or of savings that the Commissioner finds a
regulatee or class of regulatees typically could
achieve with a sum of money equal to the cost of removal,
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IV-9
(7) "Cost of removal" means the net, after tax estimated
present value of excavation costs, hauling costs,
disposal costs, fill re-sale, modification costs,and
all other costs and savings the Commissioner determines
the regulatee would experience in order to remove a
fill without a permit, taking into account, among other
factors, inflation and a discount rate equal to the
cost of capital.
(8) "Deflation" means the average decrease in prices
measured by changes in the Wholesale Price Index
prepared by the United States Department of Labor or
such other index of price changes as the Commissioner
may determine is appropriate.
(9) "Department" means the Department of Environmental
Protection.
(10) "Fill" means either (i) any solid or semi-solid sub-
stance, organic or inorganic, including but not limited
to soil, sediment, aggregate, land, rock, gravel, clay,
bog, vegetative material, mud, debris, sand, refuse, or
waste that is deposited, dumped or placed in tidal,
coastal, or navigable waters of the state, or (ii) the
encroachment in tidal, coastal, or navigable waters
resulting from the deposit, dumping, or placement of
such substances.
(11) "Fill without a permit" means any fill for which a
valid certificate, license, or permit issued under
Section 25-7d of the Connecticut General Statutes has
not been secured from the Commissioner.
(12) "Final order" means an order of the Commissioner issued
pursuant to Section 22a-6 in order to enforce any of
Sections 25-7(b-e) of the Connecticut General Statutes
which has become final by the passage of time or by the
consent of the regulatee to whom the order was issued
or after hearing.
(13) "Inflation" means the average increase in prices
measured by the changes in the Wholesale Price Index
prepared by the United States Department of Labor or
such other index of price changes as the Commissioner
may determine is appropriate.
(14) "Market value" means the estimated price of the fill or
of land similar to the fill which would in all probability
result from fair negotiations where the seller is
willing to sell and the buyer desires to buy taking
into consideration all those elements actual or poten-
tial which a seller or prospective buyer could reason-
ably urge as affecting the price of the fill or land
similar to the fill.
-------
IV-10
(15) "Person" means any individual, firm, partnership,
association, syndicate, organization, company, trust,
corporation, municipality or any other legal entity,
public or private.
(16) "Regulatee" means any person, excluding individuals,
(i) who owns, leases, or manages real property (A) that
has been, is, or may become the location of a fill
and/or (B) is adjacent to lands beneath tidal, coastal,
or navigable waters that have been, are, or may become
the location of a fill or (ii) who places fill in
tidal, coastal, or navigable waters of the state.
(17) "Remove" means, but shall not be limited to, excavate,
dig, dredge, suck, bulldoze, dragline, or blast, directly
or indirectly.
Section 22a-6b-412(c). Civil Penalties for Fill Without a Permit.
Any regulatee who places or has placed fill without a valid
certificate or permit issued by the Commissioner under
Section 25-7d of the Connecticut General Statutes and/or who
owns, leases, or manages real property adjacent to a fill
placed without such a valid certificate or permit shall be
liable for a civil penalty for each such act of placement
and/or for each such fill to be assessed by the Commissioner
pursuant to Section 22a-6b-(a)(2) of the Connecticut General
Statutes and according to procedures prescribed in Sections
22a-6b-101 and 102 of the Civil Penalty Regulations.
Section 22a-6b-412(d). Maximum Assessments for Fill Without a Permit.
d) General. Pursuant to Section 25-7e of the General
Statutes any fill placed in the tidal, coastal, or
navigable waters of the state or any activity carried
out incidental to its placement without a certificate
or permit from the Commissioner is a public nuisance.
The Commissioner may assess a civil penalty for each
such act of placement and/or for each such fill against
any regulatee placing it or allowing it to remain based
on the economic benefit accruing to the regulatee for
the entire period during which he delays removing the
nuisance.
(2) Schedule of Maximum Assessments. For each month that
a regulatee fails to remove a fill without a permit he
may be assessed an amount for each such fill no greater
than the amount listed in the following schedule for
regulatees with comparable costs of removal and for
fills with comparable market value.
-------
IV-11
Removal Costs
SCHEDULE OF MAXIMUM ALLOWABLE MOMTHLY CIVIL PENALTIES FOR A FILL
WITHOUT A PERMIT - WITH SPECIFIED REMOVAL COSTS AND MARKET VALUE
Market Value
i o
r-i O
O O
o -
w in
o o
o o
0°.
o o
o o
-o
o -
O O
M O
• Irt
* o
o o
o o
tn -
$0-5,000
55001-10,000
$10,001-20,000
$20,001-30,000
$30,001-50,000
$50,001-75,000
$75,001-100,000
$100,001-150,000
$150,001-200,000
$200,001-500,000
$500,001-1,000,000
$1,000,001-5, 000,000
$5,000,001-15,000,000
$15,000,001-and above
104.
122.
159.
196.
270.
363.
455.
640.
826.
1936.
3187.
18594.
55614. +
*
189.
207.
244.
281.
355.
448.
540.
726.
911.
2021.
3872.
18680.
55699.+
*
359.
378.
415.
452.
526.
616.
711.
896.
1081.
2192.
4043.
18850.
55870. +
*
529.
548.
585.
622.
696.
789.
881.
1066.
1251.
2362.
4213.
19021.
*
*
870.
888.
925.
963.
1037.
1129.
1222.
1407.
1592.
2702.
4553.
19361.
*
*
1296.
1314.
1351.
1388.
1462.
1555.
1647.
1832.
2018.
3128.
4979.
19787.
*
4
1721.
1740.
1777.
1814.
1888.
1981.
2073.
2258.
2443.
3554.
5405.
20213.
ft
*
2573.
2591.
2628.
2665.
2739.
2832.
2925.
3110.
3295.
4405.
6256.
21064.
*
*
3424.
3443.
3480.
3517.
3591.
3683.
3776.
3961.
4146.
5257.
7108.
21916.
*
*
8533.
8552.
8589.
8626.
8700.
8792.
8885.
9070.
9255.
10365.
12216.
27024.
*
*
17047.
17066.
17103.
17140.
17214.
17307.
17399.
17584.
17769.
18880.
20731.
35539.+
*
*
51105. +
51124. +
51161. +
51198. +
51272. +
51364. +
51457. +
51642. +
51827. +
52938.+
54789.+
*
*
*
*
«
*
*
A
*
*
*
*
*
*
*
*
*
* No more than $25,000 plus $1,000 for each day the fill is not removed after the regulatee has received a civil penalties final order.
+ Once the $25,000 of the maximum is used up, the maximum monthly charge will be $1,000 times the number of the days in the month.
(3) Explanation. The maximum amounts set forth in this
schedule represent the sum of (i) the economic advan-
tage accruing to a regulatee from one month's delay in
incurring removal costs assuming economic and tax
conditions all tending to increase the value to the
regulatee of such delay, and (ii) the beneficial return
a regulatee could expect in one month from the fill
without a permit or from similar land, assuming eco-
nomic and tax conditions all tending to increase the
value of such a fill to the regulatee. The Commissioner
shall, upon written request, provide a written explan-
ation of the methods used to calculate the amounts in
this schedule.
(4) The Commissioner shall impose lesser assessments
pursuant to Section 22a-6b-412 (e) (1) and (2) if he finds
the probable advantages of failing to remove fill
without a permit are smaller than indicated in this
schedule and he may further lower these penalties
pursuant to Sections 22a-6b-412(e)(5) and 22a-6b-
412(g).
-------
IV-12
(5) In no case shall the assessment exceed $25,000, plus
$1,000 for each day that the fill without a permit is
maintained after the regulatee has received a civil
penalties final order.
(6) The Commissioner has determined that the remedies
provided by these schedules will insure immediate and
continued compliance and will protect (i) the public
health, safety, and welfare; (ii) the public trust in
the air, water, land,and other natural resources of the
state; and (iii) the reasonable use of property.
Section 22a-6b-412(e). Determination of Amount in Individual
Cases.
(1) The Commissioner shall determine the amount of the
monthly civil penalty he may assess for each fill
without a permit by calculating the sum of (i) the
amount the regulatee has saved each month by delay in
incurring the expenses of removal, and (ii) the bene-
ficial return the regulatee could expect from the fill
or from similar land.
(2) The Commissioner shall calculate the total civil pen-
alty by taking the product of the number of months or
fractions thereof in the benefit assessment period and
the monthly civil penalty.
(3) The Commissioner shall provide a written explanation of
this methodology upon request. A record of the cal-
culations used to determine a particular assessment
will be available for public inspection at the Office
of the Director of the Department's Water Resources
Unit except to the extent that the Commissioner is
required to maintain the confidentiality of certain
information pursuant to Section 22a-6b-412(i) (3) .
(4) In no case shall an individual assessment exceed either
(i) the maximum amount Section 22a-6b-412(d) would
allow per month for a regulatee failing to remove a
fill without a permit with the same costs of removal
and beneficial return, or (ii) the total civil penalty
due during the entire benefit assessment period,
$25,000 plus $1,000 for each day the fill without a
permit is not removed after the regulatee has received
a civil penalties final order.
(5) In setting a civil penalty in a particular case, the
Commissioner shall consider all factors which he deems
relevant, including but not limited to those listed
below; and he may, as a result of considering and
balancing these factors, lower the civil penalty. The
factors he shall consider include:
(i) The amount of the assessment necessary to insure
immediate and continued compliance;
-------
IV-13
(ii) The character and degree of impact the fill with-
out a permit has on the public trust in the air,
water, and land and on the natural resources of
the state, especially any rare or unique natural
phenomena;
(iii) The character and degree of injury to, or inter-
ference with, public health, safety or welfare
which is caused or threatened to be caused by the
fill without a permit;
(iv) The conduct of the person incurring the civil
penalty in taking all feasible steps or procedures
necessary or appropriate to comply or to correct
the fill without a permit;
(v) Any prior violations by such person of statutes,
regulations, orders or permits administered,
adopted or issued by the Commissioner;
(vi) The economic and financial conditions of the
regulatee;
(vii) The character and degree of injury to, or inter-
ference with reasonable use of property which is
caused or threatened to be caused by the fill
without a permit.
Section 22a-6b-412(f). Enforcement Proceedings.
(1) Hearings.
(i) Any person in receipt of a notice of violation
issued pursuant to Section 22a-6b-101(a) of the
Civil Penalty Regulations may apply to the Com-
missioner for a hearing pursuant to Section 22a-
6b-101(b) .
(ii) Such hearing shall be conducted by the Commissioner,
a Deputy Commissioner, or a hearing officer appointed
by the Commissioner. Such hearing shall be con-
ducted pursuant to Section 4-177 to 4-185 of the
General Statutes and to the Rules of Practice of
the Department.
(iii) If the Commissioner, Deputy Commissioner, or
hearing officer presiding at the hearing deter-
mines that information important to an accurate
determination of all or part of the civil penalty
amount is not available at the time of the hearing
but will become available later, he may defer
determining the amount of the civil penalty due
until he establishes that the previously missing
information is available, at which time he shall
-------
IV-14
promptly reconvene the hearing regarding the
amount of the civil penalty due. The Commissioner
may not collect any portion of the civil penalty
until this hearing is completed and a civil pen-
alties final order issued.
(2) Appeals. Any person may appeal any civil penalties
final order of the Commissioner issued after a hearing
to the Superior Court for Hartford County within
thirty days pursuant to Section 22a-6b-(f) of the
General Statutes and Sections 22a-6b-100 to 102 of the
Civil Penalty Regulations.
Section 22a-6b-412(g). Mitigation and Correction.
(1) General. The Commissioner may mitigate any civil
penalty upon such terms as he in his discretion deems
proper or necessary upon consideration of the factors
set forth in Sections 22a-6b-(b) and (c) of the Connecticut
General Statutes, as amended.
(2) Correction of Penalties.
(i) A regulatee in receipt of a notice of violation
issued pursuant to Section 22a-6b-101(a) of the
Civil Penalty Regulations may petition the Com-
missioner for correction of the civil penalty
assessed against him at any time up to four months
after the Commissioner finds that the regulatee
has come into compliance. Such petition shall set
forth in writing any evidence that the cost of
removal or beneficial return of benefit assessment
period has been less than the Commissioner had
initially determined in assessing the civil
penalty, and it shall be sent by certified mail or
personal service to the Commissioner or the
Director of Water Resources.
(ii) The Commissioner may, in response to such a peti-
tionflower an assessment if he determines that the
evidence in the petition establishes that factors
used in calculating the initial assessment resulted
in significant error. If the Commissioner takes
no action in response to such a petition or if his
response is not satisfactory to the regulatee, the
regulatee may obtain a hearing of right once it
has come into compliance or at any other time
specified in a final order or a civil penalties
final order. Following such a hearing the Com-
missioner shall mitigate the civil penalty if and
to the extent that the actual costs of removal or
beneficial return or benefit assessment period has
been less than he had initially determined.
-------
IV-15
(iii) Where the short term use value of the land created
by the illegal fill after receipt of a notice of
violation by the regulatee is shown to be sub-
stantially less than its beneficial return or the
beneficial return on similar land, the Commissioner
may consider this fact in determining whether his
inital assessment was excessive.
(iv) Refunds shall be made with interest calculated
from the time of payment and at the cost of
capital rate used to assess the civil penalty.
(3) Reduction of the Assessment Period for Delays Beyond the
Regulatee's Control.The Commissioner shall exclude
from the benefit assessment period such periods of non-
compliance as the regulatee proves have been caused by
the United States Army Corps of Engineers; strikes or
lockouts; riots, wars, or other acts of violence;
floods, hurricanes, or other Acts of God; or other
equally severe, unforeseeable and uncorrectible events,
where such acts or events were occasioned directly upon
the regulatee or a person under contract to the regulatee,
In addition, the Commissioner shall exclude from the
assessment period such periods of non-compliance as
were occasioned by delays attributable to the Water
Resources Unit of the Department in excess of reason-
able processing times. Nothing in this section shall
prohibit a regulatee from proposing, or the Department
from accepting, a compliance timetable which excludes
from the assessment period periods of non-compliance
caused by other acts or events beyond the control of
the regulatee, such as,contractor's or supplier's
delays.
(4) Notice.
(i) The Commissioner shall maintain an up-to-date list
of every case in which he lowers a civil penalty
pursuant to Section 22a-6b-412(e) or in which he
mitigates a civil penalty pursuant to Section 22a-
6b-412(g) (1-4) or in which he lowers or mitigates
a penalty pursuant to Sections 22a-6b-411 or 22a-
6b-413. Each listing shall state the name and
address of the regulatee, the amount of the reduc-
tion, the amount of the civil penalty still to be
assessed, and the grounds for such lowering or
mitigation. The list shall be made available
promptly to any person requesting to see it.
(ii) An updated copy of the list shall be sent to
anyone requesting it.
{iii) The Commissioner shall also give notice at least
ten days prior to any hearing where the amount of
-------
IV-16
f
a civil penalty may be an issue either by sending
a written notice to all persons who have within
the preceeding twelve months, requested copies of
the lists required in Section 412(g)(4)(i) or by
publishing a notice once in one or more newspapers
with general circulation in the town or towns in
which the fill is located.
Section 22a-6b-412(h). Limited Inclusion of Past Failure to Remove
in the Assessment Period.
The Commissioner may include the period of pre-detection
violation by the regulatee in the benefit assessment period
used to calculate the civil penalty as prescribed in Section
22a-6b-412(e) subject to the following limitations: (1) no
benefit assessment period shall begin before the date on
which this regulation becomes effective; (2) No benefit
assessment period shall include a pre-detection period
greater than two years.
Section 22a-6b-412(i). Request for Information by the Commissioner.
(1) The Commissioner may require the regulatee to provide
such additional information, including information
regarding (i) the costs of removal, and (ii) the market
value of the fill and its short term use value, as he
deems necessary to effectuate the purposes of Section
22a-6b-412.
(2) Any person who files any statement, record or report
with the Commissioner containing false or misleading
information or other claims will be liable to criminal
prosecution for a Class A misdemeanor punishable by
imprisonment for a period of up to one year and a fine
of up to one thousand dollars ($1,000) for each violation
pursuant to Section 53a-157 of the Connecticut General
Statutes.
(3) Any information disclosing trade secrets and commercial
or financial information provided by a regulatee
pursuant to this section will be kept confidential if
the regulatee so requests in a letter sent by certified
mail or personal service to the Commissioner or the
Director of Water Resources, except that such infor-
mation may be disclosed to other officers, employees,
or authorized representatives of the State concerned
with carrying out these regulations or when relevant in
any hearing conducted by the Department under authority
of these regulations or in any judicial proceeding,
subject to such safeguards as the hearing officer or
presiding judge may impose.
-------
IV-17
Section 22a-6b-412(j). Collection.
(1) Payment of the civil penalties assessed under this
section may be required monthly, or at such time or
other time intervals as the Commissioner determines
will most effectively limit the Department's admini-
strative costs and further the objectives defined in
Section 22a-6b-412(d)(6).
(2) The present value of the total civil penalty assessed,
calculated at the time the notice of violation is
issued, shall be held constant regardless of the timing
of its collection.
-------
IV-18
STATE OF CONNECTICUT
RULES AND REGULATIONS
OF
THE DEPARTMENT OF ENVIRONMENTAL PROTECTION
CONCERNING: ASSESSMENT OF CIVIL PENALTIES FOR
COASTAL FILL NOT IN COMPLIANCE WITH
THE TERMS OF AN ORDER OR PERMIT
Section 22a-6b-413(a). Title.
This section shall be known and may be cited as "Civil
Penalty Regulations: Coastal Fill Not in Compliance with
the Terms of an Order or Permit."
Section 22a-6b-413(b). Definitions.
(1) "Beneficial return" means the net, after tax, rate of
return equal to the net, after tax, cost of capital of
either the regulatee or a class of similar persons on
an investment equivalent to the market value of the
fill or of land similar to the fill.
(2) "Civil penalties final order" means an order of the
Commissioner issued pursuant to Sections 22a-6b-101
and 22a-6b-413 of the Civil Penalty Regulations which
has become final by the passage of time or by the
consent of the regulatee to whom the order was issued
or after hearing.
(3) "Commissioner" means the Commissioner of the Depart-
ment of Environmental Protection.
(4) "Compliance timetable" means the schedule of dates in
a final order that determines when a regulatee must
complete specific compliance steps in order to come
into compliance with Sections 25-7b and 25-7d of the
Connecticut General Statutes.
(5) "Cost of capital" means, as determined by the Com-
missioner, either: (i) the weighted average of the
marginal rates the Commissioner finds a regulatee or
class of regulatees typically must pay per year for
debt and owner's equity or (ii) the annual rate of
return or of savings that the Commissioner finds a
regulatee or class of regulatees typically could
achieve with a sum of money equal to the cost of
removal.
(6) "Cost of removal" means the net, after tax estimated
present value of excavation costs, hauling costs,
disposal costs, fill re-sale, modification costs and
all other costs and savings the Commissioner deter-
mines the regulatee would experience in removing a
fill not in compliance with the terms of an order or
permit, taking into account, among other factors,
inflation and a discount rate equal to the cost of
capital.
-------
IV-19
(7) "Deflation" means the average decrease in prices
measured by changes in the Wholesale Price Index
prepared by the United States Department of Labor or
such other index of price changes as the Commissioner
may determine is appropriate.
(8) "Department" means the Department of Environmental
Protection.
(9) "Emergency Cease and Desist Order" means an order of
the Commissioner issued pursuant to Section 22a-7 of
the Connecticut General Statutes in order to enforce
any of sections 25-7(b-e), inclusive, of the Connecticut
General Statutes which is final upon receipt by the
regulatee.
(10) "Fill" means either (i) any solid or semi-solid sub-
stance, organic or inorganic, including but not
limited to soil, sediment, aggregate, land, rock,
gravel, clay, bog, vegetative material, mud, debris,
sand, refuse or waste that is deposited, dumped or
placed in tidal, coastal, or navigable waters of the
state, or (ii) the encroachment in tidal, coastal or
navigable waters resulting from the deposit, dumping
or placement of such substances.
(11) "Fill without a permit" means any fill for which a
valid certificate, license, or permit issued under
Section 25-7d of the Connecticut General Statutes has
not been secured from the Commissioner.
(12) "Final order" means an order of the Commissioner
issued pursuant to Section 22a-6b in order to enforce
any of Sections 25-7(b-e), inclusive, of the Connecticut
General Statutes which has become final by the passage
of time or by the consent of the regulatee to whom the
order was issued or after hearing.
(13) "Inflation" means the average increase in prices
measured by the changes in the Wholesale Price Index
prepared by the United States Department of Labor or
such other index of price changes as the Commissioner
may determine is appropriate.
(14) "Market value" means the estimated price of the fill
or of land similar to the fill which would in all
probability result from fair negotiations where the
seller is willing to sell and the buyer desires to buy
taking into consideration all those elements actual or
potential which a seller or prospective buyer could
reasonably urge as affecting the price of the fill or
land similar to the fill.
(15) "Order" means either (i) a final order or (ii) an
emergency cease and desist order.
-------
IV-20
(16) "Order assessment period" means the period of time,
expressed in months or portions thereof, (i) that a
person under a final order or emergency cease and
desist order is behind in conforming to that order's
compliance timetable as measured by the time that has
elapsed between the date of a scheduled deadline and
the date that the abatement or compliance measures
called for in the scheduled deadline are actually
completed, or (ii) during which a regulatee has failed
to comply with a requirement, term or condition of a
final order, an emergency cease and desist order, or a
permit.
(17) "Permit" means a certificate or permit issued pursuant
to Section 25-1d of the Connecticut General Statutes.
(18) "Person" means any individual, firm, partnership,
association, syndicate, organization, company, trust,
corporation, municipality or any other legal entity,
public or private.
(19) "Regulatee" means any person, excluding individuals,
(i) who owns, leases, or manages real property (A)
that has been, is, or may become the location of a
fill and/or (B) is adjacent to tidal, coastal or
navigable waters that have been, are, or may become
the location of a fill, or (ii) who places fill in
tidal, coastal or navigable waters of the State.
(20) "Remove" means, but shall not be limited to excavate,
dig, dredge, suck, bulldoze, dragline, or blast,
directly or indirectly.
(21) "Scheduled deadline" means the date in a compliance
timetable by which an abatement or compliance measure
is scheduled to be completed; such deadline may be for
any of the intermediate steps in the compliance
timetable or for the final step at which compliance is
to be completed.
Section 22a-6b-413(c). Civil Penalties for Fill not in Compliance
with the Terms of an Order or Permit.
Any regulatee under but not in compliance with the terms of
(i) a final order of the Commissioner issued pursuant to
Section 22a-6b of the Connecticut General Statutes to
remove, modify and/or abate a fill without a permit, (ii) a
permit issued pursuant to Section 25-7d of the Connecticut
General Statutes, and/or (iii) an emergency cease and
desist order issued pursuant to Section 22a-7 of the
Connecticut General Statutes to remove, modify, abate a
-------
IV-21
fill without a permit, and/or cease further placement of
fill shall be liable for a civil penalty assessed by the
Commissioner pursuant to Section 22a-6b-(a)(3) and/or 22a-
6b-{a){4) of the Connecticut General Statutes in accordance
with the procedures prescribed in Section 22a-6b-101 and
102 of the Civil Penalty Regulations.
Section 22a-6b-413(d). Schedule of Maximum Assessments.
(1) Any regulatee under but not in compliance with the
terms of (i) a final order of the Commissioner issued
pursuant to Section 22a-6b of the Connecticut General
Statutes to remove, modify and/or abate a fill without
a permit, (ii) a permit issued pursuant to Section 25-
7d of the Connecticut General Statutes, and/or (iii) an
emergency cease and desist order issued pursuant to
Section 22a-7 to remove, modify, abate, and/or cease
further placement of fill may be assessed a civil
penalty no larger than the product of (i) the maximum
monthly civil penalty the Commissioner may assess under
the schedule of maximum assessments of Section 22a-6b-
412(d) against a person for a fill without a permit
with the same costs of removal and market value of the
fill or land similar to the fill and (ii) the number of
months and/or fractions thereof in the order assessment
period.
(2) The Commissioner shall, upon written request, provide a
written explanation of how these maximum assessments
are calculated to any regulatee.
(3) The Commissioner shall impose lesser penalties pursuant
to Section 22a-6b-413(e)(1) and (2) if he finds the
expected advantages of avoiding compliance are smaller
than indicated in this schedule and he may further
lower these penalties pursuant to Sections 22a-6b-
413(e)(5) and/or 22a-6b-413(g).
(4) In no case shall the assessment exceed (i) $25,000,
plus $1,000 for each day that noncompliance with the
terms of (A) a permit, or (B) a final order to remove,
modify and/or abate continues after the regulatee has
received a civil penalties final order or (ii) $25,000
plus $5,000 for each day that violation of an emergency
cease and desist order continues after the regulatee
has received a civil penalties final order.
(5) The Commissioner has determined that the maximum
remedies provided in this schedule will insure immediate
and continued compliance and will protect (i) the
public health, safety, and welfare; (ii) the public
trust in the air, water, land and other natural resources
of the state; and (iii) the reasonable use of property.
-------
IV- 22
Section 22a-6b-413(e). Determination of Amount in Individual
Cases.
(1) The amount of the monthly civil penalty the Commissioner
may assess for each instance in which a regulatee is
not in compliance with the terms of an order or permit
shall be the sum of (a) the value of delaying incurring
the cost of removal and (b) the beneficial return the
regulatee could expect from the fill or from land
similar to the fill.
(2) The Commissioner shall calculate the total civil
penalty by multiplying the monthly civil penalty
defined in Section 22a-6b-413(e)(1) by the number of
months or fractions thereof in the order assessment
period.
(3) The Commissioner shall provide a written general
explanation of how a penalty amount is calculated upon
request. A record of the calculations used to deter-
mine a particular assessment will be available for
public inspection at the Office of the Director of the
Department's Water Resources Unit except to the extent
that the Commissioner is required to maintain the
confidentiality of certain information pursuant to
Section 22a-6b-413(h).
(4) In no case shall an individual assessment exceed (i)
the maximum amount Section 22a-6b-412(d) would allow
the Commissioner to assess per month against a regu-
latee for a fill without a permit with the same cost of
removal and market value of the fill or lands similar
to the fill times the number of months and/or fractions
thereof in the order assessment period or (ii) $25,000
plus $1,000 for each day that noncompliance with the
terms of a final order or permit continues after the
regulatee has received a civil penalties final order or
(iii) $25,000, plus $5,000 for each day that violation
of an emergency cease and desist order continues after
the regulatee has received a civil penalties final
order.
(5) In setting a civil penalty in a particular case, the
Commissioner shall consider all factors which he deems
relevant, including but not limited to those listed
below; and he may, as a result of considering and
balancing these factors, lower the civil penalty. The
factors he shall consider include:
(i) The amount of the assessment necessary to insure
immediate and continued compliance;
(ii) The character and degree of impact that non-
compliance with the order or permit has on the
public trust in the air, water, and land and on
the natural resources of the state, especially
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IV-2 3
any rare or unique natural phenomena;
(iii) The character and degree of injury to, or inter-
ference with, public health, safety or welfare
which is caused or threatened to be caused by the
regulatee's noncompliance with the order or
permit;
(iv) The conduct of the person incurring the civil
penalty in taking all feasible steps or pro-
cedures necessary or appropriate to comply with
the order or permit;
(v)
Any prior violations by such person of statutes,
regulations, orders or permits administered,
adopted or issued by the Commissioner;
(vi) The economic and financial conditions of the
regulatee;
(vii) The character and degree of injury to, or inter-
ference with reasonable use of property which is
caused or threatened to be caused by the regu-
latee's noncompliance with the order or permit.
Section 22a-6b-413(f). Enforcement Proceedings.
(1) Hearings.
(i) Any person in receipt of a notice of violation
issued pursuant to Section 22a-6b-101(a) of the
Civil Penalty Regulations may apply to the
Commissioner for a hearing pursuant to Section
22a-6b-101(b).
(ii) Such hearing shall be conducted by the Commissioner,
a Deputy Commissioner, or a hearing officer
appointed by the Commissioner. Such hearing
shall be conducted pursuant to Sections 4-177 to
4-185, inclusive, of the General Statutes and to
the Rules of Practice of the Department.
(iii) If the Commissioner, Deputy Commissioner, or
hearing officer presiding at the hearing deter-
mines that information important to an accurate
determination of all or part of the civil penalty
amount is not available at the time of the
hearing but will become available later, he may
defer determining the amount of the civil penalty
due until he establishes that the previously
missing information is available, at which time
he shall promptly reconvene the hearing regarding
the amount of the civil penalty due. The Com-
missioner may not collect any portion of the
civil penalty until this hearing is completed and
a civil penalties final order issued.
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IV-2 4
(2) Appeals. Any person may appeal a civil penalties
final order of the Commissioner issued after a hearing
to the Superior Court of Hartford County within thirty
days pursuant to Section 22a-6b-(f) of the Connecticut
General Statutes and Sections 22a-6b-101 to 102 of the
Civil Penalty Regulations.
Section 22a-6b-413(g). Mitigation and Correction.
(1) General. The Commissioner may mitigate any civil
penalty upon such terms as he in his discretion deems
proper or necessary upon consideration of the factors
set forth in Sections 22a-6b-(b) and (c) of the
Connecticut General Statutes.
(2) Correction of Penalties.
(i) A regulatee in receipt of a notice of violation
issued pursuant to Section 22a-6b-101(a) and
Section 22a-6b-413(d) of the Civil Penalty Regu-
lations may petition the Commissioner for correction
of the civil penalty assessed against him at any
time up to four months after the Commissioner
finds that the regulatee has come into compliance.
Such petition shall set forth in writing any
evidence that the cost of removal or market value
of the fill has been or would be less than
the Commissioner had initially determined in
assessing the civil penalty, and it shall be sent
by certified mail or personal service to the
Commissioner or to the Director of Water Resources.
(ii) The Commissioner may, in response to such a
petition or at his own initiative, lower an
assessment he determines was excessive. If the
Commissioner takes no action in response to such
a petition, or if his response is not satis-
factory to the regulatee, the regulatee may
obtain a hearing of right once it has come into
compliance or at any other time specified in a
final order or a civil penalties final order.
Following such a hearing the Commissioner shall
mitigate the civil penalty if and to the extent
that the cost of removal or the market value of
the fill can be shown to be less than he had
initially determined.
(iii) The Commissioner shall also mitigate the civil
penalty if and to the extent that the regulatee
comes into actual final compliance with less
delay than the total number of days of delay for
which assessments have previously been made while
the regulatee was under an order or permit.
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IV-2 5
(iv) Refunds shall be made with interest calculated
from the time of payment at the cost of capital
rate used to assess the civil penalty.
(3) Reduction of the Order Assessment Period for Delays
Beyond the Regulatee*s Control. The Commissioner
shall exclude from the order assessment period such
period of non-compliance as the regulatee proves have
been caused by the United States Army Corps of Engineers;
strikes or lockouts; riots, wars or other acts of
violence; floods, hurricanes, or other Acts of God; or
other equally severe, unforeseeable and uncorrectible
events; where such acts or events were occasioned
directly upon the regulatee or a person under contract
to the regulatee. In addition, the Commissioner shall
exclude from the order assessment period such periods
of non-compliance as were occasioned by delays attri-
butable to the Water Resources Unit of the Department
in excess of reasonable processing times. Nothing in
this section shall prohibit a regulatee from pro-
posing, or the Department from accepting, a compliance
timetable which excludes from the order assessment
period periods of non-compliance caused by other acts
or events beyond the control of the regulatee, such as
contractors' or suppliers' delays.
(4) Notice.
(i) The Commissioner shall maintain an up-to-date
list, which shall be readily available for public
inspection, of every case in which he lowers a
civil penalty pursuant to Section 22a-6b-413(e)
or in which he mitigates a civil penalty pursuant
to Section 22a-6b-413(g)(1-3). Each listing
shall state the name and address of the regu-
latee, the amount of the reduction, the amount of
the penalty still to be assessed, and the grounds
for lowering or mitigation.
(ii) An updated copy of the list shall be sent to
anyone requesting it.
(iii) The Commissioner shall also give notice of any
hearing to be held regarding cases where the
amount of a civil penalty may be an issue at
least ten days prior to the hearing either by
sending a written notice to all persons who have,
within the preceding twelve months, requested
copies of the list required - Sections 413(g) (i-
ii) or by publishing a notice in one or more
newspapers of general circulation in the town or
towns in which the fill is located.
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IV- 26
Section 22a-6b-413(h). Request for Information by the Commissioner,
(1) The Commissioner may require the regulatee to provide
such additional information, including but not limited
to information regarding costs of removal and the
market value of the fill, as he deems necessary to
effectuate the purposes of Section 22a-6b-413.
(2) Any person who files any statement, record or report
with the Commissioner containing false or misleading
information or other claims will be liable to criminal
prosecution for a Class A misdemeanor punishable by
imprisonment for a period of up to one year and a fine
of up to one thousand dollars ($1,000) for each
violation pursuant to Section 53a-157 of the Connecticut
General Statutes.
(3) Any information disclosing trade secrets and commer-
cial or financial information provided by a regulatee
pursuant to this section will remain confidential if
the regulatee so requests in a letter sent by certi-
fied mail or personal service to the Commissioner or
to the Director of the Water Resources Unit of the
Department, except that such information may be
disclosed to other officers, employees, or authorized
representatives of the State concerned with carrying
out these regulations or when relevant in any hearing
conducted under the authority of these regulations by
the Department or in any judicial proceeding, subject
to such safeguards as the hearing officer or presiding
judge may impose.
Section 22a-6b-413(i). Collection.
(1) Payment of the civil penalties assessed under this
section may be required monthly, or at such time or
time intervals as the Commissioner determines will
most effectively limit the Department's administrative
costs and further the objectives defined in Section
22a-6b-413(d)(5).
(2) The present value of the total civil penalty assessed,
calculated at the time the notice of violation is
issued, shall be held constant regardless of the time
of its collection.
-------
PART V
OPERATING MANUAL FOR THE APPLICATION OF CIVIL ASSESSMENTS
(This document was unavailable at the time of printing. It
will be available from Mr. Glenn Gross, Department of Environ-
mental Protection, 71 Capitol Avenue, Hartford, CT 06115, or
from the Director of the Water Resources Unit, Department of
Environmental Protection, State Office Building, Hartford,
CT., 06115.)
-------
PART VI
THE IMPACT OF ECONOMIC CIVIL ASSESSMENTS
ON THE ADMINISTRATIVE COSTS OF ENFORCEMENT
-------
VI-2
PART VI
THE IMPACT OF ECONOMIC CIVIL ASSESSMENTS
ON THE ADMINISTRATIVE COSTS OF ENFORCEMENT
INTRODUCTION
This Part contains the findings of CEP's study of adminis-
trative costs of the Water Resources Unit for both its present
enforcement procedures for coastal fill and the procedures it
would follow under Civil Assessment Regulations 22a-6b-411 to
413, inclusive. The major findings are as follows:
(1) Increased voluntary compliance should cut
caseloads and thereby save the Unit up to
76 percent of its total enforcement costs
for commercial and industrial coastal fill.
(2) When enforcement action is required, economic
civil assessments should cut the current per
case cost of the Unit's most common response,
the Order to Remove or Get a Permit, by 14
percent.
(3) Civil Assessments will cut the typical lapse
time between detection and final Department
action in Order to Remove or Get a Permit
cases by 43 percent.
(4) For the less common Cease and Desist Order
case, civil assessments will cut Unit costs
45 percent per case by reducing the frequency
of costly and disruptive hearings.
Furthermore, the availability of civil assessment tools will
lead to better enforcement of the statutory permit requirement
for fill below the mean high water mark.
This Part is divided into two Chapters. Chapter I concerns
the Order to Remove or Get a Permit, and compares the costs and
delay associated with the present system to those which will ex-
ist under the Civil Assessment Regulations. Chapter II contains
a similar cost comparison for cases handled by Cease and Desist
Orders. An Addendum explains the methodology employed in the
study, and provides detailed back-up information to Chapter I,
including comprehensive flow charts and step descriptions for
both the present and civil assessment procedures.
-------
VI-3
CHAPTER I
THE ORDER TO REMOVE OR GET A PERMIT
PRESENT PROCEDURES
The Water Resources Unit typically deals with unpermitted
fills by means of the Order to Remove or Get a Permit. This
order gives a regulatee 30 days either to remove the fill or to
apply for a permit for it. A simplified flow chart of the pro-
cedures followed under this order follows:
Most Common Steps in the Order to Remove or Get a Permit
HEARINGS
AND
APPEALS
DETECT/
INSPECT
A I
PROCESS
PERMIT /~T'
APPLICATION/ '
ISSUE
FINAL
ORDER
\
>
REFER TO
™Y
l_
ISSUE
This procedure is generally ineffective because it has no
teeth. Fillers never take the first option offered by the order,
i.e., removing their fill. Those who take the second option and
do not receive a permit simply remain in noncompliance. And a
sizable percentage of fillers take neither of the options sug-
gested by the order; instead they choose the third option - to
ignore the order. Theoretically the Department would go to court
when so flouted, but to date this response has been ineffective.
The Order to Remove or Get a Permit is expensive as well as
ineffective. The average Order to Remove or Get a Permit case
costs the Department close to $290 to process, with cases that
receive hearings running over $500 each. These cases typically
take five months of calls, letters, meetings, and administrative
proceedings before the regulatee"s duty to modify or remove the
fill is reaffirmed. And then, even when it is reaffirmed, it is
still almost sure to be ignored.
-------
VI-4
CIVIL ASSESSMENTS
Adding economic civil assessments to the present Order to Re-
move or Get a Permit process will cut enforcement costs and signi-
ficantly improve compliance by adding just the right level of in-
centive at the key decision points in the process. When an illegal
fill is detected, the Department will be able to use the regulatee's
civil assessment liability under Sections 411 and 412 to induce
(1) prompt submission of whatever information the Department needs
to decide what should be done in the case, (2) caution in dragging
out the negotiating process, and (3) a willingness to agree to an
order to remove or modify rather than attempt to delay it through
hearings and perhaps appeals. If the regulatee moves promptly to
come into compliance, the Department would either sharply limit or
not impose the Section 411-412 permit violation assessments.
Once the regulatee has been brought under an order, Section
413 ensures that failing to meet any of its deadlines is not eco-
nomically attractive.
Encouraging prompt compliance in this manner will allow the
Department (1) to avoid much of the substantial administrative
costs caused by uncooperative regulatees, and (2) to cut the av-
erage length of time a case remains pending before the Unit.
-------
VI-5
CIVIL ASSESSMENTS WILL CUT ADMINISTRATIVE COSTS 14 PERCENT
IN THE TYPICAL CASE.
Administrative Costs Per Case
$288
$247
Now
With CAs
Source: Interviews with Unit personnel, time logs,
and simulations
DISCUSSION; These figures reflect costs per case that requires
enforcement action. They say nothing about the effect the pre-
sence of an effective enforcement system should have on the be-
havior of prospective fillers before they fill. A CEP study of
the effect of strengthening enforcement in analogous regulatory
settings revealed that voluntary compliance with the standards
being enforced increased sharply. Specifically, the number of
persons not in compliance dropped 72 percent on average after en-
forcement was toughened. If the Water Resources Unit's caseload
dropped 72 percent, its average annual cost of handling commer-
cial and institutional fill cases would be cut 76 percent. If
voluntary compliance occurs at only half the rate the CEP study
predicts, that is, if only 36 percent, the Unit's average annual
caseload cost will still be cut 55 percent. Even if no increase
in voluntary compliance takes place as a result of the~~new en-
forcement tool, the Unit's average annual caseload cost will
drop 14 percent.
-------
VI-6
CUTTING THE NUMBER OF HEARINGS CONTRIBUTES IMPORTANTLY
TO THESE COST SAVINGS.
ADMINISTRATIVE COSTS PER CASE
Policing and Follow-up
Hearing
Processing Application
Negotiating
Conferral/Drafting
Detection/Inspection
$2pa
28
110
32
42
59
17
Now
^^
X
~ ' — — ^
~- ^
V
~ 1
$247
^\\1<^\
21
67
^X\°\\^
24
51
43
21
Jith CAs
14%
Collecting/Correcting CA
Policing and Follow-up
Hearing
Calculating/Imposing CA
"rocessing Application
Negotiating
Conferral/Drafting
Detection/Inspection
[I Presently Existing Step
^ New Step
DISCUSSION; The Department's ability to bargain away civil as-
sessment liability in exchange for consent agreements should
reduce the number of cases with hearings. Also, since the De-
partment will no longer have to use the permit process as a jaw-
boning device, it will accept permit applications less frequently,
and thus spend less time processing applications.
The major steps in processing a case under the civil assessment
system are similar to present procedures; and the costs of calcu-
lating, imposing, correcting and collecting civil assessments are
quite limited.
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VI-7
CIVIL ASSESSMENTS WILL ALSO CUT THE TIME FROM DETECTION TO
DEPARTMENT DISPOSITION BY 43 PERCENT PER CASE.
Processing Time Per Case
5.1
43%
2.9 i
Now
With CAs
Source: Water Resources Permit and Violation Files,
interviews with Unit personnel
DISCUSSION; Cutting the time that elapses between detection and
final Department action is especially important in cases involv-
ing illegal filling along the coast. If a fill is not removed
within 3 months after placement, the possibility of restoring orig-
inal bottom conditions declines markedly.
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VI-8
CHAPTER II
THE CEASE AND DESIST ORDER
PRESENT PROCEDURES
Cease and Desist Orders are effective emergency measures.
Of the 5 Cease and Desist Orders the Inland Wetlands Section
issued in 1974, 4 were obeyed immediately, and the fifth led to
an injunction against a regulatee who continued to fill. (No
Cease and Desist Orders were issued to stop illegal coastal
filling.)
However, Cease and Desist Orders have severely limited use-
fulness. They are applied only in a small number of emergency
cases where an activity likely to cause irreparable harm must be
stopped at once. Anyone caught in the act of coastal filling
might fit this description. But even the Cease and Desist Order
probably would not require removal of what had already been placed.
Very few Cease and Desist Orders can be issued for another,
very concrete reason: the Unit can only afford the cost and dis-
ruption of a small number of such orders. When the Department
issues a Cease and Desist Order, it must gather its facts
together and hold a hearing within 10 days. This requires the
small staff to drop its other work and scramble to meet this
emergency deadline. The costs are too great to be incurred often.
CIVIL ASSESSMENTS
In those few cases where issuing an Order to Cease and Desist
is both applicable and desirable, being able to impose civil
assessment liability on violators will make such cases far less
expensive. Regulatees will be far more likely to agree to postpone
or drop the hearing when they know that (1) delaying coming into
compliance will not yield economic benefits and (2) the Department
may be willing to bargain away all or part of their civil assess-
ment liability under Regulation 22a-6b-411 and 412, in order to
obtain their cooperation and a final enforceable commitment to
prompt remedial action.
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VI-9
CIVIL ASSESSMENTS WILL REDUCE THE COST OF CEASE AND DESIST
ORDERS BY 45 PERCENT.
Administrative Costs Per Case
$570
~I
45%
$312
Mow
With
CAs
DISCUSSION; Again, this 45% figure assumes a constant caseload.
If, as expected, the number of illegal fillers drops as a result
of an effective enforcement system, the number of cases requiring
Cease and Desist Orders should decrease as well. The Department
may, of course, choose to use some of the staff resources this
freed to issue and process other Cease and Desist Orders.
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VI-10
ADDENDUM
METHODOLOGY AND DETAILED COST ESTIMATES
-------
VI-11
ADDENDUM
METHODOLOGY AND DETAILED COST ESTIMATES
This Addendum explains how the summary administrative cost
information used in the last two Chapters was obtained. It be-
gins with a brief summary of the methodology used. It then spells
out both the existing enforcement process and the proposed civil
assessment process in detail - the flow of steps, a brief descrip-
tion of each and estimates of how much time (and therefore cost)
each requires.
METHODOLOGY
The CEP study of Administrative Costs for Water Resources
began by observing and interviewing members of the Water Re-
sources staff as they went about their enforcement duties. 'Staff
members were asked to describe what takes place during a typical
case where an illegal fill is detected: what steps are taken,
who takes them, how long they take, and in what percentage of
cases do they occur. With this information, and with a knowledge
of the salary and fringe rates of the various staff members, it
was possible to calculate the cost of each step in the enforcement
process and the Department's average cost per enforcement case.
Similarly, in calculating the average amount of lag time in the
typical enforcement case, Water Resource's records and personnel
were consulted to determine the average number of days that elapse
between various steps in the enforcement process.
Since the civil assessment enforcement process is modeled
after and designed to fit closely with existing Water Resources
enforcement procedures, much of the information on the present
system was directly applicable. For steps which do not exist
presently, estimates of times and delays were made by analogy to
steps that were somewhat similiar, or, when these were lacking,
by actual simulation.
The detailed flow charts, step descriptions and step by step
cost estimates that follow are the basis of the earlier assertions
about the cost savings in the Order to Remove or Get a Permit pro-
cess that will result from employing civil assessments. Multiply-
ing the costs per case (found in the step by step breakdowns) by
the percentage of cases in which a particular step occurs (found
in the flow charts) and then adding them will yield the average
cost per case figures presented in the bar graph on page VI-5.
The flow charts, with their accompanying step descriptions, times,
and percentages, will allow the re'ader to follow through the
analysis behind the summary data.
-------
VI-12
One may reasonably be skeptical about the certainty of an
assertion that "Step X costs $23.13" or "Person Y spends 1/12 of
a person/hour on Step 2." Clearly, times and costs, and even the
staff members involved in different steps, will vary from case to
case. The present enforcement process is not as cut-and-dried as
it is presented below, nor will the civil assessment process be
when it is in operation. Nevertheless, every effort has been
made to be as accurate as possible in the descriptions, times,
costs and percentages that follow, and the similarities of the two
systems under examination should ensure that most inaccuracies in
estimation will cancel each other out.
-------
VI-13
Present Enforcement Procedure
Detect Fill,
Inspect
100%
Check
File
100%
Decide On
Action
100%
80% -*-
Number of Step
Percent of Cases
That Take This
Step
-------
VI-14
Send Order to
Remove or Get
Permit
Negotiate
100%
100%
-------
VI-15
Unsatisfactory
20%
Issue Final
Order
20%
11
Process
Permit
Application
80%
80%
-------
VI-16
8
Police
Compliance
9
1 1
1 |
, General
1 ft
r
— i _..__! Tn~innr>+' i on
o%
I
— 1
20%
5%
13
r
"I
Possible
Hearing
I I
30%
14
Permit
Approved ,
Issued
30%
15
16
Permit
Denied
Issue
Final
Order
50%
50%
-------
VI-17
17
Police
Compliance
50%
0%
Non-Compliance
50%
-------
VI-18
20
1 I 21
1 Refer to' j \
H Attorney )— 1 Injunction \
General I — 1
1 ' 0%
i I
5%
-------
VI-19
STEP-BY-STEP BREAKDOWN OF PRESENT ADMINISTRATIVE COSTS
THE ORDER TO REMOVE OR GET A PERMIT PROCESS
IN WATER RESOURCES
COSTS PER CASE
(including fringe
benefits and
STEP DESCRIPTION AND TIMES (AVERAGE) indirect costs)
1. 30% of all reported violations are found
by Department Field Inspectors while work-
ing on other cases. When this happens, the
Inspector will get out of his car and briefly
examine the fill site, note any significant
characteristics and (probably) take a photo-
graph. The other 70% are initially reported
to the DEP by a citizen's phone call. An
Inspector speaks to the caller, and writes
down any relevant information. Within a
few days, the Inspector will visit the site.
More cost is incurred in citizen-detected
cases, since the Inspector must speak on
the phone, sign out a State car, and drive
to and from the fill site.
TIMES: Field Inspector 2 1/12 Person Hours $17.23
(average of Field
Inspector detection
and citizen complaint)
2. The Inspector must check the files to see
if a permit has been issued for the fill.
TIMES: Field Inspector 1/4 P.H. $ 2.07
If the Inspector detects a bona fide violation,
a meeting will take place at which an Inspector,
the Director and the Deputy Director will be
present. The Inspector who has visited the
site will explain the violation, and a decision
will be reached on how to proceed. The meeting
should last about 20 minutes.
TIMES: Field Inspector 1/3 P.H. $ 2.76
Director 1/3 P.H. 4.94
Deputy Director 1/3 P.H. 4.50
Total 1 P.H. $12.20
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VI-20
STEP DESCRIPTION AND TIMES (AVERAGE) COSTS PER CA,
4. The Department sends the violator a Notice of
Violation, generally giving him 30 days to re-
move the fill or get a permit for it, and
threatening action by the Attorney General if
the violator does not come into compliance.
TIMES: Field Inspector 1/4 P.H. $ 2.0'
Secretary 1/2 P.H. 2.7C
Total 3/4 P.H. $ 4.77
5. A variety of means are employed in attempting
to secure compliance, including phone calls,
follow-up letters, and visits to the regulatee.
The figure below is a conservative estimate for
the average time consumed in these informal pro-
ceedings.
TIMES: Field Inspector 5 P.H. $41.35
6. The violator refuses to apply for a permit.
7. The Director, Deputy Director and Field Inspector
meet to review the case and agree on the content
of the Final Order. The Deputy Director then
writes the order, which is typed by a Secretary,
proofed by the Deputy Director, and then corrected
and sent certified mail by the Secretary.
TIMES: Director 1/2 P.H. $ 7.42
Deputy Director 3 P.H. 40.38
Field Inspector 1/2 P.H. 4.14
Secretary 1 P.H. 5.40
Total 5 P.H. $57.34
8. Policing procedures include two trips to the site
by one Inspector. A meeting with the violator
will often take place during this inspection,
lasting about one-half hour. The total time re-
quired of the Inspector is highly variable, and
depends chiefly on driving time. A letter to
the violator follows each trip to the site by
the Inspector, and a copy of this is kept on file
as a record of the action taken by the Inspector.
TIMES: Field Inspector 4 P.H. $33.06
Secretary 1 P.H. 5.40
Total 5 P.H. $38.46
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VI-21
STEP DESCRIPTION AND TIMES (AVERAGE) COSTS PER CASE
9. A Field Inspector will bring the file of the
case to the Attorney General's Office and ex-
plain the matter. Any updates on the case
will be forwarded to the A.G. as well.
TIMES: Field Inspector 1 P.H. $ 8.27
10. No work is required of the Water Resources
Unit in obtaining an injunction.
11. The violator agrees to apply for a permit.
12. A permit application is reviewed initially
by the Deputy Director, and then by a Field
Inspector. A Secretary sends out notices
of the application to interested parties.
A Hearing may be held; see the description
of Step 13 below. Finally, at a meeting
attended by the Director, Deputy Director
and Field Inspector, a decision will be
made to grant or deny a permit.
TIMES: Director 1/3 P.H. $ 4.95
Deputy Director 2/3 P.H. 8.97
Field Inspector 1 1/3 P.H. 11.03
Secretary _2 P.H. 10.80
Total 4 1/3 P.H. $35.75
13. Hearings take place in about 30% of the cases
presently. A day must be spent at the outset
by a Secretary to send out hearing notices to
interested parties, arrange a room for the
hearing, and reserve recording equipment.
The hearing itself will be attended by the
Director, the Deputy Director (one of whom
will act as Hearing Examiner), a Field Inspec-
tor and a Secretary, who records the hearing.
The hearing dictabelt will be transcribed by
a Secretary, and the transcript checked by an
Engineer-Geologist in Coastal Wetlands. The
Hearing Examiner will then write a report on
the hearing, which will be distributed to
interested parties by a Secretary.
TIMES: Director 4 P.H. $ 59.36
Deputy Director 4 P.H. 53.84
Director/Dep. Dir. 6 P.H. 84.90
(Hearing Report)
Engineer-Geologist 5 P.H. 38.95
Field Inspector 4 P.H. 33.08
Secretary 18 P.H. 97.20
Total 41 P.H. $367.33
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VI-22
STEP DESCRIPTION AND TIMES (AVERAGE) COSTS PER Ci
14. If the permit application is approved the permit
will be prepared by a Secretary with the assis-
tance of a Field Inspector, who will supply in-
formation for the Secretary to include in the
standard permit form. It is then sent by the
Secretary to the regulatee by certified mail.
TIMES: Field Inspector 1/2 P.H. $ 4.1
Secretary 1 1/2 P.H. 8.1
Total 2 P.H. $12.2
15. If the application is denied, the regulatee will
be informed of this decision when he received
the Final Order of the Department (see Step 16,
below).
16. Analogous to Step 7, above.
TIMES: Total 5 P.H. $57.3
17. Analogous to Step 8, above.
TIMES: Total 5 P.H. $38.4
18. The regulatee complies with the Final Order.
19. The regulatee refuses to comply with the Final Order.
20. Analogous to Step 9, above.
TIMES: Total 1 P.H. $ 8.2
21. Analogous to Step 10, above.
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VI-23
STEP-BY-STEP BREAKDOWN OF ADMINISTRATIVE COSTS OF
COASTAL ENFORCEMENT UNDER THE PROPOSED CIVIL
ASSESSMENT REGULATIONS
STEP DESCRIPTION AND TIMES (AVERAGE)
COSTS PER CASE
(including fringe
benefits and indirect
costs)
1. Same as present Step 1, except that
Inspector will spend approximately
one-half hour extra per case pacing
off the dimensions of the fill.
TIMES: Field Inspector 2 7/12 Person Hours $21.36
2. The Inspector must check the files to
see if a permit has been issued to the
regulatee in question.
TIMES: Field Inspector 1/4 Person Hours $ 2.07
If the inspector detects a violation, a
meeting will take place at which an in-
spector, the Director and the Deputy
Director will be present. The inspector
who has visited the site will explain the
violation, and a decision will be reached
on how to proceed. The meeting should
last about 20 minutes.
TIMES; Field Inspector
Director
Deputy Director
Total
1/3 P.H.
1/3 P.H.
1/3 P.H.
1 P.H.
$ 2.76
4.94
4.50
$12.20
4. In cases where both the 411 and 412 assessments
will be imposed, the Field Inspector will call
the Department's Land Acquisition Unit to
schedule an appraisal of the fill site. Some
time before the scheduled date of this appraisal,
the Field Inspector will send Land Acquisition a
copy of the information he obtained during his
inspection, including information concerning
the boundaries of the illegal fill. These
copies will be made and sent by a Secretary.
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VI-24
STEP DESCRIPTION AND TIMES (AVERAGE) COSTS PER CASE
TIMES: Field Inspector 1/2 P.H.
Secretary 1/4 P.H.
Total 3/4 P.H.
5. When the appraisal is completed, Land
Acquisition will send the Field Inspector
their estimate of the fill site's fair
market value. The Field Inspector will
read this estimate and add it to the
case file.
TIMES: Field Inspector 1/12 P.H.
6. The Field Inspector, using a hand calculator,
will plug information into the civil assess-
ment formula to find the regulatee's liability
for pre-detection benefit and his monthly
civil assessment.
TIMES: Field Inspector 1/2 P.H.
7. The Field Inspector will instruct a Secretary
to fill out a form Notice of Violation for
the 411 assessment. When the Secretary
finishes doing this, it will be presented
to the Director for his signature. The
Secretary will then send the Notice to
the regulatee by certified mail.
TIMES: Director 1/12 P.H.
Field Inspector 1/12 P.H.
Secretary 1/3 P.H.
Total 1/2 P.H.
If the 412 assessment is to be imposed, its
Notice of Violation will be sent together
with that of the 411 assessment. Each of
the three persons involved in the previous
step will spend approximately 5 minutes extra
per case, the Field Inspector in instruction,
the Secretary in filling out the additional
form, and the Director in approving and
signing the additional form.
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VI-25
STEP DESCRIPTION AND TIMES (AVERAGE) COSTS PER CASE
TIMES: Director 1/12 P.H. $ 1.25
Field Inspector 1/12 P.H. .69
Secretary 1/12 P.H. .45
Total 1/4 P.H. $ 2.39
9. The Department's purpose in the Negotiations
is to get the regulatee to come into com-
pliance or to come under a consent order.
The regulatee will probably first call the
Department upon receiving his Notice(s) of
Violation. During this call he will talk
to the Field Inspector assigned to the case,
who will explain the regulatee's liability
and obligations to him, and probably arrange
a meeting with the regulatee and other members
of the Unit staff. At this meeting, which
should last about 1 1/2 hours, the regulatee
may wish to discuss a number of topics, in-
cluding the existence of a violation, the
amount of his civil assessments, and the
steps he can take to come into compliance
and minimize his liability. The time and
cost estimates below assume that such a
meeting takes place in 90% of all cases.
TIMES: Director 1 1/3 P.H. $19.74
Deputy Director 1 1/3 P.H. 17.90
Field Inspector 1 2/3 P.H. 13.81
Total 4 1/3 P.H. $51.45
10. In cases where the Department decides not to
impose the 412 assessment, e.g., when it de-
sires only that the regulatee obtain a permit,
not that he remove or modify the fill, only the
411 assessment will be imposed, and the Depart-
ment will process the regulatee's permit appli-
cation. This process is analogous to present
steps 12-14.
Present step
TIMES: (12) Total 4 1/3 P;H. $ 35.75
(13) Total 12 1/3 P.H. 110.20
(30% of 41)- (30% of $367.33)
(14) Total 2 P.H. 12.24
Total 18'2/3 P.H. $158.19
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VI-26
STEP DESCRIPTION AND TIMES (AVERAGE) COSTS PER CASE
11. If the regulatee is willing to agree to a Con-
sent Order, the Order will be drafted by the
Deputy Director, typed by a Secretary, reviewed
and corrected by the Deputy Director, retyped
by the Secretary, reviewed by the Director and
Field Inspector, and sent to the regulatee, cer-
tified mail by the Secretary. When the agreement
comes back signed by the regulatee it will be
filed by the Secretary.
TIMES: Director 1/4 P.H. $ 3.71
Deputy Director 3 P.H. 40.38
Field Inspector 1/4 P.H. .2.07
Secretary 2 P.H. 10.80
Total 5 1/2 P.H. $56.96
12. Same as present Step 8.
TIMES: Field Inspector 4 P.H. $33.06
Secretary 1 P.H. 5.40
Total 5 P.H. $38.46
13. The regulatee either fulfills the terms of his
Consent Order or now possesses a valid permit.
14. Any assessment(s) owed to the Department which
have not yet been collected or mitigated will be
mailed to the Water Resources Unit by the regulatee.
The check will then be deposited in the State bank
account by a Secretary, after it is logged and
shown to the Deputy Director.
TIMES: Deputy Director 1/12 P.H. $1.12
Secretary 1/2 P.H. 2.70
Total 7/12 P.H. $3.82
15. When a hearing is held, a day must be spent at
the outset by a Secretary to send out hearing
notices to interested parties, arrange a room
for the hearing, and reserve recording equip-
ment. The hearing itself will be attended by
the Director, the Deputy Director (one of whom
will act as Hearing Examiner), a Field Inspec-
tor and a Secretary, who records the hearing.
The hearing dictabelt will be transcribed by
a Secretary, and the transcript checked by an
Engineer-Geologist in Coastal Wetlands. The
Hearing Examiner will then write a report on
the hearing, which will be distributed to
interested parties by a Secretary.
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VI-27
STEP DESCRIPTION AND TIMES (AVERAGE) COSTS PER CASE
TIMES: Director 4 P.H. $ 59.36
Deputy Director 4 P.H. 53.84
Director/Dep. Dir. 6 P.H. 84.90
(Hearing Report)
Engineer-Geologist 5 P.H. 38.95
Field Inspector 4 P.H. 33.08
Secretary 18.P.H. 97.20
Total 41.P.H. $367.33
16. No use of staff time is anticipated in Court
Appeals of the findings of the Hearing Examiner.
17. If the Hearing Examiner believes that mitigation
is warranted he shall mitigate the civil assessment
to a suitable level. He will include his reasons
for mitigating the assessment in his hearing report
(see Step 15). The regulatee will receive written
notice of the mitigation of the assessment on a
form filled out by a Secretary and sent to him by
certified mail.
TIMES: Director/
Deputy Director 1/12 P.H. $1.27
Secretary 1/3 P.H. 1.80
Total 5/12 P.H. $3.07
18 Same as present Step 7.
TIMES: Director 1/2 P.H. $ 7.42
Deputy Director 3 P.H. 40.38
Field Inspector 1/2 P.H. 4.14
Secretary 1 P.H. 5.40
Total 5 P.H. $57.34
19. Same as Step 12.
TIMES: Field Inspector 4 P.H. $33.06
Secretary 1 P.H. 5.40
Total 5 P.H. $38.46
20. The regulatee fails to comply with the terms of the
Final Order.
21. The Director will instruct a Secretary to fill out
a form Notice of Violation of the Final Order to the
regulatee, including a monthly 413 civil assessment
amount, which will be the same as the monthly civil
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VI-28
STEP DESCRIPTION AND TIMES (AVERAGE) COSTS PER CASE
assessment under 412. The Secretary will then give
the notice to the Director for his approval and will
send it to the regulatee by certified mail when he
returns it.
TIMES: Director 1/6 P.H. $2.47
Secretary 1/2 P.H. 2.70
Total 2/3 P.H. $5.17
22. Only one trip and one memo is required at this
step, unlike Step 19.
TIMES: Field Inspector 2 P.H. $16.54
Secretary 1/2 P.H. 2.70
Total 2 1/2 P.H. $19.24
23. The regulatee remains in non-compliance despite
the 413 assessment.
24. A Field Inspector will bring the file of the case
to the Attorney General's Office and explain the
matter. Any updates on the case will be forwarded
to the Attorney General as well.
TIMES: Field Inspector 1 P.H. $8.27
25. No work is required of the Water Resources Unit
in obtaining an injunction.
26. The regulatee fails to comply with the terms of
his consent order.
27. Same as Step 21.
TIMES: Director 1/6 P.H. $2.47
Secretary 1/2 P.H. 2.70
Total 2/3 P.H. $5.17
Same as Step 15.
28.
TIMES: Director 4 P.H. $59.36
Deputy Director 4 P.H. 53.84
Director/Dep. Dir. 6 P.H. 84.90
(Hearing Report)
Engineer-Geologist 5 P.H. 38.95
Field Inspector 4 P.H. 33.08
Secretary 18 P.H. 97.20
Total 41 P.H. $367.33
29. No use of staff time is anticipated in Court
Appeals of the findings of the Hearing Examiner.
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VI-29
STEP DESCRIPTION AND TIMES (AVERAGE) . COST PER CASE
30. Same as Step 17,
TIMES: Director/Dep. Dir. 1/12 P.H. $1.27
Secretary 1/3 P.H. 1.80
Total 5/12 P.H. $3.07
31. Same as Step 22.
TIMES: Field Inspector 2 P.H. $16.54
Secretary 1/2 P.H. 2.70
Total 2 1/2 P.H. $19.24
32. The regulatee remains in non-complaince despite the
413 assessment.
33. Same as Step 24.
TIMES: Field Inspector 1 P.H. $8.27
34. No work is required of the Water Resources Unit in
obtaining an injunction.
35. The regulatee complies with the terms of the Final
Order.
36. Same as Step 14.
TIMES: Deputy Director 1/12 P.H. $1.12
Secretary 1/2 P.H. 2.70
Total 7/12 P.H. $3.82
37. If, after a regulatee has come into compliance, he
believes that the amount of his civil assessments
overestimated his benefits from being in non-
compliance, he may ask the Commissioner to correct
his assessment. A meeting will take place which the
regulatee, a Field Inspector and the Director will
attend. At this meeting, the regulatee will pre-
sent evidence to justify his claim for correction.
If in the opinion of the Director, correction is
called for, a refund will be made to the regulatee
with interest (see Step 40).
TIMES: Director 1 1/2 P.H. $22.26
Field Inspector 1 1/2 P.H. 12.41
Total 3 P.H. $34.67
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VI-30
STEP DESCRITPION AND TIMES (AVERAGE) COST PER CASE
38. If the regulatee is dissatisfied with the result
of the correction negotiation, he may ask for a
correction Hearing. At that Hearing, he will
make a formal presentation of his claim for a
lowered assessment. Either the Director or the
Deputy Director will serve as the Hearing Examiner.
TIMES: Director/Dep. Dir. 1 1/2 P.H. $21.23
Field Inspector 1 1/2 P.H. 12.41
Total 3 P.H. $33.64
39. No use of staff time is anticipated in court Appeals
of the findings of the Hearing Examiner.
40. If a regulatee's claim for correction is upheld,
correction and an appropriate refund will be made.
An explanatory memorandum, written by the Deputy
Director, typed by a Secretary, proofed by the
Deputy Director, and reviewed and signed by the
Director, will be sent to the Bureau of Adminis-
tration to explain the reasons for making the
refund to the regulatee.
TIMES: Director 1/4 P.H. $ 3.71
Deputy Director 3/4 P.H. 10.10
Secretary 2/3 P.H. 3.60
Total 1 2/3 P.H. $17.41
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VI-31
CIVIL ASSESMENT ENFORCEMENT PROCEEDURES
1
Detect Fill
Inspect
2
Check Files
3
Decide on
Action
**mmm
100%
100%
100%
I 1
I Contact Land I
~* Acquisition I"
I I
l_ — — — -j
50%
ey:
1 -<-
Number of Step
80%
Percent of Cases
That Take This
Step
-------
VI-32
1 Receive Land1
i Acquisition!"
I Estimate i
U — — 1
50%
1 Calculate1
H 412
(Assessment!
50%
Send 411
Notice of
Violation
100%
8
i 1
1 Send 412'
HNotice ofh
I ViolationI
I 1
50%
Negotiate
100%
I
10
(Process Permitl
I Application '
i , 1
50% T
11
Consent i
Order i
,2 | Police
,_ Compliance J
40%~ "
13
36%
• . Collect .
Assessment(s)
1 Due '
86%
-------
16
VI-33
(Possible! 1%
Appeal N
i_ _ —. —. j
15 I
i L 1
'Possible'
Hearing
I I
I 1
2%
18
I Possible .
Mitigationr
19
I
i_
1%
I
1
1
-
1
J
Issue
Final Order
Police
Compliance
10%
10%
2%
-------
VI-34
21
22
Send 413
Notice of
Violation
Police
Compliance
2%
2%
23
24
25
1%
Refer to
Attorney
General
1%
Injunction
29
27
Send 413
Notice of
Violation
4%
r~ —i
1 Possible '
1 Appeal '
Possible
Hearing
30 31
I 1
1 Possible I
Mitigation |—
Police
Compliance
.5% 4%
32
Non-Complianc
-------
VI- 3 5
Collect
Assessments
Due
33
14%
37
1 Possible I
HCorrection h
I Negotiation I
I 1
12%
Refer to
Attorney
General
Injunction
2%
2%
-------
VI-36
38 40
1 Possible1 'Possible1
H Correction I 7! Refund '
Hearing i /I '
2% I / 10%
1 Possible
[ Appeal
1%
------- |