Calculations for Assessing Regulator and Contractor Penalties for Non-Compliance or Failure to Perform
The National Pollutant Discharge Elimination System (NPDES) permit for the discharge of storm water from construction activities is a process type (as opposed to a work) permit with complicating layers of unknowable success. A properly designed Storm Water Pollution Prevention Plan (SWPPP) is only as good as weather dictate and contractors implement. No one likes regulations nor being told what to do. On the opposite end of the scale, we also know that voluntary compliance systems that ensures clean air and water fall off the table when confronted with profitability problems or low bid contracts. Project Owners and Contractors can improve the management of compliance risk if the financial rules of non-compliance are consistently and uniformly applied (analogy to speeding tickets). This presentation will show calculations that arrive at several penalty values by showcasing many photo examples, discuss the cost of selected non-compliance, who pays, expedited settlement offer, contract language, and penalty multipliers of willful negligence (culpability), violation history, and attempted cost savings. The penalty cost of not doing something as defined in the permit, project SWPPP or elsewhere in the contact must not be less that cost of selecting, installing and maintenance of effective practices. Therefore, common penalties must exceed the cost of not installing or maintaining the correct Best Management Practices (BMPs), but not so great to be challenged as unreasonable. Regulator time to administer penalties can also be enormous and a detriment if challenged to little more than a hand slap, even though the penalties cannot be used to fund their program. To make the case of penalty determination, the audience will learn to understand what actual BMPs cost, time (money) consumed to complete routine documentation, known performance limits of various structural practices, and recognize installed deficiencies. As a result and based on how the regulations were written, there should be no regulatory or contract penalty when an upset discharge does occur because the structural and non-structural BMPs were properly selected, installed and maintained. But someone still must pay for the corrective actions and adjustments due to weather and conditions beyond the control of the contractor, which is the owner of the project. This may still feel like a penalty.
The discussion will not attempt to define the actual short or long term environmental cost of damage caused by illicit discharges to waters of the United or individual states due to the subjective nature of assigning financial values to various resources. However, the projected cost of feasible cleanup, removals, and environmental restoration will be mentioned.