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Home My WebLink About2023-01-05; Encina Wastewater Authority Industrial Pretreatment Fines in the City of Carlsbad (District 2); Gomez, PazTo the members of the: CITY COUNCIL Date ~CA v CC ✓ CM ~ ACM ✓DCM (3) ✓ January 5, 2023 Council Memorandum To: From: Honorable Mayor Blackburn and Members of the City Council Paz Gomez, Deputy City Manager, Publi~orks Via: Geoff Patnoe, Assistant City Manager (5 {city of Carlsbad Memo ID# 2023001 Re: Encina Wastewater Authority Industrial Pretreatment Fines in the City of Carlsbad (District 2) This memorandum provides information related to two significant enforcement actions that the Encina Wastewater Authority (EWA) has recently taken at two industrial facilities in the City of Carlsbad. Discussion The EWA implements a Source Control Program (Program) to prevent introduction of pollutants to the sewer system that may interfere with treatment plant operation, pass through the treatment system and cause water quality violations, or harm the environment or recycled water supplies. The Program is required by the Federal Clean Water Act (33 USC section 1251 et seq., 40 CFR Part 403) and approved by the State Water Resources Control Board and is also included in the EWA's National Pollutant Discharge Elimination System Permit issued to the EWA by the San Diego Regional Water Quality Control Board (Order No. R9-2018-0059, Permit No. CA0107395). The Program provides oversight to regulated industrial and commercial facilities (users) by: • Issuing permits limiting the concentration of pollutants that can be discharged • Requiring functioning pretreatment equipment • Conducting inspections and reviewing monitoring data • Issuing enforcement actions for violations of the EWA Pretreatment Ordinance or City of Carlsbad Municipal Code Title 13 -Sewers, Chapter 16 -Discharge of Industrial Waste The EWA Enforcement Response Plan and Guide supports the EWA's responsibility to enforce all applicable pretreatment requirements in a consistent, fair and timely manner for all users. The Enforcement Response Plan and Guide includes procedures for identifying and implementing escalating enforcement pursuant to the requirements outlined in the Clean Water Act's administrative regulations, specifically 40 CFR section 403.8(f)(5). Public Works Branch Utilities Department 5950 El Camino Real I Carlsbad, CA 92008 I 442-339-2722 t Council Memo -EWA Industrial Pretreatment Fines in the City of Carlsbad (District 2) January 5, 2023 Page 2 Enforcement actions start with education but may incorporate Notice(s) of Violation (NOV) and penalties, installation of additional pretreatment equipment, increasing monitoring, suspending an industry's discharge permit or terminating sewer service. Enforcement must be sufficient to compel compliance and considers the magnitude and duration of the violation, good faith efforts of the user, compliance history of the user and impact of the violation. Maximum monetary fines are recommended at each enforcement level, which are intended to recover the cost of enforcement as well as address the economic benefit derived from the act(s) constituting the violation(s). Fines Issued On December 20, 2022, the EWA sent via certified mail an NOV with a fine of $33,750 to SAFC Carlsbad, Inc., or SAFC (Attachment A) and an NOV with a fine of $11,200 to Premier Nutra Pharma, Inc., or Premier Nutra Pharma (Attachment B) for illegal discharges into the sewer system. Fines were issued as part of the Program under the EWA's Pretreatment Ordinance. Additional details of the businesses and enforcement actions that were taken are provided below: SAFC SAFC, which is located at 6211 El Camino Real, produces viral vectors for use in vaccine and therapy clinical products. The viral vector is considered pharmaceutically active and is regulated by the Clean Water Act. The company has been in the city for 15 years as a research and development facility, which has an exemption from federal pretreatment regulations and was allowed to operate under a low-level Best Management Practices Permit. In 2015, SAFC's parent company, Sigma-Aldrich, was acquired by Merck, which made significant investments and began an expansion of the facility. During the EWA inspections of SAFC in 2016 and February 2017, SAFC staff informed the EWA that pending the Food and Drug Administration approval, commercial production was expected before late 2017. The EWA contacted SAFC numerous times between 2016 and 2019 regarding the SAFC manufacturing status and the requirement to submit baseline monitoring and permit application documents 90 days prior to the proposed industrial discharge date. In September 2019, an SAFC employee told an EWA inspector that SAFC was no longer going to pursue commercial manufacturing. In June 2020, the same SAFC employee notified the EWA that commercial production had begun in June 2017 (later determined to be October 2017). The EWA issued a cease-and-desist order on July 22, 2020, but an NOV was delayed by the now-retired EWA Source Control Manager until the Class I permit was completed. SAFC failed to submit an adequate Class I discharge permit application; therefore, the EWA issued SAFC a Class Ill zero discharge permit until an acceptable Class I discharge permit application was received. SAFC has demonstrated compliance with the conditions of the Class Ill permit and cooperated with the EWA since receiving the NOV and is no longer discharging illegal waste into the sewer system. Council Memo -EWA Industrial Pretreatment Fines in the City of Carlsbad (District 2) January 5, 2023 Page 3 SAFC knowingly began manufacturing pharmaceutical products and illegally discharged federally regulated industrial waste into the sewer system for 2.7 years (675 production days) before the EWA became aware of the illegal discharge and issued a cease-and-desist order. The fine for SAFC is $33,750. This amount was calculated by assessing a fee of $50/day for 675 production days of the violation for a total of $33,750. Under federal law, the EWA has the authority to issue a much more significant fine, up to $10,000 per violation per day (or $6.75 million for the 675 production days of violation). The amount was adjusted downward to the $SO/day level because the EWA management believes the amount is sufficient to compel compliance and prevent future violations of this nature. This fine is also enough to recover a conservative estimate of the EWA staff time for enforcement efforts ($1,878) and accounts for the economic benefit received by SAFC by avoiding monitoring of federally regulated pollutants ($28,200), which totals $30,088. Premier Nutra Pharma Premier Nutra Pharma, which is located at 5800 Newton Drive, manufactures soft gel and liquid capsules. The building was previously occupied by Select Supplements, a similar company and an EWA Class I permittee, which relocated to the City of Vista in 2018. In 2019, the EWA inspectors observed construction at the building and notified the occupants several times about the requirements to apply for a discharge permit. In October 2020, Premier Nutra Pharma knowingly began manufacturing pharmaceutical products and discharging federally regulated wastewater without a permit. This unauthorized action continued for approximately 328 calendar days (224 production days) until an unannounced EWA inspection, which was followed by a cease-and-desist order that the EWA issued on August 24, 2021. Premier Nutra Pharma applied for and received a Class I discharge permit effective May 5, 2022. Premier Nutra Pharma has continued to have compliance issues with their Class I discharge permit including violations of local limits and missed monitoring deadlines, which are being handled administratively through separate actions by the EWA. The fine for Premier Nutra Pharma is $11,200. This amount was calculated by assessing a fee of $SO/day for 224 production days of violation. Under federal law, EWA has the authority to issue a much more significant fine, up to $10,000 per violation per day (or $2.24 million for the 224 production days of violation). The amount was adjusted downward to the level of $SO/day because the EWA management believes the amount is sufficient to compel compliance and prevent future violations of this nature. The fine also collects enough to recover a conservative estimate of the EWA staff time for enforcement efforts ($2,548) and accounts for the economic benefit received by Premier Nutra Pharma by avoiding monitoring of federally regulated pollutants ($7,415), which totals $9,963. Next Steps The EWA will follow its appeal process. Fines received by the EWA from the industries will be credited to the city and applied to costs that the city pays the EWA for the city's pretreatment inspection program. Council Memo -EWA Industrial Pretreatment Fines in the City of Carlsbad (District 2) January 5, 2023 Page 4 Attachments: A. EWA Notice of Violation to SAFC Carlsbad, Inc. sent on December 20, 2022 B. EWA Notice of Violation to Premier Nutra Pharma, Inc. sent on December 20, 2021 cc: Scott Chadwick, City Manager Cindie McMahon, City Attorney Ron Kemp, Senior Assistant City Attorney Laura Rocha, Deputy City Manager, Administrative Services David Graham, Chief Innovation Officer Vicki Quiram, Utilities Director Zach Korach, Finance Director Kristina Ray, Communication & Engagement Director James Wood, Environmental Sustainability Director Matt Sanford, Economic Development Manager Jesse Castaneda, Utilities Superintendent ATTACHMENT A ENCi NA WASTEWATER AUTHOR ITY HAND DELIVERED SAFC Carlsbad, Inc. 6211 El Camino Real Carlsbad, CA 92009 Attention: Ms. Lisa Freeman A Public Agency December 20, 2022 SUBJECT: NOTICE OF VIOLATION (NOV) 6200 Avenida Encinas Carlsbad, CA 92011-1095 Telephone (760) 438-3941 FAX (760) 438-3861 (Plant) (760) 431-7493 (Adrnin) Ref: EC 22-0093 Based on information obtained during a site inspection conducted on August 11, 2021, plus research and information provided by SAFC, it was determined that this facility was discharging federally regulated wastewater generated from viral vector manufacturing for use in gene therapy applications via extraction from infected mammalian cells. Operations included cell culturing and purification plus discharge from equipment and glassware cleaning and manufacturing area floor cleaning. These operations are subject to regulation under the Pharmaceutical Manufacturing Pretreatment Standards set forth in 40 CFR Part 439.47 Subpart B -Extraction Products PSNS. Section 3.1 of the Encina Wastewater Authority's (EWA) Pretreatment Ordinance prohibits the discharge of industrial wastewater to the Encina Sewerage System without applying for and obtaining a permit. Based on the information provided to EWA, SAFC was in violation of discharging without a permit between October 2017 -July 2020 (estimated 675 business days), until the Cease and Desist Order was verbally issued on July 2, 2020. According to Encina's Enforcement Response Plan (ERP), EWA could have imposed a monetary penalty of more than $1,000/day. However, the amount was adjusted downward to the level EWA management believes is sufficient to compel compliance and prevent future violations of this nature. In accordance with EWA's Pretreatment Ordinance, attached is an invoice assessing fines for $33,750.00 for discharging federally regulated wastewater without a discharge permit. This notice does not preclude further enforcement action. If you have questions regarding this correspondence, please contact me at (760) 438-3941, extension 3603. Sincerely, -~-6r t Robert Grigg ~ Source Control Manager cc: Mr. Jesse Castaneda, Carlsbad Municipal Water District SERVING THE CITY OF VISTA, CITY OF CARLSBAD, BUENA SANITATION DISTRICT, VALLECITOS WATER DISTRICT, LEUCADIA WASTEWATER DISTRICT AND CITY OF ENCINITAS ATTACHMENT B ENCi NA WASTEWATER AUTHORITY HAND DELIVERED Premier Nutra Pharma Inc. 5800 Newton Drive Carlsbad, CA 92008 Attention: Mr. Israel Kravzov A Public Agency December 20, 2021 SUBJECT: NOTICE OF VIOLATION (NOV) PERMIT# 2431 6200 A venida Encinas Carlsbad, CA 92011-1095 Telephone (760) 438-3941 FAX (760) 438-386 I (Plant) (760) 431-7493 (Admin) Ref: EC 22-0092 Based on information obtained during a site inspection conducted on August 11, 2021 , plus research and information provided by Premier Nutra Pharma, it was determined the industry was discharging federally regulated wastewater generated from mixing, compounding, and formulation of softgel and liquid capsule manufacturing. The discharge included production equipment washing , utensil and other production equipment/container cleaning, and plant washdown. These operations are subject to regulation under the Pharmaceutical Manufacturing Pretreatment Standards set forth in 40 CFR Part 439.47 -Subpart D-mixing/compounding and formulation (PSNS). Section 3.1 of the Encina Wastewater Authority's (EWA) Pretreatment Ordinance prohibits the discharge of industrial wastewater to the Encina Sewerage System without applying for and obtaining a permit. Based on the information provided to EWA, Premier Nutra Pharma was in violation of discharging without a permit between October 2020 -August 2021 (estimated 224 business days), until the Cease and Desist Order was issued on August 24, 2021. According to Encina's Enforcement Response Plan (ERP), EWA could have imposed a monetary penalty of more than $1,000/day. However, the amount was adjusted downward to the level EWA management believes is sufficient to compel compliance and prevent future violations of this nature. In accordance with EWA's Pretreatment Ordinance, attached is an invoice assessing fines for $11,200.00 for discharging federally regulated wastewater without a discharge permit. This notice does not preclude further enforcement action. If you have questions regarding this correspondence, please contact me at (760) 438-3941, extension 3603. Sincerely, ~c;,~,, Robert Grigg L7 7 Source Control Manager cc: Mr. Jesse Castaneda, Carlsbad Municipal Water District SERVING THE err, OF VISTA, CITY OF CARLSBAD, BUENA SANITATION DISTRICT, VALLECITOS WATER DISTRICT, LEUCADIA WASTEWATER DISTRICT AND CITY OF ENCINITAS