The principle of deterrence underlies the U.S. Environmental Protection Agency's (EPA's or the Agency's) compliance monitoring and enforcement program.¹ It is referenced expressly in virtually every EPA enforcement response and penalty policy,² and endorsed in EPA Environmental Appeals Board (EAB) penalty decisions.³ The U.S. Supreme Court itself has cited deterrence as a key underlying purpose of penalties assessed to redress environmental violations.⁴ In a banner year, EPA undertakes fewer than 22,000 inspections and 4,000 civil judicial and administrative actions under multiple and complex environmental statutes,⁵ in addition to the approximately 146,000 state inspections and 9,000 enforcement actions tracked in EPA's compliance databases,⁶ for nearly eight million regulated entities.⁷ These numbers emphasize the practical and pressing importance of establishing a credible deterrent to noncompliance.

EPA has consistently described its compliance and enforcement programs as providing both specific and general deterrence. That is, inspections and other forms of compliance monitoring and enforcement are undertaken not only to identify specific violators and return them to compliance, but also to deter the violators and all other similarly situated regulated entities from future noncompliance.⁸ Underlying this paradigm is the assumption that most regulated entities will comply with the law when the costs of noncompliance exceed the benefits. For this to occur, penalty amounts must recoup any economic benefits of noncompliance (EBN) the violators may have realized. This serves to "level the playing [30 ELR 10524] field" and ensure no company obtains a competitive edge from its noncompliance. Secondly, as EPA's penalty policies consistently provide, the penalties must impose a deterrent component beyond the amount of any economic benefit of noncompliance to the violators. The current governmental emphasis on environmental performance and results,⁹ reflected in the proliferation of EPA programs to promote pollution prevention,¹⁰ innovation,¹¹ self-policing,¹² and other so-called beyond compliance efforts, highlights a third, increasingly important deterrence goal—encouraging regulated entities to adopt these values and participate in these programs in order to consistently maintain compliance as well as achieve environmental excellence.¹³ Such efforts can mean moving beyond merely preventing or correcting obvious violations, to committing the time, personnel, and funding necessary to affirmatively investigate overall compliance and identify pollution prevention opportunities.