Industrial Facility Accident Reporting Rule Civil Penalty Issue

Many industrial facilities throughout West Virginia will be regulated and affected by the recently enacted Industrial Facility Accident legislation (“SB 279”) passed in the 2009 legislative session and signed into law by Governor Joe Manchin. Also, the legislation has spawned a proposed Industrial Accident Rapid Response administrative rule (“170 CSR 2”) to provide greater guidance and detail on the issue. A major issue that needs to be resolved as the rule develops is the disparity between the statute’s civil penalty provision and the rule’s civil penalty provision. The rule’s civil penalty provision is double the amount intended by the legislature in the statute. The civil penalty provision of the statute states: 

(e) Civil penalties.

(1) The director shall impose a civil penalty of up to $100,000 on the industrial facility if he or she determines that the industrial facility failed to comply with the reporting requirement of subsection (b) of this section…
(2) The director shall impose a civil penalty on the operator or operators of an industrial facility if he or she determines that the industrial facility failed to comply with the communication or access requirements of subsections (c) and (d) of this section…

W.Va. Code §15-5b-3a(e) 

The statute caps the reporting penalty at $100,000 but is silent on the communication and access penalty. The proposed rule contains tables 170-2 A & 170-2 B at the end of the rule developed under the authority of section 5. These tables show a regulated facility may be exposed to a total of $200,000 for violations of the rule: $100,000 of potential liability for a violation of the reporting requirement and $100,000 of potential liability for a violation of the communication and access requirements.  

It was clearly the legislature’s intent to cap the entire penalty for all violations of the statute at $100,000. As evidence of this intent, the Senate Judiciary Committee subcommittee on SB 279 amended the flat $100,000 penalty language by inserting “up to” language because they felt the mandatory $100,000 penalty was arbitrary and capricious without considering the extent of the violation. So, while the legislature undertook measures intended to mitigate the $100,000 penalty, the Division of Homeland Security has developed a civil penalty provision exposing regulated facilities to twice the $100,000 liability ($200,000). The civil penalty provision in the proposed rule runs contrary to the legislature’s intent on this issue. 

There are two rule amendments, if it is decided that the agency’s interpretation is highly objectionable, that would address this problem. First, the proposed rule's maximum penalty for a notification infraction could be lowered from $100,000 to $50,000 and the maximum penalty for communication/access infractions could be lowered from $100,000 to $50,000. Second, the proposed rule could have one penalty matrix or table accounting for all circumstances that is capped at $100,000. With either of these rule amendments, the maximum penalty would be capped at $100,000 to meet the legislature’s intent on the civil penalty issue. 

This article was authored by Donnie L. Adkins, Jackson Kelly PLLC. For more information on the author see here.