In re FRM Chem, Inc.
Region 7 ("Region") of the United States Environmental Protection Agency filed this appeal fiom an Initial Decision issued on February 16,2005, by Administrative Law Judge ("ALJ") William B. Moran. The Region brought this action based on allegations that FRM Chem, Inc. ("FRM Chem") sold an unregistered and misbranded pesticide product called "Root Eater" to three different municipalities in violation of the provisions of section 12 of the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. 8 136j. The Region proposed a civil administrative penalty of $16,500, which it derived using the Enforcement Response Policy for the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) ["Penalty Policy"] (July 2,1990). FRM Chem disputed both its liability and the amount ofthe penalty. After a hearing, the ALJ found that FRM Chem was liable but declined to use the Penalty Policy to determine a penalty, relying solely on FIFRA's statutory factors in setting a penalty of $1,800. On appeal, the Region contends that the ALJ erred in making his penalty decision by not explaining the basis for the penalty in sufficient detail and by not providing persuasive and convincing reasons for his departure from the Penalty Policy.
Held: The Board rejects the penalty assessment in the Initial Decision and fashions its own assessment against FRM Chem in the amount of $16,500. Specifically, the Board concludes the following:
(1) The ALJ explained his reasons for departing from the Penalty Policy in sufficient detail but inadequately explained his ultimate choice of a $1,800 penalty. The ALJ need not relate the penalty separately to each statutory penalty factor or apportion a penalty by count, but he or she must nonetheless explain his or her reasoning for the penalty assessed in sufficient detail so that the parties and an appellate body are informed of the basis for the penalty decision. Here, the ALJ provided no meaningful explanation of how he arrived at the alternate number of $1,800 or why that number was sufficient under the facts and circumstances of this case. While the ALJ did not adequately explain or justify the sufficiency of his penalty in this case, the Board will not remand for further amplification because it rejects the ALJ's penalty assessment on other grounds.
(2) The Board finds that the ALJ's rationale for departing from the framework of the Penalty Policy, though clearly explained, was not convincing or persuasive for the reasons noted below and thus will not defer to it.
(a) Any reliance the ALJ may have placed on comparison to penalties assessed in other cases is inappropriate.
(b) The ALJ's reduction of the penalty based on his characterization of the size of FRM Chem's business lacks foundation. In addition, the ALJ did not explain the reduction he gave for the size of FRM Chem's business except to the extent that he impermissibly relied upon a legal issue that the Region was not afforded the opportunity to address an approach that was in error in any event.
(c) The ALJ underestimated the seriousness of the violation and its potential harm. In addition, he relied on factual conclusions that were not supported by the record. Furthermore, FRM Chem's attempts at labeling and in cooperating during the investigations of the violation did not merit a departure from the Penalty Policy. Finally, a larger penalty is necessary for a deterrent effect.
(3) The proposed penalty of $16,500 is properly calculated under the Penalty Policy, is supported by the evidence, and is appropriate based on the facts and circumstances of the case.