What to Do In The Event Of A Notice of Violation

While no one anticipates violating the law in connection with their business operations, it is not uncommon for developers and operators to eventually wind up receiving at least one Notice of Violation (NOV) at some point in time. In the context of subsurface operations, be it oil and gas extraction, geothermal development, carbon sequestration efforts, or even just developing over an old, abandoned oil well, NOVs can be issued by a number of different agencies. A relatively common Notice of Violation to receive is one coming from the California Geologic Management Division of the California Department of Conservation (CalGEM) or a California State Regional Water Quality Control Board (RWQCB). Very broadly speaking, here are some immediate action items that anyone receiving such a Notice of Violation should consider.***

1. Identify Any Stated Deadlines
Often NOVs contain dates by which certain responses are to be made and certain information must be provided to the citing agency in order to avoid the issuance of an order compelling compliance. Depending on what is being asked, these deadlines may take considerable effort to timely meet, and in some instances it may not be possible to meet the deadlines set by the agency. Therefore, it is important to take note of any such deadlines right away and have them in mind throughout the process so that nothing is missed and appropriate responses are given. Depending on the specific circumstances, a request for an extension of time to comply may be granted.

2. Know Which Statute Is Alleged To Have Been Violated
It is important to take note of which particular statute is alleged to have been violated, because the potential penalties and recommended response may be different depending on the allegations.

For example, a violation of California Fish and Game Code Section 5650(a) prohibits anyone from depositing, permitting the passage into, or affirmatively placing a number of different identified substances into any location where they might pass into the waters of the state. However, this statute also provides a possible affirmative defense to such a violation. (California Fish and Game Code Section 5650(c).) And, a person found to be in violation of this section is subject to a civil penalty of not more than $25,00 for each violation, the amount of which shall be determined by a judge who is statutorily instructed to weigh a number of factors. Such factors include the nature, circumstances, and gravity of the release, the extent of harm caused by the violation, whether the effects of the violation may be reversed or mitigated, and others. (California Fish and Game Code Section 5651(a) and (c).)

On the other hand, an alleged negligent violation of California Water Code Section 13387(a), which includes violating certain requirements of the Clean Water Act, carries with it potential criminal penalties which can range from $5,000 to $25,0000 for each day in which the violation occurred for a first-time violator, as well as possible imprisonment. The penalties increase with second-time negligent violations and of course, for those found to have knowingly violated the statute.

Likewise, Section 374.8 of the Penal Code requires that any person who knowingly causes hazardous substances to be deposited upon any road, street, highway, alley or railroad right–of-way, or upon the land of another with the owner’s permission, or into the waters of the state is subject to punishment by imprisonment or a fine of not less than $50 and not more than $10,000.

In the context of Notice of Violation issued by CalGEM, one example might be an alleged violation of Public Resources Code section 3206 for failure to pay idle well fees, and/or a violation of California Code of Regulations section 1772.1.4 for failure to company with annual idle well testing benchmarks, both of which may result in an order to abandon that well under Public Resources Code section 3237(a).

3. Identify The Reporting Requirements
Depending on the circumstances, different offices and agencies must be identified in the event of a discharge. For example, California Government Code Section 8670.25.5 requires that irrespective of intent or negligence, any party responsible for the discharge or threatened discharge of oil in waters of the state shall immediately report the discharge to the Office of Emergency Services pursuant to Health and Safety Code Section 25510. “Waters of the state” is a term that is very broadly defined and includes saline groundwater, irrespective of the total dissolved solids content.

Health and Safety Code Section 25510, in turn, provides that a hazardous substance release or threatened release must be reported to both the Unified Program Agencies and the Office of Emergency Services, with certain direction, caveats and requirements.

Under California Water Code section 13272, any person who causes or permits any oil or petroleum product to be discharged into the waters of the state or placed where it will likely reach the waters of the state must, as soon as the person has knowledge of the discharge and notification is possible, immediately notify the office of Emergency Services and the appropriate regional board. (California Water Code section 13272(a) and (c).) The broad definition of “waters of the state” can result in unsuspected violations in older oil fields in which damaged casing coupled with reservoir pressure can result in subsurface vertical oil and gas migration from permitted producing zones into shallower groundwater aquifers. This statute also provides that the reportable quantity for oil or petroleum products shall be one barrel (i.e. 42 gallons) or more, by direct discharge to the receiving waters, unless a more restrictive reporting standard for a particular body of water is adopted. (California Water Code section 13272(f).) Disputes over the volume of petroleum discharged are not uncommon where a discharge consists of produced water and the determination of the reportable quantity of discharged petroleum depends upon a calculation based upon the water cut.

Alternately, California Water Code section 13267 gives each RWQCB authority to investigate the quality of any waters of the state within its region. This may include requiring a discharging entity and/or potentially discharging entity to furnish a technical or monitoring program at that entity’s expense. (California Water Code section 13267(a) and (b)(1).)

4. Designate A “Point Person”
It is highly recommended that any entity that receives an NOV designate an internal company employee who will be responsible for identifying, reporting, and responding to the agencies involved. Make sure that person is familiar with applicable regulations and reporting requirements.

Failure to satisfy the reporting requirements in the event of a discharge can lead to separate fines and penalties in addition to the fines and penalties that can be imposed in connection with the discharge itself. The obligation under the reporting statutes to “immediately” report allows a certain amount of discretion in the agencies to assess fines and penalties for the failure to timely report depending on how long it takes the discharger to report, even if the discharge is eventually reported. Assigning the responsibility to identify and report discharges to a particular employee can help to ensure reporting compliance. And even if a particular discharge could not be avoided, compliance with the applicable reporting requirements will still serve to reduce the overall penalties that could otherwise be assessed.

Utilizing a single point of contact with the agency in question who is knowledgeable about the applicable statutes and regulations can help to avoid supplying incorrect and/or inconsistent information that can cause confusion and potentially compound problems.

5. Consider Appeals
There are statutorily created appeal processes applicable to agency orders, which can vary among the agencies. However, it is important to recognize that some agencies have taken the position that an NOV is not an appealable order but is simply notification of a violation that presents an opportunity to come into compliance and avoid an order. Depending on the content of the NOV in terms of the compliance required, at least one court has determined that the specific NOV in issue was an order in practical effect, giving rise to a right to appeal. The time in which to appeal an agency order is set by statute. The right to appeal can be lost by the failure to give timely notice of appeal. As a result, as soon as an NOV is received,. consideration should be given as to when and whether a notice of appeal can be filed.

6. Talk To Your Attorney
While this likely goes without saying, in the event a Notice of Violation is issued by an agency, the safest course of action is to promptly consult your attorney, who can help explain the options for challenging the NOV and guide you through the response process.

***  This article provides a general discussion of theoretical NOVs and potential actions that can be considered when responding to an NOV.  It does not constitute legal advice respecting any particular NOV, property or operations.  Legal questions specific to a particular NOV, property or operations should be directed to legal counsel with the appropriate background and experience.