Effectiveness of california's cupa program

Certified Unified Program Agencies: On the Road to Improving California’s Environmental Health

Duy Dang Celeste Drake P. Pamela Meesri March 27, 2001 PS 298B Professor De Shazo

Table of Contents Executive Summary

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I. Introduction

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II. Background on the CUPA System and its Previous Evaluations

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III. Empirical Results: Definition and Scope of the Problem

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IV. Analysis of the Problems, Trade-Offs, and Policy Options

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A. B. C. D.

Weak human resources and data-management capabilities arise from limited financial resources and lead to weak support for formal enforcement actions.

Local differences create different enforcement preferences.

If the state desires more consistency in enforcement, it should address the local fee setting mechanism.

Statutory incentives, as well as prosecutorial resources, affect enforcement choices.

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V. Conclusions and Recommendations

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Appendix

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A. B.

Works Cited Methodology

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Executive Summary In 1993, California legislators passed SB 1082, creating the Certified Unified Program Agency (“CUPA”) system in order to simplify the process of regulating and managing hazardous materials and hazardous wastes. Rather than having numerous state and local agencies regulating a single business, SB 1082 consolidates the enforcement of several different environmental regulations under the administration of one local agency called a CUPA. Since 1999, both the Legislative Analyst’s Office (“LAO”) and the California State Auditor (“CSA”) have evaluated the CUPA system, and both evaluations noted a lack of consistent enforcement by CUPAs. Both reports emphasized equity to regulated parties, but neither agency fully explored the causes of the enforcement inconsistencies they identified.

This report will expand on the enforcement problems identified but with a focus on equity in environmental protection to California residents rather than equity to regulated businesses. The recommendations in this report are based on information drawn from statistical analysis, interviews, literature review, and attendance at the 2001 CUPA Forum Conference.

This report presents three important findings that will add depth to the current debate concerning the CUPA program. First, empirical analysis reveals significant differences in the performance of city based CUPAs and county based CUPAs. Second, local differences in fee structures have resulted in some CUPAs receiving inadequate funding. Third, previously unexamined statutory incentives exist that impact CUPA choices for instituting enforcement actions against violators.

All of these findings relate to a “local control versus consistency dichotomy,” which results from the requirements of SB 1082. In enacting SB 1082, the legislature made a choice to devolve the responsibility for six environmental regulation programs to local agencies, away from direct state control.

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Data analysis reveals that city based CUPAs out perform county based CUPAs in detecting businesses which are out of compliance with hazardous materials and hazardous waste regulations. This difference is likely a result of the structure of the CUPA system, which requires all counties to participate, but allows cities to participate at their option. In such a system, only cities with a strong interest in environmental regulation would be likely to opt in to the CUPA program.

Insufficient funds often limit CUPAs from implementing all six program elements adequately and may prevent aggressive enforcement against violators. Financial constraints cause many CUPAs to have inadequate staff to carry out the required number of inspections and undertake appropriate follow-up and enforcement. Staff shortages can also lead to a lack of evidence collection and documentation. This situation hampers the enforcement efforts of district attorneys in prosecuting violators. A related complaint is that staff lack the time to complete the required follow-up. Some program managers feel that it is not cost effective to pursue certain enforcement actions because it is too expensive to pursue a case to compliance.

To address the financial constraints that affect CUPAs’ enforcement capabilities state legislators should consider the following three options: 1) maintain the status quo, 2) institute state mandated fee and performance levels, 3) institute statewide minimum fees and performance standards. The third option has the best chance to improve CUPA performance while maintaining some local control.

Once a CUPA determines that an establishment is out of compliance, the CUPA has variety of formal, informal, civil, criminal, and administrative enforcement options available to pursue the violator. If the state focuses solely on enforcement actions based on one or two state code provisions, it may not be aware of all the CUPAs’ enforcement activities. Thus, CUPAs

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may appear to be more lax on enforcement than is really the case. CUPAs may appear weak in the enforcement arena due to lack of prosecutorial support, experience, adequate staff, or political will, as well as inadequate data collection. The state has several options: 1) maintain the status quo, 2) adjust the data collection system, 3) centralize prosecution and investigation, 4) embark on an education campaign for judges, prosecutors, and elected officials, 5) address the plethora of code sections under which the states allows localities to prosecute violators. Options two and five together will give Department of Toxic Substances Control (“DTSC�) more information to better identity and address future enforcement problems and will allow the state legislators to explicitly address problems created by the various incentives for prosecution. In weighing the recommendations that this report outlines, legislators should consider not only what trade-offs they will confront in modifying the CUPA system, but also what their real goals for environmental regulation are.

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I.

Introduction This report presents the findings of research on the performance of Certified Unified

Program Agencies (“CUPAs”), explains the causes of varying performance among CUPAs, and presents policy options to address this variation.

In 1993, the California legislature passed SB 1082, creating the CUPA system in order to simplify the process of regulating and managing hazardous materials and hazardous waste.

Rather than having different government agencies regulating a single business, SB 1082 consolidates the enforcement of several different environmental regulations under the administration of one local agency called a CUPA. Since 1999, both the Legislative Analyst’s Office (“LAO”) and the California State Auditor (“CSA”) have evaluated the CUPA system, and both evaluations noted a lack of consistent enforcement by CUPAs. Both reports emphasized equity to regulated parties, but neither agency fully explored the causes of the enforcement inconsistencies they identified.

The issue of environmental regulation enforcement is especially important. While some businesses may have a valid complaint that a similar business located in an adjoining county pays a smaller inspection fee for the same service, the issue of whether one’s water is safe to drink is more likely to affect the daily lives of most citizens. In California alone, MTBE has contaminated 10,000 shallow groundwater sites; the U.S. Geological survey has found MTBE in more than 25% of the nation’s shallow urban wells, as well as in streams, lakes, rain, and snow.1 Also present are the dangers of widespread Chromium-6 contamination (and the heightened public awareness of those dangers thanks to the film Erin Brockovich). Legislators should

1

Jim Doyle and Susan Sward. “MTBE Leaks a Ticking Bomb.” The San Francisco Chronicle. December 14, 1998. p. A1.

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recognize these concerns and address more than just fee setting and procedural matters regarding CUPAs. The legislature must determine whether, in its opinion, CUPAs are under enforcing California’s environmental regulations. If they are, the legislature must determine the causes of such under enforcement. Only by determining the causes of under performance by the CUPAs can the legislature make an informed decision about how to resolve its concerns.

Expanding on the groundwork that the LAO and CSA laid out, the research that forms the basis of this report attempted to discover whether, in fact, enforcement problems do exist, and, if so, to provide a more complete exposition of what those enforcement problems might be. Our interviews, observations, and data analysis revealed that enforcement actions do in fact vary widely across CUPAs. But the LAO’s criticism that there is no statewide enforcement policy does not seem to get to the true causes of the variation. Enforcement activity differs due to several causes that include reluctance to use the enforcement policies in place, lack of adequate financial resources to pursue enforcement rigorously, and complex enforcement options.

This variation in enforcement activity is, in part, a result of the structure of the CUPA system itself. SB 1082 created a “devolved” system of environmental regulation, leaving many choices up to local governing bodies, public agencies, and prosecuting attorneys. Enforcement varies depending upon such factors as local political will, the level of financial resources available, and adequacy of human resources in terms of both subject matter expertise and sheer manpower).

Before deciding that the CUPA system is a failure, policy makers should keep in mind several considerations. First, the system itself is new. Though SB 1082 became law in 1993, 1999-2000 was the first fiscal year that all elements of the CUPA program (including the datareporting requirement) were in place. Thus, not only is the program still evolving and

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improving, but activity may also be occurring that does not show up in the records due to the current data collection scheme. Secondly, the very nature of a devolved system will create at least some heterogeneity. Thus, for any proposed reforms, the value of consistency must be weighed against the competing value of local control. Finally, financial resources are limited.

Thus, some local CUPAs must choose between devoting resources to more frequent inspections or to more vigorous enforcement. The Department of Toxic Substances Control (“DTSC”) faces similar choices between more CUPA oversight and more CUPA support.

Furthermore, state legislators should consider the goals of environmental regulation. If these regulations exist to protect the public’s health, then decision makers may want to focus on more than just the number of enforcement actions. Focusing on the time that passes from initial violation identification to eventual compliance may give legislators a more complete picture of the level of environmental protection that CUPAs provide.

This report examines these issues and recommends possible actions that state legislators may take should they decide they are dissatisfied with the current level of environmental protection that CUPAs supply. The goal of the report is to improve the CUPA program and its effectiveness in achieving its aims.

II.

Background on the CUPA System and its Previous Evaluations Prior to the enactment of SB 1082, California enforced many of its environmental

regulations through a largely uncoordinated combination of state and local efforts. For example, twenty-five county agencies, three city agencies, and the DTSC administered the hazardous waste program while 1,100 different fire agencies administered the hazardous materials management and inventory program.2 As a result of this lack of coordination, any number of

2

California Environmental Protection Agency. “Certified Unified Program.” Certified Unified Program Home Page. 1998. Online. January 8, 2001. (http://www.calepa.ca.gov/CUPA/Default.htm).

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different local or state agencies might inspect a single local business and require it to pay an additional inspection fee each time. In response to complaints made by industry lobbyists and the Chamber of Commerce, Senator Calderon sponsored SB 1082, a bill designed to consolidate and coordinate six environmental programs.3 In 1993, Governor Pete Wilson signed SB 1082 into law.

Under SB 1082, the state required all counties to apply for status as a CUPA. In order to address the needs of cities, some of which already had strong environmental inspection programs in place, the law allowed cities to opt in to the CUPA program as long as they could show that they had the minimum expertise and training to implement the six program elements.

Additionally, where more than one CUPA in a county received certification, the law required each CUPA to enter into a binding agreement with the other CUPAs that would ensure consistent and coordinated implementation throughout the county.

Each CUPA, whether housed in a Fire Department, Environmental Health Department, or some other department within the city or county would consolidate six existing environmental regulation programs with the goal of reducing: 1) the number of regular inspections to each site by combining different inspections into a single visit, and 2) the amount each regulated business paid in inspection fees. The six CUPA program elements4 include: •

Hazardous Waste Generation Program (“HWG”): CUPAs inspect hazardous waste generators and on-site hazardous waste treatment facilities

•

California Accidental Release Prevention Program (“CalARP”): CUPAs review and approve businesses’ accidental release risk analyses

3

Ibid. Also: Local CUPA Staff Person. Telephone Interview. January 25, 2001.

For clarity, we will use the term “CUPA” to discuss a single city or county implementation of SB 1082, “CUPA program” to refer to the SB 1082 system as a whole, and “CUPA program element” to refer to one of the six environmental regulatory programs consolidated under SB 1082.

4

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•

Hazardous Materials Release Response Plans and Inventories (“HMRRP”): CUPAs ensure that regulated businesses maintain response plans related to hazardous materials and coordinate these plans into an overall emergency response plan

•

Underground Storage Tank Program (“UST”): CUPAs inspect underground petroleum storage tanks, the majority of which are located at retail gas stations

•

Aboveground Storage Tank Program (“AST”): CUPAs identify above ground petroleum storage tanks that require Spill Prevention Control and Countermeasures plans and refer those to the state’s Regional Water Quality Control Boards (“RWQCBs”)

•

Hazardous Materials Management Plans and Inventories/Uniform Fire Code (“UFC”): CUPAs make sure that fire departments receive businesses’ hazardous materials plans and inventories

Each CUPA should implement these six programs under the supervision of the State Fire Marshall, the Office of Emergency Services, the State Water Resources Control Board (“SWRCB”), and the RWQCBs, with primary oversight by DTSC. Each CUPA has several responsibilities. Each must set up a single fee system to finance its operations, create a unified inspection and enforcement program, consolidate the permits of the six program elements, merge the administration of the six programs, and, if necessary, coordinate with a Participating Agency who will implement one or more of the six components if the CUPA itself lacks the resources or expertise.

By 1998, the state had certified sixty-nine CUPAs to implement the six programs within their local jurisdictions. Fifteen counties remained in which no CUPA had been certified: Butte, Calaveras, Colusa, Glenn, Imperial, Inyo, Lassen, Mariposa, Modoc, Plumas, Sierra, Sutter, Tehama, Trinity, and Yuba counties. Though some of these counties never expressed any

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interest in the program, many expressed an interest in complying, but lacked the resources or expertise required to implement the program. Until recently, these fifteen counties constituted an urgent area of concern, but the state legislature has finally addressed the issue with SB 1824. SB 1824, signed into law on September 25, 2000, allows these largely rural and sparsely populated counties to combine their resources to form regional CUPAs and creates a Rural CUPA Reimbursement Account to assist these counties in getting the program implemented.

Are CUPAs doing an adequate job of enforcing environmental regulations?

There seems to be a perception among state level observers, whether in the legislative or executive branch, that CUPAs are not doing their job effectively when it comes to the area of enforcement. The CSA and LAO have studied the DTSC and CUPAs in recent years, both finding serious problems with the CUPA program. In 1999, former Assembly Speaker Antonio Villaraigosa wrote to the DTSC seeking reports on enforcement actions that CUPAs have taken.

The DTSC’s response revealed that, to that point, no CUPA had submitted any penalties to the DTSC pursuant to Health & Safety Code § 25187 (i) and (j). While a review of this literature paints a dismal picture, the reality is not so bleak. The DTSC’s response to Villaraigosa was hardly a comprehensive report. Furthermore, neither the LAO’s report nor the CSA’s report addressed the problem of environmental health and safety directly. Both reports were more concerned with administrative, financial, and oversight issues.

The LAO Report In its report titled “State Agencies Can Do More to Improve CUPA Program,” the LAO concluded that the program “has resulted in better coordination among state agencies and less

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fragmentation in program implementation.”5 However, the LAO also found a lack of consistency in statewide implementation. The LAO attributed the inconsistencies to a lack of statewide implementation, inconsistency among local CUPAs, lax enforcement of local fee accountability, and ineffective oversight.6 The LAO emphasized the need for more uniform enforcement in order to assure “that a minimally adequate level of environmental protection is afforded to [California’s] residents, regardless of where they live.”7 The LAO recommended that the DTSC create and promulgate an official enforcement response policy.

However, the DTSC has already promulgated several documents to make the enforcement process more consistent statewide, and continues to provide training on the enforcement procedures so that the inspectors in the field can implement these policies. For instance, the DTSC has an official policy entitled “Enforcement Response Policy,” approved in August 1995, and has another entitled “Unified Policy on Environmental Criminal Conduct Coming to the Attention of Cal/EPA and CUPA Officials and Employees,” dating from December 1998. The DTSC continues to provide training on the proper use of these policies (e.g., Enforcement Response Policy—A Sound Policy Makes Good Sense,” California CUPA Conference, February 9, 2001, 10:00 a.m.). The CUPA Forum itself drafted and promulgated the booklet “Guidance for the Preparation of Inspection and Enforcement Program Plans” (Final Draft February 2000). Some of the LAO’s other recommendations, such as legislation authorizing the creation of regional CUPAs or improved provision of training needs, also have been or are currently being addressed.

5

Legislative Analyst’s Office. “Analysis of the 2000-01 Budget Bill: State Agencies Can Do More to Improve CUPA Program.” February 9, 2000. Online. March 2, 2001. p 3. (http://www.lao.ca.gov/analysis%5F2…sources/res%5F8%5cupa%5Fan100.htm) 6 Ibid.

7 Ibid. p. 6.

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Although the LAO concluded that California’s citizens receive varying degrees of environmental protection because they depend on their local CUPAs to enforce the state’s environmental regulations, the LAO did not explore this conclusion any further. The LAO did not define the problem in terms of which citizens (save those in non-CUPA counties) might be receiving less environmental protection, nor did the LAO report attempt to discover what factors might determine strong versus lax enforcement.

The CSA Report The CSA, in its report entitled “Department of Toxic Substances Control: The Generator Fee Structure is Unfair, Recycling Efforts Require Improvement, and State and Local Agencies Need to Fully Implement the Unified Program,” identified additional problems plaguing CUPAs. On the positive side, the CSA noted that the “Unified Program results in more inspections of hazardous waste generators and on-site treatment facilities than when these programs were the state’s responsibility.”8 However, the CSA also found that not all CUPAs implement all six components. They found that approximately 90% of CUPAs have all six programs. Citing a 1997 DTSC survey of hazardous waste generators, the CSA noted that those located in jurisdictions with local inspection programs had a 93% rate of compliance with hazardous waste control laws while those located in jurisdictions that did not implement the CUPA HWG program element had only a 70% compliance rate.9 Thus, the CSA pointed out that “violations of hazardous waste control laws may go undetected.”10 In addition to discussing the problem of the fifteen non-CUPA counties (a need the state has already addressed, discussed supra), the bulk of the CSA report focused on the inconsistency in fees that the DTSC and CUPAs charge to 8

California State Auditor. Department of Toxic Substances Control: The Generator Fee Structure is Unfair, Recycling Efforts Require Improvement, and State and Local Agencies Need to Fully Implement the Unified Program. Sacramento, CA: Bureau of State Audits, June 1999. p. 25.

9 Ibid. p. 34.

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regulated businesses. Though these fee inconsistencies are problematic, that concern addresses fairness to businesses that pay the fees and does not address fairness to citizens who receive varying degrees of environmental regulation. Like the LAO report, the CSA report neglected to explore individual CUPAs to discover whether certain predictors exist which might help to determine the level of environmental regulation that CUPAs provide.

What should the state look for as it assesses CUPA performance?

Although the current CUPA program is an improvement over the previous system of regulating hazardous waste generators and hazardous materials handlers, there are still problems that face the new system that hamper its ability to efficiently protect the public health. Evidence suggests that state may have lost the primary goal of environmental regulation, the protection of the public’s health. For example, the CSA’s report focuses on equity to businesses in its conclusion that the current CUPA fee structure could be made fairer. Nowhere does the CSA discuss the fairness to the residents of different CUPAs who may be receiving different levels of environmental protection, nor does the CSA address the possibility that only CUPAs that charge the highest inspection fees are providing themselves sufficient resources to perform their duties fully.

Because none of the prior evaluations have examined the problem in depth, those who have been aware of this issue may understand the problem simply to be “too few enforcement actions.” A problem defined as “too few enforcement actions” has its solution built in−more enforcement actions. However, this problem and solution may be too simplistic (a simple thought experiment would reveal that, by this definition, a CUPA that initiated one enforcement action based on five violations would be deemed less effective than a CUPA that initiated 100

10

Ibid. p. 26.

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enforcement actions based on 1,000 violations). Given the diversity of counties in California, the task of problem definition is important. It may not be useful to judge CUPAs by their achievement of a minimum number of enforcement actions per year or evaluation cycle. The state might get a better picture of its environmental safety if it looked to different data. For instance, the state may want CUPAs to report how long it takes each establishment to return to compliance once a CUPA inspector discovers a violation.

The state legislature should decide what its real objective is before it concludes that CUPA under enforcement is a problem. The legislature should examine why it created environmental regulations in the first place. Hazardous waste and materials regulations were established to protect public health, not to benefit the regulated community. Therefore, any assessment of CUPA performance should keep this goal in mind. Additionally, the legislature may want to consider the stated goals of the CUPA program: consistency, coordination, and consolidation.

III.

Empirical Results: Definition and Scope of the Problem In large part, this report attempts to discover what those inside the system believe the

problems are. After a literature search, to get a better grasp on the problems and conflicts CUPAs face, we investigated both how the CUPA staff themselves evaluated their own performance and how those who deal with CUPAs (prosecutors, state agency staff, and federal Environmental Protection Agency staff) evaluate CUPAs. Additionally, we analyzed demographic and performance data for each CUPA. We used data the CUPAs reported to the DTSC for fiscal year 1998-99 (the latest available).11 In its evaluation of CUPA performance,

11

Because the law requiring CUPAs to report their activities to the DTSC did not take effect until the middle of the fiscal year, CUPAs had the option of submitting incomplete information. State law did not mandate full reporting

by CUPAs until the 1999-2000 fiscal year. Any conclusions about the CUPA program based solely on earlier data are likely to be somewhat premature.

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the state should consider that the program has not yet stabilized into a mature form and CUPA performance may improve (even if the legislature takes no action) due to improved participation rates, data collection, and staff experience.

Heterogeneity Across CUPAs Although our research sought to find problems common to all or most CUPAs, instead we found marked differences. While one interviewee would say that the fees his agency receives balance equally with the costs, another would complain of high start-up costs to becoming a CUPA, and still another would admit to relying on his county’s general fund just to keep going.

One would complain that reporting to the state was an unnecessary burden, but the next would emphasize the importance of meeting all the state’s requirements in order to maintain his agency’s status as a CUPA. Several interviewees saw no problems with the CUPA program and felt their particular agency was doing its job effectively. Others complained about the added paperwork burden.

While some praised the communication between the state and the CUPAs, others complained of too much state interference into local matters or lack of timely state action when new regulations go into effect or new forms become necessary. While many complained about lack of resources, one CUPA Forum participant emphasized that he wanted the fee setting power to remain local.12 Some local CUPAs identified problems with their local prosecutors, complaining that they refer cases, but that the prosecutors do not take action. In response to DTSC cries for more information, many local CUPA administrators and inspectors agreed that there are already too many data reporting requirements that cut into their inspection and enforcement time.13

12

2001 California CUPA Forum Conference. “Opening Ceremonies, Plenary Session and Hosted Luncheon.”

Sheraton Hotel, Universal City, Ca. February 6, 2001. Also: CUPA Staff Interviews.

13 Ibid.

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Because the DTSC has primary oversight for the program, the insights of its staff are especially important in exploring any CUPA program problems. The DTSC, while recognizing that the implementation of the CUPA program is not perfect, points to the program’s newness and the DTSC’s procedures and policies, which evolve to address identified shortcomings. For example, Larry Matz, Section Chief of the State Regulatory Programs Division at the DTSC, has seen great improvement in the administration of the CUPA program over the past two years.

Another DTSC staffer who attended the CUPA Forum Conference stated that CUPAs need to move away from educating businesses and toward stressing enforcement and follow-up on violations.14 Sangat Kals, the former Chief of the Unified Program at the DTSC, was well aware of many of the shortcomings we had discovered through interviews with CUPA staff in the field, but said that the DTSC is addressing these issues, so that it may only be a matter of time before those shortcomings will improve.15 Despite the heterogeneity among the CUPA and state staffers, the interviews and conference yielded some recurring themes: inconsistency in both the classification of violations and the enforcement response to those violations, needed improvement in communication between the state agencies and the CUPAs, and the need for accurate data reported by the CUPAs to the DTSC. The Relationship between Violation Detection and Enforcement Actions Importantly, within each of the three largest reported program elements (HMRRP, UST, and HWG), the data revealed a high correlation between the numbers of violations each CUPA identified and the number of total enforcement actions the CUPA commenced (see Table 1).

This means that when a CUPA identifies a business that is out of compliance, the CUPA

14

2001 California CUPA Forum Conference. “CUPA Evaluations: What’s Working Well.” Sheraton Hotel, Universal City, Ca. February 9, 2001.

15 Kals, Sangat S. (Former Chief of Department of Toxic Substances Control’s Unified Program). Telephone Interview. February 1, 2001.

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generally takes measures to ensure that the business returns to compliance. However, the data revealed a lower correlation (as low as .49 for the HWG program) between the number of regulated establishments in each CUPA and the number of violations identified. This result is more problematic. Assuming that there is an underlying “true� rate of violations per establishment that is constant regardless of the number of regulated establishments in each CUPA, some CUPAs are clearly doing better than others at identifying businesses not in compliance.

Table 1: Correlation between Number of Regulated Establishments, Violations Detected, and Enforcement Actions Commenced Correlation Between Program Enforcement and Violation Violation and Establishment 0.88 0.72 HMRRP 0.80 0.68 UST 0.93 0.49 HWG Performance of City and County Based CUPAs Vary Data analysis reveals that city based CUPAs have a higher average violation to establishment ratio than county run CUPAs for the HMRRP, UST, and HWG program elements (see Table 2).16 This indicates that city operated CUPAs out perform county operated CUPAs in detecting businesses that are out of compliance with environmental regulations. This means that city based CUPAs can take more enforcement actions to ensure violators comply with the law.

One possible explanation for superior city CUPA performance stems from the inherent differences between city and county CUPAs. Cities joined the CUPA program on a voluntary basis, but the state required counties to apply for CUPA status. Thus, each city based CUPA exists only because the local city council had sufficient interest to take proactive steps to become responsible for the administration of the six CUPA program elements. Thus, the fact that city

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based CUPAs identify more violations per regulated establishment reveals the city based CUPAs’ higher level of interest in the program. Counties, on the other hand, may have political preferences that conflict with strong environmental enforcement. Because counties had no choice as to whether or not to participate in the CUPA program, the performance of county based CUPAs may reflect the widely varying preferences of county governments for different levels of environmental regulation.

Table 2: Comparison of Average Ratio of Violation Detection and Enforcement Actions between City and County CUPAs Average Ratio of Program Violation to Establishments Enforcement to Violation City County City County 0.15 0.06 1.91 1.36 HMRRP 0.32 0.20 0.97 0.97 UST 0.37 0.18 2.22 2.44 HWG Financial Constraints Affect Enforcement Actions Although SB 1082 requires CUPAs to be self-supported agencies through the inspection fees they charge to regulated businesses, the CSA reported that at least forty-two CUPAs (over 60%) spent more than they received in fees for fiscal year 1997-98.17 This implies that most CUPAs are using the general fund to finance their operations and that jurisdictions with higher overall resources can afford to spend more on their CUPAs. The data analysis confirms this hypothesis, revealing that the property tax base of a jurisdiction has a positive impact on the number of violations a CUPA reports. Thus, financial constraints of local governments do have an apparent impact on CUPA performance.

16

Because each CUPA oversees a different number of businesses, dividing the number of violations by the number of establishments creates a comparable scale. This new ratio helps to determine CUPA enforcement performance because CUPAs must first properly identify violators before they can take enforcement actions (see Appendix B).

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Political Preferences Affect Enforcement Actions Interviews with district attorneys and city attorneys also revealed causes for enforcement differences between CUPAs. Some complained that their local CUPAs do not refer enough cases for prosecution (one district attorney specifically mentioned the finger-pointing dilemma and stated that there are probably failures by both sides to refer cases and to follow through on prosecution18). Some prosecutors found prosecution very difficult given the evidence that CUPAs provide and one suggested that CUPAs have little interest in pursuing legal remedies, preferring a friendly relationship with the regulated community instead.

Political preferences may affect more than just the relationship between the CUPA and the prosecuting attorney’s office. For instance, as the total sales of retail gas stations increase in a CUPA, the level of enforcement in the UST program declines. In contrast to the UST program, as the sales receipts of regulated businesses in the HWG program increase, so do the number of enforcement actions. While it may be that CUPAs in which hazardous waste generators constitute a significant portion of the local economy feel especially vulnerable and therefore pursue more enforcement actions in comparison to other CUPAs, the UST result might point toward a contrary hypothesis that heavy industry influence is one of the factors that reduces the enforcement preferences of a CUPA jurisdiction. While the quantitative results are ambiguous, they reflect the heterogeneity discovered through the interviews and conference attendance.

Enforcement Appears Unrelated to Social Justice Factors Data analysis did not reveal underlying social justice causes for the potentially dangerous failure to identify or follow-up on non-compliance with state environmental regulations. Using 17

California State Auditor. Department of Toxic Substances Control: The Generator Fee Structure is Unfair, Recycling Efforts Require Improvement, and State and Local Agencies Need to Fully Implement the Unified Program. Sacramento, Ca: Bureau of State Audits, June 1999. p. 28.

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demographic information about the citizens of each CUPA jurisdiction, we attempted to discover whether any specific sub-group was at risk. In other words, we looked for a relationship between the presence of a particular subgroup and a lower rate of enforcement action or violation detection. The data revealed no significant relationship between enforcement action or violation detection and the population of Whites, Asians, African Americans, Latinos, the elderly (over age 64), the young (under age 18), the linguistically isolated, immigrants (whether newly arrived or living in the state more than sixteen years), those lacking high school diplomas, or those living below the poverty line. This lack of relationship means there is no identifiable sub-group that is particularly vulnerable to weaker environmental enforcement. Thus, one must look elsewhere to find the source of the variation in enforcement and violation detection.

IV.

Analysis of the Problems, Trade-Offs, and Policy Options The devolved nature of the CUPA system explains much of the reported CUPA

inconsistencies. With the enactment of SB 1082, Californians made a choice to devolve the responsibility for six environmental regulation programs to local agencies, away from direct state control. As with all such decisions, this devolution has consequences. Depending on one’s preferences, these consequences can be positive or negative.

•

Devolution begets inconsistency. The nature of locally controlled programs is that they will reflect local preferences. This is true on the state as well as the federal level. For example, because states have the authority to implement the Temporary Assistance for Needy Families (“TANF”) program, there are fifty different versions of it. Had the federal government wanted TANF to be administered consistently across states, a better choice would have been to implement it directly as a federal program. Likewise, when California placed the six

18

2001 California CUPA Forum Conference. “Enforcement Options: Using the Environmental Strike Force.”

Sheraton Hotel, Universal City, Ca. February 8, 2001.

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CUPA program elements into the hands of cities and counties, the state was intentionally allowing these localities to adapt the policy making to local conditions and preferences.

Thus, the legislature must recognize that additional local control promotes additional program inconsistency. Because consistency and local control are in conflict, more of one means less of the other. •

Resources are limited. Recognizing that CUPAs face financial constraints (as described supra), the legislature should realize that CUPAs confront a trade-off in what they can accomplish with their limited resources. More financial resources devoted to paperwork such as recording data and writing inspection reports means fewer resources devoted to work in the field such as inspections and re-inspections. Moreover, because the local governing body (county board of supervisors or city council) sets the inspection fees, the degree of resource constraint is also a function of local preferences.

As state legislators consider the weaknesses and policy alternatives described in the

following sections, they should keep these trade-offs in mind.

A)

Weak human resources and data-management capabilities arise from limited financial resources and lead to weak support for formal enforcement actions.

Insufficient funds can prevent CUPA programs from implementing all six program

elements and from aggressively enforcing each program’s regulations. Financial constraints cause many CUPAs to have inadequate staff and equipment to carry out the required number of inspections and to pursue appropriate follow-up and enforcement. A shortage of staff members or appropriate data management tools can lead to ineffective evidence collection and violation documentation. Some program managers steer staff away from activities that would support effective enforcement because the CUPAs lacks sufficient resources to perform its follow-up

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functions properly and maintain its inspection schedule as well.19 This situation hampers the enforcement efforts of district attorneys and city attorneys in prosecuting environmental cases.

The DTSC and the California CUPA Forum can effectively address some of the causes of human resource weaknesses. To address the idea that CUPA staff lack the experience or motivation to refer cases to prosecutors for enforcement, several sessions at the 2001 CUPA Forum Conference focused on this concern. One taught participants the importance of collecting sufficient evidence to prepare for prosecution and discussed the value of a successfully prosecuted case in convincing other regulated businesses to comply. Another taught participants to make use of Environmental Task Forces (also known as Strike Forces), to communicate with district attorneys and city attorneys and discuss which cases might be appropriate for referral. In general, the courses offered at the Conference addressed weaknesses that interviewees had identified in the weeks leading up to the Conference.

Although continued provision of training will likely result in more program expertise and higher levels of commitment on the part of CUPA staff members, this training will not change the political preferences of local lawmakers. Thus, as long as some local lawmakers continue to set inspection fees on regulated businesses that are too low to support CUPA activities, some CUPAs will continue to have inadequate capabilities to carry out their duties properly. Although these local variations may make CUPAs more accountable to local people, they have also caused under funding of some CUPAs and thus may threaten public safety.

B)

Local differences create different enforcement preferences.

Differences exist across all areas of the CUPA program, including, financial support of

CUPA activities, the classification of violations, and the aggressiveness with which CUPAs 19

One participant at the CUPA Forum Conference explained further: “A department’s costs of pursuing enforcement can exceed the penalties it will receive. So, some CUPA managers direct inspectors not to waste time pursuing

18

pursue violators. Some localities seem to prefer weaker enforcement policies. Interviewees made this preference clear in such statements as “Counties may have philosophical differences with the state. They may want to be more cooperative [with violators] than the state would like”20 and “Here’s the hidden danger. Now [the DTSC representative] is admitting how much time is involved [in enforcement]. It’s more than just filling out a matrix.”21 On the other hand, many 2001 CUPA Forum Conference attendees were eager to learn new methods and procedures to use in getting violators to comply and to make their communities safer. One CUPA investigator asked if it would be appropriate to publish the names of companies who were out of compliance on the internet, and another explained that, to ensure his CUPA has enough funds to adequately pursue enforcement, it bills noncompliant firms for any enforcement costs as an addition to their standard inspection fees.

These preferences exist not only among individual CUPA staff, but also in the systematic decisions that local jurisdictions make. For instance, constituents presumably vote for district attorneys, city attorneys, city council members, and county supervisors who best reflect the environmental preferences of those constituencies. Because one jurisdiction will be more probusiness or more pro-environment than another, these preferences affect the localities’ choices for leadership positions, which will in turn affect inspection fees, CUPA staffing decisions, and the aggressiveness with which the prosecuting attorneys will pursue violators.

Because SB 1082 gave localities these freedoms, the state must consider these freedoms when evaluating CUPA performance. If the state wants more consistent environmental inspection and enforcement, it should remove some of the local prerogative. If the state wants to enforcement because it is too expensive.”

20 2001 California CUPA Forum Conference. “Negotiating Penalties Session.” Sheraton Hotel, Universal City, Ca. February 9, 2001.

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continue with local control, the state must be willing to accept a wide range of results. The state can narrow this wide range, however, without completely taking the program back under state control. For example, some enforcement options require localities to pass laws and create procedures to implement them. The options to revoke a regulated establishment’s permit to operate or to close a facility entirely are two such opt in enforcement choices. Should the state decide that all CUPAs should have these options, it could create statewide authorization and uniform procedures for so doing.

Local preferences have created differences in local fees, inspection routines and frequencies, enforcement standards, and CUPA relationships with prosecuting attorneys throughout California. Some of these differences will stem from differing political leanings, but others will result directly from differences in local situations. For instance, observers should not be surprised to see differences in inspection and enforcement policies between the Alpine County CUPA (which reports five establishments with underground storage tanks) and the Los Angeles County CUPA (which reports 3,016 establishments with underground storage tanks).

The state must recognize that, due to the nature of the CUPA system, these local differences will present problems in the drive for consistency.

C)

If the state desires more consistency in enforcement, it should address the local fee setting mechanism.

The local fees that hazardous waste generators and hazardous materials handlers pay

should fully fund the operations of the local CUPAs. When a county or city sets low fees, the ability of the CUPA to do its job is restricted. When fees do not provide enough resources, some local governments supplement the CUPA with money from the general fund.22 Therefore, the

21

2001 California CUPA Forum Conference. “Enforcement Response Policy: A Sound Policy Makes Good Sense.”

Sheraton Hotel, Universal City, Ca. February 9, 2001.

22 Local CUPA Staff Person. Telephone Interview. January 25, 2001.

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level of fees and supplementary funds are up to the political preferences of the locally elected officials and do not necessarily reflect the state’s desires for sufficient program implementation.

For example, one local inspector stated that his County Board of Supervisors would not authorize a higher local fee because of its perception that the county is a small and rural, despite having some 750,000 residents and a large number of regulated businesses.23 To address the financial constraints that affect CUPAs’ enforcement capabilities, state legislators should consider the following three options.

Option 1: Maintain the Status Quo Because the CUPA program is relatively young and has been fully operational for less than three fiscal years, one might speculate that the program would improve over time as it adjusts its operational functions. However, given that many inspection and enforcement problems plaguing CUPAs originate from the inspection fees that local governments establish, it is unlikely that the local elected officials will alter the assessed fees of their own volition.

Without an increase in fees, several CUPAs will have to continue struggling to implement their programs due to inadequate staffs and physical resources. In addition, the local governments that subsidize the CUPAs by using the general fund are shortchanging other city and county programs such as police, fire, parks, libraries, and health care.

One hypothesis as to why local governments are reluctant to increase inspection fees is to remain competitive with their neighboring jurisdictions in attracting businesses to the community. If this is the case, the under funded local CUPAs will continue to lack the resources

23

Local CUPA Staff Person. Personal Interview. February 7, 2001. Also: Local CUPA Staff Person. Personal Interview. February 9, 2001; and 2001 California CUPA Forum Conference. “CUPA Evaluations: What’s Working Well.” Sheraton Hotel, Universal City, Ca. February 9, 2001.

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necessary to detect violators in time to protect the community from the dangers posed by the accidental release of hazardous materials or waste.

Option 2: Centralize the Fee Setting Power in the State’s Hands The second alternative is for the state to set the amount that each CUPA could charge the regulated businesses. A state mandated inspection fee would free CUPAs from the financial constraints created by their local governments. This would rectify the problem of staff shortages as well as allow CUPAs to implement all six program elements and fully enforce their respective regulations. With the introduction of uniform fees, the state could achieve more consistent inspections and enforcement actions because all CUPAs could afford to meet minimum established standards for inspection and enforcement.

Unlike Option 1, Option 2 resolves the issue of financially strapped CUPAs unable to perform their duties to protect the public from the exposure of hazardous materials. Secondly, by establishing a uniform fee, the state would eliminate the practice of subsidizing CUPAs from local general funds. This would increase local funds available for other programs. Furthermore, it would level the playing field for businesses that currently receive a subsidy from CUPA jurisdictions that charge fees insufficient to cover the costs of the services they provide.

However, uniform fees and state mandated standards would infringe upon local control. CUPAs would be meeting the state’s desires rather than the desires and needs of the locality. Thus, Option 2 will most likely face many objections from local governments.

Option 3: Set Minimum Standards and Fees The third option, a form of which was recommended by the LAO, takes a middle road between the first two options. The legislature could require the Secretary of the EPA to conduct an in-depth review of current CUPA fees and develop relevant standards. The Secretary could

22

then develop an overall plan that creates a minimum amount that each CUPA must charge in the form of inspection fees to support the number of required staff hours to perform the job adequately.24 These minimum standards should enable currently under funded CUPAs to have the justification to get the funding they need to improve their performance. Minimum standards will also allow for better consistency statewide in inspections and enforcement. The minimum standards and minimum fees should be just that, minimums. The plan should allow CUPA programs to set standards and fees higher than the required minimum. This option does not include maximum fee levels because this would take away the very nature of CUPAs having the flexibility to meet specific preferences and needs of the local community. By setting a maximum fee, there is a possibility that CUPAs could not fulfill the local community’s preferences in wanting a more stringent compliance standard from local businesses.

This recommendation will likely face opposition from local elected leaders who may find their power circumvented by state-mandated minimums. Having local elected governing bodies set the fees and standards was supposed to protect the local businesses and residents, but some local governing bodies now threaten the health of their residents by under funding the CUPA program. Therefore, setting a state minimum inspection and enforcement standard and fee structure would mean all Californians would enjoy at least a minimum level of protection from exposure to hazardous materials.

As part of establishing minimum inspection standards and a fee calculation plan, the state should create a financial audit team. The financial audit team will inspect CUPAs, especially those with high or low local fees. This will ensure regulated businesses that the CUPA is not over charging and ensure the public that the CUPA can function properly.

24

The Licensing Fee Structure should be based on the minimum operational costs for each of the six CUPA program elements, including inspectors’ salaries, time spent on inspection and writing reports, and other relevant factors.

23

In a nutshell, Option 3 is like Option 2, but with a built in flexibility component. Because Option 3 permits local CUPAs the flexibility to set higher regulation standards, choosing this option means that there would still be inconsistencies across CUPAs. D.

Statutory incentives, as well as prosecutorial resources, affect enforcement choices.

It would be a mistake to conclude, based on existing data, that CUPAs are not assessing

and collecting fines or penalties. The table presented by the DTSC in its response to Speaker Villaraigosa’s inquiry only calculates the enforcement penalties that CUPAs have submitted to the DTSC pursuant to California’s Health & Safety Code § 25187(i) and (j). Yet, if a prosecutor chose to prosecute under other than Health & Safety Code § 25187(i) and (j), then that prosecution did not appear in the DTSC report to Villaraigosa, which means that the report clearly understated the rate at which CUPAs pursue formal enforcement strategies.

However, CUPAs have many enforcement options outside the Health & Safety Code, some of which allow prosecutors and agencies to keep more of the settlements and fines collected. For instance, many Health & Safety Code violations also qualify as unfair business practices under the Business Code § 17200, allowing prosecution under that code. Because all the monies that violators pay for Business Code violations stay in the locality, prosecuting agencies have an incentive to prosecute under the Business Code rather than the Health & Safety Code, which yields 50% of assessed penalties to the state and 50% of the penalties to the locality (typically split “50-50” between the CUPA and the prosecuting agency). Furthermore, a CUPA may pursue other formal actions, such as permit revocation, fire code violations, or prosecution under local ordinances, all of which may have the same goal (to bring the violator into compliance and to show other operators that violations will be taken seriously), but, because of its structure, would not appear in the DTSC’s response letter to Villaraigosa.

24

Due to the variety of formal, informal, civil, criminal, and administrative enforcement options available to CUPAs and their local prosecutors, state oversight of enforcement is probably sketchy at best. So although the CUPAs may be getting high levels of cooperation from their district attorney’s offices, fire departments, RWQCBs, and even the federal EPA and federal prosecutors, the state may not recognize such enforcement if it does not specifically ask the CUPAs to report these actions. Thus, CUPAs may appear to be more lax on enforcement than is really the case.

Because environmental prosecution can be an expensive proposition both for CUPAs and for prosecuting attorney’s offices, the state should note that incentives not to prosecute exist as well. Environmental enforcement can be a loss division for district attorney’s offices because so much of the money recovered goes to clean up or must be shared with state or local agencies.25 On the other hand, some counties put all fines that their district attorneys collect into the county’s general fund, so that one division does not raise any more revenue for the district attorney’s office than another does.

Even if environmental prosecution decisions are not based on finances, they may be based on ability. Environmental enforcement may be lower than it should be because environmental prosecution is a specialty that many prosecutors do not have the required expertise or experience to do well. Thus, some district attorneys may let referrals wallow while they pursue other cases for which they feel more capable.26 A jurisdiction’s political preferences will also affect the district attorney’s pursuit of environmental violators. The political leanings of the local voters who elect the district attorneys will, to some extent, echo in the district attorney’s choices of which areas to pursue aggressively 25

2001 California CUPA Forum Conference. “Enforcement Options: Using the Environmental Strike Force.”

Sheraton Hotel, Universal City, Ca. February 8, 2001.

25

and which areas to provide fewer staff and less support. The state should expect to see different prosecutorial preferences where a hazardous waste generator is the jurisdiction’s primary employer or source of tax revenue, for instance.

Complicating the issue of under staffing are small, rural counties that have district attorney staffs as small as two attorneys. Where only two prosecutors serve the entire county, they likely lack, in addition to expertise and experience, the time and money to pursue environmental crimes. Recognizing this shortcoming, the California District Attorney’s Association implemented the Circuit Prosecutor Program to assist small, rural counties with environmental cases. The prosecutors contacted for this study gave positive reviews of the effectiveness of the Circuit Prosecutor Program.

A final difficulty identified in this area is that not all CUPAs and their prosecuting attorneys have open lines of communication. While some counties, such as Los Angeles and San Mateo, had long-standing relationships between local inspectors and district attorney’s offices, other jurisdictions seemed to approach environmental prosecution as an entirely new venture.

Recognizing this, the state has organized Environmental Task Forces in every county (or region, for small counties) in the state.27 These task forces hold monthly meetings at which prosecutors, fire departments, CUPA inspectors, law enforcement officers, and representatives from the SWRCB and RWQCBs, Parks, Fish and Game and Forestry departments as well as others can discuss current environmental regulation issues. CUPA inspectors might discuss a recalcitrant violator and other participants might suggest different approaches to handle the problem. These task forces have been in place for many years in such places as Ventura County, but are new and need time to work in other areas.

26

Kelly, Parker S. Telephone Interview. January 26, 2001.

26

Given that CUPAs that perform well may still appear weak in the enforcement arena due to lack of prosecutorial support, experience, or adequate staff, as well as inadequate data collection, the state has several options.

Option 1: Maintain the Status Quo One solution is to do nothing. This choice is appropriate if the state wishes to focus on other areas that impact CUPA enforcement, such as adequate training and inspections, or if the state merely wants to wait a few more years before taking action in this area. Maintaining the status quo will not require any additional resources to be spent (at least in the short term), but, if enforcement is truly lagging in certain jurisdictions, there is a higher risk of increased future outlays to deal with emergency clean-ups or to deal with previously undetected releases. The weakness of an absolute do-nothing approach is that its main benefit (to delay action until the CUPA program has stabilized and more information about it is available) will not be achieved unless the data collection systems improve.

Option 2: Make Enforcement Data More Specific Adjusting the data collection system will improve the DTSC’s oversight capabilities.

Data reporting could be more useful if it is more detailed. For example, to determine whether CUPAs are really pursuing the state’s regulatory priorities, each CUPA could report not only the number of civil or criminal enforcement actions, but also how many enforcement actions it pursued under each specific code (including local codes which may otherwise appear to the state to be non-enforcement). Moreover, each CUPA could report the number of referrals to the federal EPA, the district attorney, and so forth, so that potential problems in prosecuting agency follow up (rather than problems in lax CUPA effort) could be identified.

27

2001 California CUPA Forum Conference. “Enforcement Options: Using the Environmental Strike Force.”

Sheraton Hotel, Universal City, Ca. February 8, 2001.

27

Additionally, the DTSC could require CUPAs to report an additional statistic: the number of days between violation detection and return to compliance. This statistic may give the state a better grasp of how well CUPAs are protecting their residents because it will reveal whether there are CUPAs who achieve quick compliance without frequent use of formal enforcement options.

This option would increase costs to the local CUPA, which would (in theory at least) be passed on to the regulated establishments. If the locality’s governing body chose not to increase its inspection fees, the CUPAs would face a trade-off between thorough data reporting and thorough inspections. After studying the data collected pursuant to this recommendation, the state could make decisions about the localities’ incentives to pursue enforcement strategies of each type (and, if it so desired, change those incentives to reflect more accurately the state’s goals).

Option 3: Centralize Environmental Prosecution Another possibility is to centralize prosecution and investigation by folding environmental prosecution under a state legal team that CUPAs support by strictly adhering to standardized enforcement policies. This solution would be a significant change, not only from the current CUPA system, but also in terms of the power and independence that California localities have historically enjoyed. This option would greatly increase consistency and ensure that businesses statewide were subject to identical enforcement policies, but it would remove a substantial degree of local control. This option would not necessarily guarantee citizens equal environmental protection unless CUPA financing, inspection requirements, and training were standardized concurrently. Moreover, to create, train, and maintain a prosecutorial staff with

28

statewide jurisdiction over the six CUPA environmental regulatory programs would be expensive, and legislators would have to balance these costs with their other policy priorities.

Option 4: Educate Key Players Another possible solution would be to embark on an education campaign for judges, prosecutors, and elected officials on the importance of hazardous materials and hazardous waste regulation enforcement. Because those in the legal establishment sometimes view environmental crimes as less serious than street crimes, the idea behind this option would be to increase the importance with which the players in the legal system view environmental crimes. This solution could be problematic if the targeted groups do not want to participate. Although this solution would require the state to provide funds for the education programs, the expenditure would be significantly less than the consolidation of all environmental prosecutions in the hands of state attorneys (Option 3).

In terms of trade-offs, this solution would attempt to increase consistency without removing local control, and would not force CUPAs to spend more of their limited financial resources. However, the impact that this option is likely to exert is small. This option might be a good choice if the legislature decided that the enforcement problems are extant, but minimal.

Alternatively, it might be a good first step to take, before proceeding to options that are more radical if the desired effects do not occur.

Option 5: Change the Enforcement Choices Available to CUPAs and Prosecutors Finally, the state may wish to study the plethora of options available to CUPAs to pursue violators and the numerous code sections under which it allows localities to prosecute violators.

If the state is seeking the ultimate in flexibility and local control, the variety of options should remain (and possibly even expand). For instance, because some enforcement options are only

29

available if the local governing body passes an authorizing ordinance, the legislature may wish to act to give the CUPAs these powers regardless of whether the local governing body has acted in these areas yet.

If, on the other hand, the state desires uniformity, then it should narrow the range of options available to CUPAs and to district and city attorneys when CUPAs choose to refer cases for prosecution. A reduced menu of options will mean more consistency as CUPAs pursue parties who are out of compliance. To the extent that this option increases the number of referrals to city and district attorneys, CUPAs which receive inadequate funding will forego some time spent on inspections in order to spend adequate time preparing their cases for referral.

V.

Conclusions and Recommendations The CUPA program has only been proceeding at full implementation (minus the fifteen

non-CUPA counties) for less than three fiscal years. At each step, those responsible, at the local level, the DTSC, and even the federal EPA, have taken steps to examine and address needs.

Thus, in many ways, it would be premature to scrap or make major revisions to the program while a process of addressing its initial starting inefficiencies is on going.

Although it may be premature to make radical revisions to the CUPA program, we do make some recommendations that could be instituted into the current CUPA structure.

First, the state should undertake financial audits of CUPAs, both in order to reassure officials that CUPAs have adequate funding to perform their responsibilities and in order to protect the regulated community from excessively high fees. Financial audits could begin now without significant interference with the current system and with only minor intrusions to CUPAs.

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Secondly, data collection policies need to improve. Improving the data collection system would improve state oversight into the CUPA program. Data reporting would be more useful if it were more detailed. The DTSC should collect data on the length of time between violation identification and compliance. Such a statistic would motivate CUPAs to reduce the average number of days from violation to compliance; it would also help identify CUPAs that achieve compliance without generating large numbers of penalties collected. This recommendation takes into account that some cases will take more than one fiscal year to return to compliance; it will enable the DTSC to determine more accurately whether or not violators are eventually rectifying previous years’ violations.

The third recommendation is for the state to explore enforcement actions that address local needs. As stated in the analysis section, local CUPAs and their prosecuting attorneys currently choose from a variety of enforcement codes to gain compliance. The state could explore what makes enforcement via certain provisions more attractive to different CUPAs; this exploration should provide ideas for efficiently drafting codes in the future.

Other recommendations would require sweeping program changes: centralizing the CUPA program by setting state mandated fees, setting minimum fees, setting minimum program standards, and bringing legal enforcement under state control. Because the attractiveness of such options depends upon one’s political values, the state should consider the costs and benefits of enacting more sweeping changes in light of the two trade-offs we have described: consistency versus local control and resources devoted to enforcement versus resources devoted to inspection.

Setting minimum fees would benefit under funded CUPAs, as they would have a minimum amount of money flowing in from each regulated business. For many CUPAs, this

31

would increase the level of environmental protection they provide. The state must consider the benefits of this recommendation in conjunction with its corresponding reduction in the power of counties or cities to set their own fees.

The recommendation for the DTSC to set minimum inspection standards also promotes consistency over local preferences. By having the DTSC set minimum standards, the local CUPAs will have a new justification for their local governing bodies to increase inspection fees.

This recommendation would give more power to the DTSC to control each local CUPA and reduce local choice.

All our recommendations stem from the belief that the primary purpose of hazardous materials and hazardous waste regulations is to protect the public health. The future direction of the CUPA program should be to move away from a focus on business convenience toward a focus on citizen protection. We agree with several DTSC staff members who believe that the focus of CUPAs needs to move toward enforcement in addition to education. The recommendations outlined here should result in better compliance and more effective enforcement.

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Appendix

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Appendix A: Works Cited Armann, Steve (US EPA). Telephone Interview. February 2, 2001.

Bagle, Barry (Fire Marshal, Manhattan Beach Fire Department). Telephone Interview. January 25, 2001.

Berman, Rich (Santa Monica Environmental Programs). Telephone Interview. January 29, 2001.

Blake, Ann. Telephone Interview. February 5, 2001.

Brose, Greg (Ventura County District Attorney, Consumer & Environmental Affairs Division).

Personal Interviews. February 8, 2001.

Burns, Devin (Burbank Fire Department). Telephone Interview. February 2, 2001.

California Certified Unified Program Agency (CUPA) Forum. Guidance for the Preparation of Inspection and Enforcement Program Plans. February 2000.

California CUPA Forum. “Guidance for the Preparation of Inspection and Enforcement Program.” February 2000.

2001 California CUPA Forum Conference. “CUPA Evaluations: What’s Working Well.”

Sheraton Hotel, Universal City, Ca. February 9, 2001.

2001 California CUPA Forum Conference. “Enforcement Options: Utilizing the Environmental Strike Force.” Sheraton Hotel, Universal City, Ca. February 8, 2001.

2001 California CUPA Forum Conference. “Enforcement Response Policy: A Sound Policy Makes Good Sense.” Sheraton Hotel, Universal City, Ca. February 9, 2001.

2001 California CUPA Forum Conference. “MTBE.” Sheraton Hotel, Universal City, Ca. February 8, 2001.

2001 California CUPA Forum Conference. “Opening Ceremonies, Plenary Session and Hosted Luncheon.” Sheraton Hotel, Universal City, Ca. February 6, 2001.

2001 California CUPA Forum Conference. “Negotiating Penalties: Introduction to Abel and INDIPAY.” Sheraton Hotel, Universal City, Ca. February 9, 2001.

California Environmental Protection Agency. “Certified Unified Program.” Certified Unified Program Home Page. 1998. Online. January 8, 2001. (http://www.calepa.ca.gov/CUPA/Default.htm).

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California State Auditor. Department of Toxic Substances Control: The Generator Fee Structure is Unfair, Recycling Efforts Require Improvement, and State and Local Agencies Need to Fully Implement the Unified Program. Sacramento, CA: Bureau of State Audits, June 1999.

Ceccarelli, David (State Water Resources Control Board). Personal Interview. February 7, 2001.

Closson, Cheryl (Department of Toxic Substances Control). Telephone Interview. February 1, 2001.

Cutter, W. Bowman. “Environmental Federalism and the Provision of Local Public Goods Through Regulation: Underground Storage Tanks In California.” UCLA Department of Economics. (Working Draft) Department of Toxic Substances Control. Fiscal Year 1998-1999 CUPA Survey.

Dombrowski, Kimberly (Hazmat Section, Culver City Fire Department). Telephone Interview.

February 1, 2001.

Doyle, Jim; Susan Sward. “MTBE Leaks a Ticking Bomb.” The San Francisco Chronicle.

December 14, 1998. p. A1.

Fennessy, Denise (Program Manager, Orange County Health Agency). Telephone Interview.

January 29, 2001.

Fleming, Glen (San Bernardino County Haz Mat Division). Personal Interview. February 8, 2001.

Hall, Ken (Torrance Fire Department). Telephone Interview. January 25, 2001.

Jensen, Dirk. (San Mateo County CUPA). Telephone Interview. February 1, 2001.

Kals, Sangat S. (Former Chief of Department of Toxic Substances Control’s Unified Program).

Telephone Interview. February 1, 2001.

Kashak, Ed (Region 8 Aboveground Storage Tank Inspector). Telephone Interview. March 7, 2001.

Kelly, Parker S. (Deputy District Attorney, San Mateo County District Attorney’s Office).

Telephone Interview. January 25, 2001, February 1, 2001, and March 14, 2001.

Legislative Analyst’s Office. “Analysis of the 2000-01 Budget Bill: State Agencies Can Do More to Improve CUPA Program.” February 9, 2000. Online. March 2, 2001. (http://www.lao.ca.gov/analysis%5F2…sources/res%5F8%5cupa%5Fan100.htm)

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Lowry, Edwin (Director, Department of Toxic Substances Control). Letter in Response to Assembly member Antonio R. Villariagosa. March 31, 1999.

Mennack, Julie (Region 2, State Water Resources Control Board). Telephone Interview.

February 1, 2001.

Mennack, Julie (Region 2, State Water Resources Control Board). Personal Interview. February 7, 2001.

Murphy, Hew (City of Hayward). Telephone Interview. February 5, 2001.

Parker, James (Battalion Chief, South Pasadena Fire Department). Telephone Interview.

January 26, 2001.

Pierce, Mickey (Department of Toxic Substances Control). Telephone Interview. February 1, 2001, March 20, 2001.

Ponek-Bacharowski, Blythe (Region 4, State Water Resources Control Board). Telephone Interview. March 7, 2001.

Pozzebon, Lewis (Vernon City Environmental Health). Telephone Interview. January 25, 2001.

Rhodes, Steve (Fresno County CUPA). Personal Interview. February 7, 2001.

Rowe, Robert (Deputy Fire Marshal, Downey Fire Department). Telephone Interview. January 25, 2001.

Salsman, Keeon (Department of Toxic Substances Control, Correct spelling of the name could not be verified). Personal Interview. February 9, 2001.

Sjoberg, Carl (Los Angeles County Department of Public Works). Telephone Interview.

January 25, 2001.

Steers, Bonita (Yuba County Office of Emergency Services). Personal Interview. February 9, 2001.

Sturdivant, Ann (Region 8, State Water Resources Control Board). Telephone Interview. March 7, 2001.

Toney, Valerie (Manager, Los Angeles City Fire Department). Telephone Interview. January 29, 2001.

US Census Bureau. US Economic Census 1997.

US Census Bureau. US Census 1990.

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Vast, Chuck (Region 1, State Water Resources Control Board). Telephone Interview. March 7, 2001.

Walls, Russell (Region 5F, State Water Resources Control Board). Telephone Interview. March 7, 2001.

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Appendix B: Methodology We began with a review of existing literature on CUPAs, which included a search of legal and news media databases as well as review of the LAO and CSA reports. Our study attempted to discover the source of perceived enforcement problems. During the course of our investigation, we interviewed 19 individuals who work in local CUPAs, 13 individuals who work with the state or regional oversight agencies, 2 individuals at the federal level, 3 prosecuting attorneys. In addition, we attended the 2001 California CUPA Forum Conference, February 6 – 9, 2001 and talked to several participants and presenters. Attending the CUPA conference allowed us to evaluate further how CUPAs are addressing and resolving current issues that impede their performance.

We performed statistical analysis to assess whether there is a lack of enforcement action

by CUPAs. Issues analyzed included population vulnerability, social justice issues, financial resources, and location of a CUPA within a county or city. In order to perform the statistical analysis, we combined data from the 1990 population census, the 1997 economic census, and 1998-99 CUPAs reports to the DTSC. The DTSC permitted CUPAs to submit incomplete information for fiscal year 1998-99 because the law requiring CUPAs to submit data did not go into effect until the middle of the fiscal year. We focused on three CUPA programs with the most robust data (HMRRP, UST, and HWG).

Enforcement Level To determine the enforcement level by CUPAs, we examined whether CUPAs took enforcement actions upon identifying violations. Correlation runs for the HMRRP, UST, and HWG programs reveal a high positive correlation between enforcement and violations. The correlation values range from a low of 0.80 for the UST program to a high of 0.93 for the HWG

38

program. This shows that in general CUPAs take enforcement actions to bring violators back into compliance with the law. Because effective enforcement is contingent upon the discovery of violations among businesses, we performed another correlation between the number of violations discovered and the number of regulated establishments. The correlation values between violation and establishment for the HMRRP, UST, and HWG programs varied by a wide margin. The values have a range of 0.49 for UST to 0.72 for HMRRP. Inspection Performance Despite a wide range of correlation between violations and establishments for the three CUPA programs analyzed, we decided to assess the CUPAs’ inspection performance as the number of establishments in the CUPA increases. Because each CUPA oversees a different number of businesses, dividing the number of violations by the number of establishments created a comparable scale. This new ratio serves as a proxy of CUPAs’ inspection performance (see Appendix Table 1). For the HMRRP program, a trend of decreasing inspection performance appeared as CUPAs increased in size to more than 200 establishments. However, the average ratios for UST and HWG fluctuate back and forth as the number of establishments increase.

Thus, there is no clear trend of CUPA inspection performance for either of these programs.

This analysis method assumes a constant number of violations per establishment. In actuality, we do not know whether there is a linear, curved, or non-linear relationship between the number of violations and the number of facilities. However, this assumption plays a crucial role in the multivariate analysis in later sections.

The second issue is the small number of observations for each establishment range. A small number of observations means the average will shift quickly toward an extreme value.

Although the median is not sensitive to an extreme value, it would not have produced any new

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revelation in our study. For example, let us look at the HMRRP program with 200 or less establishments. The violation to establishment ratio has a range of 0 to 0.64 for ten CUPAs. However, seven CUPAs have a ratio that equals zero. Using the median would give us a value of zero, which does not change our earlier conclusion that there is a decreasing trend in inspection performance for CUPAs that have more than 200 HMRRP facilities within their jurisdiction. However, because we were working with the entire population of CUPAs rather than a statistical sample, the dangers of small sample size were minimized.

Enforcement Level and Inspection Performance Comparison of City and County CUPAs In comparing city and county CUPA enforcement level and inspection performance, the data show that on average city CUPA do a better job than county CUPAs at detecting violators for the HMRRP (0.15 to 0.06), UST (0.32 to 0.20), and HWG (0.37 to 0.18) programs. Once a city or county CUPA detects a violation, the enforcement response rate for both types of CUPAs is about the same. In the HMRRP program, city CUPAs have an average enforcement level of 1.91, which is higher than county CUPAs of 1.36. In the UST program, both, city and county CUPAs have the same average enforcement response rate of 0.97. Finally, for the HWG program, city CUPAs have an average enforcement level of 2.22, which is lower than county CUPAs of 2.44.

Other Issues That Affect Enforcement Level Other issues that might affect enforcement level include the demographic characteristics of the different CUPA jurisdictions. Since the enforcement level depends upon inspection performance, we included the number of violations, which serves as a proxy for inspection performance. Using regressions we attempted to determine how particular variables exerts influence on enforcement level and violation detection level among CUPAs. (see Appendix

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Table 2 to view the regression equations) Because people have preconceived expectations about how each variable might affect the direction of enforcement level and violation detection, we decided to follow tradition in setting the significance level at Îą = 0.05.

Population Vulnerability and Social Justice Issues We examined whether the percentage of the population in any of the following groups determine the level of environmental protection a CUPA provides: linguistically isolated, lacking a high school diploma, children (under 18), seniors (over 64), living in poverty, immigrants, White, African American, Latino, Asian. None of these variables had a significant effect on CUPA enforcement or violation detection.

Local Resources and Preferences We also examined how financial resources and political atmosphere relate to the number of enforcement actions and violation detections by CUPAs. We examined variables such as the property tax base, the number of regulated establishments, the total sales generated by the regulated businesses, and the percent of voters claiming affiliation to a political party. For every $100,000 in property taxes, enforcement in HMRRP decreases by 9.68. However, it increases the number of violation by 9.39 in the UST programs. The number of regulated businesses plays an important role in enforcement actions for all three programs and violation detection for the UST and HWG program. In HMRRP, the number of enforcements increases by 19, 37 in UST, and 74 in HWG for every 100 establishments under each program’s oversight. In addition, the number of violation increases by 52 in UST and 54 in HWG for every 100 regulated businesses.

Unlike the number of establishments, the level of sales affected the number of enforcement, but not the number of violation for all three programs. In HMRRP and HWG programs, enforcement increased by 3.5 and 160, respectively, for every $10,000 in sales generated by the

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regulated facilities. In the UST program, enforcement decreases by 120 for every $10,000 in sales. These results are unsurprising, however, because we assume that the number of violations and enforcement actions should increase as the number of regulated businesses increase.

Although we used data with incomplete reporting from DTSC for fiscal year 1998 – 1999, the statistical analysis reveals no systematic problems across the HMRRP, UST, and HWG programs. Therefore, telephone interviews and attending the CUPA conference were vital to our understanding of the wider scope of problems that CUPAs encounter.

Appendix Table 1: Results of Inspection Performance by Number of Regulated Facilities Number of Observation for Average. Violation/ Program Range of Facilities.

Violation/ Establishment Establishment <=200 10 .0681989 >200 & <=400 12 .1118631 HMRRP >400 & <=1000 19 .1017242 >1000 18 .0898768 <=50 17 .1928378 >50 & <=100 17 .3316854 UST >100 & <=200 11 .1414542 >200 12 .3124933 <=100 11 .2797794 >100 & <=300 16 .2700893 HWG >300 & <=600 12 .1339524 >600 12 .3884678

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Appendix Table 2: General Regression Models for Total Enforcement and Total Violations for HMRRP, UST, and HWG program elements: Total Enforcement = (For HMRRP, UST, HWG)

% linguistically isolated + % with high school diploma + % of population that are children + % of population that are over 64 years old + % of population in poverty + % White + % African-American + %Latinos + % Asian + % residing in U.S. 1-5 years + % residing in U.S. 6-15 years + % residing in U.S. more than 16 years + property tax base + median income + median house value + number of establishments + amount of regulated establishments’ sales + % voter registered as Democrats

Total Violations = % linguistically isolated + % with high school diploma + % of population that are children + % of population that are over 64 years old + % of population in poverty + % White + % African-American + %Latinos + % Asian + % residing in U.S. 1-5 years + % residing in U.S. 6-15 years + % residing in U.S. (For HMRRP, more than 16 years + property tax base + median income + median house UST, HWG) value + number of establishments + amount of regulated establishments’ sales + % voter registered as Democrats Regression Coefficients that are Statistically Significant (α = 0.05): Program Number of Enforcement Actions Number of Violations Property tax ↓ 97/$1,000,000 HMRRP # of Establishments ↑ 19/100 Total sales ↑ 35/$1,000,000 # of Establishments ↑ 37/100 Property tax ↓ 94/1,000,000 UST Total sales ↓ 12/$10,000 # of Establishments ↑ 52/100 # of Establishments ↑ 74/100 # of Establishments ↑ 54/100 HWG Total sales ↑ 16/$10,000

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