UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WSG 100
Date Signed: August 1997
MEMORANDUM
SUBJECT: Requirement for State Administrative Penalty Authority Under the Safe Drinking-
Water Amendments of 1996
FROM: Robert J. Blanco, Director
Implementation and Assistance Division, OGWDW
Brian J. Maas, Director
Water Enforcement Division, OECA
TO: Water Division Directors
Regions I - X
Enforcement Division Directors
Regions I - X
Regional Counsels
Regions I - X
One of the new provisions to the Safe Drinking Water Act Amendments of 1996 includes
an administrative penalty requirement for States. To obtain and/or retain primacy for the public
water system supervision (PWSS) program, section 1413(a)(6) requires that States have such
authority and reads as follows:
"(6) has adopted authority for administrative penalties (unless the constitution of the
State prohibits the adoption of the authority) in a maximum amount-
(A) in the case of a system serving a population of more than 10,000, that is not
less than $ 1,000 per day per violation; and
(B) in the case of any other system, that is adequate to ensure compliance, (as
determined by the State);
except that a State may establish a maximum limitation on the total amount of
administrative penalties that may be imposed on a public water system per violation."
A number of issues have arisen on the interpretation of this section, particularly as you
and your staffs have worked with your States to evaluate their existing authority or to draft
legislation which would provide them the requisite authority. EPA is currently working on
revising the primacy rule to include this new statutory requirement. However, Regions need not
and should not wait for regulatory revisions to begin working with your States on this issue. The
guidance attached to this memorandum sets out EPA's interpretation of this new provision and
responds to many of the questions which have been raised by staff members over the last few
months. The guidance also lays out the process EPA intends to follow in order to insure that
State primacy programs are updated as required.
-------
WSG 100
You must work with your States to ensure that their programs meet the new statutory
requirements. This includes verifying their existing authority by reviewing the State laws and/or
regulations, determining if the authority meets the new SDWA requirements, and, if the State
lacks authority or if the authority does not meet the new requirements, developing a plan with
your States to get the requisite authority. When verifying a State's existing penalty authority, it
is likely to be necessary to request from the State Attorney General an interpretation of the State
laws and/or regulations.
We will be discussing the status of your State programs with you over the next several
months. Should you have any questions on this guidance, please contact Betsy Devlin,
Associate Director of the Water Enforcement Division in OECA at (202) 564-4054 or Connie
Bosnia, Chief, Regulatory Implementation Branch in OGWDW at (202) 260-5526.
Attachment
cc: ORC Water Branch Chiefs
ORC PWSS Contacts
Drinking Water Branch Chiefs
Drinking Water Enforcement Coordinators
-------
WSG 100
GUIDANCE ON THE REQUIREMENT
FOR STATE ADMINISTRATIVE PENALTY AUTHORITY
IN SECTION 1413(a)(6) OF THE SDWA AMENDMENTS OF 1996
I. Background/New Statutory Provision
A. New Statutory Provision — Section 1413(a)(6)
The Safe Drinking Water Act Amendments of 1996 added a new paragraph to the
primacy requirements. Section 1413(a)(6) requires that States have administrative Penalty
authority in order to obtain and/or retain primacy. The new paragraph reads as follows:
"(6) has adopted authority for administrative penalties (unless the constitution of the
State prohibits the adoption of the authority) in a maximum amount-
(A) in the case of a system serving a population of more than 10,000, that is not
less than $1,000 per day per violation; and
(B) in the case of any other system, that is adequate to ensure compliance (as
determined by the State);
except that a State may establish a maximum limitation on the total amount of
administrative penalties that may be imposed on a public water system per violation."
B. Current Information on State Administrative Penalty Authorities
According to the most recent compilation on State administrative order and
administrative penalty authorities, of the 56 States and territories:
33 States/territories have some administrative penalty authority
21 States/territories do not have administrative penalty authority
2 Nonprimacy States/territories (Wyoming, District of Columbia)
Of the 21 States/territories which do not have administrative penalty authority, 18 have
AO authority; therefore, only 3 do not have any type of administrative authority.
From this compilation, it s not possible to tell if the administrative penalty authority of
the 33 States/territories which have the authority is sufficient to satisfy the requirements of the
SDWA amendments.
A list of States/territories in each of the categories listed above is contained in Appendix
1 to this guidance. Regions should verify that this list is accurate and call HQ (Betsy Devlin)
with updates to this list or an indication that the list is accurate. This task should be completed
by September 15,1997. Please note that this is not an analysis of State authority to determine
compliance with the new SDWA requirements; it is merely an indication of whether the State
has administrative penalty authority.
II. Issues
-------
WSG 100
A. Overview
The issues raised so far fall into two broad categories: interpretation of the new statutory
provision in 1413(a)(6) and implementation of that provision
A number of questions have been raised on the interpretation of this new provision:
(1) What does "in a maximum amount... that is not less than $1,000 per day per
violation" mean?
(2) What does "adequate to ensure compliance" mean?
(3) What does the provision that a State may establish a maximum limitation on the total
amount of administrative penalties which may be imposed on a public water system per
violation mean?
In addition, questions have been raised on the implementation of the provision how long
do States have to obtain the requisite authority, what process is envisioned for
revising/approving revisions to primacy programs, and what is EPA's official position towards
States which cannot or will not obtain the authority.
This guidance document set outs an interpretation of the statutory provisions and
provides guidance for the Regions on how to proceed in reviewing both existing State authorities
and proposed legislation where States need to obtain new authority.
B. Interpretation of Section 1413(a)(6)
1. Important Parts to the New Provision
-To obtain or retain primacy for the PWSS program, a State must have authority for
administrative penalties, unless the constitution of the State prohibits the adoption of the
authority.
-Depending on the size of the population being served by the PWS, the penalty authority
must be "in a maximum amount" or "adequate to ensure compliance."
-A State may establish a "maximum limitation on the total amount of administrative
penalties that may be imposed on a public water system per violation."
2. Points of Clarification
There are, two Points which need to be made clear, but on which there is no debate:
-------
WSG 100
(a) Administrative Penalty authority means, a penalty that is:
(1) assessed by an officer or agent of an administrative agency, i.e., a part of the
executive branch of the State government; and
(2) legally owing without a separate judicial action.
Of course, if a duly assessed administrative penalty is not paid, then a judicial action may
be needed to collect the penalty. This means that the State Attorney General can be asked to
bring an action for enforcement of a penalty order.
(b) Administrative penalty authority is required for primacy unless the State constitution
prohibits it; that is, prohibits an officer of an executive agency from assessing any
penalty or alternatively requires a judicial action for the assessment of all penalties. Most
State constitutions do not have such a bar. If a State asserts that its constitution prohibits
administrative penalties, the Region must obtain a statement from the State Attorney
General affirming this interpretation and a copy of the relevant provision of the State
constitution.
3. Responses to Three Specific Questions Raised
(a) Question: What is EPA's interpretation of the requirement that States
have administrative penalty authority "in a maximum amount
- in the case of a system serving a population of more than
10,000, that is not less than $1,000 per day per violation?"
The confusion in this provision revolves around the terms "maximum amount" that is
"not less than." There is, however, a sensible reading of this provision which is both consistent
with the statutory language and its legislative history. The report on Senate Bill (SB) 1316 says,
in explaining this provision, that States are to have the authority to assess administrative
penalties of at least $1,000 per day per violation for large systems. The language in the House
Bill and in the final version of the SDWA amendments is identical to that in SB 1316, and there
is no additional explanation of this language. Therefore, the explanation provided with SB 1316
is a helpful indicator of Congressional intent.
EPA therefore interprets this provision to require that States must have the authority to
impose a penalty of at least $1,000 per day per violation for systems serving a population
greater than 10,000 individuals. However, States are not obligated to assess this minimum
amount for every penalty imposed on systems serving a population of more than 10,000
individuals.
The $1,000 per day per violation is a statutory minimum.(that is, States must be able to
assess at least that amount); if a State has the authority to assess only less than $ 1,000 per day
per violation, then the State law must be amended in order to retain primacy, unless the State
-------
WSG 100
constitution prohibits this. Please note, however, that a State may have the authority to assess
'larger amounts of administrative penalties.
A final note: The wording "per day per violation" is critical. If a State has authority for
administrative penalties up to a specific dollar amount (in total, or as per day, or per violation),
but the authority is not expressed as an amount "per day per violation," then the authority is not
sufficient.
Determining whether a State law conforms to the statutory requirement can be a
challenging task as many States will not use the same language as the SDWA. In these
instances, a statement from the State Attorney General and a penalty policy from the State are
likely to assist in making such a determination.
(b) Question: What does "adequate to ensure compliance" mean?
The SDWA amendments say that for "any other system," that is, one serving a population
of 10,000 individuals or less, the administrative penalty must be "adequate to ensure
compliance" as determined by the State.
This provision is designed to give the States flexibility in dealing with the smaller
systems. The provision in part recognizes that some of the smaller systems may have difficulty
complying with the requirements of the SDWA and the regulations and do not have the financial
capability to pay a large penalty. Moreover, with some of the small and very small systems, a
modest penalty can serve as a great deterrent. In addition, assessing modest penalties often
requires less burdensome hearing procedures and thus can be more efficient. At the same time,
however, it must remembered that a good proportion of the small systems are, in fact, profit
making businesses and therefore should not be permitted to gain an economic advantage through
their noncompliance with the law.
Taking these factors into consideration, as well as many others, States must determine,
for systems serving a population of 10,000 individuals or less, a level or levels of administrative
penalties which will, in their opinion, ensure compliance. States need to include in their primacy
approval packages an explanation of why their chosen level of administrative penalty authority is
appropriate to ensure compliance. The level of penalties for small systems can be the same as
that for the larger systems.
(c) Question: What does the provision that a State may establish a maximum
limitation on the total amount of administrative penalties that may be
imposed on a public water system per violation mean?
This provision means, in short, that a State may establish an administrative penalty cap,
similar to those imposed on EPA in Section 309 of the Clean Water Act. For example, Section
309(g)(2)(B) of the Clean Water Act states that "The amount of a class II civil penalty under
paragraph (1) may not exceed $10,000 per day for each day during which the violation
-------
WSG 100
continues; except that the maximum amount of any class II civil penalty under this subparagraph
shall not exceed $125,000."
There are two important points:
(a) States are not required to establish a cap. Many may elect to do so, but it is
voluntary.
(b) If States establish a cap, the cap is not on the total administrative penalty which
may be imposed on the system; but on the total which may be imposed on the
system per violation." Thus, a State could obtain authority for administrative penalties
of $1,000 per day per violation, not to exceed $25,000 for each violation. If a PWS had,
for example, 3 maximum contaminant level violations which lasted a month each, the
system could be assessed an administrative penalty of $75,000. (This would be calculated
as follows: The PWS had 3 violations. At 1,000 per day x 30 days for each violation, the
system could be assessed $90,000, if there were no cap. However, the State has
established a cap of $25,000 for each violation; therefore, the PWS could only be
assessed the maximum for each violation — $25,000 x 3 = $75,000).
C. Implementation
The issues on implementation of this provision revolve around when States are required
to have administrative penalty authority and the process EPA will use to review and approve
revisions to State primacy programs.
1. Effective Date
The amendments to the SDWA state that "except as otherwise specified in this Act or in
the amendments made by this Act, this Act and the amendments made by this Act shall take
effect on the date of enactment of this Act." There is no other date specified in the amendments;
therefore, this provision was effective on the date of enactment, August 6, 1996. However, it is
reasonable to grant States time to change laws/regulations to comply with the new requirements.
The question then arises of how long should States have to change their laws and
regulations. The current regulations for revising approved primacy programs (40 CFR 142.12),
provide that a State has eighteen months from the time a new federal regulation is promulgated
to submit a primacy revision application. The SDWA amendments extend this time period to
two years. While these regulations do not currently apply to the primacy revisions necessary to
meet the new statutory requirements, EPA believes that allowing a two year time period for
adoption of these changes by primacy States is appropriate. As a result, Regions should work
with their States to have them submit primacy revision packages for approval within two years.
EPA strongly encourages States not to wait for the deadline, but to be working now to obtain the
needed authority and/or submit the required materials as discussed in the following sections of
this document.
-------
WSG 100
EPA is in the process of revising the primacy regulations in 40 CFR Part 142 to reflect
this new statutory requirement. Once this regulation is effective (hopefully some time in the fall
of 1997), then the process and timeframes provided in the regulations for primacy revision
approval (and program withdrawal) will apply to program revisions needed for the
administrative penalty authority. Therefore, the remainder of this document deals with the
process which EPA intends to follow once the revised regulations are effective.
If or when it becomes clear that a State is not going to obtain needed authority or the
State is not acting in good faith to obtain the authority, EPA will seek to begin the formal
primacy withdrawal process. There are serious consequences if a State loses primacy, including
the loss of State Revolving Fund (SRF) monies.
w. Process
Regions must review State laws and regulations to determine whether the State has
administrative penalty authority which meets the requirements of the SDWA. This is very likely
to include requesting a State Attorney General (AG) to provide the Region with an interpretation
of the State's authority. The AG's statement will be needed particularly in cases where the State
laws or regulations use different language than the SDWA. In addition, Regions need to request
from the States their rationale for determining that the penalty authority for systems serving a
population of 10,000 individuals or less is "adequate to ensure compliance." Regions should
also request an explanation from the States on how they plan to use their penalty authority (that
is, a penalty policy). While this is not a requirement, we believe that it will be particularly useful
in evaluating State programs.
Regions should review existing State laws and regulations and coordinate one response to
Betsy Devlin by October 15,1997. By this date the Regions should determine into which of the
four categories listed below each State program falls:
(a) States Which Currently Have Administrative Penalty Authority Which Meets the
Statutory Requirements and is Part of the Approved Primacy Program;
(b) States Which Currently Have Administrative Penalty Authority Which Meets the
Statutory Requirements but is Not Part of the Approved Primacy Program;
(c) States Which Currently Do Not Have Administrative Penalty Authority or Where
Some Changes to the Authorities Are Needed to Meet the New SDWA Requirements; or
(d) States Which Currently Do Not Have Administrative Penalty Authority and Where
the State Constitution Prohibits Such Authority.
Each of these situations requires slightly different procedures; however, in all cases,
before a Region makes a determination and informs a State that its laws and/or regulations, do or
do not meet SDWA requirements, the Regions must consult with Headquarters. This
consultation is necessary because of the need to insure consistency throughout the country.
-------
WSG 100
Details on the process for consultation, including specific contacts in OGWDW, OECA, and
OGC will be forthcoming.
(a) States Which Currently Have Administrative Penalty Authority Which Meets
the Statutory Requirements and Is Part of the Approved Primacy Program.
If, after reviewing State laws, regulations, and explanation of the chosen level of
penalties for the systems serving 10,000 individuals or less, an Attorney General's statement
where needed, and the State's penalty policy, the Region determines that the State administrative
penalty provisions meet the new statutory requirements and that these provisions have already
been approved either in an initial primacy approval package or in a program revision application,
the Region, after consultation with headquarters as noted above, should write a letter to the State
confirming this fact. The letter should also indicate when EPA approved the program. No
formal process under 40 CFR Part 142 is required to approve the program.
(b) States Which Currently Have Administrative Penalty Authority Which Meets
the Statutory Requirements but is Not Part of the Approved Primacy Program.
If the Region determines, based on its review of State laws, regulations, an explanation of
the chosen level of penalties for the systems serving 10,000 or fewer individuals, an Attorney
General's statement, and the State's penalty policy that the State administrative penalty
provisions meet the new SDWA requirements, but they have never been formally incorporated
into the primacy program, the Region and State should follow the process for program revisions
in 40 CFR 142.12.
As noted above, Regions must consult with headquarters before determining that the
State administrative penalty authority meets the new SDWA requirements.
(c) States Which Currently Do Not Have Administrative Penalty Authority or
Where Some Changes to the Authorities Are Needed to Meet the New SDWA 9
Requirements.
When a Region determines that a State does not have adequate administrative penalty
authority, the Region should consult with HQ and then write a letter to the State primacy agency
informing them of the deficiency and offering assistance as appropriate to obtain the needed
authority. The Region should negotiate with the State an agreement on a schedule for obtaining
the authority and should closely monitor the State's progress.
Once the authority is in place, the Regions and States will use the procedures in 40 CFR
142.12 as noted above to formally revise the State primacy program. Regions should consult
with HQ as they are working with States to draft legislation to insure that the new legislation will
meet the statutory requirements.
-------
WSG 100
If or when it becomes clear that the State will not adopt administrative penalty authority
which meets the new statutory requirements, the Region, with consultation of HQ, should initiate
the withdrawal process under 40 CFR 142.17. Please remember that the initiation of the
withdrawal process is a letter to the State, to which the State has 30 days to respond. However.
EPA intends to withdraw programs if States do not obtain the authority required by the SDWA.
(d) States Which Currently Do Not have Administrative Penalty Authority and
Where the State Constitution Prohibits Such Authority.
When a Region determines that a State does not have adequate administrative penalty
authority, the Region should consult with HQ and then write a letter to the State primacy agency
informing them of the deficiency and offering assistance as appropriate to obtain the needed
authority. If the State responds with the affirmation that the State constitution prohibits such
administrative penalties, the Region must request a copy of the relevant provision of the State
constitution as well as an Attorney General's statement confirming that interpretation.
The Region should then write a letter to the State saying that since the State constitution
prohibits administrative penalties, the State does not have to have that authority to retain
primacy.
We hope that this guidance is helpful to you in working on these issues. Additional
guidance will be issued on consultation with headquarters. Moreover, we will keep you
informed of the status of the revisions to the primacy regulation. Should you have any questions,
please do not hesitate to contact Connie Bosnia at (202) 260-5526 or Betsy Devlin at (202) 564-
4054.
10
-------
WSG 100
Appendix I
SUMMARY OF INFORMATION ON STATE ADMINISTRATIVE
PENALTY ORDER AUTHORITIES
Pagel of 2
Overview
According to the most recent compilation on State administrative order and
administrative penalty authorities:
33 States/territories have some administrative penalty authority
21 States/territories do not have administrative penalty authority
2 Nonprimacy States/territories (Wyoming, District of Columbia)
Of the 21 States/territories which do not have administrative penalty authority, 18 have
AO authority; therefore, only 3 do not have any type of administrative authority.
From this compilation, it is not possible to tell if the administrative penalty authority of
the 33 States/territories is adequate to meet the statutory requirements.
States with Some Administrative Penalty Authority - 33
Alabama
Arizona
Arkansas
California
Connecticut
Florida
Georgia
Hawaii
Idaho
Illinois
Iowa
Kansas
Kentucky
Louisiana
Massachusetts
Mississippi
Montana
Nebraska
Nevada
New Jersey
New York
North Carolina
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
Tennessee
Vermont
Washington
Commonwealth/No. Mariana Islands
Puerto Rico
Guam
11
-------
WSG 100
Appendix
SUMMARY OF INFORMATION ON STATE ADMINISTRATIVE
PENALTY ORDER AUTHORITIES
Page 2 of 2
States Without Administrative Penalty Authority but With Some Administrative Order
Authority - 18
Alaska Ohio
Colorado South Dakota
Delaware Texas
Indiana Utah
Maine Virginia
Maryland West Virginia
Michigan Wisconsin
Minnesota American Samoa
North Dakota
New Mexico
States Without Administrative Order Authority - 3
Missouri Virgin Islands
New Hampshire
Nonprimacy Areas- 2
District of Columbia
Wyoming
12
------- |