It Pays To Violate DEP Water Permits

DEP Lax Enforcement on Water Use, as State Suffers Extreme Heat Wave

At the outset of the Christie Administration, after review of their first budget we disclosed plummeting enforcement fines, a fact recently validated by  Todd Bates of the Asbury Park Press, who found:

proposed fines covering seven major DEP programs, including air and water quality and land use, plunged from $31.6 million in fiscal year 2007 to $9.1 million in fiscal 2011. That’s the lowest figure since at least 2002 and about half the 10-year average.

The collection of fines is down as well, dropping to $7.5 million in fiscal 2011, the lowest figure since 2006. Also, the number of enforcement inspectors has dropped by about 20 percent over the past five years, making it more difficult to catch polluters in the first place.

At the same time, the DEP has dramatically increased the number of settlements it has agreed to, allowing polluters to get off with relatively small fines. These settlements, the environmental equivalent of a plea bargain, allow violators to pay far less in fines, sometimes pennies on the dollars.

More recently, we’ve written about legal vulnerabilities that drive dramatic reductions in DEP enforcement penalties (see: Thousands of DEP Permits Unenforceable).

(see: DEP cuts $430,000 fine to Zero )

So, a story today repeats that pattern, and goes further, illustrating how it is actually profitable to violate DEP water allocation permit restrictions.

DEP issues water allocation permits to large water users (> 100,000 gallons per day). Those permits restrict the total amount of water a company can safely use in order to protect water resources and the allocated rights of other water users.

So, lets follow the math of DEP enforcement and show exactly how it pays to violate.

This should never happen, because a fundamental principle of enforcement policy is deterrence – to deter violations, the DEP enforcement action is supposed to eliminate the economic gain of a violation.

According to today’s Bergen Record,  Ridgewood Water: Fine against company result of residents who ignore restrictions

RIDGEWOOD — An official at Ridgewood Water Company says a fine levied against the company for using too much water was caused by residents who disregard water conservation rules.

“We put in watering restricting and we put them in every year,” said Frank Moritz, who runs the water company. “It’s voluntary and we did it in 2010 but the sprinklers go on and keep going on.”

Ridgewood Water services 20,000 households in Glen Rock, Wyckoff, Midland Park and Ridgewood and has been negotiating with the state Department of Environmental Protection to reduce the $38,000 fine, which was slapped on the company for using 60.1 million gallons more than allowed in 2010.

A $38,000 fine for using 60.1 million gallons equates to 63 cents per 1,000 gallons:

($38,000)/(60,100,000 gallons) X (1,000 gallons) =  $0.6323/1,000 gallons

Just last month, the Record reported that Ridgewood Water rates to rise again, despite litigation:

With the council’s unanimous approval after eight public hearings, Ridgewood Water will now bill its customers at a rate of $4.42 per 1,000 gallons. That figure is up from the $4.33 per 1,000 gallons assessed beginning in January.

So do the math:

The water company charges $4.42 per 1,000 gallons and pays a DEP fine of just $0.63 per 1,000 gallons.

They make $3.79 per gallon of water used in violation of their DEP permit.

They make money violating the DEP water allocation permit!

DEP must set fines based, at a minimum, on the economic benefit of violation.

To do that, the proposed $38,000 fine would have to be increased lost 7 TIMES, to  $265,642 (rate of $4.42 per 1,000 gallons times 60.1 million gallons)

I’ve asked DEP Assistant Commissioner for Enforcement Wolf Skacel to look into this.