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Civil Penalties and the Economic Benefits of Noncompliance: A Better Alternative for Attorneys Than EPA's BEN Model

January 1992

Citation: ELR 10003

Author: Philip Saunders

My object all sublime

I shall achieve in time —

To make the punishment fit the crime.

— Gilbert and Sullivan, The Mikado

Federal environmental laws provide for civil penalties based on a number of factors, including economic benefits, if any, that violators gain from noncompliance.1 This Dialogue describes how penalties based on the benefits of noncompliance are determined; explains how and why benefits gained (and therefore penalties incurred) can vary substantially from organization to organization and may be significantly miscalculated when based on standardized assumptions; and demonstrates the importance to the attorney, whether representing the plaintiff or defendant, of having a financial analysis performed specifically on the violating organization.

Environmental statutes that provide for penalties based on the benefits of noncompliance are the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund),2 the Federal Water Pollution Control Act (FWPCA),3 the Clean Air Act,4 and the Emergency Planning and Community Right-to-Know Act (EPCRA).5 The statutory objective is not only to penalize but to remove any economic incentive for noncompliance.

Dr. Saunders is a consultant in economics and finance based in Weston, Massachusetts. He has over 20 years experience providing analytical and business evaluation services to financial institutions, government agencies, and attorneys. He has a B.A. from Yale University and a Ph.D. from the London School of Economics.

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