oEPA
United States
Environmental Protection
Agency
Office of
Solid Wan* and
Emergency Response
DIRECTIVE NUMBER: 9900.1
TITLE: Final RCRA Civil Penalty Policy
APPROVAL DATE:
EFFECTIVE DATE: 5/8/84
ORIGINATING OFFICE: OWPE
H FINAL
D DRAFT
STATUS:
REFERENCE (other documents):
OSWER OSWER OSWER
'E DIRECTIVE DIRECTIVE Dl
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SERA
United States Environmental Protection Agency
Washington, DC 20460
OSWER Directive Initiation Request
Interim Directive Number
9900.1
Originator Information
Name of Contact Person
Virginia Steiner
Mail Code
Telephone Number
475-9329
Lead Office
D OERR
D OSW
D OUST
G3 OWPE
CD AA-OSWER
Approved for Review
Signature of Office Director
Date
Title
Final RCRA Civil Penalty Policy
Summary of Directive
Policy on assessing final penalties under RCRA for Subtitle C Violations
assessments include: Potential for Harm; economic benefit; adjustment factors;
non-monetary alternatives to penalties and hypotheticals,
monetary assessments
economic benefit
potential for harm
Penalty Policy RCRA
Type of Directive (Manual, Policy Directive, Announcement, etc.)
Policy
Status
D Draft
B Fina.
Does this Directive Supersede Previous Directive(s)? | | Yes | | No Does It Supplement Previous Directive(s)?
If "Yes" to Either Question. What Directive (number, title)
O New
LJ Revision
TT^
Yes
Review Plan
D AA-OSWER
D OERR
D OSW
D OUST
D OWPE
D Regions
D OECM
D OGC
D OPPE
D
Other (Specify)
This Request Meets OSWER Directives System Format
Signature of Lead Office Directives Officer
Signature of OSWER Directives Officer
Date
r-
Date
EPA Form 1315-17 (10-85)
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
wr IBM
MEMORANDUM
SUBJECT;
FROM:
TO:
Final RCRA Civil Penalty Policy
Courtney M. Price\
Assistant Administrator fq£ Enforcement
and Compliance
Lee M. Thomas _
Assistant Administrator for Sol'id "Waste
and Emergency Response
Addressees
Attached is the Final RCRA Civil Penalty Policy which is
being issued jointly by our Offices.
In response to comments received from both Headquarters
and Regional Offices on the January 31, 1984, Second Draft,
the following changes have been made:
0 the Potential for Harm :section has been rewritten
and new examples have been included to better
explain the concepts of major, moderate and minor;
0 the penalties listed in the matrix have been altered
slightly in order to fill the gaps between each cell;
0 the RCRA Civil Penalty Policy provides for the
calculation of the economic benefit of non-compliance.
The economic benefit formula included in the policy
takes into account two types of costs, avoided and
delayed. Definitions and examples of these terms
have been included. The IRS interest rates to be
used in the formula have been included for the
years 1980-1984;
0 the cut-off below which no economic benefit analysis
needs to be conducted has been reduced from $10,000
.to $2,500 because the lower figure is more appropriate
for the RCRA program;
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* various sections (e.g., adjustment factors)
have been altered or added to conform with the
Agen^ Civil Penalty Policy issued February 16,
1984;
j
0 non-monetary alternatives to penalties have
been removed as an option at this time;
0 the hypotheticals have been completely
revised and now include illustrations
of the economic benefit analysis and a
completed penalty computation worksheet.
In response to comments received during the RGRA
Enforcement Section Chiefs meeting held in March, we plan to
develop additional guidance on calculating the economic benefit
of noncompliance, including identifying sources of cost infor-
mation for various regulatory areas. In addition, the Agency
is endeavoring to construct a more sophisticated model that T
would calculate the economic benefit of noncompliance through -
the consideration of the following factors:
1) Capital (delayed) costs;
2) After-tax operating and maintenance (avoided) costs;
3) Period of noncompliance;
4) Penalty payment date relative to the period of non-
compliance;
5) Investment tax credit;
6) Tax benefits from depreciation, and
7) The firm's cost of capital or the rate of return the
firm uses to evaluate alternative investments.
The formula contained in today's policy should be considered as
an interim model to assist in calculating economic benefit. In
approximately six months, the Agency will provide a revised
version of the model that incorporates to the extent feasible
the above factors. We would appreciate your comments on the
practicability of a more sophisticated formula which encompasses
these factors.
The response to the drafts of the RCRA Civil Penalty
Policy was very favorable. A significant number of comments
were received from all of the Regions and several Headquarters
Offices. A considerable effort has been made to incorporate .
those comments where appropriate. We greatly appreciate your
involvement in the development of this important and long-
awaited policy.
Attachment
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FINAL
RCRA CIVIL PENALTY POLICY
May 8, 1984
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TABLE OF CONTENTS
Page
I. Introduction 1
II. Relationship to Agency Penalty Policy ....3
III. Summary of the Policy 3
IV. Administrative Record ..'. 5
V. Determination of Gravity-Based Penalty ^. 5
A. Potential for Harm 6
B. Extent of Deviation from Requirement 8
C. Penalty Assessment Matrix 10
VI. Multiple and Multi-Day Penalties 11
A. Assessing Multiple Penalties 11
B. Assessing Multi-Day Penalties 12
VII. Effect of Economic Benefit of Noncorapliance 12
A. Types of Economic Benefit 14
B. Calculation of Economic Benefit 14
VIII. Adjustment Factors and Effect of Settlement 16
A. Adjustment Factors 16
(1) Good faith efforts to comply/lack of good
faith (Degree of Cooperation/noncooperation).17
(2) Degree of willfulness and/or negligence 17
(3) History of noncompliance 18
(4) Ability to pay 20
. (5) Other unique factors 20
B. Effect of Settlement 21
IX. Appendix: Penalty Computation Worksheet 22
X. Hypothetical Applications of the Penalty Policy 24
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RCRA CIVIL PENALTY POLICY
I. INTRODUCTION
To respond to the problem of improper management of hazardous
waste, Congress amended the Solid Waste Disposal Act with the
Resource Conservation and Recovery Act (RCRA) of 1976. Although
the Act has several objectives, Congress1 overriding purpose in
enacting RCRA was to establish the statutory framework for a
national system that would ensure the proper management of
hazardous waste.
Section 3008(a) of RCRA, 42 U.S.C. S6928(a), provides that
if any person is in violation of a requirement of 'Subtitle C,
the Administrator of the Environmental Protection Agency (EPA)
may, among other options, issue an order requiring compliance
immediately or within a specified time period. Section 3008(c),
42 U.S.C. §6928(c), provides that any order issued may assess a
penalty, taking into account: '
0 the seriousness of the violation, and
0 any good faith efforts to comply with the applicable
requirements.
Section 3008(g) further provides EPA with the authority to assess
civil penalties of up to $25,000 per day of violation.
This document sets forth1the Agency's policy for assessing
administrative penalties under RCRA, 42 U.S.C. §6901 et seq. /
The purpose of the policy is to assure that RCRA civiT~penalties
are assessed in a fair and consistent manner; that penalties are
appropriate for the gravity of the violation committed; that
economic incentives for noncompliance with RCRA are eliminated;
that persons are deterred from committing RCRA violations; and
that compliance is achieved.
The policy provides internal guidelines to aid EPA
compliance/enforcement personnel in assessing appropriate
penalties, tt also provides a mechanism whereby compliance/
enforcement personnel may, within specified boundaries, exercise
discretion in negotiating administrative consent agreements and
orders, and otherwise modify the proposed penalty when special
circumstances warrant it. The policy will be supplemented as
necessary.
*/ Because there is no RCRA judicial civil penalty policy,
compliance/enforcement personnel may rely on this
administrative civil penalty policy in assessing penalties in
judicial cases.
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t.
This document does not discuss whether assessment of an
administrative civil penalty Is the correct enforcement
response to a particular violation. Rather, this document
focuses on determining what the proper civil penalty should be
once a decision has been made that a civil penalty is the proper
enforcement remedy to pursue. For guidance on when to assess
administrative penalties, consult the following:
8 Guidance on Developing Compliance Orders Under Section
3008 of RCRA, July 7, 1981;*'
0 RCRA, Section 3005(e); Continued Operation of .Hazardous
Waste Facilities by Owners or Operators Who Have
Failed to Achieve Interim Status, July 31, 1981;
0 Guidance on Developing Compliance Orders Under Section
3008 of RCRA; Enforcement of Ground-Water Monitoring
Requirements at Interim Status Facilities, January 22,
1 Oft1? . /
I x O fc ,
0 Guidance on Developing Compliance Orders Under Section
3008 of RCRA; Enforcement of the Financial Responsibility
Requirements Under Subpart H of 40 CFR Parts 264 and 265,
October 6, 1982;*/
0 Guidance on Developing Compliance Orders Under Section
3008 of RCRA; Failure to Submit and Submittal of
Incomplete Part B Permit Applications, September 9, 1983.
The discussions of specific penalty assessments set out in the
second and fifth guidances, above, are superseded by this docu-
ment. The portions of these guidances which do not address
specific penalty assessments remain operative.
The RCRA Civil Penalty Policy is immediately applicable and
should be used to calculate penalties for all RCRA administrative
actions instituted after the date of the policy, regardless of
the date of violation.
*/ These three guidances classify RCRA violations as either
Class I, II, or III, and state that Section 3008 compliance
orders should generally be issued to address Class I, Class II,
and continued or flagrant Class III violations. The Agency is in
the process of developing a RCRA enforcement response policy which
could change the current scheme for classifying and responding to
Violations. Compliance/enforcement personnel should continue to
rely on the existing guidance until the new enforcement response
policy is issued.
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*.
The procedures set out in this document are intended solely
for the guidance of government personnel. They are not intended
and cannot "be relied upon to create rights, substantive or proce-
dural, enforceable by any party in litigation with the United
States. The Agency reserves the right to act at variance with
this policy and to change it at any time without public notice.
II. RELATIONSHIP TO AGENCY PENALTY POLICY
The RCRA Civil Penalty Policy sets forth a system of penalty
assessment consistent with the established goals of the Agency's
new civil penalty policy which was issued on February 16, 1984.
These goals consist of:
0 Deterrence;
0 Fair and equitable treatment of the regulated
community; and
0 Swift resolution of environmental problems.
The RCRA penalty policy also adheres to the Agency policy's
framework for assessing civil penalties by:
•° Calculating a preliminary deterrence amount
consisting of a gravity component;
0 Determining any economic benefit of noncompliance;
and ;
0 Applying adjustment factors to account for
differences between cases.
III. SUMMARY OF THE POLICY
The penalty calculation system consists of (1) determining a
gravity-based penalty for a particular violation, (2) considering
economic benefit of noncompliance where appropriate, and
(3) adjusting the penalty for special circumstances. Two
factors are considered in determining the gravity-based penalty:
0 potential for harm; and
0 extent of deviation from a statutory or regulatory
requirement.
These two factors constitute the seriousness of a violation
under RCRA, and have been incorporated into the following penalty
matrix from which the gravity-based penalty will be chosen:
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MATRIX
Extent of Deviation from Requirement
Potential
for
Harm
MAJOR
MODERATE
MINOR
MAJOR
$25,000
to
20,000
$10,999
to
8,000
$2,999
to
1,500
MODERATE
$19,999
to
15,000
$7,999
to
5,000
$1,499
to
500
MINOR
$14,999
to
U.OOO
$4,999
to
3,000
$499
to
100
Where a company has derived significant savings by its
failure to comply with RCRA requirements, the amount of economic
benefit from noncompliance gained by the violator will be
calculated and added to the gravity-based penalty. A formula
for computing economic benefit is included.
After determining the appropriate penalty based on gravity
and, where appropriate, economic benefit, the penalty may be
adjusted upwards or downwards to reflect particular circumstances
surrounding the violation. The factors that should be considered
are:
0 . Good faith efforts to comply/lack of good faith;
0 Degree of willfulness and/or negligence;
0 History of noncompliance;
0 Ability to pay; or
0 Other unique factors.
These factors (with the exception of factors which increase the
penalty such as history of noncompliance) generally will be
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fc.
considered after proposing the penalty in the complaint, i.e.,
during the settlement stage, jjpwever, the Regi_on8_haye_ the
discretion 'to apj> ly the adjustment fa c tor a wh en_ d et e rm i n i ng_ the
initial .pejaJLtLy,,-. if__ttie_ 1 nfo'rmatiori supporting adjustment: ta"
available.
The policy also discusses the appropriate assessment of
multiple and multi-day penalties.
A detailed discussion of the policy follows.- In addition,
this document includes a few hypothetical cases where the step-
by-step assessment of penalties is illustrated. The steps
included are choosing the correct penalty cell on the matrix,
calculating the economic benefit of noncompliance, where appro-
priate, and adjusting the penalty assessment before and after
issuance of the complaint.
IV. ADMINISTRATIVE RECORD
In order to support the penalty proposed in the complaint,
compliance/enforcement personnel must include in the case file an
explanation of how the proposed penalty amount was calculated.
The case file must also include a justification of any adjust-
ments made after issuance of the complaint. In. ongoing,.cases_,
the assessment rationale would be exempt from .the.mandatory.
disclosure requirements of the Freedom of Information Act,
~5 y.S'.C." 552, because producing such records would interfere _
with enforcement proceedings,;40 CFR S2.118(a)(7). Nevertheless,
the Agency may elect to release penalty information after a com-
plaint has been issued. Once an enforcement action__has been
completed, the justification of the penalty assessment would.
no...longer be exempt from disclosure..
A penalty computation worksheet to be included in the case
file is attached. (See: Appendix.)
V. DETERMINATION OF GRAVITY-BASED PENALTY
RCRA Section 3008(c) states that the seriousness of the
violation must be taken into account in assessing penalties. The
gravity-based penalty is determined according to the seriousness
of the violation. The seriousness of a violation is based on two
factors which are used to assess the appropriate gravity-based
penalty:
0 potential for harm; and
0 extent of deviation from a statutory or regulatory
requirement.
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A~, Potential for Harm
The R£RA requirements were promulgated in order to prevent
harm to human health and the environment. Thus, noncompliance with
any RCRA requirement could result in a situation where there is a
potential for harm. The potential for harm resulting from a viola-
tion may be determined by.
0 the likelihood of exposure to hazardous waste posed
by noncompliance, or
0 the adverse effect noncompliance has on the statu-
tory or regulatory purposes or procedures for
implementing the RCRA program.
By answering questions like the following, compliance/
enforcement personnel can determine the likelihood of exposure
in a particular situation:
0 What is the quantity of waste? r
'!'
0 Is human life or health potentially threatened
by the violation?
0 Are animals potentially threatened by the
violation?
0 Are any environmental media potentially threatened
by the violation?
There may be violations where the likelihood of exposure
resulting from the violation is small, difficult to quantify, or
nonexistent, but which nevertheless may disrupt the RCRA program
(e_.£^, failure to comply with financial requirements). This
disruption may also present a potential for harm to human health
or the environment, due to the adverse effect noncompliance can
have on the statutory or regulatory purposes or procedures for
implementing the RCRA program.
For each of the above considerations -- likelihood of exposure
and adverse effect on implementing the RCRA program -- the emphasis
is placed on the potential harm posed by a violation rather than on
whether harm actually occurred. The presence or absence of direct
harm in a noncompliance situation is something over which the vio-
lator may have no control. Such violators should not be rewarded
by assessing lower penalties when the violations do not result in
actual harm.
Compliance/enforcement personnel should evaluate whether the
potential for harm is major, moderate, or minor in a particular
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t.
situation. The degree of potential harm represented by each
category i-s* defined as :
0 MAJOR (1) violation poses a substantial likelihood
of exposure to hazardous waste; and/or
(2) the actions have or may have a substantial
adverse effect on the statutory or regulatory purposes
or procedures for implementing the RCRA program.
0 MODERATE (1) the violation poses a significant likeli-
hood of exposure to hazardous waste; and/or
(2) the actions have or may have a significant
adverse effect on the statutory or regulatory purposes
or procedures for implementing the RCRA program.
0 MINOR (1) the violation poses a relatively low like-
lihood of exposure to hazardous waste; and/or
(2) the actions have or may have an adverse
effect on the statutory or regulatory purposes or
procedures for implementing the RCRA program.
The following examples illustrate the difference between
major, moderate, and minor potential for harm.
Example 1 - Major Potential for Harm
40 CFR §265.143 requires that owners or operators of hazardous
waste facilities establish financial assurance for closure of their
facilities. The purpose of this requirement is to assure that
funds will be available for proper closure of facilities. Under
§265.l43(a)(2), the wording of a trust agreement establishing
financial assurance for closure must be identical to the wording
specified in 40 CFR S264.151(a)(1). Failure to word the trust
agreement as required may appear inconsequential. However, even a
slight alteration of the language could change the legal effect of
the financial instrument so that it would no longer satisfy the
intent of the regulation. When the language of the agreement
differs from the requirement such that funds would not be available
to close the facility properly, the lack of identical wording
would have a substantial adverse effect on the regulatory scheme.
This violation would be assigned to the major potential for harm
category.
Example 2 - Moderate Potential for Harm
Under 40 CFR §262.34, a generator may accumulate hazardous
waste on-site for 90 days or less without having interim status
or a permit provided that among other requirements, each container
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or tank of waste is labeled or marked.clearly with the words,
"Hazardous Waste." In a situation where a. generator is storing
compatible waste, has labeled half of its containers, and has
clearly identified its storage area as a hazardous waste storage
area, there is some indication that the unlabeled containers
hold hazardous waste. However, because there is a chance that
the unlabeled containers could be removed from the storage area,
and that without labels the Agency would not know if the waste
had been stored for more than 90 days, this situation poses a
significant likelihood of exposure to hazardous waste (although
the likelihood is not as great as it would be if neither the
storage area nor any of the containers were marked). The
moderate potential for harm category would be appropriate in
this case. "
Ejcam£le_jj^ ^ Minor Potential for Harm
Owners or operators of hazardous waste facilities must,-under
40 CFR §265.53, submit a copy of their contingency plans to all
local police departments, fire departments, hospitals, and State
and local emergency response teams that may be called upon to
provide emergency services. If a facility has a complete contin-
gency plan, including a description of arrangements agreed to by
local entities to coordinate emergency services (§265.52), but
failed to submit copies to all of the local entities, there is a
potential for harm. However, because a complete plan exists and
arrangements with all of the local entities have been agreed to,
the likelihood of exposure and adverse effect on the implementa-
tion of RCRA would be relatively low. The minor potential for
harm category would be appropriate in this situation.
B. Extent of Deviation from Requirement
The "extent of deviation" from RCRA or its regulatory
requirements relates to the degree to which the violation renders
inoperative the requirement violated. In any violative situation,
a range of potential noncompliance with the subject requirement
exists. In other words, a violator may be substantially in com-
pliance with-the provisions of the requirement or it may have
totally disregarded the requirement (or a point in between). As
with potential for harm, extent of deviation may be either major,
moderate, or minor. In determining the extent of deviation, the
following definitions should be used:
0 MAJOR the violator deviates from the requirements of
tfKe regulation or statute to such an extent that there is
substantial noncompliance.
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*•
0 MODERATE the violator significantly deviates from
tlpT requirements of the regulation or statute but
some of the requirements are implemented as intended.
0 MINOR the violator deviates somewhat from the
regulatory or statutory requirements but most of the
requirements are met.
A few examples will help demonstrate how the evaluation
procedure described above is used to select a category:
Example 1 - Closure Plan
40 CFR §265.112 requires that owners or operators of .
treatment, storage, and disposal facilities have a written
closure plan. This plan must identify the steps necessary to
completely or partially close the facility at any point during
its intended operating life and to completely close the facility
at the end of its intended operating life. Possible violations
of the requirements of this regulation range from having no
closure plan at all to having a plan which is somewhat inadequate
(e.g., failure to include a schedule for final closure, while
complying with the other requirements). These violations might
be assigned to the "major" and "minor" categories respectively.
A violation between these extremes might involve failure to
modify a plan for increased decontamination activities as a
result of a spill on-site.
Example 2_^_ Failure to Maintain Adequate Security
40 CFR §265.14 requires that owners or operators of
treatment, storage and disposal facilities take reasonable care
to keep unauthorized persons from entering the active portion of
a facility where injury could occur. Generally, a physical bar-
rier must be installed and any access routes conscientiously
controlled.
The range of potential noncompliance with the security
requirements- is quite broad. In a particular situation, the
violator may prove to have totally failed to supply any security
systems. Total noncompliance with regulatory requirements such
as this would result in classification into the major category.
In contrast, the violation may consist of a small oversight such
as failing to lock an access route on a single occasion. Obviously,
the degree of noncompliance in the latter situation is less signi-
ficant. With all other factors being equal, the less significant
noncompliance should draw a smaller penalty assessment. In the
matrix system this is achieved by choosing the minor category.
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C. Penalty Assessment Matrix
Each of the above factors—potential for harm and extent
of deviation from a requirement--forms one of the axes of the
penalty assessment matrix. The matrix has nine cells, each
containing a penalty range. The specific cell is chosen after
determining which category (major, moderate, or minor) is appro-
priate for the potential for harm factor, and which category is
appropriate for the extent of deviation factor. The complete
matrix is illustrated below: _,
Extent of Deviation from Requirement
Potential
for
Harm
MAJOR
MODERATE
MINOR
MAJOR
$25,000
to
20,000
$10,999
to
8,000
$2,999
to
1,500
MODERATE
$19,999
to
15,000
$7,999
to
5,000
$1 ,499
to
500
MINOR
$14,999
to
11,000
$4,999
to
3,000
$499
to
100
The lowest cell (minor potential for harm/minor extent of
deviation) contains a penalty range from $100 to $499. Provi-
sion for this low range of penalties has been made because the
assessment of low penalties has proven to be an effective com-
pliance tool. The highest cell (major potential for harm/major
extent of deviation) is limited by the maximum statutory penalty
allowance of $25,000 per day of violation.
The selection of the exact penalty amount within each cell
is left to the discretion of compliance/enforcement personnel in
any given case. Compliance/enforcement personnel should be
careful to consider the seriousness of the violation only in
selecting the penalty amount within the range. The reasons the
violation was committed, the intent of the violator, and other
factors related to the violator are not considered at this point;
they will be considered at the adjustment stage.
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VI.. MULTIPLE AND MULTI-DAY PENALTIES
A. Assessing Multiple Penalties
In certain situations, EPA may find that a particular firm
has violated several RCRA regulations. A separate penalty should
be assessed for each violation that results from an independent
act (or failure to act) by the violator and is substantially
distinguishable from any other charge in the complaint for which
a penalty is to be assessed. A given charge is independent of,
and substantially distinguishable from, any other charge when it
requires an element of proof not needed by the others. In many
cases, violations of different sections of the. regulations consti-
tute independent and substantially distinguishable Violations.
For example, failure to implement a groundwater monitoring^pragram^-
..140 CFR §265.90, and failure to have a written closure plan. 40 CFR
J265.112, are violations which result from d.ifferent_..sets_Qf
^circumstances and which pose separate risks,. Ini the case of^
..firp.which has violated both of these sections of the regulations,_
_a_sep_arate count should be charged for each violation. _For penalty
_purposes, each of the violations should be assessed separately and
.the amounts totalled..
It is also possible that different violations of the same
section of the regulations could constitute independent and sub-
stantially distinguishable violations. For example, in the
case of a firm which has open containers of hazardous waste in
its storage area, 40 CFR §265.173(a), and which also ruptured
different hazardous waste containers while moving them on site,
40 CFR §265.173(b), there are two independent acts. The viola-
tions result from two sets of circumstances (improper storage
and improper handling) and pose distinct risks. In this situa-
tion, two counts with two separate penalties would be appropriate.
For penalty purposes, each of the violations should be assessed
separately and the amounts totalled.
Multiple penalties also should be assessed where one company
has violated the same requirement in substantially different
locations. An example of this type of violation is failure to
clean up discharged hazardous waste during transportation, 40 CFR
§263.31. A transporter who did not clean up waste discharged in
two separate locations during the same trip should be charged with
two counts. In these situations, the separate locations present
separate and distinct risks to public health and the environment.
Thus, separate penalty assessments are justified.
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*.
In general, multiple penalties are not appropriate where the
violations^re not independent or substantially distinguishable.
Where a charge derives from or merely restates another charge, a
separate penalty is not warranted. If an owner/operator of a
storage facility failed to specify in his waste analysis plan the
parameters for which each hazardous waste will be analyzed, 40 CFR
$265.13(b)(1), and failed to specify the frequency with which the
initial analysis of the waste will be repeated, 40 CFR S265.13(b)
(4), he has violated the requirement that he develop an adequate
waste analysis plan. The violations result from.the same factual
event (failure to develop an adequate plan), and pose one risk
(storing waste improperly due to inadequate analysis). In this
situation, both sections violated should be cited, in the complaint,
but one penalty, rather than two, should be assessed. The fact
that two separate sections were violated will be taken into account
in choosing higher "potential for harm" and "extent of deviation"
categories on the penalty matrix.
B. Assessing Multi-Day Violations
RCRA provides EPA with the authority to assess civil penalties
of up to $25,000 per violation per day, with each day that non-
compliance continues to be assessed as a separate violation.
Multi-day penalties should generally be calculated in the case of
continuing egregious violations. However, per day assessment may
be appropriate in other cases.
In the case of continuing violations, the Agency has the
authority to calculate penalties based on the number of days of
violation since the effective date of the requirement and up to
the date of coming into compliance. The gravity-based penalty
derived from the penalty matrix should be multiplied by the number
of days of violation.
VII. EFFECT OF ECONOMIC BENEFIT OF NONCOMPLIANCE
The new Agency civil penalty policy mandates the consideration
of the economic benefit of noncorapliance to a violator when penal-
ties are assessed. In accordance with the goals of the Agency
policy, the RCRA Civil Penalty Policy sets forth a system for
calculating the economic benefit of noncompliance with RCRA
requirements.
An "economic benefit component" should be calculated and
added to the gravity-based penalty when a violation results in
significant economic benefit to the violator. The following are
examples of regulatory areas which should undergo an economic
benefit analysis:
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* ^ Groundwater monitoring
0 Financial requirements
0 Closure/post-closure
0 Waste determination
0 Waste analysis
0 Clean-up of discharge
0 Part B submittals ...:••
For many RCRA requirements, the economic benefit of
noncompliance may be difficult to quantify or relatively insig-
nificant. Examples of these types of violations are failure
to submit a report or failure to maintain records. In general,
compliance/enforcement personnel need not calculate, the benefit
component where it appears that the amount of that component is
likely to be less than $2,500. This figure is more appropriate
for the RCRA program than the $10,000 cut-off in the Agency
policy because of the amount of economic benefit associated with
many RCRA violations.
It is generally the Agency's policy not to settle cases
(i.e., the penalty amount) for an amount less than the economic
benefit of noncompliance. However, the new Agency civil penalty
policy does set out three general areas where settling the total
penalty amount for less than the economic benefit may be appro-
priate. The RCRA policy has added a fourth exception for cases
where ability to pay is a factor. The four exceptions are as
follows:
0 the economic benefit component consists of an
insignificant amount (i.e., less than $2,500);
0 • there are compelling public concerns that would
not be served by taking a case to trial;
8 it is highly unlikely that EPA will be able" to
recover the economic benefit in litigation;
0 the company has documented an inability to pay the
total proposed penalty.
If a case is settled for less than the economic benefit
component, a justification must be included in the case file.
-------
A. Types of Economic Benefit
Compliance/enforcement personnel should examine two types of
economic benefit from noncompllance in determining the economic
benefit component:
0 Benefit from delayed costs; and
0 Benefit from avoided costs.
Delayed costs are expenditures which have been deferred by
the violator's failure to comply with the requirements. The
violator eventually will have to spend the money in order to
achieve compliance. Delayed costs are the equivalent of capital
costs. Examples of violations which result..in_.say.inga._^rom.
delayed costs are:
0 Failure to install ground-water monitoring ~
equipment;
0 Failure to submit a Part B permit application;
and
0 Failure to develop a waste analysis plan.
Avoided costs are expenditures which are nullified by the
violator's failure to comply. These costs will never be incurred.
Avoided costs are the equivalent of operating and maintenance
costs. Examples of violations which result in savings from avoided
costs are:
0 Failure to perform annual and semi-annual
ground-water monitoring sampling and analysis;
0 Failure to follow the approved closure plan in
removing waste from a facility, where reremoval
is not possible; and
0 • Failure to perform waste analysis before adding
waste to tanks, waste piles, incinerators, etc.
B. Calculation of Economic Benefit
Because the savings that are derived from delayed costs differ
from those derived from avoided costs, the economic benefit from
delayed and avoided costs are calculated in a different manner.
For avoided costs, the economic benefit equals the cost of complying
with the requirement, adjusted to reflect income tax effects on the
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- 15 -
*•
company. For delayed costs, the economic benefit does not equal
the cost of ^complying with the requirements, since the violator
will eventually have to spend the money to achieve compliance.
The economic benefit for delayed costs consists of the amount
of interest on the unspent money that reasonably could have
been earned by the violator during noncompliance. If noncompli-
ance has continued for more than a year, compliance/enforcement
personnel should calculate the economic benefit of both the
delayed and avoided costs for each year.
The following formula is provided to help calculate the
economic benefit component:
Economic
Benefit = Avoided Costs (1-T) + (Delayed Costs x Interest Rate)
In the above formula, T represents the firm's marginal tax
rate. In the absence of specific information regarding the "
violator's tax status, compliance/enforcement personnel should
assume that the company's marginal tax rate is 46%, the Federal
corporate tax rate for firms whose before-tax profits are
greater than $100,000. Thus, compliance/enforcement personnel
should assume that T = .46.
Compliance/enforcement personnel should calculate interest by
using the interest rate charged by the Internal Revenue Service
(IRS) for delinquent accounts. The IRS interest rates for 1980
through 1984 are as follows:
2/1/80 - 1/31/82 12%
2/1/82 - 12/31/82 20%
1/1/83 - 6/30/83 16%
7/1/83 - 6/30/84 11%
Interest rates for years other than those listed above are
available from your local IRS office.
The economic benefit formula provides a reasonable estimate
of the economic benefit of noncompliance. If a respondent
believes that the economic benefit it derived from noncompliance
differs from the estimated amount, it should present information
documenting its actual savings to compliance/ enforcement person-
nel at the settlement stage.
See Section X of this document for hypothetical applications
of the economic benefit formula. The Agency plans to develop
additional guidance on calculating the economic benefit of
noncompliance, including identifying sources of cost information
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.-:,..-- - L6 -
* *. " • •
' *' '
for various regulatory areas, and providing an Agency methodology
for computing economic benefit. For this reason, the economic
benefit formula set out in this document is for interim use
only.
VIII. ADJUSTMENT FACTORS AND EFFECT OF SETTLEMENT
A. Adjustment Factors
As mentioned in Section V of this document, the seriousness
of the violation is considered in determining the gravity-based
penalty. The reasons the violation was committed, the intent of
the violator, and other factors related to the violator are not
considered in choosing the appropriate penalty from the matrix.
However, any system for calculating penalties must have enough
flexibility to make adjustments that reflect legitimate dif-
ferences between similar violations. RCRA §30Q8(c) states that
in assessing penalties, EPA must take into account any good _
faith efforts to comply with the applicable requirements. The
new Agency civil penalty policy sets out several other adjust-
ment factors to consider. These include the degree of willful-
ness and/or negligence, history of noncomplianrp. ^M11 fry ti
pay, and other unique factors.
The adjustment factors can increase, decrease or have no
effect on the penalty amount to be paid by the violator. Note,
however, that no upward adjustment can result in a penalty greater
than the statutory maximum of $25,000 per day of violation. Adjust-
ment of a penalty may take place before issuing the proposed penalty
in the complaint, or after assessment of the proposed penalty (as
part of the settlement process). Most factors, in practice, will
be considered at the settlement stage with the burden of proof for
mitigation on the respondent. However, penalties may be adjusted
before determining the proposed assessment if the necessary
information is available. Compliance/enforcement personnel should
use whatever information on the violator (and violation) is avail-
able at the time of initial assessment. Issuance of a complaint
should not be delayed in order to collect additional adjustment
information. • The history of noncompliance factor.should be used
only to increase a penalty; .the .ability to pay factor shoujyi
b_e_ua.e.cL_ojiily. .to decrease a penalty^ Justification""for adjustments
must ~b~e~Tneluded in the case file.
In general, these adjustment factors will apply only to the
gravity-based penalty derived from the matrix, and not to the
economic benefit component if calculated. (See Section VII of this
document for exceptions.)
Application of the adjustment factors is cumulative, i.e.,
more than one factor may apply in a case. For example, if the
base penalty derived from the matrix is $9,500, and upward
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•..-..- - 17 -
*•
adjustments of 10% will be made for both history of noncompliance
and degree of willfulness and/or negligence, the total adjusted
penalty woufd be $11,400 ($9,500 + 20%).
The following discussion of the factors to consider is
consistent with the new Agency civil penalty policy. For the
purposes of simplification, the percentage ranges for the adjust-
ment factors in the Agency policy have been altered slightly for
use in the RCRA Civil Penalty Policy.
At this stage of the RCRA program it is difficult to
determine what types of non-monetary alternatives or alternative
payments would foster the goals of the program. As compliance/
enforcement personnel gain more experience in enforcing RCRA,
use of these alternatives may prove to be advantageous to the
public interest. Until such time, these alternatives, as set
forth in the new Agency civil penalty policy, are not an option
under the RCRA Civil Penalty Policy.
(1) Good faith efforts to comply/lack of good faith
(Degree of cooperation/noncooperation)
Under S3008(a) of RCRA, good faith efforts to comply with
the requirements must be considered in assessing a penalty.
Good faith can be manifested by the violator promptly reporting
its noncompliance. Assuming such self-reporting is not required
by law, this behavior can result in mitigation of the penalty. .
Prompt correction of environmental problems also can constitute
good faith. Lack of good faith, on the other hand, can result
in an increased penalty. .Compliance./enforcement personnel hayje
discretion to make adjustments up or down by as much as 25% .of.
the gravity-based penalty. Adjustments may be made in the 26%-40%
range of the gravity-based penalty, but only in unusual circum^
stances. No downward adjustment should be made if the good
faith efforts to comply primarily consist of coming into
.cojnpliance_..
'(2) Degree of willfulness and/or negligence
•
Section 3008(d) of RCRA provides for criminal penalties
for "knowing" violations. However, there may be instances of
culpability which do not meet the criteria for criminal action.
In cases where administrative civil penalties are sought for
actions of this type, the penalty may be adjusted upward for
willfulness and/or negligence. Conversely, although RCRA is a
strict liability statute, there may be instances where penalty
mitigation may be justified based on the lack of willfulness
and/or negligence.
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- 18 -
t.
In assess ing the degree of willfulness and/or negligence,
the following factors should be considered, as well as any others
deemed apropriate:
0 how much control the violator had over the events
constituting the violation;
0 the forseeability of the events constituting the
violation;
0 whether the violator took reasonable precautions
against the events constituting the violation;
0 whether the violator knew or should have known of
the hazards associated with the conduct;
0 whether the vi o la t or_knew of the legal requirement
which was violated. ~
-
It_should be noted that_.thi.s__las.t_f.acjtflr, lack of
of thV.~l.egal. .requirement , ahould ngyer^be used aa a. baa la to
r¥duce._jciie_.pjenaLty . To do so would encourage ignorance of the
law. Ra.thejT, know ledge, of .the. .law shguld_sej:ye_pjily_tLQ_eiihan.Cja
the penalty..
The amount of control which the violator had over how quickly
the violation was remedied also is relevant in certain circum-
stances. Specifically, if correction of the environmental problem
was delayed by factors which the violator can Clearly show were
not reasonably foreseeable and out of his control, the penalty
may be reduced.
Subject to the above guidance, compliance/enforcement
personnel have discretion in all cases to make adjustments up or
down by as much as JL5JL_o_f-_the_ gravity-based penalty-. Adjustments
..in the 26-40% range may be made, but only in unusual circumstances^
(3) History of noncompliance (upward adjustment only)
Where a party previously has violated RCRA or State hazardous
waste law at the same or a different site, this is usually clear
evidence that the party was not deterred by the previous enforce-
ment response. Unless the previous violation was caused by
factors entirely out of the control of the violator, this is an
indication that the penalty should be adjusted upwards.
Some of the factors the compliance/enforcement personnel
should consider are the following:
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*
- 19 -
- how similar the previous violation was;
- ••• .-•* how recent the previous violation was;
0 the number of previous violations;
* violator's response to previous violation(s)
in regard to correction of problem.
A violation generally should be considered "similar" if the
Agency's or State's previous enforcement' response should have
alerted the party to a particular type of compliance problem. A
prior violation of the same or a different RCRA or State requirement
would constitute a similar violation.
For purposes of the section, a "prior violatiojil* includes
any act or omission for which a formal enforcement response has
occurred (e.g. , EPA or State noti_ce_Qf_ violation. warning letter.,
complaint^ consent agreement, final order, or consent decree).
It also includes any act or omission for which the violator has
previously been given written notification, however informal,.
that the Agency believes a~ violation exists.
In the case of large corporations with many divisions or
wholly-owned subsidiaries, it is sometimes difficult to deter-
mine whether a previous instance of noncompliance should trigger
the adjustments described in this section. New ownership often
raises similar problems. In making this determination, compliance/
enforcement personnel should ascertain who in the organization had
control and oversight responsibility for compliance with RCRA or
other environmental laws. In those cases the violation will be
considered part of the compliance history of that regulated party.
In general, compliance/enforcement personnel should begin
with the assumption that if the same corporation was involved, the
adjustments for history of noncompliance should apply. In addi-
tion, compliance/enforcement personnel should be wary of a party
changing operators or shifting responsibility for compliance to
different persons or entities as a way of avoiding increased
penalties. The Agency may find a consistent pattern of noncom-
pliance by many divisions or subsidiaries of a corporation even
though the facilities are at different geographic locations.
This often reflects, at best, a corporate-wide indifference to
environmental protection. Consequently, the adjustment for
history of noncompliance probably should apply unless the violator
can demonstrate that the other violating corporate facilities are
independent.
Subject to the above guidance, compliance/enforcement
personnel have discretion to make upward adjustments by as much
as 25% of the gravity-based penalty. Adjustments for this factor
in the 26-40% range may be made, "but only in unusual circumstances.
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- 20 -
t.
(4) Ability to pay (downward adjustment only)
The Agency generally will not request penalties that are
clearly beyond the means of the violator. Therefore EPA should
consider the ability of a violator to pay a penalty. At the
same time, it is important that the regulated community not see
the violation of environmental requirements as a way of aiding a
financially troubled business. EPA reserves the option, in
appropriate circumstances, to seek penalties that might put a
company out of business. It is unlikely, for example, that EPA
would reduce a penalty where a facility refuses to correct a
serious violation. The same could be said for a violator with a
long history of previous violations. That long history would
demonstrate that less severe measures are ineffective.
The bur_den_to demonstrate inabiHty^p_p^y_res_tjB___on_the-
respondent, as it does with "any mitigating circumstances. Thus,
a company's inability to pay usually will be considered at the
settlement stage, and then only if the issue is raised by the
respondent. If the respondent fails to provide sufficient infor-
mation, then compliance/enforcement personnel should disregard
this factor in adjusting the penalty. The National Enforcement
Investigations Center (NEIC) has developed the capability to
assist the Regions in determining a firm's ability to pay.
When it is determined that a violator cannot afford the
penalty prescribed by this policy, or that payment" of all or a
portion of the penalty will preclude the violator from achieving
compliance or from carrying out remedial measures which the
Agency deems to be more important than the deterrence effect of
the penalty (e.g., payment of penalty would preclude proper
closure/post-closure), the following options may be considered:
0 Consider a delayed payment schedule. Such a
schedule might even be contingent upon an increase
in sales or some other indicator of improved
business.
0 . Consider an installment payment plan with interest.
0 Consider straight penalty reductions as a last
recourse.
The amount of any downward adjustment of the penalty is
dependent on the individual financial facts of the case.
(5) Other unique factors
This policy allows an adjustment for unanticipated factors
which may arise on a case-by-case basis. Compliance/ enforcement
personnel have discretion to make adjustments by as much as _25% of
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- 21 -
:<-."""' '" •
• s"'-.' »-
the gravity-baaed penalty for such reasons. Adjustments for
these factory in the 26-40% range may be made, but only In unusuaL
clrcumstangjejLj
B. Effect of Settlement
The Consolidated Rules of Practice for the assessment of
civil penalties incorporates the Agency policy of encouraging
settlement of a proceeding at any time as long as the settlement
is consistent with the provisions and objectives of RCRA and its
regulations, 40 CFR §22.18(a). If the respondent believes that
it is not liable or that the circumstances of its case justify
mitigation of the penalty proposed in the complaint, the Rules
of Practice allow it to request a settlement conference.
In many cases, the fact of a violation will be less of an
issue than the amount of the penalty assessed. The burden always
is on the violator to justify any mitigation of the assessed
penalty. The mitigation, if any, of the penalty assessed in the
complaint should follow the guidelines in the Adjustment Factors
section of this document. The consent agreement must include.a
general statement of the reasons for mitigating the proposed
penalty. Specific percentage reductions for individual factors
need not be included.
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IX. APPENDIX
PENALTY COMPUTATION WORKSHEET
Company Name:
Regulation Violated
Asessments for each violation should be determined
on separate worksheets and totalled.
(If more space is needed, attach separate sheet.)
Part I - Seriousness of Violation Penalty'
1. Potential for Harm:
2. Extent of Deviation:
3. Matrix Cell Range: .
Penalty Amount Chosen:
Justification for Penalty
Amount Chosen:
4. Per-Day Assessment:
Part II - Penalty Adjustments
Percentage Change*
Dollar Amount
1. Good faith efforts
to comply/lack of
good faith:
2. Degree of willfulness
and/or negligence:
3. History of
noncompliance:
4. Other unique factors:
5. Justification for
Adjustments:
* Percentage adjustments are applied to the dollar
amount calculated on line 4, Part I.
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PENALTY COMPUTATION WORKSHEET (cont.)
6. Adjusted Per-day
Penalty (Line 4,
Part I + Lines
1-4, Part II):
7. Number of Days of
Violation:
8. Multi-day Penalty
(Number of days x
Line 6, Part II):
9. Economic Benefit of
Noncompliance:
Justification:
10. Total (Lines 8+9, Part II)
11. Ability to Pay Adjustment:
Justification for
Adjustment:
12. Total Penalty Amount
(must not exceed $25,000
per day of violation):
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X. HYPOTHETICAL APPLICATIONS OF THE PENALTY POLICY
.••»
(l).(A) Violation: By notification dated August 15, 1980, Company
A informed EPA that it conducts activities at its facility
involving hazardous waste. In its notification, Company A
indicated that it only generated hazardous waste. A 1983
inspection revealed that Company A was also storing
hazardous waste, and had been since 1979. Company A had
not filed a Part A Permit Application and was thus operating
without a permit or interim status, in violation.of §3005
of RCRA. In addition, Company A was in violation of S3010
of RCRA by failing to notify EPA that it was storing
hazardous waste. Failure to notify and operating without a
pernit or interim status constitute independent and substan-
tially distinguishable violations. Each violation should
be assessed separately and the amounts totalled. The
inspectors indicated that Company A's storage area was
secure and that, in general, the facility was well managed.
However, there were a number of violations of the interim
status standards. The complaint issued to Company A
assessed penalties for the Part 265 violations as well as
the statutory violations. This example will discuss the
§3005 and §3010 violations only.
(B) Seriousness: (i) Failure to Notify: Potential for Harm.
Moderate - EPA was prevented from knowing that hazardous
waste was being stored at the facility. However, because
Company A notified EPA that it was a generator, EPA did
know that hazardous waste was handled at the facility.
The violation may have a significant adverse effect on the
statutory purposes or procedures for implementing the RCRA
program. Extent of Deviation. Moderate - although
Company A did not notify EPA that it stored hazardous waste,
it did notify the Agency that is was a generator. Company A
significantly deviated from the requirement, but part of
the requirement was implemented as intended, (it) Operating
without a permit. Potential for Harm. Moderate - although
Company A was operating without a permit or interim status,
its facility generally was well managed. However, there
were a number of Part 265 violations. This situation may
pose a significant likelihood of exposure which may have a
significant adverse effect on the statutory purposes for
implementing the RCRA program. Extent of Deviation.
Major - substantial noncompliance with the requirement
because Company A did not notify EPA that it stored
hazardous waste, and did not submit a Part A.
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- 25 -
*.
(C) Gravity-based Penalty: (i) Failure to notify. Moderate
potential for harm and moderate extent of deviation lead
one to the cell with the range of $5,000 to $7,999. The
mid-point is $6,500. (ii) Operating without a permit.
Moderate potential for harm and major extent of deviation
lead one to the cell with the range of $8,000 to $10,999.
The midpoint is $9,500. (iii) Total penalty: $6,500 +
$9,500 - $16,000.
(D) Settlement adjustment: Company A raised and documented
that it had cash flow problems. It did not convince EPA
that the penalty should be mitigated. An installment plan
was accepted by both parties as a means of payment. Penalty
remained at $16,000. : ,
(2)(A) Violation: Company B failed to prevent unknowing entry of
persons onto the active portion of its surface impoundment
facility. The fence surrounding the area had several holes.
40 CFR 5265.14.
(B) Seriousness: Potential for Harm. Major - some children
already have entered the area; potential for harm due to
exposure to waste may be substantial because of the lack of
adequate security around the site. Extent of Deviation.
Moderate - there is a fence, but it has holes.Significant
degree of deviation, but part of the requirement was imple-
mented.
(C) Gravity-based Penalty: Major potential for harm and
moderate extent of deviation yield the penalty range of
$15,000 to $19,999. The midpoint is $17,500.
(D) Pre-complaint Adjustment: During the inspection of the
facility, EPA discovered that the operator of Company B
had been made aware of the above occurrence more than
three months earlier, but had failed to repair the fence
or increase security in that area. The penalty is
adjusted upwards 25% for willfulness and/or negligence.
$17,500.+ $4,375 - $21,875. [Penalty calculation using
the Penalty Computation Worksheet follows this hypothetical.]
(E) Settlement Adjustment: Company B gave evidence at
settlement of labor problems with security officers and
reordering and delivery delays for a new fence. Company
B was very cooperative and stated that a new fence
had been installed after issuance of the complaint and that
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- 26 -
security would be provided for by another company in the
near future. Even though the company was very cooperative,
its actions were only those required under the regulations.
No justification for mitigation for good faith efforts to
comply exists. No change in $21,875 penalty.
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PENALTY COMPUTATION WORKSHEET
Company Name:
Regulation Violated
Asessments for each violation should be determined
on separate worksheets and totalled.
(If more space is needed, attach separate sheet..)
Part I - Seriousness of Violation Penalty -
1. Potential for Harm:
2. Extent of Deviation:
3. Matrix Cell Range:
Penalty Amount Chosen:
Justification for Penalty
Amount Chosen: f
4. Per-Day Assessment:
Part II - Penalty Adjustments
Percentage Change*
Dollar Amount
1. Good faith efforts
to comply/lack of
good faith:
2. Degree, of willfulness
and/or negligence:
3. History of
noncompliance:
4. Other unique factors:
5. Justification for
Adjustments:
/o/A
JO/A
K)/A
* Percentage adjustments are applied to the dollar
amount calculated on line 4, Part I.
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».
PENALTY COMPUTATION WORKSHEET (cont.)
6. Adjusted Per-day
Penalty (Line 4,
Part I + Lines
1-4, Part II):
7. Number of Days of
Violation:
8. Multi-day Penalty
(Number of days x
Line 6, Part II):
9. Economic Benefit of
Noncompliance:
Justification:
K//A
N/A
10. Total (Lines 8+9, Part II)
11. Ability to Pay Adjustment:
Justification for
Adjustment:
12. Total Penalty Amount
(must not exceed $25,000
per day of violation):
N/A
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- 29 -
v ».
(3)(A) Violation: A 1984 Inspection of Company C's land disposal
facility revealed that Company C had failed to Implement a
ground-water monitoring system by November 1981 as required
under 40 CFR $265.90. The facility had taken no steps to
implement a system: it failed to install monitoring wells
(S265.91), and to obtain and analyze samples (5265.92); no
outline of a ground-water quality assessment program had
been prepared (§265.93); and no records were kept nor
reports submitted to the Agency (S265.94). All of the
violations arise from the same set of circumstances.
Because Company C did not install wells, no sampling and
analysis could occur. Without sampling and analysis,
Company C did not have information with which to prepare a
quality assessment program outline, keep records, or submit
reports to the Agency. Therefore, the violations are not
independent and substantially distinguishable in this
situation. [See: Assessing Multiple Penalties]. A single
penalty assessment is appropriate, with each section of the
regulations that was violated cited in the complaint. ;
(B) Seriousness: Potential for Harm. Major - the violation
could pose a substantial likelihood of exposure and could
have a substantial adverse effect on the purposes for
implementing the RCRA program. Extent of Deviation. Major -
none of the requirements were implemented asintended.
(C) Gravity-based Penalty: Major potential for harm and major
extent of deviation yield the cell with the penalty range
of $20,000 to $25,000. The mid-point is $22,500.
(D) Economic Benefit of Noncompliance: Ground-water monitoring
has been identified as an area for which an economic benefit
component may be significant. The following estimates of
the costs of complying with the ground-water monitoring
requirements are taken from a January 1982 report prepared
for EPA by Geraghty & Miller, Inc., entitled, Development
of Ground-Water Monitoring Requirements and Costs for
Current RCRA Regulatory Requirements, Contract No. 68-01-5838:
First Year Costs
Cost of ground-water quality assessment $2,000
plan outline and ground-water sampling
and analysis plan (COP)
Cost of wells (COW), 1 upgradient and 3 $9,000
downgradient
Cost of sampling (COS) $1,640
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- 30 -
i »~
....- Cost of analysis (COA) $11,360
Cost or report (COR), report for $3,200
determining system needs, not report
required under S265.94
TOTAL $27,200
Second Year Costs
Cost of sampling and cost of analysis $1 ,900
(COS, COA), assuming no contamination
found . . , r
Assumptions: geology is unconsolidated material; hollow-
stem auger drilling; PVC construction material; ground-
water sampling by hand bailing; wells dug 50 ft. deep; r
estimated costs remained constant over time. '
COP, COW, COR, and first year COS and COA are delayed costs.
Company C eventually will make these expenditures in order
to achieve compliance. Second year and subsequent COS and
COA are avoided costs. Company C has permanently avoided
incurring these costs.
Calculation of Economic Benefit Component
For each year of noncomp.liance (1981-1984), the economic
benefit component should be calculated using the formula
set out in Section VII:
Economic
Benefit » Avoided Costs (1-T) + (Delayed Costs x Interest Rate)
1981: By November 1981, Company C was required to implement
its ground-water monitoring system by installing
wells, obtaining and analyzing samples at least
quarterly, and preparing a quality assessment program
outline.
Delayed costs = $27,200
Avoided costs = $0
IRS interest rate =12%
Assume T = .46
Economic Benefit = $0 + ($27,200 x 12%)
- $3,264
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: - 31 -
* ' fc.
1982: Company C still had not implemented its ground-
- - -ywater monitoring system. In addition, it had not
obtained and analyzed samples at least annually or
semi-annually, depending on the indicator parameter.
Delayed costs - $27,200
Avoided costs - $1,900
IRS interest rate - 20%
Assume T = .46
Economic Benefit - $1,900 (1-.46) + C$27,200 x 20%)
- $6,466
1983: Company C still had not implemented its ground-
water monitoring system. In addition, it had not
obtained and analyzed samples at least annually or
semi-annually, depending on the indicator parameter.
Delayed costs = $27,200
Avoided costs » $1,900
IRS interest rate = 13.5% (the average of 16% and 11%)
Assume T - .46
Economic Benefit = $1,900 (1-.46) + ($27,200 x 13.5%)
= $4,698
Total Economic Benefit = $3,264 + $6,466 + $4,698
= $14,428
Penalty proposed .in complaint » gravity-based penalty +
economic benefit component
- $22,500 + $14,428
= $36,928
Because noncompliance continued over a three year period,
the proposed penalty does not exceed $25,000 per day of
violation.
(E) Settlement Adjustment: Company C did not request a
settlement conference but did comply with the Compliance
Order and paid the proposed penalty.
(4)(A) Violation: Pursuant to §3007(a) of RCRA, EPA sent a
letter to Company D requesting that it furnish informa-
tion relating to hazardous waste. Specifically, five
separate records were requested. The letter required a
response to EPA within 14 calendar days of Company D's
receipt of the letter. One month after Company D
received EPA's information request, it submitted three
of the five documents requested. EPA sent a second
letter requesting the two remaining documents. Company
D failed to respond to the request.
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».
(B) Seriousness: Potential for Harm. Moderate - Based on
the nature of "the information requested, EPA determined
that Company D's failure to submit information relating
to hazardous waste to EPA as requested may have a signi-
ficant adverse effect on the purposes and procedures
for implementing the RCRA program. Extent of Deviation.
Moderate - Company D did submit some of the information
requested. It significantly deviated from the require-
ment, but part of the requirement was implemented as
intended.
(C) Gravity-based Penalty: Moderate - potential for harm
and moderate extent of deviation yield the penalty range
of $5,000 to $7,999. The midpoint is $6,500.
(D) Pre-Assessment Adjustments - On two previous occasions
at different facilities, Company D failed to respond
completely to S3007 requests for different information.'
In those cases, EPA issued administrative complaints with
proposed penalties of $6,500 and $8,125 respectively.
Both cases resulted in Consent Agreements and Final
Orders which were entered into before EPA requested the
information in the present case. The penalty is adjusted
upwards 50% for history of noncompliance. $6,500 +
$3,250 - $9,750. Compliance/enforcement personnel
determined that the penalties assessed in the previous
cases had failed to deter Company D from repeated
noncompliance with RCRA, For this reason, a multi-day
penalty of $9,750 per day from the date the information
was due to EPA was assessed.
(E) Settlement Adjustment: Company D failed to convince EPA
that any penalty mitigation was justified. Settlement
negotiations broke down and the case went to an
administrative hearing.
(5)(A) Violation: Company E's Part B Permit Application was called
in by EPA in 1983. Company E, a land disposal facility,
failed -to submit its Part B by the date specified when the
application was called-in. EPA issued a Notice of Deficiency
requiring submission of a complete Part B within 30 days.
EPA also issued a warning letter stating that failure to
submit a complete Part B application is a violation of
40 CFR §270.10(a) which may result in the assessment of
civil penalties and the initiation of procedures to termi-
nate the facility's interim status. Company E sent EPA a
one-page response several weeks after the date stipulated
in the Notice of Deficiency. The response was seriously
incomplete. Thus, Company E failed to submit a complete
Part B in violation of 40 CFR S270.10(a).
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4
(B) Seriousness: Potential for Harm. Moderate - Inspections of
CompanyE's facility have revealed a generally well-managed
operation. However, failure to carry out the applicable
requirements of 40 CFR §270.14-270.29 could pose a significant
likelihood of exposure in this situation. The violation could
have a significant adverse effect on the procedures for
implementing the RCRA program. Extent of Deviation. Major -
Part B application was seriously incomplete.~
(C) Gravity-based Penalty: Moderate potential for harm and
major extent of deviation lead one to the cell with the
range of $8,000 to $10,999. The mid-point is $9,500.
(D) Economic Benefit of Noncompliance: Failure to submit or
submittal of an incomplete Part B application has been
identified as an area for which an economic benefit component
may be significant. In a document prepared by EPA's Office
of Solid Waste requesting clearance from the Office of 7
Management and Budget to call in Part B applications, it was
estimated that the cost of preparing a Part B for a land
disposal facility was approximately $150,000. The document,
entitled, FY 1984 Burden Hours for RCRA Land Disposal
Permitting Standards is dated November 18, 1983.
The economic benefit component should be calculated using
the formula set out in Section VII:
Economic
Benefit = Avoided Costs (1-T) + (Delayed Costs x Interest Rate)
Failure to submit a complete Part B is a delayed cost.
Company E eventually will spend the money in order to
achieve compliance. No avoided costs are associated with
this violation. The economic benefit should be calculated
for a one year period. The IRS interest rate for 1983 is
13.5% (the average of 16% and 11%).
Economic Benefit = $0 + ($150,000 x 13.5%)
= $20,250
Penalty proposed in complaint = gravity-based penalty +
economic benefit component
= $9,500 + $20,250
= $29,750
Because noncompliance continued over a period of several
months, the proposed penalty does not exceed $25,000 per
day of violation.
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(E) Settlement Adjustment: At the settlement conference,
CompanyE raised and documented that it was in a poor
financial state and would be unable to pay the full penalty,
Company E also told the Agency that it intended to cease
handling hazardous waste. Because of the company's
inability to pay, and because of the Agency's desire that
Company E put what money it has into proper closure and
post-closure care at its facility, the penalty was reduced
to $5,000. A Compliance Order was issued putting Company E
on a schedule for closing its facility in accordance with
its approved closure plan. -
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