Enforcement: Financial Assurances, LEA Central

The Financial Assurances Section (FAS) enforcement procedures and authority to assess penalties are implemented according to Public Resources Code, sections 45000 and 45023. Local Enforcement Agencies (LEA) are informed of the financial assurance violations and the California Department of Resources Recycling and Recovery’s (CalRecycle) intent to pursue enforcement. All pertinent CalRecycle employees are apprised of any enforcement action pursued against an operator by FAS.

Operators of disposal facilities are required to demonstrate financial assurances for closure and postclosure maintenance and operating liability to the CalRecycle. Operators are also required to maintain adequate funds for closure and postclosure maintenance and operating liability for third party claims.

To ensure effective and consistent enforcement in the area of financial assurances, and maintain a high rate of compliance, CalRecycle staff must pursue appropriate enforcement action against operators violating the financial assurance requirements.

Enforcement Options

There are two steps to providing a formal written acknowledgment of violations, defining violations and remedies for reaching compliance:

  1. Notice of Violation: The Notice of Violation (NOV) is the first step in enforcement and provides written notice that an operator is violating the regulatory requirements and also outlines what steps to take to achieve compliance with the regulations.
  2. Notice and Order or Stipulated Notice and Order: If an operator does not adequately respond to the NOV, the FAS may consider the next step in enforcement, the Notice and Order (N&O). An N&O contains provisions for assessing penalties in the event an operator fails to comply with an NOV. An operator may respond to an NOV by proposing a schedule for compliance. In this case the CalRecycle may enter into a Stipulated Notice and Order and both the operator and CalRecycle staff would agree on a schedule and payment amounts to achieve compliance with the regulations.

Penalty Assessment

Assessing penalties is an integral part of the enforcement process. Assessing penalties associated with financial assurances violations is a unique process. Disposal facility operators who do not comply with the financial assurances requirements maintain an unfair competitive advantage over their counterparts who comply with the requirements. There is a cost to an operator who complies with the financial assurance requirements, since most third party providers of financial assurance require a fee. This may come in the form of a premium or administrative fees.

The amount of a penalty is determined by using a gravity based matrix and an economic benefit factor. Combining the matrix and formula processes allows for flexibility and consistency in the penalty assessment phase. This process establishes a range for determining the initial penalty and a degree of fairness by using the economic benefit factor. It eliminates incentives for continued non-compliance.


The axes of the matrix is formed by the following two factors:

  • The degree of noncompliance. A violator may be partially out of compliance with the regulations or completely out of compliance with the regulations.
  • The potential for harm is measured by the degree to which the violator’s actions adversely affect the public health, safety and the environment. This degree is measured by the remaining operating life of the facility.  For example, if a facility is within 2 years or less of closure and is violating the financial assurance requirements, the violation is considered “Major.” If a facility is between 2 and 10 years of closure, the violation is considered “Moderate.” If the facility has 10 years or more of life remaining, the violation is considered “Minor.”

The low range penalties are necessary because low penalties have proven to be an effective compliance tool. The highest range is limited by the maximum statutory penalty allowance of $10,000 per violation per day according to Public Resources Code, section 45023. The selection of the exact penalty in any given case is at the discretion of CalRecycle.

Economic Benefit Factor

The formula assessment considers the economic benefit an operator receives from violating the requirements. This calculation provides more specific amounts and does not allow flexibility in determining the amount of the penalty to be assessed. This calculation considers the cost of securing a third party mechanism and using that cost to determine an initial penalty based on the number of years or months a violator is out of compliance.

Modification of Initial Penalty

CalRecycle staff may modify an initial penalty assessment by using the following parameters:

  • Evidence of additional coverage has been provided subsequent to the enforcement action
  • Good faith efforts to comply or lack of good faith
  • Degree of willingness and/or negligence
  • History of compliance
  • Other unique factors (e.g., size of operation, threat to public safety and health and the environment)

Other Compliance Options

Formal enforcement actions such as Notice and Orders and Stipulated Notice and Orders with penalties are not always the appropriate action to take against an operator violating the financial assurance requirements. CalRecycle may consider other compliance options such as:

  • Placing restrictions on an operator’s current financial assurance demonstration (e.g., requiring more frequent reporting requirements).
  • Prohibiting an operator to use the existing financial assurance demonstration and requiring the operator to establish an alternate acceptable mechanism.

Appeals and Process for Continuing an Enforcement Action

The regulations, by referencing the statute provide the authority to any aggrieved person to appeal an order issued by an enforcement agency, such as CalRecycle. An appeals process is an integral part of any enforcement procedure.

The regulations also define the administrative process for continuing an enforcement action in the event an operator continues to violate the financial assurance requirements.

Facility Enforcement Home

For more information contact: Solid Waste Facilities, PermitTrainingAssistance@calrecycle.ca.gov