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22 ELR 10529 | Environmental Law Reporter | copyright © 1992 | All rights reserved EPA's Civil Penalty Policies: Making the Penalty Fit the ViolationBarnett M. LawrenceEditors' Summary: EPA has set numerous records in recent years in assessing civil penalties against violators of environmental laws. This Comment explains how EPA uses guidance documents called civil penalty policies to calculate civil penalties. The various federal environmental statutes leave EPA with considerable discretion in setting a civil penalty amount. The author describes this statutory framework and then discusses the role of EPA's civil penalty policies in administrative and judicial enforcement actions. The Comment outlines EPA's general policy on civil penalty assessment and then turns to EPA's numerous statute-specific penalty policies. The section on statute-specific policies includes a table listing key facts for each provision of a statute that authorizes EPA to seek civil penalties. Finally, the Comment addresses the criticism of EPA's implementation of the policies and EPA's response to the criticism. Mr. Lawrence prepared this Comment while an associate editor of the Environmental Law Reporter. In June 1992 he began work at DPRA, a Rosslyn, Virginia, environmental consulting firm. The views expressed are the author's. In the last several years, the U.S. Environmental Protection Agency (EPA) has broken one record after another in assessing civil penalties against violators of environmental laws. In fiscal year 1990, EPA assessed a record $61.3 million in civil penalties1 and eight EPA programs set records for highest administrative or judicial civil penalties.2 In the three years from fiscal year 1988 to 1990, EPA collected 54 percent of all civil penalties assessed in its 21-year history.3 Other highlights include the following: In 1989, EPA obtained a record $15 million penalty in a court case against a pipeline company under the Toxic Substances Control Act (TSCA)4 and the Resource Conservation and Recovery Act (RCRA).5 In January 1992, EPA assessed a record $15.7 million penalty in a TSCA administrative action against another pipeline company.6 In September 1991, EPA filed 21 administrative enforcement actions under RCRA, TSCA, and the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)7 against companies that illegally exported or imported hazardous waste. EPA assessed a total of $9.8 million in civil penalties.8 This Comment explains how EPA arrives at these dramatic penalty figures. EPA uses informal guidance documents called civil penalty policies to determine penalties. These policies are internal agency documents that include a methodology for calculating civil penalties for a given violation. EPA has issued a general civil penalty policy and numerous statute-specific civil penalty policies.9 Familiarity [22 ELR 10530] with these policies is critical to understanding EPA's enforcement process. This Comment first lays out the statutory basis for civil penalties and how much discretion the statutes leave to EPA in setting penalties. The Comment then discusses the role of EPA's civil penalty policies in administrative and judicial proceedings. It then describes EPA's 1984 general civil penalty policy and the framework for statute-specific approaches. The Comment next turns to the numerous statute-specific policies. This section includes a table listing key facts for each provision of a statute that authorizes EPA to seek civil penalties. The table lists the statutory provision authorizing the civil penalty, the violations covered by that provision, the maximum penalty authorized by the statute, any penalty assessment criteria included in the statute, and any applicable EPA penalty policy. Finally, the Comment addresses some of the criticism of EPA's implementation of its policies and EPA's response to the criticism. Statutory Basis for Civil Penalty Assessment Federal environmental statutes typically provide that any civil penalty shall not exceed $25,000 per day of noncompliance for each violation.10 These statutory ceilings rarely come in to play when EPA is determining an appropriate penalty. For example, a company that violated a recordkeeping provision of a statute every day for a year, but did not release pollutants in violation of any standards, would be subject to a statutory maximum penalty of over $9 million.11 Although EPA does not take recordkeeping violations lightly, its penalty assessment would not approach $9 million. The statutory maximum is generally only limiting when there is an egregious violation of short duration.12 The statutes also generally include some general criteria for EPA or the courts to follow in assessing penalties. For example, Clean Air Act § 113(e) requires EPA (or the court) to consider the following factors in assessing a penalty: the size of the business, the economic impact of the penalty on the business, the violator's full compliance history and good faith efforts to comply, the duration of the violation, payment by the violator of penalties previously assessed for the same violation, the economic benefit of noncompliance, the seriousness of the violation, and other factors as justice may require.13 Role of EPA's Civil Penalty Policies The statutory ceilings and penalty assessment criteria leave EPA with considerable discretion in setting penalties. EPA has taken the approach of issuing informal civil penalty policies to guide its calculation of appropriate penalties. The civil penalty policies do not address whether a civil penalty action is the appropriate enforcement response to a particular violation. These documents simply determine the proper civil penalty amount once EPA has decided to seek a civil penalty.14 Written penalty policies have several advantages over the alternative of relying on the judgment of EPA's enforcement staff on a case-by-case basis. First, they allow EPA to bring consistency to the penalty assessment process — similar violations will receive similar penalties — while still leaving EPA enough flexibility to adjust penalties based on considerations in individual cases. Second, the penalty policy approach produces a penalty figure that can be justified to a federal district court judge, administrative law judge, and the violator.15 Third, this approach allows EPA to efficiently train new staff on the method for civil penalty assessment.16 The policies are primarily used for calculation of penalties that EPA will seek in administrative enforcement actions and that would be acceptable in settlement of administrative and judicial actions. Some policies are applicable only to administrative enforcement actions, while others focus solely on settlement of judicial enforcement actions. Each penalty policy includes a prominent disclaimer emphasizing that the policies are internal agency guidance documents. A typical disclaimer provides: The procedures set forth in this document are intended solely for the guidance of the U.S. EPA. They are intended, and cannot be relied on, to create rights, substantive or procedural, enforceable by any party in litigation with the United States government. The U.S. EPA reserves the right to act at variance with this guidance and to change it at any time without public notice.17 Despite these disclaimers, the policies are also relied on to a lesser extent by parties other than EPA enforcement personnel. EPA administrative law judges (ALJs) generally rely on the policies in ruling on appeals of civil penalty assessments. EPA's consolidated regulations governing the administrative assessment of civil penalties require ALJs to consider any civil penalty guidelines in assessing a civil penalty.18 An ALJ noted in a challenge to a RCRA administrative penalty that the RCRA penalty policy will "ordinarily [be] considered by the presiding judge in assessing a civil penalty in order to provide a uniform penalty policy calculation system."19 Although an ALJ must [22 ELR 10531] consider the penalty policy, the ALJ is not bound by them.20 Courts also sometimes use the policies in calculating penalties. For example, the district court in Chesapeake Bay Foundation v. Gwaltney of Smithfield, Ltd.21 calculated the penalty of a defendant in a Clean Water Act citizen suit using EPA's 1984 general civil penalty policy.22 Of course, the policies are not binding on the courts. Some courts have gone further and held that EPA's penalty policies are not entitled to deference. In Friends of the Earth v. Archer Daniels Midland Co.,23 the United States challenged a proposed consent decree in a Clean Water Act citizen suit on the grounds that it did not include a civil penalty payable to the United States. The government cited EPA's Clean Water Act penalty policy, which requires a substantial settlement in all settlements, to support its argument that no civil penalty exists in the proposed decree. The court found that the policy was not binding and is not entitled to deference. The court rejected the government's reliance on Chevron, U.S.A., Inc. v. NRDC,24 because the issue in that case was the administration of a statutory scheme, not policy guidelines.25 One court explicitly rejected the penalty figure calculated under an EPA policy. In Katzon Bros. v. EPA,26 the Tenth Circuit remanded a civil penalty imposed on a pesticide producer for failure to file an annual production report. EPA had filed an administrative complaint proposing a penalty of $4,200, which was upheld by the Regional Administrator and the Administrator of EPA. EPA argued that it derived the penalty using its FIFRA civil penalty policy. The 10th Circuit held that while EPA may have followed its penalty policy, neither the Regional Administrator nor the Administrator adequately addressed the penalty amount.27 The court noted that the administrators failed to consider the company's prior compliance, its ability to pay the penalty, or the fact that the violation did not affect the environment.28 EPA's civil penalty policies have also been used by plaintiffs in citizen suits in negotiating a penalty with defendants,29 as well as by state courts. For example, the court in State ex rel. Celebrezze v. Dearing30 applied an EPA penalty policy in assessing a civil penalty for violations of Ohio's hazardous waste laws. Some state agencies responsible for running a state's federally authorized program have adopted EPA's civil penalty policies or similar policies.31 However, EPA has not required states to adopt these penalty policies as a condition of approval of their authorized programs.32 EPA's General Civil Penalty Policy EPA issued its Policy on Civil Penalties (General Policy)33 in 1984 to establish a single set of goals for penalty assessment in EPA administrative and judicial enforcement actions and to bring more consistency to the penalty assessment process. The General Policy establishes three goals for penalty assessment: deterrence, fair and equitable treatment of the regulated community, and swift resolution of environmental problems.34 The deterrence goal includes both specific deterrence (persuading the violator not to commit more violations) and general deterrence (persuading others not to violate the law). To effectively achieve deterrence, the 1984 Policy provides that penalties should include a benefit component and a gravity component. The benefit component is intended to remove any significant economic benefits the violator received from failure to comply with the law by placing the violator in the same position as if the violator had been in compliance on time. The benefit component includes both benefit from delayed costs35 and costs that [22 ELR 10532] are avoided completely by noncompliance.36 Also in 1984, EPA issued a separate policy on calculating the economic benefit of noncompliance.37 This guidance document introduced a new computer model called BEN (short for economic benefit) for calculating economic benefit.38 The guidance provides that EPA enforcement personnel should use BEN whenever the "rule of thumb" method39 for assessing economic benefit indicates that the economic benefit of noncompliance is greater than $10,000 or the violator rejects the rule of thumb calculation. EPA observed that BEN has the advantages of not requiring EPA personnel to perform financial research and allowing a violator who cooperates with EPA to provide actual financial data that may affect the penalty calculation. Further, BEN is easy to use and produces an economic benefit figure that can be defended in administrative or judicial proceedings.40 To achieve deterrence, however, the penalty must do more than just recover economic benefit. The General Policy thus provides that the penalty must also include an additional amount to ensure that the violator is economically worse off than if the violator had complied with the law — the gravity component.41 The gravity component reflects the seriousness of the violation. For example, a violation that causes severe damage to the environment is considered more serious than an isolated recordkeeping violation. The sum of the benefit and gravity components yields a preliminary deterrence figure. To achieve the second goal of penalty assessment, fair and equitable treatment of the regulated community, the General Policy states that the preliminary deterrence figure should be increased or decreased to account for the following factors: degree of willfulness and/or negligence, history of noncompliance, ability to pay,42 degree of cooperation, and other unique factors specific to the violator or case.43 The preliminary deterrence figure, as adjusted by these factors prior to the start of settlement negotiations, yields the initial penalty target figure. This figure is generally the penalty EPA assesses in administrative complaints. In judicial actions, this figure would be EPA's first settlement goal. To achieve the third goal of penalty assessment, swift resolution of environmental problems, EPA pursues two basic approaches.44 First, EPA will provide incentives to settle, including reducing the gravity component of the penalty where the violator has already instituted remedies prior to the commencement of litigation. Second, EPA will provide disincentives to delaying compliance by increasing the preliminary deterrence figure if the projected duration of the violation is extended during settlement negotiations due to the defendant's actions. EPA further adjusts the initial penalty target figure to account for developments after negotiations have begun. These additional adjustments include consideration of the violator's ability to pay (to the extent not considered in calculating the initial penalty target), reassessment of adjustments used in calculating the initial penalty target in light of new information, reassessment of the preliminary deterrence amount to reflect continued periods of noncompliance not included in the original calculation, and alternative payments agreed to prior to the commencement of litigation. Application of these additional adjustments to the initial penalty target figure yields the adjusted penalty target figure. In summary, the General Policy outlines the following process for assessing a civil penalty: calculate preliminary deterrence amount (economic benefit + gravity component), apply adjustment factors to find the initial penalty target figure, and apply additional adjustments to the initial penalty target figure after settlements negotiations have begun to find the adjusted penalty target figure. Statute-Specific Civil Penalty Policies On the same day it issued the General Policy, EPA also issued a document that provides a framework for individual EPA offices to follow in developing medium-specific penalty policies.45 This document was intended to ensure that the general process outlined in the General Policy is uniformly implemented by the various EPA programs. EPA has since issued or updated individual penalty policies for most of its programs where civil penalties are authorized by statute. The statute-specific policies typically begin with a discussion of EPA's statutory penalty authority and an overview of the enforcement process for that program. The policies then include sections on determining the economic benefit and gravity components of the penalty. The gravity component section will often include a penalty assessment matrix.46 The policies generally next discuss how the initial penalty figure should be adjusted based on factors such as good faith efforts to comply, history of noncompliance, and ability to pay. The policies also often include a section on calculating penalties for multiple and multi-day violations. [22 ELR 10533] Finally, many of the statute-specific policies include examples of penalty calculations. The following table lists the key facts for each provision of a statute that authorizes EPA to seek civil penalties, including any EPA civil penalty policy. The table includes a citation to the statutory authority,47 the violations covered by the statutory provision, the maximum penalty authorized by the statute, the statutory penalty assessment criteria language, a citation to any applicable EPA penalty policy, and a brief discussion of the penalty policy. A. Policy on Civil Penalties, ELR ADMIN. MATERIALS 35083 (Policies) (Feb. 16, 1984). B. Framework for Statute-Specific Approaches to Penalty Assessments: Implementing EPA's Policy on Civil Penalties, ELR ADMIN. MATERIALS 35073 (Policies) (Feb. 16, 1984). C. Guidance on Calculating the Economic Benefit of Noncompliance for a Civil Penalty Assessment, ELR ADMIN. MATERIALS 35085 (Policies) (Nov. 5, 1984). D. Guidance on Determining a Violator's Ability to Pay a Civil Penalty, ELR ADMIN. MATERIALS 35087 (Policies) (Dec. 12, 1986). E. Policy on the Use of Supplemental Enforcement Projects in EPA Settlements (Feb. 12, 1991). A. Clean Air Act § 113 (stationary source) [42 U.S.C. § 7413, ELR STAT. CAA 48] Violations covered: violations of SIPs and permits, Title 1, § 303, Titles 4-6, and attempts to build/modify stationary source in area for which a § 113(a)(5) finding has been made. Maximum penalty authorized by statute: $25,000 per day for each violation. Statutory penalty assessment criteria: In determining the amount of penalty to be assessed under [§ 113 or § 304(a) — the citizen suit provision], the Administrator or the court, as appropriate, shall take into consideration (in addition to such other factors as justice may require) the size of the business, the economic impact of the penalty on the business, the violator's full compliance history and good faith efforts to comply, the duration of the violation as established by credible evidence (including evidence other than the applicable test method), payment by the violator of penalties previously assessed for the same violation, the economic benefit of noncompliance, and the seriousness of the violation. Clean Air Act § 113(e). Section 113(e)(2) defines the number of days of violation for which a penalty may be assessed under §§ 113, 304(a), and 120. EPA penalty policy: Clean Air Act Stationary Source Civil Penalty Policy (Oct. 25, 1991). This general policy applies to most Clean Air Act violations. The policy is used in calculating administrative penalties under § 113(d) and in calculating a minimum settlement amount in civil judicial cases under § 113(b). The policy states that in calculating the penalty amount to be sought in an administrative complaint, the economic benefit and gravity components should be calculated using the most aggressive assumptions supportable. The policy is designed to ensure that the penalty pled in the administrative complaint is never lower than any revised penalty calculated later based on more detailed information. In judicial cases, this policy is limited to pretrial settlement of enforcement actions. At trial, government attorneys may find it helpful to introduce a penalty calculated under this policy as a point of reference in a demand for penalties. However, once a case goes to trial, government attorneys should demand a larger penalty than the minimum settlement figure calculated under this policy. Eight appendices deal with types of violations not appropriate for the general policy. The appendices cover (1) violations of prevention of significant deterioration/new source review permit requirements (revised 3/25/87), (2) the gravity component for vinyl chloride violations (revised 2/8/85), (3) the benefit and gravity components for asbestos demolition and renovation violations (revised 8/22/89), (4) sources of volatile organic compounds that use reformulation to low-solvent technology as the compliance method (revised 3/25/87), (5) air civil penalty worksheet (revised 3/25/87), (6) volatile hazardous air pollutants (added 3/2/88), (7) new residential wood heaters (added 9/14/89), and (8) manufacture or import of controlled substances in violation of 40 C.F.R. Part 82 concerning protection of stratospheric ozone (revised 4/2/90). 2. § 113(d) — administrative penalties Violations covered: violations of state implementation plans, Title 1, Titles 3-6, and attempts to build/modify stationary sources where § 113(a)(5) finding made. Maximum penalty authorized by statute: $25,000 per day of violation. There is a $200,000 total cap except where EPA and the Department of Justice determine that a higher [22 ELR 10534] penalty is appropriate. For field citations of minor violations, the maximum penalty is $5,000 per day of violation. Statutory penalty assessment criteria: § 113(e) criteria listed above under II.A.1 applies. EPA penalty policy: Clean Air Act Stationary Source Civil Penalty Policy (Oct. 25, 1991). See discussion above under II.A.1. B. Clean Air Act § 120 (noncompliance penalty) [42 U.S.C. § 7420, ELR STAT. 55] Section 120, which applies to stationary sources, is an alternative mechanism for assessing administrative penalties. Prior to the 1990 Clean Air Act amendments, it was the only method for assessing administrative penalties. Section 120 penalties are roughly equivalent to the economic benefits of noncompliance. EPA has rarely used § 120, instead relying mostly on § 113. With its new administrative penalty authority in § 113(e), EPA is not likely to rely on § 120. Regulations implementing § 120 are found at 40 C.F.R. Parts 66-67. Penalties are calculated according to EPA's Technical Support Document and Instruction Manual. One court held that penalties under §§ 120 and 113 may be simultaneous, independent, and cumulative. [United States v. Int'l Harvester Co., 624 F. Supp. 216, 16 ELR 20382 (S.D. Ohio 1985).] C. Clean Air Act § 205 (emission standards for motor vehicles) [42 U.S.C. § 7524, ELR STAT. CAA 106] 1. Clean Air Act § 205(a) and (b) — civil judicial Violations covered: violations of § 203(a)(1), (a)(4), or (a)(5), and § 203(a)(3)(A) or (B). Maximum penalty authorized by statute: $25,000 for any person who violates § 203(a)(1), (a)(4), or (a)(5) or any manufacturer or dealer who violates § 203(a)(3)(A). $2,500 for any person other than a manufacturer or dealer who violates § 203(a)(3)(A) or any person who violates § 203(a)(3)(B). Any violation of § 203(a)(1), (a)(3)(A), or (a)(4) constitutes a separate offense for each motor vehicle or motor vehicle engine. $25,000 per day of violation for any person who violates § 203(a)(2). Statutory penalty assessment criteria: In determining the amount of any civil penalty to be assessed under [§ 205(b)], the court shall take into account the gravity of the violation, the economic benefit or savings (if any) resulting from the violation, the size of the violator's business, the violator's history of compliance with [Clean Air Act Title II], action taken to remedy the violation, the effect of the penalty on the violator's ability to continue in business, and such other matters as justice may require. a. Motor Vehicle Import Program With Revised Mitigation Policy and Automotive Imports — Fact Sheet (Apr. 1986). b. Interim Tampering and Defeat Device Civil Penalty Policy (Apr. 3, 1992). This document describes EPA's policy for determining penalties for violations of the antitampering and defeat device provisions in Clean Air Act § 203(a)(3). 2. Clean Air Act § 205(c) — administrative Violations covered: same as under § 205(a) and (b). Maximum penalty authorized by statute: $200,000, unless EPA and the Department of Justice determine that a larger penalty is appropriate for administrative assessment. Statutory penalty assessment criteria: In determining the amount of any civil penalty assessed under [§ 205(c)], the Administrator shall take into account the gravity of the violation, the economic benefit or savings (if any) resulting from the violation, the size of the violator's business, the violator's history of compliance with [Clean Air Act Title II], action taken to remedy the violation, the effect of the penalty on the violator's ability to continue in business, and such other matters as justice may require. EPA penalty policy: See II.C.1. above. D. Clean Air Act § 211(d) (regulation of fuels — civil judicial and administrative) [42 U.S.C. § 7545, ELR STAT. CAA 113] Violations covered: violations of § 211(a), (f), (g), (k), (l), (m), and (n); violation of the regulations prescribed under § 211(c), (h), (i), (k), (l), (m), and (n); and failure to furnish information or conduct tests required under § 211(b). Maximum penalty authorized by statute: not more than the sum of $25,000 for every day of such violation and the amount of economic benefit or savings resulting from the violation. Statutory penalty assessment criteria: Civil penalties shall be assessed in accordance with § 205(b) and (c). See II.C. above. a. Guidelines for the Assessment of Civil Penalties Under Section 211(d) of the Clean Air Act, 40 Fed. Reg. 39973 (Aug. 29, 1975). b. Lead Banking Penalty Policy and Revisions of Lead Usage and Reporting Penalty Policy (Dec. 18, 1987). c. Volatility Civil Penalty Policy (Dec. 1, 1989). This policy applies to penalties for violations of the volatility regulations for gasoline and alcohol blends at 40 C.F.R. §§ 80.27 and 80.28 and appendices D, E, and F. A. Clean Water Act § 309 [33 U.S.C. § 1319, ELR STAT. FWPCA 038] 1. Clean Water Act § 309(d) — civil judicial Violations covered: violations of §§ 301, 302, 306, 307, 308, 318, and 405; any permit condition or limitation implementing any of these sections in a permit issued under § 402 by EPA or a state, or in a permit issued under § 404 by a state; any requirement imposed in a pretreatment program approved under § 402(a)(3) or (b)(8); and violations of orders issued by EPA under § 309(a). Maximum penalty authorized by statute: $25,000 per day for each violation. Statutory penalty assessment criteria: In determining the amount of a civil penalty the court [22 ELR 10535] shall consider the seriousness of the violation or violations, the economic benefit (if any) resulting from the violation, any history of such violations, any good-faith efforts to comply with the applicable requirements, the economic impact of the penalty on the violator, and such other matters as justice may require. For purposes of [§ 309(d)], a single operational upset which leads to simultaneous violations of more than one pollutant parameter shall be treated as a single violation. a. Clean Water Act Penalty Policy for Civil Settlement Negotiations (Feb. 11, 1986). This policy applies to federal Clean Water Act civil judicial enforcement actions seeking penalties under § 309. It covers violations of NPDES permits by industrial and municipal facilities, discharges without an NPDES permit, violations of general and categorical pretreatment requirements and local limits, monitoring and reporting violations, violations of § 405 sludge use or disposal requirements, violation of § 308 information requests, violation of § 309 administrative orders, and other violations. The policy does not apply to enforcement actions under §§ 311 or 404. b. Guidance on Effect of Clean Water Act Amendment Civil Penalty Assessment Language (Aug. 28, 1987). This guidance concludes that each Clean Water Act violation is subject to a separate civil judicial penalty of $25,000 per day, or administrative penalty of $10,000 per day, subject to the Class I maximum of $25,000 and the Class II maximum of $125,000. 2. Clean Water Act § 309(g) — administrative Violations covered: violations of §§ 301, 302, 306, 307, 308, 318, and 405; violations of permit conditions or limitations implementing these sections in a § 402 permit, or in a § 404 permit issued by a state; and violations of a condition or limitation in a § 404 permit issued by the Corps of Engineers. Maximum penalty authorized by statute: Class I penalties may not exceed $10,000 per violation, with a maximum Class I penalty of $25,000. Class II penalties may not exceed $10,000 per day for each day during with the violation continues, with a maximum Class II penalty of $125,000. Statutory penalty assessment criteria: In determining the amount of any penalty assessed under [§ 309(g)], the Administrator or the Secretary, as the case may be, shall take into account the nature, circumstances, extent and gravity of the violation, or violations, and, with respect to the violator, ability to pay, any prior history of such violations, the degree of culpability, economic benefit or savings (if any) resulting from the violation, and such other matters as justice may require. For purposes of [§ 309(g)], a single operational upset which leads to simultaneous violations of more than one pollutant parameter shall be treated as a single violation. a. Addendum to the Clean Water Act Civil Penalty Policy for Administrative Penalties (Aug. 28, 1987). This policy applies only to the calculation of administrative penalties, not to the calculation of penalties in judicial actions or § 404 actions. The penalty calculated under this policy represents a penalty that EPA will accept in settlement of its administrative penalty action. The amount EPA proposes to assess or seeks in an administrative action need not be identical to the amount calculated under the policy as acceptable for settlement. b. Guidance on Effect of Clean Water Act Amendment Civil Penalty Assessment Language (Aug. 28, 1987). See discussion above at III.A.1. B. Clean Water Act § 311 (oil and hazardous substances) [33 U.S.C. § 1321, ELR STAT. FWPCA 042] 1. Clean Water Act § 311(b)(7) — civil judicial Violations covered: violations of § 311(b)(3), failure to carry out removal of discharge under order pursuant to § 311(c), failure to comply with order under § 311(e)(1)(B), and violations of regulations issued under § 311(j). Maximum penalty authorized by statute: The owner, operator, or person in charge of a vessel, onshore facility, or offshore facility from which oil or a hazardous substance is discharged in violation of § 311(b)(3) shall be subject to a civil penalty of up to $25,000 per day of violation or up to $1,000 per barrel of oil or unit of reportable quantity of hazardous substance discharged. Any such owner/operator who without sufficient cause fails to properly carry out removal of the discharge under an order pursuant to § 311(c) or fails to comply with an order under § 311(e)(1)(B) shall be subject to a civil penalty of up to $25,000 per day of violation or up to three times the costs incurred by the Oil Spill Liability Trust Fund as a result of such failure. Any person who violates a regulation issued under § 311(j) shall be subject to a civil penalty of up to $25,000 per day of violation. If a violation of § 311(b)(3) was the result of gross negligence or willful misconduct by an owner/operator, that person shall be subject to a civil penalty of not less than $100,000, and not more than $3,000 per barrel of oil or unit of reportable quantity of hazardous substance discharged. Statutory penalty assessment criteria: In determining the amount of a civil penalty under [§ 311(b)(6) and (7)], the Administrator, Secretary, or the court, as the case may be, shall consider the seriousness of the violation or violations, the economic benefit to the violator, if any, resulting from the violation, the degree of culpability involved, any other penalty for the same incident, any history of prior violations, the nature, extent, and degree of success of any efforts of the violator to minimize or mitigate the effects of the discharge, the economic impact of the penalty on the violator, and any other matters as justice may require. 2. Clean Water Act § 311(b)(6) — administrative Violations covered: discharges of oil or hazardous substances by an owner, operator, or person in charge of a vessel, onshore facility, or offshore facility in violation of § 311(b)(3); and failure by an owner/operator to comply with a regulation issued under § 311(j). Maximum penalty authorized by statute: A Class I penalty may not exceed §10,000 per violation, with a maximum of $25,000. A Class II penalty may not exceed $10,000 per [22 ELR 10536] day for each day during which the violation continues, with a maximum of $125,000. Statutory penalty assessment criteria: same as for § 311(b)(7) civil judicial action. See III.B.1. above. C. Clean Water Act § 312 (marine sanitation devices) [33 U.S.C. § 1322, ELR STAT. FWPCA 049] Violations covered: violations of § 312(g)(1); § 312(h)(1), (2), and (4); and any regulation issued under § 312. Maximum penalty authorized by statute: $5,000 for each violation of § 312(g)(1) and § 312(h)(1) and (2); $2,000 for each violation of § 312(h)(4) or any regulation issued under § 312. Statutory penalty assessment criteria: In determining the amount of the penalty, or the amount agreed upon in compromise, the gravity of the violation, and the demonstrated good faith of the person charged in attempting to achieve rapid compliance, after notification of a violation, shall be considered by [the Secretary of the department in which the Coast Guard is operating]. D. Clean Water Act § 404 (dredge and fill permits — civil judicial) [33 U.S.C. § 1344, ELR STAT. FWPCA 060] Clean Water Act § 309(g) provides for administrative penalties for § 404 violations. See III.A.2. above. Violations covered: violations of conditions or limitation in a permit issued by the Secretary of the Army under § 404, and violations of an order issued by the Secretary of the Army under § 404(s)(1). Maximum penalty authorized by statute: $25,000 per day for each violation. Statutory penalty assessment criteria: In determining the amount of a civil penalty, the court shall consider the seriousness of the violation or violations, the economic benefit (if any) resulting from the violation, any history of such violations, any good-faith efforts to comply with the applicable requirements, the economic impact of the penalty on the violator, and such other matters as justice may require. IV. Resource Conservation and Recovery Act (RCRA) A. RCRA § 3008 [42 U.S.C. § 6928, ELR STAT. RCRA 020.] 1. RCRA § 3008(g) — civil judicial Violations covered: violations of RCRA Title C (hazardous waste management). Maximum penalty authorized by statute: $25,000 for each violation. Each day of violation constitutes a separate violation. Statutory penalty assessment criteria: none. EPA penalty policy: RCRA Civil penalty Policy, ELR ADMIN. MATERIALS 35273 (Policies) (Oct. 1990). This policy establishes EPA's internal guidelines for determining penalty amounts that should be sought in administrative complaints and that would be acceptable in settlement of administrative and judicial enforcement actions. The policy does not limit the penalty amounts sought in civil judicial actions. A separate policy applies to RCRA's underground storage tank program (RCRA Title I). 2. RCRA § 3008(a) — administrative Violations covered: violations of RCRA Title C (hazardous waste management). Note that RCRA § 3008(c) authorizes EPA to assess an administrative civil penalty for violations of compliance orders. Maximum penalty authorized by statute: $25,000 per day of noncompliance for each violation. Statutory penalty assessment criteria: In assessing such a penalty, the Administrator shall take into account the seriousness of the violation and any good faith efforts to comply with applicable requirements. EPA penalty policy: RCRA Civil Penalty Policy, ELR ADMIN. MATERIALS 35273 (Policies) (Oct. 1990). See discussion above at IV.A.1. B. RCRA § 9006 (underground storage tanks) [42 U.S.C. § 6991e, ELR STAT. RCRA 046] 1. RCRA § 9006(a), (d) — administrative Violations covered: any requirement of RCRA Title I (underground storage tank (UST) title). Maximum penalty authorized by statute: An owner who knowingly fails to notify or submit false information under § 9002(a) is subject to a civil penalty not to exceed $10,000 for each tank for which notification is not given or false information is submitted. An owner or operator that fails to comply with requirements or standards issued under § 9003, with a requirement or standards of an approved state program, or with § 9003(g) is subject to a civil penalty not to exceed $10,000 for each tank for each day of violation. Statutory penalty assessment criteria: The Administrator may assess a penalty that he "determines is reasonable taking into account the seriousness of the violation and any good faith efforts to comply with the applicable requirements." RCRA § 9006(c). EPA penalty policy: EPA Penalty Guidance for Violations of Underground Storage Tank Regulations, ELR ADMIN. MATERIALS 35303 (Policies) (Nov. 1990). This policy provides guidance for determining the appropriate civil penalty for an administrative complaint and order. The policy does not limit the penalty amount sought in civil judicial actions. In settling judicial cases, EPA may use the narrative penalty assessment criteria to determine or justify the penalty amount that EPA agrees to accept. The policy states that although it is intended primarily for EPA regional enforcement staff, state and local UST implementing agencies may find it useful to adapt some of the concepts and methodologies for their programs. 2. RCRA § 9006(a) — civil judicial Violations covered: any requirement of Title I, and failures [22 ELR 10537] to comply with § 9006(a) compliance orders. Maximum penalty authorized by statute: $25,000 for each day of continued noncompliance with administrative order. Statutory penalty assessment criteria: none. EPA penalty policy: The Penalty Policy for Violations of Underground Storage Tank Regulations, ELR ADMIN. MATERIALS 35303 (Policies) (Nov. 1990), states that judicial enforcement actions are reserved for violations of administrative orders. The policy states that EPA should seek the maximum penalty in these cases. V. Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) A. CERCLA § 109 [42 U.S.C. § 9609, ELR STAT. CERCLA 031] 1. CERCLA § 109(a) and (b) — administrative Violations covered: violation of § 103(a) or (b) (relating to notice); violation of § 103(d)(2) (relating to destruction of records); violation of § 108 (relating to financial responsibility), the regulations under § 108, or any denial or detention order under § 108; violation of an order under § 122(d)(3) (relating to settlement agreements for action under § 104(b)); and failure or refusal referred to in § 122(l) (relating to violations of administrative orders, consent decrees, or agreements under § 120). Maximum penalty authorized by statute: $25,000 per violation for Class I penalty; and $25,000 per day for each day during which the violation continues for Class II penalty. For Class II penalties, the penalty amount for second or subsequent violations is $75,000 for each day during which the violation continues. Statutory penalty assessment criteria: In determining the amount of any penalty assessed pursuant to [§ 109(a) for a Class I penalty], the President shall take into account the nature, circumstances, extent and gravity of the violation or violations and, with respect to the violator, ability to pay, any prior history of such violations, the degree of culpability, economic benefit or savings (if any) resulting from the violation, and such other matters as justice may require. CERCLA § 109(a)(3). Although these factors apply only to Class I penalties as a matter of law, EPA also applies them to Class II penalties as a matter of policy. EPA penalty policy: Final Penalty Policy for EPCRA §§ 302, 303, 304, 311, and 312 and for CERCLA § 103, ELR ADMIN. MATERIALS 35261 (Policies) (June 13, 1990). This policy provides guidance to EPA personnel in assessing administrative penalties for violations of CERCLA § 103(a) and (b) (as well as various provisions of the Emergency Planning and Community Right-to-Know Act (EPCRA) — see VI.A-C below). The policy states that it should also be used to develop internal negotiation penalty figures for civil judicial enforcement actions. EPA may also use the narrative penalty assessment criteria to argue for as high a penalty in a civil judicial case as the facts of a case justify. 2. CERCLA § 109(c) — civil judicial Violations covered: same as for § 109(a) and (b). See V.A.1. above. Maximum penalty authorized by statute: $25,000 per day for each day during which the violation (or failure or refusal) continues. The penalty ceiling for a second or subsequent violation (or failure or refusal) is $75,000 for each day during which the violation (or failure or refusal) continues. Statutory penalty assessment criteria: none EPA penalty policy: Final Penalty Policy for EPCRA §§ 302, 303, 304, 311, and 312 and for CERCLA § 103, ELR ADMIN. MATERIALS 35261 (Policies) (June, 13 1990). See discussion above under V.A.1. B. CERCLA § 104(e) — civil judicial [42 U.S.C. § 9604(e), ELR STAT. CERCLA 016] Violations covered: a court may assess a civil penalty against any person who unreasonably fails to comply with § 104(e)(2), (3), or (4), or an order issued under § 104(e)(5)(A). Maximum penalty authorized by statute: $25,000 for each day of noncompliance. Statutory penalty assessment criteria: none. C. CERCLA § 106(b)(1) — civil judicial [42 U.S.C. § 9606(b)(1), ELR STAT. CERCLA 024] Violations covered: failure to comply with a § 106(a) order. Maximum penalty authorized by statute: $25,000 for each day in which such violation occurs or such failure to comply continues. Although the heading of § 106(b)(1) is "Fines," and the text of the statute uses the word fines, this is a civil penalty provision. See SUSAN B. COOKE, THE LAW OF HAZARDOUS WASTE § 14.03[4][c] (perm. ed. rev. vol. 1989). Statutory penalty assessment criteria: none. VI. Emergency Planning and Community Right-to-Know Act (EPCRA) A. EPCRA § 325(a) (emergency planning — civil judicial) [42 U.S.C. § 11045(a), ELR STAT. EPCRA 010] Violations covered: failure to obey EPA order to facility owner or operator (except owner or operator of facility designated under § 302(b)) to comply with §§ 302(c) and 303(d). Maximum penalty authorized by statute: $25,000 for each day in which the violation occurs or failure to comply continues. Statutory penalty assessment criteria: none. EPA penalty policy: Final Penalty Policy for EPCRA §§ 302, 303, 304, 311, and 312 and for CERCLA § 103, ELR ADMIN. MATERIALS 35261 (Policies) (June 13, 1990). This policy provides guidance to EPA personnel in assessing administrative penalties for violations of EPCRA §§ 302, 303, 304, 311, and 312. In civil judicial cases, EPA may use the policy to calculate minimum acceptable penalty amounts for settlement purposes, and use the narrative penalty assessment criteria to argue for as high a penalty as the facts of a case justify. A separate penalty policy applies [22 ELR 10538] to violations of EPCRA § 313. See VI.C. below. B. EPCRA § 325(b) (emergency notification) [42 U.S.C. § 11045(b), ELR STAT. EPCRA 010] 1. EPCRA § 325(b)(1) and (2) — administrative Violations covered: violations of § 304. Maximum penalty authorized by statute: $25,000 per violation for Class I penalties; $25,000 per day for each day during which the violation continues for Class II penalties; $75,000 for each day during which the violation continues for second or subsequent violations for Class II penalties. Statutory penalty assessment criteria: In determining the amount of any penalty assessed pursuant to § 325(b), the Administrator shall take into account the nature, circumstances, extent and gravity of the violation or violations and, with respect to the violator, ability to pay, any prior history of such violations, the degree of culpability, economic benefit or savings (if any) resulting from the violation, and such other matters as justice may require. EPCRA § 325(b)(1)(C). EPCRA § 325(b)(2) also requires that EPA assess any Class I administrative civil penalty in the same manner, and subject to the same provisions, as civil penalties under TSCA § 16. EPA interprets EPCRA § 325(b)(2) to mean that it must follow the procedural aspects of TSCA § 16 and consider TSCA § 16 statutory factors (which include the same factors as those listed in EPCRA § 325(b)(1)(C) plus the requirement that EPA consider the penalty's impact on the violator's ability to continue to do business), but not any specific penalty policies developed under TSCA § 16. EPA penalty policy: Final Penalty Policy for EPCRA §§ 302, 303, 304, 311, and 312 and for CERCLA § 103, ELR ADMIN. MATERIALS 35261 (Policies) (June 13, 1990). See discussion above under VI.A. 2. EPCRA § 325(b)(3) — civil judicial Violations covered: violations of § 304. Maximum penalty authorized by statute: $25,000 per day for each day during which the violation continues. For a second or subsequent violation, $75,000 for each day during which the violation continues. Statutory penalty assessment criteria: none. EPA penalty policy: Final Penalty Policy for EPCRA §§ 302, 303, 304, 311, and 312 and for CERCLA § 103, ELR ADMIN. MATERIALS 35261 (Policies) (June 13, 1990). See discussion above under VI.A. C. EPCRA § 325(c) (reporting requirements — civil judicial and administrative) [42 U.S.C. § 11045, ELR STAT. EPCRA 011] This provision allows EPA to assess a civil penalty by administrative order or to bring an action in federal district court. Violations covered: violations of §§ 311, 312, 313, and § 323(b), and failure to furnish information required under § 322(a)(2). Maximum penalty authorized by statute: any person (other than a governmental entity) who violates § 312 or § 313 is liable for up to $25,000 for each violation; and any person (other than a governmental entity) who violates § 311 or § 323(b), and any person who fails to furnish information required under § 322(a)(2) is subject to up to $10,000 for each violation. EPA penalty policies: a. Final Penalty Policy for EPCRA §§ 302, 303, 304, 311, and 312 and for CERCLA § 103, ELR ADMIN. MATERIALS 35261 (Policies) (June 13, 1990). See discussion above under VI.A. b. Enforcement Response Policy for Section 313 of the Emergency Planning and Community Right-to-Know Act, ELR ADMIN. MATERIALS 35199 (Policies) (Dec. 12, 1988). This policy contains a section on assessing a civil administrative penalty for violations of § 313. D. EPCRA § 325(d) (trade secrets — civil judicial and administrative penalties) [42 U.S.C. § 11045(d), ELR STAT. EPCRA 011] This provision allows EPA to assess a civil penalty by administrative order or to bring an action in federal district court. Violations covered: explanations submitted by trade secret claimants that EPA determines under § 322(d)(4) (or after receiving supplemental supporting detailed information under § 322(d)(3)(A)) present insufficient assertions to support a finding that a specific chemical identity is a trade secret; and frivolous trade secret claims. Maximum penalty authorized by statute: $25,000 per claim. Statutory penalty assessment criteria: none. VII. Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) FIFRA § 14(a) — administrative [42 U.S.C. § 136l(a), ELR STAT. FIFRA 024] Violations covered: violations of any provision of FIFRA. Maximum penalty authorized by statute: registrants, commercial applicators, wholesalers, dealers, retailers, or other distributors are subject to a penalty of not more than $5,000 for each offense; private applicators who violate FIFRA after receiving written warning from EPA or following a citation for a prior violation are subject to a penalty of not more than $1,000 for each offense; and private applicators who hold or apply registered pesticides, or use dilutions of registered pesticides, only to provide a service of controlling pests without delivering any unapplied pesticide to any person so served, and who violate FIFRA are subject to a penalty of not more than $500 for the first offense nor more than $1,000 for each subsequent offense. Statutory penalty assessment criteria: In determining the amount of the penalty, the Administrator shall consider the appropriateness of such penalty to the size of the business of the person charged, the effect on the person's ability to continue in business, and the gravity of the violation. Whenever the Administrat or finds [22 ELR 10539] that the violation occurred despite the exercise of due care or did not cause significant harm to health or the environment, the Administrator may issue a warning in lieu of assessing a penalty. a. Enforcement Response Policy for FIFRA (July 2, 1990). This policy includes a section on assessing administrative penalties. b. Guidance for Enforcement of the Child-Resistant Packaging Regulation (June 11, 1981). c. FIFRA § 7(C) Enforcement Response Policy (Feb. 10, 1986). This policy includes a section on assessing administrative penalties. The civil penalty assessment matrix is superseded by the matrix in the July 2, 1990, Enforcement Response Policy. d. Routine Use of SEC "10-K" Statements in TSCA and FIFRA Civil Penalty Actions (Oct. 17, 1980). e. FIFRA Compliance Program Policy No. 12.4, "Making Restricted Use Pesticides Available for Use Other Than in Accordance With Section 3(d) of FIFRA" (June 22, 1986). VIII. Toxic Substances Control Act (TSCA) TSCA § 16 — administrative [42 U.S.C. § 2615, ELR STAT. TSCA 026] Violations covered: violations of § 15, which applies to violations of rules or orders issued under § 4; violations of § 5 and § 6 or any rule or order issued under § 5 and § 6; violations of Subchapter II on asbestos hazard emergency response or any rule or order issued under Subchapter II; use for commercial purposes of a chemical substance or mixture that a person knew or had reason to know was manufactured, processed, or distributed in commerce in violation of § 5 or § 6, or any rule or order issued under § 5 or § 6, or an order issued in an action under § 5 or § 6; failure to establish or maintain records, submit reports, notice, or other information, or permit access to or copying of records required by FIFRA or a rule; and failure to permit entry or inspection as required by § 11. Maximum penalty authorized by statute: $25,000 for each violation. Each day a violation continues is a separate violation. Statutory penalty assessment criteria: In determining the amount of a civil penalty, the Administrator shall take into account the nature, circumstances, extent, and gravity of the violation or violations and, with respect to the violator, ability to pay, effect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other matters as justice may require. TSCA § 16(a)(2)(B). TSCA § 16(a)(2)(C) provides that EPA may compromise, modify, or remit, with or without conditions, any civil penalty which may be imposed under [§ 16(a)]. a. TSCA Civil Penalty Policy, 45 Fed. Reg. 59770 (Mar. 10, 1980). b. Polychlorinated Biphenyls (PCB) Penalty Policy, ELR ADMIN. MATERIALS 35235 (Policies) (Apr. 9, 1990). EPA uses this policy to calculate penalties in all administrative actions concerning PCBs. The policy implements a system for determining penalties in administrative civil actions under TSCA § 16. c. TSCA Settlement With Conditions (Nov. 15, 1983, and Dec. 20, 1985). d. Final TSCA Good Laboratory Practice Enforcement Response Policy (Apr. 9, 1985) — includes section on assessment of administrative penalties. e. Routine Use of SEC "10-K" Statements in TSCA and FIFRA Civil Penalty Actions (Oct. 17, 1980). Enforcement Response Policy for TSCA § 4 Test Rules (May 28, 1986). This policy includes a section on assessing an administrative penalty. TSCA § 5 Enforcement Response Policy (June 8, 1989). This policy includes a section on assessing an administrative penalty. a. Revised Asbestos in Schools Rule Enforcement Response Policy (July 2, 1984). This policy includes a section on assessing an administrative penalty. b. Amendment to the Revised Asbestos in Schools Enforcement Response Policy (Oct. 18, 1985). c. Asbestos Abatement Projects Rule Compliance Monitoring Strategy (Aug. 30, 1986, and memo dated Sept. 9, 1986). d. PCB Penalty Policy, ELR ADMIN. MATERIALS 35235 (Policies) (Apr. 9, 1990). TSCA §§ 8, 12, and 13 policies: a. TSCA §§ 8, 12, and 13 Enforcement Response Policy (May 15, 1987) — includes section on assessing an administrative penalty. b. Inventory Reporting Regulations: Final Enforcement Strategy (Apr. 25, 1979). IX. Safe Drinking Water Act (SDWA) A. SDWA § 1414 (public water systems) [42 U.S.C. § 300g-3, ELR STAT. SDWA 004] 1. SDWA § 1414(b) — civil judicial Violations covered: violation of national primary drinking water regulation, violation of order issued under § 1414(g), and violation of any schedule or other requirement imposed pursuant to a variance or exemption granted under §§ 1415 and 1416. Maximum penalty authorized by statute: $25,000 for each day in which a violation occurs. Statutory penalty assessment criteria: serious of the violation, the population at risk, and other appropriate factors. SDWA § 1414(b). EPA penalty policy: Safe Drinking Water Act Public Water System Settlements — Interim Guidance (Nov. 17, 1983). 2. SDWA § 1414(c) — civil judicial Violations covered: violations of § 1414(c) or its regulations. Maximum penalty authorized by statute: $25,000. Statutory penalty assessment criteria: none. EPA penalty policy: none. 3. SDWA § 1414(g) — administrative Violations covered: failure to comply with administrative order issued under § 1414(g), which may be issued in any case in which EPA is authorized to bring a civil action under § 1414 or § 1445 with respect to any regulation, schedule, or requirement. Maximum penalty authorized by statute: $25,000 per day of violation. SDWA § 1414(g)(3) provides that when a civil penalty sought by EPA does not exceed $25,000, the penalty must be assessed by EPA in an administrative action. When the penalty sought by EPA exceeds $5,000, the penalty must be assessed by a civil action. Statutory penalty assessment criteria: none. B. SDWA § 1423 (underground injection control) [42 U.S.C. § 300h-2, ELR STAT. SDWA 009] 1. SDWA § 1423(b) — civil judicial Violations covered: violation of any requirement of an applicable underground injection control (UIC) program or order requiring compliance under § 1423(c). Maximum penalty authorized by statute: $25,000 for each day of violation. Statutory penalty assessment criteria: none. 2. SDWA § 1423(c) — administrative Violations covered: any case in which EPA is authorized to bring a civil action under § 1423. Maximum penalty authorized by statute: For violations of requirements concerning the underground injection of brine or other fluids brought to the surface in connection with oil or natural gas production, or any underground injection for secondary or tertiary recovery of oil or natural gas, EPA may assess a penalty of not more than $10,000 for each day of violation, up to a maximum administrative penalty of $125,000. For violations of other requirements, EPA may assess a civil penalty of not more than $10,000 for each day of violation, up to a maximum administrative penalty of $125,000. Statutory penalty assessment criteria: In assessing any civil penalty under § 1423(c), the Administrator shall take into account appropriate factors, including (i) the seriousness of the violation; (ii) the economic benefit (if any) resulting from the violation; (iii) any history of such violations; (iv) any good-faith efforts to comply with the applicable requirements; (v) the economic impact of the penalty on the violator; and (vi) such other matters as justice may require. EPA penalty policy: Final UIC Program Administrative Order Settlement Policy — Underground Injection Control Guidance No. 75 (Jan. 24, 1992). This policy applies to the determination of administrative order settlement amounts. It states that it should not be used to calculate penalty amounts in proposed administrative orders. The penalty amount in a proposed administrative order should be the highest amount, up to the statutory cap, that the region is able to defend before a presiding officer. The policy also states that it is not intended to be used by presiding officers. This policy will be used by EPA regional offices to calculate the minimum acceptable settlement amount in UIC regulation violation cases. The settlement amount calculated under the policy should not be reduced except for documented extenuating situations, such as ability to pay. C. SDWA § 1431 (emergency powers — civil judicial) [42 U.S.C. § 300i, ELR STAT. SDWA 014] Violations covered: violation of orders issued under § 143(a)(1). Maximum penalty authorized by statute: $5,000 for each day in which the violation occurs or failure to comply continues. Statutory penalty assessment criteria: none. D. SDWA § 1441 (assurance of availability of adequate supplies of chemicals for treatment of water — civil judicial) [42 U.S.C. § 300j, ELR STAT. SDWA 014] Violations covered: violation of orders issued under § 1441(c)(1). Maximum penalty authorized by statute: $2,500 for each failure to comply. Statutory penalty assessment criteria: none. E. SDWA § 1445 (records and inspections — civil judicial) [42 U.S.C. § 300j-4, ELR STAT. SDWA 018] Violations covered: violation of § 1445(a), and refusal to allow EPA to enter and conduct any audit or inspection authorized by § 1445(b). Maximum penalty authorized by statute: $25,000. X. Marine Protection, Research, and Sanctuaries Act § 105 (MPRSA) [33 U.S.C. § 1415] Violations covered: violations of any provision of the ocean dumping title of the MPRSA or its regulations. Maximum penalty authorized by statute: $50,000 for each violation. For violations involving the dumping of medical waste, the maximum penalty is $125,000 for each violation. Each day of a continuing violation is a separate offense, as is the dumping from each of several vessels or other sources. Statutory penalty assessment criteria: In determining the amount of the penalty, the gravity of the violation, prior violations, and the demonstrated good faith of the person charged in attempting to achieve rapid compliance after notification of a violation shall be considered by said Administrator. For good cause shown, the Administrator may remit or mitigate such penalty. XI. Oil Pollution Act (OPA) A. OPA § 4303 (financial responsibility) [33 U.S.C. § 2716a, ELR STAT. Oil Poll Act 022] 1. OPA § 4303(a) — administrative Violations covered: violation of § 1016 or its regulations or with a denial or detention order issued under § 1016(c)(2). Maximum penalty authorized by statute: not to exceed $25,000 per day of violation. Statutory penalty assessment criteria: In determining the amount of the penalty, the President shall take into account the nature, circumstances, extent, and gravity of the violation, the degree of culpability, any history of prior violation, ability to pay, and such other matters as justice may require. 2. OPA § 4303(b) — civil judicial Violations covered: same as for § 4303(a). Maximum penalty authorized by statute: The statute provides that EPA may, in addition to or in lieu of assessing a penalty under § 4304(a), request the Attorney General to secure such relief as necessary to compel compliance with § 1016. Statutory assessment criteria: The district court may grant any relief as required by the public interest and equities of the case. EPA's revision in the last few years of many of its civil penalty policies has played a key role in the rise in EPA's civil penalty assessments. All these policies have incorporated EPA's 1984 policy of recovering the economic benefit of noncompliance, plus an amount based on the seriousness of the violation. Penalty assessments have risen steadily since these policies were implemented.48 Despite the dramatic rise in civil penalty assessments, a 1991 General Accounting Office (GAO) report criticized EPA for failing to document the calculation or assessment of the economic benefit and for failing to adequately implement its penalty policies in its regional offices and in the states.49 The report noted that EPA's 1984 general policy provides a reasonable and consistent criteria for assessing civil penalties. However, the report concluded that EPA will have trouble implementing the policy over the long run unless it increases its monitoring of penalty practices by the EPA regions and requires the states to implement penalty policies that require recovery of economic benefit.50 The GAO also recommended that EPA require its regions to provide information on administrative penalties for EPA's penalty reporting system, including calculations of economic benefit and gravity, and identify the individuals or offices that will be responsible for monitoring penalty practices. EPA responded to the GAO report in a letter to the Chairman of the Senate Committee on Governmental Affairs.51 EPA acknowledged that some problems existed in its penalty assessment procedures, but concluded that they have been or are being addressed in ways that are more efficient than those recommended by the GAO. EPA believes that the GAO greatly overstated the level of the lack of documentation of economic benefit, and EPA has implemented several management improvements52 that it believes will eliminate any remaining documentation problems. EPA also observed that while it may ultimately decide to adopt a policy that would require states to adopt economic benefit penalty policies in their authorized programs, EPA believes that it is premature to make such a major change without fuller discussion with the states. Further, many state statutes authorize smaller maximum penalties and some states would have to amend their state constitutions to increase their penalty authorities. EPA believes that it would be preferable to have states voluntarily adopt the economic benefit policy rather than make it a condition of delegation. EPA took another step toward more consistent application of its penalty policies when it issued its revised RCRA civil penalty policy in October 1990. The RCRA policy includes a section on documentation that requires enforcement personnel to fully document their calculation of the civil penalties sought in administrative complaints.53 EPA also intends to periodically review regional RCRA penalty calculation worksheets.54 EPA's civil penalty policies will play an even more important role in environmental enforcement as EPA regions continue their progress in implementing the policies and as more states incorporate the policies into their authorized programs. Expect to see more record civil penalty assessments in the years ahead. 1. OFFICE OF ENFORCEMENT, EPA, NATIONAL PENALTY REPORT: OVERVIEW OF EPA FEDERAL PENALTY PRACTICES FY 1990 (Apr. 1991) [hereinafter 1990 PENALTY REPORT]. The $61.3 million figure includes $38.5 million in civil judicial penalties and $22.8 million in administrative penalties. EPA set a new record in fiscal year 1991 by assessing $73.1 million in civil penalties. The civil penalties collected in fiscal year 1991 alone amount to 23 percent of all civil penalties collected in EPA's history. EPA, ENFORCEMENT ACCOMPLISHMENTS REPORT (May 1992). 2. 1990 PENALTY REPORT, supra note 1, at 21. Record judicial penalties were set under the Toxic Substances Control Act (TSCA), the Safe Drinking Water Act's underground injection control program, and the wetlands program. Record administrative penalties were assessed under TSCA, the Clean Water Act, the Emergency Planning and Community Right-to-Know Act (EPCRA) (§§ 302-312), the Comprehensive Environmental Response, Compensation, and Liability Act (§ 103), EPCRA § 313, and the Federal Insecticide, Fungicide, and Rodenticide Act. 3. Id. EPA collected over $133 million in civil judicial penalties in these three years. 4. 15 U.S.C. §§ 2601-2671, ELR STAT. TSCA 001-056. 5. 42 U.S.C. §§ 6901-6992k, ELR STAT. RCRA 001-050. See 1990 PENALTY REPORT, supra note 1, at 1. The case is United States v. Texas Eastern Transmission Corp., No. H-88-1917 (S.D. Tex. 1989). 6. The administrative complaint was filed by EPA Region IV against Tennessee Gas Pipeline Company of Houston, Texas. In re Tenneco, Inc., EPA No. TSCA-IV-92-P4021 (complaint filed Jan. 13, 1992). 7. 7 U.S.C. §§ 136-136y, ELR STAT. FIFRA 001-034. 8. EPA, EPA Enforcement Action Targets Illegal Export/Import of Waste, Chemicals (Sept. 26, 1991) (press release and fact sheet). 9. Statute-specific policies are needed to account for the differences in statutory programs. EPA has issued penalty policies for most of is major regulatory programs. There may be separate policies to cover different provisions of the same statute. For example, EPA has issued two separate policies for EPCRA. See table at section VI in text. 10. See, e.g., RCRA § 3008(g), 42 U.S.C. § 6928(g), ELR STAT. RCRA 021. For a complete list of the maximum civil penalties authorized by EPA-administered statutes, see the table in the text below. 11. 365 days x $25,000 = $9,125,000. 12. Jonathan D. Libber, Penalty Assessment at the Environmental Protection Agency: A View From Inside, NAT'L ENVTL. ENFORCEMENT J., Apr. 1991, at 3. 13. Clean Air Act § 113(e)(1), 42 U.S.C. § 7413(e)(1), ELR STAT. CAA 51. For a complete list of the statutory penalty assessment criteria for all EPA-administered statutes, see the table in the text below. Congress left open how much weight EPA or the courts should give each factor. A recent district court decision described how district courts should apply the statutory penalty assessment criteria in Clean Air Act § 113(e). United States v. A.A. Mactal Constr. Co., No. 89-2372-CV (D. Kan. Apr. 10, 1992). The court stated that a district court should first calculate the statutory maximum penalty and then consider the statutory factors to mitigate the maximum penalty. The court noted that the penalty should not be reduced below the economic benefit obtained by the violator. 14. EPA has issued enforcement response policies under its various programs for guidance on when to use administrative, judicial, or criminal enforcement. See, e.g., EPA, ENFORCEMENT RESPONSE POLICY FOR SECTION 313 OF THE EMERGENCY PLANNING AND COMMUNITY RIGHT-TO-KNOW ACT, ELR ADMIN. MATERIALS 35199 (Policies) (Dec. 2, 1988); EPA, RCRA ENFORCEMENT RESPONSE POLICY (Dec. 21, 1987). 15. Libber, supra note 12, at 5. 16. Id. 17. EPA, PENALTY GUIDANCE FOR VIOLATIONS OF UST REGULATIONS, ELR ADMIN. MATERIALS 35235 (Policies) (Nov. 1990). 18. 40 C.F.R. § 22.27(b) (1991). 19. In re Cooling Tower Co., No. RCRA-09-88-0008, slip op. at 4 (Initial Decision Nov. 30, 1989). See also In re Michigan Waste Systems, No. RCRA-V-W-84-R-054, slip op. at 63 (Initial Decision Sept. 30, 1991); In re Sandoz, Inc., RCRA Appeal No. 85-7 (Final Decision Feb. 27, 1987). 20. See, e.g., In re Hutch Oil Co., No. TSCA-V-C-196 (Initial Decision June 2, 1986); In re Freemont City Schools, No. TSCA-V-C-264 (Initial Decision June 26, 1985). 21. 611 F. Supp. 1542, 15 ELR 20663 (E.D. Va. 1985), aff'd, 791 F.2d 304, 16 ELR 20636 (4th Cir. 1986), vacated and remanded sub nom. Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Found., 484 U.S. 49, 18 ELR 20142 (U.S. 1987). 22. The court noted that EPA's penalty policy provides a helpful analytical framework for arriving at a civil penalty. It is especially useful in light of the substantial maximum penalty that the statute authorizes, on the one hand, and the total absence of guidance Congress has provided in assessing penalties pursuant to [Clean Water Act § 309(d)], on the other hand. 611 F. Supp. at 1556, 15 ELR at 20670. The 1987 Clean Water Act amendments added penalty assessment criteria to § 309(d). The court also observed that there are few cases that explain in any detail how they calculate a civil penalty under § 309(d). See also Student Public Interest Research Group of New Jersey v. Hercules, Inc., 19 ELR 20903 (D.N.J. Apr. 6, 1989) (court applied EPA's general 1984 civil penalty policy to Clean Water Act citizen suit); Fishel v. Westinghouse Elec. Corp., 17 ELR 20465 (M.D. Pa. Dec. 12, 1986) (court applied EPA's general 1984 civil penalty policy to RCRA, Clean Water Act violations). 23. 20 ELR 21385 (N.D.N.Y. July 19, 1990). See also Sierra Club v. Elec. Controls Design, Inc., 909 F.2d 1350, 20 ELR 21081 (9th Cir. 1990) (noting that EPA's Clean Water Act penalty policy is irrelevant to appeal of proposed Clean Water Act consent decree in citizen suits, because the policy is intended only to guide EPA in cases prosecuted by the government); Atlantic States Legal Found. v. Simco Leather Corp., 755 F. Supp. 59, 21 ELR 20864 (N.D.N.Y. 1991) (although due some deference, Clean Water Act policy not binding). But see Pennsylvania Envtl. Defense Found. v. Bellefonte Borough, 718 F. Supp. 431, 436-37, 20 ELR 20286, 20288 (M.D. Pa. 1989) (deferring to the mitigation project rule in EPA's Clean Water Act penalty policy in review of proposed consent decree) (citing Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837, 844, 14 ELR 20507, 20509 (1984)). 24. 467 U.S. 837, 14 ELR 20507 (1984). 25. Friends of the Earth, 20 ELR at 21387 n.7. 26. Katzson Bros. v. EPA, 839 F.2d 1396, 18 ELR 20942 (10th Cir. 1988). 27. Id. at 1400-01, 18 ELR at 20943-44. 28. Id. 29. See, e.g., Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Found., 484 U.S. 49, 18 ELR 20142 (1987). 30. 17 ELR 20771 (Ohio Ct. App. Nov. 13, 1986). 31. U.S. GEN. ACCOUNTING OFFICE, NO. GAO/RCED-91-166, ENVIRONMENTAL ENFORCEMENT. PENALTIES MAY NOT RECOVER ECONOMIC BENEFIT GAINED BY VIOLATORS (June 1991). 32. Id. 33. EPA, POLICIES ON CIVIL PENALTIES, ELR ADMIN. MATERIALS 35083 (Policies) (Feb. 16, 1984) [hereinafter GENERAL POLICY]. 34. Id. 35. The types of violations that result in savings from delayed costs include failure to install equipment needed to meet discharge standards, failure to effect process changes needed to eliminate pollutants from products or waste streams, and testing violations where testing still must be done to demonstrate compliance. EPA, A FRAMEWORK FOR STATUTE-SPECIFIC APPROACHES TO PENALTY ASSESSMENTS: IMPLEMENTING EPA's POLICY ON CIVIL PENALTIES, ELR ADMIN. MATERIALS 35073 (Policies) (Feb. 16, 1984) [hereinafter FRAMEWORK]. 36. Violations that enable a violator to permanently avoid compliance costs include cost savings for operation and maintenance of equipment that the violator failed to install, failure to properly operate and maintain existing control equipment, and failure to conduct necessary testing. Id. at 35076. 37. EPA, GUIDANCE FOR CALCULATING THE ECONOMIC BENEFIT OF NONCOMPLIANCE FOR A CIVIL PENALTY ASSESSMENT, ELR ADMIN. MATERIALS 35085 (Policies) (Nov. 5, 1984). 38. For a discussion of BEN by EPA's BEN model coordinator, see Libber, supra note 12. See also EPA, BEN: A MODEL TO CALCULATE THE ECONOMIC BENEFIT OF NONCOMPLIANCE, USER'S MANUAL (June 1990). 39. The "rule of thumb" method estimates economic benefit of noncompliance as "[five percent] per year of the delayed one-time capital cost for the period from the date the violation began until the date compliance was or is expected to be achieved." FRAMEWORK, supra note 35, at 35075. 40. Libber, supra note 12, at 5. There is a debate over the methodology used by BEN in calculating economic benefit. EPA maintains that the model is academically sound, but recognizes that there are other ways to calculate economic benefit. Libber, supra note 12, at 6. Other commentators have argued that the BEN methodology is flawed. See Robert H. Fuhrman, The Role of EPA's BEN Model in Establishing Civil Penalties, 21 ELR 10246 (May 1991); Philip Saunders Jr., Civil Penalties and the Economic Benefits of Noncompliance: A Better Alternative for Attorneys Than EPA's BEN Model, 22 ELR 10003 (Jan. 1992). 41. GENERAL POLICY, supra note 33, at 35083. 42. EPA, GUIDANCE ON DETERMINING A VIOLATOR'S ABILITY TO PAY A CIVIL PENALTY, ELR ADMIN. MATERIALS 35087 (Policies) (Dec. 16, 1986). EPA uses a computer model called ABEL to determine a violator's ability to pay. 43. GENERAL POLICY, supra note 33, at 35084. 44. Id. 45. FRAMEWORK, supra note 35. 46. For example, the penalty assessment matrix from the RCRA civil penalty policy is:
47. The table includes provisions that authorize EPA to assess a civil penalty in an administrative action or a judicial action. The table does not include provisions that authorize the Department of Justice to file a lawsuit to collect a civil penalty assessed by EPA. See, e.g., TSCA § 16, 42 U.S.C. § 2615, ELR STAT. TSCA 026. 48. Libber, supra note 12, at 5. 49. U.S. GEN. ACCOUNTING OFFICE, supra note 31. 50. Id. at 14-16. 51. Letter from Richard D. Morgenstern, EPA Acting Assistant Administrator, to Sen. John Glenn, Chair., Senate Committee on Governmental Affairs (Oct. 9, 1991). 52. EPA's Assistant Administrator for Enforcement issued a memorandum to the regions entitled "Documenting Penalty Calculations and Justifications in EPA Enforcement Actions" (Aug. 9, 1990). This memorandum "imposes stringent requirements on the regions to discuss the penalty in settlement packages and administrative cases, and fully document penalty decisions in case files." Letter from Richard D. Morgenstern to Sen. John Glenn, supra note 51, at 3. 53. EPA, RCRA CIVIL PENALTY POLICY, ELR ADMIN. MATERIALS 35273, 35274 (Policies) (Oct. 1990). 54. Leonard A. Miller, Tougher RCRA Penalty Policy Enacted, HAZARDOUS WASTE & TOXIC TORTS L. & STRATEGY, Mar. 1991, at 3. 22 ELR 10529 | Environmental Law Reporter | copyright © 1992 | All rights reserved |