Yes, the Regional Water Quality Control Boards Have Discretion Over Enforcement and Penalties

A first guess may be that any state agency you have to deal operates in black and white, within a very proscribed set of rules, and with little room for making decisions on a case by case basis. However, when it comes to the Regional Water Quality Control Board (“Water Board”) the Water Board staff for each region has significant discretion in coming to decisions relating to whether to refer a matter to enforcement (or not) and issuing penalties (and how much).

Considerations the Water Boards Must Take Into Account When Navigating the Paths to Closure

You may have heard of the elusive “No Further Action” letter or of the goal of reaching “closure” for a property after cleanup. The determinations of whether to issue that letter or consider a site has reached closure are not made in a vacuum. Arriving at decisions whether to consider a site fully investigated and not a threat, or fully remediated, for example, actually does involve discretion. The Water Boards have been given the leeway to consider various factors over when a cleanup or corrective-action matter is considered resolved. While they do have lines (corrective action must protect human health, safety, and the environment (Health & Safety Code § 25296.10)), and cleanup goals must be achieved within a reasonable time (State Water Board Resolution 92-49), there is actually flexibility as to concluding whether those goals have been achieved.

A clear example of that discretion are the cases involving petroleum underground storage tank (UST) cleanup. There is a set of risk-based criteria that can be used to arrive at the ultimate goal of considering the site to be protective of human health and the environment. These criteria allow a case to be closed even when residual contamination remains. The criteria are almost like a checklist, and when analyzed and weighed, give the teams at the Water Board responsible for making those calls room to make conclusions based on site-specific information. This is why there can be disagreement between the Water Board and named party in agreeing on when and whether a case is closed.

A case can be considered closed either by fitting the UST policy’s defined general and media-specific criteria, or through a site-specific risk analysis showing the case is low-risk, even if it doesn’t tick every box. Staff still make a case-specific recommendation to the board’s Executive Officer. Where a case presents a low risk on site-specific review, staff identify the impediments to closure, which channels the board’s discretion into a transparent, reviewable record rather than a potentially vague and unsupported judgment call.

Water Board is Legally Mandated to Consider Certain Factors when Assigning Penalties

Not only can the Water Boards issue notices of violation and orders related to doing technical work at a property, but they can assign penalties using Administrative Liability Complaints (“ACL”). What you may not know is that the penalty assessed in that ACL can often be negotiated. The State Water Board’s Enforcement Policy lists a number of factors that the Water Boards must consider.

Specifically, the Water Board must, by law, weigh a specific set of factors in developing a dollar amount—in other words the Water Board cannot simply assign a number or use the ACL simply to punish. Those factors are:

• Nature of the violation;
• Circumstances under which the violation occurred;
• The extent of the contamination;
• The gravity or harm from the violation;
• Whether the discharge is susceptible to cleanup or abatement;
• Degree of toxicity of the discharge;
• Ability of the party to pay;
• The effect of the penalty amount on the party’s ability to continue its business;
• Any voluntary cleanup efforts taken;
• Prior history of violations;
• Degree of culpability;
• Economic benefit or savings, if any, resulting from the violation; and
• Other matters that justice may require.

The Floor: No Financial Upside From Violating

Built within these factors is broad discretion for the Water Board to arrive at a penalty amount. While the penalty can be negotiated down, the assessment does have a floor—it must be at least at a level that recovers any economic benefit the violator derived from the violation. In other words, a party can’t come out financially ahead, no matter whether the contamination was caused on purpose or by accident.

Keeping Discretion Consistent: The Scoring Methodology

Because there is discretion built into these factors, it may seem that outcomes may be wildly different depending on who is considering them. To ensure that is not the case and provide reasonable consistency, the statutory factors are converted into a scoring methodology — assigning a “potential for harm” score and a “deviation from requirement” score. Taken together the score develops a penalty range, before adjustments for culpability, history of any violations, cleanup cooperation, and/or ability to pay. Because no two cases are the same, outcomes may be different for cases that on their face, look very similar. It’s important not to automatically compare ACL apples to ACL apples—one of those ACLs may actually be an orange.

Discretion is the Common Thread Between Enforcement and Penalties

In both penalty-setting and closure decisions, the pattern is the same: there are statutory floors, ceilings, and structured factors, but the Water Boards are still given the room to come to site-specific conclusions within that frame — weighing culpability, harm, cooperation, and risk on the facts of the individual case, and documenting that reasoning. The stated goal being that discretion is exercised consistently, fairly and is reviewable.

Why This Matters and Where a Lawyer Comes In

The reason all of this matters: the penalty is never just a foregone conclusion — it’s the product of a negotiation. Having a good consultant is important in reaching closure. An environmental lawyer can help with the question of “how much should the facility really be paying in this specific case” by using, among other things, their understanding of the litigation risks and knowledge of what evidence supports the relevant factors, their relative importance in a given circumstance, and what might happen if agreement isn’t reached.