Report 2018-107 Recommendation 5 Responses

Report 2018-107: California Department of Resources Recycling and Recovery: It Has Not Provided the Oversight Necessary to Ensure That the Mattress Recycling Program Fulfills Its Purpose (Release Date: August 2018)

Recommendation #5 To: Resources Recycling and Recovery, Department of

In order to bring violators of the recycling act into compliance and to ensure that its enforcement activities are timely, CalRecycle should do the following:

- Assess penalties for noncompliance with the recycling act.

- Publicize any penalties it assesses against violators of the recycling act as a deterrent to potential violators.

- Monitor inspection cases to ensure that it does not complete them before the retailers in question have remedied any instances of noncompliance.

- Execute a plan to verify compliance for all inspections in which it did not obtain evidence of compliance.

- Develop and implement a timeline for the penalty phase of the enforcement process.

- Regularly review the timeliness of its enforcement process and prioritize any overdue enforcement actions based on its enforcement timelines.

Annual Follow-Up Agency Response From October 2021

CalRecycle assesses penalties for noncompliance with the mattress recycling act through settlements and administrative civil complaints consistent with Title 14 California Code of Regulations sections 18970 and 18971. Consistent with Government Code section 6253.8, CalRecycle posts enforcement actions for noncompliance and associated assessed penalty amounts as a deterrent on our internet website at www2.calrecycle.ca.gov/Docs/EnforcementOrder.

CalRecycle monitors mattress inspections cases through its ShEPRd database to ensure that inspections are not closed out before the businesses have remedied any noncompliance. ShEPRd2 has validation and verification points which inspectors need to acknowledge, which include verifying that violations have been corrected prior to "concluding" an inspection. ShEPRd2 requires final supervisor approval when: violations are recorded in the database; inspection reports and notices of violation are drafted; and inspection cases related to violations are "concluded".

CalRecycle implemented a plan to track the 188 businesses identified in the 2018 State Auditor's report. Of the 188 businesses:

- 185 provided supporting documentation that they were compliant or no longer subject to the mattress recycling act.

- One business was served an administrative complaint alleging civil penalties on June 3, 2021. The enforcement action is on-going.

- Two businesses have on-going violations and CalRecycle is pursuing enforcement actions.

CalRecycle has developed and implemented a progressive enforcement process. Through this process CalRecycle prioritized the enforcement actions identified in the 2018 State Auditor's report and completed 98.4% of the 188 inspections. CalRecycle has continued to review the timeliness of its enforcement process and is now averaging 91 days from the final notice of violation deadline to issuance of a settlement offer with penalties.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From September 2020

CalRecycle has taken steps to ensure that mattress inspections are complete, including verifying that a retailer has remedied any instances of noncompliance. This has been accomplished through the development and implementation of a verification procedure that is built within CalRecycle' s ShEPRd2 system/database.

ShEPRd2's design includes a system of tracking. In addition, the Supervisor maintains a tracking system of those businesses that have been issued a streamlined penalty or have been transferred to the Legal Office for issuance of an Accusation. This additional system allows the supervisor and upper management to monitor businesses as they progress through the phased enforcement process.

Of the 188 inspections that required follow-up, 185 have been concluded; one was referred Legal Affairs for further action; and two in process.

Since the completion of the audit, the Legal Office has received 10 referrals that are eligible for pursuit of administrative penalties via administrative litigation. Six of those referrals have been resolved either through settlement or administrative decision. The remaining four are under development and being prioritized based on advice from enforcement staff. The outstanding administrative default decision (Furniture Warehouse) is being converted into a civil judgment to facilitate pursuance of penalty collection.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Although it provided some evidence that it had taken steps to implement the recommendation, this evidence, which included excerpts of its inspection case tracking sheets and the status of cases within the penalty phase did not address all components of the recommendation.

1-Year Agency Response

CalRecycle has completed its progressive enforcement process and timelines.

CalRecycle continues to execute the procedures and tracking system created to ensure that every inspection that notes a violation is followed-up on. Staff will either verify compliance or initiate the progressive enforcement process and continue through that process until the business in question achieves compliance and/or penalties are pursued.

Summary of backlogged cases:

Of the initial group of 22 business, the department found 20 business compliant, and found two (2) in violation. The department issued penalties on these latter businesses; they are now compliant. Of the group of 22, two (2) businesses have new violations and the department has initiated the streamline penalty process.

Of the second group of 166 businesses with violations (other than registration with MRC), 159 businesses are in compliance, one (1) business is under further investigation, and six (6) businesses are in the accusation phase. Since the last audit response report (6-month report), the department issued penalties on five (5) businesses; these five are now compliant.

CalRecycle website, www2.calrecycle.ca.gov/Docs/EnforcementOrder, is compliant with Government Code Section 6253.8. Once an enforcement case decision is delivered, it is posted.

The Deputy Director of Waste Permitting, Compliance and Mitigation Division, continues to ensure full implementation of the plan.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

CalRecycle did not provide evidence that it fully implemented all components of this recommendation. It did not provide evidence that it is actively monitoring inspection cases, nor did it provide evidence that it executed its plan to verify compliance for all inspections in which it did not obtain evidence of compliance. Further, CalRecycle did not provide evidence that it has implemented its timeline for the penalty phase of the enforcement process or that it is regularly reviewing the timeliness of the enforcement actions.

6-Month Agency Response

CalRecycle is updating steps in the progressive enforcement process and timeline. A newly developed streamline penalty process is being piloted and will be added to the progressive enforcement flow chart and timeline which was provided in the 60 day response.

CalRecycle continues to execute procedures and tracking system to ensure that every inspection that notes a violation is followed-up on and that staff either verifies compliance or initiates the progressive enforcement process and continues through that process until compliance achieved and /or a penalty is assessed. Summary of backlogged cases: 1) of initial group of 22 business, 20 business are in compliance and 2 are in accusation phase, pending decision, 2) of second group of 166 businesses with violations (other than registration with MRC), 81 businesses are in compliance, 36 businesses are being verified, 7 businesses are in accusation phase. Remaining 78 businesses will be reviewed by summer of 2019.

CalRecycle website, https://www2.calrecycle.ca.gov/Docs/EnforcementOrder/, is compliant with Government Code Section 6253.8. Once an enforcement case decision is issued, a press release will be posted.

Mark de Bie, Deputy Director of Waste Permitting, Compliance and Mitigation Division, will be responsible for the implementation of the plan.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

CalRecycle is moving forward with litigation against several businesses that have not come into compliance. Penalties will be assessed pursuant to litigation. It is also preparing to update its public website to allow for the publicizing of penalties assessed against violators. It will begin issuing press releases describing enforcement and penalty actions. It is encouraging the Mattress Recycling Council California to publish future press releases in its monthly newsletter.

Additionally, CalRecycle developed a tracking system that identifies the specific phase of an inspection and ensures complete documentation of compliance will be obtained for each inspection conducted. CalRecycle has also refined the mattress enforcement procedures to specify that cases should not be concluded until all violations are corrected.

CalRecycle has developed and is executing a plan to certify compliance for all inspections in which full documentation of compliance has not been obtained. As a result, re-inspections are occurring and many businesses are moving into compliance. Staff is gathering information to pursue enforcement actions on other businesses as appropriate, prioritizing those that have not registered with MRC.

CalRecycle has begun work on developing a timeline for the penalty phase. The completion of existing enforcement efforts will be used to develop a timeline and provide reasonable expected periods for cases to be completed. CalRecycle is also developing a streamlined penalty process for administrative civil penalties that will further expedite the penalty phase.

CalRecycle management receives regular status reports regarding field inspections. These reports are based on the new standardized tracking system that provides for continuous updates of the status of inspections as well as enforcement actions.

Mark de Bie, Deputy Director of Waste Permitting, Compliance and Mitigation Division, will be responsible for the implementation of the plan.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2018-107

Agency responses received are posted verbatim.