The penalty is assessed once they have not taken the action. It's not punitive; it is compensatory—well, I don't know if I would use the word “compensatory”, but it is intended to be a deterrent. It should generally cost less or at least be comparable to the cost for them to actually take the action, so that it would be a deterrent to inaction.
On February 5th, 2018. See this statement in context.