U.S. Environmental Protection Agency
Office of Enforcement and Compliance Assurance
Office of Regulatory Enforcement, Multimedia Enforcement Division
GENERAL ENFORCEMENT POLICY COMPENDIUM
December 1994
The General Enforcement Policy Compendium is a collection of enforcement policies and guidances that
apply to more than one program. Medium-specific policies are found in their respective statute-specific
compendiums. All the documents contained in this Compendium are releasable to the public in their entirety.
The enforcement program established the Compendium in 1982. At that time, it contained only 11
documents. By 1993, the Compendium included 90 documents numbered from GM-1 through GM-90. The Office
of Enforcement and Compliance Assurance (OECA) revised and redesigned the Compendium in 1994. As part of
this effort, OECA developed a new numbering system for the documents in the Compendium. In order to allow for
continuity, those documents retained from the previous version of the Compendium have both the old and new
document numbers.
The Compendium consists of three parts. The first is the Table of Contents, which is a list of documents
divided into fifteen subject headings. The second is a new Descriptive Index, containing capsule summaries of
each of the documents contained in the Compendium. The third part consists of the actual documents themselves.
If you are searching for a document but do not know its title, we suggest you first look in the Table of
Contents in the appropriate section. Once you find a document that you think might provide the needed guidance,
read the summary in the Descriptive Index to make sure it is the appropriate one. Some document titles may not
effectively indicate the contents of those documents. After you think you have the correct document, locate it in
the Compendium in the appropriate section.
OECA has widely circulated The Table of Contents and Descriptive Index electronically and through hard
copies. Copies of the full Compendium can be found in the following locations: EPA Libraries in Headquarters, the
Regional Offices, Regional Laboratories and DOJ; Regional Counsels; Regional Environmental Services Divisions
(those located outside the main Regional Offices); Office Directors and Division Directors in OECA (including NEIC in
Denver); Special Agents in Charge; and Office of General Counsel.
If you have any questions about the General Enforcement Policy Compendium, please contact Jonathan
Libber of the Multimedia Enforcement Division at (202) 564-6011.
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GENERAL ENFORCEMENT POLICY
COMPENDIUM
Volume I
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TABLE OF CONTENTS
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12/1/94
GENERAL ENFORCEMENT POLICY COMPENDIUM
TABLE OF CONTENTS
DESCRIPTIVE INDEX
CROSS INDEX
COMPENDIUM DOCUMENTS
I.
REFERRALS
B.
RF.l General Procedures and Goals
RF.1-1: Memorandum of Understanding Between DOJ and
EPA (GM-3) (June 15, 1977)
RF.1-2: Draft DOJ/EPA Litigation Procedures (GM-8)
(April 8, 1982)
RF.1-3: Model Litigation Report Outline and Guidance
(GM-48) (January 30, 1986)
RF.1-4: General Operating Procedures for EPA's Civil
Enforcement Program (GM-12) (July 6, 1982)
RF.1-5: Implementing Nationally Managed or Coordinated
Enforcement Actions (GM-35) (January 4, 1985)
RF.1-6: Policy on Invoking Section 9 of the EPA/DOJ
Memorandum of Understanding (GM-63)
(August 20, 1987)
RF.1-7: Headquarters Review and Tracking of Civil
Referrals (GM-26) (March 8, 1984)
RF.2 Direct Referrals
RF.2-1: Expansion of Direct Referral of Cases to DOJ
(GM-69) (January 14, 1988)
RF.2-2: Implementation of Direct Referral for Civil
Cases (GM-18) (December 1, 1983)
RF.3 Delays in Filing Cases
II,
RF.3-1:
RF.3-2
PENALTIES
DOJ Procedures for Returning Certain Unfiled
Cases to EPA for Further Processing (GM-78)
(November 12, 1987)
Hold Action Requests (GM-90)
(November 16, 1990)
A. PT.l General Procedures and Goals
PT.l-l: Policy on Civil Penalties (GM-21)
(February 16, 1983)
PT.1-2: A Framework for Statute-Specific Approaches to
Penalty Assessments (GM-22)
(February 16, 1984)
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PT.1-3: Documenting Penalty Calculations and Justi-
fications in EPA Enforcement Actions (GM-88)
(August 9, 1990)
PT.1-4: Remittance of Fines and Civil Penalties
(GM-38) (April 15, 1985)
PT.1-5: Guidance for Calculating the Economic Benefit
of Noncompliance for a Civil Penalty
Assessment (GM-33) (November 5, 1984)
PT.1-6: Division of Penalties with State and Local
Governments (GM-45) October 30, 1985)
B. PT.2 Mitigation
PT.2-1: Guidance on Determining a Violator's Ability
to Pay a Civil Penalty (GM-56)
(December 16, 1986)
PT.2-2: Policy on the Use of Supplemental Environ-
mental Projects in EPA Settlements (GM-77)
(February 12, 1991)
PT.2-3: Guidance on Calculating After Tax Net Present
Value of Alternative Payments (GM-51)
(October 28, 1986)
C. PT.3 Stipulated Penalties
PT.3-1: Use of Stipulated Penalties in EPA Settlement
Agreements (GM-75) (January 24, 1990)
PT.3-2: Procedures for Assessing Stipulated Penalties
(GM-67) (January 11, 1988)
D. PT.4 Confidential Information (see Descriptive Index
for Summaries of BEN and ABEL case memoranda which are
not contained in the Compendium)
PT.4-1: Economic Benefit from Noncompliance: An
Analysis of Judicial and Administrative
Interpretation (August 1, 1993) (GM-no)
PT.4.2: Ability to Pay — for Profit Entities: An
Analysis of Judicial and Administrative
Interpretation (August 1, 1993) (GM-no)
III. CONTRACTOR LISTING
A. CL.l General Listing
CL.1-1: US Environmental Protection Agency Contractor
Listing Procedures and Guidance (May 1993)
B. CL.2 Discretionary Listing
CL.2-1: Guidance on Implementing the Discretionary
Contractor Listing Program (GM-53)
(November 26, 1986)
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' C. CL.3 Asbestos
CL.3-1: Asbestos Contractor Listing (GM-no)
(June 30, 1988)
CL.3-2: Defining the "Violating Facility" for
purposes of Listing Asbestos Demolition and
Renovation Companies Pursuant to Section 306
of the Clean Air Act (GM-no) (March 11, 1988)
D. CL.4 Mandatory Listing
CL.4-1: Implementation of Mandatory Contractor Listing
(GM-32) (August 8, 1983)
CL.4-2: EPA Policy Regarding the Role of Corporate
Attitude, Policies, Practices, and Procedures
in Determining Whether to Remove a Facility
from the EPA List of Violating Facilities
Following a Criminal Conviction (GM-no)
(October 31, 1991)
IV. SETTLEMENTS
A. SE.l Procedures
SE.1-1: Form of Settlement in Civil Judicial Cases
(GM-42) (July 24, 1985)
SE.1-2: Guidance on the Use of Alternative Dispute
Resolution in EPA Enforcement Cases (GM-62)
(August 14, 1987)
SE.1-3: Process for Conducting Pre-Referral Settlement
Negotiations on Civil Enforcement Cases
(GM-73) (April 13, 1988)
SE.1-4: Enforcement Settlement Negotiations (GM-39)
(May 22, 1985)
SE.l.5: Policy Against "No Action" Assurances (GM-34)
B. SE.2 Terms of Settlement
SE.2-1: Multi-media Settlements of Enforcement Cases
(GM-80) (February 6, 1990)
SE.2-2: Interim Policy on the Inclusion of Pollution
Prevention and Recycling Provisions in
Enforcement Settlements (GM-79)
(February 25, 1991)
SE.2-3: Final EPA Policy on the Inclusion of
Environmental Auditing Provisions in
Enforcement Settlements (GM-52)
(November 14, 1986)
V. CRIMINAL ENFORCEMENT POLICIES THAT IMPACT CIVIL ENFORCEMENT
A. CP.l Parallel Proceedings
CP.1-1: Parallel Proceedings Policy (June 21, 1994)
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B. CP.2 Case Management Procedures
CP.2-1 The Exercise of Investigative Discretion
(January 12, 1994).
CP.2-2 Referral of Criminal Cases for Prosecutive
Action (March 2, 1993).
VI. PUBLICITY
A. PB.l Civil Enforcement
PB.1-1: Policy on Publicizing Enforcement Activities
(GM-46) (November 21, 1985)
B. PB.2 Criminal Enforcement
PB.2-1 Policy on Responding to Public or Media
Inquiries Regarding Criminal Cases
(December 22, 1989).
VII. REGULATORY DEVELOPMENT
A. RG.l General Procedures and Goals
RG.1-1: Issuance of Enforcement Considerations for
Drafting and Reviewing Regulations &
Guidelines for Developing New or Revised
Compliance and Enforcement Strategies (GM-58)
(August 15, 1985)
RG.1-2: A Summary of OE's Role in the Agency's
Regulatory Review Process (GM-47)
(January 27, 1986)
RG.1-3: The Regulatory Development Process: Change in
Steering Committee Emphasis and OE
Implementation (GM-59) (February 6, 1987)
RG.1-4: Ex Parte Contacts in EPA Rulemaking (GM-4)
(August 4, 1977)
VIII. STATE/FEDERAL AGREEMENTS
A. SF.l General Procedures and Goals
SF.1-1: Revised Policy Framework for State/EPA
Enforcement Agreements (GM-41)
(June 26, 1984)
SF.1-2: Guidance for the FY 1989 State/EPA Enforcement
Agreements Process (GM-57) (June 20, 1988)
IX. ORDERS AND DECREES
A. OR.l Drafting and Modifying Orders and Decrees
OR.1-1: Guidance for Drafting Judicial Consent Decrees
(GM-17) (October 19, 1983)
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OR.1-2: Procedures for Modifying Judicial Consent
Decrees (GM-68) (January 11, 1988)
B. OR.2 Monitoring and Enforcing Orders and Decrees
OR.2-1: Manual on Monitoring & Enforcing
Administrative and JudicialOrders (GM-86)
(February 6, 1990)
OR.2-2: Guidelines for Enforcing Federal District
Court Orders (GM-27) (April 18, 1984)
X. FEDERAL FACILITIES
A. FF.l Compliance Monitoring and Enforcement
FF.1-1: Federal Facilities Compliance Strategy (GM-25)
(November 8, 1988)
XI. TRACKING ENFORCEMENT ACTIVITIES
A. TK.l General Procedures and Goals
TK.1-1: Agency Judicial Consent Decree Tracking and
Follow-up Directive (GM-76) (January 11, 1990)
TK.1-2: Guidance on Certification of Compliance with
Enforcement Agreements (GM-74) (July 25, 1988)
TK.1-3: Revised Regional Referral Package Cover Letter
and Data Sheet (GM-40) (May 30, 1985)
TK.l-4: Consent Decree Tracking Guidance (GM-19)
(December 20, 1983)
TK.1-5: Procedures and Responsibilities for Updating
and Maintaining the Enforcement
Docket (GM-60) (March 10, 1987)
TK.1-6: Enforcement Docket Maintenance (GM-61)
(April 8, 1988)
TK.1-7: Support of the Enforcement DOCKET for
Information Management in OECA
(October 3, 1994)
XII. CASE MANAGEMENT
A. CM.l General Procedures and Goals
CM.1-1: Case Management Plans (GM-71) (March 11, 1988)
CM.1-2: Regional Enforcement Management: Enhanced
Regional Case Screening (GM-85)
(December 3, 1990)
CM.1-3: Guidance on Evidence Audit of Case Files
(GM-20) (December 30, 1983)
(See also Section V, CRIMINAL ENFORCEMENT POLICIES THAT
IMPACT CIVIL ENFORCEMENT)
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XIII. INSPECTIONS
B. IN.l General Procedures and Goals
IN.1-1: Conduct of Inspections After the Barlow's
Decision (GM-5) (April 11, 1979)
IN.1-2: Visitor's Releases and Hold Harmless
Agreements as a Condition to
Entry to EPA Employees
on Industrial Facilities (GM-1)
(November 8, 1972)
XIV. COMMUNICATIONS
CO.l Communications with Litigants
CO.1-1: Contacts with Defendants and Potential
Defendants in Enforcement Litigation (GM-6)
(October 7, 1981)
CO.1-2: "Ex Parte" Rules Covering Communications Which
Are the Subject of Formal Adjudicatory
Hearings (GM-7) (December 10, 1981)
CO.1-3: Enforcement Document Release Guidelines
(GM-43) (September 16, 1985)
(See also section VI PUBLICITY)
XV. MISCELLANEOUS
D. MI.1 Other
MI.1-1: Assertion of the Deliberative Process
Privilege (GM-66) (October 3, 1984)
MI.1-2: Strengthening the Agency's Administrative
Litigation Capacity (GM-89) (May 3, 1989)
MI.1-3: Professional Obligations of Government
Attorneys (GM-2) (April 19, 1976)
MI.1-4: Liability of Corporate Shareholders and
Successor Corporations for Abandoned
Sites Under CERCLA (GM-28)1
(June 13, 1984)
MI.1-5: Interim Guidance on review of Indian
Lands Enforcement Actions (October
21, 1992) attaching EPA Policy for
the Administration of Environmental
Programs on Indian Reservations
(November 8, 1984) (GM-no)
xThis policy is to be transferred to the CERCLA Policy
Compendium after a generic policy is developed to take its place.
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DESCRIPTIVE INDEX
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12/1/94
GENERAL ENFORCEMENT POLICY COMPENDIUM
DESCRIPTIVE INDEX
I. REFERRALS (RF)
A. RF.l General Procedures and Goals
(GM-3) (RF.1-1)
Memorandum of Understanding Between Department of
Justice and the Environmental Protection Agency (June
15, 1977)
The Department of Justice (DOJ) conducts the civil
litigation of the EPA. This document is a Memorandum of
Understanding (MOU) that clarifies the roles of DOJ and EPA
attorneys. This memorandum contains 19 clauses, the first 15 of
which are the more substantive. They are:
(1) the Attorney General (AG) has control over all cases to
which EPA or the Administrator is a party;
(2) the Administrator may request that the AG permit Agency
attorneys to participate in cases;
(3) EPA attorneys shall not file any documents in a court
proceeding without prior approval of the AG;
(4) the AG has control over the conduct of all litigation
and allocates tasks among the attorneys employed by DOJ and
Agency participating attorneys;
(5) if DOJ and EPA attorneys disagree over the conduct of a
case, the Administrator may obtain a review of the matter by the
AG;
(6) settlement of any case where DOJ represents EPA requires
the concurrence of the Administrator and the AG;
(7) EPA and DOJ conduct a joint annual review of DOJ's and
EPA's personnel requirements for Agency litigation;
(8) DOJ must file cases within 60 days or report why
complaints have not been filed;
(9) if DOJ hasn't filed within 120 days, the Administrator
can request DOJ to file within 30 days;
(10) all requests for litigation shall be submitted by EPA
through the General Counsel or the Asst. Administrator for
Enforcement to the Asst. AG for the Land and Natural Resources
Division, and shall be accompanied by a standard litigation
report;
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(11) EPA shall make the file of any matter that is the
subject of litigation available to DOJ attorneys;
(12) the Administrator shall review the Agency's procedures
for preparing the record in cases involving direct review in the
Courts of Appeal;
(13) negotiation of any agreement to be filed in court
requires the authorization and concurrence of the AG;
(14) the AG shall defer to the Administrator's
interpretation of scientific and technical matters in conducting
litigation for EPA; and
(15) this agreement doesn't affect the authority of the
Solicitor General to carry out his functions with regard to
appeals or petitions.
(GM-8) (RF.1-2)
Draft Department of Justice/Environmental Protection
Agency Litigation Procedures (April 8, 1982)
These procedures were the result of a DOJ/EPA meeting to
strengthen enforcement efforts. It is divided into two main
parts: a discussion of EPA enforcement goals and objectives, and
the Quantico Guidelines for Enforcement Litigation (reached as a
result of the meeting).
Three EPA enforcement goals and objectives are stated: (1)
to support and advance the regulatory policies of EPA through the
use of all available enforcement means to ensure compliance,
deter unlawful conduct, and remove incentives of noncompliance;
(2) to give the regulated community fair notice of EPA's policies
and the requirements they impose on the regulated community; and
(3) to establish regulatory policies and enforcement goals,
priorities and procedures to effectuate its policy initiatives
and to guide the Dept. of Justice [DOJ] in its role as EPA's
litigation counsel. The Quantico Guidelines are divided into
five parts: (a) goals & purposes; (b) general observations; (c)
DOJ and EPA commitments; (d) process [procedures]; and (e)
specific issues discussed (Superfund national strategy guidelines
and existing consent decrees).
(GM-48) (RF.1-3)
Model Litigation Report Outline and Guidance (January
30, 1986)
This guidance has two purposes: (a) to create a common
understanding among Agency personnel and Dept. of Justice
attorneys as to what the litigation report needs to cover; and
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(b) to make the litigation report's form consistent. This
guidance is a two-part document. First comes the Model
Litigation Report - Outline. The Model Litigation Report -
Guidance follows the Outline, addressing and explaining in detail
most of the items in the Outline.
The Outline includes: (1) cover page; (2) table of contents;
(3) synopsis of the case; (4) statutory bases of referral; (5)
description of the defendant; (6) nature of the violations; (7)
enforcement history of the defendant and pre-referral
negotiations; (8) injunctive relief; (9) penalties; (10) major
issues; (11) significance of referral; (12) litigation strategy;
and (13) attachments.
(GM-12) (RF.1-4)
General Operating Procedures for EPA's Civil
Enforcement Program (July 6, 1982)
This document describes the roles and relationships of the
various EPA offices which participate in enforcement activities.
Seventeen sections follow the introduction, the last three of
which are housekeeping clauses. The substantive sections are, in
order of their appearance: enforcement objectives; roles and
relationships; delegations and concurrence requirements;
reporting requirements and Office of Legal and Enforcement
Counsel oversight; reviewing compliance and determining
responses; escalation; case development process; referral
process; Headquarters review of case development; post-referral
procedures; negotiations; enforcing consent decrees and final
orders; appeals; and communications/press relations. The section
on roles and responsibilities is further separated into Regional
Administrators, Assistant Administrators, the Regional Counsel,
Enforcement Counsel matters, General Counsel matters, DOJ and
U.S. Attorneys' offices, policy coordination, coordination with
states, and EPA's accountability system.
These procedures do not apply in any respect to the
development and referral of criminal cases.
(GM-35) (RF.1-5)
Implementing Nationally Managed or Coordinated
Enforcement Actions (January 4, 1985)
This guidance addresses how EPA shall handle administrative
and judicial civil enforcement cases which are managed or
coordinated at the EPA Headquarters level. The policy was
developed to ensure that such actions are identified, developed,
and concluded in a manner consistent with the principles set
forth in the Policy Framework for State/EPA Enforcement
Agreements.
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The guidance covers: (1) the criteria for nationally managed
or coordinated enforcement cases; (2) roles and responsibilities
in the process for identifying nationally managed or coordinated
cases; (3) roles and responsibilities in case development; and
(4) press releases and major communications.
(GM-63) (RF.1-6)
Policy on Invoking section 9 of the EPA/DOJ Memorandum
of Understanding (August 20, 1987)
This policy states EPA policy on the authority of EPA
attorneys to represent the Agency in litigation. Primary
responsibility for litigating all EPA judicial cases is assigned
under the Memorandum of Understanding (MOU) to the Dept. of
Justice [DOJ] upon referral from EPA. If a complaint is not
filed within 120 days of the referral, EPA can request the
Attorney General to file within 30 days. If DOJ does not comply,
EPA may represent itself in court by invoking Section 9 of the
MOU.
The policy first describes the MOU in detail, then discusses
current (1987) experiences, stating that EPA has rarely notified
DOJ of its intention to invoke Section 9 of the MOU and appoint
Agency attorneys to represent itself, although a number of cases
have fallen within.its scope. Next, the memo presents
considerations affecting invoking Section 9: (a) the reason(s)
why the case remains unfiled; (b) the Agency interest to be
served by assuring filing of the case sooner; (c) the ability of
EPA to handle the litigation without DOJ involvement and support;
(d) the desire to maintain DOJ involvement in cases; and (e) the
likelihood of filing a complaint in the near future if Section 9
is not invoked and whether or not invoking Section 9 is likely to
accelerate filing. The GM then describes the procedures for
invoking Section 9 — who, what cases, and how. It concludes by
stating that the Office of Regional Counsel has the primary
responsibility to provide legal support to prosecute and manage a
case where the Agency has invoked Section 9.
(GM-26) (RF.1-7)
Headquarters Review and Tracking of Civil Referrals
(March 8, 1984)
This policy clarifies the relationship between the Office of
Compliance Monitoring and the Regional offices with regard to the
handling of civil enforcement litigation. GM-26 is composed of
the following: (1) Classification of Referrals; (2) Evaluation of
Direct Referrals; (3) Tracking All Referrals in the Computer
Docket; (4) Referrals Requiring Concurrence; and (5) Managing the
Civil Enforcement Docket.
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The first section, "Classification of Referrals," lists the
four classes of cases in the Agency's civil enforcement program
and briefly describes the appropriate roles of Headquarters and
the Regional offices for each class.
The next section, "Evaluation of Direct Referrals,"
addresses the review criteria for direct referrals. It explains
the appropriateness of direct referrals, the format of the cover
memorandum, and the substantive adequacy of direct referral
packages. In addition, the procedures to be followed in cases of
erroneous direct referrals are briefly explained.
The third and fourth sections are extremely succinct. The
third describes the procedures for the tracking of referrals in
the computer docket and the fourth discusses how to handle
referrals requiring concurrence. The last section explains the
duties of Enforcement Counsels.
B. RF.2 Direct Referrals
(GM-69) (RF.2-1)
Expansion of Direct Referral of Cases to DOJ (January
14, 1988)
EPA and the Dept. of Justice [DOJ] agreed to expand the
categories of civil judicial cases to be referred directly to DOJ
from EPA Regional offices without the concurrence of the Asst.
Administrator for the Office of Enforcement [OE]. This
memorandum offers guidance to EPA personnel regarding procedures
to follow in implementing the expanded referral agreement.
The section covering procedures is divided into six parts.
First, the guidance addresses cases subject to direct referral.
Second, the memorandum explains preparation and distribution of
referral packages (which require a cover letter summarizing eight
listed elements of the case, the litigation report, and the
documentary file supporting the litigation report). Third, the
guidance discusses identification and resolution of significant
legal and policy issues (Region has the initial responsibility to
identify the issues, OE and Headquarters [HQ] program office
review them, and DOJ reviews them and consults with OE and
Region). Next, the memorandum discusses case quality and
strategic value. Withdrawal of cases prior to filing and
maintenance of the Agency-wide Case Tracking System are discussed
last.
There are four attachments: (1) the EPA-DOJ agreement of
January 5, 1988; (2) an outline of the direct civil referral
process as the Agency intends to implement it; (3) a list of
types of cases which will continue to be referred through HQ; and
(4) RF.2-2 (Implementation of Direct Referrals for Civil Cases).
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(GM-18) (RF.2-2)
Implementation of Direct Referral for Civil Cases
(December 1, 1983)
This document guides EPA Headquarters and Regional personnel
regarding procedures to follow in implementing the 9/29/83 EPA-
DOJ direct referral agreement. The major part of the guidance
addresses procedures for cases subject to direct referral. The
other two parts briefly discuss cases not subject to direct
referral (which go through the Office of Enforcement [OE] with a
target 21-day turnaround) and measuring the efficacy of the
direct referral agreement.
The attached agreement lists categories of cases which can
be referred directly from the Regional Administrator to the Dept.
of Justice [DOJ]; all others must continue to be reviewed by
Headquarters OE and referred by the Asst. Administrator for OE to
DOJ. The major part of this implementation guidance first
addresses the contents of a referral package: a cover letter
including a summary of eight listed elements, the litigation
report, and the documentary file supporting the litigation
report. This part next addresses DOJ responsibilities under the
agreement, then explains Headquarters OE responsibilities. The
major part concludes with a section discussing settlements in
cases subject to direct referral, where the Asst. Administrator
for OE shall continue to approve all settlements and consent
decree modifications, even in direct referrals.
C. RF.3 Delays in Filing Cases
(GM-78) (RF.3-1)
DOJ Procedures for Returning Certain Dnfiled Cases EPA
for Further Processing (November 12, 1987).
This policy briefly explains 1987 Department of Justice
(DOJ) procedures to clear its enforcement docket of EPA cases
that remain unfiled at DOJ for more than sixty days after
referral while the Region is negotiating a consent decree or
compiling additional information to support its filing.
It continues to describe four ways that cases returned under
this procedure could be reactivated by DOJ. DOJ will reactivate
the case if the Region: (1) provides the requested additional
information necessary for filing; (2) forwards a signed consent
decree for processing; (3) notifies the Office of Enforcement and
DOJ that the progress of the negotiations no longer justifies
further delay in the filing of the complaint and requests that a
complaint be filed; or (4) EPA resolves and internal policy
conflict affecting the filing.
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(GM-90) (RF.3-2)
Procedures for "Hold Action" Requests (November 16,
1990)
This policy gives detailed procedures by which Regional
Counsel and Enforcement Counsel may request that the Department
of Justice (DOJ) delay filing of a case which has been referred
to DOJ. It begins by stating that such requests are generally
disfavored. In order to reduce the need for such requests, EPA
is urged to use pre-referral negotiation procedures. The GM
grants non-delegable authority to request a hold on a referred
civil case to the Regional Counsel. The authority is limited to
circumstances where additional time is needed to pursue pre-
filing settlement negotiations, to add other counts or
defendants, or to where unspecified realities of litigation
militate in favor of a brief filing delay.
In all cases, the cumulative delay limit on each case held
is sixty days. Any hold beyond sixty days (individual or
cumulative) may be requested solely by the Asst. Administrator
for Enforcement.
II. PENALTIES (PT)
A. PT.l General Procedures and Goals
(GM-21) (PT.1-1)
Policy on civil Penalties (February 16, 1983)
This policy provides the basic rationale for why penalties
are critical to effective EPA administrative and judicial
enforcement actions. The goals of penalty assessment include:
(1) deterrence; (2) fair and equitable treatment of the regulated
community; and (3) swift resolution of environmental problems.
This document is divided into the following six sections:
(1) Introduction; (2) Applicability; (3) Deterrence; (4) Fair and
Equitable Treatment of the Regulated Community; (5) Swift
Resolution of Environmental Problems; and (6) Intent of Policy
and Information Requests for Penalty Calculations.
A Framework for Statute-Specific Approaches to Penalty
Assessments (PT.1-2), the companion document to this policy, is
to be utilized for developing penalty guidance appropriate for
the user's particular program. In order to achieve the policy
goals, the Policy on Civil Penalties directs that all
administratively imposed penalties and settlements of civil
penalty actions should be consistent, whenever possible, with the
methods enunciated in the Framework.
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Although this document does not address the mechanisms for
achieving the policy goals, it does indicate when new versus old
program-specific policies are to be followed. In addition, it
lists several statutes that are not subject to this policy.
(GM-22) (PT.1-2)
A Framework for Statute-Specific Approaches to Penalty
Assessments (February 16, 1984)
This policy provides assistance to persons using the Policy
on Civil Penalties (PT.1-1) to develop a medium-specific penalty
policy. This framework applies to administratively imposed
penalties and to settlements of administrative and judicial
penalty actions. The Framework document is divided into two main
sections. The first of these offers brief instructions on how to
write a medium-specific policy. The second, an appendix, gives
detailed guidance on implementing each section of the
instructions from the first section and explains how the
instructions are intended to further the goals of the policy.
Part I, writing a program specific policy, addresses the
following elements of the penalty: (1) developing a penalty
figure; (2) calculating a preliminary deterrence amount; (3)
adjusting the preliminary deterrence amount to derive the initial
penalty target figure (prenegotiation adjustment); (4) adjusting
the initial penalty target during negotiations; (5) use of the
policy in litigation; and (6) use of the policy as a feedback
device.
The Appendix has three sections of its own. The first
focuses on achieving deterrence by assuring that the penalty
first removes any economic benefit from noncompliance. Then it
adds an amount to the penalty that reflects the seriousness of
the violation. The second provides adjustment factors so that
the action will result in both a fair and equitable penalty and a
swift resolution of the environmental problem. The third
presents some "practical advice" on the use of the penalty
figures generated by the policy.
(GM-88) (PT. 1-3)
Documenting Penalty Calculations and Justifications in
EPA Enforcement Actions (August 9, 1990)
This policy institutes a uniform system for documenting
penalty calculations and explaining how they are consistent with
applicable penalty policy in all EPA enforcement actions.
First, every settlement package transmitted from a Region to
Headquarters for concurrence must include a written "penalty
justification" explaining how the penalty (economic benefit and
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gravity components) was calculated and discussing the
justification for any mitigation. When the rationale for
mitigation is litigation risk, the justification should state the
probable outcome of litigation and offer specific legal and
factual analysis supporting that conclusion. The justification
is prepared for circulation within the Office of Regional Counsel
and for signature of the Asst. Administrator. It must not be
circulated to the presiding agency official (as it could
constitute an ex parte communication). All case files are
required by the GM at all times during the course of the
enforcement action to contain documentation of the current bottom
line penalty agreed upon by the litigation team. The bottom line
may change, but any modification must be justified by a
documented change of conditions.
(GM-38) (PT. 1-4)
Remittance of Fines and civil Penalties (April 15,
1985)
This policy provides information on the remittance procedure
instituted by the EPA Office of the Comptroller. EPA adopted the
Nationwide Lockbox System for receipt of payments on debts owed
to the Agency in order to improve the process. The list attached
to GM-38 shows for each Region and for EPA Headquarters the
lockbox address to which payments of penalties owed the Agency
should be sent. In addition, it lists the address to which
remittances for Superfund billings nationwide should be sent.
(GM-33) (PT. 1-5)
Guidance for Calculating the Economic Benefit of
Noncompliance for a Civil Penalty Assessment (November
5, 1984)
This guidance amplifies the material in the Appendix of the
"Framework for Statute-Specific Approaches to Penalty
Assessment," (PT.1-2) describing how to calculate the economic
benefit of noncompliance as part of developing a civil penalty.
The guidance introduces BEN, the computer model, in terms of how
this model resolves the identified problems related to the use of
the prior model, CIVPEN. It points out the circumstances under
which BEN can and cannot be used in calculating a civil penalty.
The exhibit attached to this document summarizes BEN. In
addition, the guidance explains the new civil penalty policy
approach, how to use BEN to calculate economic benefit of
noncompliance, and the advantages of BEN over other calculation
methods.
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(GM-45) (PT. 1-6)
Division of Penalties with State and Local Governments
(October 30, 1985)
State and local governments may share in civil penalties
that result from their participation in federal environmental
enforcement actions, to the extent that penalty division is
permitted by federal, state, and local law and is appropriate
under the circumstances of the individual case. This policy
briefly describes how penalty divisions advance federal
enforcement goals, some concerns with penalty divisions, and the
factors to be considered in deciding if penalty division is
appropriate.
B. PT.2 Mitigation
(GM-56) (PT. 2-1)
Guidance on Determining a Violator's Ability to Pay a
Civil Penalty (December 16, 1986)
This document offers guidance on when and how to adjust a
penalty target figure when a violator claims that paying a civil
penalty would cause extreme financial hardship.
The memorandum begins by discussing when to apply the
ability to pay factor and the methodology for applying that
factor using the ABEL computer model. This guidance follows this
with sections discussing: (a) a violator's options for paying a
civil penalty; (b) information necessary to determine ability to
pay; (c) confidentiality of financial information provided to
EPA; (d) a four-step process to apply the ability to pay factor;
and (e) the financial computer program (ABEL).
The guidance includes two narrative hypotheticals in Exhibit
1, one assuming that the violator is financially healthy and the
other assuming that the violator is not financially healthy.
Also included in the document is Attachment A, data for an ABEL
example.
(GM-77) (PT. 2-2)
Policy on the Use of Supplemental Environmental
Projects in EPA Settlements (February 12, 1991)
This policy describes the theory behind supplemental
environmental projects (SEPs) and the conditions under which they
might be considered. According to the document, EPA may approve
a supplemental project so long as that project furthers the
Agency's statutory mandates to clean the environment and deter
violations of the law. The SEPs may be considered if the
violations are corrected through actions to ensure future
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compliance, deterrence objectives are served, and there is an
appropriate relationship (vertical or horizontal nexus) between
the nature of the violation and the environmental benefits to be
derived from the supplemental project.
The document is divided into twelve sections, some of which
are very detailed. First, five categories of projects are
suggested as potential SEPs: (1) pollution prevention projects;
(2) pollution reduction projects; (3) projects remedying adverse
public health or environmental consequences; (4) environmental
auditing projects; and (5) enforcement-related environmental
public awareness projects. Next, the document offers three
examples of projects not permissible as SEPs. It goes on to
define the required nexus of the SEP to the violation. The other
nine sections follow in this order: status of the enforcement
action; main beneficiary of a SEP; extent to which the final
assessed penalty can reflect a SEP; SEPs for studies; substitute
performance of a SEP; level of concurrence of affected Regions;
oversight and tracking; documenting approval of SEP proposals;
and coverage of this policy.
(GM-51) (PT. 2-3)
Guidance on Calculating After Tax Net Present Value of
Alternative Payments (October 28, 1986)
This guidance provides a methodology for calculating the
after tax net present value (ATNPV) of an environmentally
beneficial project proposed by a violator to mitigate a portion
of a civil penalty. The document first discusses the basis of
mitigation, the 1984 uniform civil penalty policy (PT.1-1 and
PT»l-2), which permits EPA to accept, under specified conditions,
a violator's investment in environmentally beneficial projects
for mitigation. (Those conditions are contained in the Policy on
the Use of Supplemental Environmental Projects in EPA Settlements
(PT.2-2)). EPA cannot mitigate the civil penalty to an extent
greater than the ATNPV of the alternative payment. This policy
then explains use of the BEN computer model to calculate the
ATNPV of alternative payments. (By January of 1995, a new model,
PROJECT, will be available to do this calculation.) Attachment A
closes the guidance with an example of a proposed alternative
payment project with the BEN computer model output showing the
ATNPV of the investment.
C. PT.3 Stipulated Penalties
(GM-75) (PT. 3-1)
Use of Stipulated Penalties in EPA Settlement
Agreements (January 24, 1990)
This document provides relatively specific guidance on the
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use of stipulated penalties in the settlement of enforcement
actions. It addresses multiple issues and gives a preferred
approach and its rationale. This guidance does not supersede an
existing medium-specific policy, "Guidance on the Use of
Stipulated Penalties in Hazardous Waste Consent Decrees"
(9/21/87). It applies to judicial settlements and to
administrative cases where EPA has legal authority to assess
stipulated penalties. The asserted primary goal of stipulated
penalties is to provide an effective deterrent to violation of
the settlement agreement.
This guidance is divided into six sections: (1) Types of
Requirements to Which Stipulated Penalties Should Apply; (2)
Level of Stipulated Penalties; (3) Method of Collection; (4)
Timing of Enforcement Responses; (5) Reservation of Rights; and
(6) Collection of Stipulated Penalties.
The penalties can apply to any clearly definable event.
This document lists six criteria to apply to set the level of the
penalty: (1) initial civil penalties imposed; (2) economic
benefit of non-compliance; (3) source's ability to pay; (4)
gravity of the violation; (5) source's history of compliance; and
(6) an escalating schedule for the length of the violation.
The guidance provides two methods of collection: the
preferred method, viz., the penalty automatically becomes due
upon [non]occurrence of a specified even, or the penalty is
payable on demand by the government. For additional guidance,
the EPA Manual on Monitoring & Enforcing Administrative and
Judicial Orders should be consulted. The document concludes by
stressing the necessity of reserving all rights to the government
to pursue any other enforcement responses for violation of
consent agreement provisions (see Guidance for Drafting Judicial
Consent Decrees (OR.1-1) for model language of a consent decree),
and by urging prompt action to collect stipulated penalties that
are due.
(GM-67) (PT. 3-2)
Procedures for Assessing Stipulated Penalties (January
11, 1988)
This guidance clarifies procedures for assessing stipulated
penalties on account of consent decree violations. Unless the
consent decree provides otherwise, letters to defendants
demanding payment of stipulated penalties should be sent by the
Department of Justice (DOJ). This memo lists the following steps
to enlist DOJ assistance: (1) Region sends letter to DOJ
requesting DOJ to issue a demand letter, containing a summary of
relevant facts, issues, and proposed solutions; (2) DOJ sends
Region and Office of Enforcement any response to the demand
letter; (3) if the response is unsatisfactory, Region sends
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direct referral package to DOJ, requesting that DOJ enforce the
unresolved consent decree violations; (4) DOJ takes action to
enforce the original consent decree with full participation by
Region; and (5) when the defendant pays a stipulated penalty to
the government without receiving a demand letter, Region notifies
the appropriate Associate Enforcement Counsel. This document
concludes with a paragraph on making appropriate entries in the
SPMS (now STARS) Consent Decree Tracking Measure.
D. PT.4 Confidential Information (Summaries of BEN and
ABEL Case Memoranda not contained in Compendium
(GM-no) (PT. 4-1)
Summaries of BEN and ABEL Case Memos not contained in
Compendium
This enforcement sensitive case memorandum reviews all the
case law in the area of measuring and recapturing of economic
benefit. It is designed for environment enforcement
professionals at the Federal, State and local level. It examines
the issue by topic and uses the cases to illustrate the major
points. The current memorandum is dated August 1, 1993. It is
usually updated on an annual basis. Government enforcement
personnel can obtain copies from Jonathan Libber at (202) 564-
6011.
(GM-no) (PT. 4-2)
Ability to Pay —For-Profit Entities: An Analysis of
Judicial and Administrative Interpretation
This enforcement sensitive case memorandum reviews all the
case law in the area of establishing and proving a violator's
claim of inability to afford compliance, clean-ups or civil
penalties. It is designed for environment enforcement
professionals at the Federal, State and local level. It examines
the issue by topic and uses the cases to illustrate the major
points. The current memorandum is dated August 1, 1993. It is
usually updated on an annual basis. Government enforcement
personnel can obtain copies from Jonathan Libber at (202) 564-
6011.
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III. CONTRACTOR LISTING (CL)
A. CL.l General Listing Procedures
(GM-no) (CL.1-1)
US Environmental Protection Agency Contractor Listing
Procedures and Guidance (May 1993)
This document sets forth the procedures for the Contractor
Listing Program (CLP). It addresses both listing and removal
procedures for both mandatory and discretionary listing. This
document contains:
1) a summary of the legal authority for the contractor
listing program, including the statutory and regulatory
authorities governing the CLP;
2) a detailed description of the procedures followed
by the Listing Official (LO) in processing both
mandatory and discretionary recommendations to list;
3) a detailed description of the procedures the LO
follows with processing automatic removals and requests
for removal from the EPA List of Violating Facilities
(the List).
4) a description of the roles in the process of EPA
staff in both the Regions and Headquarters; and
5) procedures for publishing confirmations of listing
and removal from the List.
In addition, the document contains a number of attached
documents which can be used as guidance when drafting the
documents called for under the CLP's procedures. The attachments
also include Federal regulations governing the listing program
and copies of policy documents and case decisions pertaining to
the listing program.
B. CL.2 Discretionary Listing
(GM-53) (CL. 2-1)
Guidance on Implementing the Discretionary Contractor
Listing Program (November 26, 1986)
This guidance establishes Agency policy and procedures for
implementing the discretionary contractor listing program in EPA
enforcement proceedings. After the statement of purpose and the
background sections, this document covers multiple topics as they
apply to contractor listing.
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First of all, certain statutes and Executive Order 11738
authorize EPA to prohibit facilities from obtaining federal
government contracts, grants, or loans, as a consequence of
criminal or civil environmental violations. The policy describes
appropriate cases for discretionary listing recommendations: (1)
violations of consent decrees; (2) continuing or recurring
violations following filed civil judicial actions; (3) violations
of administrative orders; (4) multi-facility noncompliance within
a single company; and (5) other circumstances. The document then
recites the required standard of proof in listing proceedings.
It also addresses fairness concerns in EPA use of contractor
listing, press releases on contractor listing actions,
coordination with the Department of Justice, applicability of
contractor listing to municipalities, use of listing in
administrative orders, obtaining information concerning
government contracts held by a facility under consideration for
listing, and Headquarters assistance in preparing and processing
listing recommendations.
This listing guidance includes an appendix entitled "The
Listing Program and Final Revisions to 40 CAR Part 15." Also
included are five attachments: (A) Model Listing Recommendation
Based on Administrative Enforcement Action; (B) Model Listing
Recommendation Based on Judicial Enforcement Action; (C)
attachment to B; (D) Model Letter to a Facility Violating the
Clean Water Act Requesting a List of its Federal Contracts,
Grants, and Loans; and (E) [same as D for the Clean Air Act].
C. CL.3 Asbestos
(GM-No) (CL. 3-1)
Asbestos Contractor Listing (June 30, 1988)
The subject of this policy is the application of contractor
listing regulations to the specific circumstances of a violation
of a NESHAP by an asbestos demolition and renovation (D&R)
company. It discusses the issues of listing: (1) where a company
has repeated violations of short duration, (2) when it is
appropriate to designate the company rather than the demolition
site as the "facility", and (3) when actions satisfy the
requirement of "correction of conditions giving rise to listing".
(GM-NO) (CL. 3-2)
Defining the "Violating Facility" for Purposes of
Listing Asbestos Demolition and Renovation Companies
Pursuant to Section 306 of the Clean Air Act (March 11,
1988)
A "facility" includes "any...location or site of
operations...to be used i the performance of a contract, grant or
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loan" under the definition in Section 15.4 of the Clean Air Act.
This policy confirms that the business address or the address of
some other property used by an asbestos demolition and renovation
(D&R) company may be used to identify the "violating facility".
This is in addition to the address of the particular site
involved in the violating activity (e.g., the place of business
of a customer). Based upon this interpretation of facility, EPA
can place a D&R company on the List of Violating Facilities, so
long as the business address of the contractor is fairly
associated with the activity which is the violating conduct.
D. CL.4 Mandatory Listing
(GM-32) (CL. 4-1)
Implementation of Mandatory Contractor Listing (August
8, 1984)
The proposed revisions to 40 CAR Part 15 require that the
List of Violating Facilities automatically include any facility
which gives rise to a criminal conviction of a person under
Section 113(c)(l) of the Clean Air Act or Section 309(c) of the
Clean Water Act. This document describes the procedures for
mandatory listing and the procedures for removal from the
mandatory list.
(GM-No) (CL. 4-2)
EPA Policy Regarding the Role of Corporate Attitude,
Policies/ Practices, and Procedures in Determining
Whether to Remove a Facility from the EPA List of
Violating Facilities Following a Criminal Conviction
(October 31, 1991)
This policy discusses the AA's determination and the EPA
Case Examiner's decision in Valmont Industries, which established
the principle that the presence of a poor corporate attitude
regarding compliance with environmental standards, thus creating
a climate facilitating the likelihood of a violation, may be part
of the condition giving rise to the conviction which must be
corrected prior to removal of the facility from the List. Then
it clarifies the extent to which corporate attitude may be a
relevant factor for determining correction in cases involving
knowing or negligent criminal conduct, where evidence of willful
falsification or deception itself is not involved.
Criteria are provided which will be applied by EPA in
determining whether the condition giving rise to a conviction has
been corrected in a given case. Factors which EPA will consider
include, without limitation: (1) the establishment of an
effective program to prevent and detect environmental problems
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and violations of the law (in this regard, six steps are
enumerated which, taken together, satisfy at least minimally the
requirement of the exercise of due diligence); (2) the relation
of the precise actions included in the program to the size,
nature of business, and prior history of the organization; and
(3) any voluntary environmental cleanup or compliance
activities, or pollution prevention or reduction measures
performed.
IV. SETTLEMENTS (SE)
A. SE.l Procedures
(GM-42) (SE. 1-1)
Form of Settlement in Civil Judicial Cases (July 24,
1985)
In response to a situation in which a case was settled
without a consent decree and the defendant later refused to abide
by the terms of the informal settlement, the Office of
Enforcement decided to place in writing the Agency's general
policy regarding the form of settlement of civil judicial
enforcement cases.
This policy directs that after a complaint is filed, all
civil judicial cases should be settled only by consent decree, or
where appropriate, by stipulation of dismissal. The "where
appropriate" in the latter option refers to situations where the
settlement requires payment of a penalty and the penalty has been
paid in full at the time of settlement.
In cases involving "extraordinary and compelling
circumstances" in which EPA, in consultation with the Dept. of
Justice, decides to settle without a consent decree or
stipulation of dismissal, the Agency attorneys should obtain
advance concurrence from the Asst. Administrator for Enforcement.
(GM-62) (SE. 1-2)
Guidance on the Use of Alternative Dispute Resolution
in EPA Enforcement Cases (August 14, 1987)
According to this guidance, EPA intends to use the
Alternative Dispute Resolution [ADR] process to efficiently
resolve enforcement actions with results similar to those the
Agency reaches through litigation and negotiation. This guidance
seeks to: (1) establish policy; (2) describe methods; (3)
formulate case selection procedures; (4) establish
qualifications; and (5) formulate case management procedures.
First, the document describes the methods of ADR, such as
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mediation, arbitration, fact-finding, and mini-trials. Then it
discusses characteristics of enforcement cases suitable for ADR.
Such traits include impasse (actual or potential), resource
considerations, and remedies affecting parties not subject to an
enforcement action (local/state government, citizen group, etc.).
The document next prescribes the procedure for approval of cases
for ADR — integrating selection of cases for ADR into the
existing enforcement case selection process and creating decision
points and contacts in the Regions, Headquarters, and the Dept.
of Justice to determine whether to use ADR in particular actions.
Following those sections, the guidance discusses procedures
for selection of a qualified Third Party Neutral. Then, other
miscellaneous issues are discussed, such as memorialization of
agreements, fees for Third Party Neutrals, confidentiality of
records and communications arising from ADR, and the relationship
of ADR to "timely and appropriate" and "significant
noncompliance" requirements. It concludes with a section
detailing procedures for the management of ADR cases, with
illustrative attachments for each of the various ADR techniques.
(GM-73) (SE. 1-3)
Process for Conducting Pre-Referral settlement
Negotiations on Civil Enforcement Cases (April 13,
1988)
This document is (1) an EPA-DOJ agreement on the process for
conducting pre-referral settlement negotiations of non-Superfund
civil judicial enforcement cases and (2) an attached set of
protocols establishing a process for providing a Regional office
with pre-authorization to negotiate settlement with potential
defendants before resorting to the full-scale referral/litigation
process. The document is divided into five main sections
providing guidance and a flow chart with a timeline for achieving
the procedures set out in the text.
First, to initiate the process, the Regional Administrator
shall send to the Office of Enforcement (OE), Headquarters (HQ)
Program Compliance Office, and the Department of Justice (DOJ) a
mini-litigation report/case summary addressing eleven listed
topics and a proposed draft consent decree. Second, DOJ, OE, and
HQ Program Office provide comments on the proposed case, national
issues, terms of settlement, further contact points, and
negotiation/litigation strategy. Third, the EPA HQ must either
approve or disapprove the signed consent decree for civil
settlements. Simultaneously, DOJ must review the decree and
approve or disapprove. Finally, if approved, DOJ moves the court
to enter the consent decree.
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(GM-39) (SE. 1-4)
Enforcement settlement Negotiations (May 22, 1985)
The Office of Enforcement (OE) drafted this document as a
result of several Regions submitting settlements for OE approval
that had been communicated to and tentatively agreed upon with
defendants without Headquarters' (HQ) knowledge, involvement, or
approval. This policy emphasizes that a copy of all draft
settlement agreements should be transmitted by the Regional
Counsel to the appropriate Enforcement Counsel before it is
presented to the defendant. In addition, the policy briefly
explains the rationale behind this policy and how in the future
OE will handle cases in which Regions have concluded settlements
without prior consultation with HQ.
(GM-34) (SE. 1-5)
Policy Against "No Action" Assurances (November 16,
1986)
This policy reaffirms EPA policy against giving definitive
assurances, either written or oral, outside the context of a
formal enforcement proceeding that EPA will not proceed with an
enforcement response for a specific individual violation of an
environmental protection statute, regulation, or other legal
requirement.
The policy briefly explains the reasons for not making "no
action" promises, the types of requested assurances to which this
policy applies, exceptions to this policy, and how the policy
relates to state and local enforcement efforts. In addition,
guidance is given on how to proceed in cases of definitive
written or oral no action commitments.
B. SE.2 Terms of Settlement
(GM-80) (SE. 2-1)
Multi-media Settlements of Enforcement Cases (February
6, 1990)
The purpose of this document is to provide guidance which
explains (a) EPA disfavor of case settlements which include
releases of potential enforcement claims under statutes not named
in the complaint and not serving as the basis for any EPA
enforcement action, and (b) the procedure for approval for any
multi-media settlements of enforcement claims in civil judicial
enforcement claims.
Since standard EPA policy dictates that releases should be
no broader than the causes of action asserted in the complaint,
EPA should grant a multi-media release only in exceptional single
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media enforcement cases. This guidance lists three factors to
consider in granting such a release: (1) the extent to which EPA
is in a position to know whether it has a cause of action
warranting further relief against the settling party under each
of the statutes included in the relief; (2) whether the
settlement provides adequate consideration for the broader
release; and (3) whether the settling party is in bankruptcy. It
also prohibits releasing any cause of action not based on an EPA
federal statute.
The next section is procedural. Approval for the release
must be secured from the appropriate EPA official. There must be
cross-media consultation and investigation among all affected
Regional Program Offices. The Regional Administrator must give
Headquarters notice of the release and an explanation of the
Region's decision. Finally, the Office of Enforcement division
with the lead in the settlement must ensure that other affected
divisions don't object to the multi-media release.
(GM-79) (SE. 2-2)
Interim Policy on the Inclusion of Pollution Prevention
and Recycling Provisions in Enforcement Settlements
(February 25, 1991)
This policy offers Agency enforcement personnel a generic
interim policy and guidelines for including pollution prevention
and recycling provisions in administrative or judicial settlement
agreements. After stating its purpose and giving some background
on the EPA's definition of pollution prevention, the document is
split into two sections.
First, the document states the interim policy: EPA favors
pollution prevention and recycling as a means of achieving and
maintaining compliance and of correcting outstanding violations
when negotiating enforcement settlements (civil or criminal and
with all entities). It continues, offering four situations which
favor the use of pollution prevention conditions in the
settlements. Then it explains the use of pollution prevention as
a means of correcting a violation and pollution prevention
conditions "incidental" to the correction of a violation.
The last part of the policy details specific elements of the
interim policy. It provides factors for establishing timeliness
for implementing the conditions: (a) seriousness of the
violation; (b) aggregate gain in "extra" pollution prevention;
(c) reliability/availability of the technology; (d) applicability
of the technology; and (e) compliance-related considerations. It
goes on to discuss general considerations for assessing penalties
and more specific guidelines for supplemental environmental
projects. GM-79 concludes with a brief discussion of tracking
and assessing compliance with settlement terms, delegations and
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level of concurrence, and organizational issues.
Attached to this document are a list of seventeen target
chemicals, the Policy on the Use of Supplemental Environmental
Projects in EPA Settlements (PT.-2-2), and a memo (Attachment B)
announcing the creation of an Agency workgroup on multi-media
enforcement.
(GM-52) (SE. 2-3)
Final EPA Policy on the Inclusion of Environmental
Auditing Provisions in Enforcement Settlements
(November 14, 1986)
This document provides Agency enforcement personnel with
general criteria for and guidance on selecting judicial and
administrative enforcement cases in which EPA will seek to
include environmental auditing provisions among the terms of any
settlement.
The first major section of the guidance provides the
statement of policy and suggests that environmental auditing
provisions are most likely to be proposed in settlement
negotiations when there is a pattern of violations attributable
to the absence of an environmental management system, or when the
type of violations indicates the likelihood that similar
noncompliance problems may exist or occur elsewhere in the
facility or at other facilities operated by the regulated entity.
This section goes on to discuss the scope of the audit
requirement (which type of audit to propose), EPA oversight of
the audit process, EPA requests for audit-related documents,
stipulated penalties for audit-discovered violations, and the
effect of auditing on EPA inspection and enforcement. EPA
employees are instructed in the last major section of the
auditing guidance to follow Implementing Nationally Managed or
Coordinated Enforcement Actions (RF.1-5) and the Revised Policy
Framework for State/EPA Enforcement Agreements (SF.1-2) when
negotiating over facilities located in more than one EPA region.
There are several attachments to the auditing guidance:
A - Environmental auditing policy statement;
B - Representative sample of environmental auditing settlements
achieved to date;
C - Model environmental compliance audit provision, with require-
ment for certification of compliance;
D - Model environmental compliance audit provision, with require-
ment for submission of plan for improvement of
environmental management practices;
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E - Model environmental compliance and management audit provision
with all audit results submitted to EPA;
F - Model environmental compliance and management audit provision
with extensive Agency oversight; and
G - Model emergency environmental management reorganization
provision.
V. CRIMINAL ENFORCEMENT POLICIES THAT IMPACT CIVIL ENFORCEMENT
(CP)
A. CP.l Parallel Proceedings
(GM-no) (CP.1-1)
Parallel Proceedings Policy (June 21, 1994)
The purpose of this policy is to define and explain by whom,
why, when, and to what purpose EPA uses parallel proceedings to
maximize results and minimize legal risks for all enforcement
actions and to preserve limited enforcement resources. The
document states five principles that guide EPA enforcement
personnel as to when to use parallel civil and criminal
proceedings. I then lists some procedures to follow when during
parallel proceedings.
B. CP.2 Case Management Procedures
(GM-no) (CP.2-1)
The Exercise of Investigative Discretion (January
12, 1994).
This policy has been issued by the Director of OCE to give
EPA Special Agents guidance in assessing and evaluating their
cases for potential criminal referral and prosecution. It
combines expressions of Congressional intent and OCE experience
in operating under existing criminal/civil Regional case-
screening criteria, incorporating by reference GM-85 (recodified
as CM.1-2), "Regional Enforcement Management: Enhanced Regional
Case Screening" (December 3, 1990). This policy acquaints civil
enforcement personnel with the criteria under which OCE its cases
so that appropriate referrals are made from civil to criminal
within EPA.
Congressional intent regarding case selection is summarized
as follows: criminal enforcement authority should target the most
egregious and significant cases. EPA's case selection process
for identifying the most worthy cases for criminal case
development focuses on 1) significance of environmental harm and
2) culpable conduct. The two selection criteria further
enumerate factors to weigh culpable conduct and seriousness of
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the environmental harm. Emphasis is placed on equal application
of the criteria and factors to corporations and individuals
alike, based on the evidence of culpability in each case.
Emphasis is also placed on the consideration of administrative
and civil remedies as appropriate alternatives for less flagrant
violations, and correctly distinguishing these latter cases from
appropriate criminal cases in practice.
(GM-no) (CP.2-2)
Referral of Criminal cases for Prosecutive Action
(March 2, 1993).
This policy redelegates authority for criminal case
referrals to DOJ from the Director of OCE to the Director of the
Criminal Investigation Division, to be accomplished in
consultation with the Director of the Criminal Enforcement
Counsel Division. The policy also incorporates the "Regional
Enforcement Management: Enhanced Regional Case Screening" (GM-85
recodified as CM.1-2) as the starting point of the referral
process, to consider whether violations would be best addressed
by administrative, civil-judicial, and/or criminal investigation
and prosecution. The role of the Regional Criminal Enforcement
Counsel (RCEC) in the process is to assess the legal soundness of
the case, provide appropriate liaison functions, and assist DOJ
when warranted in prosecuting the cases.
The policy sets out a system of case initiation and
review beginning with the Special Agent-in-Charge, the RCEC, and
finally the Director of the Criminal Investigations Division.
All cases receive this review prior to referring the case to the
appropriate United States Attorney's Office for assistance in
investigation, grand jury action, and/or prosecution.
VI. PUBLICITY (PB)
A. PB.l Civil Enforcement
(GM-46) (PB. 1-1)
Policy on Publicizing Enforcement Activities (November
21, 1985)
This document establishes EPA policy on informing the public
of Agency enforcement activities, since publicity is an element
of the EPA's program to deter environmental noncompliance.
The memorandum begins with a statement of policy: press
releases are to be issued for judicial and administrative
enforcement actions, including settlements and successful rulings
and other significant enforcement program activities. The main
part of this policy, implementation of the policy, is divided
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into five subsections. First, it discusses when to use press
releases. Next, it covers approval of press releases. Then it
addresses coordination among various EPA offices, the Dept. of
Justice [DOJ], and the states. Distribution of press releases to
the local and national media and to targeted trade press and
mailing lists is discussed in the fourth subsection. The GM
concludes by exploring use of publicity other than press
releases.
An Addendum of August 4, 1987, is an attached guidance on
how to address the issue of the "penalty gap" that occurs where
the difference between the proposed and final penalty is
appreciable. The addendum also provides standard text to be
included in EPA press releases.
B. PB.2 Criminal Enforcement
(GM-no) (PB.2-1)
Policy on Responding to Public or Media Inquiries
Regarding Criminal Cases (December 22, 1989).
Criminal investigations are managed in EPA's criminal law
enforcement program by trained law enforcement personnel (Special
Agents). When cases warrant criminal prosecution they are
systematically referred to criminal prosecutors in the Department
of Justice for action. However, public inquiries regarding
criminal cases are not directed only to OCE or the Department of
Justice, but may come to other EPA employees who are not in the
criminal program. On those occasions when the public or news
media contact any Agency personnel seeking information about (or
even to verify the existence or determine the nature of) a
criminal case, all EPA personnel, whether in a civil or criminal
program, should respond: "EPA has a policy to neither confirm or
deny the existence of a criminal investigation". EPA personnel
may further explain that the purpose of that response is to
protect the Constitutional rights of the parties being
investigated, as well as to preserve the integrity of the
Agency's and the Department of Justice's criminal investigation,
which are conducted under strict Federal rules of criminal
procedure for those reasons.
VII. REGULATORY DEVELOPMENT (RG)
A. RG.l General Procedures and Goals
(GM-58) (RG. 1-1)
Issuance of Enforcement Considerations for Drafting and
Reviewing Regulations & Guidelines for Developing New
or Revised Compliance and Enforcement Strategies
(August 15, 1985)
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This document is a two-part directive. Part I addresses
enforcement considerations for drafting arid reviewing
regulations. Part II presents guidelines for developing new or
revised compliance and enforcement strategies.
Part I is intended to provide guidance in the form of a
checklist of minimum considerations for workgroup members to use
during the process of developing a "major rule" or a "significant
rule" that may have enforcement ramifications as well as any
other rule with enforcement implications. A checklist of thirty-
four questions follows, dividing the major concerns into:
preamble; definitions; scope and applicability of regulation;
performance standards; monitoring and inspection; record keeping/
recording requirements; and demonstrating compliance with
performance standards.
Part II is structured similarly, providing a guidance
checklist to evaluate the need for new or revised compliance and
enforcement strategies, to assess the appropriate timing for
completing these strategies, and to determine the scope of
strategies that need to be developed. The checklist applies to
developing new or revised strategies for: (1) new Agency program
initiatives; (2) new statutory responsibilities delegated to the
Agency; (3) revisions to existing regulations that a program
office determines will have a significant effect on an ongoing
program; and (4) programs with existing strategies that are not
producing adequate environmental results.
(GM-47) (RG. 1-2)
A Summary of OE's Role in the Agency's Regulatory
Review Process (January 27, 1986)
This guidance describes the Office of Enforcement's (OE)
role and responsibilities in the EPA regulatory process and sets
forth procedures for OE staff to follow in reviewing and
concurring in regulation packages.
The first part of the memorandum, OE's role in the Agency's
regulation review process, is divided into sections discussing
participation in Steering Committee meetings, Start Action
Request (SAR) review, Agency-wide work groups, Steering Committee
review, and red border review (the final interoffice review).
The second part of this document contains procedures for
concurrence on regulation packages under OE review, first
describes procedures under the old system, then describes
revisions to the procedures, and explains in greater detail the
procedures currently followed by OE.
Appendix 1 provides three charts outlining the regulation
review process. Chart 1 is the old system, and Charts 2 & 3 are
the new system. Appendix 2 summarizes EPA's regulation
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development and review process as managed by the Office of
Policy, Planning, and Evaluation (OPPE).
(GM-59) (RG. 1-3)
The Regulatory Development Process: Change in Steering
Committee Emphasis and OE Implementation (February 6,
1987)
EPA issued this directive to prevent situations where major
issues or concerns are raised at the last minute before a
Steering Committee meeting. The document is divided into two
sections and several attachments.
The first section provides a background sketch and statement
of purpose. The second section proffers two procedures to
follow: (1) at the conclusion of a Steering Committee meeting, a
draft agenda for the next meeting is distributed; and (2) each
Enforcement Counsel should review that draft agenda for matters
applicable to his or her program area and then provide a one page
summary for any issues that should be voiced to the Committee
with respect to each agenda topic.
Attachment 1 is the memo announcing this change. Attachment
2 outlines changes and roles in the regulatory development
process, including how the process will work, responsibilities of
workgroup chairs, and roles and responsibilities of Steering
Committee members. Attachment 3 is a prototype "Working Group
Format" with several "Fact Sheets."
(GM-4) (RG. 1-4)
Ex Parte Contacts in EPA Rulemaking (August 4, 1977)
This document presents guidelines all EPA employees should
follow in discussing the merits of proposed rules with interested
persons outside the Agency during the period between proposal and
promulgation.
First, during the period between proposal and promulgation
of a rule, all employees should respond to inguiries about the
rule, explain how it would work, and attend public meetings of
interested groups. Second, during this period, EPA employees may
meet with interested persons for the purpose of better
understanding any technical, scientific, and engineering issues
involved or discussing the broader questions involved.
In all cases, a written summary of the significant points
made at the meetings must be placed in the comment file. All new
data or significant arguments presented should be reflected in
the summary. This requirement applies to every form of
discussion with outside interested persons as long as the
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discussion is significant
VIII. STATE/FEDERAL AGREEMENTS (SF)
A. SF.l General Procedures and Goals
(GM-41) (SF. 1-1)
Revised Policy Framework for State/EPA Enforcement
Agreements (August 25, 1986 - originally issued June
26, 1984)
The document is the Agency's policy framework for
implementing an effective state/federal enforcement relationship
through national program guidance and regional/state agreements.
This document was intended to reinforce the Guidance for FY 1987
Enforcement Agreements Process (4/15/86), and to serve as a guide
for negotiations and implementation of the Enforcement
Agreements. The revisions incorporate into the Policy Framework
addenda developed between 1984 and 1986 in the areas of oversight
of state civil penalties, involvement of the state attorneys
general in the enforcement process, and implementation of
nationally managed/coordinated cases.
The policy framework is divided into six sections. The
first section, State/Federal Enforcement Agreements: Form, Scope
and Substance, sets forth the form and scope of the agreements as
well as the degree of flexibility the Regions have in tailoring
national policy to individual states.
The second section, Oversight Criteria and Measures:
Defining Good Performance, outlines the criteria and measures for
defining a quality program whether the compliance or enforcement
program is administered by EPA or a state. According to this
section, the criteria are intended to serve only as guidance and
are not to be adopted word-for-word. Criterion #5 is a new
section which deals with the definition of what constitutes
timely and appropriate enforcement response.
The next section, Oversight Procedures and Protocols, sets
forth principles on how EPA should conduct its oversight
function. This section discusses the approach, the process, and
the follow-up and consequences of oversight.
Criteria for Direct Federal Enforcement in Delegated States,
the fourth section, explains the circumstances under which EPA
takes direct enforcement action in a delegated state. It also
covers the manner in which EPA should take action so that state
programs are being strengthened simultaneously.
Section five, Advance Notification and Consultation, deals
with EPA's policy of "no surprises." It explains what measures
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must be taken with each state in order to ensure that the policy
is effectively carried out.
The final section. State Reporting, reviews key reporting
and recordkeeping requirements for management of data and public
reporting on compliance and enforcement program accomplishments.
It lists seven measures for EPA to use to manage and oversee
performance by Regions and states.
(GM-57) (SF. 1-2)
Guidance for the Fy 1989 State/EPA Enforcement
Agreements Process (June 20, 1988)
This guidance introduces the regional enforcement strategies
process as a means of addressing state and regional priorities
and reiterates the importance of timely and appropriate
enforcement responses and federal facilities compliance.
Attachment 1, the main part of the guidance, covers five
topics: (1) maintaining the enforcement agreements process; (2)
improved management and tracking of enforcement responses (for
enforcement responses that are timely and appropriate & for
tracking and follow-through on cases); (3) inspector training and
development; (4) up front agreements on penalty sharing; and (5)
working with states to improve federal facilities compliance.
IX. ORDERS AND DECREES (OR)
A. OR.l Drafting and Modifying Orders and Decrees
(GM-17) (OR. 1-1)
Guidance for Drafting Judicial Consent Decrees (October
19, 1993)
This document provides guidance on the provisions EPA should
include when drafting a settlement agreement covering a civil
enforcement action for which the federal government has decided
that judicial remedies are appropriate. The GM explains each
step in drafting a settlement agreement and accompanies the text
with examples for each part of an agreement.
First, the guidance explains standard front end provisions,
which provide the factual and legal background for the consent
decree, including the parties, the cause(s) of action, and the
procedural history. Next, the GM explains the transitional
clause. This clause signals the end of the introductory portions
of the decree and the beginning of the court's order.
The majority of the guidance is a detailed explanation of
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provisions that may be included in the court's order. These are:
(a) jurisdiction and statement of the claim; (b) applicability
clause; (c) public interest provision; (d) definitions section;
(e) compliance provisions — generally/for repeat violators/
performance bonds; and (f) thirteen provisions defining other
responsibilities of the parties to the decree. Appendix A
presents a consent decree checklist. Appendix B is a sample
consent decree.
(GM-68) (OR. 1-2)
Procedures for Modifying Judicial Consent Decrees
(January 11, 1988)
This document clarifies procedures for modifying consent
decrees and other judicial orders in EPA enforcement cases. The
memorandum defines a consent decree "modification" as changes to
the consent decree proposed jointly by the government and the
defendant to address circumstances that arose since the entry of
the consent decree. The policy then prescribes four steps: (1)
when the need to modify is discovered, Region sends a letter to
the Enforcement Counsel and to the Dept. of Justice [DOJ]
notifying them of the intent to open negotiations with the
defendant and summarizing relevant facts, issues, and proposed
solutions; (2) Region proceeds to negotiate a modification in the
manner described in the letter; (3) the Office of Enforcement
[OE] retains authority for approving modifications on behalf of
EPA, and DOJ retains the same for the U.S.; (4) after OE and DOJ
approve the modification, DOJ presents the proposed consent
decree modification to an appropriate court for approval. The
document concludes with a paragraph on appropriate reporting in
the SPMS (now STARS) Consent Decree Tracking Measure.
B. OR.2 Monitoring and Enforcing Orders and Decrees
(GM-86) (OR. 2-1)
Manual on Monitoring & Enforcing Administrative and
Judicial Orders (February 6, 1990)
This Manual is a large collection of text and appendices
intended to guide EPA enforcement staff on their roles and
responsibilities in monitoring and enforcing final order
requirements. The Manual applies to all regulatory enforcement
programs except CERCLA (Superfund). In general, the Manual
outlines the process for working with EPA Financial Management
Offices and the Department of Justice (DOJ) in monitoring and
collecting penalties.
Chapter One (Monitoring and Reporting the Status of Final
Orders) includes a section defining final administrative and
judicial orders and sections on drafting enforceable orders,
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monitoring systems, reporting requirements, and additional
oversight requirements for administrative orders and for judicial
orders.
Chapter Two (Collection of Administrative Penalties)
discusses authority for administrative penalty collection,
financial management collection procedures, and organizational
roles and responsibilities.
Chapter Three (Collection of Judicial Penalties) includes
sections on payment depositories, organizational roles and
responsibilities, distribution of final orders, monitoring
payments, EPA enforcement reporting of payment status,
coordination of DOJ and EPA accounts receivable reporting
systems, pursuit of outstanding penalty debts, and termination of
judicial penalty debts by various means.
Chapter Four (Enforcing Final Orders) provides information
on enforcing administrative and judicial orders, with subsections
on modifications, stipulated penalties, motions to enforce, and
contractor listing.
Compendium documents RF.2-2, OR.2-2, PT.3-1, TK.1-1 and
TK.1-2 are attached. Also included are appendices entitled: (1)
Model System for Administrative Penalty Collection; (2)
Procedures for Modifying Judicial Decrees; (3) Procedures for
Notifying DOJ of Stipulated Penalties; and (4) Contractor Listing
in Cases of Non-compliance with Administrative or Judicial
Orders.
(GM-27) (OR. 2-2)
Guidelines for Enforcing Federal District Court Orders
(April 18, 1984)
This guidance outlines how to ensure enforcement of federal
court orders. The purpose of the guidelines is to establish
uniform Agency objectives in preparing for and in responding to
violations of court orders. The guidelines apply to the
enforcement of consent decrees and nonconsensual orders entered
in federal district court that remedy violations of any of EPA's
laws or regulations.
The guidelines explain in some detail how to draft orders to
ensure enforceability. The guidelines also address how to select
responses to violations of court orders. Finally, other matters,
such as who should sign a consent decree and what types of
timetables should be established for responding to certain
violations are briefly discussed.
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X. FEDERAL FACILITIES (FF)
A. FF.l Compliance Monitoring and Enforcement
(GM-25) (FF. 1-1)
Federal Facilities Compliance Strategy (November 8,
1988)
EPA developed the new Federal Facilities Compliance Strategy
in order to "ensure that federal agencies achieve compliance
rates in each media program which meet or exceed those of major
industrial and major municipal facilities." The document, also
known as the "Yellow Book," establishes a comprehensive and
proactive approach to achieving and maintaining high rates of
compliance at all federal facilities.
The Yellow Book was written: (1) to serve as guidance for
EPA Headquarters and Regional staff; (2) to clarify state and
federal compliance monitoring and enforcement roles; (3) to
inform federal agencies of EPA's strategy and identifying
procedures to be followed when violations have been discovered;
and (4) to communicate EPA's approach for addressing compliance
problems at federal facilities to Congress, the public, and
concerned interest groups.
The Yellow Book is comprised of eight chapters which set out
the basic framework for EPA's media programs to follow in
ensuring that federal facilities are fully integrated into
federal and state compliance monitoring and enforcement
activities. The chapters are: (1) Introduction; (2) Summary of
Relevant Environmental Statutes and Executive Orders; (3)
Identification of the Regulated Community; (4) Compliance
Promotion, Technical Assistance, and Training; (5) Compliance
Monitoring; (6) Enforcement Response to Compliance Problems and
Violations of Environmental Laws at Federal Facilities; (7) Role
of the States in Responding to Federal Facilities Violations; and
(8) EPA Roles and Responsibilities for Program Implementation.
XI. TRACKING ENFORCEMENT ACTIVITIES (TK)
A. TK.l General Procedures and Goals
(GM-76) (TK. 1-1)
Agency Judicial Consent Decree Tracking and Follow-Up
Directive (January 11, 1990)
This policy specifies EPA requirements for how Regional
Offices track compliance with judicial consent decree
requirements and for how Regions select and document decisions on
appropriate EPA follow-up responses to consent decree violations.
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The document prescribes requirements for: (1) implementing
the Agency guidance on certification of compliance with
enforcement agreements; (2) regional consent decree tracking and
follow-up database management; (3) file documentation of consent
decree violations; (4) decisions on Agency follow-up to
violations; (5) maintaining data on the current status of EPA
consent decrees; and (6) termination of consent decrees and
closing cases.
The policy first provides some general background
information on the allocation of consent decree tracking
responsibilities between regional program divisions and Offices
of Regional Counsel. It then expands on each of the six
requirements listed above. The fourth section details the
criteria for determining the appropriate EPA response to
violations: the environmental harm caused, the duration of the
violation, the compliance history of the defendant, the
deterrence value, the defendant's ability to respond, and the
economic gain of non-compliance.
The policy also includes a sample Consent Decree Violation
and Follow-Up Form.
(GM-74) (TK. 1-2)
Guidance on Certification of Compliance with
Enforcement Agreements (July 25, 1988)
Verification of settlement agreements which require specific
performance to achieve or maintain compliance with a regulatory
standard is key to EPA enforcement. The Office of Enforcement
issued this guidance to assist drafters of settlement agreements
in the effort to make the agreements more easily verifiable and
enforceable.
The guidance achieves its purpose through two elements: (1)
certification of compliance by a responsible corporate official,
and (2) documentation to verify compliance. The section
explaining the first element states that a "responsible official"
must sign the compliance reports (under threat of criminal or
civil contempt sanctions for intentionally deceiving or
misleading the EPA) and that certification is especially
important for entities with a history of non-compliance. The
other section discusses why documentation to verify compliance
should be identified in settlement agreements.
Attachment A provides a suggested checklist for
documentation purposes.
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(GM-40) (TK. 1-3)
Revised Regional Referral Package Cover Letter and Data
Sheet (May 30, 1985)
In order to streamline the civil judicial case referral
process, a new standard referral package cover letter and data
sheet were formulated. (See attached copy of the Cover Letter
and Model Data Sheet.) Most of the case information is to be
provided on the data sheet so that it is easier to track
referrals. The cover letter and data sheet contain eleven
elements designed to provide a brief, but thorough summary of the
case to the reviewer.
(GM-19) (TK. 1-4)
Consent Decree Tracking System Guidance (December 20,
1983)
This document offers guidance on the use of the tracking
system to enable EPA to track the compliance of consent decrees
for all media on a national basis.
This guidance begins by defining the scope of the system:
information on all court-entered judicial consent decrees to
which EPA is a party, as well as the status of compliance efforts
required by these decrees. The memorandum next discusses the
tracking system's objectives. Then, the document explains the
key tracking system components: (l) the Repository (a collection
of physical copies of EPA consent decrees); (2) the Consent
Decree Library (an automated management information system to
store summaries of each EPA consent decree on file in the
Repository); (3) compliance monitoring (source reporting and/or
on-site inspections); and (4) compliance tracking (gathering and
compiling compliance information). Next, the GM briefly
discusses tracking system operation. It concludes by defining
the office responsibilities of the NEIC, Regional Administrators,
and Office of Enforcement Headquarters. Included in this
guidance are Attachment A, a sample prospective quarterly report,
and Attachment B, a sample retrospective quarterly report.
(GM-60) (TK. 1-5)
Procedures and Responsibilities for Updating and
Maintaining the Enforcement Docket (March 10, 1987)
This policy declares that an accurate and current docket
data base depends on the initial entry of cases and on the
regular monthly review and case update by the Headquarters (HQ)
and Regional attorneys assigned to the case. The memo lists
eight steps in the process of maintaining the docket (and states
who performs them and when): (1) prepare Case Data and Facility
Data Forms for the initial entry of cases; (2) enter all new
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cases; (3) prepare monthly case updates; (4) enter monthly case
updates; (5) run reports to verify overall accuracy of Docket and
distribute for verification; (6) verify accuracy and make
corrections; (7) enter corrections; and (8) run accounting
reports and complete SPMS (now STARS) reporting instruction
forms.
The policy continues, offering a further explanation of the
initial entry of a case, major milestone event dates, overall
status, HQ review time, the "Referral Indicator," concluded
cases, HQ Division, and law/section violated and cited in the
complaint.
(GM-61) (TK. 1-6)
Enforcement Docket Maintenance (April 8, 1988)
This guidance provides detailed procedures to ensure that
all parties understand their responsibilities for entering cases
into the Docket and for the regular monthly review and update of
the Case Status Report. The memo first discusses the definition
of a case, then initial case entry, followed by case status
review procedures, and concludes with quality assurance.
The first section covers DOCKET design, assigning a case
number, amendments to ongoing cases, and use of DOCKET for SPMS
(now STARS), accountability, and with the Workload Model. The
second part of the document, initial case entry, directs the
regional attorney to enter the case into the system as soon as he
or she begins case development. It then instructs the regional
attorney to complete: (1) a Case Data form [appendix A]; (2) a
Facility Data form [appendix B]; and (3) a Case Summary [appendix
C].
The third section, case status review procedures, explains
that the lead EPA attorney has primary responsibility for monthly
review and update of all active cases, particularly concentrating
on: (a) case information; (b) major milestones and miscellaneous
events; (c) staff and attorney names; (d) results; (e) penalties;
and (f) case status comments. The final section concisely
addresses quality assurance, which results from OE HQ monthly
review of the overall DOCKET for accuracy and completeness.
Appendix D gives an example of the nature and method of
entering status comments. Appendix E charts roles and
responsibilities (who, what, when, and how). Appendix F provides
summary "case code" tables.
(GM-no) (TK.1-7)
Support of the Enforcement DOCKET for Information
Management in OECA (October 3, 1994)
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This policy adds formal administrative enforcement actions
to the DOCKET information system. Prior to this, only judicial
actions were officially tracked. In addition it states that
Regional Counsels have the primary responsibility for entering
and maintaining enforcement data. Although it recognizes a role
for the Division Directors in ORE. The policy further states
that OECA will examine the feasibility of including all formal
administrative orders in DOCKET.
XII. CASE MANAGEMENT (CM)
A. CM.l General Procedures and Goals
(GM-71) (CM. 1-1)
Case Management Plans (March 11, 1988)
This document offers a mechanism to enhance the
effectiveness of the environmental enforcement program by
providing a road map for bringing a case from initiation to
conclusion. The primary elements of the mechanism are organizing
the tasks to be performed, assigning the persons to perform those
tasks, and outlining the dates by which those tasks are to be
completed. The mechanism is supposed to cover both litigation
and negotiation elements, as well as legal and technical tasks.
The guidance gives general procedural directions leading up
to the Department of Justice (DOJ) attorney having a case plan in
place by the date of filing of the complaint. The case plan
addresses the roles of DOJ, the Assistant U.S. Attorney, and
Regional and Headquarters legal and technical staff. The case
plans are to be updated on a quarterly basis to maintain their
effectiveness.
A two-page form, "Preliminary Case Plan," is attached.
(GM-85) (CM. 1-2)
Regional Enforcement Management: Enhanced Regional Case
Screening (December 3, 1990)
This guidance is divided into five sections. First, it
explains the objectives of case screening, including the
strategic value of undertaking federal enforcement, the
appropriate enforcement response, the appropriate considered use
of innovative settlement conditions or tools, the encouragement
of potential multi-media and cross-statutory action, and the
effective integration of criminal and civil enforcement. The
second section lays out the requirements for a regional case
screening capability. It lists criteria for an acceptable case
screening process, explains the attached case screening worksheet
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to help assess what further screening might be necessary and to
help identify early on how an enforcement case should be
developed. This section offers five ways in which Regions can
phase in and focus enhanced case screening, and it requires
coordination and review before and during criminal investigations
in cases of ongoing releases or discharges.
The third section and attached charts la, Ib, and Ic explain
the OE recommended case screening approach. It recommends
continued reliance on initial screening on a single media basis
using the case worksheets, detailed monthly review by a multi-
media screening committee of cases identified as having a multi-
media concern, and a third level of committee reviewing
violations identified through the civil enforcement process for
criminal enforcement potential and review of criminal leads and
investigations for priority. The fourth section declares that,
through strategic planning, the Region can target investigation
and enforcement for a number of factors. The final section
provides general oversight directions to help the Office of
Enforcement evaluate implementation to help meet EPA's goals for
criminal enforcement and multi-media cases.
Three charts are attached. A sample case screening
worksheet is also attached. Four narrative appendices are also
attached discussing: (1) choosing between administrative and
judicial enforcement; (2) identifying candidates for innovative
settlement terms or enforcement tools; (3) ensuring a multi-media
case screening perspective; and (4) integrating civil and
criminal enforcement activities.
(GM-20) (CM. 1-3)
Guidance on Evidence Audit of Case Files (December 30,
1983)
This guidance discusses the evidence audit system, which is
designed to establish an overall case document control system, to
provide quick and complete access to records, and to provide a
means for assuring admissibility of the evidence.
After the introduction, which discusses the purposes and
advantages of evidence audits, the guidance addresses the
proposed procedure. Under this section, the roles of the
Regional Administrator and the Asst. Administrator for the Office
of Enforcement are first discussed. Then the required elements
of an evidence audit are listed and briefly explained. These
are: (1) document assembly; (2) document organization and review;
(3) evidence profiles (graphic or narrative presentations of the
history and chain of custody of evidence from the time of
collection through final disposition); and (4) document storage
and retrieval. The document concludes with an operational
outlook narrative, explaining how to get assistance from the NEIC
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Evidence Audit Unit.
XIII. INSPECTIONS (IN)
(GM-5) (IN. 1-1)
Conduct of Inspections After the Barlow's Decision
(April 11, 1979)
This document offers guidance to the Regions in the conduct
of inspections in light of Marshall v. Barlow's Inc., and the
need to obtain warrants and other process for inspections
pursuant to EPA-administered acts. The guidance focuses on the
preparation for and conduct of inspections, including (1) how to
proceed when entry is denied, (2) under what circumstances a
warrant is necessary, and (3) what showing is necessary to obtain
a warrant.
The section titled "Conduct of Inspections" is divided into
seven parts. Preparation, including seeking a warrant before
inspection, administrative inspections v. criminal inspections,
the use of contractors to conduct inspections, and inspections
conducted by state personnel, comes first. Next, aspects of
entry are discussed, such as consensual entry, withdrawal of
consent, when entry is refused, and Headquarters notification.
Then, the guidance discusses areas where a right of warrantless
entry still exists: emergency situations, FIFRA inspections, and
"open fields" and "in plain view" situations. A section on
securing a warrant follows.
Next, the Barlow7s guidance explains standards and bases for
the issuance of administrative warrants in three contexts: civil
specific probable cause warrants, civil probable cause based on a
neutral administrative inspection scheme, and criminal warrants.
Guidance on inspecting with a warrant and returning the warrant
close out the section. Two conclusions are drawn: (a) Barlow's
requires EPA to formalize its neutral inspection schemes; and (b)
Barlow's generally precludes initiating civil and/or criminal
actions for refusal to allow warrantless inspections.
Three attachments are included. Attachment 1 is a warrant
application, affidavit, and warrant to conduct an inspection,
where the Agency has specific probable cause to believe that a
civil violation of an EPA regulation or Act has occurred.
Attachment 2 is the same three documents, in which the
establishment to be inspected has been selected under a neutral
administrative inspection scheme. Attachment 3 is a neutral
administrative scheme for CFC inspections.
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(GM-1) (IN. 1-2)
Visitor's Releases and Hold Harmless Agreement as a
Condition to Entry to EPA Employees on Industrial
Facilities (November 8, 1972)
Certain firms had required EPA employees to sign agreements
purporting to release the firms from tort liability as a
precondition to granting entry. This guidance responds to three
issues this practice presents.
First, while EPA employees can probably release the entities
from tort liability to themselves, the employees are instructed
not to sign such releases under any circumstances. Signing
jeopardizes the government's right of subrogation under the
Federal Employees Compensation Act. Second, while any agreement
to make the government responsible for employee-caused injuries
is probably invalid, employees are instructed not to sign any
agreement purporting to do so. Rather than sign an agreement,
this guidance directs the EPA employee to cite the statutory
authority granting the right of entry, without mentioning any
civil/criminal penalties. If access is denied, the employee is
to inform the Office of General Counsel, which will decide how to
proceed.
XIV. COMMUNICATIONS (CO)
CO. Communications with Litigants
(GM-6) (CO. 1-1)
Contracts with Defendants and Potential Defendants in
Enforcement Litigation (October 7, 1981)
This policy is a short memorandum on five requirements
governing contact with actual or potential defendants in
enforcement litigation. First, EPA needs to consult with the
Dept. of Justice (DOJ) before contacting defendants in
enforcement litigation or potential defendants in cases referred
to DOJ for filing. Second, EPA must give DOJ an opportunity to
participate in any meetings with such persons or firms to review
their compliance status. Third, EPA must give DOJ notice of and
opportunity to attend meetings requested by potential defendants
or their counsel. Fourth, EPA shall coordinate ground rules with
DOJ in advance of any meetings. Fifth, EPA must provide follow-
up information to DOJ promptly after the conclusion of any
meetings.
-------
39
(GM-7) (CO. 1-2)
"Ex Parte" Rules Covering Communications Which Are the
Subject of Formal Adjudicatory Hearings (December 10,
1981)
This policy guides EPA staff in recognizing and avoiding
improper ex parte communications and in taking remedial steps if
an improper ex parte communication occurs. Sections I - III
define ex parte contacts and describe the rules governing them.
Section IV describes measures for minimizing the adverse legal
impact of such communications when they occur.
The first section discusses why rules about ex parte
contacts exist and to what they apply, listing nine areas where
EPA conducts formal adjudicative hearings and listing
Administrative Procedure Act (APA) reguirements. The next
section addresses what an ex parte communication is, providing
the APA definition and a "working" definition. The third section
discusses the rules governing ex parte communications, including
what kinds of communications concern "the merits" of a hearing,
what communications within EPA are prohibited, and what
communications with persons outside EPA are prohibited. The
final section addresses ways to minimize ex parte communications
and actions to take if they should occur. In this section are
five illustrations of preventive measures to lessen the
likelihood of problems as well a curative measure, viz.. to make
the content and circumstances a part of the official record of
the proceeding and give the parties a chance to respond on the
record.
(GM-43) (CO. 1-3)
Enforcement Document Release Guidelines (September 16,
1985)
The Guidelines are intended to assist program personnel and
enforcement attorneys in their decisions on whether to withhold
or release enforcement documents requested by the public. They
are designed to provide Agency-wide consistency in the release of
enforcement related documents and to promote fairness to all
public interests. The guidance clearly states that it is
intended to provide only interpretive guidelines and general
principles, and that decisions to release documents will vary
with each case depending on each program's statutory and
programmatic needs.
The goal, scope, and general principles of the Guidelines
are briefly described. Next, the Guidelines address releasing
general enforcement documents. These include enforcement policy
documents, enforcement strategic planning documents, management/
administrative documents, deliberative support documents,
reference files, and documents containing attorney-client
-------
40
communications.
The last section discusses releasing case-specific
documents. The first part of this section looks at the release
of case files. It begins with a discussion of the release of
case files in general and then goes on to specifically address
the release of attorney work product and attorney-client
materials, settlement documents, and other documents such as law
enforcement documents which discuss unique investigative
techniques not generally known outside the government. The
second half discusses the release of case status reports.
The Appendix briefly describes several statutes and
regulations which place constraints on the Agency's discretion to
release documents to the public.
XV. MISCELLANEOUS (MI)
(GM-66) (MI. 1-1)
Assertion of the Deliberative Process Privilege
(October 3, 1984)
The purpose of this guidance is to prevent disclosure of
certain materials containing personal advice, recommendations, or
opinions relating to the development of Agency policy,
rulemaking, use of enforcement discretion, settlement of cases,
etc., in response to depositions, motions to compel discovery,
and questions posed at a trial or hearing. The guidance explains
when, who can, and how to assert the privilege.
Section I discusses the application of the privilege and
some of its limitations (with supporting case citations).
Section II explains when to assert the privilege. The Agency
will not assert the privilege in every case where it applies;
therefore, the materials should be released, except where: (a)
release may cause harm to the public interest; (b) the materials
are subject to another privilege justifying nondisclosure; or (c)
release would be unlawful. Section III explains that, in
general, the head of the office responsible for development of
the material in question should assert the privilege. Finally,
Section IV addresses how to assert the privilege, detailing six
procedural steps that must be undertaken.
Attached to this guidance are Delegation 1-49 of 10/3/84
(This is the actual delegation of authority from the
Administrator to assert the privilege.) and two short memoranda
from the General Counsel on procedures for obtaining concurrence.
-------
41
(GM-89) (MI. 1-2)
Strengthening the Agency's Administrative Litigation
Capacity (May 3, 1989)
This policy provides a mechanism to decide whether or not to
appeal adverse Administrative Law Judge (ALJ) decisions and how
to reply to Respondent appeals to the Chief Judicial Officer of
favorable decisions. Its purpose is to assure, at minimum cost,
national program input and regional consistency in a timely
manner. First, the Regional Office must fax a copy of the
decision and a brief summary to the Office of Enforcement Branch
Chief, the appropriate Office of General Counsel Branch Chief,
and the Office of Regional Counsel standing contacts. A
conference call follows. The call provides an opportunity to
identify issues for appeal, identify what support will be
available to assist the lead office, and incorporate both a
national and a regional perspective into the briefs.
(GM-2) (MI. 1-3)
Professional Obligations of Government Attorneys (GM-2)
(April 14, 1976)
This guidance discusses some of the obligations of EPA
attorneys, both under the Canons of Professional Ethics and under
various provisions of law. The five main areas covered are: (1)
confidential commercial or financial information; (2) Civil or
criminal investigations; (3) attorney-client communications; (4)
commitments on behalf of EPA; and (5) ex parte communications.
Under the broader heading of attorney-client communications are
communications with the Dept. of Justice, legal advice, support
of Agency positions, and dealing with outside parties represented
by an attorney.
(GM-28) (MI. 1-4)
Liability of Corporate Shareholders and Successor
Corporations for Abandoned sites Under CERCLA (GM-28
(June 13, 1984J1
This policy identifies the extent to which corporate
shareholders and successor corporations may be held liable under
the law for response costs arising from the release of a
hazardous substance from an abandoned hazardous waste facility.
The first section address the extent of liability of corporate
shareholders, and the second section examines the liability of
successor corporations. Each of the two.sections follows the
same format.
1 This Policy is to be transferred to the CERCLA Policy
Compendium after a generic policy is development to take its place.
-------
42
First, a short background is provided on whether there is
any statutory language in CERCLA which makes either corporate
shareholders or successor corporations responsible for cleanup
costs for the release of a hazardous substances from an abandoned
hazardous waste facility. In the case of corporate shareholders,
the background section also explains why EPA may want to extend
liability to include corporate shareholders and whether
traditional corporate law allows for such an extension.
The issue of the particular section is set out and then a
short summary section answers the issue in general terms. Each
discussion section explains in detail what is advanced in the
summary. In addition, the discussion doctrine of sections
pertaining to each issue review the courts' traditional approach
to limited liability and the current evolving standards,
specifically as to "piercing the corporate veil." The discussion
section on corporate shareholder liability also explains how the
"piercing the corporate veil" is applied by federal courts, in
contrast to how it is applied by state courts. Each section ends
with a short conclusion as to how the Agency should proceed in
cases involving corporate shareholders or successor corporations.
(GM-no) (MI. 1-5)
Interim Guidance on Review of Indian Lands Enforcement
Actions (October 21, 1992) with attachment, EPA Policy
for the Administration of Environmental Programs on
Indian Reservations (November 8, 1984)
The EPA policy which announces, inter alia, as its eighth
principle, that Assistant Administrators, Regional Administrators
and the General Counsel should work cooperatively with Tribal
governments to achieve compliance with environmental statutes and
regulations on Indian reservations, consistent with the principle
of Indian self-government. The policy states:
• Where tribally owned or managed facilities do not meet
Federally established standards, the Agency will
endeavor to work with the Tribal leadership to enable
the Tribe to achieve compliance.
• Where reservation facilities are clearly owned or
managed by private parties and there is no substantial
Tribal interest or control involved, the Agency will
endeavor to act in cooperation with the affected Tribal
Government, but will otherwise respond to noncompliance
by private parties on Indian reservations as EPA does
to noncompliance by the private sector outside
reservations.
• Direct EPA actions against Tribal facilities through
the judicial or administrative process will be
-------
43
considered where the Agency determines, in its
judgment, that (1) a significant threat to human health
or the environment exists, (2) such action would
reasonably be expected to achieve effective results in
a timely manner, and (3) the Federal Government cannot
utilize other alternatives to correct the problem in a
timely fashion.
The policy is attached to Interim Guidance, which assigns
the responsibility to coordinate policy and management issues,
and legal issues in consultation with the Office of General
Counsel, to the Senior Legal Advisor of the Office of Federal
Programs (OFA). That person will make appropriate
recommendations, and the AA will be advised of enforcement
options. Until the Indian Policy Implementation Guidance is
formally revised, all future direct EPA enforcement actions
against tribal facilities, except for emergency situations,
should be submitted to the AA. The AA will act in consultation
with the OFA, including its Senior Legal Advisor, and the General
Counsel.
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CROSS INDEX
-------
12/1/94
GENERAL ENFORCEMENT POLICY COMPENDIUM
CROSS INDEX
GM NUMBER CURRENT STATUS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
R
R
R
R
R
R
R
R
T
D
D
R
D
D
D
D
R
R
R
R
R
R
T
D
R
R
R
R
D
D
D
R
R
R
R
D
(IN. 1-2)
(MI. 1-3)
(RF.1-1)
(RG.1-4)
(IN. 1-1)
(CO. 1-1)
(CO. 1-2)
(RF.1-2)
(RF.1-4)
(OR. 1-1)
(RF.2-2)
(TK.1-4)
(CM. 1-3)
(PT.1-1)
(PT.1-2)
(FF.1-1)
(RF.1-7)
(OR. 2-2)
(MI. 1-4)
(CL.4-1)
(PT.1-5)
(SE.1-5)
(RF.1-5)
Key:
R = Recodified in New Compendium (New Number in
Parentheses)
T = Transfered to the Criminal Enforcement Compendium
D = Deleted
-------
GM NUMBER CURRENT STATUS
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
D
R (PT.1-4)
R (SE.1-4)
R (TK.1-3)
R (SF.1-1)
R (SE.1-1)
R (CO. 1-3)
D
R (PT.1-6)
R (PB.1-1)
R (RG.1-2)
R (RF.1-3)
D
D
R (PT.2-3)
R (SE.2-3)
P (CL.2-1)
D
D
R (PT.2-1)
R (SF.1-2)
R (RG.1-1)
R (RG.1-3)
R (TK.1-5)
R (TK.1-6)
R (SE.1-2)
R (RF.1-6)
D
D
R (MI. 1-1)
R (PT.2-3)
R (OR. 1-2)
R (RF.2-1)
D
R (CM. 1-1)
D
R (SE.1-3)
R (TK.1-2)
R (PT.3-1)
Key:
R = Recodified in New Compendium (New Number in
Parentheses)
T = Transfered to the Criminal Enforcement Compendium
D = Deleted
-------
GM NUMBER CURRENT STATUS
76 R (TK.1-1)
77 R (PT.2-2)
78 R (RF.3-1)
79 R (SE.2-2)
80 R (SE.2-1)
81 D
82 D
83 D
84 D
85 R (CM.1-2)
86 R (OR.2-1)
87 D
88 R (PT.1-3)
89 R (MI.1-2)
90 R (RF.3-2)
Key:
R = Recodified in New Compendium (New Number in
Parentheses)
T = Transfered to the Criminal Enforcement Compendium
D = Deleted
-------
RF.1
-------
RF.1-1
-------
«r 'v
/ ^ *i
1 ^25 * ' UNITED STATSS ENVIRONMENTAL PROTECTION AGENCY
\. .-/ WASHINGTON. D C. :0^63
AUG 2 1 1981
THE
Honorable William French Smith .
The Attorney General
Washington, D.C. 20530
RE: Memorandum of Understanding Between the Department
of Justice And the Environmental Protection Agency
Dear Mr. Attorney General:
Under Paragraph 10 of the Memorandum of Understanding
between the Department of Justice and the Environmental
Protection Agency dated June 15, 1977 (copy enclosed),
EPA's General Counsel and Assistant Administrator for
Enforcement, EPA, were given authority to request civil
litigation from the Department of Justice.
On July 1, 1981, the Environmental Protection Agency
underwent an internal reorganization which resulted, in
part, in the abolishment of the Office of Enforcement as
well as the position of Assistant Administrator for
Enforcement. In addition, the Office of General Counsel was
placed under an Associate Administrator for Legal Counsel and
and Enforcement.
The principal enforcement authorities previously
delegated to the Assistant Administrator for Enforcement
•vere redelegated to the Associate Administrator for Legal
Counsel and Enforcement on July 14, 1981. Therefore, the
authority previously vested in -the Assistant Administrator
for Enforcement under the above referenced memorandum now
reside* in the Associate Administrator for Legal Counsel and
Enforcement.
-------
-2-
Accordingly, requests to the Department of Justice for
routine civil litigation under the terms of the Memorandum
of Understanding will now come from the Associate Administrator
for Legal Counsel and Enforcement. The present Associate
Administrator for Legal Counsel and Enforcement is Mr. Frank
A. Shepherd.
This reorganization and redelegation does not, of
course, affect the authority of Regional Administrators who
may continue to request litigation under Paragraph 10 of the
Memorandum of Understanding in matters requiring an immediate
temporary restraining order.
Sincerely yours,
Anne M. Gorsuch
ccs Assistant Attorney General
Land and Natural Resources Division
Assistant Attorney General
Civil Division
-------
MEMORANDUM OF UNDERSTANDING
j ' BETWEEN
j THE DEPARTMENT O? JUSTICE
j AND
: THE ENVIRONMENTAL PROTECTION AGENCY
KHEREAS, the Department of Justice conducts the civil
litigation of the Environmental Protection Agency;
WHEREAS, the'conduct of that litigation requires a
close and cooperative relationship between the attorneys
• • f
of the Department of Justice ar.d of the Environmental
Protection Agency;
WHEREAS, the achievement of a close and cooperative
•„
relationship requires a clarification of the respective
roles of the attorneys of the Department of Justice *na of
the Environmental Protection Agency;
WHEREAS, the Attorney General may decline to represent
* • • p
the Agency in particular civil actions, in which case the
• .
Agency nay be represented by its o«m attorneys; and
WHEREAS, most challenges to and enforcement of regulatory
•
standards and procedures adopted by the Environmental Pro-
tection Agency involve; scientific, -technical, and policy
issues and determinations developed in lengthy rulemaking
proceedings in which the Agency's attorneys have-been involved
end can provide the necessary expertise.
-------
- 2 -
NO/*', therefore, the following memorandum of under-
standing is entered into between the Attorney General of
the United States and the Administrator of the Environmental
• •
Protection Agency for the purpose of promoting the efficient
and effective handling of civil litigation involving the
Environmental Protection Agency;
1. The Attorney Genera-! of the United States (herein-
after referred to as the "Attorney General") shall have
control over all cases to which the Environmental Protection
Agency (hereinafter referred to as the "Agency") or the
. Administrator of the Environmental Protection Agency (herein-
after referred to as the "Administrator") is a party.
2. Khen requested by the Administrator, the Attorney
General shall permit attorneys employed by the Agency
(hereinafter referred to as •"Agency participating attorneys")
to participate in cases involving direct review in the Courts
of Appeal, and shall also permit such attorneys to participate
in, other civil cases to which either the Agency or the
•
Administrator are a party, provided, however, that:
(a) the Administrator or his delegate shall
designate a specific Agency participating attorney for
each case and sholl communicate the name of such attorney
•in writing to the Attorney General;
(b) such Agency portic.ipatir.rj attorney shall be
subject to the supervision and control of the Attorney
General; and
-------
- 3 -
(c) if required by the Attorney General, an
Agency participating attorney shall be appointed as a
•
Special Attorney or Special Assistant United States
Attorney and take the required oath prior to conducting
or participating in any kind of Court proceedings.
3. Agency attorneys shall not file any pleadings
* .
or other documents in a court proceeding without the prior
v.
approval of the. Attorney General.
4. .It is .understood that participation by Agency
attorneys under -this memorandum includes appearances in
Court, participation in trials and oral arguments, partici-
«.
pation in the preparation of briefs, memoranda and pleadings,
participation in discussions with opposing counsel, -including
•
settlement negotiations, and"all other aspects of case
preparation normally associated with the responsibilities
of an attorney in the conduct of litigation; provided,
however, that the Attorney-General shall retain control ovtr
the conduct of all litigation. Such control shall include
•
the ngnt to allocate tasks between attorneys employed by
. • •
the Department of Justice and Agency participating attorneys.
•
•In allocating tasks between the Department's and the Agency's
•
attorneys, the Attorney General shall give due consideration
• • •
*:o the substantive knowledge of the respective attorneys
** • • •
of the matter at issue so that the Government's resources
are utilized to the best advantage.
-------
- 4 -
5. In the event of any disagreement between attorneys
of the Department of Justice and of the Agency concerning
the conduct of any case, the Administrator may obtain a
review of the matter in question by the Attorney General.
The Attorney General shall give full consideration to the views
and requests-of the Agency and shall make every effort to
eliminate disagreements on a mutually satisfactory basis. In
carrying out such reviews, the Attorney General shall consult
with the Administrator. In implementing this provision, it
is understood fhat-the Attorney General will not be expected
by the Administrator to interfere with the direction of any
trial in progress.
6. The settlement of any case in which the Department
of Justice represents the Agency or the Administrator shall
require consultation with and concurrence of both the Adminis-
trator and the Attorney General.
7. The Administrator and the Attorney General shall
make an annual review of both .the Department's and the
Agency's personnel requirements for Agency litigation. The
Attorney General and the Administrator will cooperate in
making such appropriation requests as are required to irain-
-2in their respective staffs at a level adequate.to the needs
t»
of the Agency's litigation.
. . •
8.' The. Attorney General shall establish specific
deadlines, not longer than 60 days, within which the Depart-
ment's Attorneys must either file complaints in Agency cases
-------
• 5 •
or report to the Attorney General why any such complaint
has not been filed. In the event any Department Attorney
does not file a complaint, he shall thereafter submit further
periodic reports to the Attorney General until the conplaint"
* •
is filed or a decision is reached that it shall 'not be filed.
" • "
Copies of the reports required by this section shall be pro-
vicec to the Agency.if requested.
9. If the Attorney General fails to file a complaint
within 120 days, of the referral of a request for litigation
and a litigation report by the Agency to the Attorney General,
then the Administrator nay request the Attorney General to
s
file a complaint within 30 days. Failure of the Attorney '.
General to thereafter file a complaint within the said 30
days nay be considered by tYTe Administrator or his delegate
to be & failure of the Attorney General to notify the Adminis-
trator within a reasonable time that he will appear in litiga-
tion for purposes of Section 305 of the Clean Air Act, 42
U.S.C. 1857h-3, Section 506 of the Federal Water Pollution
•
Control Act, 33 U.S.C. 13GG,-or Section 1450 of the Safe
Drinking Water Act, 42 U.S.C. 300j-9; provided, however, that
the failure of the Attorney General to file a complaint
within the time period requested by the Administrator in a
case in which the Administrator requested iracdiatc action
under Sections 311(e) and 504 of the Federal Water Tolluticn
Control Act, 33 U.S.C. 1321, 136-'; Sortion 303 of the Claan
-------
- 6 -
Air Act, 42 U.S.C. 1857H-1; or Section 1431 of the Safe
Drinking Water Act, 42 U.S.C. 300i; to protect public
health may also be considered by the Administrator to be
a failure of the Attorney General to so notify the
Administrator'under Section 305 of the Clean Air Act, 506
of the Federal Water Pollution Control Act or Section 1450
of the Safe Drinking Water Act.
v-.
10. All requests of the Agency for litigation shall
be submitted by the Agency through its General Counsel or
its Assistant Administrator for Enforcement to the Assistant
Attorney General for the Land and Nazural Resources Division
• •*
or for the 'Civil Division', except matters requiring an
immediate temporary restraining order may be submitted by
regional Administrators of the Agency simultaneously to a
United States Attorney and the appropriate Assistant
Attorney General. All requests for litigation shall be
accompanied by a standard litigation report which shall
contain such information as shall be determined from time-
to- tine by the Attorney General to bo necessary in order to
prosecute Agency litigation. Similar reports shall also be
provided for suits in which the Agency or the Administrator
is a defendant, as requested by the Attorney General.
11. The Agency shall make the relevant file of any
moitcr that is the; subject of litigation svni.lr.blc to
attorneys fcr the Department of Justice at a convenient
-------
- 7 - . .
location when a request for litigation is submitted or
when the Department is required to defend the Agency or
the Administrator.
12. The Administrator shall undertake to review the
•
Agency's procedures for the preparation of the record in
cases involving direct review in the Courts of Appeal,
including analyses of such natters as assembly, indexing,
pagination, timing of preparation, and the allocation of
tasks between the Agency and the Department. • The Admir.is-
•
trator shell consult with the Attorney General on the
re-examination of these procedures.
13. The negotiation of any agreement to be filed in
court shall require the authorization end concurrence of
the Attorney General.
14. In conducting jLitxgation for the Administrator,, the
Attorney General shall defer to the Administrator's inter-
pretation of scientific and technical matters.
15. Nothing in'"this agreement shall-e.ffeet any authority
tof the Solicitor General to authorize or decline to authorize'
appeal* by the Government from any district court to any
• .. • ^
»• •
appellate court or petitions to such courts for the issur.r.ce
of extraordinary writs, such as the authority conferred by
28 Cm 0.20, or to carry out his traditional functions with
regard to appeals to or petitions for review by the Su?rr>r.a
•
Court.
16. In order to.effectively imp1ftwent the terns of this
Memorandun, the Attorney General and the Administrator will
-------
transmit copies of this Memorandum to all personnel affected
by its provisions. This Memorandum shall r.ot preclude the
Department and the Agency from entering into mutually satis--
factory arrangements concerning the handling of a particular
case.
17. This Agreement shall apply to all cases filed on or
after the* dite/of approval of this Agreement by the .Attorney
General and the Administrator.
18. The Attorney General and ths Administrator nay
delegate their respective functions and responsibilities
under, thir- Agreement.
• M •
19. The Department end the Agency shall adjust the
conduct of cases arising before the effective date of this
Agreement in a manner consistent with the spirit of this
Agreement.
GRIFFIN B. SELL
Attorney General
Date; ^> / (T
DOUGLAS/:;. ^..;bTLi;
Adir.inii/trr.rsr
Environmc'-.tnj. Trotcctien Agency
i: n.".t^. tC. tC'.(l^.
Date
-------
RF.1-2
-------
UNITED CTATES ENVIRCN'.'.i.v. A'_ P9CTECTION AGENCY
WASHING r- %. =; ;:4to
- '-2
Jfc" $
^*^
orricc or
AMD CN'OnCCMKMT COUMSCk
MZMORANT3UM
SUBJECT: Draft DOJ/EPA Litiqation Procedures
FROM:
TO:
Robert M. ?erry
Associate Administrator for Legal
Counsel and General Counsel
Associate Administrator
Assistant Administrators
Regional Administrators
Office Directors
Regional Counsels
Enforcement
In furtherance of the Adrinistrator's policy to strengthen
and improve this Agency's enforcement capability, particularly
with regard to litigation, a mectir^ with the Department cf
Justice to discuss these matters occurred yesterday at Quantico,
Virginia. I an pleased to report tha"; it was highly productive
and successful. Attached is a sir-nary of the matters discussed,
the recommendations produced and a process that will strengthen
our enforcement efforts. Each of ycu has a critical role to
insure the success of this vital endeavor, ar.d I lock forward
to discussing it with you ahd receiving any comments you may
have.
Attachment
-------
ZX?C?.CZ:*Z::T GOALS ASD OBJECTIVES
of
c~~rcr c? LZSAL A:TD z:T?o?.cs-!s:rr csrasz
U. S. LKVIRONMSKTAL PSSTSCT2GM AGENCY
1. The role of enforcement is to support and advance
the regulatory policies of EPA through use of all
available enforcement means; to insure compliance
with applicable laws and regulations; to deter
unlawful conduct and to remove any incentive to
non-compliance.
2. The regulated community is entitled to fair notice
of EPA's policies and the requirements they impose
on the regulated community. All members of the
regulated community should expect that they will be
treated in a consistent, fair manner which
-- - removes any- competitive—advantage-gained -by-non.- J_.
compliance.
3. ZPA is responsible for establishing regulatory policies
and enforcement goals, priorities and procedures to
effectuate its policy initiatives. These policies
and priorities are what guide the Department of Justice
in its role as EPA's litigation counsel. This litiga-
tion will be conducted pursuant to the C-:-*tico Guide-
lines for Enforcement Litigation developed between
the Environmental Protection Agency and the Department
of Justice.
-------
QVAirriCC- GVIDELINES FOP. ZK7GP.CEMENT LITIGATION
1. GOALS AXD PUP.PCSIS
"cr I?A
To achieve compliance with applicable law
through effective enforcement.
To inform the regulated communities, Congress
and the public that IPA will enforce the statutues
it administers in a prompt, fair and even-handed manner.
For DOJ
To provide the lirigation support necessary to
aid EPA in the accomplishment of these goals.
•
2. GZSZRAL OBSERVATIONS ' ' ••
A. Emphasis will be placed on bringing meaningful
enforcement cases, particularly hazardous waste cases,
criminal cases and ar.forcene.it of existing consent
decrees;
B. Especially with regard to recently-enacted
*
statutes, DOJ needs policy gx'.idance from EPA to
give direction on enforcement activity and to main-
tain consistency;
C. Regional offices of EPA will be the lynch-
pin of the agency fcr identifying and developing
enforcement matters ;
trators piay xey rexes in rne enzorctuneuc,
which are being clarified;
-------
- 2 -
E. . Scares, where possible, should be giv-.«n the
opportunity and incentive to initiate enforce-
oenc cases. Effectiveness of state enforcement
accion5 vill be considered;
F. While national enforcement priorities are
necessary, flexibility la deiirable for region-
by-region determinations;
G. Criainal enforceaent priorities and
processes are being developed separately froo
civil matters;
H. United States Attorneys play a critical
role and should be involved wherever possible;
I.. Between EPA Headquarters and the regions,
areas of responsibility will be identified
to allow regional flexibility.
J. Focused use of administrative discovery
powers is necessary for effective investigation
of the factual/technical basis for cases.
3. RESPECTIVE COMMITMENTS
A* On enforceaent policy femulation, EPA
will seek, where appropriate, to confer fend
coordinate with DOJ concerning potential ia-
pacts on litigation;
3. Pslicy guidance given to K.A.'s ir.d'K.C.'f
be provided to DOJ:
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- 3 -
C. Informal working groups in all media
will continue (or be established) to pro-
vide DOJ/EPA-OGC input co address legal issues;
i
D. Associate Adainistrator Ferry and Assistant
i
j Attorney General Carol Ł. C-inkins will be avails.:le
to diicuii new enforcement guidance with R.A.'s
and K.C.'s in U.C. To be discussed will be R.A.
accountability and commitment to a sustained,
orderly enforcement program that includes litiga-
tion as a desirable component;
E. Associate Administrator Perry will meet with
Assistant Administrators on enforcement policy,
to clarify roles and secure commitments from
program side for sufficient technical support;
T. Assistant Attorney General Dinkins will
sake similar presentations to United States
Attorneys on policies, processes and roles;
G. Violations vill be discovered through
self-reporting, regular inspections, citizen
complaints, administrative discovery and
trained criminal investigators;
n. Administrative pcvers, to be used for
investigatory purposes, should be delegated
to rsgicT.s by eliminating need for Head-
quarter's concurrence;
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- 4 -
I. Ones a case is referred, the government
will re=ain open to negotiation but will con-
tinue to move the case to trial.
P3CCZS3
A. DUJ attorneys assigned on a regional basis
to handle all aedia;
B. EPA regional enforcement attorneys are aedia-
•pecific; .*'
C. A lead agency attorney (generally an attorney
from the region) will be designated to manage the
case for the agency and coordinate with DOJ;
0. Regular, monthly meetings will be held in
the regions, attended by DOJ and EPA attorneys,
with technical staff present and AUSA's invited
to discuss:
1. general enforcement actions, in-
cluding EPA administrative processes
and investigations exclusive of criminal
natters;
2. eases targeted by EPA as likely
candidates for litigation, to deterioe
a. whether DOJ assistance prior
to referral would be helpful; and
b. adequacy of agency de-
velopment of case;
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- 5 -
?, cases previously discussed as
tic rrers to be identified for case
development to DCJ;
4. separate meetings will be
held in the regions with program
hftads co discuss program enforce-'
aent priorities and concerns;
Ł. Following discussions At monthly neetings
regarding potential natters for ease develop-
aent, when region determines that aatter is a
potential civil enforceaent case, R.C. requests
DOJ assistance for case developaent
1. te&u is formalized at this point.
in anticipation of litigation;
2. technical support is committed;
2. goal is resolution through nego-
tiated settlement or final Judgment;
F. Vhen a case hasCgaturedTI^he regional
administrator requests the Associate Admin-
is tator to refer the case to DOJ for litiga-
tion;
»
G. Some cases vill be referred directly to
DOJ without forming a case development teas.
H. Tor true emergencies, telephonic authori-
zaricr to file vill suffiza;
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- 6 -
I. A new reiarral package format, nor.
srreaa-lined and ap?ropria:i; to the case
development process identified above will
be produced;
J. For cases referred before monthly
neetings begin, DOJ and EPA will confer
informally prior to referral;
K. Aitociace Administrator Perry and
Assistant Attorney General Dinkins are
available for dispute resolution if
difficulties or disputes cannot be
handled at intermediate levels;
L. Coordination for all of theee efforts
%
will include
1. Ferry and Dinkins visits Co
regions;
2. Ferry and Dinkin* bi-weekly
meetings with staff;
3. Ferry and Dinkins monthly
meetings without staff:
A. regular monthly meetings at
staff level in regions;
5. working groups in D.C. on
CUJ input into policy formulation
re litigation impact;
-------
6. Basic understanding -y both
agency and DCJ lawyers of their
respective roles and the need
for a cooperative spirit.
5. SPECIFIC ISSUES DISCUSSED
A. EPA is establishing guidelines for
Superfund national strategy including
especially criteria for which injunctions
are appropriate and whether the regions
or headquarters has the initiative for
Superfund enforcement;
B. Existing Consent Decrees
1. collection and analysis of
compliance status of all existing
consent decrees to be accelerated;
2. uniform policy to be adopted
en modification of existing decrees
through judicial action;
3. violations of existing consent
decrees are a top priority for
enforcement;
4. collection cf stipulated pen
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RF.1-3
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\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY Ł> f? / -
WASHINGTON, D.C. 20460 "
JH30TO
MEMORANDUM
OFFICE OF ENFORCEMENT
ANDCOMFUANCE
MONITORING
SUBJECT: Model Litigatiqp^Raport Outline and Guidance
PROM: Richard Mays/
Senior Enforcement Counsel
\s
TO: Associate Enforcement Counsels
Headquarters Program Enforcement Division
Directors
Regional Counsels
Regional Program Division Directors
Attached are the Model Litigation Report Outline and the
Model Litigation Report Guidance. All litigation reports
referred to OECM or the Department of Justice after March 1,
1986r should follow the Outline in regard to format and the
Guidance in regard to content. The purposes of these two
documents are (1) to create a common understanding among Agency
personnel and DOJ attorneys as to what the report needs to
cover and (2) to make the litigation report's form consistent.
These two documents have been prepared by a workgroup consisting
of Jack Winder, OECM-Water; Bill Quinby, OECM-Policy; Mike
Vaccaro, Region III; Robert Schaefer, Region V; and Tom Speicher,
Region VIII. They also reflect extensive review and input from
the Regions, OECM, and the Environmental Enforcement Section of
the Department of Justice.
While we anticipate that the Model Guidance will be parti-
cularly useful to the less experienced attorney, it will also
serve as a reference for the experienced attorney. The Outline
will be of use to all Agency enforcement personnel as it will
serve as a checklist to determine if all the parts of the pack-
age are complete and in the correct format. By utilizing the
models in preparing litigation referral reports, we will be able
to expedite the referral process.
-------
-2-
If you have any questions regarding these two documents,
please contact Bill Quinby of the Legal Enforcement Policy
Division. Be can be reached on FTS 475-8781, his mail code is
LE-130A, and his E-Mail Box is 2261.
cc: Chief, Land and Natural Resources Division, DOJ
-------
OFFICE OF ENFORCEMENT AND COMPLIANCE MONITORING
Model Litigation Report - Outline
Any section of this outline may be addressed in the litigation
report by the entry of "not applicable (N/A)" It the section
is not relevent to the referral, or by "see section • if
the specific information requested in the outline has been
fully supplied in another section. In addition, this outline
is not applicable to $107 CERCLA cost recovery cases; to CERCLA
$106, TSCA $7 or RCRA $7003 cases.
1. Cover Page:
a. Region, Act involved and judicial district.
b. Name and address of defendant.
c. Name and address of facility.
d. Regional contacts (program/legal).
e. Stamp date Region refers report on cover page.
2. Table of Contents.
3. Synopsis of the Case.
4. Statutory Bases of Referral:
a. Applicable statutes; cross-media coordination.
b. Enforcement authority; jurisdiction and venue.
c. Substantive requirements of law.
5. Description of Defendant:
a. Description of facility.
b. State of incorporation of defendant.
c. Agent for service of process.
d. Defendant's legal counsel.
e. Identity of other potential defendants.
6. Description of Violations:
a. Nature of violations.
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-2-
b. Date and manner violations identified.
c. Dates and duration of violations.
d. Pending regulatory changes.
e. Environmental consequences (past, present and future)
7. Enforcement History of Defendant and Pre-referral
Negotiations:
a. Recent contacts with defendant by EPA/Region, (e.g.,
AOs, permits, grants).
b. Pre-referral negotiations.
c. Contacts with defendant by state, local agencies and
citizens, and actions taken.
d. Prior enforcement history of defendant.
R. Injunctive Relief:
a. Steps to be taken by defendant to achieve compliance.
b. Feasible alternatives.
c. Cost and technology considerations.
9. Penalties:
a. Proposed civil penalty and legal authority.
b. Penalty analysis/calculation.
c. Present financial condition of defendant.
10. Major Issues:
a. Issues of national or precedential significance.
b. Bankruptcy Petitions.
11. Significance of Referral:
a. Primary justification for referral.
b. Program strategy.
c. Aqency priority.
d. Program initiatives outside of stated strategy.
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-3-
e. Relation ot reterral to previous or concurrent cases
or actions.
12. Litigation Strategy:
a. Settlement potential/plan for settlement.
b. Need tor interrogatories and requests for admissions.
c. Potential for summary judgment.
d. Need for preliminary Injunction.
e. Identity of potential witnesses.
f. Elements ot proof and evidence and need for additional
evidentiary support.
g. Anticipated defenses (legal and equitable) and govern-
ment responses.
h. Resource commitments.
i. New evidence.
13. Attachments, where applicable:
a. Index to attachments.
b. Draft complaint.
c. Draft discovery.
d. Draft consent decree.
e. Draft motions.
f. Table of Violations.
g. Documentation of violations.
h. Permits and contracts.
i. Significant correspondence between EPA, defendant
and/or state.
j. Penalty analysis/calculation; BEN printout.
k. Diagram ot facility.
-------
-4-
1. Case Plan.
itu Dun and Bradstreet report; SEC Form 10K; Annual Report;
Papers relating to corporate status from Secretary of
State's office; ABEL printouts and legal description
of property, as necessary and if obtainable.
n. Other relevant information.
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OFFICE OF ENFORCEMENT AND COMPLIANCE MONITORING
.Model Litigation Report - Guidance
Any section of this outline nay be addressed in the litigation
report by the entry of "not applicable (N/A)" it the section
is not relevent to the referral, or by "see section • if
the specific information requested in the outline has been
fully supplied in another section. In addition, this guidance
is not applicable to $107 CERCLA cost recovery cases; to CERCLA
S106, TSCA $7 or RCRA $7003 cases.
1. Cover Page:
a. Region, Act involved and judicial district.
b. Name and address of defendant.
Include names, addresses and telephone numbers
ot all defendants (corporate/individual).
c. Name and address of facility.
Include names, addresses and telephone numbers
of all facilities subject to the referral. Include
county for venue purposes.
d. Regional contacts (program/legal).
Include names, addresses and telephone numbers of
the regional program-technical and legal contacts who
prepared the report.
e. Stamp date Region refers report on cover page.
2. Table of Contents:
Include headings, all sub-headings and page numbers.
3. Synopsis of the Case:
Limit this synopsis to two pages (double-spaced), when
possible.
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-2-
The synopsis should contain a summary or brief descrip-
tion of (1) the tacts (causes) which led to the violation,
(2) the legal basis of the violation and its environmental
seriousness, and (3) the proposed relief. Indicate need for
expedited filing here.
4. Statutory Bases of Referral: Ł/
a. Reference all applicable federal statutes by USCA cita-
tion and by section of the Act. State whether coordina-
tion across media has occurred. Discuss reasons for
including or omitting cross media claims.
b. Summarize the enforcement authority and the juris-
diction and venue provisions of applicable statutes.
If there is reason to file the action in a district
other than where the facility is located, note each
available district and Indicate the reasons for tiling
there.
c. Present the substantive requirements of the law (federal/
state) and applicable regulations and permits. Pertinent
excerpts from federal/state laws and regulations should
\/ Careful cross-media regional review should ensure that all
'available causes ot action are included. OECM recognizes that
in some cross-media cases, the initial cause(s) of action may
be ready tor referral, but that a secondary cause ot action
under a different statute may be a low priority matter or
require substantial development before the case is ready for
referral. Where the secondary cause of action is minor, or
where the case development will take a substantial amount of
time, the case should be referred with the excluded secondary
cause of action clearly identified. However, it the secondary
cause of action is major, or if development will not unreasonably
delay the referral, all such causes ot action should generally
be referred toqether.
-------
-3-
be indent!fled and set forth here or attached to the
report.
5. Description of Defendant:
a. Description of facility.
1) Describe the violating corporation or individual
and the particular facility in question. Note any
relevant corporate or personal interrelationships
or subsidiaries. Indicate it the violator is a
governmental entity. If there is a question as to
whether the corporation has been dissolved or
subsumed into a different entity, ascertain status
ot corporation and attach Dun and Bradstreet report
and corporation papers from Secretary of State's
ottice under section 13 n.
2) Briefly discuss the business of the defendant,
providing details about the facility in question.
When the defendant is a manufacturer, describe
what is produced. Emphasis should be on the
particular process that is causing the problem.
Describe the plant and processes used. Include
legal description of the property under section
13 n., it needed. Reference and attach diagrams
to the litigation report. Photographs and video
tapes ot the source may be helpful in that they
often improve the "show" quality of a case should
it reach court.
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-4-
If defendants include corporate officers,
discuss tacts Indicating participation ot the
corporate officers in the activities resulting
In the violations.
b. State of incorporation of defendant.
Include state of incorporation and the principal
place of business.
c. Agent for service of process.
• ;,^
Incl-ude name, address and telephone number of agent
for service of process.
d. Defendant's legal counsel.
Include full name, address and telephone number
of legal counsel. It corporate counsel, so state.
e. Identity of other potential defendants.
It it is not immediately clear who should be
named defendants, discuss all potential defendants
including the state, and their relation to other
potential defendants and to their potential liability
tor the violations that give rise to the reterral.
Cover all of the facts having a bearing on which
potential defendants should be named and evaluate all
reasonable options.
6. Description of Violations:
a. Nature of violations.
Discuss the types of pollutants being discharged.
Also indicate the sources ot the pollutants, their
-------
-5-
nature, quantity or size, and the relation to the
statutory, regulatory or permit provisions violated.
b. Date and manner violations identitled.
Indicate earliest date when violation became known
to EPA and manner In which It was discovered (e.g.,
inspection, notice from state, etc.).
c. Identify dates and duration of violations, any mitigat-
ing actions by defendant to reduce or correct violations
and any recalcitrance. Include Table of Violations at
section 13 f.
Describe all EPA/State site inspections, sampling
and other investigative activities, the dates ot the
activities and the conclusions drawn. Attach inspec-
tion reports under 13 g.
State present compliance status of the defendant:
in compliance, in violation, unknown.
d. Pending regulatory changes.
Identify pending regulatory changes which do or
may impact the enforcement action, e.g., requests tor
SIP revisions, variance applications, pending revisions
to NPDES permits, pending RCRA permit applications or
challenges to applicable regulations.
e. Environmental consequences (past, present and future).
Indicate briefly what environmental damage, if
measurable, has occurred in the past, is now happening
or will occur in the future if not abated. Include
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-6-
reasonable estimates of total damage to human health and
to the environment as a consequence ot the violations.
Although the seriousness of the violation is not
technically a requirement of proot in enforcement of
certain statutes, it is sometimes relevant to the
assessment ot penalties and equitable relief.
Consider the following factors in assessing the
seriousness of the violation (a) the release ot toxics
or mutagens or carcinogens is more serious than the
release ot so-called conventional pollutants; (b) the
release of large quantities of pollutants is more
significant than the release ot small quantities; (c)
bi©accumulative wastes posing long-term threats are
more serious than biodegradable wastes; (d) the release
of pollutants in an area not attaining primary ambient
air quality standards is more significant than the
release in an area not meeting secondary standards;
(e) the release ot pollutants which directly and demon-
strably affect health or the environment is more serious
than those which have no direct or obvious effect;
(f) ongoing present violations which the government
seeks to stop are more significant than episodic viola-
tions which have ceased, and (g) a violation which
undermines the ability ot the Agency to make sound
regulatory judgments (e.g., the submission of fraudulent
toxicity data in support of a pesticide registration)
is more serious than a single instance of false reporting,
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-7-
7. Enforcement History of Defendant and Pre-referral Negotiations:
Attach copies of relevent documents referenced below,
if available, under section 13 g.
a. Recent contacts with defendant by EPA/Region and
actions taken including administrative actions.
Indicate recent contacts and enforcement actions
taken by EPA/Region, e.g., letters, oral communications,
administrative requests/orders, etc. Include recent
actions in all media and under all statutes. Include
any related or pending administrative enforcement
proceedings e.g., (CAA $120, TSCA $16(a), RCRA $3008,
FIFRA $$13 or 14(a), and MPRSA $105(a) proceeding).
State defendant's responses.
Also indicate recent contacts by/with permits and
grants staff, if any. With regard to grants, indicate
likelihood source will obtain grant, compliance schedule
associated with proposed grants, relationship of grants
to financial capability and any problems in grant his-
tory that may affect injunctive relief or penalties.
b. Pre-referral negotiations.
Include a brief summary of all attempts at negotiating
a settlement prior to referral of the case, including
attempts by state. Fully describe attempts at compromise
and why process failed. Consider use of Alternative
Dispute Resolution (third party neutrals) as method of
resolvinq case.
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-8-
c. Contacts with defendant by state, local agencies and
citizens, and actions taken.
Include recent contacts or actions taken or antici-
pated by state, local agencies and citizens. In par-
ticular discuss history of state involvement including
any state civil or criminal enforcement actions taken
or pending, if state met timely and appropriate criteria,
and it state-anticipates additional enforcement actions.
d. Prior enforcement history of defendant, if available
and practical.
This item relates to all prior actions and results
other than those noted above taken by any governmental
entity against the violator. (Include citizens' suits
or notices ot intent to file.) In some cases compilation
of this history will be impractical. If so, include
only the most recent or most significant actions taken
under any environmental statute.
Injunctive Relief:
a. Steps to be taken by defendant to achieve compliance.
Indicate in general terms what affirmative relief
should be requested. Consider use of an environmental
audit (compliance and management) as an element of the
remedy. If a series of acts are required, so state.
Also Include basic but not elaborate technical informa-
tion, if available, to support the proposed remedy.
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-9-
Specify technology which will meet regulatory require-
ments, and indicate the time requirements tor a schedule
of compliance which considers time necessary for design,
contracting, construction and start-up. (This is not
inconsistent with EPA policy of not prescribing specific
compliance technologies. This information may be neces-
sary in court to illustrate what remedy will bring the
source into compliance and/or to demonstrate technical
\
feasibility if contested by the defendant.) If no
known technology can assure compliance, describe what .
in particular EPA expects the source to do, including
plant closure where applicable. Indicate if another
source has adopted the recommended control technology.
b. Feasible alternatives.
Describe alternative remedies if appropriate and
discuss why the primary remedy and/or sanction was
selected. Consider "studies" by defendant as a remedy
t
where a precise course ot action cannot be detined at
time of referral.
c. Cost and technology considerations.
Indicate cost of compliance of the remedy. Base
these costs on the Region's best estimates. Indicate
technological feasibility problems.
Penalties:
a. Proposed civil penalty and legal authority.
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-10-
1) Bottom line and opening negotiation figure.
Include two figures here (1) the proposed bottom
line or the amount for which EPA will agree to settle.
Calculate this figure by use of the appropriate
medium-specific penalty policy (see section b. below.),
and (2) the proposed figure with which EPA will open
any negotiations or settlement talks. This second
' fioure will be higher than the bottom line figure
but will be related to it.
2) Statutory maximum amount.
Include amount, how calculated and legal author-
ity for the statutory maximum amount.
b. Penalty analysis/calculation.
Include here a brief summary of the penalty analysis
and calculation, including a specific estimate (based on
BEN) of economic benefit of non-compliance. Attach the
actual detailed analysis and calculations using the
appropriate medium-specific penalty policy under sec-
tion 13 j.
c. Present financial condition of defendant.
Indicate known financial condition of defendant,
ability to pay penalties and meet other objectives of
litigation and source of information. ABEL, a computer
model that evaluates a defendant's financial ability to
comply and pay penalties, may be of assistance here.
The model will be available in the spring of 1986.
Include necessary bonding requirements and reasons
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-11-
therefor, if applicable. If there is a question as to
defendant's tlnancial capability, include Dun and
Bradstreet report, ABEL computer printouts, SEC Form
10K and Annual Report, if obtainable, under section 13 m.
10. Major Issues:
a. Issues of national or precedential significance.
Indicate it reterral is case ot tirst impression or
has other legal, national or precedential significance.
b. Bankruptcy Petitions.
Describe the status of bankruptcy petition, if any,
including (1) whether Chapter 7, 11 or 13, (2) whether
reorganization plan filed, and (3) bar .date for proof
of claim.
11. Significance of Referral:
a. Primary justification for referral.
If a case does not present obvious "serious" health
ettects or environmental harm, but is compelling for
some other reason, e.g., deterrence of continued,
blatant violations ot the law, this should be indicated.
A defendant with a history of violations is usually more
worthy of attention than a first time offender.
b. Program strategy.
Indicate if the case is part of the national pro-
gram's stated strategy and briety show how it tits
into that strategy. Indicate if violator is in SNC.
c. Agency priority.
Indicate briefly if the violator is of a class listed
in the prr-..- am strategy for priority monitoring, and ir
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-12-
the violation is of a class listed in the strategy for
priority case action in fiscal year operating guidance.
<3. Program initiatives outside of stated strategy.
Indicate briefly the initiative such as (1) enforcing
a new or existing provision, regulation or statute for
the first timer (2) actions against municipalities for
pretreatment violations, (3) targeting a geographic area
or industry/ or (4) "batch or cluster* cases against one
type of industry or violator.
e. Relation ot referral to previous or concurrent cases or
actions.
Indicate briefly if this case relates to any concur-
rent or previous case or action (administrative or
judicial) brought by the Agency or by a state.
It there is or has been a state or federal criminal
proceeding pending against the defendant involving the
same or a related matter, indicate the nature of the
proceeding, its relationship to this case, and state
reasons tor a parallel civil proceeding.
If this referral involves overfiling of a state
enforcement action, indicate this and state reasons
for overfiling.
12. Litigation Strategy:
a. Settlement potential/plan for settlement.
1) Indicate it there is a realistic potential for
settlement, and if so, what that settlement plan
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-13-
is. Include present contacts with defendant by
EPA, DOJ or the U.S. Attorney's ottice.
2) Present negotiating posture and comparison of
this posture with "bottom-line" settlement
figure from section 9 a.
b. Need for interrogatories and requests for admissions.
Indicate need for interrogatories and/or requests
tor admissions. Include potential names and addresses,
if available.
c. Potential for summary judgment.
Indicate it case has potential for summary judgment„
and if so, briefly describe why, and how case can be
prepared for tiling. Include draft motion with support-
ing memorandum and affidavits, if possible. Attach
under section 13 e.
d. Need for preliminary injunction.
Emphasize urgency and reasons tor requesting prelim-
inary injunction and time frame, if applicable.
e. Identity of potential witnesses.
1) Government's case
Indicate witnesses and witness needs both as
to liability and remedy.
Identify all lay witnesses and any already
known expert witnesses by name, address, place of
employment and business phone. Include substance
ot anticipated/actual testimony and it statements
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-14-
are attached or are on file. For expert witnesses
include (1) tield ot expertise and qualifications,
(2) past cases where retained, (3) if under EPA
contract, and (4) if not under EPA contract, which
office/contract will be available to retain the
expert.
Indicate whether any further investigation is
necessary to identify lay witnesses. Indicate any
additional expert witnesses needed beyond those
already known by area ot expertise and testimony
needed and state which office/contract will be
available to retain the experts. In particular,
indicate if expert witnesses will be necessary to
analyze and/or testity in regard to environmental
consequences, technological remedy development or
tinancial capability.
2) Defendant's case.
Identify all lay or expert defense witnesses
anticipated, including their employment addresses,
expertise and likely content of testimony.
f. Elements ot proof and evidence and need for additional
evidentiary support.
1) List the necessary elements of proof to establish
the violation under each statute/section involved.
2) Present a detailed, objective, factual analysis
oi the strength or weakness ot all available real,
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-15-
documentary and testimonial evidence corresponding
to each necessary element ot proot set torth in the
above list. New or stale evidence is relevant, as
is the dependability ot testing techniques and legal
status of test methods. Therefore, spell out any
assumptions made as to the quality ot this evidence.
Identify missing facts and holes in data.
3) Identify and indicate location ot all real evidence.
Identify all documentary evidence, and if possible,
attach (or state location of) each Item ot documen-
tary evidence under section 13 g. Include a list
ot all ongoing and planned evidence gathering efforts?
e.g., ongoing DMR analysis, new stack tests, CEM data,
or RCRA information request for further inspection.
4) If evidence will be obtained at a later date, state
how and when.
5) If evidence is to be made available by discovery,
suggest discovery plan. Indicate (1) type of
evidence to be developed, (2) person or organization
currently in possession ot evidence, and (3) draft
of initial discovery to be used. Identify areas
where swift action on discovery is needed. To
preserve testimony or records attach initial draft
discovery documents under section 13 c.
g. Anticipated defenses (legal and equitable) and govern-
ment responses.
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-16-
1) Indicate all actual or anticipated legal and
equitable defenses favorable to the defendant, and
briefly set forth the government's response thereto.
For defenses such as governmental estoppel, laches
or attlrmative defenses based on Rule 12 ot the
Federal Rules of Civil Procedure, EPA need only
identity the detense and the underlying tacts and
• • ,f
merits. The DOJ attorneys will usually be familiar
with the legal issues. On the other hand, EPA
attorneys are usually more familiar with defenses
based on Agency statutes, regulations and policies,
or Agency involvement in matters central to the
case. For these defenses the Region should not
only identify the defenses and underlying facts,
but fully discuss their legal bases and merits.
2) Include all technical data and test results
favorable to the violator both as to prima tacie
case and defenses. Indicate any relevant or
mitigating tactors that may bear adversely on the
government's contentions. Reference defense
witnesses under section 12 e. 2.
h. Resource commitments.
Describe estimated case budget; indicate what
resource commitments both budgetary and personnel will
be required and if the Region is prepared to provide
-------
-17-
them. If not, state where they will be obtained. In-
clude here costs tor experts and additional testing.
i. New evidence.
Update all new evidence and information and forward
it to Headquarters, DOJ and/or the U.S. Attorney, as it
becomes available.
13. Attachments, where applicable:
a. Index to attachments.
List attachments and use tabs if possible for
ease ot reference.
b. Draft complaint.
Include draft complaint. Headquarters and DOJ
consider the complaint a useful document, although at
a later date the complaint may change.
c. Dratt discovery.
If discovery is needed, include initial interroga-
tories and request for production, etc., as appropriate
or known.
d. Dratt consent decree.
Unless the case is straightforward, minor or
negotiations have reached a productive stage, inclusion
of a draft consent decree at this point in the case
development would not be practical or advisable. If
attached, indicate the stipulated penalties.
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-18-
Draft motions.
Inclusion of draft notions depends somewhat on the
urgency, complexity and litigation strategy ot the
case. Include when necessary and appropriate.
Table of Violations.
The Table of Violations should specify dates for
each alleged violation, and tor each, the statutory/
regulatory provisions involved.
Documentation of violations.
Include here documentation of violations and
enforcement history of defendant referenced in section
7. Include copies of inspection reports. Also include
here documentary evidence referenced under section 12
f. 3.
Permits and contracts.
Include copies of all applicable permits and con-
tracts.
Significant correspondence between EPA, defendant
and/or state.
Attach all correspondence relative to the viola-
tion/case.
Penalty analysis/calculation; BEN printout.
This attachment is a detailed analysis ot the brief
summary in 9 b. above. Indicate the proposed bottom
line settlement figure (based on the appropriate
penalty policy) and an opening negotiation position.
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-19-
The settlement figure should briefly discuss how the
bottom line figure was determined, particularly in
regard to any economic benetlt contained in this figure.
The proposed opening negotiating position should con-
tain a briet statement why that particular figure is
appropriate. Attach BEN printout.
k. Diagram of facility.
Include any official or unofficial diagram of the
facility, or the actual workings (drawings) ot the
violation. Any diagram, if not misleading or factually
incorrect, will be useful. The diagram need not be to
scale or one made by a professional artist or draftsman..
State if video tapes were made and where located.
1. Case Plan.
Attach a case plan here if prepared by the Region.
m. Dun and Bradstreet report; SEC Form 10K; Annual Report;
Papers relating to corporate status from Secretary of
State's oitice; ABEL printouts and legal description
of property, as necessary and if obtainable.
n. Other relevant information.
This is a catch-all category and includes all
other relevent documents, technical data and information,
etc., which may aid the AECs, DOJ and the U.S. Attorney
in preparation and prosecution of the case. Please list
in the Index to Attachments all such documents included
here.
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RF.1-4
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12/1/94
REVISERS NOTE
General Operating Procedures for the Civil Enforcement Program
(RF.l-4)
There have been many changes in the structure and function
of the Agency's enforcement program since the Agency issued this
/
memorandum. While the approach stated in this document is still
valid in many areas, it must be read in conjunction with more
current descriptions of the structure and function of the
enforcement program.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WAtMIMOTON. DC *M«0 p
JUL e
•wet *r
AMB
MEMORANDUM
SUBJECT: General Operating Procedures for the
Civil Enforcement Program
FROM: Robert M. Perry
Associate Administrator for Lrgal snd Enforcement
Counsel and General Counsel
• \tr
TO: Associate Administrator for
Policy and Resource Management
Assistant Administrators
Regional Administrators
Staff Office Directors
2. Introduction
This memorandum provides general guidance regarding EPA's
enforcement process, consistent with new Regional and Headquarters
structures. The memorandum describes the respective roles and
relationships of the various EPA offices which participate in
enforcement activities.
I greatly appreciate tne contributions which you and yovr -
respective staffs have Bade In participating in th*» * jlopment
of this general guidance. This guidance has reached the point
at which it has received the consensus support of all affected
Agency offices on virtually all matters which it addresses.
More detailed guidance on operating procedures for eac.v media-
specific program will be forthcoming from the responsible
Assistant Administrators and ayself. •
The guidance contained in this document on responsibilities
and wcr*t:r.j relationships of all offices involved in the enforce-
ment process (which includes both enforcement compliance activities
and enforceaent legal activities) has received a strong endorsement
from the Administrator. The prescribed procedures provide explicit
guidance for implementing the Administrator's general policies on
these natters and are consistent with
• The Administrator's June 12, 1961 announcement of a new
Headquarters structure;
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-2-
- The Administrator's September IS, 1981 memorandum regarding
a new regional organization structure;
- My May 7, 1982 memorandum regarding the reorganization
of the Offices of Regional Counsel;
- The June, 1977 Memorandum of Understanding between the
Department of Justice and EPA.
The operating procedures specified in this document are
designed to help accomplish the following objectives of the
Regional reorganizations stated in the Administrator's September
IS/ 1981 memorandum: /
"Reorganization Objectives. Regional organization
decisions include consideration of the following objectives:
- Clarifying accountability for regional programs.
• Facilitating communication links between related
Headquarters and regional components.
- Improving regional policy and management
decision-making.
- Placing functions in organizations where they can
best be integrated with related activities.
- Favoring fewer and larger organizations to avoid
subsequent further consolidation and reorganization
in a time of declining resources.
". . . . Major features of the authorized organization
include the following:
"1. Enforcement functions of permit issuance and related
compliance monitoring are assigned to the appropriate program
divisions. This includes issuance of notices of violation and
administrative orders/ after consulting with the Office of
Regional Counsel. (Permit coordination functions and place-
ment are optional.)
•2. Legal work associated with enforcement litigation and
current Regional Counsel functions will be performed in newly
structured and expanded Offices of Regional Counsel reporting
to the [Associate Administrator for Legal and Enforcement
Counsel and] General Counsel with the following provisions:
•a. Regional Counsels will provide the Regional
AdministratorfsJ with legal advice and assistance for all
program areas in an attorney client relationship.
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-3-
•b. The Regional Administrator will continue to
initiate enforcement actions. These actions will be based
upon guidance from the [Associate Administrator for Legal
and Enforcement Counsel and General Counsel, through]
the Enforcement Counsel .... and with legal concurrence
of the Regional Counsel. ±/
•c. As in the past the Regional Administrators
will participate in and concur with the [Associate Adminis-
trator for Legal and Enforcement Counsel and) General Counsel
in selections, promotions, awards and disciplinary actions
for Regional Counsels. Regional Administrators will be a
party to performance agreements for and will participate in
the performance ratings of Regional Counsels by the [Associate
Administrator for Legal and Enforcement Counsel and) General
Counsel.
"d. The Regional Administrator will also continue
to manage the resources of the Office of Regional Counsel and
will provide certain administrative support such as space
allocations, processing of personnel actions, and the management
of travel and training accounts."
I/ Note that the Regional Counsel's formal concurrence
responsibility for enforcement actions as referenced in paragraph
2(b) (when read in conjunction with paragraph 1 of this excerpt)
arises at the point at which the Regional Administrator is prepared
to initiate a case referral by forwarding a case to the Office
of Legal and Enforcement Counsel for subsequent referral to the
Department of Justice. For further specifics on these procedures,
please see Section IX below. Note also "hit enforcement actions
(i.e. actions responding to specific instances of detected
violations), and enforcement activities generally, also should
be consistent with relevant guidance from Headquarters program
offices.
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-4-
The guidance in this memorandum on the enforcement process
applies to the internal Agency working relationships and
processes involved in identifying and resolving violations
using informal, administrative and judicial enforcement
activities. It does not apply in any respect to the development
arc* referral of criminal cases, which is being addressed in
a separate memo on general operating procedures for the criminal
enforcement program. Moreover, any existing program-specific
guidance on enforcement operating procedures remains in
effect until it can be expressly superseded by new guidance
which is consistent with the policies and procedures articulated
in this document. /
II. Enforcement Objective's
This guidance prescribes operating procedures which the
the Adminstrator has endorsed as vital to assist EPA in
discharging its responsibility to administer a strong,
aggressive, and fair enforcement program. The procedures
described here also are designed to achieve the following
enforcement objectives along with the general objectives
associated with the Regional reorganizations:
- Establishing an enforcement program which deters unlawful
conduct and advances the regulatory policies of EPA through
use of all available enforcement means.
- Maintaining a credible enforcement program which encourages
prompt, voluntary compliance, bj . Jeals firmly with
significant violations which cannot be resolved rooperatively
and includes the use of litigation where appropriate.
- Directing all enforcement activities towards the achievement
of maximum environmental benefits.
In order to help achieve these objectives, these procedures
emphasize:
- Continuing close and cooperative relationships
among the Office of Legal and Enforcement Counsel
(OLEC), which includes the Regional Counsel offices,
the Department of Justice (DOJ), and all EPA program
offices with enforcement responsibilities.
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-5-
*
4 »
- Working closely with States as partners in the enforcement
process. 2/
III. Roles and Relationships
EPA's enforcement program is intended to induce regulated
parties to meet environmental requirements and to rectify instances
of noncompliance. In order to accomplish these goals, EPA's
enforcement effort includes both compliance-oriented activities
and legal-oriented activities. The compliance activities are
primarily the responsibility of EPA's program offices, while the
legal activities are primarily charged to OLEC (including the
Offices of Regional Counsel).
While there are certain enforcement activities in which lead
responsibility is clear, there are other EPA activities which
include both compliance and legal elements. Moreover, different
activities for which a given office has lead responsibility can call
for varying degrees of involvement with other EPA offices. It is
crucial to the success of the Agency's enforcement program that
OLEC and the program offices work closely together in developing
policies, establishing coordination procedures and implementing
actions in areas where both elements are present. Similarly, it
is important that both OLEC and the program offices diligently
coordinate activities in their respective areas of primary responsi-
bility to ensure that EPA appropriately focuses all phases of its
enforcement program on achieving common objectives.
In the area of enforcement policy development, Assistant
Administrators have the lead in developing policies governing
compliance activities, while the Adminstrator has assigned me to
take the lead in developing policies governing legal natters.
OLEC and the Assistant Administrators are responsible for working
together in developing enforcement policy regardless of who has
the lead, and should jointly issue those policies which significantly
involve both of their respective areas of primary responsibility.
The Administrator has decided that I shall be responsible for
ensuring that all enforcement policies which EPA develops are
capable of being applied effectively and are consistent with the
goals of the Administrator under Federal law. The Associate
Administrator for Policy and Resource Management is responsible
for overseeing the fcrmulation of all Agency policy.
2/ For a more specific discussion on coordinating enforcement
Activity with States, see Section III(H) below.
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-6-
* »
Program offices in Headquarters and the Regions are responsible
for identifying and establishing priorities for handling instances
of noncompliance within their respective areas of authority,
evaluating the technical sufficiency of actions designed to remedy
violations, identifying for formal action those cases which cannot
be resolved less formally, and providing the technical support
necessary for developing cases and conducting litigation.
OLEC (including the Offices of Regional Counsel) serves
EPA's respective program offices in enforcement matters in an
attorney-client relationship. This means that OLEC is respon-
sible as legal counsel for providing client program offices with
support for informal and formal administrative resolution of
violations, for the conduct of litigation (which includes
identifying evidence needed to support litigation), for interpreting
statutes, regulations and other legal precedent covering EPA's
activities, and for advising program managers on the legal
implications of alternative courses of action.
Close cooperation among all parties (including DOJ) during
the case development process is critical to a successful and
legally supportable enforcement program. Early and frequent
consultation of Regional Counsels by the Regional programs is
vital in case identification and development. Moreover, a close
working relationship with program or technical staff is vital
to the Regional Counsels to ensure that the Regional Counsels
can serve the clients' interests.
Regional Counsels are responsible for consulting with
the Associate Administrator for Legal and Enforcement Counsel and
General Counsel, through the Enforcement Counsel, and with
DOJ, where appropriate, to ensure that unresolved legal issues
do not subsequently become impediments to litigation. Similarly,
Regional Administrators are responsible for consulting early
with Assistant Administrators on program policy matters to resolve
expeditiously any issues that may cause problems in developing a
case for litigation. Representatives of EPA and DOJ offices
with enforcement responsibilities will work as a case development
team on a particular matter to coordinate their efforts and to
minimize or eliminate all problems prior to the Regional Counsel's
concurrence in a civil referral.
Finally, OLEC will develop management procedures to ensure
that Enforcement Counsel and General Counsel attorneys work
closely together to identify and resolve expeditiously any legal
issues pertaining to enforcement matters, and thus enable EPA to
speak with one legal voice.
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-7-
The following synopsis of roles and relationships state in
more detail the respective organizational responsibilities regarding
enforcement natters:
A. Regional Administrators. The Administrator's September
15, 1981 memorandum makes clear that Regional Administrators
have responsibility (consistent, as explained in Section IV
below, with applicable delegations of authority and concurrence
requirements) for enforcement compliance functions such as
issuing permits, monitoring compliance, collecting compliance
information according to Headquarters' guidance, and issuing
notices of violation and administrative orders. They are also
responsible for initiating enforcement legal actions arising out
of these functions. In executing these functions, the Regional
Adr.iristra tor's responsibilities include building relationships
with State compliance programs, identifying violations of Federal
environmental laws, resolving those violations in a timely fashion
and a cooperative manner whenever possible, handling administrative
enforcement action* and referring cases to Headquarters vi.en
judicial action is necessary. Because the Regional Administrators
are primarily responsible and accountable for the successful
operation of Regional enforcement programs, they are the principal
clients in enforcement matters.
Notices of violation, administrative orders, administrative '
civil penalty complaints, and many intermediate decisions are
actions with legal consequences. Since the Regional Administrators
must bear the responsibility for the legal sufficiency of their
actions, they should consult with their respective Offices of
Regional Counsel prior to taking these actions, as indicated in
the Administrator's September 15, 1981 memorandum. In addition,
because the Regional Administrators also are responsible for the
technical sufficiency of their actions, they are further responsible
for budgeting and supplying the necessary technical resources
and support, or otherwise arranging for that support (e.g., from
a Headquarters program office or the National Enforcement
Investigation Center), to permit the Agency to develop and pursue
enforcement actions, including litigation where appropriate.
The Regional Administrators are also responsible for'obtaining
adequate Regional Counsel participation in preparing a case
(including final formal concurrence of the Regional Counsel)
prior to forwarding the case to Headquarters for formal referral
to DOJ.
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-8-
The Regional Administrators will be responsible for
ensuring that they follow all policy directives from an Assistant
Administrator. The Regional Administrators must ensure early in
the case development process that proposed enforcement actions
in response to specific instances of noncompliance are consistent
with national program policy directives established by the respon-
sible Assistant Administrators), and that Assistant Administrators
have the opportunity to participate in and review case development
activity. The Regional Administrators also must ensure that
they satisfy any national program review or concurrence require-
ments/ consistent with Section IV below. OLEC normally will not
take responsibility for those program concurrences or reviews,
although staff attorneys will be available to assist throughout
the review process.
Regional Administrators also are responsible for following
up on enforcement actions (including litigation) to ensure that
violations remain corrected and that regulated parties are complying
with the requirements which those enforcement actions impose.
B. The Assistant Administrators. As the national program
managers, the Assistant Administrators are responsible for
establishing enforcement compliance priorities, providing overall
direction to and developing accountability measures for their
respective Regional enforcement compliance programs, k'eeping
compliance statistics (based on input as necessary from Regional
offices), providing technical support (including appropriate
Headquarters technical support for litigation activity), providing
resources in Regional program budgets to support enforcement
activities, taking the lead role in preparing guidance and policy
decisions on enforcement compliance issues, and concurring as
necessary on enforcement actions at as early a stage in the case
development process as possible. In addition, Assistant Adminis-
trators may retain responsibility for issuing civil administrative
complaints and other administrative orders in cases of first
impression, overriding national significance, or violations by
any entity in more than one region.
The Assistant Administrators are responsible for developing
and implementing program policies, and should rely on OLEC to
help them put enforceable, defensible programs in place. The
Assistant Administr*.Trs also are responsible for participating
with OLEC in handling enforcement legal issues and rcr preparing
joint guidance for areas in which compliance and legal issues
overlap.
-------
OLEC acts as attorney to the Assistant Administrator and
the Headquarters program offices on enforcement matters. OLEC
attorneys are available to consult with program staff during the
development of program regulations, policies and guidance in
order to ensure the legal sufficiency of decisions and documents
relating to enforcement natters.
C. OLEC; The Regional Counsel (Enforcement Functions). In
accordance with the Administrator's September 15, 1981 memorandum
and the Nay 7, 1982 memorandum regarding reorganization of the
Offices of Regional Counsel, the Regional Counsels are to provide
the Regional Administrators and Regional program managers with
legal advice and assistance for all program areas in the attorney-
client relationship.' Thus, for example, in enforcement matters
cJie Regional Counsels are available to assist the Regional program
managers in drafting or reviewing the terms and conditions of
permits, notices of violation, administrative orders, or adminis-
trative complaints (particularly where new or unique matters
are involved). Because the Regional Administrators .*i
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-10-
t
of DOJ and Headquarters Enforcement Counsel attorneys so as to
resolve any potential legal problems for litigation as early in
the ease development process as possible. Regional Counsels
also provide legal representation for the Agency in administrative
hearings originating in the region, including NPDES evidentiary
hearings, and administrative appeals from those hearings.
Let me emphasize that in all these matters the Regional
Counsels must make every effort to ensure that they continue
to maintain the close working relationships with their counterparts
in the Regional program offices, aod that they also maintain
clear and open lines of communication.
D. OLEC; Enforcement Counsel Matters. Consistent with
attorney-client relationships, the Associate Administrator for
Legal and Enforcement Counsel and General Counsel provides,
through the Enforcement Counsel, legal advice regarding enforce-
ment matters to the Assistant Administrators to assist them in
performing their programmatic functions, including advice on
enforcement activities for which Headquarters program offices
are responsible. The Associate Administrator for Legal and En-
forcement Counsel and General Counsel, through the Enforcement
Counsel, also develops legal enforcement policies and guidance;
confers, where appropriate, with DOJ on the potential impact of
enforcement policy on litigation; and cooperates with the Assis-
tant Administrators in the development of enforcement policies
which involve both enforcement compliance and enforcement legal
activities.
The Enforcement Counsel checks both cases forwarded from
the Regions for referral to DOJ and consent decrees prior to
submitting them for approval to the Associate Administrator for
Legal and Enforcement Counsel and General Counsel to ensure that
they are complete and that they identify and properly address
all precedential or nationally significant questions. (See
Section X below.) Enforcement Counsel attorneys may be assigned
a more active role in case development or litigation-related
activities in a limited number of actions involving precedential
or overriding nationally significant .issues as described in
Section VII(B) in the May 7, 1982 OLEC memorandum on regional
reorganization* Otherwise, Regional Counsel attorneys will
assume the Agency lead, and Enforcement Counsel attorneys will
function in a supporting role by keeping apprised of the issues
from the start of the case development process as OLEC's Headquar-
ters representatives and by coordinating legal activity and the
contribution of case information to the case development effort
from Headquarters and the Regions.
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-11-
*
The National Enforcement Investigation Center (NEIC), which
reports to the Enforcement Counsel, is a national technical resource
with special expertise in natters asociated with investigations,
case development, litigation support, and evidence. The Regional
Administrators and Assistant Administrators, in support of enforce-
ment compliance and case development activities, nay draw upon
the NEIC's resources as they deem necessary, consistent with
priorities which OLEC establishes regarding NEZC's availability.
Regional and Assistant Administrators should give closest
consideration to involving NEZC in cases which have precedential
implications, national significance, or are multi-Regional in
nature, as opposed to cases which 'involve more routine matters.
E. OLEC: General Counsel Matters. Within the Agency,
tne Associate Administrator for Legal and Enforcement Counsel
and General Counsel, through the Deputy General Counsel, will
continue to be responsible for interpreting statutes and regula-
tions, reviewing proposed policy for consistency with national
law, providing national legal interpretations, and assisting in
resolving legal issues which arise in connection with policies
and regulations, in order to assure that the Agency speaks with
one legal voice. Consistent with present practices and existing
guidance, the Associate Administrator for Legal and Enforcement
Counsel and General Counsel will manage, through the Deputy
General Counsel, all matters resulting from judicial appeals
(with either General Counsel attorneys or Regional attorneys
acting as lead Agency counsel, depending on the nature of the
matter). The Regional Counsels will manage the Agency's legal
role in hearings and administrative appeals of actions origina-
ting in the Regions, including proceedings relating to permits
and administrative civil penalty actions.
F. The Department of Justice and the U.S. Attorneys* Offices.
The Agency's working relationship with the Department of Justice
and the U.S. Attorneys continues to be governed by the June 1977
Memorandum of Understanding. DOJ's and the U.S. Attorneys'
primary roles will normally be that of conducting judicial enforce-
ment matters and participating in case development activities as
described in Section VIZI below. OLEC's Headquarters and Regional
components are expected to use their best efforts to ensure that
they maintain constructive working relationships with DOJ in
these areas.
G. Policy Coordination. As indicated above, the Assistant
Administrators and Z should work closely together during the
formulation of all policies which affect enforcement to make
sure that the Agency conducts its enforcement activity in a
credible and legally supportable manner. The Administrator has
affirmed my responsibility to take the lead in coordinating
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-12-
work on establishing systematic procedures for developing and
tracking Agency enforcement policy. As part of this effort, I
am planning to propose the joint development with each of the
Assistant Administrators of a comprehensive set of enforcement
operating procedures for each program, in order to provide
consistent guidance for all stages of the case development
process. Program guidance which is currently in effect remains
operative except to the extent it is inconsistent with the
operating procedures prescribed in this document and is not
superseded by future guidance.
As policy or guidance documents affecting Regional enforce-
ment programs are developed, Regional offices should be consulted
or otherwise receive an opportunity to be involved at an early
ztsgc to make sure that the final guidance documents can be
implemented effectively.
H. Coordination with States. Coordination with States is
normally the responsibility of the Regional Administrator, subject
to national guidance. Because this responsibility encompasses
many areas in addition to enforcement, this memorandum does not
cover general issues associated with the Region-State relationship.
On enforcement matters, however, Regional Administrators
should maintain close working relationships with appropriate
State program officials. As part of enforcement planning activities
independent of the case development process. Regional offices (with
participation from Headquarters program offices and consistent
with national guidance) should consult with States to develop
general strategies for handling noncTr"1 iance, for promoting
local resolution of noncompliance problems, and for facilitating
open lines of communication by
• Consulting on which enforcrrrsr.t actions States should
manage and which Regional Offices should manage.
• Agreeing on appropriate time frames and parameters for case
resolution.
• Agreeing on circumstances under which EPA may assume the
lead on a case from the' State.
• Coordinating activity on tracking the progress of enforcement
actions.
• Following up on the application of agreed-upon strategies to
ensure their effectiveness.
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-13-
On legal matters specifically, the Office of Regional Counsel
should develop a close working relationship with State Attorneys
General and/or other appropriate legal authorities in each State
in order to support the Regional Administrator in coordinating
activity with that State. The Office of Regional Counsel is also
available to consult with the Regional program managers regarding
delegations/ the legal sufficiency of State remedies, or other
legal aspects of State actions.
National environmental laws do assign major roles to the
States for administering pollution control programs. Those laws
also place ultimate responsibilities for effective enforcement
on the Federal Government. The States' respective abilities to
enforce environmental' requirements can vary according to the
•Lolutory authorities, personnel, or other resources available
to them, zt is the Administrator's policy to uphold the
environmental statutes which EPA administers, and the Regional
Administrators are responsible for complementing State efforts
with Federal action in order to achieve compliance with those
laws in a timely manner.
I. EPA's Accountability System. EPA's accountability system,
overseen by the Associate Administrator for Policy and Resource
Management, monitors the performance of the Agency's entire enforce-
ment program, including both compliance and legal activities.
It is the Administrator's policy that pursuant to national program
direction from the Assistant Administrators, Regional Administrators
will establish specific measures of compliance and enforcement
performance for which they will be held accountable in the
accountability system. As the Agency's 'law firm", OLEC will be
similarly accountable for providing consistent legal advice,
decisions and policies; for expediting all referrals; and for
reducing backlogs of cases which have already been filed or
referred to the Department of Justice.
IV. Delegations and Concurrence Requirements.
The Administrator has endorsed an initiative to streamline
the enforcement process through a. high-priority review of both
existing delegations of authority and concurrence requirements
i.nposed through those delegations or through other actions.
Each of the Assistant Administrators and OLEC should expeditiously
review all delegations and concurrence requirements relating to
enforcement activities in their respective areas of responsibility
to identify requirements which are unnecessary or inconsistent
with a streamlined approach to enforcement. Until the Administra-
tor has an opportunity to act on the recommendations resulting .from
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-14-
this review, existing delegations (with any conditions) remain
in effect and should be followed until appropriate changes are
approved to implement the guidance provided in this document.
The Assistant Administrators and I shall announce any changes
of specific enforcement concurrence requirements in our respec-
tive areas of responsibility.
V. Reporting Requirements and OLEC Oversight
OLEC's Enforcement Counsel will keep to a minimum requests
for case development records and reports from Regional or
program offices. Enforcement Counsel staff will place priority
on direct access to files or tracking and reporting systems for
case information to minimize additional information collection
and reporting burdens. I expect the Regional Counsels to continue
to update the automated enforcement docket for cases which will
be or which already have been referred from the Regional offices,
and to provide periodic updates on all cases as necessary.
Consistent with historical practices, Regional Counsels must
keep complete records of recommendations, decisions and documents
relating to the legal aspects of all cases, including cases which
are in early stages of development. This requirement .is intended
to ensure that an adequate legal record exists for each case that
the Agency ultimately refers for judicial action and to facilitate
•valuations of Regional Counsels' performance on enforcement
matters.
The Regional Counsel should work closely with the Regional
Administrator to assist the Regional Administrator in following
similar recordkeeping practices to ensure that maintained files
are legally sufficient.
VI. Reviewing Compliance and Determining Responses.
The process of identifying violations and conducting Federal
compliance activities is the responsibility of the Regional
Administrator, consistent with national guidance and statutory
authorities and with applicable working agreements with States.
This process includes the following activities:
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-15-
- Identifying noncomplying sources and potential enforcement
- targets.
- Coordinating enforcement actions with States, as appropriate.
- Determining the appropriate Agency response to violations,
including:
• Requests for information (formal or informal).
• Informal discussions with the source.
/
• Warning letters or notices of violation.
• Administrative orders or administrative civil penalty
complaints.
• Referrals to Headquarters for civil judicial action.
- Participating in a client's role in settlement discussions
to resolve administrative or judicial proceedings.
Throughout the process, the Regional Counsel will act as
attorney to the Regional program client. Since the Regional
Administrator must make decisions and take actions with legal
consequences, the Regional Administrator should ensure that the
Regional Counsel is consulted as appropriate throughout the process*
particularly with regard to the legal consequences of selecting
alternative enforcement tools. Attorneys are available to
ensure that all enforcement documents, especially administrative
orders and administrative civil penalty complaints, meet all
Agency legal requirements and are enforceable. Regional program
officers should avail themselves of Regional Counsel attorney
participation in discussions with an outside party who is represented
by counsel.
As the likelihood increases that judicial remedies will
become necessary to resolve a case, the importance of attorney
involvement also increases. This includes meaningful coordination
with DOJ attorneys at early stages of the case development process
consistent with the procedures specified in Section VIII below.
Rigorous standards of evidence and conduct will apply in any
adjudicative proceeding; thus, it is crucial that cases be built from
the outset in a legally supportable wa>, This memorandum discusses
in more detail in subsequent sections the referral process and the
conduct of settlement negotiations.
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-16-
VII. Escalation
The Regional Administrator is responsible for the timeliness
of informal solutions to violations of environmental laws and
for initiating the case development process. This concept is
central to a credible enforcement program. The Regional
Administrator (subject to Headquarters program office guidance)
and OLEC share responsibility for achieving timely resolution of
cases once the case development process begins.
Responses to violations should be meticulously tracked within
each Region to make sure that each violation is responsibly resolved
as expeditiously as practicable. ' Time deadlines or goals should
be established within each Region as optimum response times; in
«?*• areas, these deadlines or goals have already been established
in national guidance.
The Administrator has given strong general support to the
use of reasonable 'deadline* dates in conducting negotiations to
ensure that negotiations do not become a means for delay. In
any particular case, the Regional Administrator (in consultation
with the Regional Counsel) should always be prepared to escalate
to the next-most-serious response, when necessary, to avoid pro-
tracted, negotiations resulting in unreasonably delayed remedial
action.
It remains the Administrator's policy to take formal enforce-
ment action when negotiations or other efforts fail. I shall
accept--and the Administrator will encourage--well-documented
civil judicial referrals from Regional Administrators whenever,
in their judgement, such action is necessary to ensure continued
progress toward compliance, even though active negotiations
still may be underway.
VIII. The Case Development Process
A group from OLEC (including Regional Counsel representatives)
has been conferring with DOJ for the purpose of, among other things,
formulating a process for developing, cases for civil litigation.
This process involves periodic meetings in the Regions, at which
EPA attorneys and technical staff will meet with DOJ attorneys
(and invite Assistant U.S. Attorneys) to:
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-17-
-- discuss approaches to developing cases targeted as likely
candidates for litigation;
— review appropriate ways to handle developments relating to
cases discussed at prior meetings)
— provide information on program enforcement issues and
priorities;
— refine procedures for handling enforcement actions generally!
and
— form litigation teams and assign case preparation and
responsibilities.where the Region has identified matters
which require a litigation enforcement response.
Once the Regional Administrator determines that a case has
a strong potential for referral, the Region will form a case
development team consisting of the lead Agency attorney and
representatives from the Regional program staff and DOJ. 3/ The
goal of this team is to reach a resolution of the enforcement
action, based on the technical support of the Regional Administrator*
through negotiated settlement or final judgement in litigation.
For each case, EPA will designate a lead Agency attorney.
As stated in the Hay 7, 1982 memorandum regarding reorganization
of the Office of Regional Counsel, the lead Agency attorney will
normally be a Regional attorney, but may be a Headquarters attorney
under some circumstances. Section VII(B) of that memorandum
provides a more detailed discussion of circumstances in which a
Headquarters attorney might be assigned the Agency lead (for
example, in cases of overriding national significance or in some
cases in which the Agency is involved in enforcement and defensive
litigation). The lead Agency attorney will coordinate case
development activities with DOJ.
3/ Headquarters program and Enforcement Counsel staff may participate
more actively in the case development process if precedential or
nationally significant issues are involved, especially under newly
developing programs.
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IX. The Referral Process
Consistent with the Administrator's September 15, 1981
memorandum, the Regional Administrator will initiate referrals
of enforcement cases in which settlement negotiations outside
the context of litigation either have been unsuccessful, or are
otherwise inappropriate due, e.g., to the need to halt the
violation quickly. The Regional Administrator initiates a
referral by forwarding a case to me with a recommendation to
refer that case to DOJ for litigation. The Regional Counsel's
formal concurrence shall ensure that the initiated referral is
legally sufficient and consistent'with national guidance. Early
involvement by appropriate EPA and DOJ staff, through the case
development procedures articulated in Section VIII above, is
impoitant to the successful development of a judicial referral.
This early involvement will reduce the need for development and
review of documents in a formal referral package late in the
case developrent process. Regional Administrators are responsible
for supporting this practice within their programs.
As the initiator of the referral, the Regional Administrator
is ultimately responsible for the completeness and quality of the
development of the forwarded case. This includes conformance with
all applicable-national guidance and policies established by OLEC
and by the appropriate program office.
Inasmuch as a case developed for referral can require the
drafting of important legal documents (e.g. complaint, consent
decree, memoranda on points of law), it is highly advisable that
the Regional Administrator assign the actual task of preparing
those documents in conjunction with DOJ to the lead Agency attorney
on the litigation team. A case developed for referral will rely
upon technical information and support from the Regional program
office and, where appropriate, from the Headquarters program
office. This method is likely to ensure the legal sufficiency
of the case when the Regional Administrator initiates the referral.
Every request for judicial action must have the formal concurrence
of the Regional Counsel before the Regional Administrator initiates
referral by forwarding the case to Headquarters.
To support a referral', the Regional Administrator must be
in a position to identify all technical assistance needed to
bring the case to successful completion. Jhe act of forwarding
the case to Headquarters for referral constitutes the Regional
Administrator's commitment to ensure that this technical assistance
and technical support which may later be identified is available
when needed.
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X. Headquarters Review of Case Development
Under the June 1977 EPA/DOJ Memorandum of Understanding,
the Associate Administrator for Legal and Enforcement Counsel
is responsible for formally transmitting a civil referral to the
DOJ. 4/ Headquarters attorneys will conduct a limited final
legal~"review on my behalf of cases forwarded for referral from
the Regions primarily to ensure completeness, consistent applica-
tion of law and enforcement policy, and appropriate development
of legal precedent. For some cases involving important precedent
or issues of overriding national significance. Headquarters
attorneys also may be assigned a more active role in the case
development process. /
Again, Regional Counsel lead attorneys must undertake
«ai*ly consultation with Headquarters and DOJ attorneys through the
case development team format as cases are being prepared. In
this manner, case development teams can identify precedential
or nationally significant issues early and can reduce the likeli-
hood that DOJ or the U.S. Attorney will raise concerns late in
the referral process regarding the advisability of pursuing
civil litigatic.:.
47The term "Assistant Administrator for Enforcement" in the
Memorandum was changed to "Associate Administrator for Legal
and Enforcement Counsel" by letter of the Administrator to the
Attorney General, in order to reflect the Agency's new organi-
xational structure.
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4
Similarly, close coordination by the lead Agency attorney
with technical personnel in the Regional program office (who
in turn should work closely with the Headquarters program office)
and any NEZC participants is also essential in order to achieve
early agreement on appropriate remedies, schedules, and other
technical aspects of the case prior to referral. Headquarters
program review of case development on behalf of Assistant
Administrators also will begin early in the process to identify
and resolve problems quickly and will focus1 on ensuring technical
completeness and appropriate application of program policy. In
this area as well. Headquarters program officials may be assigned
a more active role in cases involving important precedent, overrid-
ing national program significance, or activity in more than one
region. Headquarters program officials must ensure that they
perform their review function in a manner that avoids impeding
the expeditious referral of cases to OOJ once the Regional
Administrators have forwarded those cases to Headquarters.
XI. After EPA Refers a Case to DOJ
Following the referral of a case to DOJ, the lead Agency
attorney on the case will be responsible for coordinating responses
to all requests for supplemental information by the Department
r»r by the U.S. Attorney's Office. Program office staff will be
responsible for providing needed technical support. The lead
Agency attorney is responsible for keeping program officials and
other previously involved Agency attorneys apprised of case
developments after referrals.
XII. Negotiations
The Regional Administrators will normally be responsible for
ensuring a sound technical and scientific basis for resolutions of
identified violations. Prior to EPA referring an enforcement case
to DOJ, the Regional Administrators normally will be responsible
for directing or conducting informal settlement negotiations (subject
to the program-specific guidance which will be forthcoming). The
Regional Counsel should be present at discussions in which outside
parties are represented by counsel. Once the case has been referred,
DOJ normally is responsible for managing settlement discussions,
with the active participation of Regional personnel, in the context
of an attorney-client relationship. Regional Counsels will make
»very effort to identify resources needed for negotiations
in close consultation with program managers.
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*
4
The Administrator has affirmed that I urge OLEC staff at
Headquarters and in the Regions to caution their "client" program
offices and others within the Agency about the sensitivity of
contacts with persons or firms that are involved in cases
referred to DOJ for filing. There are siany matters unrelated
to a specific enforcement action—e.g., processing of grants,
development of rules—in which a party nay be interested and
which may be discussed without counsel present. Care should be
taken/ however, to determine the purpose(s) for which meetings
are sought by defendants and potential defendants so that appro-
priate arrangements can be made. ,11 natters related to • pending
case are raised by such persons during the course of a meeting
arranged for other purposes, any discussion of the case should
be interrupted and continued only after consultation with an
Agency attorney assigned' to the case.
XJJI. Enforcing Consent Decrees and Final Orders
Following the entry of a consent decree or final order,
compliance assessment is the responsibility of the Regional
Administrator, in the same way that the Regional Administrator
assesses compliance with statutory or regulatory requirements.
In the event that a source violates a consent decree or order,
a motion for contempt or modification of the decree nay be appro-
priate. The decision to file for contempt or to negotiate a
modification will normally be the Regional Administrator's,
based upon the advice of the Regional Counsel and subject to
national guidance issued by the responsible Assistant Administrator
or OLEC. Since the violation would concern a filed case and a
consent decree modification would involve a court order, DOJ and
the U.S. Attorney's Office should be given the opportunity to
take part in any of those discussions. Negotiations with affected
parties should be conducted in the manner described previously
in this document (with an opportunity for Assistant Administrator
participation). All modifications to consent decrees must be
approved in the same nanner as the original consent decrees.
XIV. Appeals
Generals-Counsel attorneys serve as the Agency's principal
defense lawyers and are responsible for any matter before Courts of
Appeals, including appeals of decisions relating to enforcement
actions. In such cases, the lead General Counsel attorney will
continue to be determined in accordance with a memorandum of
December 14, 1979 on the subject from the Deputy General Counsel.
The lead Agency attorney on the appeal will be responsible for
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-22-
tt
working closely with the lead Agency attorney appointed to the
original enforcement case, as veil as the appropriate Regional and
Headquarters program office personnel. The lead Agency attorney
originally appointed to an administrative enforcement action
which is subsequently appealed normally will verve as co-counsel
with the General Counsel attorney in the Court of Appeals.
With regard to hearings before an administrative law Judge
or appeals of administrative actions to the Administrator* the
Regional Counsel will normally provide legal representation for the
Agency on matters arising in the Regions, including permit conditions
and administrative civil penalty decisions. However, in accordance
with the OLEC memorandum of May 7, 1982, on regional reorganization,
when issues of overriding national significance exist, or when
Headouarters initiates the administrative action, the lead may be
assigned to a Headquarters attorney, upon the agreement of the
Regional Counsel and the appropriate supervisor in the Enforcement
Counsel's office.
XV. Communications/Press Relations
Throughout the enforcement process, the Regional Administrator
is responsible for ensuring that the appropriate information
flows openly and smoothly to all parties, with a legitimate interest
in the final outcome. Once a matter is referred to DOJ, however,
all Agency personnel should exercise care in releasing any infor-
mation or statement, including press releases, in connection with
the matter without previously consulting DOJ. The lead Agency
attorney is responsible for the smooth and complete flow of
information to supporting attorneys w'-hin the Agency and in DOJ.
The Regional Administrator and the Regional program managers
are responsible for communicatir- with States, except if a State
is a party to a filed judicial action. In that case, the U.S.
Attorney and DOJ should participate in or be consulted about any
such communications.
Likewise, the Regional Administrator will normally be
responsible for handling any press inquiries or releases concerning
an endorsement action. The Regional Counsel is available to provide
legal advice on the handling of those matters. Upon occasion,
such inquiries or press releases may be handled best by the Enforce-
ment Counsel or the appropriate Assistant Administrator, but only
when all parties and the press office agree that this procedure is
the best course of action. For filed actions, DOJ or the U.S.
Attorney's office should be consulted before interacting with the .
press.
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In the event of inquiries from Congress, OLEC will work
closely with the Regional Administrators, the appropriate
Assistant Administrator, and the Congressional Liaison Office
prior to releasing any information or making any public
statements.
XVI. Reservation
The policy and procedures set forth herein, and internal
office procedures adopted pursuant hereto, are intended
solely for the guidance of government personnel. They are
not intended to, do not, and may not be relied upon to create
a right or benefit, substantive or procedural, enforceable
at law by a party to litigation with the United States
Environmental Protection Agency. The Agency reserves the
right to take any action alleged to be at variance with
these policies and procedures or not in compliance with
internal office procedures that may be adopted pursuant to
these materials.
XVII. Delegation of Authority
Through a memorandum issued as a cover to this document,
.the Aiir.ir,istrator is delegating to me the authority to construe,
interpret or amend the guidance prescribed here. She similarly
has delegated to me the authority for issuing any follow-up
guidance for implementing the general operating procedures
prescribed here, unless the follow-up guidance is limited to
matters for which a single Assistant Administrator or Regional
Administrator is solely responsible. Of course, I shall work
closely with affected Assistant or Regional Administrators
in deciding how to exercise these delgated authorities, and
in appropriate cases shall issue national guidance jointly with
the relevant national program managers.
XVIII. Superseded Policy
These procedures supersede the policies and procedures issued
by the Enforcement Counsel on February 26, 1982, which are revoked
in their entirety.
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RF.1-5
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
» • I 4 C OfFICE OF
JKSh ^ iŁb5 ™E *OMIN,ST»«
MEMORANDUM
SUBJECT: Implementing Nationally Managed or Coordinated
Enforcement Actions: Addendum to Policy Framework
for State/EPA Enforcement Agreements
FROM: Alvin L. Aim
Deputy Administrator
TO: Assistant Administrators
Regional Administrators
Regional Enforcement Contacts
Steering Committee on the State/Federal Enforcement
Relationship
Associate Administrator for Regional Operations
I am pleased to transmit to you a ccpy of SPA's policy
statement on Implementing Nationally Managed or Coordinated
Enforcement Actions, as an addendum to the Agency's Policy
Framework for State/EPA Enforcement Agreements, issued on
June 26, 1984.
The policy statement was developed at the request of
Courtney price and myself by an OECM work group with repre-
sentatives from the Headquarters Program Offices and Regions.
The draft policy statement was reviewed by the Steering
Committee on the State/Federal Enforcement Relationship.
This final policy statement reflects the Steering Committee's
comments.
I think this policy is an important addition to our
efforts to build both a more effective national enforcement
program and a strong working relationship with the States.
Coordinated case preparation will have an increasingly
important role in establishing precedent for cur new programs,
in creating a greater deterrent effect when dealing with
numerous snail sources and in addressing recurring patterns
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- 2 -
of noncompliance within regulated entities. This policy
clarifies not only the circumstances under which nationally
managed or nationally coordinated cases are appropriate/ but
most important, it clarifies the roles and relationships
among EPA headquarters, Regions and State or local governments
with delegated programs.
This additional policy guidance, in concert with the
recently completed State/EPA Enforcement Agreements, should
provide a consistent framework for enhancing our joint Federal
and State efforts to achieve a strong and effective national
enforcement presence.
Attachment
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12/2fi/R4
SPA POLICY ON IMPLEMENTING NATIONALLY MANAGED OP
COORDINATED ENFORCEMENT ACTIONS
This policy addresses how EPA will handle the small
subset of federal civil enforcement cases, both administrative
and judicial, which are managed or coordinated at the EPA
Headquarters level. The policy was developed to ensure these
actions are identified, developed and concluded consistent
with the principles set forth in the Policy Framework for
State/EPA Enforcement "Agreements." It covers the criteria
and process for deciding what cases might best be managed or
coordinated nationally; the roles and relationships of EPA
Headquarters and regional offices and the States; and protocols
for active and early consultation with the involved States
and Regions.
A. Criteria for Nationally Managed or Coordinated Enforcement
Cases
Most enforcement cases are handled at the state, local
or EPA regional level for reasons of efficiency and effectiveness
and in view of the primary role that States and local governments
have in enforcement under most of the major environmental
statutes. The Policy Framework identifies several instances
in which direct enforcement actions may be taker, by EPA, which
in most instances will be handled by EPA Regions pursuant to
the State/EPA Enforcement "Agreements." However, some of
those cases may most appropriately be managed or coordinated
at the national level by SPA Headquarters.
In addition to instances in which en EPA Regicn requests
Headquarters assistance or lead in an enforcement case, these
"national" cases will usually arise within the context of
three of the criteria for direct EPA action mentioned in the
Policy -Framework:
— National Precedent (legal or program precedent): the
degree to which the case is one of first impression
in law or the decision is fundamental co establishing
a basic element of the national compliance and
enforcement program. This is particularly important
for early enforcement cases under a new program or
issues that atfect implementation of the program on
a national basis.
— Repeat Patterns of Violations and Violators; the
degree to which there are significant patterns of
repeat violations at a given facility or type of
source or patterns of violations within multi-facility
regulated entities. The latter is of particular
concern where the noncompliance is a natter of national
(e.g., corporate) policy or the lack of sound environ-
mental management policies and practices at a national
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- 2 -
level which can best be remedied through settlement
provisions which affect such national policies and
practices.
— Interstate Issues (multiple States or Regions): the
degree to which a case may cross regional or state
boundaries and requires a consistent approach. .
This is particularly important where there may be a
potential for interregional transfers of pollution
problems and the case will present such issues when
SPA Regions or States are defining enforcement remedies.
EPA's response to any of these circumstances can range
from increased headquarters oversight and legal or technical
assistance, to close coordination of State and Regional
enforcement actions, to direct management of the case by
Headquarters.
There are essentially two types of "National" cases. A
nationally managed case is one in which EPA Headquarters has
the responsibility for the legal and/or technical development
and management of the case(s) from the time the determination
is made that the case(s) should be nationally managed in
accordance with the criteria and process set forth in this
policy. A nationally coordinated case(s) is one which preserves
responsibility for lead legal and technical development and
management of the cases within the respective EPA regions
and/or state or local governments. This is subject, however,
to the oversight, coordination and management by a lead
Headquarters attorney and/or program staff on issues of
national or programmatic scope to ensure that all cf the
cases within-che scope of the nationally coordinated case are
resolved to achieve the sane or compatible results in furtherance
of EPA's national program and enforcement goals.
Section C below describes more fully the roles and
relationships of EPA headquarters and regional and state
personnel, both legal and technical, in either nationally
managed or nationally coordinated cases.
There are several factors to apply to assess whether, in
addition to the normal Headquarters oversight, a case should
be handled as: (1) nationally managed; or (2) nationally
coordinated. None of these factors may necessarily be sufficient
in themselves but should be viewed as a whole. These factors
will include:
availability or most efficient use cf State or SPA
Regional or Headquarters resources.
ability of the agency to affect the outcome through
alternative means. One example is issuance of
timely policy guidance which would enable the States,
local governments or EPA Regions to establish the
appropriate precedent through independent action.
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- 3 -
— favorable venue considerations.
environmental results which could be achieved through
discrete versus concerted and coordinated action,
such as potential for affecting overall corporate
environmental practices.
— location of government legal and technical expertise
at EPA Headquarters or in the Regions/ recognizing
that expertise frequently can be tapped and arrangements
be made to make expertise available where needed.
To the extent possible, where cases warrant close national
attention, EPA Headquarters will coordinate rather than
directly manage the case on a national basis thereby enabling
Regions and States to better reflect facility-specific enforcement
considerations.
B. Process for Identifying Nationally-Managed or Coordinated
Cases — Roles and Responsibilities
EPA recognizes the importance of anticipating the need
for nationally managed or coordinated cases to help strengthen
our national enforcement presence; and of widely sharing
'information both on patterns of violations and violators and
on legal and program precedent with EPA Regions and States.
To do this:
Headquarters program offices, '.n cooperation with the
Office of Enforcement and Cornyiiance Monitoring should
use the Agency's Strategic planning process to help
identify upcoming enforcement, cases of national precedence
and importance. They also should develop and disseminate
to Regions information on anticipated or likely patterns
or sources of violations for specific industries and
types of facilities.
Regional offices are responsible for raising to Headquarters
situations which pose significant legal or program
precedent or those in which patterns of violations are
occurring or which are likely to be generic industry-
wide or company-wide which would make national case
management or coordination particularly effective.
State and local officials are encouraged to raise to EPA
Regional Offices situations identified above which would
make national case management or coordination particularly
effective.
Whether a case will be managed or coordinated at the national
level will be decided by the Assistant Administrator for Enforce-
ment and Compliance Monitoring after full consultation with the
affected program Assistant Administrators, Regional Administrators
and state or local governments with approved or delegated programs
in what is intended to be a consensus building process. There
will be a full discussion among all of the parties of all of
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the ramifications for the program and a review of all of the
important criteria involved in the decision. In the event of
a lack of consensus as to whether the case should be managed
or coordinated at the national level, the AA for OECM shall
make the determination, with an opportunity for a hearing
and timely appeal to the Administrator or Deputy Admini-
strator by the Regional or other EPA Assistant Administrator.
The Regions will be responsible for communicating with
any affected States using mechanisms established in the State/
EPA Enforcement "Agreements," to raise the possibility of
national case management or coordination and to ensure that
timely information on the status of any independent state,
local or regional enforcement actions can and would be factored
irito the decisions regarding: (1) whether to manage the case
nationally; (2) whether to coordinate the case nationally; (3)
what legal and technical assistance might be provided in a state
lead case; and (4) what facilities to include in the action.
C. Case Development — Roles and Responsibilities
Nationally managed cases are those that are managed out
of EPA Headquarters with a lead headquarters enforcenent
attorney and" a designated lead headquarters program contact.
Notwithstanding headquarters lead, in most instances, timely
and responsive Regional office legal and technical support
and assistance is expected in developing and managing the
case. In these instances, the Regions will receive credit
for a case referral (on a facility basis) for this effort.
The decision on the extent of Regional office involvement
and case referral credit will be made at the time of decision
that the case should be nationally managed. Regions which
play a significant role in the development and/or prosecution
of a case will be involved in the decision-making process in
any case settlement proceedings and the Regional Administrator
will have the opportunity to formally concur in 3ny settlement.
Nationally coordinated cases are those that are coordi-
nated out of EPA Headquarters with lead regional and/or state
or local attorneys and associated program office staff. The
headquarters attorney assigned to the case(s) and designated
headquarters program office contact have clear responsibility
for ensuring national issues involved in the case which
require national coordination are clearly identified and
developed and in coordinating the facility-specific actions
of the regional offices to ensure that the remedies and
policies applied are consistent. This goes beyond the normal
headquarters oversight role. The headquarters officials have
both "a facilitator role in coordinating information exchange
and a policy role in influencing the outcome for the identified
issues of national concern.
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Whether a case is nationally managed or nationally
coordinated, as a general rule if SPA is managing a case,
States will be invited to participate fully in case develop-
ment and to formally join in the proceedings if they so
desire by attending meetings and planning sessions. States
will be consulted on settlement decisions but will be asked
to formally concur in the settlement only if they are parties
to the litigation.
On a case-by-case basis, the National Enforcement and
Investigations Center (NEIC) may be asked to play a role in
either type of national case to coordinate evidence gathering,
provide needed consistency in technical case development
and policy, witnesses and chain of custody, and/or to monitor
consent decree compliance.
D. Press Releases and Major CcmmufSSbations
A communications plan should be developed at an early
stage in the process. This should ensure that all of the
participating parties have an opportunity to communicate
their role in the case and its outcome. Most important, the
communications plan should ensure that the essential message
from the case, e.g., the anticipated precedents, gets sufficient
public attention to serve as a deterrent for potential future
violations.
All regional and state co-plain.tiffs will be able to
issue their own regional, state-specific or joint press
releases regarding the case. However, the timing of chose
releases should be coordinated so that they are released
simultaneously, if possible.
It is particularly important that the agencies get
maximum benefit .from the deterrent effect of these significant
national cases through such mechanisms as:
more detailed press releases to trade publications
i.e., with background information and questions and
answers
— development of articles
— interviews with press for development of more in-
depth reporting
press conferences
— meetings with public/environmental groups — including
meetings on the settlement of national cases which
have generated incense local or national interest
speeches before industry groups about actions
communications with congressional committees
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RF.1-6
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. W4«0 ft F.
ALB 20 B87
OFFICI OF EVFO*CEMF\T
AND COMPLIANCE
MOSITOIUVG
MEMORANDUM
SUBJECT: Policy on Invoking Section 9 of the EPA/DOJ
•'. Memorandum of Understanding
FROM* Thomas L. Adams, Jr. Vj . VO
Assistant Administrator * v*" **^
TO: Regional Administrators
Regions I-x
Section 9 of the EPA/DOJ Memorandum of Understanding concerning
civil litigation provides authority to the Administrator to appoint
Agency attorneys to represent the Agency in certain circumstances.
This is an important but virtually unused authority. The lack of
use to date may be due, in part, to the absence of a policy and
procedure for invoking Section 9.
We anticipate greater use of Section 9 in the future on a
•elected basis to carry out its intended purpose. To facilitate
its future use, we have developed the attached policy. We look
forward to working closely with you in its implementation.
If you have any questions about the policy, please feel free
to call Ed Reich at FTS 382-3050.
Attachment
cc: Deputy Regional Administrators, Regions I-x
Regional Counsels, Regions I-x
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POLICY INVOKING SECTION 9 OF THE EPA/DOJ MEMORANDUM OF UNDERSTAND]
Background
In June 1977, EPA and the Department of Justice entered into a
Memorandum of Understanding concerning the conduct of environmental
litigation. The MOU was intended to ensure that Federal court civil
litigation under EPA statutes was effectively conducted to the best
interests of the government and the public. It was also intended to
resolve differing views of the appropriate roles of DOJ and Agency
attorneys and establish a close and cooperative relationship between
the attorneys of the two agencies. The MOU dealt specifically with
civil litigation under the Clean Air Act, the Federal Water Pollution
Control Act, and the Safe Drinking Water Act, although it has
become the model for litigation under other environmental statutes
as well. The MOU received legislative sanction in 1977 when Congress
specifically incorporated the MOU in Section 305(b) of the Clean
Air Act.
Primary Responsibilities Under the MOU
The MOU creates a number of important responsibilities for
each agency, reflecting the roles and areas of expertise of each.
The major provisions of the MOU can be summarized as follows:
(1) The Attorney General "shall have control over" all case:
to which EPA is a party.
(2) When requested by the Administrator, the Attorney General
shall permit Agency attorneys to participate in ca*es
"subject to the supervision and control of the Attorney
General."
(3) The Attorney General retains the right to allocate tasks
between attorneys, giving "due consideration to the
substantive knowledge of the respective attorneys of the
matter at issue so that the Government's resources are
utilized to the best advantage."
(4) Settlement of any case in which DOJ represents the Agency
requires the concurrence of both the Administrator and
the Attorney General (or their delegatees).
(5) The Attorney General shall establish specific deadlines,
not longer than 60 days, by which time DOJ attorneys must
either file complaints or report to the Attorney General
why such complaint has not been filed.
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(6) If a complaint is not filed within 120 days of referral,
the Administrator may request the Attorney General to
file a complaint within 30 days. Failure to thereafter
file within said 30 days may be considered by the Agency
as a failure of the Attorney General to notify the
Administrator within a reasonable time that he will
appear in litigation for the purposes of Section 305
of the Clean Air Act, Section 506 of the Federal Water
Pollution Control Act, or Section 1450 of the Safe
Drinking Water Act. (Under such circumstances, the
Administrator is authorized by the cited statutory
provisions to appoint Agency attorneys to appear and
represent him.)
(7) Failure to file a complaint within the time period
requested by the Administrator in cases seeking
immediate action under the emergency provisions of the
three statutes also would constitute a failure to so
notify the Administrator, also authorizing Agency
attorneys to assume representation.
(8) In conducting litigation, the Attorney General shall
defer to the Administrator's interpretation of
scientific and technical matters.
Current Experience
Experience has shown that the 60 day target for filing cases
has not been consistently met. There are a number of explanations
for the disparity between the 60-day deadline created by the MOU
and the actual performance in implementing it. In some instances,
the complexity of the case makes review and filing within 60 days
an unrealistic target. In other cases, further pre-filing prepara-
tion is required or the case is held after referral at EPA's
request for reasons of litigative strategy or to conduct pre-filing
settlement negotiations. However, cases may also be delayed in
filing for reasons relating purely to management and utilization of
DOJ resources and DOJ's own sense of priorities. Certain cases may
be important to EPA because of the principle involved and yet may
be viewed by DOJ attorneys as being only marginally worth their
time, thui affecting the relative priority such cases receive. In
a few cases, differences in statutory or regulatory interpretation
or unresolved policy issues can also delay filing.
An analysis of unfiled cases pending at DOJ shows that a
number of cases fall within the scope of Section 9 of the MOU,
affecting cases unfiled after 120 days. However, the Agency has
only rarely notified DOJ of its intention to invoke that section
and appoint Agency attorneys to represent itself, let alone
actually appoint such attorneys under that section.
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-3-
Consideration Affecting Invoking Section 9
Section 9 is clearly intended to give the Agency the discretion
to assume responsibility for representing itself in cases unfiled
after 120 days, after 30 days notice to DOJ. There are a wide
variety of considerations that go into deciding whether it is
appropriate to invoke the MOU.
The threshold consideration relates to the reasons for the
case remaining unfiled. Obviously, if the case is unfiled because
EPA agrees that further pre-filing preparation is required or
because EPA has asked for a delay for litigative strategy reasons
or to conduct pre-filing settlement negotiations, invoking
Section 9 would be inappropriate and unwarranted.
However, if a case is unfiled simply due to unavailability of
DOJ resources, consideration of invocation may be appropriate.
Further, if DOJ believes that a case should not be filed due to
technical deficiencies in the evidence but EPA does not agree,
consideration should be given to invoking Section 9 in light of
DOJ's failure to defer to the Agency's expertise in accordance with
Section 14 of the MOU. Finally, if the delay is due to differences
over interpretation and application of Agency policy or priorities,
and DOJ does not defer to the Agency's proper role in establishing,
interpreting, and implementing policy or priorities, consideration ~
of Section 9 would also be appropriate.
Even within the classes of cases identified in the previous
paragraph, invoking the MOU should be viewed as an unusual action
when other attempts to resolve the problems in a case have proven
fruitless. Within these classes of cases, the Agency must weigh
such additional factors as:
(a) the Agency interest to be served by assuring filing of
the case in a more timely fashion. Where the case is
necessary to validate an Agency policy objective, this
may be a particularly important consideration;
(b) the ability of the Agency, both in terns of attorney
availability and experience levels, to handle the
litigation without DOJ involvement and support;
(c) the desire to maintain, as much as possible, DOJ
involvement in cases since combined use of Agency
and DOJ resources normally provides the most effective
government representation; and
(d) the likelihood of filing of the complaint within the near
future if the MOU is not invoked, and whether invoking the
MOU is likely to accelerate filing by DOJ.
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-4-
(Note that invoking Section 9 in the sense of sending a letter
to the Attorney General requesting him to file within 30 days does
not, in itself, commit the Agency to assume the lead after that
period.)
Procedures for Invoking Section 9
Section 9 may be invoked only by the Assistant Administrator
for Enforcement and Compliance Monitoring. It may be invoked at
his own initiative, upon the request of a Regional Administrator or
his delegatee, or at the request of the Assistant Administrator
for Air and Radiation for cases arising under Sections 203 and 211
of the Clean Air Act.
A request by the RegionV to invoke Section 9, which would
normally involve enforcement litigation, should be in memorandum
form and should be directed to the Assistant Administrator for
OECM. The memorandum should briefly summarize the facts of the
case, especially any relevant information not previously contained
in the referral package, and the appropriateness of invoking
Section 9 in light of the criteria discussed in this memorandum.
The memorandum should detail, to the best of the Region's knowledge,
the reasons for the case remaining unfiled, and all efforts made to
get the case filed. If DOJ had asked for any additional informa-
tion before filing, the memorandum should detail specifically what
was requested and how the Agency responded. The request should
also contain a proposed case management plan, a recommendation as
to which EPA lawyers should be designated to represent the Agency,
and a commitment by the Region to provide the resources (technical
and legal) necessary to prosecute the action.
Upon receipt and review of the memorandum, or after discussion
with the Regional Administrator and the Regional Counsel or their
delegatees where the Assistant Administrator raises the issue on
his own initiative, the Assistant Administrator may decide to
invoke Section 9. If so, prior to the Agency's sending a letter
under Section 9, the Deputy Assistant Administrator - Civil
Enforcement and the appropriate Associate Enforcement Counsel will
meet with the Chief, Environmental Enforcement Section to see if an
acceptable resolution can be achieved or if any circumstances exist
of which the Agency nay not be aware. The appropriate Regional
Counsel, or designee, will be given notice and opportunity to
V As used in this section, the terms "Region" and "Regional
Administrator and Regional Counsel* shall mean, for cases
under Sections 203 and 211 of the Clear! Air Act, the Office of Air
and Radiation and the Assistant Administrator for Air and Radiation,
respectively.
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-5-
attend any such meeting. Assuming the matter is not acceptably
resolved in this manner, the Assistant Administrator shall send a
letter to the Assistant Attorney General, Land and Natural Resources
Division requesting him to file within 30 days in accordance with
Section 9.
During this 30-day period, the Agency will continue to make
all reasonable efforts to obtain the filing of the complaint. If
at the end of the 30-day period the case remains unfiled, the
Assistant Administrator will again discuss the case with the
Regional Administrator and Regional Counsel to determine the
appropriate action. If determined to be appropriate, the Assistant
Administrator shall appoint Agency attorneys to represent the
Agency in the case and so notify the Assistant Attorney General in
writing of this action.
Support of Cases Where Agency Invokes Section 9
It is primarily the responsibility of the Office of Regional
Counsel to provide the legal support to prosecute and manage a case
where the Agency appoints its own attorneys under Section 9. This
consideration should be factored into both the recommendation to
invoke Section 9 and in the case management plan. However, if the
Regional Counsel so requests, the appropriate Associate Enforcement
Counsel in OECM will endeavor to provide assistance to supplement
Regional resources available for the case.
Where a case is to be nationally-managed in accordance with
existing guidance, the appropriate Associate Enforcement Counsel
will be primarily responsible for providing legal support. For
cases arising under Sections 203 and 211 of the Clean Air Act,
attorneys in the Field Operations and Support Division of the
Office of Air and Radiation will exercise primary responsibility.
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RF.1-7
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6n
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
llAR 4
l**MCtMINT AMD
MEMORANDUM
SUBJECT: Headquarters Review^and Tracking /AŁ Civil Referrals
FROM: Courtney M. Price _
Assistant Administrator
Office of Enforcement and Compliance Monitoring
TO: Regional Administrators
Regions I-X
Regional Counsels
• Regions I-X
Associate Enforcement Counsels
The Office of Enforcement and Compliance Monitoring is
committed to working cooperatively with Regional Offices to
track civil enforcement litigation and to generally improve
management of EPA's enforcement litigation. The following
procedures provide for expedited handling of case referrals
which continue to be reviewed by Headquarters and for over-
sight of "direct* case referrals. They also clarify roles
in the management of various classes of judicial actions.
This guidance supplements and, where inconsistent* supersedes
previous guidance on review and tracking of civil referrals.
I. CLASSIFICATION OF REFERRALS
Four distinct classes of cases have evolved in the Agency's
civil judicial enforcement program. Those classes of cases and
roles in handling each class nay be described as follows:
Class I: Nationally managed cases involving highly
significant and precedential issues of major
importance in the particular program, or
involving 'activities in more than one Region.
The lead legal and/or technical responsibilities
in such cases usually rest in Headquarters, with
assistance from the Regional office(s).
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Class II: Cases involving issues of significance which
may be unique or precedential, or which are
important to establish or further Agency
enforcement goals. The lead legal and
technical responsibilities in such cases
usually rest in the Regional offices, with
substantial assistance and oversight from
Headquarters.
Class III: Cases which are significant and important to
Agency enforcement goals, but which are not
likely to raise issues which are unique or
precedential. The lead legal and technical
responsibilities in such cases rest in the
Regional offices. Headquarters involvement
will be limited to general oversight to ensure
that Agency policies are followed and that
cases are being prosecuted in an expeditious
manner. Routine communications should take
. place directly between Regional attorney
staff and the Department of Justice or U.S.
Attorneys.
Class XV: Cases which may be referred directly from the
Regions to Department of Justice (DOJ)
Headquarters pursuant to the September 29,
1983 letter agreement between Alvin L. Aim
for EPA and F. Henry Habicht, II for DOJ
(copy attached). Direct referrals are
presently authorized for the more routine
cases in the Air and Water programs.
Headquarters attorney involvement in those
cases will be limited to summary review and
oversight as described herein. Routine
communications should take place between
Regional Attorney Staff and DOJ or U.S.
Attorneys.
The classes of cases which fall within the Class IV are
set forth with specificity in the letter agreement between
Alvin Aim and F. Henry Habicht, II dated September 29, 1983.
For all other cases, the initial determination of category
and lead responsibilities will be made by the Regional
Administrator at the time the referral package is forwarded
to Headquarters for review. That determination should be
included as a part of the cover memorandum accompanying and
summarizing the referral package. Unless the Associate Enforr
ment Counsel for the appropriate OECM division disagrees, the
case will be handled accordingly. Should the Associate
Enforcement Counsel believe that the case has been
miscategorized, he or she should consult with the Regional
Administrator-or the designated Regional enforcement contact
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-3-
regarding the classification of the case or decision on lead
responsibilities. The Associate will also notify the Regional
Counsel of the issue. If agreement cannot be achieved, 1 will
determine the appropriate classification and lead responsi-
bilities after consultation with all relevant parties within
the Agency.
After the initial classification of a case, facts may
develop or issues arise which will justify a reclassification.
Either the Associate Enforcement Counsel or the Regional
Administrator (or the designated Regional enforcement contact
person) nay suggest reclassification of a case or modifi-
cation of lead responsibilities. The decision on reclassifi-
cation will be made as described above for original classifi-
cation.
II. EVALUATION OF DIRECT REFERRALS
On December 1, 1983 we started a one year trial period for
direct referral of certain types of enforcement litigation to
the Department of Justice. The types of civil enforcement
cases for which I have waived the requirement of concurrence .
are listed in a September 29, 1983 letter from Alvin L. Aim to
F. Henry Habicht, II (copy attached), procedures for imple-
menting the d;rect referral process were detailed in a
November 28, 1583, memorandum I addressed to Regional
Administrators, Regional Counsels and Headquarters staff (copy
attached). As a point of clarification, it is my intent that
conterr.pt actions may also be handled as direct referrals if the
original case would meet the current criteria for direct referra
Headquarters will review and evaluate the information copy
required to be furnished to EPA Headquarters when each direct
referral is sent to the Department of Justice. Associate
Enforcement Counsels for the programs where direct referrals
are utilized will prepare checklists which, at a minimum,
provide for review of the following criteria:
A. Appropriateness of direct referral
The case should be clearly within one of the categories
enumerated in the September 29, 1983, letter from Alvin Aim to
P. Henry Habieht, II for which direct referral may be used.
Contempt actions in cases which fit the direct referral cate-
gories may also be handled through direct referral procedures.
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B. Format of the cover memorandum
The referral package should include the Case Data and
Facility Data forms and a cover memorandum which identifies
and discusses at least the following subjects: nature of the
case, cause of action, proposed remedy, issues of national
or precedential significance, description of consultation
for case development (including names of Headquarters and
DOJ attorneys contacted), identification of Regional contact
persons, and basis for treating case as a direct referral.
C. Substantive adequacy of direct referrals
Each direct referral package should contain the following
elements:
1. An adequate cause of action;
2. Description of evidence sufficient to prove the
violations (copies of documentary evidence should
be attached, if possible, and the person(s) with
custody of all evidence should be identified);
3. Evaluation of potential defendants and a discussion
of why the named defendants were selected;
4. Discussion of State involvement in efforts to
resolve the violations;
5. Evaluation of potential defenses and how they can
be refuted;
6. Evaluation of issues of precedential significance
in the case, including a discussion about how the
positions proposed by the Regional Office are
consistent with law and national policy;
7. Description of the environmental harm to be remedied
or other reasons which justify prosecution of the
case at the time of referral;
8. Description of the remedy to be sought or the
specific discovery required to establish a remedy
in the case;
9. Discussion of-penalties to be sought (a) if the
case proceeds to trial and (b) as an initial
settlement position; and
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-5-
10. Description of attempts made to settle the case,
problems encountered in settlement discussions,
and the date of the last contact with the source
owner or other potential defendant.
Within 30 calendar days after receiving the information
copy of a direct referral the Associate Enforcement Counsel
will send a copy of the completed checklist to the Regional
Office, maintaining a file copy to serve as a basis for
periodic evaluation.
If a case which is not within the category for direct
referral is erroneously tent through the direct referral pro-
cess, the Associate Enforcement Counsel will prepare a
response ranging from a simple notice to the Region indicat-
ing why the direct referral was erroneous to a withdrawal
from the Department of Justice. If a case which should have
been directly referred to the Department of Justice is
erroneously sent to Headquarters for concurrence, the
Associate will, after consultation with the Region, forward
it to the Department of Justice as a direct referral. A copy
of the memorandum forwarding the case to the Department of
justice will be sent to the Region.
III. TRACKING ALL REFERRALS IN THE COMPUTER DOCKET
All civil cases must be entered and tracked in the
Enforcement Docket System. Guidance on responsibilities for
docket procedures is contained in memoranda dated April 21,
1983, November 23, 1963, and November 28, 1983 (copies
attached). The following docket guidance supplements and,
where inconsistent, supersedes those memoranda.
Each Regional attorney has primary responsibility for
updating all of his or her active cases as part of the monthly
update procedures. Headquarters attorneys will also continue
to provide information to the system. Case Status Update
reports will be sent on or about the first of each month to
the Regional Docket Control or Regional Coordinator for
distribution to the responsible Regional attorneys. By the
10th of each month, the Regional attorney must see that an
update is submitted to the Regional data analyst (if the
Region has one) or is mailed to Headquarters Docket Control,
Bruce Rothrock (LE-130A).
As with all referrals, an information copy of direct
referrals must be sent to Headquarters, directed to my atten-'
tion, and must include completed Case Data and Facility Data
Forms (copies of those forms are attached). The correspondence
Control unit (CCU) will route the package to the appropriate
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-6-
OECM division, and will give the Case Data Form, the Facility
Data Form, and a copy of the cover letter referral memorandum
to Headquarters Docket Control for entry of the case into
the Docket System. Keg ions with Regional Docket Control should
give copies of the Case and Facility Data Forms and the
referral memorandum directly to regional data analyst for entry
into the system. Failure to attach those forms nay result in
the cases not being entered in the Docket System, and the
Region not receiving credit for the case at the tine of
referral.
Copies of direct referral packages are to be sent simul-
taneously to the Department of Justice and EPA Headquarters.
The "Date to EPA Headquarters" and the "Date Referred to
DOJ" shown in the Case Docket System will be the date on the
cover letter from the Regional Administrator. The System is
being modified so that direct referrals will be identified
and can be separately retrieved from the System. A new
event for "Date Received EPA HO" will also be added. This
event will be used as an approximate date when the Land
and Natural Resources Division, Department of Justice,
receives the referral package and, consequently, when the
thirty day clock begins to run for determining whether
Headquarters DOJ or the U.S. Attorney will have the lead*
litigation responsibilities as provided in the September 29,
19B3 letter agreement between Alvin Aim and Henry Habicht, II.
IV. REFERRALS REQUIRING CONCURRENCE
The review criteria for direct referrals contained in
this memorandum also apply to cases which require Headquarters
concurrence. Rather than incorporating the results of review
in a file checklist, however, the results will be incorporated
in the memorandum that Associates prepare for me recommending
whether to refer the case to the Department of Justice or
return the case to the Region. A copy of the memorandum will
be sent to the Region. If the case represents a type that
should be considered for direct referral in the future, the
memorandum addressed to me should so indicate.
All settlements require Headquarters concurrence. Thus,
referrals which include a consent decree to be filed with
the complaint require Headquarters concurrence. Such referrals
should contain the following elements:
1. A clear statement of a cause of action;
2. Identification and discussion of any issues of
national significance;
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-7-
3. Analysis justifying proposed penalties in terms of
applicable penalty policies; and
4. An enforceable consent decree which (a) resolves
the violation, (b) is in accordance with require-
ments of applicable statutes, regulations and
policies and (c) includes an appropriate termi-
nation date or specifies some other process for
concluding the court's jurisdiction. See "Guidance
for Drafting Judicial Consent Decrees" (GM-17)
issued October 19, 1983 for a complete description
of consent decree requirements.
V. MANAGING THE CIVIL ENFORCEMENT DOCKET
Involvement by the Associate Enforcement Counsels in all
cases, including those that do and do not require Headquarters
concurrence, will provide a basis for developing national
expertise and will identify areas where national guidance is
needed, in addition it will prepare us to respond quickly
when settlement proposals are submitted for approval. Me *
must ensure that litigation is expeditiously prosecuted, that
national policies are implemented and that statutory require-'
ments are scrupulously observed. Whenever Headquarters
identifies a problem, the Associate Enforcement Counsel
should communicate with the Regional Counsel and Department
of Justice. Where quick resolution cannot be informally
achieved, the Associate should corwr.unicate in writing on the
subject to the Regional Office and Department of Justice and
place a copy of the nemo in the Headquarters case file. X
rely on the judgment of each Associate as to when a natter is
of sufficient importance that it should be called to my
attention.
The Associate Enforcement Counsels will monitor the
activities of the Regions and the Department of Justice to
make sure that all cases are vigorously prosecuted after
referral. Extensive informal discussions and efforts at
voluntary resolution normally occur prior to referral. We
should move forward resolutely when litigation is required.
Settlement discussions nay, of course, proceed on a parallel
track, but they generally should not result in suspension of
litigation activities. My November 28, 1983 memorandum
describing procedures for implementation of direct referrals
specifically requires that I concur in any delay after a
case has been referred to the Department of Justice. Whether
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-8-
or not the case was directly referred, the Associates should
identify and call to my attention any instance where the
government has caused or agreed to delay in the filing or
prosecution of any case without my consent.
The Associate Enforcement Counsels will use the
computerized enforcement docket and other available information
to monitor the overall litigation effort. In addition, they
and their staffs will make periodic visits to Regional offices
to fulfill this office's oversight role, unless action is
required to ensure that an Agency policy or a legal require-
ment is followed, or that a case is prosecuted expeditiously,
this office will not interject itself into individual Class
III or Class XV cases. Headquarters attorneys may, at the
request of a Regional office to the Associate Enforcement
Counsel, provide assistance, consistent with resource
availability and other priorities.
My November 28, 1983 memorandum on direct referrals
indicates that Regional offices should obtain Headquarters
approval for settlement proposals before they are forwarded
to the defendant. This procedure should apply to to-all
cases whether or not they were directly reffered. Each
Associate Enforcement Counsel is authorized to approve
settlements at this stage, using his or her judgment whether
to confer with me on critical issues before agreeing to a
proposal. The Associate will make sure the settlement meets
the criteria set forth above for consent decrees, complies
with all applicable policies and laws, and is consistent
with national program objectives. I must approve all final
settlements before they are filed in court.
Attachments
cc: Office Directors, DECK
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..... INDEX OF ATTACHMENTS
1. Memorandum fron Courtney M. Price, Assistant Administrator
for Enforcement and Compliance Monitoring to Regional
Administrators, Regional Counsel, Associate Enforcement
Counsels and OEM Office Directors (November 28, 1983)
(concerning implementation of direct referrals beginning
December 1, 1983)*
2. Memorandum from Courtney M. Price, Assistant Administrator
for Enforcement and Compliance Monitoring to Regional
Counsels (November 23, 1983) (concerning further instructions
for maintenance of the enforcement docket system).
3. Letter from Alvin L. Aim, Deputy Administrator, U.S. EPA to
F. Henry Habicht, II, Acting Assistant Attorney General,
US Department of Justice (September 29, 1983) (concerning
direct referral of classes of cases)..
•
• . •
A. Memorandum from Courtney M^ Price, Assistant Administrator
and General Counsel to Associate Enforcement Counsels,
Regional Counsels, OLEC Office Directors and Correspondence
Control Unit (April 21, 1983) (concerning procedures for
maintenance of enforcement docket system).
5. Enforcesent Docket System Case Data and Facility Data Forms.
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\
I UNITED STATES ENVIRONMENTAL PROTECTION A!
KV 28 B63
HEMORANIOM
SUBJECT: Implementation of Direct Referrals for Civil Cas<
Beginning December 1, 1983
FROM: Courtney M. Pricey
Assistant Administrator fof Enforcement
and Compliance Monitoring
TO: Regional Administrators, Regions 1 - X.
Regional Counsels, Regions I - Z
Associate Enforcement Counsel*
OECM Office Directors
I. BACKGROUND
On September 29. 1983, the Environmental Protection'
Agency (EPA) and the Land and Natural Resources Division of
the Department of Justice (DOJ) entered into an agreement
which, beginning on December 1. 1983, allows certain
categories of cases to be referred directly to DOJ from EPA
Regional offices without my prior concurrence. A copy of
that agreement is attached to this memorandum.
This memorandum provides guidance to EPA Headquarters
and Regional personnel regarding procedures to follow in
implementing this direct referral agreement. Additional
guidance will be issued as required.
II. PROCEDURES TOR CASES SUBJECT TO DIRECT REFERRAL
The attached agreement lists those categories of
cases which can be referred directly by the Regional
Administrator to DOJ. All other cases oust continue Co be
reviewed by Headquarters OECM and will be referred by me to
DOJ. Cases which contain counts which could be directly
referred and counts which require Headquarters concurrence
should be referred to EPA Headquarters. If you are uncertain
whether a particular case may be directly referred, you
should contact the appropriate Associate Enforcement Counsel
for guidance.
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-2-
Manv of the procedures for direct referral cases ere
adequately explained in the September 29th agreement.
•However, there are tame point* I vant to emphasise.
Referral packages should be addressed to Mr. F. Henry
.Habicht, II, Assistant Attorney General, Land end Natural
Resources Division, U.S. Department of Justice, Uashi>oo,
D.C. 20530, Attention: Stephen D. Ramsey. The tine limitations
set forth in the agreement for review and initial disposition
of the package vill commence upon receipt of the package in
the Land and Natural Resources Division, end not -*t the DOJ
nailroom. Delivery of referral packages to the Land and
Natural Resources Division will be expedited by use of
express nail, which is not commingled with regular Bail in
DOJ's nailroom.
The contents of a referral package (either direct to
DOJ or to EPA Headquarters) should contain three primary
divisions: (1) a cover letter; (2) the litigation report;
(3) the documentary file supporting the litigation report.
The cover letter should contain a summary of the following
elements:
. (a) identification of the proposed defendant(s); •
9
(b) the statutes and regulations which are the basis
for the proposed action against the defendant(s);
(c) a brief statement of the facts upon which the
proposed action is based;
(d) proposed relief to be sought against the defendant(s);
(e) significant or precedential legal or factual issues;
(f) contacts with the defendant(s), including any
previous administrative enforcement actions taken;
(g) lead Regional legal and technical personnel;
(h) any other aspect of the case which is significant and
should be highlighted, including any extraordinary
resource demands which the case may require.
A referral to DOJ or to Headquarters EPA is tantamount
to a certification by the Region that it believes the case
is sufficiently developed for the filing of a complaint,
and that the Region is ready, willing and able to provide
such legal and technical support ae might be reasonably
required to pursue the case through litigation.
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As provided in the Septcnber 29, 1983, agreement.
information copies of the referral package nay be provided
to the U.S. Attorney for the appropriate judicial district
in which the proposed case nay be filed. These information
packages should be clearly labelled or stamped with the
following vords: "Advance Copy — No Action Required At
This Tine". Also, information copies should be simultaneously
provided to the appropriate OECH division at Headquarter*.
It is important that the directly referred cases be tracked
in our case docket ays tea and Headquarters oversight initiated,
Copies of the referral cover letter vill be provided to
OZCM's Office of Management Operations for inclusion la the
automated case docket system when Headquarters informational
copy is received at OECM's Correspondence Control Unit.
Department of Justice Responsibilities
DOJ shares our desire to handle these cases AS expedl-
tiously as possible. To that end, DOJ has agreed that,
within thirty days of receipt of the package in the Land arad
Natural Resources Division at DOJ Headquarters, it vill
determine whether Headquarters DOJ or the U.S. Attorney
vill have the lead litigation responsibilities on • specific
case. DOJ vill notify the Regional offices directly of its
determination in this regard, with a copy to the appropriate
DECK division. Although USA offices vill have lead respon-
sibilities in' nany cases, the Land and Natural Resources
Division vill continue to have oversight and management
responsibility for all cases. All complaints and consent
decrees vill continue to require the approval of the
Assistant Attorney General tor the division before the case
can be filed or settled.
DOJ has reaffirmed the time frame of the Memorandum
of Understanding, dated June 15, 1977, for the filing of
cases vithin 60 days after receipt of the referral package,
vhere possible. Where it is not possible, DOJ vill advise
the Region and Headquarters of any reasons for delays in
filing of the case. However, when DOJ determines that
the USA should have the lead responsibilities in a case, DOJ
vill forward the case to the USA vithin thirty days of
referral to the extent feasible.
DOJ can request additional information from a Region
on a case or return a case to a Region for further develop-
ment. In order to avoid these delays, referral packages
should be as complete as possible and the Regions should
vork closely with DOJ to develop referral packages.
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J
'
The Deputy Administrator has expressed concern in the
past on the number of cases returned to the Regions or
declined by EPA or DOJ. 2 have Assured the Deputy Administrate
that I vill closely track the number of cases declined by
DOJ or returned to the Regions and the reasons for the
declination or return as indications of whether direct
referrals are a feasible method of handling EPA'e judicial
enforcement program.
Headquarters OECM Responsibilities
Although OECM vill not formally concur on cases directly
referred to DOJ, OECM vill still review these packages and
nay offer comments to the Regions and DOJ. DOJ is free to
request EPA Headquarters assistance on cases, as DOJ
believes necessary. EPA Headquarters review vill help to
point out potential issues and pinpoint areas where future
guidance should be developed. OECM vill also be available
as a consultant to both DOJ and the Regions on these cases.
OECM vill be available to address policy issues as they
arise and, as resources permit, nay be able to assist in
case development or negotiation of these cases. Any request
from a Regional office for Headquarters legal assistance
should be in vriting from the Regional Administrator to
ne, setting forth the reasons for the request and the type
of assistance needed.
OECM also na in tains an oversight responsibility for
these cases. Therefore, Regional attorneys nust report
the status of these cases on a regular basis through use
of the automated case docket"! All information for the case
required by the case docket system nust appear in the
docket and be updated in accordance vith current guidance
concerning the automated docket ays tea.
Settlements in Cases Subject to Direct Referral
I vill continue to approve and execute all settlements
in enforcement cases, including those in cases subject to'
direct referral and amendments to consent decrees in these
cases. This is necessary to ensure that Agency policies and
enforcement activities are being uniformly and consistently
applied nationwide. After the defendants have signed the
settlement, the Regional Administrator should forward a
copy of the settlement to ne (or ny designee) vith a written
analysis of the settlement and a request that the settlement
be signed and referred for approval by the Assistant Attorney
General for the Land and Natural Resources Division and for
entry. The settlement will be reviewed by the appropriate
OECM Enforcement Division for consistency vith law and
Agency policy.
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-5-
Vithln twenty-one days from the date of receipt of the
settles eat by the appropriate OECM division. 2 will either
sign the settlement and transmit it to DOJ With a request
that the settlement be entered, or transmit a memorandum to
the Regional Office explaining factors which justify post-
ponement of referral of the package to DOJ. or return the
package to the Region for changes necessary before the
agrees en t can be signed.
Obviously, ve vant to avoid the necessity of
communicating changes in Agency settlement positions to
defendants, especially after they have signed a negotiated
agreement. To avoid this, the Regional office should
coordinate with Headquarters OECM and DOJ in development of
settlement proposals. A copy of all draft settlement
agreements should be transmitted by the Regional Counsel to
the appropriate Associate Enforcement Counsel for review
before it is presented to the defendant. The Associate
Enforcement Counsel will coordinate review of the settlement
with the Headquarters program office and respond to the
Regional office, generally, within ten days of receipt of
the draft. The Regional office should remain in contact
with the Headquarters liaison staff attorney as negotiations
progress. Failure to coordinate settlement development
with appropriate Headquarters offices nay result in rejection
of a proposed settlement which has been approved by the
defendant(s) and the Regional office.
I will also continue to concur in and forward to DOJ
all requests for withdrawal of cases after referral. In
addition, I will review and concur in any delay in the filing
or prosecution of a case after referral. . This is appropriate
because cases which are referred to DOJ should be expeditiously
litigated to conclusion, unless e settlement or some other
extraordinary event justifies suspending court proceedings.
The review of reasons for withdrawal or delay of cases
after expenditure of Agency and DOJ resources is an Important
function of OECM oversight. Therefore, should the Regional
offices desire to request withdrawal or delay of a case
which has been referred to DOJ, a memorandum setting forth
the reasons for such a request should be forwarded to the
appropriate OECM division, where it vill be reviewed end
appropriate action recommended to me.
III. CASES NOT SUBJECT TO DIRECT REFERRAL
Those cases not subject to direct referral will be
forwarded by the Regional Administrator to the Office
of Enforcement and Compliance Monitoring for review prior
to referral to DOJ. OECM has committed to a twenty-one day
turn-around time for these cases. The twenty-one day
review period starts when the referral is received by the
appropriate OECM division.-
-------
Within this twenty-one day period, DECM will decide
whether to refer the case to DOJ (OECM then has fourteen
additional days to formally ref.er the case), to return the
case to the Region for further development, or to request
additional info mat ion from the Region.
Because of this rfhort OECM review period, emphasis
should be placed on developing complete referral package*
so that delay occassioned by requests for additional infor-
mation from the Region will be rare. OECM nay refer a case
to DOJ vhich lacks soae information only if the referral
can be supplemented vith a minimum of time and effort by
information available to the Regional office vhich can
immediately be gathered and transmitted to DOJ. However,
this practice is discouraged. In the few instances in
which a case is referred to DOJ without all information
attached, the information should, at a minimum, be centrally
organized in the Regional office and the litigation report
should analyze the completeness and substantive content of
the information.
A referral will be returned to the Region, vith an
explanatory memorandum, if substantial information or
further development is needed to complete the package.
Therefore, the Regions should work closely with OECM
attorneys to be certain referral packages contain all
necessary information. ' .
IV. MEASURING THE EFFICACY OF THE DIRECT REFERRAL AGREEMENT
I will use EPA's case docket system, OECM'6 quarterly
Management Accountability reports and DOJ's responses to
the referral packages to review the success of the direct
referral agreement. OECM will review the quality of the
litigation reports accompanying directly referred cases and
discuss the general quality of referrals from each Regional
office at case status meetings held periodically vith DOJ's
Environmental Enforcement Section.
If you have any questions concerning the procedures
set out in this memorandum, please contact Richard Hays,
Senior Enforcement Counsel, at FTS 382-4137*
Attachment
-------
* UNITE* STATES EKVIRDMMEK7A1. FftDTECTiDK A3ŁkCY
if .', WlkSMIWBTOX.
Honorable T. Henry Babiebt* XX 'J;
Acting Asfiistant Attorney General •"';
Land and Natural Jteaaurce* Diviaieo'
U.5. Department of Justice
Kashington, D.C. 20530
Dear Bankt
Aa a result of our meeting en Thursday* September •#' ltB€* -c
and the subsequent discussions of respective staffs* we sirs* in
agreement that, subject to the conditions set forth below* the
classes of cases listed herein vill be referred'directly frost
EPA's Regional Offices to the Land and natural Resources Division
of the Department of Justice in Washington, D.C«
• . •
The terms, conditions and procedures to be followed in
implementing this agreement arei
• .
2. The Assistant Administrator for Enforcement and Compliance
Monitoring will waive for a period of one year the requirement
of the Assistant Administrator's prior concurrence for referral
to the Department of Justice for the following classes of
judicial enforcement casess
fa) Cases under Section 1414(b) of the Safe Drinking Mater
Act which involve violations of the National Interim
Primary Drinking Water Regulations, such as reporting 0r
monitoring violations, or maximum contaminant violations*
•
(b) The following cases under the -Clean Water Acts
(i) cases involving discharges without a permit
by industrial discharger* s
'"•*
(ii) all cases against minor industrial disehargerat
liii) cases'involving failure to monitor or report by
'industrial dischargers;
-------
(iv) referral* to collect stipulated penalties f
industrials under consent decrees;
-------
(ill) 903 shall, within 30 days from receipt ef the
referral package, determine II) whether the Lands
Division of 1109 will have lead responsibility for
the cue; or 12) whether the USA will have *aaŁ
responsibility for the ease.
1 . «;; »
While ft is Agreed that to the extent feasible*
cases in which the OSA will nave the lead will **
transmitted to the DBA for filing and handling
. * . within this 30-day period, if DOJ determines that
the case requires additional legal or factual
development «t DOJ prior to referring the vatfesr
to the OSA, the case Bay be returned to the
Regional Office, or Bay be retained at the Lands
Division of DO3 for further development* including
requesting additional information from the Regional
Office. In any event. DOJ will notify the Regional
Office, DECK and the OSA of its determination of
the lead role within the above-mentioned 30-day
period.
(iv) Regardless of whether DOJ or the OSA is determined
to have lead responsibility for management of
the ease, the procedures and tine limitations «et
forth in the HOU and 26 CFR fO.65 et eeq., shall
remain in effect and shall run c.oncurrently with*
the management determinations made pursuant-to
this agreement*
> «
3. (a) All other cases not specifically described in paragraph
1, above, which the Regional Offices propose for judicial
enforcement* shall first be forwarded to DECK and the
appropriate Headquarters program office for review.
A copy of the referral package shall be forwarded simul-
taneously by the Regional Office to the Lands Division of
DOJ and to the OSA for the appropriate judicial district*
the OSA*a copy being marked "advance copy-no action required
at this time.* .
* ' . * •*
(b) OECM shall review the referral package within twenty-en*
(21) calendar days of the date of receipt of said package
from the Regional Administrator and shall, within said
time period, make a determination of whether the ease
should be (a) formally referred to DOJ, (b) returned to .
the Regional Administrator for any additional development
which may be required; or (c) whether the Regional
Administrator should be requested to provide any additional
material or information which may be required to satisfy
the necessary and essential legal and factual requirements"
for that type ef case.
-------
tc) Any request for information, or return of the case
to the Region shall be transmitted by appropriate letter
or memorandum signed by the AA for OCCM (or her designee}
within the aforementioned twenty-one day period. Should
OŁCM concur in the proposed referral of the case to &OJ»
the actual referral shall be by letter from the AA for
DECK (or her designee) signed within fourteen days of
the termination of the aforementioned twenty-one day
review period. Copies of the letters referred to herein
shall b* sent to the Assistant Attorney General for the
Lands Division of DOS* .
•^i - *• *.*'*•••.. *
(d) Upon receipt of the referral package by DOJ, the
. . procedures and time deadlines set forth in paragraph
Mo. 8 of the MOU shall apply.
Zn order to allow sufficient time prior to implementation of
this agreement to make the U.S. Attorneys, the Regional Offices
and our staffs aware of these provisions, it is agreed that this
agreement shall become effective December 1, 1963. Courtney trie*
will distribute a memorandum within CPA explaining this agreement
and how it will be implemented within the Agency. (You will receivi
a copy.) J ~
Z believe that this agreement will eliminate the necessity of
formally amending the Memorandum of Understanding between our
respective agencies, and will provide necessary experience to
ascertain whether these procedures will result in significant
savings of time and resources. In that regard, Z have asked
Courtney to establish criteria for measuring the efficacy of this
agreement during the one year trial period, and Z ask that you
cooperate with her in providing such reasonable and necessary
information as she may request of you in making that determination.
At the end of the trial period—or at any time in the interval—
we may propose such adjustments in the procedures set forth herein
as may be appropriate based on experience of all parties.
Zt is further understood that it is the mutual desire of the
Agency and DOJ that cases be referred to the OSA for filing as
expeditiously as possible.'
Z appreciate your cooperation in arriving at this agreement.
Zf this meets with your approval, please sign the enclosed copy
in the space indicated belov and xeturn the copy to m* for our
files. • . ... • .-,.
Sincerely yours.
Alvin Z,. Aim
Deputy Administrator
Approve
F. Benry HaTbicht, Zl
Acting Assistant Attorney General
iand and Natural Resources Division
T.S. DcD»rt»sBt of
-------
ENFORCEMENT CASE DATA FORM
CASE NO.: - - E
(Assigned by Docket Control
Date Entered:
* CASE NAME:
* TYPE CASE:.
(See Back for Adm.)
* HQ DIVISION:
* LAW/SECTION:
1. /
2. /
3. /
4. /
5. /
* TECHNICAL CONTACT:
* .REGIONAL ATTORNEY:
* DEFENDANTS:
COMPLAINT?
(Y/N)
1.
2.
3.
4.
* STATE:
VIOLATION TYPE:
DATE OPENED:
* DATE INITIATED:
(Civil)
DATE ISSUED:
(Adj. Ada.)
DATE CONCLUDED:
DATE VIOLATION
DETERMINED:
PROPOSED PENALTY:
CIV - Civil
CIT - Citizen Suit
BNK - Bankruptcy
AIR - Air
HAZ - Hazardous Waste
PES - Pesticides and Toxics
* (Please use the section
of the law VIOLATED,
NOT the section that
authorizes the action)
MOB - Mobile
WAT - Water
PHONE: FTS - _
PHONE: FTS - _
NAMED IN
POLLUTANT:
* REFERRAL INDICATOR RH: Region to HQ
RD: Region to DOJ
(Direct Referral)
Direct Referral Lead: DOJ USA
DATE DOCUMENTS
RECEIVED BY ORC:
* Required fields - must be filled out for case entry
-------
FACILITY DATA FORM
*PLEASE USE THE ADDRESS OF THE SITE OF VIOLATION (NOT THE COMPANY MAILING
ADDRESS).
*A SEPARATE FORM MUST BE COMPLETED FOR EACH FACILITY CITED IN THE CASE.
CASE NO.:
-E
I (Assigned by DOCKET analyst)
I EPA ID I:
(Assigned by FINDS analyst)
* FACILITY NAME:
* STREET ADDRESS:
* CITY:
*TYPE OWNERSHIP:
* STATE
ZIP:
P: Private industry or individual,
F: Federal Government :
S: State
C: County
M: Municipal
D: District
A'C CODE(s) :
(one required)
OPTIONAL
PARENT COMPANY:
NPDES PERMIT NO.
SUPERFUND SITE:
LATITUDE:
LONGITUDE:
(Y or N)
-------
RF.2
-------
RF.2-1
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
JAN
OFFICE OF ENFORCEMEV
\NDCOWPL; VNI E
MONITORING
MEMORANDUM
SUBJECT:
FROM:
TO:
Expansion of Direct Referral of Cases to thq
Department of Justice
Thomas L. Adams, Jr.
Assistant Administrator"
Regional Administrators, Regions I - X
Deputy Regional Administrators, Regions I
Regional Counsels, Regions I - X
Assistant Administrators
Associate Enforcement Counsels
OECM Office Directors
I. BACKGROUND
During the past year, my office has worked closely with
the Regions, the Headquarters program offices, and the Land
and Natural Resources Division of the U.S. Department of
Justice (DOJ) to expand the use of direct referral of cases.
On January 5, 1988, EPA and DOJ entered into an agreement
which expanded the categories of civil judicial cases to be
referred directly to DOJ Headquarters from the EPA Regional
offices without my prior concurrence. In entering into this
agreement, EPA has taken a major step towards streamlining
the enforcement process and more fully utilizing our Regional
enforcement capabilities.
On January 13, 1988, the Administrator signed an interim
delegations package which will allow the Agency to immediately
implement expanded direct referrals to DOJ. A final delega-
tions package is now being prepared for Green Border review.
-------
This memorandum provides guidance to EPA Headquarters
and Regional personnel regarding procedures to follow in
implementing the expanded direct referral agreement. Prior
guidance on direct referrals appears in a November 28, 1983,
memorandum from Courtney Price entitled "Implementation of
Direct Referrals for Civil Cases Beginning December 1, 1983.
That guidance is superseded to the extent that the current
guidance replaces or changes procedures set forth therein;
otherwise the 1983 document remains in effect.
II. SUMMARY
Effective immediately for non-CERCLA cases, and effec-
tive April 1, 1988, for CERCLA cases, the Regions will4
directly refer to the Department of Justice all civil cases
other than those listed in the attachment to this memorandum
entitled "Cases Which Will Continue to be Referred Through
Headquarters." This attachment lists cases in new and
emerging programs and a few, highly-selected additional
categories of cases where continued referral through EPA
Headquarters has been determined to be appropriate. EPA
Headquarters will have 35 days to review the case simul-
taneously with DOJ. EPA Headquarters will focus its review
primarily on significant legal or policy issues. If major
legal or policy issues are raised during this review, EPA
Headquarters will work with the Regi'on to expedite resolu-
tion.
Attached is a copy of the agreement between EPA and DOJ,
which is incorporated into this guidance. Many of the
procedures for direct referral of cases are adequately
explained in the agreement. However, there are some points I
would like to emphasize.
III. PROCEDURES
A. CASES SUBJECT TO DIRECT REFERRAL
The attached agreement lists those categories of cases
which must continue to be referred through the Office of
Enforcement and Compliance Monitoring (OECM). All other
cases should be referred directly by the Regional Office to
DOJ Headquarters, with the following two exceptions:
(1) cases which contain counts which could be directly
referred and counts which require prior EPA Headquarters
review should be referred through EPA Headquarters, and
-------
(2) any referral which transmits a consent decree
should be referred through EPA Headquarters, except
where existing delegations provide otherwise.
If you are uncertain whether a particular case may be
directly referred, you should contact the appropriate
Associate Enforcement Counsel for guidance.
B. PREPARATION AND DISTRIBUTION OF REFERRAL PACKAGES
The contents of a referral package (either direct to DOJ
or to EPA Headquarters) should contain three primary divi-
sions: (1) a cover letter; (2) the litigation report; %(3) the
documentary file supporting the litigation report.
The cover letter should contain a summary of the
following elements:
(a) identification of the proposed defendant(s);
(b) the statutes and regulations which are the basis
for the proposed action against the defendant(s);
(c) the essential facts upon which the proposed action
is based, including identification of any signi-
ficant factual issues;
(d) proposed relief to be sought against defendant(s);
(e) significant or precedential legal or policy issues;
(f) contacts with the defendant(s), including any
previous administrative enforcement actions taken;
(g) lead Regional legal and technical personnel;
(h) any other aspect of the case which is significant
and should be highlighted, including any extra-
ordinary resource demands which the case may
require.
A direct referral to DOJ is tantamount to a certifi-
cation by the Region that it believes the case is suffi-
ciently developed for filing of a complaint, and that the
Region is ready, willing and able to provide such legal and
technical support as might be reasonably required to pursue
the case throucrh litigation.
Referral packages should be addressed to the Assistant
Attorney General, Land and Natural Resources Division, U.S.
Department of Justice, Washington D.C. 20530. Attention:
-------
Chief, Environmental Enforcement Section. Copies of all
referral packages should also be sent to the Assistant
Administrator for OECM and the appropriate Headquarters
program offioe.
DOJ has reaffirmed the time frame of the Memorandum of
Understanding, dated June 15, 1977, for the filing of cases
within 60 days after receipt of the referral package, where
possible. DOJ can request additional information from a
Region on a case or return a case to a Region for further
development. In order to avoid these delays, referral
packages should 'be as complete as possible and the Regions
should work closely with DOJ to develop referral packages.
C. IDENTIFICATION AND RESOLUTION OF SIGNIFICANT%LEGAL
AND POLICY ISSUES
A major element in assuring the success of the expanded
direct referral program is an efficient process to identify
and resolve significant legal and policy issues. This should
be done as early as possible to assure that unresolved issues
not delay a referral. Early identification and resolution
will also help the Agency to avoid devoting significant
Regional resources to preparing a litigation report for a
case which will ultimately be considered inappropriate for
referral.
The procedures make clear that the Regional office has
the initial responsibility for identification of significant
legal and policy issues. Such issues should be identified to
OECM and the appropriate Headquarters program office as soon
as a decision is made to proceed with litigation. All
parties should then work to address the issues as quickly as
possible, preferably before the referral package is sent to
Headquarters.
The agreement with DOJ also outlines procedures for
Headquarters review of referral packages to determine whether
any significant legal or policy issues exist which would
impact filing, and the process for resolution of such issues.
If an issue surfaces during the 35-day Headquarters review
period, OECM will work for quick resolution of the issue,
with escalation as necessary to top Agency management. This
should serve primarily as a "safety valve" for those few
issues not previously identified, rather than as the point at
which issues are first raised.
Finally, if DOJ raises a significant legal or policy
issue during its review, OECM will work with the Region and
the Headquarters program office to expedite resolution of the
issue. If DOJ makes a tentative determination to return a
-------
referral, DOJ will consult with OECM and the Regional Office
in advance of returning the referral.
D. CASE QUALITY/STRATEGIC VALUE
OECM will evaluate Regional performance as to the
quality and strategic value of cases on a generic basis.
While OECM will not request withdrawal of an individual
referral based on concerns about quality or strategic value,
it will consider these factors during the annual audits of
the Offices of Regional Counsel and the annual Regional
program office reviews. Concerns relative to issues of
quality or strategic value will also be raised informally as
soon as they are identified.
E. WITHDRAWAL OF CASES PRIOR TO FILING
Cases should be fully developed and ready for filing at
the time they are referred to DOJ Headquarters. Thus, case
withdrawal should be necessary only under the most unusual
circumstances. If, after consultation with OECM, withdrawal
is determined to be appropriate, the Regions may request that
DOJ withdraw any directly referred case prior to filing.
Copies of the Region's request should be sent to the Assis-
tant Administrator for OECM and the appropriate program
office.
F. MAINTENANCE OF AGENCY-WIDE CASE TRACKING SYSTEM
In order to assure effective management of the Agency's
enforcement program, it is important to maintain an accurate,
up-to-date docket and case tracking system. Regional
attorneys must continue to report the status of all cases.
including directly referred cases, on a regular basis through
use of the national Enforcement Docket System. All infor-
mation for the case required by the case docket system must
appear in the docket and be updated in accordance with
current guidance concerning the automated docket system.
If you have any questions concerning the procedures set
forth in this memorandum, please contact Jonathan Cannon,
Deputy Assistant Administrator for Civil Enforcement, at
FTS 382-4137.
Attachment
cc: Hon. Roger J. Marzulla
David Buente
Nancy Firestone
Assistant Section Chiefs
-------
I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
/ WASHINGTON. D.C. 20460
... 24
OFFICE OF
ENFORCEMENT AND
COMPLIANCE MONITORING
Honorable Roger J. Marzulla
Acting Assistant Attorney General
Land and Natural Resources Division
Washington, D.C. 20530
Dear Roger:
As you know! the Agency has been considering changes in
existing procedures to increase the effectiveness of its enforcement
program. One change, which we discussed at our recent*meeting with
you, is a major expansion of the direct referral program for civil
judicial enforcement actions, whereby such cases are referred
directly from the Regional Administrators to your office.
We believe the past successes of this program and the
increased maturity of Regional staff warrant adopting direct
referrals as the basic mode of operation. Thus, with your
acceptance, we intend to utilize direct referrals to your office
for virtually all civil cases other than those relating to certain
new statutory authorities or emerging programs where judicial
enforcement experience is limited. As such programs mature, we
will expand the scope of direct referrals to cover them. In
addition, as new programs are implemented under new statutory or
regulatory requirements, we contemplate an initial period of
referrals through Headquarters for these cases prior to their
incorporation into the direct referral process.
Based on discussions within the Agency and with your staff,
we would propose that direct referrals cover all civil cases but
those listed in Attachment A. This list includes cases in new and
emerging programs and a few, highly-selected additional categories
of cases where continued referral through Headquarters has been
determined to be appropriate. This would allow direct referral of
the vast majority of civil cases, including those which would still
require significant national coordination to assure a consistent
approach (such as auto coating VOC air cases). For this reason,
the procedures applicable to this small subset of cases as outlined
in the memorandum entitled "Implementing Nationally Managed or
Coordinated Enforcement Actions: Addendum to Policy Framework for
State/EPA Enforcement Agreements" dated January 4, 1985 will remain
in effect.
-------
-2-
For all but CEPCLA cases, this expansion would be effective
on.January 1, 1988. For CERCLA cases, direct referrals would take
effect on April 1, 1988. We anticipate joint issuance by our
offices of the model CERCLA litigation report prior to that date.
Also attached (Attachment B) is the outline of the direct
civil referral process as the Agency intends to implement it.
This outline refines current direct referral procedures by more
clearly focusing authority and accountability within the Agency.
Under these modified procedures, the Regional Office has the
lead on direct referrals. The Region will be solely responsible
for the quality of the referral. In this context, quality
encompasses both the completeness and accuracy of the litigation
report and the strategic value of the case. Any problems
involving case quality should be raised directly with the Region.
OECM will evaluate Regional performance as to the "quality
and strategic value of cases on a generic basis. While OECM will
not request withdrawal of an individual referral on the basis of
concerns about quality or strategic value, we are committed to
working with the Regional Offices to assure that current standards
are maintained or even exceeded in future referrals. We welcome
your input on Agency performance to assist us in this regard.
As the procedures detail, OECM (as well as the appropriate
Headquarters office) will continue to be actively involved in
identification and resolution of significant legal and policy
issues. Such issues normally should be raised and resolved prior
to the actual referral. If such an issue surfaces during the
35-day Headquarters review period, we will work for quick resolution
of the issue, with escalation as necessary to top Agency management.
During the period required for resolution, DOJ will treat the
referral as "on hold". In the unusual circumstance where an issue
is still unresolved after 60 days from the date of referral, we
would contemplate withdrawal of the referral by the Agency pending
resolution unless a formal "hold" letter has been submitted in
accordance with the procedures contained in the memorandum entitled
"Expanded Civil Judicial Referral Procedures" dated August 28,
1986.
If a significant policy or legal issue is raised by DOJ during
its review, OECM remains committed to work with the Regional and
program offices to assure expedited resolution of the issue.
Obviously, these procedures are not intended to inhibit discussions
between our offices to facilitate a resolution. In addition, if
DOJ makes a tentative determination to return a referral, we
understand that you will consult with OECM and the Regional Office
in advance of returning the referral.
-------
-3-
We believe this expansion in use of direct referrals represent
a major advance in streamlining the Agency's enforcement process
and- appreciate your support in its implementation. This letter,
upon your acceptance, will supersede the letters of September 29,
1983, October 28, 1985, and August 28, 1986 on this subject and
constitute an amendment to the June 15, 1977 Memorandum of
Understanding between our respective agencies.
I appreciate your continuing cooperation and support in our
mutual efforts to make our enforcement process more effective. I
hope this letter meets with your approval. If so, please sign in
the space provided below and return a copy of the letter to me for
distribution throughout the Agency.
Sincerely,
Thomas L. Adams, Jr.
Assistant Administrator
Attachments
Approved:
,
JM05««8
Roger J. Marzulla"Date
Acting Assistant Attorney General
Land and Natural Resources Division
U.S. Department of Justice
-------
RESPONSIBILITIES AND PROCEDURES FOR DIRECT REFERRALS
OF CIVIL JUDICIAL ENFORCEMENT ACTIONS TO THE DEPARTMENT OF JUSTICE
(1) Regional Offices have the lead on direct referrals to
the Assistant Attorney General, Land and Natural Resources Division,
Department of Justice (DOJ) ? Regions will be responsible for
the quality of referrals.
(2) Regions will identify any significant legal/policy issues
as soon as the decision is made to proceed with litigation. Such
issues will be raised in writing for consideration by OECM and the
appropriate Headquarters program office. All parties will attempt
to resolve such rssues as early as possible, preferably before the
referral package is sent to Headquarters. Regions will also flag
such issues in the cover memo transmitting the referral*.
(3) At the same time the referral is sent to DOJ, it will be
sent to OECM and the appropriate Headquarters program office for a
simultaneous and independent review to determine whether any other
significant policy/legal issues exist which would impact filing.
(4) Headquarters offices will complete their reviews within
35 days of receipt of the referral. Each Headquarters office will
notify the Region in writing of any significant issues identified
or that no such issues have been identified. A copy of this
memorandum will be sent to DOJ. The Headquarters offices will
coordinate their reviews and, to the extent possible, provide a
consolidated response.
(5) If significant issues are identified and not readily
resolved, Headquarters (the Assistant Administrator for OECM),
after consultation with the program office Assistant Administrator,
may request the Regional Administrator to withdraw the case. If
the Regional Administrator and the Assistant Administrator for OECM
(and, as applicable, the program office Assistant Administrator)
are unable to agree on the appropriate resolution of the issue, the
issue would be escalated to the Deputy Administrator.
(6) If a significant issue is not resolved within 60 days of
the date of referral, the case will normally be withdrawn pending
resolution unless an appropriate "hold" letter is sent to DOJ in
accordance with the procedures contained in the memorandum entitled
"Expanded Civil Judicial Referral Procedures" dated August 28, 1986
(document GM-50 in the General Enforcement Policy Compendium.)
(7) Headquarters will NOT request withdrawal of a referral
package for any of the following reasons:
— overall quality of referral package
— strategic value of case
— adequacy of documentation
-------
-2-
(8) If DOJ makes a tentative decision to return a referral
to.EPA, it will consult with the Regional Office and OECM prior
to making a final decision to return the case.
(9) Headquarters will evaluate on a generic basis (e.g.,
trends or repeated concerns) the quality/strategic value of a
Region's referrals. Concerns relative to issues of quality or
strategic value will be raised informally as soon as they are
identified.
(10) Headquarters oversight will be accomplished primarily
through annual program and OGC/OECM reviews, or ad_ hoc reviews
as problems are identified in a given Region.
Note; Where a re.ferral also transmits a signed consent decree
for Headquarters approval, the procedures applicable to
processing settlements shall apply in lieu of these
procedures.
-------
CASES WHICH WILL CONTINUE TO BE REFERRED THROUGH HEADQUARTERS
ALL MEDIA:
Parallel Proceedings — Federal civil enforcement
matters where a criminal investigation of the same
violations is pending
RCRA/CERCLA; UST enforcement
Enforcement of RCRA
technology regulations
land ban and minimum
Enforcement of administrative orders for access
and penalty cases for failure to comply with
requests for access (Section 104)
Referrals to enforce Title III of SARA, the
Community Right-to-Know provisions
TSCA/FIFRA;
Referrals to compel compliance with or restrain
violations of suspension orders under FIFRA
Section 6(c)
FIFRA actions for stop sales, use, removal, and
seizure under Section 13
Referrals to enforce Title III of SARA, the
Community Right-to-Know provisions
Injunctive actions under Section 7 of TSCA
(actions for injunctive relief to enforce the
regulations promulgated under Section 17 or
Section 6 could be directly referred)
WATER;
Clean Water Act pretreatment violations —failure
of a POTW to implement an approved local
pretreatment program
Clean Water Act permit violations relating to or
determined by biological methods or techniques
measuring whole effluent toxicity
PWSS cases to enforce against violations of
administrative orders which were not issued using
an adjudicatory hearing process
-------
WATER
(contd.) Cases brought under the Marine Protection,
Research and Sanctuaries Act (MPRSA)
UIC cases1
AIR: Smelter cases
1 The ten cases referred to date indicate that the
regulations raise interpretive issues of continuing national
significance. There also appears to be a need for greater
experience at gathering the facts necessary to prove violations
and support appropriate relief. For this reason, the first 3 UIC
cases from each Region shall be referred through Headquarters.
Once the Associate Enforcement Counsel for OECM determines that
the Region has completed three successful referrals, the Region
may proceed to refer these cases directly to DOJ.
-------
UNITED STATES ENVIRONMENTAL P*um.TIUN
WABMIN6TOW. DC tMM ^ ' *
KV28B63
•HFOKCBMBMT I
MEMORANLOM
SUBJECT: Implementation of Direct Referrals for Civil Caa<
Beginning December 1. 1983
FROM: Courtney M. Pricev^.^^JJZ*-/'
Assistant Administrator foe Enforcement
and Compliance Monitoring
TO: Regional Administrators, Regiona I - X
Regional Counsels, Regions X • X
Associate Enforcement Counsel*
OECM Office Directors
I.
On Septeaber 29. 1983, the Environmental Protection
Agency (EPA) and the Land and Natural Resources Division of
the Department of Justice (DOJ) entered into an agreement
which, beginning on December 1. 1983, allows certain
categories of cases to be referred directly to DOJ fro» EPA
Regional offices without ay prior concurrence. A copy of
that agreement is attached to this memorandum.
This aenorandua provides guidance to EPA Headquarter*
and Regional personnel regarding procedures to follow in
implementing this direct referral agreement. Additional
guidance will be issued as required.
II. PROCEDURES TOR CASES SUBJECT TO DIRECT REFERRAL
The attached agreement lists those categories of
cases which can be referred directly by the Regional
Administrator to DOJ. All other cases Bust continue to be
reviewed by Headquarters OECM and will be referred by ae to
DOJ. Cases which contain counts which could be directly
referred and counts which require Headquarters concurrence
should be referred to EPA Headquarters. If you are uncertain
whether a particular case Bay be directly referred, yon
should contact the appropriate Associate Enforcement Counsel
for guidance.
-------
Many of the procedures for direct referral cases are
adequately explained in the September 29th agreement*
However, there are some points' 2 want to emphasize.
Referral packages should be addressed to Mr. F. Henry
Rabicht, II. Assistant Attorney General. Land and Natural
Resources Division. U.S. Department of Justice, Washington.
D.C. 20530, Attention: Stephen D. Ramsey. The tiae linitations
set forth in the agreement for review and initial disposition
of the package will commence upon receipt of the package in
the Land and natural Resources Division, and not -at the DGJ
mail room. Delivery of referral packages to the Land and
Natural Resources Division will be expedited by use of
express mail, which is not commingled with regular mail la
DOJ's mailroom.
The contents of • referral package (either direct to
DOJ or to EPA Headquarters) should contain three primary
divisions: (1) a cover letter; (2) the litigation report;
(3) the documentary file supporting the litigation report.
The cover letter should contain a summary of the following
elements:
(a) identification of the proposed defendant(s);
(b) the statutes and regulations which are the basis
for the proposed action against the defendant(s);
(c) a brief statement of the facts upon which tie
proposed action is based;
(d) proposed relief to be sought against the defendant(s);
<«) significant or precedential legal or factual issues;
(f) contacts with the defendant(s), including any
previous administrative enforcement actions taken;
(g) lead Regional legal and technical personnel;
(h) any other aspect of the case which is significant and
should be highlighted, including any extraordinary
resource demands which the case may require.
A referral to DOJ or to Headquarters EPA is tantamount
to a certification by the Region that it believes the case
is sufficiently developed for the filing of a complaint.
and that the Region is ready, willing and able to provide
such legal and technical support as might be reasonably
required to pursue the case through litigation.
-------
As provided In the September 29, 1983, agreement,
information copies of the referral package nay be provided
to the U.S. Attorney for the appropriate judicial district
in which the propoaed case nay be filed. These information
package* ahould be clearly labelled or stamped with the
following words: "Advance Copy — Mo Action Required At
This Tine". Also, information copies should be simultaneously
provided to the appropriate OECM division at Headquarters.
It ia important that the directly referred cases be tracked
in our case docket eystem and Headquarters oversight initiated.
Copies of the referral cover letter will be provided to
OZCM's Office of Management Operations for Inclusion in the
automated case docket system when Headquarters informational
copy is received at OECM's Correspondence Control Unit.
Department of Justice Responsibilities
•
DOJ shares our desire to handle these cases as expedi-
tiously as possible* To that and, ZXX7 has agreed that,
within thirty days of receipt of the package in the Land mad
Natural Resources Division at DOJ Headquarters, it will
determine whether Headquarters DOJ or the D.S. Attorney
trill have the lead litigation responsibilities on a specific
case. DOJ will notify the Regional offices directly of Its
determination in this regard, with a copy to the appropriate
OECM division. Although USA offices will have lead respon-
sibilities in many cases, the Land and Natural Resources
Division will continue to have oversight and management
responsibility for all cases. All complaints and consent
decrees will continue to require the approval of die
Assistant Attorney General tor the division before the case
can be filed or settled.
DOJ has reaffirmed the tine frame of the Memorandum
of Understanding, dated June 15, 1977, for the filing of
cases within 60 days after receipt of the referral package,
where possible. Where it is not possible, DOJ will adviae
the Region and Headquarters of any reasons for delays in
filing of the case. However, when DOJ determines that
the USA should have the lead responsibilities in a case, DOJ
will forward the case to the USA within thirty days of
referral to the extent feasible.
DOJ can request additional information from a Region
on a case or return a case to a Region for further develop-
ment. In order to avoid these delays, referral packages
should be as complete as possible and the Regions should
work closely with DOJ to develop referral packages.
-------
The Deputy Administrator has expressed concern In the
past on the number of cases returned to the Regions or
declined by EPA or DOJ. I have assured the Deputy Adninistrator
that I vill closely track the nmber of cases declined by
DOJ or returned to the Regions and the reasons for the
declination or return as indications of whether direct
referrals are a feasible method of handling EPA's judicial
enforcement program,
Headquarters OECM Responsibilities
Although OECM vill not formally concur on cases directly
referred to DOJ, OECM vill still review these packages and
aay offer conn en ts to the Regions and DOJ. DOJ is free to
request EPA Headquarters assistance on cases, as *DOJ
believes necessary. EPA Headquarters review vill help to
point out potential issues and pinpoint areas where future
guidance should be developed. OECM vill also be available
as a consultant to both DOJ and the Regions on these cases.
OECM vill be available to address policy issues as they
arise and, as resources permit, »ay be able to assist in
case development or negotiation of these cases. Any request
from a Regional office for Headquarters legal assistance
should be in writing from the Regional Administrator to
me, setting forth the reasons for the request and the type
of assistance needed.
OECM also maintains an oversight responsibility for
these cases. Therefore. Regional attorneys aust report
the status of these cases on a regular basis through use .
of the automated case docket. All information for the case
required by the case docket system must appear in the
docket and be updated in accordance vith currant guidance
concerning the autoaated docket system.
Settlements in Cases Subject to Direct Referral
I vill continue to approve and execute all settlements
in enforcement cases, including those in cases subject to
direct referral and amendments to consent decrees in these
cases. This is necessary to ensure that Agency policies and
enforcement activities are being uniformly and consistently
applied nationwide. After the defendants have signed the
settlement, the Regional Administrator should forward a
copy of the settlement to ae (or ay designee) vith a written
analysis of the settlement and a request that the settlement
be signed and referred for approval by the Assistant Attorn<
General for the Land and Natural Resources Division and for
entry. The settlement vill be reviewed by the appropriate
OECM Enforcement Division for consistency vith lav and
Agency policy.
-------
-5-
Vithln twenty-one days from the date of receipt of the
settlement by the appropriate OECM division. 1 vill cither
• ign the settlement and transmit it to DOJ with a request
that the settlement be entered, or tranrait a memorandum ro
the Regional Office explaining factors which justify post*
poneoent of referral of the package to DOJ, or return the
package to the Region for changes necessary before the
agrees en t can be signed.
Obviously, we want to avoid the necessity of
communicating changes in Agency settlement positions to
defendants, especially after they have signed a negotiated
agreement. To avoid this, the Regional office should
coordinate with Headquarters OECM and DOJ in development of
settlement proposals. A copy of all draft settlement •
agreements should be transmitted by the Regional Counsel to
the appropriate Associate Enforcement Counsel for review
before it is presented to the defendant. The Associate
Enforcement Counsel will coordinate review of the settlement
with the Headquarters program office and respond to the
Regional office, generally, within ten days of receipt of
the draft. The Regional office should remain la contact
with the Headquarters liaison staff attorney as negotiation*
progress. Failure to coordinate settlement development
with appropriate Headquarters offices may result in rejection
of a proposed settlement which has been approved by the
defendant(s) and the Regional office*
I will also continue Ło concur in and forward to DOJ
all requests for withdrawal of cases after referral, la
addition, I will review and concur in any delay in the filing
or prosecution of a case after referral. This is appropriate
because cases which are referred to DOJ should be expeditiously
litigated to conclusion, unless a settlement or some other
extraordinary event Justifies suspending court proceedings.
The review of reasons for withdrawal or delay of cases
after expenditure of Agency and DOJ resources is an important
function of OECM oversight. Therefore, should the Regional
offices desire to request withdrawal or delay of a case
which has been referred to DOJ, a memorandum setting forth
the reasons for such a request should be forwarded to the
appropriate OECM division, where It will be reviewed and
appropriate action recommended to Be.
III. CASES HOT SUBJECT TO DIRECT REFERRAL
Those cases not subject to direct referral will be
forwarded by the Regional Administrator to the Office
of Enforcement and Compliance Monitoring for review prior
to referral to DOJ. OECM has committed to a twenty-one day
turn-around tine for these cases. The twenty-one day
review period starts when the referral is received by the
appropriate OECM division.
-------
Within this twenty-one day period, OECM will decide
whether to refer the case to DOJ (OECM then has fourteen
additional days to formally refer the ease) , to return the
case to the Region for further developnent, or to request
additional information from the Region.
Because of this rfhort OECM review period, enphasis
should be placed on developing complete referral package*
so that delay occasioned by requests for additional infor-
mation from the Region will be rare. OECM Bay refer a case
to DOJ which lacks sane information only if the referral
can be supplemented with a minimum ot tine and effort by
information available to the Regional office which can
immediately be gathered and transmitted to DOJ. However,
this practice is discouraged. In the few instances in
which a case is referred to DOJ without all information.
attached, the information should, at a minimum, be centrally
organized in the Regional office and the litigation report
should analyze the completeness and substantive content of
the information.
A referral will be returned to the Region, with an
explanatory memorandum, if substantial information or
further development is needed to complete the package.
Therefore, the Regions should work closely with OECM
attorneys to be -certain referral packages contain all
necessary information.
IV. MEASURING THE EFFICACY OF THE DIRECT REFERRAL AGREEMENT
I will use EPA's case docket system, OECM's quarterly
Management Accountability reports and DOJ'a responses to
the referral packages to review the success of the direct
referral agreement. OECM will review the quality of the
litigation reports accompanying directly referred cases and
discuss the general quality of referrals from each Regional
office at case status meetings held periodically with DOJ'a
Environmental Enforcoaent Section.
If you have any questions concerning the procedures
set out in this memorandum, please contact Richard Mays,
Senior Enforcement Counsel, at FTS 362-4137.
Attachment
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• *rr •*>.- •.•-:• 8
' -^*. •_ • ••«
f UNITED STATES ENVIRONMENT Ai. FROTECT1OJ* A3EKCY
"- ' ' 7 v "' ^'V't ' ?V?4*>
Honorable F. Henry Babiebt, XX J\ * *J^ . «.7
Acting Assistant Attorney General • ' - • V.^-^ " '%~
Land and Natural Resources Diviaioa • ... -•'; ^* *
O.6. Department of Justice . '•''"'"•'•* r
Washington, D.C. 20530 - ^-"."
'••'•• "?>^--- •••j'r-.-;i-' • • •
Dear Banks . '-?.J>. ' t >..*:
As a result of our meeting en Thursday* September •/
and the subsequent discussions of respective staffs, we are in
agreement that, aubject to the conditions set forth below, the
elasses of eases listed herein will be referred'directly from
ZPA's Regional Offices to the Land and Natural Resources Division
of the Department of Justice in Washington, D.C*
The terms, conditions and procedures to be followed in
implementing this agreement ares
X* The Assistant Administrator for Enforcement and Compliance
Monitoring will waive for a period of one year the requirement
of the Assistant Administrator*s prior concurrence for referral
to the Department of Justice for the following classes of
judicial enforcement casess
(a) Cases under faction 1414(b) of the Safe Drinking Hater
Act which involve violations of the National Interim
Primary Drinking Water Regulations, auch as reporting or
monitoring violations, or maximum contaminant violatioaai
(b) The following cases under the Clean Water Acts
(i) cases involving discharges without a permit
by industrial dischargersi
• * .."•*..• '
lii) all cases against ainor industrial dischargersi
liii) cases Involving failure to monitor or report by
* industrial dischargers!
-------
fivl referrals to collect stipulated penalties f
industrials voder consent decrees;
.referrals to collect administrative spill penalties
mder Section 311 (j) of the
Ccl All cases under the Clean Air Act except the following!
(i) cases involving the steel industry}
(ii) cases involving non-ferrous smeltersi
(iii) cases involving National Emissions Standards for
Bazardous Air Pollutantst •••
fiv) cases involving the post-1982 enforcement policy.
2. Csses described in Section 1* above* shall be referred
directly from the Regional Administrator to the Land and
natural Resources Division of DOJ ia the following Banner t
(a) The referral package shall be forwarded to the Assistant
Attorney General for Land and Natural Resources* U.S.
Department of Justice (DOJ), with copies of the package
being simultaneously forwarded to the D.S. Attorney
(USA) for the appropriate judicial district in which
the proposed case is to be filed (marked "advance copy-
no action required at this time*)* and the Assistant
Administrator for Enforcement and Compliance Monitoring
(OECM) at EPA Headquarters. OECM shall have the following
functions with regard to said referral packages
(i) OECM shall have ao responsibility for review of
such referral packages* and the referral shall be
: effective as of the date of receipt of the package
by DOJt however* OECM shall comment to the Region
upon any apparent shortcomings or defects which
it My observe in the package. DOJ may, of course*
continue to consult with OECM on such referrals.
Otherwise* OECM shall be responsible only for
routine oversight of the progress and management
of the case consistent with applicable present
«nd future guidance. OECM shall* however* retain
final authority to approve settlements oo behalf
of EPA for these cases* as ia other cases.
• '.<..
iii) The referral package shall be la the format and
contain information provided by guidance memoranda
as may be promulgated from time to time by OECM t
consultation with DOJ and Regional representstie\
-------
fill} DOJ shall, within 30 days from receipt of the
referral package* determine (1) whether the Lands
Division of DOJ will have lead responsibility for
the ease* or <2> whether the OŁA will have lead
responsibility for the case.
1 • » c »
Hhile it is agreed that to the extent feasible,
cases in which the OSA wiJJ have the lead will he
transmitted to the OSA for filing and handling
. * . • within this 30-day period* if DOJ determines that
the case requires additional legal or factual
development mt DOJ prior to referring the matter
to the OSA, the case may be returned to the
Regional Office, or Bay be retained at the lands
Division of DOJ for further development, including
requesting additional information fron the Regional
Office. In any event, DOJ will notify the Regional
Office, OECM and the USA of its determination oŁ
the lead role within the above-mentioned 30-day
period.
(iv) Regardless of whether DOJ or the OSA is determined
to have lead responsibility for management of
the case, the procedures and time limitations set
forth in the HOU and 28 CFR 10.65 et seq., shall
remain in effect and shall run concurrently with
the management determinations made pursuant to
this agreement.
3. (a) All other cases not specifically described in paragraph
1, above, which the Regional Offices propose for judicial
enforcement* shall first be forwarded to OECM and the
appropriate Bead quarters program office for review.
A copy of the referral package shall be forwarded simul-
taneously by the Regional Office to the Lands Division of
DOJ and to the OSA for the appropriate judicial district,
the OSA*a copy being marked 'advance copy-no action required
at this time.* .
(b) OECM shall review the referral package within twenty-one
(21) calendar days of the date of receipt of said package
from the Regional Administrator and shall* within said
time period, make a determination of whether the case
should be (a) formally referred to DOJ, (b) returned to
the Regional Administrator for any additional development
which may be required? or (c) whether the Regional
Administrator should be requested to provide any additional
material or information which may be required to satisfy
the necessary and essential legal and factual requirements"
for that type of case.
-------
tc) Any request for intonation, or return of the
to the ftegion shall be transmitted by appropriate letter
or Memorandum signed by the AA for OECH (or her designee)
within the aforementioned twenty-one day period. Should
OŁCM concur In the proposed referral of the case to &OJ,
the actual referral shall be by letter from the AX for
OECH (or her designee) signed within fourteen days of
the termination of the aforementioned twenty-one day
review period. Copies of the letters referred to herein
shall b* sent to the Assistant Attorney General for the
Lands Division of DOS* .
*»'.' ••-.. :. ' ••••" •"'• •""."
-------
RF.2-2
-------
IMPLEMENTATION OF DIRECT REFERRALS FOR CIVIL CASES
EPA GENERAL ENFORCEMENT POLICY I GM - 18
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY
EFFECTIVE DATE: DEO 1 198?
-------
\
I UNITED STATES ENVIRONMENTAL PROTECTION
' WASHINGTON. DC SM40
KDY 28 B63
HEMORANLUK
SUBJECT: Implementation of Direct Referral* for Civil Cue*
Beginning Deember 1. 1963
FROM: Courtney M. PriceV_ __
Assistant Administrator for) Enforcement
and Compliance Monitoring
TO: Regional Administrators, Regions I - X.
Regional Counsels, Regions I - Z
Associate Enforcement Counsels
OECM Office Directors
I. BACKGROUND
On September 29, 1983, the Environmental Protection'
Agency (EPA) and the Land and Natural Resources Division of
the Department of Justice (DOJ) entered into an agreement
which, beginning on December 1, 1983, allows certain
categories of cases to be referred directly to DOJ fron EPA
Regional offices without my prior concurrence. A copy of
that agreement is attached to this memorandum.
This memorandum provides guidance to EPA Headquarters
and Regional personnel regarding procedures to follow in
implementing this direct referral agreement. Additional
guidance will be issued as required.
II. PROCEDURES FOR CASES SUBJECT TO DIRECT REFERRAL
The attached agreement lists those categories of
cases which can be referred directly by the Regional
Administrator to DOJ. All other cases must continue to be
reviewed by Headquarters OECM and will be referred by me to
DOJ. Cases which contain counts which could be directly
referred and counts which require Headquarters concurrence
should be referred to EPA Headquarters. If you are uncertain
•whether a particular case may be directly referred, you
should contact the appropriate Associate Enforcement Counsel
for guidance.
-------
-2-
Many of the procedures for direct referral cases are
adequately explained in the September 29th agreement.
'However, there are some points* I vant to emphasize.
Referral packages should be addressed to Mr* I*. Henry
Habicht, II, Assistant Attorney General, Land and Natural
Resources Division, B.S. Department of Justice, Washington.
D.C. 20530, Attention: Stephen D. Ramsey. The time limitations
set forth in the agreement for review and initial disposition
of the package will commence upon receipt of the package in
the Land and Natural Resources Division, and not -at the DOJ
mailroom. Delivery of referral packages to the Land and
Natural Resources Division will be expedited by use of
express nail, which is not commingled with regular nail in
DOJ's mailroom.
The contents of a referral package (either direct to
DOJ or to EPA Headquarters) should contain three primary
divisions: (1) a cover letter; (2) the litigation report;
(3) the documentary file supporting the litigation report.
The cover letter should contain a summary of the following
elements:
. (a) identification of the proposed defendant(s); •
(b) the statutes and regulations which are the basis
for the proposed action against the defendaat(s);
(c) a brief statement of the facts upon which the
proposed action is based;
(d) proposed relief to be sought against the defendant(s);
(e) significant or precedential legal or factual issues;
(f) contacts with the defendant(s), including any
previous administrative enforcement actions taken;
(g) lead Regional legal and technical personnel;
(h) any other aspect of the case which is significant and
should be highlighted, including any extraordinary
resource demands which the case may require.
A referral to DOJ or to Headquarters EPA is tantamount
to a certification by the Region that it believes the case
is sufficiently developed for the filing of a complaint,
and that the Region is ready, willing and able to provide
such legal and technical support ae might be reasonably
required to pursue the case through litigation.
-------
AB provided is the September 29, 1983, agreement,
information copies of the referral package may be provided
to the U.S. Attorney for the appropriate judicial district
in which the proposed case nay be filed. These information
packages should be clearly labelled or stamped vith the
following vords: "Advance Copy — Mo Action Required At
This Time". Also, information copies should be simultaneously
provided to the appropriate OECM division at Headquarters.
It is important that the directly referred cases be tracked
in our case docket Bye ten and Headquarters oversight in it la ted 4
Copies of the referral cover letter vill be provided to
OECM's Office of Management Operations for inclusion In the
automated case docket system when Headquarters informational
copy is received at OECM's Correspondence Control Unit.
Department of Justice Responsibilities
DOJ shares our desire to handle these cases as expedi-
tiously as possible. To that end, DOJ has agreed that,
within thirty days of receipt of the package in the Land sad
Natural Resources Division at DOJ Headquarters, it vill
determine whether Headquarters DOJ or the U.S. Attorney
vill have the lead litigation responsibilities on a specific
case. DOJ will notify the Regional offices directly of its
determination in this regard, with a copy to the appropriate
OECM division. Although USA offices will have lead respon-
sibilities in'many cases, the Land and Natural Resources
Division will continue to have oversight and management
responsibility for all cases. All complaints and consent
decrees will continue to require the approval of the
Assistant Attorney General for the division before the case
can be filed or settled.
DOJ has reaffirmed the time frame of the Memorandum
of Understanding, dated June 15, 1977, for the filing of
cases within 60 days after receipt of the referral package,
where possible. Where it is not possible, DOJ will advise
the Region and Headquarters of any reasons for delays in
filing of the case. However, when DOJ determines that
the USA should have the lead responsibilities in a case, DOJ
will forward the case to the USA within thirty days of
referral to the extent feasible.
DOJ can request additional information from a Region
on a case or return a case to a Region for further develop-
ment. In order to avoid these delays, referral packages
should be as complete as possible and the Regions should
work closely with DOJ to develop referral packages.
-------
The Deputy Administrator has expressed concern in the
past on th« number of cases returned to the Regions or
declined by EPA or DOJ. I have assured the Deputy Administrator
that I will closely track the number of cases declined by
DOJ or returned to the Regions and the reasons for the
declination or return as indications of whether direct
referrals are a feasible method of handling EPA's judicial
enforcement program.
Headquarters OECM Responsibilities
Although DECK vill not formally concur on cases directly
referred to DOJ, OECM vill still review these packages and
nay offer comments to the Regions and DOJ. DOJ is free to
request EPA Headquarters assistance on cases, as DOJ
believes necessary. EPA Headquarters review vill help to
point out potential issues and pinpoint areas where future
guidance should be developed. OECM vill also be available
as a consultant to both DOJ and the Regions on these cases.
OECM vill be available to address policy issues as they
arise and, as resources permit, nay be able to assist in
case development or negotiation of these cases. Any request
from a Regional office for Headquarters legal assistance
should be in writing from the Regional Administrator to
me, setting forth the reasons for the request and the type
of assistance needed.
OECM also maintains an oversight responsibility for
these cases. Therefore, Regional attorneys nust report
the status of these cases on a regular basis through use
of the automated case docket.All information for the case
required by the case docket system nust appear in the
docket and be updated in accordance with current guidance
concerning the automated docket systen.
Settlements in Cases Subject to Direct Referral
I vill continue to approve and execute all settlements
in enforcement cases, including those in cases subject to*
direct referral and amendments to consent decrees in these
cases. This is necessary to ensure that Agency policies and
enforcement activities are being uniformly and consistently
applied nationwide. After the defendants have signed the
settlement, the Regional Administrator should forward a
copy of the settlement to ne (or ny designee) vith a written
analysis of the settlement and a request that the settlement
be signed and referred for approval by the Assistant Attorney
General for the Land and Natural Resources Division and for
entry. The settlement will be reviewed by the appropriate
OECM Enforcement Division for consistency vith law and
Agency policy.
-------
Within twenty-one days from the date of receipt of the
settlement by the appropriate OECM division. 2 vill either
sign the settlement and transmit it to DOJ Vith a request
that the settlenent be entered, or transmit a memorandum to
the Regional Office explaining factors which Justify post-
poneaent of referral of the package to DOJ, or return the
package to the Region for changes necessary before the
agrees en t can be signed.
Obviously, ve vant to avoid the necessity of
communicating changes in Agency settlement positions to
defendants, especially after they have signed a negotiated
agreement. To avoid this, the Regional office should
coordinate with Headquarters OECM and DOJ in development of
settlement proposals. A copy of all draft settlement
agreements should be transmitted by the Regional Counsel to
the appropriate Associate Enforcement Counsel for review
before it is presented to the defendant. The Associate
Enforcement Counsel will coordinate review of the settlement
with the Headquarters program office and respond to the
Regional office, generally, within ten days of receipt of
the draft. The Regional office should remain in contact
with the Headquarters liaison staff attorney as negotiations
progress. Failure to coordinate settlement development
with appropriate Headquarters offices nay result in rejection
of a proposed settlement which has been approved by the
defendant(s) and the Regional office.
I will also continue to concur in and forward to DOJ
all requests for withdrawal of cases after referral. In
addition, I will review and concur in any delay in the filing
or prosecution of a case after referral.. This is appropriate
because cases which are referred to DOJ should be expeditiously
litigated to conclusion, unless a settlement or some other
extraordinary event justifies suspending court proceedings.
The review of reasons for withdrawal or delay of cases
after expenditure of Agency and DOJ resources is an important
function of OECM oversight. Therefore, should the Regional
offices desire to request withdrawal or delay of a case
which has been referred to DOJ, a memorandum setting forth
the reasons for such a request should be forwarded to the
appropriate OECM division, where it vill be reviewed smd
appropriate action recommended to ne.
III. CASES NOT SUBJECT TO DIRECT REFERRAL
Those cases not subject to direct referral will be
forwarded by the Regional Administrator to the Office
of Enforcement and Compliance Monitoring for review prior
to referral to DOJ. OECM has committed to a twenty-one day
turn-around time for these cases. The twenty-one day
review period starts when the referral is received by the
appropriate OECM division.
-------
-6-
Vithin this twenty-one day period, DECM will decide
whether to refer the case to DOJ (OECM then has fourteen
additional days to formally refer the case) , to return the
case to the Region for further development, or to request
additional information from the Region.
Because of this tfhort OECM review period, emphasis
should be placed on developing complete referral packages
so that delay occassioned by requests for additional infor-
mation from the Region will be rare. OECM nay refer a case
to DOJ which lacks some information only if the referral
can be supplemented with a minimum of time and effort by
information available to the Regional office which can
immediately be gathered and transmitted to DOJ. However,
this practice is discouraged. In the few instances in
which a case is referred to DOJ without all information
attached, the information should, at a minimum, be centrally
organized in the Regional office and the litigation report
should analyze the completeness and substantive content of
the information.
A referral will be returned to the Region, with an
explanatory memorandum, if substantial information or
further development is needed to complete the package.
Therefore, the Regions should work closely with OECM
attorneys to be certain referral packages contain all
necessary information. ' . -
IV. MEASURING THE EFFICACY OF THE DIRECT REFERRAL AGREEMENT
I will use EPA's case docket system, OECM16 quarterly
Management Accountability reports and DOJ's responses to
the referral packages to review the success of the direct
referral agreement. OECM will review the quality of the
litigation reports accompanying directly referred cases and
discuss the general quality of referrals from each Regional
office at case status meetings held periodically with DOJ's
Environmental Enforcement Section.
If you have any questions concerning the procedures
set out in this memorandum, please contact Richard Hays,
Senior Enforcement Counsel, at FTS 382-4137.
Attachment
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••I-
UNITED STATES EU'tflRDMMEKTAl. FftDTECTlOJ*' ASCWTY
X. i>r aaccr
T . fy
*^-\i.-.. •• ••• '-sr ir
t~"f" • • ..'• .-T»_'
Honorable T. Benry Babicbt, II ^.; . \*'*!•*> c Vr *
Acting Assistant Attorney General •; - ; V.^'-V ^^r"" Ł-
l^nd and natural Jtesourcec Divlsiaa • .-;. .';''v t.* " *""
XJ.B. Departaent of Justice • v "'""•.'* ~ ^
Washington, D.C. 20530 .- .«•-'"•". - ."
<• '-"^-' ••*•:-.-ar ' • - -
Dear Banks . ' .vf> s >..T S
••.-.. .<«•"'•>-• •• '?•••.
•' • . ««r-
As a result of our meeting on Thursday, September B, 19B5-»
and the subsequent discussions of respective staffs, ve are in
agreement that, subject to the conditions set forth below, the
classes of cases listed herein will be referred'directly fre*
EPA's Regional Offices to the Land and Natural Resources Division
of the Department of Justice in Washington, D.C.
The terns, conditions and procedures to be followed in
implementing this agreement ares
• »
1. The Assistant Administrator for Enforcement and Compliance
Monitoring will waive for a period of one year the requirement
of the Assistant Administrators prior concurrence for referral
to the Department of Justice for the following classes of
judicial enforcement casess
la) Cases under Section 2414(b) of the Sale Drinking Water
Act which involve violations of the National Interim
Primary Drinking Water Regulations, such as reporting or
jmonitoring violations, or suximum contaminant violations;
(b) The following cases under the -Clean Water Acti
•
(i) cases involving discharges without a permit
by industrial dischargers*
**.*•••
(ii) all cases against minor industrial dischargersi
(ill) cases Involving failure to monitor or report by
industrial dischargers;
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.Ł-
fiv) referrals to collect stipulated penalties Ł
industrials under consent decrees;
CvJ referrals to collect administrative spill penalties
under Section 311 (j) of the
.. .... ,
(c) All cases twder the Clean Air Act except the following*
• (i) cases involving the steel industry;
. _ V
(ii) cases involving non-ferrous smelters;
~Ł.... ..- . . . • ..
(iii) cases involving national Emissions Standards for
Hazardous Air Pollutants i ••
• *.
fiv) cases involving the post-1982 enforcement policy.
2. Cases described in Section 1, above, shall be referred
directly from the Regional Administrator to the Land and
natural Resources Division of DOJ in the following sunners
/
(a) The referral package shall be forwarded to the Assistant
Attorney General for Land and Natural Resources, 0.6.
Department of Justice (DOJ), with copies of the package
being simultaneously forwarded to the U.S. Attorney
(USA) for the appropriate judicial district in which
the proposed case is to be filed (marked 'advance copy-
. no action required at this time"), and the Assistant
Administrator for Enforcement and Compliance Monitoring
(DECK) at EPA Headquarters. OECM shall have the following
functions with regard to said referral packages
(i) DECK shall have no responsibility for review of
such referral packages, and the referral shall be
: effective as of the date of receipt of the package
by DOJ; however, OECM shall comment to the Region
upon any apparent shortcomings or defects which
it a\ay observe in the package. DOJ day, of course,
continue to consult with OECM on such referrals.
Otherwise, DECK shall be responsible only for
routine oversight of the progress and management
of the case consistent with applicable present
and future Guidance. OECM shall, however, retain
final authority to approve settlements on behalf
of EPA for these cases, as in other cases.
(ii) The referral package shall be in the format and
contain information provided by guidance memoranda
a& may be promulgated from time to time by OECM in
consultation with DOJ and Regional representatives.
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(ill) DOJ shall, within 30 days iron receipt of the
referral package* determine (1) whether the Lands
Division of DD3 will have lead responsibility for
the ease; or (2) whether the USA will have lead
responsibility for the case.
l • * v • • » •
While ft is agreed that to the extent feasible,
cases in which the DSA wilJ have the lead trill fee
transmitted to the DSA for filing and handling
within this 30-day period, if OOJ determines that
the case requires additional legal or factual
development «t DOJ prior to referring the -amtfttr
to the DSA, the case nay be returned to the
Regional Office, or may be retained at the Lands
Division of DOJ for further development, including
requesting additional information from the Regional
Office. In any event* DOJ will notify the Regional
Office, DECK and the OSA of its determination of
the lead role within the above-mentioned 30-day
period.
(iv) Regardless of whether DOJ or the DSA is determined
to have lead responsibility for management of
the ease, the procedures and tine limitations »et
forth in the MOD and 2B CFR fO.65 et seq., ahall
remain in effect and shall run cpncurrently with*
the management determinations made pursuant-to
this agreement.
3. (a) All other cases not specifically described in paragraph
1, above, which the Regional Offices propose for judicial
enforcement shall first be forwarded to DECK and the
appropriate Headquarters program office for review,
A copy of the referral package shall be forwarded simul-
taneously by the Regional Office to the Lands Division of
DOJ and to the DSA for the appropriate judicial district*
the OSA's copy being marked "advance copy-no action required!
at this tim*.« .
t .*
(b) OECM shall review the referral package within twenty-one
(21) calendar days of the date of receipt of said package
from the Regional Administrator and shall* within said
time period, make a determination of whether the case
should be (a) formally referred to DOJ, (b) returned to
the Regional Administrator for any additional development
which aaay be required; or (e) whether the Regional
Administrator should be requested to provide any additional
material or information which may be required to satisfy
the necessary and essential legal and factual requirements"
for that type of case.
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(c) Any request for information, or return of the ease
to the Region shall be transmitted by appropriate letter
or memorandum signed by the AA for DECK (or her desiynee)
within the aforementioned twenty-one day period. Should
OŁCM concur in the proposed referral of the case to 2>OJ,
the actual referral shall be by letter from the AA for
OEQN (or her designee) signed within fourteen days of
the termination of the. aforementioned twenty-one day
review period. Copies of the letters referred to herein
shall b* sent to the Assistant Attorney General for the
Lands Division of DO3. .
(d) Upon receipt of the referral package ty DOJ, the
. • procedures and time deadlines set forth in paragraph
Mo. 8 of the KOU shall apply.
In order to allow sufficient time prior to implementation of
this agreement to make the U.S. Attorneys, the Regional Offices
and our staffs aware of these provisions, it is agreed that this
agreement shall become effective December 1, 1963. Courtney Price
will distribute a memorandum within CPA explaining this agreement
and how it will be implemented within the Agency, (you will receivi
s copy.) ^ *"
2 believe that this agreement will eliminate the necessity of
formally amending the Memorandum of Understanding between our
respective agencies, and will provide necessary experience to
ascertain whether these procedures will result in significant
savings of time and resources. In that regard, 2 have asked
Courtney to establish criteria for measuring the efficacy of this
agreement during the one year trial period, and 2 ask that you
cooperate with her in providing such reasonable and necessary
information as she may request of you in making that determination.
At the end of the trial period—or at any time in the interval—
we may propose such adjustments in the procedures set forth herein
as may be appropriate based on experience of all parties.
It is further understood that it is the mutual desire of the
Agency and DOJ that cases be referred to the DSA for filing as
expeditiously as possible.'
I appreciate your cooperation in arriving at this agreement.
If this meets with your approval, please sign the enclosed copy
in the space indicated be lev and return the copy to jae for our
files.
Sincerely yours.
Alvin I. Arm
Deputy Administrator
Approve^:
'
F. Benry H^bicht, II
Acting Assistant Attorney General
iajid and Natural Resources Division
U.S. Department jof Justice
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RF.3
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RF.3-1
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY ^ p, V
WASHINGTON, D.C. 204(0
OFFICE OF FNFOROFMFM
ASDCOMPUfNCf
MONITORING
NOV I219ST
MEMORANDUM
SUBJECT: DOJ Procedures for Returning Certain Unfiled Cases to
EPA for Further Processing
I a t
FROM: Jonathan Z. CannonWVYUJ>'/(JKW^
Deputy Assistant Administrator for Civil Enforcement
TO: Deputy Regional Administrators, Regions I - X
Regional Counsels,/ Regions I - X
The Department of Justice (DOJ), Environmental Enforcement
Section, is instituting new procedures to clear its enforcement
docket of EPA cases that remain unfiled at DOJ for more than
sixty days after referral (or beyond any additional period
covered by a hold letter) while the region is negotiating a
consent decree or compiling additional information to support
filing. For record keeping purposes, rather than declining these
referrals, DOJ will return these cases to the region for "further
Agency processing" but will retain all files on these cases and
continue to work with EPA towards resolving them.
The return of these cases will be made by a letter from the
Chief of the Environmental Enforcement Section or the Environ-
mental Defense Section, as warranted. This letter will be
addressed to or copy the Deputy Assistant Administrator for Civil
Enforcement, the appropriate Associate Enforcement Counsel, and
the Regional Counsel. Cases returned to the region for further
Agency processing will be identified in EPA's enforcement computer
docket ast "returned to region." OECM Compliance and Evaluation
Branch Chief Ranelle Rae will insure appropriate treatment of
these cases under SPMS.
Cases returned to the region under these circumstances would
be reactivated by Justice if the region (1) provides the requested
additional information necessary for filing; (2) forwards a signed
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consent decree for processing by OECM and DOJ1; (3) notifies OECfl
and DOJ that the progress of the negotiations no longer justifies
further delay in the filing of the complaint and requests that a
complaint be filed; or (4) EPA resolves an internal policy
conflict affecting the filing. The Agency would not have to
prepare a new referral package or litigation report.2 In cases in
which a filing is requested because negotiations have been
unproductive and there is no consent decree, concurrence by OECM
is not required to reactivate the case. However, written notice
of the region's request to reactivate should be given to OECM to
insure proper tracking.
cc: David Buente
Margaret Strand
Associate Enforcement Counsels
Headquarters Program Office Enforcement Division Directors
Renelle Raer OCAPO
1 The Region should keep the DOJ and OECM attorneys informed
of the progress of negotiations and obtain the approval of DOJ and
OECM before a written consent decree is transmitted to the
defendant.
2 If new violations had occurred or were discovered durinq
the period of negotiations, the Region would need to provide OOJ
with adequate evidence of such violations.
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RF.3-2
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F.3-Z
UNfTEO STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, O.C. 20460
NOV I 6 1990
MEMORANDUM
SUBJECT: "Hold Action" RequeaJt*?
FROM: James M. Stfoc)
Assistant Administrator ».
•
TO: Regional Counsels
At the Regional Counsels meeting in Seattle, v« discussed
th« problem of cases whose filing was being delayed by informal
staff-level "hold action* requests. To deal with this problem,
and strengthen our management of this process, Ed Reich sent to
you on August 27 a draft of the new procedures for such requests.
Based on your positive comments, and the support of the
Department of Justice (see attached), I am adopting these
procedures effective immediately.
Please assure that all Regional Counsel Staff are aware of,
and comply with, these procedures.
Attachment
cc: Edward E. Reich
Scott Fulton
Associate Enforcement Counsels
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Procedures for "Hold Action" Recruests
1. "Hold action" requests (requests to dtlay filing of a
complaint) arc generally disfavored. When EPA
refers a case to the Department of Justice, it should
be with the intent to get it filed as quickly as
possible, and the case should be fully prepared for
filing. The Department seeks to file a complaint
within 60 days of receipt of a referral.
2. Use of prereferral negotiation procedures in cases
where pro-filing negotiations are desired should reduce
the need for "hold action" requests.
3. The following procedures are adopted to better manage
the "hold action" request process.
A. Authority to request a hold on a referred
civil case for up to sixty days is hereby
delegated to the Regional Counsels. This
authority is non-delegable, but may be
exercised by an Acting Regional Counsel.
This delegated authority is limited to
circumstances in which additional time is
needed either: (1) to pursue pre-filing
settlement negotiations (where settlement
is viable); (2) to allow for the addition
of other counts or defendants or (3) where
litigation practicalities, recognized by
both the Regions and DOJ, militate in
favor of a brief filing delay. The Regional
Counsel can request more than one short hold
if necessary but the cumulative time of all
such holds for any case is strictly limited
to sixty days.
B. Any hold beyond 60 days, individually or
cumulatively, can be requested only by the
AA for Enforcement. The Regional Counsel
would initiate this request, where
appropriate, by preparing a letter to the
Assistant Attorney General, Environment and
Natural Resources Division for the signature
of the Assistant Administrator for
Enforcement and sending this letter and an
appropriate transmittal memorandum to the AA.
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PT.1
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PT.1-1
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PT./-/
POLICY ON CIVIL PENALTIES
EPA GENERAL ENFORCEMENT POLICY #GM - 21
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY
EFFECTIVE DATE: FEB I fi J98A
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Introduction
This document, Policy on Civil Penalties, establishes a
single set of goals for penalty assessment in EPA administrative
and judicial enforcement actions. These goals - deterrence,
fair and equitable treatment of the regulated community, and
swift resolution of environmental problems - are presented here
in general terms. An outline of the general process for the
assessment of penalties is contained in Attachment A.
A companion document, A Framework for Statute-Specific
Approaches to Penalty Assessments, will also be issued today.
This document provides guidance to the user of the policy on
how to write penalty assessment guidance specific to the user's
particular program. The first part of the Framework provides
general guidance on developing program-specific guidance; the
second part contains a detailed appendix which explains the basis
for that guidance. Thus, the user need only refer to the appendix
when he wants an explanation of the guidance in the first part of
the Framework.
In order to achieve the above Agency policy goals, all
administratively imposed penalties and settlements of civil
penalty actions should, where possible, be consistent with the
guidance contained in the Framework document. Deviations from
the Framework's methodology, where merited, are authorized as
long as the reasons for the deviations are documented. Documen-
tation for deviations from the Framework in program-specific
guidance should be located in that guidance. Documentation for
deviations from the program-specific .guidance in calculating
individual penalties should be contained in both the case files
and in any memoranda that accompany the settlements.
The Agency will make every effort to urge administrative
law judges to impose penalties consistent with this policy and
any medium-specific implementing guidance. For cases that go
to court, the Agency will request the statutory maximum penalty
in the filed complaint. And, as proceedings warrant, EPA will
continue to pursue a penalty no less than that supported by the
applicable program policy. Of course, all penalties must be consis-
tent with applicable statutory provisions, based upon the number
and duration of the violations at issue.
Applicability
This policy statement does not attempt to address the
specific mechanisms for achieving the goals set out for penalty
assessment. Nor does it prescribe a negotiation strategy to
achieve the penalty target figures. Similarly, it does not
address differences between statutes or between priorities of
different programs. Accordingly, it cannot be used, by itself,
as a basis for determining an appropriate penalty in a specific
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-2-
action. Each EPA program office, in a joint effort with the
Office of Enforcement and Compliance Monitoring, will revise
existing policies, or write new policies as needed. These
policies will guide the assessment of penalties under each
statute in a manner consistent with this document and, to the
extent reasonable, the accompanying Framework.
Until new program-specific policies are issued, the
current penalty policies will remain in effect. Once new
program-specific policies are issued, the Agency should
calculate penalties as follows:
0 For cases that are substantially settled,
apply the old policy.
0 For cases that will require further sub-
stantial negotiation, apply the new policy
if that will not be too disruptive.
Because of the unique issues associated with civil penal-
ties in certain types of cases, this policy does not apply to
the following areas:
0 CERCLA §107. This is an area in which
Congress has directed a particular kind
of response explicitly oriented toward
recovering the cost of Government cleanup
activity and natural resource damage.
0 Clean Water Act §311(f) and (g). This also
is cost recovery in nature. As in CERCLA
§107 actions, the penalty assessment
approach is inappropriate.
0 Clean Air Act §120. Congress has set out in
considerable detail the level of recovery
under this section. It has been implemented
with regulations which, as required by law,
prescribe a non-exclusive remedy which
focuses on recovery of the economic benefit
of noncompliance. It should be noted, how-
ever, that this general penalty policy builds
upon, and is consistent with the approach
Congress took in that section.
Much of the rationale supporting this policy generally
applies to non-profit institutions, including government entities.
In applying this policy to such entities, EPA must exercise judg-
ment case-by-case in deciding, for example, how to apply the
economic benefit and ability to pay sanctions, if at all. Further
guidance on the issue of seeking penalties against non-profit
entities will be forthcoming.
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Deterrence
The first goal of penalty assessment is to deter people from
violating the law. Specifically, the penalty should persuade the
violator to take precautions against falling into noncompliance
again (specific deterrence) and dissuade others from violating the
law (general deterrence). Successful deterrence is important
because it provides the best protection for the environment. In
addition, it reduces the resources necessary to administer the
laws by addressing noncompliance before it occurs.
If a penalty is to achieve deterrence, both the violator and
the general public must be convinced that the penalty places the
violator in a worse position than those who have complied in a
timely fashion. Neither the violator nor the general public
is likely to believe this if the violator is able to retain an
overall advantage from noncompliance. Moreover, allowing a
violator to benefit from noncompliance punishes those who have
complied by placing them at a competitive disadvantage. This
creates a disincentive for compliance. For these reasons, it
is Agency policy that penalties generally should, at a minimum,
remove any significant economic benefits resulting from failure
to comply with the law. This amount will be referred to as the
"benefit component" of the penalty.
Where the penalty fails to remove the significant economic
benefit, as defined by the program-specific guidance, the case
development team must explain in the case file why it fails to do
so. The case development team must then include this explanation
in the memorandum accompanying each settlement for the signature
of the Assistant Administrator of Enforcement and Compliance
Monitoring, or the appropriate Regional official.
The removal of the economic benefit of noncompliance only
places the violator in the same position as he would have been if
compliance had been achieved on time. Both deterrence and funda-
mental fairness require that the penalty include an additional
amount to ensure that the violator is economically worse off than
if it had obeyed the law. This additional amount should reflect
the seriousness of the violation. In doing so, the penalty will
be perceived as fair. In addition the penalty's size will tend
to deter other potential violators.
In some classes of cases, the normal gravity calculation may
be insufficient to effect general deterrence. This could happen
if, for example, there was extensive noncompliance with certain
regulatory programs in specific areas of the United States. This
would demonstrate that the normal penalty assessments had not been
achieving general deterrence. In such cases, the case development
team should consider increasing the gravity component sufficient to
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achieve general deterrence. These extra assessments should
balance the other goals of this policy, particularly equitable
treatment of the regulated community.
This approach is consistent with the civil penalty
provisions in the environmental laws. Almost all of them
require consideration of the seriousness of the violation.
This additional amount which reflects the seriousness of the
violation is referred to as the "gravity component". The
combination of the benefit and gravity components yields the
"preliminary deterrence figure."
As explained later in this policy, the case development
team will adjust this figure as appropriate. Nevertheless, EPA
typically should seek to recover, at a minimum, a penalty which
includes the benefit component plus some non-trivial gravity
component. This is important because otherwise, regulated
parties would have a general economic incentive to delay
compliance until the Agency commenced an enforcement action.
Once the Agency brought the action, the violator could then
settle for a penalty less than their economic benefit of
noncompliance. This incentive would directly undermine the
goal of deterrence.
Fair and Equitable Treatment of the Regulated Community
The second goal of penalty assessment is the fair and
equitable treatment of the regulated community. Fair and
equitable treatment requires that the Agency's penalties must
display both consistency and flexibility. The consistent
application of a penalty policy is important because otherwise
the resulting penalties might be seen as .being arbitrarily
assessed. Thus violators would be more inclined to litigate
over those penalties. This would consume Agency resources and
make swift resolution of environmental problems less likely.
But any system for calculating penalties must have enough
flexibility to make adjustments to reflect legitimate differences
between similar violations. Otherwise the policy might be
viewed as unfair. Again, the result would be to undermine
the goals of the Agency to achieve swift and equitable resolu-
tions of environmental problems.
Methods for quantifying the benefit and gravity components
are explained in the Framework guidance. These methods signifi-
cantly further the goal of equitable treatment of violators.
To begin with, the benefit component promotes equity by re-
moving the unfair economic advantage which a violator may have
gained over complying parties. Furthermore, because the benefit
and gravity components are generated systematically, they
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will exhibit relative consistency from case to case. Because
the methodologies account for a wide range of relevant factors,
the penalties generated will be responsive to legitimate
differences between cases.
However, not all the possibly relevant differences between
cases are accounted for in generating the preliminary deterrence
amount. Accordingly, all preliminary deterrence amounts should
be increased or mitigated for the following factors to account
for differences between cases:
0 Degree of willfulness and/or negligence
0 History of noncompliance.
0 Ability to pay.
0 Degree of cooperation/noncooperation.
0 Other unique factors specific to the
violator or the case.
Mitigation based on these factors is appropriate to the extent
the violator clearly demonstrates that it is entitled to miti-
gation.
The preliminary deterrence amount adjusted prior to the
start of settlement negotiations yields the "initial penalty
target figure". In administrative actions, this figure
generally is the penalty assessed in the complaint. In judicial
actions, EPA will use this figure as the first settlement goal.
This settlement goal is an internal target and should not be
revealed to the violator unless the case development team feels
that it is appropriate. The initial penalty target may be
further adjusted as negotiations proceed and additional
information becomes available or as the original information is
reassessed.
Swift Resolution of Environmental Problems
The third goal of penalty assessment is swift resolution
of environmental problems. The Agency's primary mission is to
protect the environment. As long as an environmental violation
continues, precious natural resources, and possibly public
health, are at risk. For this reason, swift correction of
identified environmental problems must be an important goal of
any enforcement action. In addition, swift compliance conserves
Agency personnel and resources.
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The Agency will pursue two basic approaches to promoting
quick settlements which include swift resolution of environmental
problems without undermining deterrence. Those two approaches
are as follows:
1. Provide incentives to settle and institute prompt
remedial action.
EPA policy will be to provide specific incentives to settle,
including the following:
0 The Agency will consider reducing the
gravity component of the penalty for
settlements in which the violator already
has instituted expeditious remedies to
the identified violations prior to the
commencement of litigation.^/ This would
be considered in the adjustment factor
called degree of cooperation/noncoopera-
tion discussed above.
0 The Agency will consider accepting additional
environmental cleanup, and mitigating the
penalty figures accordingly. But normally,
the Agency will only accept this arrangement
if agreed to in pre-litigation settlement.
Other incentives can be used, as long as they do not result in
allowing the violator to retain a significant economic benefit.
2. Provide disincentives to delaying compliance.
The preliminary deterrence amount is based in part upon
the expected duration of the violation. If that projected period
of time is extended during the course of settlement negotiations
due to the defendant's actions, the case development team should
adjust that figure upward. The case development team should
consider making this fact known to the violator early in the negoti-
ation process. This will provide a strong disincentive to delay
compliance.
I/ For the purposes of this document, litigation is deemed to
begin:
0 for administrative actions - when the
respondent files a response to an adminis-
trative complaint or when the time to
file expires or
0 for judicial actions - when an Assistant
United States Attorney files a com-
plaint in court.
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Intent of Policy and Information Requests for Penalty Calculations
The policies and procedures set out in this document and in
the Framework for Statute-Specific Approaches to Penalty Assessment
are intended solely for the guidance of government personnel.
They are not intended and cannot be relied upon to create any
rights, substantive or procedural, enforceable by any party in
litigation with the United States. The Agency reserves the right
to act at variance with these policies and procedures and to change
them at any time without public notice. In addition, any penalty
calculations under this policy made in anticipation of litigation
are exempt from disclosure under the Freedom of Information Act.
Nevertheless as a matter of public interest, the Agency may
elect to release this information in some cases.
Courtney M. Price
Assistant Administrator for
Enforcement and Compliance Monitoring
Attachment
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ATTACHMENT A
Outline of Civil Penalty Assessment
I. Calculate Preliminary Deterrence Amount
A. Economic benefit component and
B. Gravity component
(This yields the preliminary deterrence amount.)
II. Apply Adjustment Factors
A. Degree of cooperation/noncooperation (indicated through
pre-settlement action.)
B. Degree of willfulness and/or negligence.
C. History of noncompliance.
D. Ability to pay (optional at this stage.)
E. Other unique factors (including strength of case,
competing public policy concerns.)
(This yields the initial penalty target figure.)
III. Adjustments to Initial Penalty Target Figure After
Negotiations Have Begun
A. Ability to pay (to the extent not considered in
calculating initial penalty target.)
B. Reassess adjustments used in calculating initial
penalty target. (Agency may want to reexamine
evidence used as a basis for the penalty in the
light of new information.)
C. Reassess preliminary deterrence amount to reflect
continued periods of noncompliance not reflected
in the original calculation.
D. Alternative payments agreed upon prior to the
commencement of litigation.
(This yields the adjusted penalty target figure.)
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PT.1-2
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fT.J-2
A FRAMEWORK FOR STATUTE-SPECIFIC APPROACHES
TO PENALTY ASSESSMENTS;
IMPLEMENTING EPA'S POLICY ON CIVIL PENALTIES
EPA GENERAL ENFORCEMENT POLICY #GM - 22
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY
EFFECTIVE DATE:
6 1984
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Contents Page
Introduction 1
Writing a Program-Specific Policy 2
I. Developing a Penalty Figure 2
II. Calculating a Preliminary Deterrence Amount 2
III. Adjusting the Preliminary Deterrence Amount 3
to Derive the Initial Penalty Target Figure
IV. Adjusting the Initial Penalty Target Figure 4
During Negotiations
Use of the Policy in Litigation
Use of the Policy as a Feedback Device
Appendix 6
Introduction 6
The Preliminary Deterrence Amount 6
I. The Benefit Component 6
A. Benefit from delayed costs 7
B. Benefit from avoided costs 9
C. Benefit from competitive advantage 10
D. Settling a case for an amount less than 11
the economic benefit component
II. The Gravity Component 13
A. Quantifying the gravity of a violation 13
B. Gravity factors 14
Initial and Adjusted Penalty Target Figure 16
I. Flexibility-Adjustment Factors 17
A. Degree of willfulness and/or negligence 17
B. Degree of cooperation/noncooperation 19
C. History of noncompliance 21
D. Ability to pay 23
E. Other unique factors 24
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11
Appendix (Con't)
II. Alternative Payments 24
III. Promoting Consistency 27
Use of Penalty Figure in Settlement Negotiations 28
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Introduction
This document, A Framework for Statute-Specific Approaches
to Penalty Assessment/ provides guidance to the user of the
Policy on Civil Penalties on how to develop a medium-specific
penalty policy. Such policies will apply to administratively
imposed penalties and settlements of both administrative and
judicial penalty actions.
In the Policy on Civil Penalties, the Environmental
Protection Agency establishes a single set of goals for penalty
assessment. Those goals - deterrence, fair and equitable
treatment of the regulated community, and swift resolution of
environmental problems - will be substantially impaired unless
they are pursued in a consistent fashion. Even different
terminology could cause confusion that would detract from the
achievement of these goals. At the same time, too much rigidity
will stifle negotiation and make settlement impossible.
The purpose of this document is to promote the goals of
the Policy on Civil Penalties by providing a framework for
medium-specific penalty policies. The Framework is detailed
enough to allow individual programs to develop policies that
will consistently further the Agency's goals and be easy to
administer. In addition, it is general enough to allow each
program to tailor the policy to the relevant statutory provi-
sions and the particular priorities of each program.
While this document contains detailed guidance, it is not
cast in absolute terms. Nevertheless, the policy does not
encourage deviation from this guidance in either the development
of medium-specific policies or in developing actual penalty
figures. Where there are deviations in developing medium-
specific policies, the reasons for those changes must be
recorded in the actual policy. Where there are deviations from
medium-specific policies in calculating a penalty figure, the
case development team must detail the reasons for those changes
in the case file. In addition, the rationale behind the deviations
must be incorporated in the memorandum accompanying the settlement
package to Headquarters or the appropriate Regional official.
This document is divided into two sections. The first one
gives brief instructions to the user on how to write a medium-
specific policy. The second section is an appendix that gives
detailed guidance on implementing each section of the instruc-
tions and explains how the instructions are intended to further
the goals of the policy.
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Writing a Program Specific Policy
Summarized below are those elements that should be present
in a program-specific penalty policy. For a detailed discus-
sion of each of these ideas, the corresponding portions of the
appendix should be consulted.
I. Developing a Penalty Figure
The development of a penalty figure is a two step process.
First the case development team must calculate a preliminary
deterrence figure. This figure is composed of the economic
benefit component (where applicable) and the gravity component.
The second step is to adjust the preliminary deterrence figure
through a number of factors. The resulting penalty figure is
the initial penalty target figure. In judicial actions, the
initial penalty target figure is the penalty amount which the
government normally sets as a goal at the outset of settlement
negotiations. It is essentially an internal settlement goal and
should not be revealed to the violator unless the case development
team feels it is appropriate. In administrative actions, this
figure generally is the penalty assessed in the complaint.
While in judicial actions, the government's complaint will request
the maximum penalty authorized by law.
This initial penalty target figure may be further adjusted
in the course of negotiations. Each policy should ensure that
the penalty assessed or requested is within any applicable
statutory constraints, based upon the number and duration of
violations at issue.
II. Calculating a Preliminary Deterrence Amount
Each program-specific policy must contain a section on
calculating the preliminary deterrence figure. That section
should contain materials on each of the following areas:
0 Benefit Component. This section should
explain:
a. the relevent measure of economic benefit
for various types of violations,
b. the information needed,
c. where to get assistance in computing
this figure and
d. how to use available computer systems
to compare a case with similar previous
violations.
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0 Gravity Component. This section should first
rank different types of violations according
to the seriousness of the act. In creating
that ranking, the following factors should be
considered:
a. actual or possible harm,
b. importance to the regulatory
scheme and
c. availability of data from other
sources.
In evaluating actual or possible harm, your scheme should
consider the following facts:
0 amount of pollutant,
0 toxicity of pollutant,
0 sensitivity of the environment,
0 length of time of a violation and
0 size of the violator.
The policy then should assign appropriate dollar amounts
or ranges of amounts to the different ranked violations to
constitute the "gravity component". This amount, added to the
amount reflecting economic benefit, constitutes the preliminary
deterrence figure.
Ill. Adjusting the Preliminary Deterrence Amount to Derive the
Initial Penalty Target Figure (Prenegotiation Adjustment)
Each program-specific penalty policy should give detailed
guidance on applying the appropriate adjustments to the pre-
liminary deterrence figure. This is to ensure that penalties also
further Agency goals besides deterrence (i.e. equity and swift
correction of environmental problems). Those guidelines should
be consistent with the approach described in the appendix. The
factors may be separated according to whether they can be con-
sidered before or after negotiation has begun or both.
Adjustments (increases or decreases, as appropriate) that
can be made to the preliminary deterrence penalty to develop an
initial penaly target to use at the outset of negotiation include:
0 Degree of willfulness and/or negligence
0 Cooperation/noncooperation through pre-
settlement action.
0 History of noncompliance.
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0 Ability to pay.
0 Other unique factors (including strength of
case, competing public policy considerations).
The policy may permit consideration of the violator's ability
to pay as an adjustment factor before negotiations begin. It
may also postpone consideration of that factor until after negoti-
ations have begun. This would allow the violator to produce
evidence substantiating its inability to pay.
The policy should prescribe appropriate amounts, or ranges
of amounts, by which the preliminary deterrence penalty should
be adjusted. Adjustments will depend on the extent to which
certain factors are pertinent. In order to preserve the penalty's
deterrent effect, the policy should also ensure that, except for
the specific exceptions described in this document, the adjusted
penalty will: 1) always remove any significant economic benefit
of noncompliance and 2) contain some non-trivial amount as a
gravity component.
IV. Adjusting the Initial Penalty Target During Negotiations
Each program-specific policy should call for periodic reas-
sessment of these adjustments during the course of negotiations.
This would occur as additional relevant information becomes avail-
able and the old evidence is re-evaluated in the light of new
evidence. Once negotiations have begun, the policy also should
permit adjustment of the penalty target to reflect "alternative
payments" the violator agrees to make in settlement of the case.
Adjustments for alternative payments and pre-settlement corrective
action are generally permissible only before litigation has
begun.
Again, the policy should be structured to ensure that any
settlement made after negotiations have begun reflects the
economic benefit of noncompliance up to the date of compliance
plus some non-trivial gravity component. This means that if
lengthy settlement negotiations cause the violation to continue
longer than initially anticipated, the penalty target figure
should be increased. The increase would be based upon the extent
that the violations continue to produce ongoing environmental
risk and increasing economic benefit.
Use of the Policy In Litigation
Each program-specific policy should contain a section on
the use of the policy in litigation. Requests for penalties
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should account for all the factors identified in the relevant
statute and still allow for compromises in settlement without
exceeding the parameters outlined in this document. (For each
program, all the statutory factors are contained in the Frame-
work either explicitly or as part of broader factors.) For admin-
istrative proceedings, the policy should explain how to formulate
a penalty figure, consistent with the policy. The case develop-
ment team will put this figure in the administrative complaint.
In judicial actions, the EPA will use the initial penalty
target figure as its first settlement goal. This settlement
goal is an internal target and should not be revealed to the
violator unless the case development team feels it is appro-
priate. In judicial litigation, the government should request
the maximum penalty authorized by law in its complaint. The
policy should also explain how it and any applicable precedents
should be used in responding to any explicit requests from a
court for a minimum assesment which the Agency would deem
appropriate.
Use of the Policy as a Feedback Device
Each program-specific policy should first explain in detail
what information needs to be put into the case file and into the
relevant computer tracking system. Furthermore, each policy
should cover how to use that system to examine penalty assessments
in other cases. This would thereby assist the Agency in making
judgments about the size of adjustments to the penalty for the
case at hand. Each policy should also explain how to present
penalty calculations in litigation reports.
Courtney M. Price
Assistant Administrator for
Enforcement and Compliance Monitoring
Attachment
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APPENDIX
Introduction
This appendix contains three sections. The first two sections
set out guidelines for achieving the goals of the Policy on Civil
Penalties. The first section focuses on achieving deterrence by
assuring that the penalty first removes any economic benefit from
noncompliance. Then it adds an amount to the penalty which reflects
the seriousness of the violation. The second section provides
adjustment factors so that both a fair and equitable penalty will
result and that there will be a swift resolution of the environmental
problem. The third section of the framework presents some practical
advice on the use of the penalty figures generated by the policy.
The Preliminary Deterrence Amount
The Policy on Civil Penalties establishes deterrence as an
important goal of penalty assessment. More specifically, it speci-
fies that any penalty should, at a minimum, remove any significant
benefits resulting from noncompliance. In addition, it should
include an amount beyond removal of economic benefit to reflect
the seriousness of the violation. That portion of the penalty
which removes the economic benefit of noncompliance is referred to
as the "benefit component;" that part of the penalty which reflects
the seriousness of the violation is referred to as the "gravity
component." When combined, these two components yield the "prelim-
inary deterrence amount."
This section of the document provides guidelines for calcu-
lating the benefit component and the gravity component. It will
also present and discuss a simplified version of the economic
benefit calculation for use in developing quick penalty deter-
minations. This section will also discuss the limited circum-
stances which justify settling for less than the benefit component.
The uses of the preliminary deterrence amount will be explained
in subsequent portions of this document.
I. The Benefit Component
In order to ensure that penalties remove any significant
economic benefit of noncompliance, it is necessary to have
reliable methods to calculate that benefit. The existence of
reliable methods also strengthens the Agency's position in both
litigation and negotiation. This section sets out guidelines for
computing the benefit component. It first addresses costs which
are delayed by noncompliance. Then it addresses costs which are
avoided completely by noncompliance. It also identifies issues
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to be considered when computing the benefit component for those
violations where the benefit of noncompliance results from factors
other than cost savings. This section concludes with a discussion
of the proper use of the benefit component in developing penalty
figures and in settlement negotiations.
A. Benefit from delayed costs
In many instances, the economic advantage to be derived from
noncompliance is the ability to delay making the expenditures
necessary to achieve compliance. For example, a facility which
fails to construct required settling ponds will eventually have to
spend the money needed to build those ponds in order to achieve
compliance. But, by deferring these one-time nonrecurring costs
until EPA or a State takes an enforcement action, that facility
has achieved an economic benefit. Among the types of violations
which result in savings from deferred cost are the following:
0 Failure to install equipment needed to meet
discharge or emission control standards.
0 Failure to effect process changes needed
to eliminate pollutants from products or
waste streams.
0 Testing violations, where the testing still
must be done to demonstrate achieved com-
pliance.
0 Improper disposal, where proper disposal is
still required to achieve compliance.
0 Improper storage where proper storage is still
required to achieve compliance.
0 Failure to obtain necessary permits for dis-
charge, where such permits would probably be
granted. (While the avoided cost for many
programs would be negligible, there are pro-
grams where the the permit process can be
expensive).
The Agency has a substantial amount of experience under
the air and water programs in calculating the economic benefit
that results from delaying costs necessary to achieve compliance.
This experience indicates that it is possible to estimate the
benefit of delayed compliance through the use of a simple formula.
Specifically, the economic benefit of delayed compliance may be
estimated at: 5% per year of the delayed one-time capital cost
for the period from the date the violation began until the date
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compliance was or is expected to be achieved. This will be
referred to as the "rule of thumb for delayed compliance" method.
Each program may adopt its own "rule of thumb" if appropriate.
The applicable medium-specific guidance should state what that
method is.
The rule of thumb method can usually be used in making
decisions on whether to develop a case or in setting a penalty
target for settlement negotiations. In using this rule of thumb
method in settlement negotiations, the Agency may want to make
the violator fully aware that it is using an estimate and not
a more precise penalty determination procedure. The decision
whether to reveal this information is up to the negotiators.
The "rule of thumb" method only provides a first-cut estimate
of the benefit of delayed compliance. For this reason, its use
is probably inappropriate in situations where a detailed analysis
of the economic effect of noncompliance is needed to support or
defend the Agency's position. Accordingly, this "rule of thumb"
method generally should not be used in any of the following cir-
cumstances:
0 A hearing is likely on the amount of the
penalty.
0 The defendant wishes to negotiate over the
amount of the economic benefit on the basis
of factors unique to the financial condition
of the company.
0 The case development team has reason to
believe it will produce a substantially
inaccurate estimate; for example, where the
defendant is in a highly unusual financial
position, or where noncompliance has or will
continue for an unusually long period.
There usually are avoided costs associated with this type
of situation. Therefore, the "rule of thumb for avoided costs"
should also be applied. (See pages 9-10). For most cases, both
figures are needed to yield the major portion of the economic
benefit component.
When the rule of thumb method is not applicable, the economic
benefit of delayed compliance should be computed using the Meth-
odology for Computing the Economic Benefit of Noncompliance.
This document, which is under development, provides a method
for computing the economic benefit of noncompliance based on a
detailed economic analysis. The method will largely be a refined
version of the method used in the previous Civil Penalty Policy
issued July 8, 1980, for the Clean Water Act and Title I of the
Clean Air Act. It will also be consistent with the regulations
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implementing Section 120 of the Clean Air Act. A computer
program will be available to the Regions to perform the analysis,
together with instructions for its use. Until the Methodology
is issued, the economic model contained in the July 8, 1980,
Civil Penalty Policy should be used. It should be noted that
the Agency recently modified this guidance to reflect changes in
the tax law.
B. Benefit from avoided costs
Many kinds of violations enable a violator to permanently
avoid certain costs associated with compliance.
0 Cost savings for operation and maintenance of
equipment that the violator failed to install.
0 Failure to properly operate and maintain
existing control equipment.
0 Failure to employ sufficient number of
adequately trained staff.
0 Failure to establish or follow precautionary
methods required by regulations or permits.
0 Improper storage, where commercial storage is
reasonably available.
0 Improper disposal, where redisposal or cleanup
is not possible.
0 Process, operational, or maintenance savings
from removing pollution equipment.
0 Failure to conduct necessary testing.
As with the benefit from delayed costs, the benefit com-
ponent for avoided costs may be estimated by another "rule of
thumb" method. Since these costs will never be incurred, the
estimate is the expenses avoided until the date compliance is
achieved less any tax savings. The use of this "rule of thumb"
method is subject to the same limitations as those discussed in
the preceding section.
Where the "rule of thumb for avoided costs" method cannot
be used, the benefit from avoided costs must be computed using
the Methodology for Computing the Economic Benefit of Noncom-
pliance. Again, until the Metholology is issued, the method
contained in the July 8, 1980, Civil Penalty Policy should be
used as modified to reflect recent changesin the tax law.
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C. Benefit from competitive advantage
For most violations, removing the savings which accrue
from noncompliance will usually be sufficient to remove the
competitive advantage the violator clearly has gained from
noncompliance. But there are some situations in which noncom-
pliance allows the violator to provide goods or services which
are not available elsewhere or are more attractive to the
consumer. Examples of such violations include:
0 Selling banned products.
0 Selling products for banned uses.
0 Selling products without required labelling
or warnings.
0 Removing or altering pollution control
equipment for a fee, (e.g., tampering with
automobile emission controls.)
0 Selling products without required regula-
tory clearance, (e.g., pesticide registra-
tion or premanufacture notice under TSCA.)
To adequately remove the economic incentive for such viola-
tions, it is helpful to estimate the net profits made from the
improper transactions (i.e. those transactions which would not
have occurred if the party had complied). The case development
team is responsible for identifying violations in which this
element of economic benefit clearly is present and significant.
This calculation may be substantially different depending on the
type of violation. Consequently the program-specific policies
should contain guidance on identifying these types of violations
and estimating these profits. In formulating that guidance, the
following principles should be followed:
0 The amount of the profit should be based on
the best information available concerning
the number of transactions resulting from
noncompliance.
0 Where available, information about the
average profit per transaction may be used.
In some cases, this may be available from
the rulemaking record of the provision
violated.
0 The benefit derived should be adjusted to
reflect the present value of net profits
derived in the past.
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lt is recognized that the methods developed for estimating
the profit from those transactions will sometimes rely substan-
tially on expertise rather than verifiable data. Nevertheless,
the programs should make all reasonable efforts to ensure that
the estimates developed are defensible. The programs are encour-
aged to work with the Office of Policy, Planning and Evaluation
to ensure that the methods developed are consistent with the
forthcoming Methodology for Computing the Economic Benefit of
Noncompliance and with methods developed by other programs. The
programs should also ensure that sufficient contract funds are
available to obtain expert advice in this area as needed to
support penalty development, negotiation and trial of these kinds
of cases.
D. Settling cases for an amount less than the economic
benefit
As noted above, settling for an amount which does not remove
the economic benefit of noncompliance can encourage people to
wait until EPA or the State begins an enforcement action before
complying. For this reason, it is general Agency policy not to
settle for less than this amount. There are three general areas
where settling for less than economic benefit may be appropriate.
But in any individual case where the Agency decides to settle for
less than enconomic benefit, the case development team must detail
those reasons in the case file and in any memoranda accompanying
the settlement.
1. Benefit component involves insignificant amount
It is clear that assessing the benefit component and
negotiating over it will often represent a substantial commitment
of resources. Such a commitment of resources may not be warranted
in cases where the magnitude of the benefit component is not likely
to be significant, (e.g. not likely to have a substantial impact on
the violator's competitive positions). For this reason, the case
development team has the discretion not to seek the benefit com-
ponent where it appears that the amount of that component is
likely to be less than $10,000. (A program may determine that
other cut-off points are more reasonable based on the likelihood
that retaining the benefit could encourage noncomplying behavior.)
In exercising that discretion, the case development team should
consider the following factors:
0 Impact on violator; The likelihood that
assessing the benefit component as part
of the penalty will have a noticeable
effect on the violator's competitive
position or overall profits. If no such
effect appears likely, the benefit com-
ponent should probably not be pursued.
0 The size of the gravity component; If the
gravity component is relatively small, it
may not provide a sufficient deterrent, by
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itself, to achieve the goals of this policy.
0 The certainty of the size of the benefit
component; If the economic benefitis quite
well defined, it is not likely to require
as much effort to seek to include it in the
penalty assessment. Such circumstances also
increase the likelihood that the economic
benefit was a substantial motivation for the
noncompliance. This would make the inclusion
of the benefit component more necessary to
achieve specific deterrence.
It may be appropriate not to seek the benefit component in
an entire class of violation. In that situation, the rationale
behind that approach should be clearly stated in the appropriate
medium-specific policy. For example, the most appropriate way
to handle a small non-recurring operation and maintenance vio-
lation may be a small penalty. Obviously it makes little sense
to assess in detail the economic benefit for each individual
violation because the benefit is likely to be so small. The
medium-specific policy would state this as the rationale.
2. Compelling public concerns
The Agency recognizes that there may be some instances where
there are compelling public concerns that would not be served by
taking a case to trial. In such instances, it may become necessary
to consider settling a case for less than the benefit component.
This may be done only if it is absolutely necessary to preserve
the countervailing public interests. Such settlements might be
appropriate where the following circumstances occur:
0 There is a very substantial risk of creating
precedent which will have a significant
adverse effect upon the Agency's ability
to enforce the law or clean up pollution
if the case is taken to trial.
0 Settlement will avoid or terminate an
imminent risk to human health or the
environment. This is an adequate
justification only if injunctive relief
is unavailable for some reason, and if
settlement on remedial responsibilities
could not be reached independent of any
settlement of civil penalty liability.
0 Removal of the economic benefit would
result in plant closings, bankruptcy, or
other extreme financial burden, and there
is an important public interest in allow-
ing the firm to continue in business.
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Alternative payment plans should be fully
explored before resorting to this option.
Otherwise, the Agency will give the per-
ception that shirking one's environmental
responsibilities is a way to keep a failing
enterprise afloat. This exemption does not
apply to situations where the plant was
likely to close anyway, or where there is a
likelihood of continued harmful noncompliance.
3. Litigation practicalities
The Agency realizes that in certain cases, it is highly unlikely
the EPA will be able to recover the economic benefit in litigation.
This may be due to applicable precedent, competing public interest
considerations, or the specific facts, equities, or evidentiary
issues pertaining to a particular case. In such a situation it is
unrealistic to expect EPA to obtain a penalty in litigation which
would remove the economic benefit. The case development team then
may pursue a lower penalty amount.
II. The Gravity Component
As noted above, the Policy on Civil Penalties specifies that
a penalty, to achieve deterrence, should not only remove any eco-
nomic benefit of noncompliance, but also include an amount reflecting
the seriousness of the violation. This latter amount is referred
to as the "gravity component." The purpose of this section of the
document is to establish an approach to quantifying the gravity
component. This approach can encompass the differences between
programs and still provide the basis for a sound consistent treat-
ment of this issue.
A. Quantifying the gravity of a violation
Assigning a dollar figure to represent the gravity of a vio-
lation is an essentially subjective process. Nevertheless, the
relative seriousness of different violations can be fairly
accurately determined in most cases. This can be accomplished
by reference to the goals of the specific regulatory scheme and
the facts of each particular violation. Thus, linking the dollar
amount of the gravity component to these objective factors is a
useful way of insuring that violations of approximately equal
seriousness are treated the same way.
Such a linkage promotes consistency. This consistency
strengthens the Agency's position both in negotiation and before
a trier of fact. This approach consequently also encourages
swift resolution of environmental problems.
Each program must develop a system for quantifying the
gravity of violations of the laws and regulations it administers.
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This development must occur within the context of the penalty
amounts authorized by law for that program. That system must
be based, whenever possible, on objective indicators of the
seriousness of the violation. Examples of such indicators are
given below. The seriousness of the violation should be based
primarily on: 1) the risk of harm inherent in the violation at
the time it was committed and 2) the actual harm that resulted
from the violation. In some cases, the seriousness of the
risk of harm will exceed that of the actual harm. Thus, each
system should provide enough flexibility to allow EPA to consider
both factors in assessing penalties.
Each system must also be designed to minimize the possi-
bility that two persons applying the system to the same set of
facts would come up with substantially different numbers. Thus,
to the extent the system depends on categorizing events, those
categories must be clearly defined. That way there is little
possibility for argument over the category in which a violation
belongs. In addition, the categorization of the events relevant
to the penalty decision should be noted in the penalty develop-
ment portion of the case file.
B. Gravity Factors
In quantifying the gravity of a violation, a program-specific
policy should rank different types of violations according to the
seriousness of the act. The following is a suggested approach to
ranking the seriousness of violations. In this approach to rank-
ing, the following factors should be considered:
0 Actual or possible harm; This factor
focuses on whether (and to what extent)
the activity of the defendant actually
resulted or was likely to result in an
unpermitted discharge or exposure.
0 Importance to the regulatory scheme; This
factor focuses on the importance of the
requirement to achieving the goal of the
statute or regulation. For example, if
labelling is the only method used to pre-
vent dangerous exposure to a chemical,
then failure to label should result in a
relatively high penalty. By contrast, a
warning sign that was visibly posted but
was smaller than the required size would
not normally be considered as serious.
0 Availability of data from other sources;
The violation of any recordkeeping or
reporting requirement is a very serious
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matter. But if the involved requirement
is the only source of information, the
violation is far more serious. By contrast,
if the Agency has another readily available
and cheap source for the necessary infor-
mation, a smaller penalty may be appro-
priate. (E.g. a customer of the violator
purchased all the violator's illegally
produced substance. Even though the
violator does not have the required
records, the customer does.)
0 Size of violator; In some cases, the
gravity component should be increased
where it is clear that the resultant
penalty will otherwise have little
impact on the violator in light of the
risk of harm posed by the violation.
This factor is only relevant to the
extent it is not taken into account by
other factors.
The assessment of the first gravity factor listed above,
risk or harm arising from a violation, is a complex matter. For
purposes of ranking violations according to seriousness, it is
possible to distinguish violations within a category on the basis
of certain considerations, including the following:
0 Amount of pollutant; Adjustments for the
concentration of the pollutant may be
appropriate, depending on the regulatory
scheme and the characteristics of the
pollutant. Such adjustments need not be
linear, especially if the pollutant can
be harmful at low concentrations.
0 Toxicity of the pollutant; Violations
involving highly toxic pollutants are more
serious and should result in relatively
larger penalties.
0 Sensitivity of the environment: This
factor focuses on the location where the
violation was committed. For example,
improper discharge into waters near a
drinking water intake or a recreational
beach is usually more serious than dis-
charge into waters not near any such use.
0 The length of time a violation continues;
In most circumstances, the longer a
violation continues uncorrected, the
greater is the risk of harm.
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Although each program-specific policy should address each
of the factors listed above, or determine why it is not relevant,
the factors listed above are not meant to be exhaustive. The
programs should make every effort to identify all factors rele-
vant to assessing the seriousness of any violation. The programs
should then systematically prescribe a dollar amount to yield a
gravity component for the penalty. The program-specific policies
may prescribe a dollar range for a certain category of violation
rather than a precise dollar amount within that range based on
the specific facts of an individual case.
The process by which the gravity component was computed must
be memorialized in the case file. Combining the benefit component
with the gravity component yields the preliminary deterrence amount,
In some classes of cases, the normal gravity calculation may
be insufficient to effect general deterrence. This could happen
if there was extensive noncompliance with certain regulatory
programs in specific areas of the United States. This would
demonstrate that the normal penalty assessments had not been
achieving general deterrence. The medium specific policies should
address this issue. One possible approach would be to direct the
case development team to consider increasing the gravity component
within a certain range to achieve general deterrence. These extra
assessments should be consistent with the other goals of this
policy.
Initial and Adjusted Penalty Target Figure
The second goal of the Policy on Civil Penalties is the
equitable treatment of the regulated community. One important
mechanism for promoting equitable treatment is to include the
benefit component discussed above in a civil penalty assessment.
This approach would prevent violators from benefitting economi-
cally from their noncompliance relative to parties which have
complied with environmental requirements.
In addition, in order to promote equity, the system for
penalty assessment must have enough flexibility to account for
the unique facts of each case. Yet it still must produce enough
consistent results to treat similarly-situated violators similarly.
This is accomplished by identifying many of the legitimate differ-
ences between cases and providing guidelines for how to adjust
the preliminary deterrence amount when those facts occur. The
application of these adjustments to the preliminary deterrence
amount prior to the commencement of negotiation yields the initial
penalty target figure. During the course of negotiation, the case
development team may further adjust this figure to yield the
adjusted penalty target figure.
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Nevertheless, it should be noted that equitable treatment is
a two-edged sword. While it means that a particular violator will
receive no higher penalty than a similarly situated violator, it
also means that the penalty will be no lower.
I. Flexibility-Adjustment Factors
The purpose of this section of the document is to establish
additional adjustment factors to promote flexibility and to iden-
tify management techniques that will promote consistency. This
section sets out guidelines for adjusting penalties to account for
some factors that frequently distinguish different cases. Those
factors are: degree of willfulness and/or negligence, degree of
cooperation/noncooperation, history of noncompliance, ability to
pay, and other unique factors. Unless otherwise specified, these
adjustment factors will apply only to the gravity component and
not to the economic benefit component. Violators bear the burden
of justifying mitigation adjustments they propose based on these
factors.
Within each factor there are three suggested ranges of
adjustment. The actual ranges for each medium-specific policy
will be determined by those developing the policy. The actual
ranges may differ from these suggested ranges based upon program
specific needs. The first, typically a 0-20% adjustment of the
gravity component, is within the absolute discretion of the case
development team. V The second, typically a 21-30% adjustment,
is only appropriate in unusual circumstances. The third range,
typically beyond 30% adjustment, is only appropriate in extra-
ordinary circumstances. Adjustments in the latter two ranges,
unusual and extraordinary circumstances, will be subject to scrutiny
in any performance audit. The case development team may wish to
reevaluate these adjustment factors as the negotiations progress.
This allows the team to reconsider evidence used as a basis for
the penalty in light of new information.
Where the Region develops the penalty figure, the appli-
cation of adjustment factors will be part of the planned Regional
audits. Headquarters will be responsible for proper application
of these factors in nationally-managed cases. A detailed dis-
cussion of these factors follows.
A. Degree of Willfulness and/or Negligence
Although most of the statutes which EPA administers are
strict liability statutes, this does not render the violator's
_!/ Absolute discretion means that the case development team
may make penalty development decisions independent of EPA
Headquarters. Nevertheless it is understood that in all
judicial matters, the Department of Justice can still review
these determinations if they so desire. Of course the authority
to exercise the Agency's concurrence in final settlements is
covered by the applicable delegations.
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-18-
willfulness and/or negligence irrelevant. Knowing or willful
violations can give rise to criminal liability, and the lack
of any culpability may, depending upon the particular program,
indicate that no penalty action is appropriate. Between these
two extremes, the willfulness and/or negligence of the violator
should be reflected in the amount of the penalty.
In assessing the degree of willfulness and/or negligence,
all of the following points should be considered in most cases:
0 How much control the violator had over the
events constituting the violation.
0 The forseeability of the events consti-
tuting the violation.
0 Whether the violator took reasonable
precautions against the events con-
stituting the violation.
0 Whether the violator knew or should have
known of the hazards associated with the
conduct.
0 The level of sophistication within the
industry in dealing with compliance issues
and/or the accessibility of appropriate
control technology (if this information is
readily available). This should be balanced
against the technology forcing nature of the
statute, where applicable.
0 Whether the violator in fact knew of the
legal requirement which was violated.
It should be noted that this last point, lack of knowledge
of the legal requirement, should never be used as a basis to
reduce the penalty. To do so would encourage ignorance of
the law. Rather, knowledge of the law should serve only to
enhance the penalty.
The amount of control which the violator had over how
quickly the violation was remedied is also relevent in certain
circumstances. Specifically, if correction of the environmental
problem was delayed by factors which the violator can clearly
show were not reasonably foreseeable and out of its control, the
penalty may be reduced.
The suggested approach for this factor is for the case
development team to have absolute discretion to adjust the
penalty up or down by 20% of the gravity component. Adjustments
in the + 21-30% range should only be made in unusual circumstances.
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-19-
Adjustments for this factor beyond +_ 30% should be made only in
extraordinary circumstances. Adjustments in the unusual or
extraordinary circumstance range will be subject to scrutiny in
any audit of performance.
B. Degree of Cooperation/Noncooperation
The degree of cooperation or noncooperation of the violator
in remedying the violation is an appropriate factor to consider in
adjusting the penalty. Such adjustments are mandated by both the
goals of equitable treatment and swift resolution of environmental
problems. There are three areas where this factor is relevant.
1. Prompt reporting of noncompliance
Cooperation can be manifested by the violator promptly
reporting its noncompliance. Assuming such self-reporting is not
required by law, such behavior should result in the mitigation of
any penalty.
The suggested ranges of adjustment are as follows. The case
development team has absolute discretion on any adjustments up to
_+ 10% of the gravity component for cooperation/noncooperation.
Adjustments can be made up to +_ 20% of the gravity component, but
only in unusual circumstances. In extraordinary circumstances,
such as self reporting of a TSCA premanufacture notice violation,
the case development team may adjust the penalty beyond the +_ 20%
factor. Adjustments in the unusual or extraordinary circumstances
ranges will be subject to scrutiny in any performance audit.
2. Prompt correction of environmental problems
The Agency should provide incentives for the violator to
commit to correcting the problem promptly. This correction must
take place before litigation is begun, except in extraordinary
circumstances.Ł/ But since these incentives must be consistent
with deterrence, they must be used judiciously.
2/ For the purposes of this document, litigation is deemed to
begin:
0 for administrative actions - when the
respondent files a response to an adminis-
trative complaint or when the time to
file expires or
0 for judicial actions - when an Assistant
United States Attorney files a com-
plaint in court.
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-20-
The circumstances under which the penalty is reduced depend
on the type of violation involved and the source's response to
the problem. A straightforward reduction in the amount of the
gravity component of the penalty is most appropriate in those
cases where either: 1) the environmental problem is actually cor-
rected prior to initiating litigation, or 2) ideally, immediately
upon discovery of the violation. Under this approach, the reduction
typically should be a substantial portion of the unadjusted gravity
component.
In general, the earlier the violator instituted corrective
action after discovery of the violation and the more complete
the corrective action instituted, the larger the penalty
reduction EPA will consider. At the discretion of the case
development team, the unadjusted gravity component may be
reduced up to 50%. This would depend on how long the environ-
mental problem continued before correction and the amount of any
environmental damage. Adjustments greater than 50% are permitted,
but will be the subject of close scrutiny in auditing performance.
It should be noted that in some instances, the violator
will take all necessary steps toward correcting the problem but
may refuse to reach any agreement on penalties. Similarly, a
violator may take some steps to ameliorate the problem, but
choose to litigate over what constitutes compliance. In such
cases, the gravity component of the penalty may be reduced up
to 25% at the discretion of the case development team. This
smaller adjustment still recognizes the efforts made to correct
the environmental problem, but the benefit to the source is not
as great as if a complete settlement is reached. Adjustments
greater than 25% are permitted, but will be the subject of close
scrutiny in auditing performance.
In all instances, the facts and rationale justifying the
penalty reduction must be recorded in the case file and in-
cluded in any memoranda accompanying settlement.
3. Delaying compliance
Swift resolution of environmental problems will be encour-
aged if the violator clearly sees that it will be financially
disadvantageous for the violator to litigate without remedying
noncompliance. The settlement terms described in the preceding
section are only available to parties who take steps to correct a
problem prior to initiation of litigation. To some extent, this
is an incentive to comply as soon as possible. Nevertheless, once
litigation has commenced, it should be clear that the defendant
litigates at its own risk.
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-21-
In addition, the methods for computing the benefit component
and the gravity component are both structured so that the penalty
target increases the longer the violation remains uncorrected.
The larger penalty for longer noncompliance is systematically
linked to the benefits accruing to the violator and to the con-
tinuing risk to human health and the environment. This occurs
even after litigation has commenced. This linkage will put the
Agency in a strong position to convince the trier of fact to
impose such larger penalties. For these reasons, the Policy
on Civil Penalties provides substantial disincentives to litigat-
ing without complying.
C. History of noncompliance
Where a party has violated a similar environmental require-
ment before, this is usually clear evidence that the party was
not deterred by the Agency's previous enforcement 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.
In deciding how large these adjustments should be, the case
development team should consider the following points:
0 How similar the previous violation was.
0 How recent the previous violation was.
0 The number of previous violations.
0 Violator's response to previous violation(s)
in regard to correction of the previous
problem.
Detailed criteria for what constitutes a "similar violation"
should be contained in each program-specific policy. Neverthe-
less a violation should generally be considered "similar" if the
Agency's previous enforcement response should have alerted the
party to a particular type of compliance problem. Some facts
that indicate a "similar violation" was committed are as follows:
0 The same permit was violated.
0 The same substance was involved.
0 The same process points were the source
of the violation.
0 The same statutory or regulatory provision
was violated.
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-22-
0 A similar act or omission (e.g. the failure
to properly store chemicals) was the basis
of the violation.
For purposes of this section, a "prior violation" includes
any act or omission for which a formal enforcement response has
occurred (e.g. notice of violation, warning letter, complaint,
consent decree, consent agreement, or final order). It also
includes any act or omission for which the violator has pre-
viously 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, the case
development team should ascertain who in the organization had
control and oversight responsibility for the conduct resulting
in the violation. In some situations the same persons or the
same organizational unit had or reasonably should have had
control or oversight responsibility for violative conduct. In
those cases, the violation will be considered part of the com-
pliance history of that regulated party.
In general, the case development team should begin with
the assumption that if the same corporation was involved, the
adjustments for history of noncompliance should apply. In
addition, the case development team should be wary of a party
changing operators or shifting responsibility for compliance to
different groups as a way of avoiding increased penalties. The
Agency may find a consistent pattern of noncompliance 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 noncom-
pliance should probably apply unless the violator can demonstrate
that the other violating corporate facilities are independent.
The following are the Framework's suggested adjustment
ranges. If the pattern is one of "dissimilar" violations,
relatively few in number, the case development team has absolute
discretion to raise the penalty amount by 35%. For a relatively
large number of dissimilar violations, the gravity component can
be increased up to 70%. If the pattern is one of "similar"
violations, the case development team has absolute discretion to
raise the penalty amount up to 35% for the first repeat violation,
and up to 70% for further repeated similar violations. The case
development team may make higher adjustments in extraordinary
circumstances, but such adjustments will be subject to scrutiny
in any performance audit.
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-23-
D. Ability to pay
The Agency will generally not request penalties that are
clearly beyond the means of the violator. Therefore EPA should
consider the ability to pay a penalty in arriving at a specific
final penalty assessment. At the same time, it is important
that the regulated community not see the violation of environ-
mental requirements as a way of aiding a financially troubled
business. EPA reserves the option, in appropriate circumstances,
of seeking a penalty that might put a company out of business.
For example, it is unlikely 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 vio-
lations. That long history would demonstrate that less severe
measures are ineffective.
The financial ability adjustment will normally require a
significant amount of financial information specific to the
violator. If this information is available prior to commence-
ment of negotiations, it should be assessed as part of the
initial penalty target figure. If it is not available, the
case development team should assess this factor after commence-
ment of negotiation with the source.
The burden to demonstrate inability to pay, as with the
burden of demonstrating the presence of any mitigating circum-
stances, rests on the defendant. If the violator fails to
provide sufficient information, then the case development team
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. Further information on this system will be made
available shortly under separate cover.
When it is determined that a violator cannot afford the
penalty prescribed by this policy, the following options should
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. This approach is a real
burden on the Agency and should only be
considered on rare occasions.
0 Consider non-monetary alternatives, such as
public service activities; For example, in
the mobile source program, fleet operators
who tampered with pollution control devices
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-24-
on their vehicles agreed to display anti-
tampering ads on their vehicles. Similar
solutions may be possible in other industries.
0 Consider straight penalty reductions as a last
recourse; If this approach is necessary, the
reasons for the case development team's
conclusion as to the size of the necessary
reduction should be made a part of the formal
enforcement file and the memorandum accompany-
ing the settlement. Ł/
° Consider joinder of the violator's individual
owners: This is appropriate if joinder is
legally possible and justified under the
circumstances.
Regardless of the Agency's determination of an appropriate
penalty amount to pursue based on ability to pay considerations,
the violator is still expected to comply with the law.
E. Other unique factors
Individual programs may be able to predict other factors
that can be expected to affect the appropriate penalty amount.
Those factors should be identified and guidelines for their use
set out in the program-specific policies. Nevertheless, each
policy should allow for adjustment for unanticipated factors
which might affect the penalty in each case.
It is suggested that there be absolute discretion to adjust
penalties up or down by 10% of the gravity component for such
reasons. Adjustments beyond the absolute discretion range will
be subject to scrutiny during audits. In addition, they will
primarily be allowed for compelling public policy concerns or the
strengths and equities of the case. The rationale for the reduction
must be expressed in writing in the case file and in any memoranda
accompanying the settlement. See the discussion on pages 12 and
13 for further specifics on adjustments appropriate on the basis
of either compelling public policy concerns or the strengths and
equities of the case.
II. Alternative Payments
In the past, the Agency has accepted various environmentally
beneficial expenditures in settlement of a case and chosen not to
3/ If a firm fails to pay the agreed-to penalty in an adminis-
"frative or judicial final order, then the Agency must follow
the Federal Claims Collection Act procedures for obtaining the
penalty amount.
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-25-
pursue more severe penalties. In general, the regulated community
has been very receptive to this practice. In many cases,
violators have found "alternative payments" to be more attrac-
tive than a traditional penalty. Many useful projects have been
accomplished with such funds. But in some instances, EPA has
accepted for credit certain expenditures whose actual environ-
mental benefit has been somewhat speculative.
The Agency believes that these alternative payment projects
should be reserved as an incentive to settlement before litigation,
For this reason, such arrangements will be allowed only in preliti-
gation agreements except in extraordinary circumstances.
In addition, the acceptance of alternative payments for
environmentally beneficial expenditures is subject to certain
conditions. The Agency has designed these conditions to prevent
the abuse of this procedure. Most of the conditions below applied
in the past, but some are new. All of these conditions must be
met before alternative payments may be accepted:^/
0 No credits can be given for activities
that currently are or will be required
under current law or are likely to be re-
quired under existing statutory authority
in the forseeable future (e.g., through
upcoming rulemaking).
0 The majority of the project's environmental
benefit should accrue to the general public
rather than to the source or any particular
governmental unit.
0 The project cannot be something which the
violator could reasonably be. expected to do
as part of sound business practices.
4/ In extraordinary circumstances, the Agency may choose not to
pursue higher penalties for "alternative" work done prior to
commencement of negotiations. For example, a firm may recall a
product found to be in violation despite the fact that such
recall is not required. In order for EPA to forgo seeking
higher penalties, the violator must prove that it has met the
other conditions herein stated. If the violator fails to prove
this in a satisfactory manner, the case development team has the
discretion to completely disallow the credit project. As with
all alternative projects, the case development team has the dis-
cretion to still pursue some penalties in settlement.
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-26-
0 EPA must not lower the amount it decides
to accept in penalties by more than the
after-tax amount the violator spends on
the project.Ł/
In all cases where alternative payments are allowed, the
case file should contain documentation showing that each of
the conditions listed above have been met in that particular
case. In addition when considering penalty credits, Agency
negotiators should take into account the following points:
0 The project should not require a large
amount of EPA oversight for its comple-
tion. In general the less oversight
the proposed credit project would
require from EPA to ensure proper
completion, the more receptive EPA
can be toward accepting the project
in settlement.
0 The project should receive stronger
consideration if it will result in the
abatement of existing pollution,
ameliorate the pollution problem that
is the basis of the government's claim
and involve an activity that could be
ordered by a judge as equitable relief.
0 The project should receive stronger
consideration if undertaken at the
facility where the violation took place.
0 The company should agree that any publicity
it disseminates regarding its funding of
the project must include a statement that
such funding is in settlement of a lawsuit
brought by EPA or the State.
5/ This limitation does not apply to public awareness activities
such as those employed for fuel switching and tampering violations
under the Clean Air Act. The purpose of the limitation is to
preserve the deterrent value of the settlement. But these viola-
tions are often the result of public misconceptions about the
economic value of these violations. Consequently, the public
awareness activities can be effective in preventing others from
violating the law. Thus, the high general deterrent value of
public awareness activities in these circumstances obviates the
need for the one-to-one requirement on penalty credits.
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-27-
Each alternative payment plan must entail an identified
project to be completely performed by the defendant. Under the
plan, EPA must not hold any funds which are to be spent at EPA's
discretion unless the relevant statute specifically provides
that authority. The final order, decree or judgment should
state what financial penalty the violator is actually paying and
describe as precisely as possible the credit project the violator
is expected to perform.
III. Promoting Consistency
Treating similar situations in a similar fashion is central
to the credibility of EPA's enforcement effort and to the success
of achieving the goal of equitable treatment. This document has
established several mechanisms to promote such consistency. Yet
it still leaves enough flexibility for settlement and for tailor-
ing the penalty to particular circumstances. Perhaps the most
important mechanisms for achieving consistency are the systematic
methods for calculating the benefit component and gravity compo-
nent of the penalty. Together, they add up to the preliminary
deterrence amount. The document also sets out guidance on uniform
approaches for applying adjustment factors to arrive at an initial
penalty target prior to beginning settlement negotiations or an
adjusted penalty target after negotiations have begun.
Nevertheless, if the Agency is to promote consistency, it
is essential that each case file contain a complete description
of how each penalty was developed. This description should cover
how the preliminary deterrence amount was calculated and any
adjustments made to the preliminary deterrence amount. It should
also describe the facts and reasons which support such adjustments.
Only through such complete documentation can enforcement attorneys,
program staff and their managers learn from each others' experience
and promote the fairness required by the Policy on Civil Penalties.
To facilitate the use of this information, Office of Legal
and Enforcement Policy will pursue integration of penalty infor-
mation from judicial enforcement actions into a computer system.
Both Headquarters and all Regional offices will have access to
the system through terminals. This would make it possible for
the Regions to compare the handling of their cases with those of
other Regions. It could potentially allow the Regions, as well
as Headquarters, to learn from each others' experience and to
identify problem areas where policy change or further guidance
is needed.
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-28-
Use of Penalty Figure in Settlement Discussions
The Policy and Framework do not seek to constrain negotiations.
Their goal is to set settlement target figures for the internal
use of Agency negotiators. Consequently, the penalty figures
under negotiation do not necessarily have to be as low as the
internal target figures. Nevertheless, the final settlement
figures should go no lower than the internal target figures unless
either: 1) the medium-specific penalty policy so provides or
2) the reasons for the deviation are properly documented.
-------
PT.1-3
-------
USE.
UNITED STATES ENVIRONMENTAL PROTECTION AGcki<- Y
WASHINGTON, O.C. 20460
MEMORANDUM
SUBJECT: Documenting Penalty Calculations and Justifications in
EPA Enforcement Ac
FROM: James M.
Assistant Administrator
TO: Addressees
This memorandum institutes a uniform system for documenting
penalty calculations and explaining how they are consistent with
the applicable penalty policy in all EPA enforcement actions. It
expands on the September 14, 1987 Guidance on Processing of
Consent Decree* (GM-64) and .requirements in several media
specific penalty policies. The system will allow regional and OE
management to assure that EPA settlement agreements comply with
applicable penalty policies, and will provide documentation for
our actions for purposes of oversight review. The memorandum
sets out the information regarding the penalty which must be
discussed at each stage of litigation* The exact format of the
discussion is left to the discretion of each program. All
discussions of the agency's settlement position regarding
penalties are, of course, strictly enforcement confidential
workproduct, should be clearly labeled as such and should not be
released.
Effective immediately, every settlement package transmitted
from the Regional Administrator or Regional Counsel to
Headquarters for concurrence must include a written "Penalty
Justification." This should include) an explanation of how the
penalty, including the economic benefit and gravity component,
was calculated. Tha Region should than discuss in detail the
justification for any mitigation of either component. In
partiatilajr, reference should be made to the factor or language in
the pemMl$ty policy that is relied upon to justify the mitigation,
and • daeussion Bust be included detailing why mitigation is
varranteoT in tha particular case. For administrative cases, a
Penalty Justification should be prepared for circulation within
the Office of Regional counsel with a final consent agreement or
o^-der. zt may not be circulated to the agency official who signs
the final order as the presiding agency official, usually the
Regional Administrator, because it could constitute •» nirt«
communication which would have to be snared with defendants under
40 C.P.R. Part 22.
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- 2 -
When the factor relied upon to justify mitigation is
litigation risk, the Region should state the probable outcome of
litigation along- with legal and factual analysis which supports
its conclusion. For judicial cases, this should be done in
consultation with the Department of Justice. Specific discussion
of the evidentiary problems, adverse legal precedent, or other
litigation problems in the case should be included. If the
reguired discussion of the penalty is contained in the litigation
report or subsequent correspondence between the ORC and OE, the
settlement package from the Region may reference this discussion
along with an attachment of the previous documentation.
A similar discussion of Penalty Justification should also be
included in every settlement package transmitted from the
Associate Enforcement Counsels for the signature of the Assistant
Administrator. The Headquarters staff may, however, reference
the discussion in the regional memorandum when it is sufficient.
seriously deficient Penalty Justifications will be returned to
the Region to allow a proper analysis to b« prepared before the
Assistant Administrator for Enforcement reviews a consent decree
for signature. ...
In addition, each office of Regional Counsel case file and
all OE files in cases in which OE is involved should contain at
all times during the course of an enforcement action
documentation of the current bottom line agreed upon by the
litigation team. For civil administrative cases, this will begin
with the filing of the administrative complaint. For civil
judicial cases, this will begin with the litigation report, which
should include the penalty proposed by the Region initially. The
litigation report should clearly indicate how the gravity and
economic benefit components were calculated under the applicable
penalty policy and discuss in detail any mitigation that is
proposed. Significant uncertainties which could result in
further mitigation should also be identified.
The OB attorney assigned to the case will than determine if
OE concurs with the-penalty proposed by the Region in reviewing
the referral. O« concurrence will be documented in writing,
placa*; ia the) Oft casa file and provided to the Region, if OE
does afcr concur with the penalty proposed by the Region in the
refenntK tha assigned OB attorney will prepare a memorandum to
the Ration stating with specificity tha basis(es) of tha
nonconeurrence.
onca tha enforcement action is initiated or pre-filing
negotiations begin, tha litigation team should document any
agreed upon changes to the bottom line penalty based upon new
information or circumstancee which arise during the course of the
enforcement action. This documentation must, at a minimum.
-------
include a memorandum to the file recording how both the gravity
and economic benefit components were calculated, the basis in the
applicable penalty policy and in the specific facts of the case
for any mitigation, and the changed circumstances or new
information which justify modification of the bottom line. This
vi11 be especially beneficial in cases where there are changes in
the litigation team over time. It will enable new attorneys
assigned to the case to know what the current bottom line penalty
is and how that has been determined over the course of the case.
These requirements will serve several functions. It will
ensure that management has adequate information to judge
consistency with the applicable penalty policies in specific
cases and in the various enforcement programs overall. It also
will ensure that every regional case file and all OE files in
cases in which OE is involved have written documentation of how
the penalty obtained was calculated and justified in terns of the
penalty policy. This is essential for reviews or audits of our
settlements.
Addressees:
Regional Administrators
Regions I-X
Deputy Regional Administrators
Regions I-X
Regional Counsels
Regions I-X
E. Donald Elliott
General Counsel
Headquarters Compliance Program Division Directors
Associate Enforcement Counsels
Richard B. Stsvart
Assistant Attorney General
Environment and Natural Resources Division
U.AV Department of Justice
.•••*«
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PT.1-4
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<*•"' "fi
\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
/ / WASHINGTON, D.C. 20460
APR 151985
OFFICI OF
ASDCOMHIANCI
MOMTOMN&.
MEMORANDUM
SUBJECT: Remittance of Fine* and Civil Pena^ies
FROM: Courtney M. Price\—I
. Assistant Administrator for Enforcement
and Compliance Monitoring (LE-133)
TO: Associate Enforcement Counsels
Director, Office of Compliance Analysis and
Program Operations,
Regional Counsels
This is to inform you of a new Agency remittance procedure
instituted by the EPA Office of the Comptroller. The procedure
applies to payments on all debts owed EPA, including civil
penalties assessed by the Agency.
All EPA orders requiring payment of fines or civil penal-
ties—or letters transmitting those orders—will include language
consistent with 'the new procedure, which is described below.
EPA has adopted the Department of Treasury's Nationwide
Lockbox System for receipt of payments on debts owed to the
Agency. Under the Lockbox System, debtors are directed to remit
payments to the Post Office Box address used by the designated
EPA lockbox bank. Payments received at that "lockbox" are
deposited immediately by the responsible bank, and the Agency
receives a copy of the remittance and all accompanying documents
within one working day. Users of the system have found that
the lockbox has several benefits: Improved cash management,
increased physical security for the checks, stronger internal
controls, and a reduced administrative burden.
For your information, I have attached a listing that shows,
for each region and for EPA Headquarters, the lockbox address
to which payments of penalties owed the Agency will be sent.
(Remittances for Superfund billings nationwide are sent to a
single lockbox address.)
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-2-
Chief Administrative Law Judge Edward Finch is directing
all Agency administrative law judges and hearing clerks to
implement this new procedure.
The new procedure supersedes the requirement in the Consol-
idated Rules of Practice (CROP), 40 CFR $22.31(b), that payment
is to be forwarded directly to the regional hearing clerk.
This paragraph in the CROP will be formally revised in the
near future. Because this revision is procedural only, it nay
be implemented prior to the completion of formal rulemaking.
Under the new procedure, the servicing financial management
offices will contact the appropriate hearing clerk as soon as
they receive notification of a remittance, and will provide
the hearing clerk with a' copy of the check and accompanying
documents. Accordingly, questions concerning the status of a
civil penalty may be directed to either of those offices. In
addition, the headquarters Financial Reports and Analysis
Branch (FTS 382-5131) maintains a computerized record of civil
penalty receivables and collections nationwide.
More detailed procedures for penalty collections are being
developed by EPA's Office of the Comptroller. In the meantime,
any questions concerning the lockbox procedure should be directed
to your financial management office.
Attachment
cc: General Counsel
Edward B. Finch, Chief Administrative Law Judge
Assistant Administrators
Associate Administrators
Regional Administrators
C. Morgan Kinghorn, Comptroller
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LOCKBOX DEPOSITORIES
REGION
LOCKBOX BANK
ADDRESS FOR
REMITTING PAYMENT
Region 1
Boston
Region 2 -
flew York
Region 3 -
Philadelphia
Region 4 -
Atlanta
Region 5
Chicago
Region 6
Dallas
Region 7 -
Kansas City
Region 8 -
Denver
Mellon Bank
Mellon Bank
Mellon Bank
The Citizens and
Southern National
Bank
The First National
Bank of Chicago
Mellon Bank
Mellon Bank
Mellon Bank
EPA - Region 1
(Regional Hearing Clerk)
P.O. Box 360197M
Pittsburgh, PA 15251
EPA - Region 2
(Regional Hearing Clerk)
P.O. Box 36018RM
Pittsburgh, PA 15251
EPA - Region 3
(Regional Hearing Clerk)
P.O. Box 360515M
Pittsburgh, PA 15251
EPA - Region 4
(Regional Hearing Clerk)
P.O. Box 100142
Atlanta, GA 30384
EPA - Region 5
(Regional Hearing Clerk)
P.O. Box 70753
Chicago, IL 60673
EPA - Region 6
(Regional Hearing Clerk)
P.O. Box 360582M
Pittsburgh, PA 15251
EPA - Region 7
(Regional Hearing Clerk)
P.O. Box 360748M
Pittsburgh, PA 15251
EPA - Region 8
(Regional Hearing Clerk)
P.O. Box 360859M
Pittsburgh, PA 15251
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Region 9 -
San Francisco
Region 10 -
Seattle
Mellon Bank
Mellon Bank
Headquarters - Mellon Bank
Washington, D.C.
All Superfund
Billi ngs
Mellon Bank
EPA - Region 9
(Regional Hearing Clerk)
P.O. Box 360863M
Pittsburgh, PA 15251
EPA - Region 10
(Regional Hearing Clerk)
P.O. Box 360903M
Pittsburgh, PA 15251
EPA - Washington
(Hearing Clerk)
P.O. Box 360277M
Pittsburgh, PA 15251
EPA - Superfund
P.O. Box 371003M
Pittsburgh, PA 15251
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PT.1-5
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
KV 51984
omci or »sK»ciMtvr
ANDCOMPLJAKQ
MONITORING
MEMORANDUM
SUBJECT: Guidance for Calculating uhs Econoaic Benefit of
Noncocnpliance for a. Civil Penalty Assessment
i ^ 0\
FROM: Courtney M. Price \^_J2^JL^
Assistant Administrator for Enforcement
and Compliance Monitoring
TO: Regional Administrators
Associate Enforcement Counsels
OECM Office Directors
I. PURPOSE
This guidance amplifies the material in the Appendix of
GM-22, "Framework for Statute-Specific Approaches to Penalty
Assessment." The Appendix presents a description of how to
calculate the economic benefit of nonconpiiance as part of
developing e civil penalty. A new computer model, BEN, is a
refinement of the methodology for calculating the econecic
benefit of noncompliance. •
By refining the aethodc by which we calculate the economic
benefit cf noncompliance, wo will:
1. Respond to ths probieas that er.fcrcesent and progi'es
officer, identified concerning methods for -ulculitir.g ths
econoaic benefit coopcnent of a civil penalty;
2. Ensure among ihe m^dia prograas appropriate consistency
in calculating the economic benefit component cf 2 civil penalty;
3. Ensure that the occnonic benefit cf noncoapli&nce Con-
tinues to be a fairly valued, reasonable component of a ;ivil
penalty; end
4. Ensure that the assumptions and data used in BEN to
calculate the economic benefit component can be de*?nded at
cither an administrative hearing or a judicial proceeding.
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II. SCOPE
This guidance describes BEN, the new computer model, in
terms of how this model resolves the identified problems related
to the use of CIVPEN. EPA personnel can use BEN to calculate the
econonic benefit a violator gains from delaying capital expendi-
tures for pollution control equipment or from avoiding the costs
of operating and maintaining pollution control equipment.
Exhibit I summarizes BEN.
EPA personnel cannot use BEN to calculate the economic
benefit component of a civil penalty if a violator's action
does not involve a delayed or avoided expenditure. Under
these circumstances, program offices may elect to develop
statute-specific formulas as provided in GM-22 for calculating
the economic benefit component of a civil penalty. These
formulas would be used to develop civil penalties in response
to actions such as certain TSCA marking/disposal violations or
RCRA reporting violations. The rule of thumb in the general
penalty policy would not be appropriate for these types of
violations.
OPPE is considering the feasibility of developing a second
computer model or rule of thumb formula that could be applied
uniformly to violations that do not involve delayed or avoided
expenditures.
III. NEW CIVIL PENALTY POLICY APPROACH
Regional personnel nay use the rule of thumb described in
GM-22 to develop a preliminary estimate of the economic benefit
component of a civil penalty. The rule of thumb is for the
convenience of EPA and is not intended to give a violator a lower
economic benefit component in a civil penalty. Regional personnel
should consider whether an estimate of economic benefit derived
with the rule of thumb would be lower than an estimate calculated
with BEN. For example, the longer the period of noncompliance,
the more the rule of thumb underestimates the economic benefit
of noncompliance.
If EPA proposes and a violator accepts the rule of thunb
calculation, Regional personnel can develop the civil penalty
without further analysis of economic benefits. If a violator
disputes the economic benefit figure calculated under the rule
of thumb, a more sophisticated method to develop the economic
benefit component of the penalty is required.
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In general, if the estimate under the rule of thumb is
less than $10,000, the economic benefit component is not needed
to develop a civil penalty;1 the other factors in GM-22 still
apply. If the rule of thumb estimate is more than $10,000,
Regional personnel should use BEN to develop an estimate of
the economic benefit component*
IV. USING BEN TO CALCULATE ECONOMIC BENEFIT OF NONCOMPLIANCE
EPA personnel should use the revised computer model BEN
whenever:
1. the rule of thumb indicates that the
economic benefit of noncompliance is
greater than $10,000; or
2. the violator rejects the rule of thumb
calculation.
BEN uses 13 data variables. At the option of the user,
BEN substitutes standard values for 8 of the 13 entries, and
the user only provides data for 5 variables. (See Exhibit I.)
BEN also has the capability for EPA personnel to enter
for those 8 variables the actual financial data of e violator.
In appropriate cases, EPA should notify a violator of the
opportunity to submit actual financial data to use in SEN
instead of the 8 standard values. If a violator agrees to
supply financial data, the violator must supply data fcr all
the standard values.
V. ADVANTAGES OF BEN OVER OTHER CALCULATION METHODS
The computer nodel BEN has advantages over previously
used methods for calculating the economic benefit component
of a civil penalty. BEN does not require financial research
by EPA personnel. The five required variables are information
about capital costs, annual operation and maintenance costs,
and the dates for the period of noncompliance. Further, BEN
has the flexibility to allow a violator who cooperates with
EPA to provide actual financial data that may effect the penalty
calculation.
I/ Although the general penalty policy cut off point is $10,000,
each program office nay establish a cut off point for the
progress's mecium-specific policy.
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An economic benefit component calculated with BEN can be
defended in an administrative or judicial proceeding on the
grounds that the standard values used in BEN are derived from
standard financial procedures and the violator had an opportu-
nity to provide financial data to help develop the civil penalty.
The use of BEN or statute-specific formulas when appro-
priate gives the Regional Offices flexibility in determining
the economic benefit of nonccapliance. Regional personnel
have a consistent method for developing a civil penalty under
several statutes for multiple violations that involve delayed
capital costs end avoided operation and maintenance costs.
BEN is easy for a layman to use. The documentation is
built into the program so that a Regional user always has
updated documentation and can use the program with minimal
training. States are more likely to follow EPA's lead in
pursuing the economic benefit of noncompliance through civil
penalty assessments because the method available from EPA to
serve as a model does not require extensive financial research.
cc: Regional Enforcement Contacts
Program Compliance Office Directors
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Exhibit I .
BEN
A. Accessed via terminal to EPA's IBM computer in Durban/ N.C.
B. Can be run in either of two nodes:
1. Standard node:
a) Requires 5 inputs:
i. Initial Capital Investment
ii. Annual Operating and Maintenance Expense
iii. First Month of Noncompliance
iv. Compliance Date
v. Penalty Payment Date
b) Relies on realistic standard values for
remaining variables:
i. A set of standard values fcr private
companies
ii. A set of standard values for munici-
pally- owned or not-for-profit companies
c) Would be used for final calculation of economic
benefit unless the violating firm objected and
supplied all its own financial data
2. Specific node:
a) Requires 13 inputs
b) Would be used if violating firm supplied data or
if EPA staff researched data
C. Is easy to use
1. Optional on-line documentation will guide inexperienced
users through each step of the nodel
2. Written documentation will be available by December
1984
D. Is based on modern financial principle:.'
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PT.1-6
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OCT30B85
OFFICE OF ENFORCEMtNT
AND COMPLIANCE
MONTTOMNC
MEMORANDUM
SUBJECT: Division of Penalties with State and Local Governments
PROM: Courtney M. Price C_
Assistant Administrate!:"for Enforcement
and Compliance Monitoring
TO: Regional Administrators
Associate Enforcement Counsels
Program Enforcement Division Directors
Regional Counsels
This memorandum provides guidance to Agency enforcement
attorneys on the division of civil penalties with state and
local governments, when appropriate. In his "Policy Framework
for State/EPA Enforcement Agreements* of June 26, 1984, Deputy
Administrator Al Aim stated that the EPA should arrange for
penalties to accrue to states where permitted by law. This
statement generated a number of inquiries from states and from
the Regions. Both the states and the Regions were particularly
interested in what factors EPA would consider in dividing
penalties with state and local governments. In addition, the
issue was raised in two recent cases, U.S. v Jones t Laughlin
(N.D. Ohio) and U.S. v Georgia Pacific Corporation (M.D. La.).
In each case, a state or local governmental entity requested a
significant portion of the involved penalty. Consequently, OECM
and DOJ jointly concluded that this policy was needed.
EPA generally encourages state and local participation in
federal environmental enforcement actions. State and local
entities may share in civil penalties that result from their
participation, to the extent that penalty division is permitted
by federal, state and local law, and is appropriate under the
circumstances of the individual case. Penalty division advances
federal enforcement goals by:
1) encouraging states to develop and maintain active
enforcement programs, and
2) enhancing federal/state cooperation in environmental
enforcement.
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However, penalty division should be approached cautiously because
of certain inherent concerns, including:
1) increased complexity in negotiations among the
various parties, and the accompanying potential
for federal/state disagreement over penalty
division; and
2) compliance with the Miscellaneous Receipts Act, 31
U.S.C. $3302, which requires that funds properly
payable to the United States must be paid to the U.S.
Treasury. Thus any agreement on the division of
penalties must be completed prior to issuance of and
incorporated into a consent decree.
As in any other court-ordered assessment of penalties under
the statutes administered by EPA, advance coordination and
approval of penalty divisions with the Department of Justice is
required. Similarly, the Department of Justice will not agree
to any penalty divisions without my advance concurrence or that
of my designee. In accordance with current Agency policy,
advance copies of all consent decrees, including those involv-
ing penalty divisions, should be forwarded to the appropriate
Associate Enforcement Counsel for review prior to commencement
of negotiations.
The following factors should be considered in deciding if
penalty division is appropriate:
1) The state or local government must have an indepen-
dent claim under federal or state law that supports
its entitlement to civil penalties. If the entire
basis of the litigation is the federal enforcement
action, then the entire penalty would be due to the
federal government.
2) The state or local government must have the authority
to seek civil penalties. If a state or local govern-
ment is authorized to seek only limited civil
penalties, it is ineligible to share in penalties
beyond its statutory limit.
3) The state or local government must have partici-
pated actively in prosecuting the case. For example,
the state or local government must have filed com-
plaints and pleadings, asserted claims for penalties
and been actively involved in both litigating the
case and any negotiations that took place pursuant
to the enforcement action.
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4) For contempt actions, the state or local governnent
must have participated in the underlying action
giving rise to the contempt action, been a signatory
to the underlying consent decree, participated
in the contempt action by filing pleadings asserting
claims for penalties, and been actively involved
in both litigating the case and any negotiations
connected with that proceeding.}/
The penalties should be divided in a proposed consent
decree based on the level of participation and the penalty
assessment authority of the state or locality. Penalty division
may be accomplished more readily if specific tasks are assigned
to particular entities during the course of the litigation.
But in all events, the division should reflect a fair apportion-
ment based on the technical and legal contributions of the
participants, within the limits of each participant's statutory
entitlement to penalties. Penalty division should not take
place until the end of settlement negotiation. The subject
of penalty division is a matter for discussion among the
governmental plaintiffs. It is inappropriate for the defendant
to participate in such discussions.
cc: F. Henry Babicht IX, Assistant Attorney General
Land and Natural Resources Division
I/ it the consent decree contains stipulated penalties and
specifies how they are to be divided, the government will
abide by those terms.
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PT.2
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PT.2-1
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| UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
DEC I 6 !986
1,
MEMORANDUM
SUBJECT: Guidance on Determining a Violator's
Ability to Pay a Civil Penalty
FROM: Thomas L. Adams, Jr. AX. >3sP"««.^, \-
Assistant Adminstrator for ^
Enforcement and Compliance Monitoring
TO: Assistant Administrators
Regional Administrators
I. PURPOSE
This guidance amplifies the discussion in the Uniform
Civil Penalty Policy on how to adjust a penalty target figure
when a violator claims paying a civil penalty would cause
extreme financial hardship. This guidance was developed to
meet the commitment made in the Uniform Civil Penalty Policy
issued February 16, 1984, and in response to Regional Office
requests for amplification of the "Framework for Statute-
Specific Approaches to Penalty Assessments" (GM-22).
II. APPLICABILITY
This guidance applies to the calculation of civil
penalties under medium-specific policies issued in accordance
with the Uniform Civil Penalty Policy that EPA imposes on:
1. Por-profit publicly or closely held entities; and
2. Por-profit entities owned by not-for-profit entities.
This guidance does not apply to:
1. The calculation of civil penalties that EPA imposes
on municipalities and other not-for-profit entities; or
2. A violator who files for bankruptcy or is in bankruptcy
proceedings after EPA initiates the enforcement action.
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III. SCOPE
This guidance only gives a general evaluation of the
financial health of a violator and the possible effects of
paying a civil penalty for the purpose of settlement
negotiations. It describes when to apply the ability to pay
factor and provides a methodology for applying the factor
using a computer program, ABEL.
The guidance does not prescribe the amount by which EPA
may reduce a civil penalty if the ability to pay factor is
applied. The methodology in this guidance will not calculate
a specific dollar amount that a violator can afford in civil
penalties nor does it provide a way to predict whether paying
a certain amount for a civil penalty will cause an already
financially troubled firm to go out of business.
For an ability to pay analysis, EPA needs specific financial
information from a violator (see section V). EPA includes the
financial data in a litigation report only when the data are
requested by the Department of Justice or offered by the violator,
»
IV. THE ABILITY TO PAY FACTOR
Under the Uniform Civil Penalty Policy, EPA may consider
using the ability to pay factor to adjust a civil penalty
when the assessment of a civil penalty may result in extreme
financial hardship. Financial hardship cannot be expressed
in absolute terms. Any limitation on a violator's ability
to pay depends on how soon the payments must be made and
what the violator has to give up to make the payments. A
violator has several options for paying a civil penalty:
1. Use cash on hand;
2. Sell assets;
3. Increase debt by commercial borrowing;
4. Increase equity by selling stock;
5. Apply toward a civil penalty for a period of time
what wo-id otherwise be distributed as profit; or
6. Use internally-generated future cash flows by deferring
or eliminating some planned future investments.
Each of these options will affect a for-profit violator's
operations to some degree. EPA must decide whether to adjust
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a proposed penalty amount and by how much, taking into account
the gravity of the violation and other criteria in medium-
specific guidance.
V. INFORMATION TO DETERMINE ABILITY TO PAY
If ability to pay is at issue, EPA may request from a
violator any financial information the Agency needs to evaluate
the violator's claim of extreme financial hardship. A violator
who raises the issue has the burden of providing information
to demonstrate extreme financial hardship.
Financial information to request from for-profit entities
may include the most recent three to five years of:
1. Tax returns;
2. Balance sheets;
3. Income statements;
4. Statements of changes in financial position;
5. Statements of operations;
6. Retained earnings statements;
7. Loan applications, financing agreements,
security agreements;
8. Annual reports; or
9. Business services, such as Compustat, Oun and
Bradstreet, or Value Line.
t '
Tax returns are the most complete and in the most consis-
tent form for analysis. Tax returns also provide financial
information in a format for direct input into ABEL. Annual
reports ar« the most difficult to analyze and may require
the assistance of a financial analyst.
When reque: < ng information informally or through
interrogatories or discovery, ETA should ask for three to
five years of tax returns along with all other financial
information that a violator regularly maintains as business
records. If a violator refuses to give EPA the information
to evaluate the violator's ability to pay, EPA should seek
the full calculated penalty amount under the assumption that
the violator can pay.
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VI. CONFIDENTIALITY OF FINANCIAL INFORMATION
A violator can claim confidentiality for financial
information tubmitted to EPA. In accordance with the regu-
lations on confidential business information, 40 CFR 2.203,
EPA must give notice to a violator that the violator may
assert a business confidentiality claim. EPA's notice must
contain the information required in 40 CFR 2.203. The notice
must include a statement that if the violator submits financial
information without a confidentiality claim, EPA may release
the information without further notice to the violator.
The violator can make a claim of confidentiality for
financial information in a cover letter accompanying the
information. Information in published annual reports would
not be entitled to confidential treatment.
VII. APPLYING THE ABILITY TO PAY FACTOR
Under the terms of a consent decree, a violator pays a
civil penalty in addition to making any capital investment
necessary to come into compliance. EPA considers the costs
of attaining compliance when applying the ability to pay factor
to a civil penalty calculation.
EPA determines whether to apply the ability to pay
factor using a four-step process:
1. Determine, if'possible, whether a violator plans to
claim extreme financial hardship;
2. Determine whether criteria in the Uniform Civil
Penalty Policy and medium-specific guidance require consideration
of ability to pay;
3. Evaluate the overall financial health of a violator's
operations by analyzing financial information provided by a
violator or from other sources, such as business services; and
4. Project the probabilities of a violator having future
internally-generated cash flows to evaluate how paying a proposed
civil penalty nay affect * violator's financial decisions.
VIII. FINANCIAL COMPUTER PROGRAM
EPA's computer program, ABEL, assists in evaluating the
financial health of for-profit entities, based on the estimated
strength of internally-generated cash flows. ABEL uses financial
information on a violator to evaluate the overall financial
health of a violator (step 3 above). The program uses standard
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financial ratios to evaluate a violator's ability to borrow
money and pay current and long-term operating expenses.
ABEL al»o projects the probable availability of
future internally-generated cash flows to evaluate some of a
violator's options for paying a civil penalty (step 4 above).
EPA is developing a user's manual to provide self instruction
in the use of ABEL in addition to the documentation and help
aids in the computer program.
Exhibit 1 is a hypothetical use of ABEL to evaluate a
violator's financial health. If the ABEL analysis indicates
that a violator may not be able to finance a civil penalty
with internally-generated cash flows, EPA should check all
available financial information for other possible sources
of cash flows for paying a civil penalty.
For example, in corporate tax returns, item 26 of
Schedule A (cost of goods sold) sets forth deductions for
entertaining, advertising, and professional dues. Schedule E
shows the compensation of officers. In Schedule L (balance
sheets), item 8 sets forth investments that may include
certificates of deposit or money market funds. These types
of assets and expenses do not directly affect operations and
may vary considerably from year to year without adversely
affecting the violator's operations. Because a civil penalty
should be viewed as a one-time expense, these kinds of assets
and expenses could be sources of cash for a civil penalty.
Using the sources of financial information from the example
above, liquid assets such as certificates of deposit and
money market funds could be used to pay a penalty. Expenses
for advertising, entertaining, or professional dues could be
reduced for a short period to pay a civil penalty. A corporate
officer might even be willing to take less compensation for
a short period. A combination of options like these may
produce enough cash flow to pay a civil penalty without
causing the violator extreme financial hardship in meeting
operating expenses.
Attachment
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EXHIBIT 1
Assumption that Violator is Financially Healthy
Assume that EPA has calculated an economic benefit for
Company X oŁ $140,000 and a gravity component of $110,000 for
a total proposed penalty of $250,000. EPA presents the
proposed penalty after several negotiation sessions, and the
CEO for Company X then claims that the company cannot afford
to pay that much. In support of the claim, the CEO produces
accounting statements showing that the firm paid no income
taxes for the previous three years and had less than $100,000
in net income for those years.
EPA requests tax returns and other financial information
for the most recent three years of Company X. EPA enters the
tax return information in ABEL and receives the output in
Attachment A. The Phase 1 analysis from ABEL is not dispositive
of the issue, so EPA performs a Phase 2 analysis.
The Phase 2 analysis indicates that Company X can finance
a civil penalty of $250,000 from internally-generated cash flows,
even after planning for $400,000 in pollution control investments
and $50,000 for annual O&M expenses. The table in Phase 2
shows a 99 percent probability that Company X will have future
cash flows with a net present value of $370,061 available to
pay a civil penalty.
Assumption that Violator Is Not Financially Healthy
Assume again that EPA has calculated a total penalty amount
of $250,000. Company Z claims extreme financial hardship. If
the ABEL analysis indicates that Company Z would have little
probability of generating $250,000 in cash flows during the
next five years, EPA would go back to the financial data
supplied by the violator and look for items that may indicate
a source of cash, including loans outstanding to corporate
officers, entertainment expense deductions, company cars or
airplanes, amount of compensation for corporate officers,
compensation for relatives of corporate officers who .do not
have clearly defined duties.
If the ABEL Phase 1 analysis indicates that Company Z
may have additional debt capacity (debt/equity ratio), EPA
would look in the tax returns for the amount of long term
debt the violator is carrying and analyze any loan applications
the violator submitted \n response to I "'Vs request for
financial information, frequently, firms can borrow additional
money for operations and free up cash flow to pay civil
penalties.
Even a firm on the verge of bankruptcy may choose to
settle an enforcement action with a civil penalty provision in
the consent decree. EPA should always seek some civil penalty.
ABEL and other financial analysis provide a range of penalty
amounts for the purpose of settlement negotiations.
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ATTACHMENT A
- : ••
DATA- FOR ABEL EXAMPLE
ANALYSIS DATE: NOVEMBER 24, 1986
DEBT EQUITY RATIOS
1985 0.58 A RATIO LESS THAN 1.3 INDICATES THE FIRM
MAY HAVE ADDITIONAL DEBT CAPACITY •
1984 2.91 A RATIO GREATER THAN 1.3 INDICATES •
THE FIRM MAY HAVE DIFFICULTY BORROWING
1983 ..1.59 A RATIO GREATER THAN 1.5 INDICATES
• THE FIRM MAY HAVE DIFFICULTY BORROWING .
PLEASE ENTER A. CARRIAGE RETURN TO CONTINUE
CURRENT" RATIOS ' |
1983 1.10 A RATIO LESS THAN 2.0 MAY INDICATE |
LIQUIDITY PROBLEMS- ' :
»
1TC4 1.20 A RATIO LESS THAN 2.0 MAY INDICATE • j
LIQUIDITY PROBLEMS . \
4
19S3 1.03 A RATIO LESS THAN 2.0 MAY INDICATE
LIQUIDITY .PROBLEMS
PLEASE ENTEP A CARRIAGE RETURN TO CONTINUE
LEAVER'S RATIOS
c <
19B3 0.22 A RATIO GREATER THAN 0.20 INDICATES «
HEALTHY SOLVENCY j
1964 0.20 A RATIO. BETWEEN' 0. 10 AND 0.20 IS. j
INDETERMINATE ' |
P !
1933 0.30 A RATIO GREATER THAN 0.20 INDICATES j
HEALTHY SOLVENCY | '
P I
PLEASE ENTER A CARRIAGE RETURN TO CONTINUE '
I
C " '
TIMES INTEREST EARNED
19Q3 1.02 A RATIO LESS THAN 2.0 MAY INDICATE |
SOLVENCY PROBLEMS • »
17S4 1.64 A RATIO LESS THAN 2.0 MAY INDICATE
SOLVENCY PROBLEMS •
1963 1.30 A RAT 1C LESS THAN 2.0 MAY INDICATE ;
SOLVSr:CY F.--02LIM3
>
PLEASE ENTER A CAFRI^SE RETURN TO CONTITJUE
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ABEL INTERPRETS THE OVERALL RESULTS Of THE FINANCIAL
RATIOS AS FOLLOWS: . - <
ALTHOUGH THE FIRM MAY FACE CURRENT CASH IOR LIQUIDITY*'
CONSTRAINTS, ITS LONG-TERM, PROSPECTS ARE GOOD AND IT SHOULD
BE ABLE TO FINANCE PENALTIES AND INVESTMENTS. A PHASE
TWO ANALYSIS IS RECOMMENDED.
ABEL NOTES THAT THE FIRM'S MOST RECENT DEBT-EQUITY
RATIO IS SUBSTANTIALLY-BETTER .THAN ITS HISTORIC AVERAGE.
AE'EL NOTES THAT THE FIRM'S MOST RECENT TIMES INTEREST
EARNED IS SUBSTANTIALLY POORER THAN ITS HISTORIC AVERAGE.
*•» *' "
DO YOU WISH TO CONTINUE WITH T! IE PHASE TWO ANALYSIS
(Y OR N).?4 t:'_, . ..^.;. .. . .. . ,,- >.... - ;.. , -, '. . ... .
DO YOU WISH TO ANALYZE A CIVIL PENALTY (P> OR A NEW
INVESTMENT ? •
PLŁA3E INPUT THE INITIAL PROPOSED SETTLEMENT PENALTY
AMOUNT IN CURRENT DCLLARS 'E.G., 300O) ; IF THERE IS NO TA^CE'ED
PENALTY, ENTER 0.
250000
ElIF'InE PROCEEDING WITH THE CIVIL PENALTY ANALYSIS,
•-E-EL WILL REQUIRE C2RTAIN ADDITIONAL INFOr ENTER- t.'
200000
PLEASE ENTER WHAT YEAR DOLLARS THIS 15 Ł
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ŁNfER ANY NON-uEPfrEC. I- T'-Ł, BUT TAX
LEuuCTIGLS COSTS ASSOCIATED WITH THE NEW INVESTMENT.
IF THERE 13 NO COST THAT MEETS THIS REQUIREMENT
PLEASE ENTER 0.
100000
PLEASE ENTER WHAT YEAR DOLLARS THIS' IS EXPRESSED IN
(E.G. , 1784)
1985 -.-r •
' • » • ' •
ENTER THE ANNUAL OiM COST OF THE NEW INVESTMENT*.
IF THERE IS NO QJfcM COST, ENTER O
50000
PI-EASE ENTER .WHAT YEAR DOLLARS THIS IS EXPRESSED IN •
(E.G., 1984)
1985 ' •••"*••
THE FOLLOWING STANDARD VALUES ARE USED IN THIS SECTION OF
1. REINVESTMENT RATE » O.O
2. NOMINAL DISCOUNT 3ATE -13.69V.
3. INFLATION RATE - 4.41V.
4. MARGINAL INCOME TAX RATE -5Q.OOV.
5. INVESTMENT TAX CREDIT =10.00'X
DO YOU WISH TO HAVE THESE ITEMS EXPLAINED ('( OR "H ^
N
DO YOU WISH TO CHANGE ANY OF THESE INPUTS (V OR N)?
ftBKL IS READY" TO PROVIDE "ODTPUT ~ YOU HAVE "THE CHOICE
OF THREE OUTPUT OPTIONS:
1. PRINT ONLY THE POSSIBILITY OF THE PRESENT VALUE
OF THE FIRM'S FIVE YEAR PROJECTED CASH FLOW EXCEED I r.'ij
EITHER AN INITIAL PROPOSED SETTLEMENT PSNALTV OP. A PECUIRED
.INVESTMENT.
2. PRINT A TABLE SHOWING THE NET AVAILABLE CASH FLOW
WITH AN ANALYSIS OF THE TABLE.
3. PRINT A DETAILED TABLE SHOWING THE COMPONENTS' OF THE
FIRM'S CASH TLCWS. THIS OPTION MAY BE HELPFUL TO' FINANCIAL
ANALYSTS BUT 15 NOT RECOMMENDED FOR MOST USERS.
PLEASE ENTER YOUR CHOICE Cl,2 OR 3).
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THERE IS A 99.9 % CHANCE THAT THE FIRM
CAN FINANCE THE PROPOSED SETTLEMENT PENALTY QF
* • 250000.OOBASED-ON THE STRENGTH OF INTERNALLY
GENERATED CASH FLOWS FOR THE NEXT FIVE YEARS THE
ANALYSIS AT THIS POINT DOES NOT DEMONSTRATE '
CONCLUSIVELY THE FIRM'S ABILITY TO PAY THE PROPOSED
PENALTY. TO MAKE A DETERMINATION, ONE MUST LOOK AT
THE FIRM'S OTHER OPTIONS, INCLUDING INCREASING EQUITY
SELLING ASSETS, OR LEVERAGING UNLEVERED ASSETS. '
ABEL IS READY TO BEGIN OUTPUT. IF YOU WI3H PLEASE
POSITION YOUR PRINTER TO THE START OF A NEW PAGE. PLEASE
ENTER A CARRIAGE RETURN TO CONTINUE
DATA FOR ABEL EXAMPLE
ANALYSIS DATE: NOVEMBER 24, 1986
NET PRESENT VALUE EQUIVALENT
PROBABILITY AVAILABLE ANNUAL CHARGE
f
50.0 716944.31 280891.31
60.0 679230.23 266115.37
70.0 , 6»33832.69 . 25023Q.OO
30.0 591423.31 231713.62
90.0 525833.30 206013.06
73.0 471726.Si, 134317.56
99.0 370061.81 144986.37
THE HBCVE CATA Af?
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PT.2-2
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UNfTEO STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
FEE I 2 1991
OFFCS OF ENWRCŁM6Vr
MEMORANDUM
Policy on the Use of Supplemental Environmental
Projects in EPA Setttoaants
SUBJECT
FROM: James M. strocl
Assistant AjJ»*Alstrator
TO: Regional Administrators
Deputy Regional Administrators
Regional Counsels
Regional Program Division Directors
Assistant Administrators
General Counsel
Program Compliance Directors
Associate Enforcement Counsels
V
This memorandum transmits the new Agency policy on the use
of "supplemental environmental projects" in Agency consent orders
and decrees. It amends GM-22, "A Framework for statute-specific.
Approaches to Penalty Assessments; Implementing- EPA's Policy on
Civil Penalties (issued February 16, 1984), by replacing and
superseding the section on "Alternative Payments" on pages 24-27
of that documejg0,_jjŁeja0*..note that this policy amends only
the section on -"alternative payments" and that all other sections
of GM-22 remain in affect.
In the past, the Agency has used several terms to describe
substantive settlement conditions (usually projects or
activities)/ other than those required aa injunetive relief to
cqrrect the underlying violation. which the defendant/respondent
may undertaXe in exchange for a reduction in the amount of the
assessed civil penalty. In GM-22, these conditions are called
"alternative) payments." They also have periodically been
referred to as "mitigation projects" or "environmentally
beneficial expenditures." The Agency's past experience with
these projects has sometimes been problematic, in part because
GM-22 did not fully describe the kinda of projects that are
appropriate for penalty reduction, the situations under which
they should be considered, and the amount by which the penalty
demand can be reduced.
Printed on Re
I Paper
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The Agency believes that these projects, if carefully
crafted and executed, provide useful environmental benefits
beyond what can be secured solely through injunctive relief. We
particularly believe they can be a useful vehicle in promoting
pollution prevention. Last year, the Office of Enforcement
explored with the Environmental Management Counsel major issues
relating to the use of "alternative payments," and since then has
worked closely with the Environment and Natural Resources
Division of the Department of Justice to develop this new policy
on the systematic use of these projects. This policy applies to
both administrative and judicial settlements.
In order to provide a common term of reference, this policy
replaces the term "alternative payment" with the general term
"supplemental environmental project." The policy describes five
specific categories of projects which the Agency will consider as
supplemental environmental projects in a settlement: pollution
prevention; pollution reduction; environmental restoration;
environmental auditing.? and py*?*,Id awareness. It also provides a
number of specific examples of supplemental projects.
I am confident that this new policy on "supplemental
environmental projects" will enable the Agency to secure
additional protection of human health and the environment
while avoiding the difficulties which occasionally characterized
their past use. This policy takes effect immediately, and media-
specific policies will be modified to conform to this policy as
quickly as possible. Any questions you have regarding its
implementation should be addressed to Ed Reich, the Deputy
Assistant Administrator for Enforcement or to Scott Fulton,
Senior Enforcement Counsel.
Attachment
cc: Deputy Administrator
Associate Deputy Administrator
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EPA POLICY ON THE USE OF SUPPLEMENTAL
ENVIRONMENTAL PROJECTS IN ENFORCEMENT SETTLEMENTS
February 12, 1991
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1
Supplemental Envl'ron»e,ntal Project^
A. Introduction
In settlement of environmental enforcement cases, the United
States will insist upon terms which require defendants to achieve
and maintain compliance with Federal environmental laws and
regulations. In certain instances, additional relief in the form
of projects remediating the adverse public health or environment-
al consequences of the violations at issue may be included in the
settlement to offset the effects of the particular violation
which prompted the suit. As part of the settlement, the size of
the final assessed penalty may reflect the commitment of the
defendant/respondent to undertake environmentally beneficial
expenditures ("Supplemental Environmental Projects").
Even when such conditions serve as a basis for considering a
Supplemental Environmental Project, the Agency's penalty policies
will still require the assessment of a substantial monetary
penalty according to criteria described in A Framework for
Statute-Specific Approaches to Penalty Assessments; Implementing
EPA's Policy on civil Penalties (GM-22), generally at a level
which captures the defendant/respondent's economic benefit of
noncompliance plus some appreciable portion of the gravity
component of the penalty. Each administrative settlement in-
which a "horizontal" Supplemental Environmental Project or
substitute performance is proposed (see below) must be approved
by the Assistant Administrator for Enforcement, and, where
required by the Agency's delegations policy, the media Assistant
Administrator. Judicial settlements, including any of the
projects described herein, will continue to require the approval
of the Assistant Administrator for Enforcement and also be
approved by the Assistant Attorney General for the Environment
and Natural Resources Division.
EPA will expand its approach to Supplemental Environmental
Projects while also maintaining a nexus (relationship) between
the original violation and the supplemental project. EPA may
approve a supplemental project so long as that project furthers
the Agency's statutory mandates to clean up the environment and
deter violations of the lav.1 Accordingly, supplemental projects
1 A supplemental project cannot be used to resolve
violations at a facility other than the facility or facilities
which are the subject of the enforcement action. This would run
counter to deterrence objectives, since it would effectively give
a company a penalty "break" for violations at -one facility for
undertaking what amounts to legally required compliance efforts
at another facility. Such a scenario would operate to reward
recalcitrance, poor-management practices, and non-compliance.
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may be considered if: (1) violations are corrected through
actions to ensure future compliance; (2) deterrence objectives
are served by payment of a substantial monetary penalty as
discussed above; and (3) there is an appropriate "nexus" or
relationship between the nature of the violation and the
environmental benefits to be derived from the supplemental
project.
All supplemental projects must improve the injured
environment or reduce the total risk burden posed to public
health or the environment by the identified violations. The five
categories of permissible supplemental activities are pollution
prevention, pollution reduction, environmental restoration,
environmental auditing projects, and public awareness projects
which are directly related to addressing compliance problems
within the industry within which the violation took place. EPA
negotiators should make it clear to a defendant/respondent
interested in proposing a supplemental project that the Agency is
looking only for these types of projects (cf. section F, below).
Under no circumstances will a defendant/respondent be given
additional time to correct the violation and return to compliance
in exchange for the conduct of a supplemental project.
B. Categories of Supplemental Environmental Projects
Five categories of projects will be considered as potential
Supplemental Environmental Projects, subject to meeting the
additional criteria described in succeeding sections.
1. Pollution Prevention Projects
Consistent with the Agency's forthcoming Pollution
Prevention Policy Statement and Pollution Prevention Strategyr a
pollution prevention project substantially reduces or prevents
the generation or creation of pollutants through use reduction
(i.e., by changing industrial processes, or by substituting
different fuels or materials) or through application of closed-
loop processes. A project which substantially reduces the
discharge of generated pollutants through innovative recycling
technologies may be considered a pollution prevention project if
the pollutants are kept out of the environment in perpetuity.
2. Pollution Reduction Projects
A pollution reduction project is defined as a project which
goes substantially beyond compliance with discharge limitations
to further reduce the amount of pollution that would otherwise be
discharged into the environment. Examples include a project that
reduces the discharge of pollutants through more effective end-
of-pipe or stack removal technologies; through improved operation
-------
and maintenance; or recycling of residuals at the end of the
pipe.2
Sometimes an acceptable pollution reduction project may
encompass an "accelerated compliance project". For instance,
assuming there is a statutory or regulatory schedule for
pollution phaseout or reduction (or is likely to be proposed in
the foreseeable future, e.g., an upcoming rulemaking), if a
defendant/respondent proposes to complete a phaseout or reduction
at least 24 months ahead of time, and such proposal for
accelerated compliance can be demonstrated to result in
significant pollution reduction (i.e., one can objectively
quantify a substantial amount of pollution reduction due to the
accelerated compliance) then such a proposal may proceed to be
evaluated according to the rest of the appropriateness criteria
below. In addition, if the defendant/respondent substitutes
another substance for the one being phased out, he has the burden
to demonstrate that the substance is non-polluting, otherwise no
supplemental environmental project will be allowed and, indeed,
additional liability may accrue.
3. Projects Remediating Adverse Public Health or
Environmental Consequences (Environmental Restoration
Projects)
*
An environmental restoration project is defined as a project
that not only repairs the damage done to the environment because
of the violation, but which goes beyond repair to enhance the
environment in the vicinity of the violating facility.
4. Environmental Auditing Projects
Environmental Auditing that represents general good business
practices are not acceptable supplemental projects under this
policy (cf. Section E).' However, such a project may be
considered by the Agency if the defendant/respondent undertakes
additional auditing practices designed to seek corrections to
1 where the obligation to reduce the pollution is already
effective, or is subject to-an "as soon as practicable1*
or comparable standard, a proposal to further reduce
pollution would not fulfill the definition of a pollution
reduction project, and would not be appropriate.
^ \
3 It should be noted that the Agency has the authority to
require an environmental audit as an element of injunctive
relief when it deems it appropriate given the fact pattern
surrounding the violation subject to the usual limits on the
scope of injunctive relief..
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existing management and/or environmental practices whose
deficiencies appear to be contributing to recurring or potential
violations. These other potential violations may encompass not
only the violating facility, but other facilities owned and
operated by the defendant/respondent, in order to identify, and
correct as necessary, management or environmental practices that
could lead to recurring or future violations of the type which
are the basis for the enforcement action.'
Audit projects which fall within the scope of this policy
can be justified as furthering the Agency's legitimate goal of
encouraging compliance with and avoiding, as well as detecting,
violation of federal environmental laws and regulations. Such
audits will not, however, be approved as a supplemental project
in order to deal with similar, obvious violations at other
facilities.
5. Enforcement-Related Environmental Public Awareness
Projects
These projects are defined as publications, broadcasts,
or seminars which underscore for the regulated community the
importance of complying with environmental laws or disseminate
technical information about the means of complying with
environmental laws. Permissible public awareness projects may
included sponsoring industry-wide seminars directly related to
correcting widespread or prevalent violations within an industry,
e.g., a media campaign funded by the violator to discourage fuel
switching and tampering with automobile pollution control equip-
ment or one which calls for the defendant/respondent to organize
a conference or sponsor a series of public service announcements
describing how violations were corrected at a facility through
the use of innovative technology and how similar facilities could
also implement these production changes.
Public Awareness Projects directly serve Agency deterrence
objectives and contribute indirectly to Agency enforcement
efforts. Though they are not subject to the nexus requirement
applicable to other supplemental environmental projects, they
must be related to the type of violations which are/were the
subject of the underlying lawsuit. Defendants/respondents who
fund or implement a public awareness project must also agree to
publicly state in a prominent manner that the project was
undertaken as part of the settlement of a lawsuit brought by the
Agency or a State. These projects will be closely scrutinized to
ensure that they fulfill the legitimate objectives of this policy
in all respects.
4 Of course, this requirement is subjject to the
qualifications of footnote 1.
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6. Pro-iects pot Allowed as Supplement?! Projects
Several types of projects, which have been proposed in the
past, would no longer be approveable Supplemental Environmental
Projects. Examples of projects that would not be eligible
include:
1. general educational or environmental awareness-
raising projects (e.g., sponsoring public seminars
about, or inviting local schools to tour, the
environmental controls at a facility; promoting
recycling in a community);
2. contribution to research at a college or
university concerning the environmental area of
noncorapliance or concerning any other area of
environmental study;
3. a project unrelated to the enforcement action, but
otherwise beneficial to the community e.g.,
contribute to local charity).
C. "Nexus" (Relationship1 of Supplemental Environmental Project
to the Violation
9
The categories of Supplemental Environmental Projects
described above (except for Public Awareness Projects) may be
considered if there is an appropriate "nexus" or relationship
between the nature of the violation and the environmental
benefits to be derived from the type of supplemental project.
For example, the "nexus" between the violation and an
environmental restoration project exists when it remediates
injury caused by the same pollutant at the same facility giving
rise to the violation. Such projects must further the Agency's
mission as defined by appropriate statutory mandates, including
the purpose sections of the various statutes under which EPA
operates. The Agency will evaluate whether the required "nexus"
between the pollutant discharge violation and the project exists.
1. Requirements for Remediation Projects
Examples of circumstances presenting an appropriate nexus
include: ;
a. A project requiring the purchase of wetlands which then
act to purge pollutants unlawfully discharged in
receiving waters. In this example, EPA will evaluate
whether the required "nexus" between the pollutant
discharge violations and the wetlands to be purchased
can be established. EPA will evaluate the nexus
between the project and the violation in terms of both
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geography and the pollution treatment benefits of the
wetlands.
b. A project which calls for the acquisition and
preservation of wetlands in the immediate vicinity of
wetlands injured by unlawful discharges, in order to
replace the environmental services lost by reason of
such injury.
c. A "restoration" project, such as a stream sediment
characterization or remediation program to determine
the extent and nature of pollution caused by the
violation and to formulate and implement a plan for
remediating sediment near the facility. Such a stream
sediment characterization or restoration project, if
obtainable as injunctive relief pursuant to the
statutory provisions of the Clean Water Act in the
particular case, would not be approveable as a
supplemental project.
2. Nexus for Pollution Prevention/Pollution Reduction/
Environmental Restoration/Environmental Auditing
Projects • ;
The "nexus" for pollution prevention, pollution reduction,
environmental restoration and environmental auditing projects may
either be vertical or horizontal. as described below.
a. Vertical "Nexus"
A "vertical" nexus exists when the supplemental project
operates to reduce pollutant loadings to a given environmental
medium to offset earlier excess loadings of the same pollutant in
the same medium which were created by the violation in question.
Even if the violations are corrected by reducing pollutant
loadings to the levels required by law, further reductions may be
warranted in order to alleviate the risk to the environment or
public health caused by past excess loadings. Typically, such
projects follow a violation back into the manufacturing process
to address the root causa, of the pollution. Such reductions may
be obtained from the source responsible for the violation or, in
appropriate cases, nay be obtained from another source, either
upstream, up gradient or upwind of the responsible source.
For example, if pollutants were discharged in violation of
the Clean Water Act from a facility at a certain point along a
river, an acceptable pollution reduction project would be to
reduce discharges of that same pollutant at an upstream facility
on the same river. Another classic example of a1"vertical"
pollution prevention activity is the alteration of a production
process at a facility which handles a portion of the
manufacturing process antecedent to that which caused the
-------
violation of the regulatory requirement in a way that yields
reductions or total elimination of the residual pollutant
discharges to the environmental media assaulted by the violation.
Both of these examples present the necessary nexus between the
violation and the supplemental project.
b. Horizontal "Nexus"
A "horizontal" nexus exists when the supplemental project
involves either (a) relief for different media at a given
facility or b) relief for the same medium at different
facilities. The nexus between supplemental projects in this
category and the violation must be carefully scrutinized. The
nexus will be met only if the supplemental project would reduce
the overall public health or environmental risk posed by the
facility responsible for the violation or enhances the prospects
for reducing or eliminating the likelihood of future violations
substantially similar to those which are the basis for the
enforcement action. Approval of such projects is appropriate
only where the terms of the settlement insure that the
defendant/respondent will be subject to required injunctive
relief prescribed by the compliance and deterrence policies
stated in the various Acts and their implementing regulations.
In those circumstances, the Agency believes the required nexus to
the statutory goals has been'met.
Following are examples of approveable projects demonstrating
a "horizontal" nexus to the violation:
l. violations of the Resource Conservation and Recovery Act
(RCRA) or the Clean Water Act may have exposed the
neighboring community to increased health risks because of
drinking water contamination. In addition to correcting
these violations, it may be appropriate to reduce toxic air
emissions from the same facility in order to compensate for
the excess health risk to the community which resulted from
the RCRA or CWA violations.
2. A supplemental project is proposed which reduces pollutant
discharges at a defendant/respondent's other facilities
within the same air quality basin or water shed as at the
facility which violated legal requirements applicable to
releases of. the same pollutant. In this case, the overall
supplemental project would be designed to reduce the overall
health or environmental risk posed by related operations to
the environment or to the health of residents in the same
geographic vicinity by reducing pollutant discharges to the
air basin or watershed and to compensate for past excess
discharges.
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3. A supplemental project is proposed which reduces pollutant
discharges at a defendant/respondent's other (non-
violating) facility(ies). Such a project would be
approveable where the violating and non-violating facilities
are engaged in the same production activities and use the
same production processes, where appreciable risks of
violations and legal requirements applicable to releases
of that same pollutant substantially similar to those at
the violating facility are posed by the non-violating
facility(ies), and where the defendant/respondent can
establish that significant economies of scale would be
achieved by incorporating pollution prevention process
changes at both the violating and non-violating facilities.
Alternatively, the settlement could call for the defendant/
respondent to substitute input chemicals across all such
facilities (e.g., replace higher toxic solvents with lower
toxic solvents at all paint manufacturing plants) or to
reduce the emissions loadings of particular emissions at all
such facilities as part of a NESHAPS settlement. Such
projects would, therefore, reduce the overall health or
environmental risk posed by such operations to the
environment or to the health of residents in the same
geographic vicinity.
4. In settlement of a Toxic Substances Control Act (TSCA)
PMN (premanufacture notification) violation for
manufacturing a polymer without providing formal advance
notice at a facility, the defendant/respondent could
establish a closed loop recycling system to reduce the
amount of that facility's product manufacturing waste which
must be sent to a RCRA Subtitle C landfill. Operating the
facility in violation of TSCA created a risk of unwarranted
health or environmental injury. If TSCA penalty and
injunction requirements have been met, then the supplemental
project could be justified on the grounds that it would
compensate for this unwarranted risk by reducing the -overall
health or environmental risk presented by the facility*
After the project category and "nexus" criteria have been
met, a potential supplemental project must also meet the
criteria described in the following sections, below» Most of
the conditions below applied in the past, but some are new.
All of these conditions must be met before a supplemental
project may be accepted.
D. status of the Enforcement Action/Compliance History of
Defendant/Respondent
V
Any defendant/respondent against whom the Agency has taken
an enforcement action may propose to undertake a supplemental
project at any time prior.to resolution of the action, although
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the Agency should consider both the status of the litigation/
administrative action and the resources that have been committed
to it before deciding whether to accept it. In addition, the
respondent's enforcement history and capability to successfully
complete the project must be examined during evaluation of a
supplemental project proposal.
The Agency negotiators must also consider whether the
defendant/respondent has the technical and economic resources
needed to successfully implement the supplemental project. In
addition/ a respondent who is a repeat offender may be a less
appropriate respondent from which to receive and evaluate a
supplemental project proposal than a first time violator.
E. Main Beneficiary of a Supplemental Environmental Project
The Federal Government's sole interest in considering
supplemental projects is to ameliorate the adverse public health.
and/or environmental impacts of violations. Projects are not
intended to reward the defendant/respondent for undertaking
activities which are obviously in his economic self-interest
(e.g., update or modernize a plant to become more competitive).
Therefore, as a general rule, these projects will usually not be
approved when they represent' a "sound business practice1* , i.e.,
capital expenditures or management improvements for which the
Federal negotiators may reasonably conclude that the regulated
entity, rather than the public, is likely to receive the substan-
tial share of the benefits which accrue from it.
The only exception to the prohibition against acceptance of
a supplemental project which represents a "sound business
practice" is for a pollution prevention project. Although a
pollution prevention project can be viewed as a "sound business
practice" since (by definition) it is designed both to make
production more efficient and reduce the likelihood of
noncompliance, it also has the advantage of potentially providing
significant long-tern environmental and health benefits to the
public. Therefore, the "sound business practice" limitation will
be waived only for pollution prevention projects if the Federal
negotiators .decide, after due consideration and upon a clear
demonstration by the defendant/respondent as to what the public
health and/or environmental benefits would be, that those
benefits are so substantial that the public interest would be
best served by providing additional incentives to undertake the
project.
F. Extent to Whicfr the Final Assessed Penalty-can Reflect a
Supplemental Environmental Project
Although supplemental projects may directly fulfill EPA's
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10
goal of protecting and restoring the environment, there is an
important countervailing enforcement goal that penalties
should have the strongest possible deterrent effect upon the
regulated community. Moreover, the Agency's penalty policies
require the assessment of a substantial monetary penalty
according to criteria described in "Implementing EPA's Policy on
Civil Penalties" (GM-22), generally at a level which captures the
defendant/respondent's economic benefit* of noncompliance plus
some appreciable portion of the gravity component of the
penalty.4
In addition, EPA must not lower the amount it decides to
accept in penalties by more than the after-tax amount the
violator spends on the project. EPA should calculate the net
present after tax value of the supplemental project at the time
that the assessed penalty is being calculated. If a supplemental
project is approved, a portion of the gravity component of the
penalty may be mitigated by an amount up to the net present
after-tax cost of the supplemental project, depending on the
level of environmental benefits to the public.
G. Supplemental Environmental Projects for Studies
Supplemental Environmental Projects for studies will not be
allowed without an accompanying commitment to implement the
results. First, little or no environmental benefit may result in
the absence of implementation. Second, it is also quite possible
that this type of project is one which the violator could
reasonably be expected to .do as a "sound business practice".
Pollution prevention, pollution reduction and environmental
restoration studies, as well as environmental audits, are defined
narrowly for purposes of meeting Supplemental Environmental
Project policy guidelines. They will only be eligible as
supplemental projects if they are a part of an Agency-approved
set of actions to reduce, prevent, or ameliorate the effects of
pollution at the respondent's facility (e.g., a comprehensive
* Where a violation is found which did not confer a
significant economic benefit, e.g. a failure to notify, the
settlement must still include payment of a penalty which at least
captures a portion of the proposed gravity component.
' If a defendant/respondent can establish through use of
documents and affidavits sworn under penalty of perjury that it
cannot afford to pay the civil penalty derived from use of the
appropriate civil penalty policy, the Agency will consider
entering into an "ability to pay settlement" for less than the
economic benefit of non-compliance.
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11
waste minimization or emissions reduction program). The amount
attributable to a supplemental project may include the costs of
necessary studies. Nonetheless, a respondent's offer to conduct
a study, without an accompanying commitment to implement the
results, will not be eligible for penalty reduction. In
considering the applicability of a proposed study, the1 Agency
negotiators will consider the likelihood of success, i.e.,
substantial pollution reduction or prevention, in making a
determination.
While studies are not by themselves eligible supplemental
environmental projects, to encourage pollution prevention, EPA
will make a limited exception to this general approach for
pollution prevention studies. Such studies will be eligible for
a penalty offset when they are part of an Agency-approved set of
pollution prevention activities at a facility and are designed to
correct the violation (e.g., a recycling feasibility study, waste
minimization opportunity assessment, or waste reduction audit).
The size of the penalty offset may include the costs of the
studies. The commitment to conduct the study also must be
tangible (e.g., the project completed on schedule, etc.). The
U.S. must have the authority to review the completed study to
decide whether it is technologically and/or economically feasible
to implement the results. Should the U.S. decide that the
results can be implemented but the defendant/ respondent is
unwilling to do so, the "offset" for the pollution prevention
study will be rescinded and the final assessed penalty must be
paid in full (cf. Section J. on payment assurance).
H. Substitute Performance of Supplemental Environmental
Projects
A supplemental environmental project which meets the other
criteria of this policy may consist in part or whole of
substitute performance by an entity or entities other than the
violator. Such a substitute must bear a reasonable geographical
or media-specific relationship to the underlying violation. This
substitute performance must be assured through agreements which
are enforceable by EPA, and may consist of agreements for
emissions limits, process design or input changes, natural
resource preservation or conservation easements/ or other means
of achieving compliance with the terms of the proposed
supplemental environmental project. In the event a violator
proposes acceptable substitute performance, EPA will credit the
violator with an amount up to the net after tax cost of the
project as if it were being performed by the violator. The
violator, will, however, remain responsible for the performance
of the project or the payment of the penalty offset if substitute
performance is not completed.
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12
I. Level of Concurrence
There may be practical problems in administering cross-
media and/or cross-regional projects. Staff allocations for
oversight requirements will necessarily increase, as will the
level of resources needed for tracking purposes since tracking a
supplemental project is more complex than tracking whether a
payment is made. In addition, the likelihood of new issues
emerging due to noncompliance with the conditions of the project
is significant.
The extent of coordination/concurrence for a supplemental
project which involved more than one Region will vary according
to the nature and complexity of the proposal. All affected
Regions must be notified about a supplemental project which would
have only a modest impact on facilities in those Regions (e.g., a
commitment to undertake an environmental audit at all of the
defendant/respondent's facilities across the country). However,
all affected Regions would have to concur in a proposed
supplemental project which would involve significant oversight
resources or activities (e.g., a pollution prevention activity
which required major construction or process changes). Also, all
affected EPA parties must be consulted on their respective
oversight responsibilities. As stated previously, judicial
settlements, including any of the projects described herein, will
continue to require the approval of the Assistant Administrator
for Enforcement and also be approved by the Assistant Attorney
General for the Environment and Natural Resources Division.
Each proposed administrative settlement which has a
"horizontal" nexus to the violation or which involves substitute
performance also must be approved by the Assistant Administrator
for Enforcement and, where required by the Agency's delegations
policy, the media Assistant Administrator.
J. Overs iqht/Tracking
Supplemental Environmental Projects may require third-party
oversight. In such cases, these oversight costs should be borne
by the respondent, and it must agree as a part of the settlement
to pay for an independent, third-party auditor to monitor the
status of the supplemental project. The auditor will be required
by the settlement to submit specific periodic reports, including
a final report evaluating the success or failure of the
supplemental project, and the degree to which the project
satisfied these guidelines. All reports must be submitted to
EPA. Upon request, EPA may provide copies of the reports, or
copies of portions of the reports, to the respondent. The timing
and amount of reports released to the defendant/respondent shall
be at EPA's sole discretion.
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13
Obviously, a certain amount of government oversight will be
required to monitor compliance with the terns of an agreement
that contains a supplemental project. "Horizontal" pollution
prevention or pollution reduction supplemental projects which
involve more than one Region (e.g., production changes at more
than one facility) may require additional oversight, and the
estimated amount of time and resources required for effective
oversight is another criteria which the negotiators should use to
determine whether to include the project in the settlement
agreement.
The consent order or decree shall specify overall timeliness
and milestones to be met in implementing the supplemental
project. If the defendant/respondent does not comply
satisfactorily with the terms of the supplemental project, he
shall be liable for the amount by which the assessed penalty was
reduced (with applicable interest). The consent order or decree
should contain a mechanism for assuring prompt payment, e.g.,
through stipulated penalties consistent with the other sections
of this policy or, if appropriate, the posting of a bond (in the
amount by which the assessed penalty was reduced) to be forfeited
if the supplemental project is not fully implemented.
•
K. Documentin
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PT.2-3
-------
PT. 1-3
| UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
4? WASHINGTON. D.C. 20460
OCT 2 8 1986
OFFICE Of
ENFORCCMF.NT AND
COMPLIANCE MONITOHINQ
MEMORANDUM
SUBJECT: Guidance on Calculating After Tax Net Present Value
of Alternative Payments
FROM: Thomas L. Adams, Jr.
Assistant Administrator for
Enforcement and Compliance Monitoring
TO: Assistant Administrators
Regional Administrators
PURPOSE
This guidance provides a methodology for calculating the
after tax net present value of an environmentally beneficial
project proposed by a violator to mitigate a portion of a civil
penalty. We developed this guidance in reponse to requests from
both the Regions and Headquarters on how to evaluate a project's
real cost to a violator. The Associate Enforcement Counsels,
Regional Enforcement Contacts, Regional Counsels, and the Chief
of the Environmental Enforcement Section at Department of Justice
have reviewed this guidance. In addition, the Tax Litigation
Division of the Internal Revenue Service and the Corporate
Finance Division of the Securities and Exchange Commission
reviewed pertinent language in this document. We hope it will
be useful. The policy on alternative payments is set forth in
the February 16, 1984, uniform civil penalty policy.
BACKGROUND
The 1984 civil penalty policy provides flexibility for EPA
to accept, under specified-conditions, a violator's investment in
environmentally beneficial projects to mitigate part of a civil
penalty. The policy allows the use of these alternative payments
as an incentive for settlement. The policy does not contemplate
a dollar-for-dollar reduction in the civil penalty equal to the
cost of an acceptable alternative payment project. Furthermore,
EPA will not accept more than the after tax net present value
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of an alternative payment project. The Agency also can choose
to accept less than that amount. Ł/
EPA must carefully balance the benefits of fostering settle-
ments by approving alternative payment projects against the benefits
of achieving the broadest deterrent impact from enforcement actions.
Allowing these projects to mitigate part of a penalty may reduce
the deterrent effect of an action on the regulated community.
A civil penalty is not tax deductible under 26 U.S.C.
§162(f); therefore, the full amount of the penalty is a
liability to a violator.Ł/ Conversely, if a violator invests
in an alternative payment project, that investment may be tax
deductible. EPA must use the after tax value of a proposed
investment when determining whether and by how much to mitigate
a civil penalty.Ł/
In addition to considering the tax effects of an alterna-
tive payment project, EPA must evaluate the cost of the project
in terms of its present value. An alternative payment project
usually requires expenditures over time.^/ Therefore, the Agency
also must reduce the after-tax value of the cash flows invested
in an alternative payment project to its net present value at
the date of settlement.
lyProposed alternative payment projects may not be used to
mitigate the entire amount of a civil penalty. The Agency
plans to issue further policy clarifying the use of alter-
native payments in settlement negotiations.
2/ A written agreement specifiying the tax implications of the
civil penalty is essential. The agreement should be a legally
binding contract. The agreement should state that the civil
penalty is punitive and deterrent in purpose and is a non- ,
deductible expense.
3/ In addition to tax benefits, a firm also can generate
positive, image-enhancing publicity from the project developed
for the alternative payment; however, the penalty policy requires
that any publicity a violator generates about the project must
include a statement that the project is undertaken in settlement
of an enforcement action by EPA or an authorized state.
4/ A dollar today is worth more than a dollar a year from now
for two reasons: 1) if a dollar today is held in a no-interest
checking account, inflation erodes the value of that dollar over
the year; and 2) if a dollar today is invested at a rate higher
than the rate of inflation, that dollar increases in value by
the amount of earnings in excess of the inflation rate.
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The BEN computer model can calculate the atter tax net
present value of a violator's proposed alternative payment.
Appendix A of tne BEN User's Manual provides the procedure tor
calculating after tax net present value of capital investmentr
operation and maintenance costs, and one-time costs.
USING BEN TO CALCULATE THE AFTER TAX NET PRESENT VALUE OF
ALTERNATIVE PAYMENTS
To use BEN to calculate after tax net present value of an
alternate payment project, respond to the BEN questions as
follows:
1. Enter the case name (variable 1);
2. For variables 2 through 4, enter the incremental
costs for the alternative payment project of:
Pollution control equipment;
b. Operation and maintenance;
c. One-time expenditure;
3. Substitute the date of settlement of the enforcement
action tor the first month of non-compliance
(variable 5);
4. Enter the compliance date or completion date of the
alternative investment for variables 6 and 7;
5. Select standard values for variables 8 through 13;jy
6. Select output option 2.
5/ Decreasing the tax rate used in BEN increases the amount of a
civil penalty and also increases the after-tax cost ot an
alternative investment. Therefore/ a violator has an incentive
to provide a lower marginal tax rate tor an alternative payment
project than the one used to calculate the civil penalty.
Both the civil penalty calculation and the alternative payment
calculation must use the same tax rate. The annual inflation
rate and the discount rate should be the same as the rates used
in the civil penalty calculation.
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Calculation C in output option 2 expresses the after tax
net present value ot tne alternative payment on tne date of
settlement, which is the date substituted for the first month
ot noncompliance (variable 5). THIS tigure is the maximum
amount by which EPA may mitigate a civil penalty. Attachment
A is an example ot a proposed alternative payment project with
the BEN output showing the after tax net present value of the
investment.
If you have any questions about calculating the after tax
net present value ot a proposed alternative payment, call Susan
Gary Watkins of my staff (FTS 475-8786).
Attachment
cc: Regional Counsels
Associate Enforcement Counsels
Compliance Office Directors
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ATTACHMENT A
ALTERNATIVE PAYMENT EXAMPLE
Suppose a violator offers to invest over the next 20 months
$500,000 in pollution control equipment. The equipment will
provide environmental benefits beyond those that result from
meeting legal requirements for compliance. The after tax net
present value in 1986 dollars of a $500,000 investment over a
period of 20 months is $299,562. Therefore, the value of the
alternative payment in this example is $299,562, although the
violator must commit to investing $500,000. Exhibit 1 shows
how the BEN model displays the data.
If EPA approves the alternative payment project in the
example, the Agency may propose an adjusted penalty target figure
that is as much as $299,562 less than the initial penalty target
figure.V Other adjustment factors also may reduce the initial
penalty target figure.
The effects of inflation and return on a dollar are smaller
over shorter periods of time. Consequently, the difference
between the after tax net present value of an alternative payment
and the total amount of the alternative payment decreases as the
time between the date of settlement and the date of the final
alternative payment decreases. If the violator in the example
could invest $500,000 in pollution control equipment in less
than 2 months after settlement, the net present value of the
investment wouDd be $76,742 greater (See Exhibit 2).
For using the BEN model to calculate the after tax net
present value of the proposed alternative payment for this
example the data required are:
1. Case Name: Alternative Payment Example
2. Capital investment: 500000 1986 dollars
3. One-time nondepreciable expenditure: 0
4. Annual O&M expense: 7000 1985 dollars
5. Month of settlement: 4, 1986
6. Compliance date:
7. Penalty payment date:
12, 1987
12, 1987
_!/ The Agency is never obligated to mitigate a civil penalty by
the full amount of the after tax net present value of an alter-
native payment project. For example, EPA might mitigate a civil
penalty by only half of the after-tax net present value of the
project.
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EXHIBIT 2
OUTPUT OPTIOB 2
ALTERNATIVE PAYMENT EXAMPLE
.-v r i" •» T : . . .
. 1986
*
2 Ł!»f = «Ł.:•'..
A. PRESENT VALUE COST "OF PURCH AS INS'" THE'INITIAL '
I IbH I
^^^^^XTn^^^^^^i^^^
OPERATING IT THROUGHOUT ITS USEFUL LIFE
303688
B. PRESENT VALUE COST OF ON-TIME PURCHASE AND
OPERATION OF INITIAL POLLUTION CONTROL
EQUIPMENT PLUS ALL FUTURE REPLACEMENTS
PRESENT VALUE COST OF DELAYED PURCHASE AND
OPERATION OP POLLUTION CONTROL EQUIPMENT
379682
PLUS ALL FUTURE REPLACEMENTS
———«••—
D. ECONOMIC BENEFIT OF A 1 MONTH DELAY
AS OF INITIAL DATE OF NONCOMPLIANCE
(EQUALS B MINUS C)
376304
1 MONTH DCLAV
THE ECONOMIC BENEFIT OP ft
AS OF THE PENALTY PAYMENT DATE, 1 MONTHS
ftFTER THC IMlTIftL DATE Or NDHCOMPLIAHCC
THE ECONOMIC SAVINGS CALCULATION ABOVE
U5CP TME POLLOM1NB VAMA6LE9; T
USER SPECIFIED VALUES
1. CASE NAME'
ALTERNATIVE PAYMENT EXAMPLE
3.
5.
• *•* *
7.
INITIAL CBPITftL IIMV 'STMCKT • 9
ONE 'I ME NONDEPRECIABLE EXPENDITURE -
FIRST MONTH OF NONCOMPLIANCE-
PENALTY PAYMENT- DATE-
*
11.
12,
O
1987
1987
STANDARD VALUES
o. uocruL Lire or POLLUTION CONTROL EQUIPMENT
9. INVESTMENT TAX CREDIT RATE - -.- -
10. MARGINAL INGOMC TAX RATE • > -
10.00
11. ANNUAL INFLATION RATE*
12. DIOCOUNT RATE
6.00
10.00
13. AMOUNT OF LOW INTEREST.FINANCING
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EXHIBIT 1
uuxrur OPTION 2
ALTERNATIVE PAYMENT EXAMPLE
APRIL 16, C19B6
A. PRESENT VALUE COST OF PURCHASING THE INITIAL
PHI I I IT TON mMTK-nt FntlTPMFMT DM TTMP ANP
OPERATING IT THROUGHOUT ITS USEFUL LIFE
B.
PRESENT VALUE COST OF ON-TIME PURCHASE AND
OF INTTTAL POLLUTION CDNTRDL
EQUIPMENT PLUS ALL FUTURE KEPLACEMENTS
PRESENT VALUE COST OF DELAYED PURCHASE AND
OPERATION OF POLLUTION CONTROL EQUIPMENT
PLUS ALL FUTURE REPLACEMENTS
ECONOMIC DENEFIT OF A 20 MUNIH •.•»-. L
AS OF INITIAL DATE OF NONCOMPLIAtiCE
(EQUALS B MINUS C)
5B62C
i\\~
FIT DF A 20 MONTH DELAY
MŁ CT l'!L t-.'JALTY PAYMENT DATE, 20 MONTHS
AFTER THE INITIAL DATE OF NONCOMPLIANCE
77252
_>«>_>_>_> THE ECONOMIC SAVINGS CALCULATION ABOVE '<-<-<-<-<-<•
MggP TUP POLL OWING VARIABLES! ,
USER SPECIFIED VALUES-
1. CASE NAME- ALTERNATIVE PAYMENT EXAMPLE
2 INITIAI_ CAPITAL INVESTMENT » »
5OOOOO
DOLLAR:-
3. ONE 'IME NONDEPRECIABLE EXPENDITURE -
4. ANNUAL OfcM EXPENSE- ; *.
7OOO 1986 DOLLAR;
5. FIRST MONTH OF NONCOMPLIANCE'
6. COMPLIANCE DATE-
7. PENALTY PAYMENT DATE- l.r
4, 1986
12. 1987
1987
STANDARD VALUES..
8.
9.
10.
11.
12.
13.
USEFUL -tlFE OF POLLUTION CONTROL
INVESTMENT TAX CREDIT RATE. -
MARGINAL INCOME TAX RATE--
ANNUAL INFLATION RATE- •. . X.-.
DISCOUNT RATE » x* ' ' • ' '• •
AMOUNT OF LOW INTEREST FINANCING
* . • ' ">i ' '" *
'• »• 1
EQUIPMENT -
. ' * •" * •
* ' * •
. • '
• *
.rui^i < . .
15
10.
50.
6.
IB.
0
YŁ,
0-
uo
00
V.
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PT.3
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PT.3-1
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GM-7S"
.(. 1IO.N A(,'K.NCY
WA>.HIM.IO.N. !).C. :0
JAN 2 4 1990
OKHl'F Oh ! vrORCt'Mf.Nr
\Sp ' .A(P| |.\ VF
M- )S i 11 >W lS(i
MEMORANDUM
SUBJECT: Use of Stipulated Penalties in EPA Settlement
Agreements
FROM: James M. StrocJ _
Assistant Administrator
TO: Addressees
This memorandum provides guidance on the use of
stipulated penalties in settlement of enforcement actions.
For each issue discussed, a preferred approach is stated
along with its rationale. These preferred approaches should
be followed absent unusual circumstances dictating an alter-
native approach. The guidance applies to judicial settle-
ments except that it does not supersede the September 21,
1987 Guidance on the Use of Stipulated Penalties in Hazardous
Waste Consent Decrees. It also applies to administrative
cases where EPA has legal authority to assess stipulated
penalties.
Stipulated penalties are penalties agreed to by the
parties to a settlement agreement for violation of the agree-
ment's provisions. These penalties are then made a part of
the agreement, and are enforceable if it is violated. In EPA
settlement agreements, the primary goal of a stipulated
penalty is to act as an effective deterrent to violating the
settlement agreement.
i
I. Types of Requirements to Which Stipulated Penalties
Should Apply
Any clearly definable event in a settlement agreement
may be appropriate for stipulated penalties in a given case.
Such events include testing and reporting requirements,
interim and final milestones in compliance schedules, and
final demonstration of compliance. The government litigation
team assigned to a case should carefully consider which
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consent agreement provisions are appropriate for stipulated
penalties and be prepared to vigorously enforce them. Stipu-
lated penalties"can even be attached-to-consent agreement
provisions requiring, payment of. up-front penalties so long as
the stipulated penalties are higher than the interest,
computed at the statutory interest rate, on the underlying
amount. Every consent agreement requirement to which stipu-
lated penalties are attached should be drafted to ensure that
the standards for determining compliance are clear and objec-
tive, and that any information required to be submitted to
EPA is clear and unequivocal.
In general, stipulated penalties are particularly impor-
tant for requirements of the consent agreement which do not
represent regulatory or statutory violations for which the
agency could potentially get statutory maximum penalties.
Such provisions may include a requirement to install specific
control equipment where the regulations and statute involved
require only compliance with a discharge or emissions stan-
dard, or environmental auditing or management requirements
designed to ensure future compliance. Without stipulated
penalty provisions, penalties for violation of such provi-
sions in judicial cases are only available at the judge's
discretion in a contempt action under the court's inherent
authority to enforce its own order.
Attaching stipulated penalties to violations of consent
agreement provisions which are also violations of a statute
or regulation with a specified statutory maximum penalty has
advantages and disadvantages which Agency attorneys should
consider carefully in the context of a particular case. The
advantage is ease of enforcement. The Agency can pursue
violations without having to bring a new enforcement action
or, in the judicial context, a contempt action. The disad-
vantage is where stipulated penalties for such violations are
set at less than the statutory maximum, parties may argue
that the government has bargained away some of its
enforcement discretion.
If a particularly egregious statutory or regulatory
violation occurs for which the government feels the applic-
able stipulated penalties are not adequate, sources may claim
the government is equitably estopped from pursuing other
enforcement responses. Sources may argue in the context of a
contempt action or new enforcement action that the govern-
ment has already conceded in the consent agreement that a
fair penalty for this type of violation is the stipulated
penalty, and therefore, the court should not require any
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additional penalty. Sources may make this argument even if
the. government has reserved all rights to pursue various
enforcement responses for consent agreement violations.1
II. Level of Stipulated Penalties
Because the statutes EPA is charged with enforcing vary
so widely, penalty schedules for all media or types of viola-
tions are not practical. There are, however, several impor-
tant criteria which should always be considered in setting
stipulated penalty amounts. Each program office, in concert
with the appropriate OECM Associate Enforcement Counsel, may
want to consider providing further, more specific guidance on
appropriate levels or ranges for stipulated penalties based
on the criteria below.
One key element which applies to setting the levels of
all stipulated penalties for violation of a consent agreement
provision is that the defendant is by definition a repeat
offender when the provision is violated. For this reason,
such stipulated penalties should be higher on a per day basis
than the initial civil penalties imposed. See Guidelines for
Enforcing Federal District Court Orders in Environmental
Cases (GM-27).
The economic benefit accruing to a source due to a
violation should be recovered in order for the stipulated
penalty to be an effective deterrent. For some types of
violations, such as notice provisions, the economic benefit
of noncompliance may be minimal, though significant stipu-
lated penalties may be appropriate based on other criteria as
discussed below. For these types of violations, no formal
BEN analysis is necessary. For violation of provisions which
involve quantifiable delayed or avoided costs, such as
installation of control equipment as part of a compliance
schedule, the minimum stipulated penalty should be the
economic benefit of noncompliance. However, the recidivism
factor will nearly always justify a penalty well above this
minimum, which often serves as the point of departure for a
minimum initial penalty.
The source's ability to pay can be another important
criterion to consider. How much of a deterrent a stipulated
penalty is will depend on how financially significant it is
to the source. The same stipulated penalty may be
1 In considering whether to attach penalties to violations
uncovered by an environmental audit, the November 14, 1986 Final
EPA Policy on the Inclusion of Environmental Auditing Provisions
in Enforcement Settlements (GM-52) should be consulted.
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financially crippling to one source, while merely a routine
business expense for another. However, the burden is always
on the-idef endant to raise such issues during negotiations-and
to justify lower, stipulated, penaltieazthan.'.the government has
proposed. Financial ability to pay a penalty can be
determined using the ABEL computer program for corporate
violators and the MABEL computer program for municipal
violators.
It should be emphasized that this factor should not be
considered a reason for lowering the level of stipulated
penalties below the level equal to the economic benefit. It
would mainly affect the degree to which this base minimum
amount is increased to account for the recidivist nature of
the violation. The key concern is that stipulated penalties
should be set at levels which are significant enough to deter
violations rather than resulting in a "pay-to-pollute"
scheme.
Another criterion which should be considered in setting
stipulated penalty amounts is the gravity of the violation,
i.e.. how critical is the requirement to the overall
regulatory scheme and how environmentally significant is the
violation. The environmental significance factor should
include consideration of potential and actual harm to human
health and the environment. In general, consent agreement
provisions which are central to a particular regulatory
scheme should have higher stipulated penalties than
provisions that are considered less significant. It is up to
each enforcement program to make judgments about the relative
importance of respective requirements. As previously noted,
some consent agreement requirements such as notice provisions
may have little or no associated economic benefit, but may
nevertheless be critical to the regulatory program in
question and would warrant high stipulated penalties.
Another consideration related to the gravity component
is the source's history of compliance. If the source has a
record of previous violations, a higher stipulated penalty
may be necessary because earlier enforcement responses were
ineffective in deterring subsequent violations.
Another option to consider whenever setting stipulated
penalty levels is an escalating schedule, in which the
stipulated penalty increases with the length of the
violation. For example, violations of up to two weeks might
have stipulated penalties of $1000 per day while violations
of two to four weeks might have stipulated penalties of $2000
per day, and so on.
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III. Method of Collection
Settlement agreements should"state the method by which
stipulated penalties will be coilectedc_5Va options are for
the settlement agreement to provide that the penalty is
automatically due upon the occurrence or non-occurrence of a
specified event, or it may make the penalty payable only on
demand by the government.
Automatic payment is the preferred approach. It saves
resources which would otherwise be devoted to making demands
for payment and may put the government in a more advantageous
position should the source declare bankruptcy. If payment is
made on demand, the consent agreement should make it clear
that the legal liability of the source for the stipulated
penalty attaches immediately upon violation, and it is only
payment of the penalty to the Agency which is not due until
demand is made.
Settlement agreements should always state where and how
the penalty should be paid and how the check should be draft-
ed. See EPA Manual on Monitoring and Enforcing Administra-
tive and Judicial Orders for additional guidance. In
addition, settlement agreements should not agree-to pre-
enforcement review of accrued stipulated penalties.
IV. Timing of Enforcement Responses
Prompt action to collect stipulated penalties due under
any consent agreement is crucial. If stipulated penalties
are due on demand, it is very important such demands be
timely. The government encounters significant difficulty
collecting stipulated penalties if it sits on its rights.
Delay allows penalties to increase to levels parties may
argue are inequitable. Sources may also raise equitable
defenses such as laches or estoppel, arguing that the govern-
ment cannot fail to exercise its rights for extended periods
of time allowing stipulated penalties to continue to accrue
and then move to collect unreasonably high penalties. The
government, of course, can and should always rebut such
claims by arguing it is simply enforcing the decree or agree-
ment as agreed to by defendant, and is not subject to such
equitable defenses. However, this unnecessary complication
should be avoided.
A cap on the amount of stipulated penalties which can
accrue is generally not a preferred solution to this problea.
The stipulated penalty would lose its deterrent value once
the cap is reached. Also, the main goal of any enforcement
action must be compliance with the law so that public health
and welfare, is protected. If consent agreement provisions
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are allowed to be violated long enough for a cap to be reach-
ed, serious environmental consequences may have occurred.
Providing that, stipulated penalties only apply for a
specific, reasonably short period of time in conjunction with
reserving to the government all available enforcement respon-
ses for violation of the consent agreement, however, solves
many of the problems mentioned above. By its own terms,
stipulated penalties will not accrue to levels defendants can
argue are inequitable. The government will be in a strong
position when it pursues other enforcement options, such as
contempt actions or a new enforcement action to get
additional penalties, because it can argue that the penalties
in the original consent agreement were not enough to deter
the defendant from further violations and the possibility of
additional penalties was clearly contemplated.
V. Reservation of Rights
All consent agreements must contain a provision which
reserves to the government the right to pursue any legally
available enforcement response for violation of any consent
agreement provision. These enforcement responses would
include civil contempt proceedings and injunctive relief, and
criminal contempt proceedings for particularly egregious
violations. However, for provisions mandated by statute or
regulation and which have stipulated penalties attached, a
reservation to pursue statutory penalties is suggested but
not required. For model language, see the October 19, 1983
Guidance for Drafting Judicial Consent Decrees (GM-17).
VI. Collection of Stipulated Penalties
The government should be prepared to collect the full
amount of stipulated penalties due under a consent agreement.
No agreement should ever anticipate compromise by specifying
instances where it will be allowed, aside from a standard
force majeure clause. In rare, unforeseeable circumstances,
however, the equities of a case may indicate that the govern-
ment may compromise the amount it agrees to collect. For
penalties payable on demand, the government may also exercise
prosecutorial discretion by declining to proffer a demand for
stipulated penalties for minor violations of a consent agree-
ment.
It may also-be appropriate to provide that stipulated
penalties for violation of interim milestones in a compliance
schedule will be forgiven if the final deadline for achieving
compliance is met. This is clearly inappropriate where there
is significant environmental harm caused by the defendant
missing the interim deadlines. If such a provision is used.
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the defendant should generally be required to place accrued
penalties in an escrow account until compliance by the final
deadline is- achieved.
In judicial cases, the Attorney General and his
delegatees in the Department of Justice (DOJ) have plenary
prosecutorial discretion to compromise stipulated penalties.
This authority stems from 25 U.S.C. § 516, which reserves to
DOJ authority to conduct the litigation of the United States,
including cases in which an agency of the United States is a
party, and the cases and regulations broadly interpreting
this authority.
In administrative cases handled solely by EPA,
stipulated penalties should be collected pursuant to the
enforcement authority granted to EPA under the statute gover-
ning the case. This authority to collect and compromise
stipulated penalties varies from statute to statute.
Separate from the process for collecting stipulated
penalties, EPA must keep track of money owed the federal
government (accounts receivable) resulting out of the acti-
vities of the Agency, including administrative penalty
assessments. A stipulated penalty becomes an account receiv-
able when the appropriate Agency official determines that a
violation of a consent agreement provision with an attached
penalty has occurred. Under Agency financial regulations and
policies for monitoring accounts receivable, stipulated
penalties due and owing must be reported within three days to
the Regional Financial Management Office (FMO). The FMO is
responsible for entering the stipulated penalty as an
accounts receivable into the Agency's Integrated Financial
Management System (IFMS). The "appropriate agency official"
who determines the existence of a stipulated penalty account
receivable is responsible for keeping the FMO updated on the
status of enforcement penalty collection efforts. A more
detailed account of these procedures is included in the
Manual on Monitoring and Enforcing Administrative and Judi-
cial Orders.
Addressees:
Regional Administrators
Regions I-X
Deputy Regional Administrators
Regions I-X
Regional Counsels
Regions I-X
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E. Donald Elliott
General Counsel
Headquarters ..Compliance Program Divisions Directors
Mary T. Smith, Acting Director
Field Operations and Support Division
Office of Mobile Sources
David Buente, Chief
Environmental Enforcement Section
U.S. Department of Justice
Associate Enforcement Counsels
Workgroup Members
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PT.3-2
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I SITED STATES F.NV IRONMENT Xl. PROTECTION
\V \>H|N'.1OV I) (
PT. V
January 11, 1988 ' '
MEMORANDUM
SUBJECT: Procedures for Assessing Stipulated Penalties
FROM: Thomas L. Adams, Jr. ^—-^W-****/ V*. *>s^«—*> >^~
Assistant Administrator for Enforcement i \
and Compliance Monitoring \\
TO: Regional Administrators
Regional Enforcement Contacts
Regional Counsels
Regional Program Division Directors
Program Office Enforcement Directors
The purpose of this memorandum is to clarify procedures for
assessing stipulated penalties for consent decree violations.
As discussed in my August 23, 1986 memo on Expanded Civil
Judicial Referral Procedures, the direct referral process will
be followed to enforce the terms of a judicial decree for payment
of penalties agreed to as part of the settlement on the original
violation. Stipulated penalties (i.e. penalties due and owing
because of a violation of the consent decree terms) are not
covered under the above direct referral procedures. -The procedure
described below will be used for enforcing the payment of
stipulated penalties.
Unless the consent decree specifies otherwise, letters to
defendants demanding payment of stipulated penalties should be
sent by DOJ. The following procedures apply for enlisting DOJ's
assistance:
o The Region sends a letter to DOJ (copy to OECM) requesting
DOJ to issue a demand letter. The letter to DOJ should
contain summary information sufficient to apprise DOJ of
relevant facts, issues and proposed solutions.
o DOJ copies the Region and OECM with any response to the
demand letter.
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o If the response is unsatisfactory, the Region will send
a direct referral package to DOJ (copy to OECM). The
referral package should request that DOJ enforce against
the unresolved consent decree violations, include any
relevant new information arising since the demand letter
request, and specify the extent of the relief which EPA
wishes to pursue.
o DOJ takes appropriate action to enforce the original
consent decree with full participation by the Region.
o When the defendant pays stipulated penalties to the
Federal government without receiving a demand letter
(e.g. if the consent decree establishes stipulated
penalties which are automatically due when certain events
happen and the defendant pays such sums to EPA or the
U.S. Attorneys Office), the Region should notify the
appropriate Associate Enforcement Counsel of that fact
in writing or by telephone. OECM is currently developing
procedures for' tracking and collecting civil penalties
which may change the notification requirement in the
future.
SPMS CONSENT DECREE TRACKING MEASURE
Under the SPMS consent decree measure, a demand letter is not
considered a "formal enforcement response." A penalty payment
must be received or a direct referral package sent to DOJ (copy
to OECM) before the violation is considered addressed. Where a
demand letter has been sent, the Region should report the decree
in the "in violation with action planned" category. When a
direct referral is sent to DOJ to address the non-payment of a
stipulated penalty, the Region should report the decree in the
"in violation with action commenced" category.
If you have any questions regarding these procedures, please
contact Lisa Oyler, Compliance Evaluation Branch, OECM, at 475-6113
cc: Roger J. Marzulla, DOJ
David Buente, DOJ
Gerald A. Bryan, OCAPO
^. ._ -»_^^_ L. ^ _ k.1 ^ T ^
\JC L Q X U n • Dbjaiif vw*-»ts-f
Thomas Gallagher, NEIC
Deputy Assistant Administrators, OECM
Associate Enforcement Counsels, OECM
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PT.4-1
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PT. M-
ENFORCEMENT SENSITIVE AND CONFIDENTIAL
August 1, 1993
MEMORANDUM
Subject: Economic Benefit from Non-Compliance: An Analysis of
Judicial and Administrative Interpretation
From: Craig Spencer, Student Intern*
Program Development and Training Branch
Matthew Azrael, Student Intern
Program Development and Training Branch
To: Jonathan Libber, BEN & ABEL Coordinator
Program Development and Training Branch
Government personnel may contact Jonathan Libber for a copy of
this document. He may be reached at (202) 564-6011.
*Jason Grinnell, another law student, played a key role in
updating this memorandum.
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PT.4-2
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ENFORCEMENT SENSITIVE AND CONFIDENTIAL
August 1, 1993
MEMORANDUM
Subject: Ability to Pay — For-Profit Entities: An Analysis of
Judicial and Administrative Interpretation
From: Craig Spencer, Student Intern*
Program Development and Training Branch
Matthew Azrael, Student Intern
Program Development and Training Branch
To: Jonathan Libber, BEN & ABEL Coordinator
Program Development and Training Branch
Government personnel may contact Jonathan Libber for a copy of
this document. He may be reached at (202) 564-6011.
*Jason Grinnell, another law student, played a key role in
updating this memorandum.
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CL.1
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CL.1-1
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U.S. Environmental Protection Agency
Contractor Listing Procedures and Guidance
Office of Enforcement
Contractor Listing Program
May 1993
051193 rev.
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TABLE OF CONTENTS
I. INTRODUCTION
II. BACKGROUND AND LEGAL AUTHORITY
in. LISTING PROCEDURES .................................. 3
A. Computation of Time ............................. 3
B.
1.
2.
3.
4.
5.
6.
Mfiiptsin Fil* of Pendine Criminal Cases
Obtain Notice of Convictions
Review tf\$ ConviCtionS
Notify Facilitv and Public of Listing
EPA Guidance On Implementation of Mandatory
Listing
Plea Agreements
(4)
(4)
(4)
(4)
(5)
(7)
C. Discretionary Listing ............................. 7
1. LO Receives Recommendation To List (8)
2. Review Recommendation (9)
3. LO Briefs AA On Listing Recommendation (9)
4. AA Declines To List (10)
5. AA Decides To Proceed With Proposed Listing. LO Notifies
Facility and Prepares Draft Determination (10)
6. Final Agency Action Taken On The Recommends tifln to List
(11)
7. Withdrawal Of A Recommendation To List (15)
8. Stavs Of A Discretionary Listing Action (16)
9. EPA Guidance On Implementing Discretionary
Listing (17)
10. Big Apple Wrecking Corporation Case (18)
D. Defining The Violating Facility ...................... 18
1. Introduction (18)
2. Role of Regional Counsel. Regional
Program Staff, and CID (21)
3. Guidance Document: Defining the "Violating Facility" for
Purposes of Listing Asbestos Demolition and Renovation
Companies Pursuant to Section 306 of the Clean Air Act, March
11, 1988. (19)
4. Contractors (20)
5. Independent Facilities (21)
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APPENDIX
TABLE ONE:
TABLE TWO:
Attachment A:
Attachment B:
Attachment C:
Attachment D:
Attachment E:
Attachment F:
Attachment G:
Attachment H:
Attachment I:
Attachment J:
Attachment K:
Attachment L:
Attachment M:
Attachment N:
IV. PROCEDURES FOR REMOVAL FROM THE LIST
A. Automatic Removal "
1. Mandatory Listing
2. Discretionary Listing
B. Requests For Removal
45-DAY PERIOD.
1. Removal Of Underlying Court Order.
2. Expiration Of One Year
(Discretionary Listing Only)
3. Plan For Compliance
(Discretionary Listing Only)
4. The Condition Giving Rise To Listing Has
Been Corrected
5. Removal Hearing (Administrative Appeals
To Case Examiner and the Administrator)
(22)
(22)
21
22
23
(23)
(24)
(24)
(24)
(27)
(31)
Listing Official's Discretionary Listing Checklist.
Listing Official's Removal Checklist
Model Confirmation Letter to a Facility Listed Under Mandatory Listing.
Request For Removal From the List of Violating Facilities (Mandatory
Listing) [Enclosure with Attachment A]
Model Letter Notifying GSA of Addition to Lists .of Parties Excluded
From Federal Procurement or Nonprocurement Programs (Mandatory
Listing).
Model Memorandum providing information for press office preparation
of press release on listing action.
Model Memorandum Requesting Comments on Recommendation to List.
Model Request for Additional Information From Recommending Person
(Discretionary Listing).
Contractor Listing Program Legal Authority.
Contractor Listing Regulations, 40 CFR Pan 15, September 5, 1985.
Memorandum, Implementation of Mandatory Contractor Listing. August
8, 1984.
Memorandum, Guidance on Implementing the Discretionary Contractor
Listing Program. November 26, 1986.
Memorandum, Listing Asbestos Demolition and Renovation Companies
Pursuant to Section 306 of the Clean Air Act. March 11, 1988.
Memorandum, Asbestos Contractor Listing. June 30, 1988.
Memorandum, EPA Policy Regarding the Role of Corporate Attitude.
Policies. Practices, and Procedures In Determining Whether To Remove
A Facility From The EPA List of Violating Facilities Following A
Criminal Conviction. October 31, 1991.
Contractor Listing Guidance List, November 1991.
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Attachment 0:
Attachment P:
Attachment Q:
Attachment R:
Attachment S:
Attachment T:
Attachment U:
Attachment V:
Attachment W:
Attachment X:
Attachment XX:
Attachment YY:
Attachment Z:
Sample Regional Administrator's Recommendation to Remove Facility
From the EPA List of Violating Facilities, Exxon Bavway Refinery,
Bayonne Terminal and Inter-Refinerv Pipeline. November 6, 1991.
[DELIBERATIVE PROCESS DOCUMENT! DO NOT RELEASE!
Sample Regional Administrator's Recommendation Not to Remove Facility
From the EPA List of Violating Facilities, * lul" Communit
Service Treatment Plant. March 11, 1993. FDELIBERATTVE PROCESS
DOCUMENT; DO NOT RELEASE!
Assistant Administrator's Decision, Valmont Industries. Inc.. January 12,
1990.
Case Examiner's Decision, Valmont Industries. Inc.. June 5, 1990.
General Counsel's Decision, Big Apple Wrecking Corporation. August 15,
1991.
Assistant Administrator's Decision, The Bill L. Walters Companies. May
li. 1991.
Assistant Administrator's Determination Regarding Petition For
Determination of Independent Facilities, Exxon Corporation rExxon
Bavwav). September 30, 1991.
Assistant Administrator's Determination, Fflitt HftTIP1"1" Community
Service Treatment Plant. April 19, 1993.
"EPA's Contractor Listing Program: A List You Do Not Want To
Make," Jonathan S. Cole, Federal Facilities Environmental Journal.
Summer 1991.
"Contractor Listing: EPA's Hidden Enforcement Program,", Jonathan S.
Cole, Journal of Environmental Permitting. Winter 1992/93.
"Independent Verification That Requirements For Removal Have Been
Met in Mandatory Listing Cases," from EPA Contractor Listing
Protocols.
"Definition, for Purposes of Removal, of the 'Condition' That Gives Rise
to Mandatory Listing," from EPA Contractor Listing Protocols.
Discretionary Listing Caselaw:
a. United States v. Interlake. Inc.. 432 F. Supp. 987 (N.D. HI.
1977);
United States v. U.S. Steel Com.. 10 E.R.C. 1751 (N.D. 111.
1977);
United States v. Del Monte de Puerto Rico. 9 E.R.C. 1495
(D.P.R. 1976).
5.
C.
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LIST OF ABBREVIATIONS
The following abbreviations are used in the Contractor Listing Procedures.
AA Assistant Administrator for Enforcement •
CAA Clean Air Act
CE Case Examiner
CFR Code of Federal Regulations
CID Criminal Investigation Division, Ofc. of Criminal Enforcement
CLP Contractor Listing Program
CWA Clean Water Act
DCE Director of Civil Enforcement
DOCE Director, Office of Criminal Enforcement
EC(s) Enforcement Counsel for Air or Water, or Both
ECS-DOJ Environmental Crimes Section, Department of Justice
EPA Environmental Protection Agency
GSA General Services Administration
List The EPA List of Violating Facilities
LO Listing Official
OCAPO Office of Compliance Analysis and Program Operations
OCE Office of Criminal Enforcement
OGC Office of General Counsel
OPA Office of Public Affairs
ORC Office of Regional Counsel
RA Regional Administrator
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Contractor Listing Procedures and Guidancq
I. INTRODUCTION
This document sets forth the procedures that the Contractor Listing Program (CLP) and
the Listing Official (LO), or his or her designee, use in administering the contractor listing legal
authority. (Clean Air Act § 306, 42 U.S.C. § 7606; Clean Water Act § 508, 33 U.S.C. § 1368;
Executive Order 11738; and 40 CFR Part 15). It addresses both listing and removal procedures
and identifies the nature of the assistance that will be required from all EPA offices supporting
the listing program.
This document includes a summary of the legal authority for the contractor listing
program, including the statutory and regulatory authorities governing the contractor listing
program. It contains a detailed description of the procedures followed by the LO in processing
mandatory listing actions and discretionary recommendations to list It also provides a detailed
description of the procedures the LO follows when processing automatic removals and requests
for removal from the EPA List of Violating Facilities (the List). It describes the essential roles
of EPA staff in the Region and at Headquarters in carrying oui the listing program. It also
describes the procedures for publishing, confirmations of listing and removal from the List in the
GSA "Lists of Parties Excluded From Federal Procurement and Nonprocurement Programs."
In addition to describing in detail the procedures to be followed when processing listing
and removal actions, this document contains numerous documents which can be used as guidance
when drafting the documents called for under the CLP's procedures. The attachments also
include the federal regulations governing the listing program and copies of policy documents and
case decisions pertaining to the listing program.
Although this document provides detailed procedures for processing listing and removal
actions, it does not attempt to prescribe the circumstances under which listing should be used
as an enforcement tool.
For questions or further information on any aspect of the contractor listing program,
please call the CLP at (202) 260-8781.
H. BACKGROUND AND LEGAL AUTHORITY
The Clean Air Act (CAA), Section 306, and the Clean Water Act (CWA), Section 508,
as implemented by Executive Order 11738 [38 FR 25161, September 12,1973] and 40 CFR Part
15, automatically prohibit facilities from being used in the performance of any Federal contract,
grant or loan (including subcontracts, subgrants, and sub loans), where a person who owned,
* The policies and procedures set forth in this document are intended solely as guidance for government
personnel. They are not intended, and cannot be relied upon, to create any rights, substantive or procedural,
enforceable by any party in litigation with the United States. EPA reserves the right to act at variance with
these policies and procedure, and to amend them at any time without publk notice.
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leased, or supervised the facility at the time of the violation has been convicted under CWA
§ 309(c) or CAA § 113(c). The 1990 CAA amendments added a sentence to CAA § 306. This
sentence provided explicit authority for the Administrator to list additional facilities of a
convicted company. This amendment is a formal legislative statement of authority which already
existed under EPA policy and EPA's inherent contract administration authority. This
amendment is discussed in more detail below. The legal authorities also permit EPA to list
facilities on the basis of certain civil violations of the CWA or CAA, under its discretionary
listing authority.
Two executive orders were signed subsequent to passage of the CWA and CAA. Both
are substantially the same and reiterate the language of statutes, as well as stating the policy
behind the contractor listing provisions, delegating authority to the Administrator, requiring
cooperation from each Federal Agency, and stating the duty of the Administrator to circulate the
List of Violating Facilities and to issue rules that are, to the maximum extent feasible, uniform
with respect to the listing of CAA and CWA violators.
Pursuant to Executive Order 11738, EPA promulgated 40 CFR Part 15 (40 Fed. Reg.
17124) to provide procedures for ensuring that Executive branch agencies conduct their
procurement and assistance programs in accordance with the President's responsibility for
ensuring compliance with CAA and CWA standards. On February 5, 1979, EPA appended to
these regulation a procedural statement explaining the decisionmaking process within EPA
relating to placement of facilities on the list. Revision and amendments to the contractor listing
regulations were promulgated on September 5, 1985 (50 FR 36188). Draft amendments and
revisions have been prepared pursuant to the 1990 Clean Air Act Amendments, and
promulgation of these is scheduled for mid-1993.
Several sections of the legislative history of the CWA and CAA have specific references
to contractor listing. Some of the more significant language in the legislative history is as
follows:
1. "This section [CWA § 508] would be limited, whenever feasible and
reasonable to contracts affecting only the facility not in compliance, rather than an entire
corporate entity or operations division. There might be cases where a plant could not participate
in a Federal contract due to a violation but another plant owned by the same company might bid
and transfer other work to the first plant. This type of action would circumvent the intent of this
provision. In this case, the company's second facility should also be barred from bidding until
the first plant returns to compliance..." Legislative history of Federal Water Pollution Control
Act, 1972, Senate Report, p.3749.
2. "It [the amendment] also addresses situations where determining the definition
of the facility is problematic - such as asbestos demolition and renovation companies who move
their operations from building to building. This amendment clarifies that in such situations EPA
can define the facility to be the office of the convicted company ... Discretionary rather than
mandatory listing of additional facilities provides the flexibility necessary for the EPA to
consider variations in the structure of violating industries." CAA Amendments, Report on
Environment and Public Works, United States Senate, December 20, 1989. pp. 371-372.
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Facilities prohibited from receiving federal contracts or assistance under this authority
are placed on the Environmental Protection Agency's (EPA) List of Violating Facilities. The
statutes, their legislative histories, the Executive Order and the regulations identify two purposes
for the listing program: (1) to protect the government's proprietary interest; and (2) to ensure
compliance with the CAA and CWA.
Facilities owned, leased, or operated (at the time of the violation) by persons2 found
guilty of certain criminal convictions are subject to automatic (i.e., mandatory) listing upon
conviction. Facilities are subject to discretionary listing, after following procedures contained
in the regulations, as a result of certain civil and criminal violations of the CAA or CWA, or
state or local criminal convictions for violating clean air or clean water standards. Although
CAA and CWA violations which have been the subject of criminal or civil enforcement activities
are the basis for listing a facility, listing is an administrative function which is independent of
the underlying enforcement action. Listing provides EPA with an effective administrative tool
to obtain compliance with the CAA and CWA where an administrative or judicial action
identified in 40 CFR § 15.11(a)(l) - (6) has already been initiated against a facility, or where
its owner, operator, or supervisor has been convicted of an offense under CAA § 113(c) or
CWA § 309(c).
ffl. LISTING PROCEDURES
A. Computation of Time. Unless otherwise stated, in computing any period of time
prescribed or allowed in the protocols, the day of the event from which the
designated period begins to run shall not be included. Saturdays, Sundays, and
Federal legal holidays shall be included. When a stated time expires on a
Saturday, Sunday, or a legal holiday, the stated time period shall be extended to
include the next business day. Failure to take action in a timely fashion may
result in the loss of rights, termination of a listing or removal action, or a
decision to proceed with the listing or removal action without the participation of
the nonresponding party.
B. Mandatory Listing. The facility that is the source of the CAA or CWA violations
is automatically placed on the List if it is owned, leased, or supervised (at the
time of the violation) by a person convicted under CAA § 113(c) or CWA §
309(c), for those violations. § 15.103 Even though a facility is automatically
listed if it is the source of a CAA or CWA violation that leads to the conviction
of the owner, operator, or supervisor of the facility, the LO follows the steps
listed below to process the mandatory listing action.
2 Throughout this document, references .to ^persons * are understood to include all entities defined as a
•person'in 40CFR § 15.4.
3 Throughout this document, references to the regulations are to 40 CFR Part IS, unless otherwise
indicated. Thus, 40 CFR § IS. 10 is cited as § IS. 10.
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1. Maintain File of Pending Criminal Cases. The Contractor Listing
Program (CLP), with assistance from the Office of Criminal Enforcement,
Criminal Investigation Division (CID), develops and maintains a
compilation of the indictments, informations, and other charging
documents that evidence potential criminal charges that may lead to
mandatory listing of a facility.
2. Obtain Notice of Convictions. It is the responsibility of CID to notify the
LO of criminal convictions, see § 15.13(a), and to supply copies of the
informations, indictments, or other charging documents, and judgments of
conviction, to the LO. Notice of the conviction should be sent to the LO
prior to sentencing, even though the judgment of conviction may not be
filed until some time later. The CLP may also request case documents
directly, e.g., from the court or from the U.S. Attorney's Office.
3. Review the Convictions. The LO determines whether listing is warranted
under the regulations by reviewing the documents associated with the
conviction to ensure that: (a) the conviction occurred under CAA §
113(c) or CWA § 309(c), § 15.10.; and (b) that the facility to be listed
was owned, leased or supervised, at the time of the violation giving rise
to the conviction, by the person convicted under CAA § 113(c) of CWA
§309(c), § 15.10.
These determinations may require the LO to review the following
documentation, obtained with the assistance of CID: (1) documentation
of the charges filed against the defendant, as evidenced by the signed and
dated indictment, information, or other charging document(s) (original and
as finally amended); (2) documentation of the circumstances of the
conviction, as evidenced by court-filed documents, such as the signed and
dated final plea agreement(s), dismissal(s) of counts, and sentencing
report(s) and memoranda; (3) documentation that the final conviction or
guilty plea has been entered by the court; (4) documentation that the
sentence has been imposed, as evidenced by court documents, such as the
signed and dated final Judgment and Commitment/Probation Order; and
(5) documentation evidencing the underlying technical data, evidence of
violation or corrective action, or other relevant information.
4. Notify Facility and Public of Listing. Once the LO determines that a
facility meets the criteria for mandatory listing (see § III.D. below
("Defining The Violating Facility")), the LO:
a. Places the facility on the List as of the date of conviction (i.e., the date
of the judgment order of conviction);
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b. Assigns a docket number to the facility and places the case on the listing
docket;
c. Notifies the Assistant Administrator for Enforcement (AA); the Director,
OCAPO; the Director of Civil Enforcement (DCE); ine Director, Office
of Criminal Enforcement (DOCE); the owner, operator, or supervisor of
the facility; the Enforcement Counsel (EC) for Air, or Water, or both; the
Regional Administrator, Office or Regional Counsel, and regional
program office; the Chief Counsel, Environmental Crimes Section,
Department of Justice (ECS-DOJ); the Director, Criminal Investigation
Division, Office of Criminal Enforcement (CID); and the Assistant United
States Attorney (AUSA) in the criminal action. § 15.16(a);
d. Notifies the General Services Administration (GSA) that the facility is to
be added to the "Lists of Parties Excluded From Federal Procurement or
Nonprocurement Programs."
e. Provides the EPA Office of Public Affairs (OPA) with the information
necessary to prepare a press release or press advisory,4 where
appropriate.
5. EPA Guidance On Implementation of Mandatory Listing
a. Summary of Memorandum
On August 8, 1984, the Assistant Administrator for Enforcement issued
a memorandum setting forth policy and procedures for Mandatory Listing. The
main points of this memorandum are:
1. Facilities owned, operated or supervised by convicted violators of
the CWA or CAA will be automatically placed on the List of
Violating Facilities.
4 Use of Press Releases . The LO works with the regional press office tod EPA Office of Public Affairs
to see that press releases concerning listing actions are issued, as appropriate, to the national press, local media
in the area where the violations occurred, and the trade press of the affected industry. (Saa. Guidance on
Implementing the Discretionary Contractor Listing Program (November 26,1986, GM-53).
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2. Only criminal convictions in Federal court will result in listing.
State court convictions dq not result in mandatory listing3.
3. Verification of conviction (entry of guilty verdict or guilty plea) by
the Associate Enforcement Counsel for Criminal Enforcement
(now the Director of Criminal Enforcement) triggers listing.
(NOTE: This policy has been superseded; signing of the judgment
order triggers listing, and the date of entry of judgment is the date
upon which the automatic statutory ineligibility of the violating
facility is effective.)
4. Removal procedures
b. Discussion
As noted above, OE's policy is to confirm a mandatory listing when a
judgment order of conviction has been signed in a criminal case. This policy was
instituted because a guilty plea or verdict can be modified prior to sentencing and
entry of judgment, affecting the consequent listing. The current practice ensures
that listing decisions, including determining what is the "condition giving rise to
the conviction," are made with reference to the appropriate final judicial order in
the criminal case.
The procedures outlined in the 1984 memorandum have been, for all
practical purposes, superseded by the contractor listing • protocols (adopted
October 1987, revised 1991), although the concepts, except as noted above,
remain valid. Other features of the CLP as set forth in this memorandum have
also been changed: confirmations of listing and removal are no longer published
in the Federal Register. The GSA list is used instead. The CLP receives notices
of convictions from the CID upon receipt by the CID.
EPA recognizes the potential for confusion within the Federal government
contracting community if issuance of a Confirmation of Listing is delayed, for
example, because the CLP did not receive timely notification of a criminal
conviction in a case that results in mandatory listing. Consequently, it is
important for the CLP to be notified of pending cases as soon as possible, prior
to conviction, so that it can be prepared to issue prompt confirmation of listing
after the conviction. The CLP has recently established procedures by which other
s However, state court convictions may be the basis for discretionary listing, or for debannent or suspension
by EPA's Office of Grants and Debannent, Debannent and Suspension Division, pursuant to the Federal Acquisition
Regulation, 48 CFR Part 9, or EPA's Nonprocuretnent Debannent and Suspension Regulation, 40 CFR Part 32.
For information on these authorities contact the EPA Debannent and Suspension Division (OARM, Office of Grants
and DebannentXMail Code PM-216F) at (202) 260-8025.
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Federal investigative agencies, e.g., the Federal Bureau of Investigation and the
Naval Investigative Service, will provide to the CLP information about CAA and
CWA criminal cases in which EPA is not involved.
It is EPA's intention that the A A will make necessary listing decisions
(e.g., in certain cases, what is the violating facility), within 10 days of the CLP's
receipt of a Judgment Order of conviction. In some cases, however, it will be
necessary, due to the complexity of the case, to obtain additional information
concerning the violation that led to the criminal conviction and consequent
mandatory listing. In such cases, it is EPA's intention that the AA will make
necessary listing decisions within 10 days after the CLP has the information
necessary to make such determinations.
6. Plea Agreements.
The statutory ineligibility that results from a criminal conviction under
CAA § 306 or CWA § 508 is automatic and is self-executing. It is a
Congressionally mandated restriction on using appropriated Federal funds for
contracts, grants or loans which are to be performed using a facility which was
owned, operated or supervised at the time of the violation, by a convicted CAA
or CWA violator.
Neither EPA nor other Federal authorities (e.g., U.S. Attorneys) may
agree not to apply the mandatory prohibition of CAA § 306 and CWA § 508.
Defendants in criminal cases may attempt to seek such assurances from the U.S.
Attorney's Office, or from EPA. It is EPA's position that such assurances should
not be given, nor should EPA agree to substitute a charge which will not result
in mandatory listing for a CAA or CWA criminal charge (if justified by the facts)
which would result in mandatory listing (for example, if a Clean Water Act
criminal charge is readily provable, then it is inappropriate to agree to substitute
a Rivers and Harbors Act (Refuse Act) count in place of the CWA charge, to
avoid mandatory listing.) Plea agreements also should not contain assurances as
to either the timing or the result of a request for removal from the List of
Violating Facilities in cases involving mandatory listing.
The CLP is available for consultation in cases involving attempts by
defendants to negotiate mandatory listing issues. The CLP has drafted model plea
agreement language which may be used in such cases.
C. Discretionary Listing. The discretionary listing process begins with the filing of
a recommendation to list a facility. A facility will be listed under the
discretionary listing process if EPA determines that the facility has a record of
continuing or recurring noncompliance with clean air or clean water standards,
and has been the subject of one of the enforcement activities described in §
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8
15.11(a)(l)-(6). See Guidance on Implementing the Discretionary Contractor
Listing Program. § III (November 26, 1986)(GM-53), for guidance on selecting
discretionary listing cases.
A recommendation to list may be submitted by a "recommending person",
defined in § 15.4 as the "Regional Administrator, the Associate Enforcement
Counsel for Air or the Associate Enforcement Counsel for Water or their
successors, the Assistant Administrator for Air and Radiation or the Assistant
Administrator for Water or their successors, a Governor, or a member of the
public. The Regions will have primary responsibility for selecting cases for EPA-
initiated listing actions. The Enforcement Counsels (ECs) for Air and Water and
the Assistant Administrators for Air and Water will rarely initiate listing
recommendations.
Each recommendation to list will be processed by representatives from the
Office of Regional Counsel, the regional program office, the EC for Air or
Water, or both, and the LO. The regional representatives will act as advocates
for the Region's position on the recommendation to list. The representatives of
the ECs will act as counsel to both the Region and the LO. The adjudicative
function will be conducted by the LO assigned to the case. Each representative
will be responsible for ensuring that his or her office completes its responsibilities
under the Protocols in a timely fashion, and that all necessary reviews by policy
level officials within his or her office are obtained.
Under the regulations, a recommending person may withdraw a
recommendation to list at any time before the conclusion of the listing
proceeding. A recommending person is obligated to withdraw the
recommendation to list if he or she determines that the conditions which gave rise
to the recommendation to list have been corrected, or the facility is on an EPA-
approved plan for compliance which will ensure that the conditions that gave rise
to the recommendation to list will be corrected, § 15.11(d). Ł& also, paragraph
ffl.C.7., pp. 16-17). Thus, as a practical matter, if the facility corrects fully the
condition which is the basis for the listing action, and the recommending person
withdraws the recommendation to list, the listing process is terminated. The steps
for processing a discretionary listing action are set forth below.
1. LQ Receives Recommendation To List. The discretionary listing process
begins when the LO receives a recommendation to list, § 15.11(b). It is
anticipated that most recommendations will be prepared by the Regions
and that they will have lead responsibility for preparing EPA-initiated
recommendations. The Guidance on Implementing the Discretionary
Contractor Listing Program (November 26, 1986)(GM-53), includes
model discretionary listing recommendations based on both administrative
and judicial enforcement actions. The Regions will also act as the
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Agency's primary contact for processing State or citizen initiated listing
recommendations.
2. Review Recommendation. As soon as a recommendation to list is
received, the LO transmits a copy to the appropriate ECs, and, if the
Region did not submit the recommendation to list, the LO transmits the
recommendation to list to the Regional Administrator (RA), Office of
Regional Counsel (ORC), and regional program office, to review and
submit comments on the recommendation to the LO within 10 days.
During the same period, the LO reviews the recommendation to
list, § 15.11(c), to ensure that it contains: (a) the name, address, and
telephone number of the person filing the recommendation, § 15. 1 l(b)(l);
(b) a description of the facility, including its name and address, §
15.11(b)(2); (c) a description of the alleged continuing or recurring
noncompliance, and supporting data, § 15.11(b)(3); and (d) a description
of the criminal, civil, or administrative action or conviction which is
pertinent to the facility and the alleged continuing or recurring violations,
§ 15.11(b)(4). .,.
If, after reviewing the recommendation to list and the comments
on the recommendation, the LO determines that additional documentation
is needed, the LO returns the recommendation to the recommending
person, identifying in writing the specific information required.
Resubmitted recommendations must be processed according to the
procedures for processing an original recommendation, as set forth in
paragraph III.C. (p. 8 et seq.).
3. LO Briefs AA On Listing Recommendation. When the LO is satisfied
that the recommendation to list meets the requirements of the regulations,
the LO does the following:
a. The LO DflcKctft The CaK The LO assigns a docket number to
the facility and places the case on the listing docket.
b. The LO Prepares A Briefing Memorandum. The LO prepares a
briefing memorandum and transmits it and a copy of the
recommendation to list to the AA. The briefing memorandum
should: (i) summarize the status of the listing recommendation; (ii)
review for the AA the pros and cons of proceeding with the listing
action at this point, based upon the comments received from the
Region and the EC(s); and (iii) offer the AA the opportunity to
have an oral briefing on the listing recommendation. If an oral
briefing is requested, the LO schedules the briefing and arranges
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10
for representatives of the EC(s), OCE and OCAPO to be present,
and offers the RA, ORC,, and regional program offices an
opportunity to be present, in person or by telephone. At the
briefing, staff will advise the AA of the basis for the
recommendation to list. •
4. AA Declines To List. If, after being briefed ont he listing
recommendation, the AA decides to decline the recommendation to list,
the LO does the following:
a. The LO Prepares A Statement Of Reasons. The LO prepares a
brief statement for the AA's signature, explaining the AA's
reasons for the decision not to proceed with the listing action.
This statement will be included in the record of the listing action
and will be provided to the recommending person and the owner,
operator, or supervisor of the facility. Consequently, the statement
should exclude all information which the Agency would seek to
withhold under the Enforcement Document Release Guidelines,
GM-43 (September 15, 1985).
b. The LQ Submits The Statement For Headquarters Review. The
LO submits the draft statement for review by (1) the EC(s) for
Air, Water, or both; (2) the DCE; and, to prevent conflict with
potential criminal actions, (4) the DOCE. •
c. The LQ Transmits The Statement To The AA To Sign. At the
conclusion of the review by appropriate Headquarters staff, the LO
transmits the statement to the AA for his signature.
d. The LO Notifies Owner. Once the A A has approved and signed
the statement of reasons, the LO notifies the owner, operator, or
supervisor of the facility that a recommendation to list the facility
has been filed, and encloses a copy of the recommendation to list
and the statement of reasons for not proceeding with the
recommendation with the notice letter. The LO also sends a copy
of the notice letter and enclosures to the recommending person.
5. AA Decides To Proceed With Proposed Listing. LQ Notifies Facility and
Prepares Draft Determination. After the LO has briefed the AA on the
recommendation to list and the AA has decided to proceed with the
recommendation to list, the LO does the following:
a. The LO Notifies Owner. The LO notifies the owner, operator, or
supervisor of the facility that a recommendation to list the facility
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has been filed and encloses a copy of the recommendation to list
with the notice letter. The notice will also advise the owner,
operator, or supervisor that he or she may request a listing
proceeding before a Case Examiner (CE) to determine the
propriety of the proposed listing, § 15.12(a). A copy of this
notice is sent to the listing case staff representatives and to the
recommending person.
b. The LO Transmits The Recommendation To The Region. The LO
prepares a transmittal memorandum, and transmits to ORC the
recommendation to list and any comments received from the A A,
EC(s), RA, and regional program office, requesting that ORC
prepare and return to the LO within 15 days, a detailed summary
of the documentation regarding the recommendation to list, and
copies of any documents necessary for the LO to prepare a draft
determination. Unless the Regional Administrator or Deputy
Regional Administrator have previously reviewed the
recommendation to list, one of these officials must acknowledge in
writing that he or she has reviewed the recommendation to list and
has attached any comments to the recommendation.
c. The LQ Drafts The Determination. Upon receipt from the Region
of the recommendation to list and summary of documentation
regarding the recommendation, and after the 30-day period for
requesting a listing proceeding has expired, the LO drafts a
determination for the AA's signature, and revises the summary of
documentation to include any materials available at Headquarters.
d. The LQ Submits The Draft Determination For Headquarters
Review and Comment. Once the draft determination to list has
been prepared, the LO acknowledges that he or she has reviewed
it. The draft determination is then transmitted for review and
comment, along with the summary of documentation, to: (1) the
EC(s) for Air, Water, or both; (2) the Director, OCAPO; and (3)
the DCE and the DOCE.
6. Final Agency Action Taken On The Recommendation to List. After the
LO has notified the facility that a recommendation to list has been filed
and transmitted to the AA for decision, final Agency action on the
recommendation will occur as a result of one of the following processes:
a. AA Decides (Listing Proceeding Not Held). At any point before
a listing proceeding is held, the AA may, in his or her discretion,
decline to list the facility, § 15.11(c). If a facility does not request
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a listing proceeding within 30 days of receiving notice that a
recommendation to list has been filed, the AA must decide whether
to list the facility. In such a case, the AA's determination on the
recommendation to list is final Agency action, § 15.12(d).
After all of the EPA personnel identified in paragraph
Ill.C.S.d. have reviewed the draft determination and commented
on it, the LO prepares a transmittal memorandum, and sends to the
AA a draft determination, any comments from the EC(s) or the
Region, the summary of supporting documentation, and a briefing
memorandum that summarizes: (i) the history of the case; (ii) the
status of the case; (iii) the reasons for the recommended
determination; (iv) whether the RA, ORC, and regional program
office have expressed comments in agreement with the draft
. determination; and (v) any special problems or considerations.
If an oral briefing is requested, the LO schedules the
briefing and arranges for representatives of the EC(s), OCE and
OCAPO to be present, and offers the RA, DRA, ORC, and
regional program offices an opportunity to be present, in person or
by telephone.
Based upon the AA's decision on the recommendation to
list, the LO does the following:
(1) AA Decides To List. If the AA decides to list, his
or her decision is final Agency action on the
recommendation to list, and the LO follows the
steps set forth in the Listing Official's Discretionary
Listing Checklist found in Table One.
(2) AA Declines To List. If the A A decides not to list,
the LO notifies the owner, operator, or supervisor
of the facility, the EC(s), OCE, and the RA, ORC,
and program office, that the recommendation to list
has been declined. The AA's decision not to list is
final Agency action on the listing recommendation.
b. Listing Proceeding Requested. If the owner, operator, or
supervisor of the facility requests a listing proceeding within 30
days of receiving notice that a recommendation to list has been
filed, the LO does the following:
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(1) AA Designates A Case Examiner The A A designates a
Case Examiner for the listing proceeding, § 15.12(a). The
Case Examiner should be an EPA attorney who has subject
matter expertise, who is not involved in the underlying
enforcement action or listing action, and who is not
supervised or employed by the person recommending
listing (i.e., the CE should be from a different EPA
region). The LO will consult with the EC(s) to identify
appropriate persons to act as Case Examiners in listing
proceedings.
(2) Case Examiner Schedules Listing Proceeding. The CE
schedules the listing proceeding and notifies the
recommending person, the owner, operator, or supervisor
of the facility, the LO, and the listing case representatives
(see paragraph III.C. above) of the date, time, and place of
the listing proceeding, § 15.12(b). That notice letter also
informs all parties of their obligation to provide to all other
parties at least 7 days prior to the listing proceeding, any
papers which they intend to submit at the listing
proceeding.
It is the responsibility of the CE and the LO to
attempt to arrange the timing and location of the listing
proceeding so that it is convenient for all parties to attend.
• The CE determines whether the listing proceeding should
be adjourned for good cause shown, as provided in
paragraph III.C.8.a. (page 17).
(3) CE Obtains Court Reporter. The CE retains the services
of a court reporter, § 15.13(b)(2), paid for by EPA.
(4) Listing Proceeding Held. The listing proceeding is
conducted in accordance with § 15.13(b). Regardless of
who files the recommendation to list, EPA will be
represented at the listing proceeding by the EPA regional
or headquarters attorney responsible for the underlying
enforcement action, unless that attorney is unavailable, in
which case ORC will select an attorney to represent EPA.
(5) LO Obtains Decision of CE. The Case Examiner issues his
or her written decision on whether to list the facility and
files it with the LO within 30 davs of the conclusion of the
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listing proceeding, and any supplementation of record
allowed by the Case Examiner, § 15.13(c).
c. LO Sends Notice of CE's Decision And Opportunity For OGC
Review. After the CE files his or her decision with the LO, the
LO is responsible for notifying the appropriate parties of the CE's
decision, as follows:
(1) CE Decides To List. The LO notifies the owner, operator,
or supervisor of the facility, the recommending person, the
EC(s), the DCE and DOCK, the RA, ORC, the regional
program office, and the Director, OCAPO, of the CE's
decision to list the facility and of the facility's opportunity
to have OGC review that decision if such review is
requested within 30 davs. § 15.13(d).
(2) CE Decides Not To List. The LO notifies the owner,
operator, or supervisor of the facility, the recommending
person, the EC(s), the DCE and DOCE, the RA, ORC, the
regional program office, and the Director, OCAPO, of the
CE's decision denying the recommendation to list the
facility. The Case Examiner's decision not to list is final
Agency action on the recommendation to list, § 15.14(d).
d. OGC Review Not Requested. If the CE decides to list the facility,
the facility may request that OGC review the CE's decision. The
request for review must be made in writing and must be received
by the LO within 30 days of the date on which notice of the CE's
decision was received by the facility.
If the LO does not receive a timely request for OGC
review, then the CE's decision granting the recommendation to list
stands as final Agency action, § 15.14(d), and the LO follows the
steps set forth in the Listing Official's Discretionary Listing
Checklist, found in Table One.
e. OGC Review Requested. If the facility files a timely request with
the LO for OGC review, the LO does the following:
(1) The LO Transmits The Request For OGC Review To
QRC. The LO transmits to ORC a copy of the request for
OGC review. ORC is responsible for obtaining comments
from the EC(s) and recommending person (if the
recommendation to list was not filed by EPA). ORC must
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then prepare and return to the LO, within 14 days of
receiving the request for OGC review, a reply brief stating
the Agency's response to the facility's claims in the request
for OGC review. Generally, the attorrey who represented
EPA at the listing proceeding should prepare the reply
brief.
(2) LO Transmits Request To QGC. When the LO receives
the reply brief responding to the request for OGC review,
the LO transmits to OGC: (i) the CE's decision; (ii) the
request for review; (iii) the reply brief; (iv) the comments
of the EC(s) and the recommending person; and (v) the
entire record of the listing action.
(3) QGC Reviews CE's Decision. OGC reviews the CE's
decision based on the record of the listing proceeding,
considered as a whole, and issues a final decision within 30
days or as soon as practicable, § 15.14(c).
f. The LQ Obtains QGC's Decision. When OGC files its decision
with the LO, it becomes final Agency action on the
recommendation to list, § 15.14(c). The. LO then does the
following:
(1) QGC Affirms The Case Examiner. If OGC affirms the
CE's decision to list, listing is effective when OGC's
decision is filed with the LO. The LO follows the steps in
the Listing Official's Discretionary Listing Checklist, found
in Table One.
(2) QGC Reverses The Case Examiner. If OGC reverses the
CE, the LO notifies the owner, operator, or supervisor of
the facility, the recommending person, the AA, the DCE
and DOCE, the Director, OCAPO, the EC(s), the RA,
ORC, and regional program office, that the
recommendation to list has been denied on the basis of
OGC's decision on review.
7; Withdrawal Of A Recommendation To List. The recommending person
may withdraw his or her recommendation to list under the following
circumstances:
a. Prior To The Conclusion Of The Listing Proceeding. At any time
before the CE issues his or her written decision concluding the
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listing proceeding, the recommending person may withdraw the
recommendation to list fpr any reason. However, a request to
withdraw the recommendation must be made in writing and must
state the reason for withdrawing the request. A recommending
person must withdraw a recommendation to list if he or she
determines that the facility has corrected the condition which gave
rise to the recommendation to list, § 15.11(d).
b. After the Conclusion of the Listing Proceeding.
After the CE has issued his or her decision at the conclusion of the
listing proceeding, a recommendation to list may be withdrawn
only if the recommending person determines that the facility has
corrected the condition which gave rise to the recommendation to
list, § 15.11(d). The request to withdraw the recommendation to
list must be made in writing and must state the reason for
withdrawing the recommendation. A recommending person must
withdraw a recommendation to list if he or she determines that the
facility has corrected the condition which gave rise to the
recommendation to list, § IS.ll(d).
8. Stays Of A Discretionary Listing Action. All stays of listing actions are
presumed to be prejudicial to the proceedings. Consequently, a stay of a
discretionary listing action may be granted only under the following
circumstances:
a. Prior To The Listing Proceeding. The LO may grant a stay of the
discretionary listing action (1) for a period not to exceed 60 days,
(2) upon timely notice, (3) for good cause shown, (4) on the
record, and (5) after consideration of the prejudice to the parties
or the proceeding.
b. During The Listing Proceeding. The Case Examiner may grant a
stay of the listing proceeding (1) for a period not to exceed 60
days, (2) to permit any party to obtain evidence, or (3) for any
other reason that will advance the proceedings, (4) giving due
consideration to the prejudice to the parties.
c. After The Listing Proceeding. The LO may grant a stay of the
discretionary listing action (1) for a period not to exceed 60 days,
(2) upon timely notice, (3) for good cause shown, (4) on the
record, and (5) after consideration of the prejudice to the panics.
Any stay shall QOJ extend the time in which a party must request
review by the EPA General Counsel of a Case Examiner's decision
in a listing proceeding.
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9. EPA Guidance On Implementing Discretionary T j^j
a. Summary of policy
On November 26, 1986, the AA for Enforcement issued guidance
on implementing discretionary listing program. Some of the main points
and subjects of this memorandum are:
1. Discretionary listing process is effective in achieving more
expeditious compliance and case settlements.
2. Recommendations to list should be considered for all cases of
noncompliance with consent decrees, all civil cases where
violations are ongoing, violations of administrative orders,
multifacility noncompliance within a single company, (p.2-3)
3. Standard of proof in listing proceedings. "Record must show by a
preponderance of the evidence that there is a record of continuing
or recurring non-compliance, (p.4)
4. Fairness and discussion of contractor listing with opposing parties
in settlement negotiations. Case must involve clearly applicable
standard; distinguishing between recommendations and final
decisions. (p.S)
5. Coordination with DOJ. Making sure listing activity does not
compromise litigation. (p.S)
6. Requesting information from facilities about government contracts
during a civil case. Model letters, (p. 6)
b. Use of Discretionary Listing
1. Discretionary listing continues to be an underutilized component
of the contractor listing program. There are however several
examples of situations where discretionary listing has been a
powerful tool.
Ex 1. Frequently, merely sending a letter pursuant to CAA§ 114
or CWA § 308 requesting information on the company's Federal
contract can assist in the settlement of civil suits.
Ex 2. In the Wheeling Pittsburgh case, EPA was faced with an
intransigent company during settlement negotiations of a Clean Air
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Act civil suit involving three facilities. Institution of a
discretionary listing procedure resulted in a settlement of the civil
suit within a month.
10. Big Apple Wrecking Corporation Case
On August 15, 1991, the Office of General counsel issued a
decision In the Matter of: Big Apple Wrecking Corporation. In this
decision on appeal from a Case Examiner's decision to list Big Apple
Wrecking Corp.'s Bronx, NY facility, the General Counsel vacated the
Case Examiners decision to list respondent's facility. Citing the preamble
to the 1984 contractor listing regulations, the General Counsel ruled that
continuing or recurring violations must be evaluated on case by case basis
(evidence of two or more violations is not enough by itself). It was held
that the listing decision must contain an explanation of the Agency's
reasons for concluding that a particular series of violations presents a
proper occasion for invoking the listing remedy. The Agency must decide
whether listing the particular facility with continuing of recurring
violations is appropriate "in light of the policies and purposes which
underlay the listing remedy," namely to "undertake procurement and
assistance activities in manner that will result in effective enforcement of
the Clean Air Act, and not to favor businesses which cut cost by failing
to comply with environmental laws."
The General Counsel also upheld the policy concerning the
definition of "facility" as it applies to asbestos removal operations, noting
that defining the business address as the violating facility was not only
appropriate, but to do otherwise would gut the effectiveness of the listing
program.
D. Defining The Violating Facility
1. Introduction
The CWA § 508 and CAA § 306 do not define "facility." Defining this
important term has been accomplished through rulemaking. 40 CFR Part 15
defines facility as:
any building, plant, installation, structure, mine, vessel or other
floating craft, location or site of operation owned, leased, or
supervised by an applicant, contractor, grantee, or borrower to be
used in the performance of a contract, grant, or loan.
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This apparently straightforward definition is generally applied without difficulty.
However, cases arise where application of the definition presents a challenge.
For example: If a facility where NPDES violations occur is supervised by
contractors and the contractors are convicted, should the contractor's place of
business be listed as the facility? What is-constitutes the "facility" where the oil
pipe running between a shipping terminal and storage tanks ruptures? What
should be listed where CWA violations occur when oil is discharged from the hull
of ship that has run aground.
2. Role of Regional Counsel. Regional Program and CID.
In certain cases, the conditions which gave rise to the criminal conviction
that results in mandatory listing may affect more than the site of the violation,
and the violating facility may, therefore, be the company's business address, or
an operating unit of the company. When such cases arise, and these situations
are not expressly addressed by existing guidance or policy (e.g., the policy that
states that for asbestos violators, the business address is the violating facility),
Regional counsel, Regional program staff, and CID agents play a very important
role in providing the CLP, and the AA, information on which to base the
determination of what is the violating facility.
In all cases which may result in mandatory listing, the Regional attorney(s)
handling the enforcement action against the facility should contact the CLP as
soon as possible, so that relevant information can be provided to assist in
determining the identity of the violating facility. These determinations must be
made before the time of the conviction, or as soon after as is practicable. This
is especially important in cases where there may be an issue concerning
determining what is the violating facility, so early contact with the CLP is
extremely important.
3. Guidance Document: Defining the "Violating Facility" for Purposes of
Listing Asbestos Demolition and Renovation Companies Pursuant to
Section 306 of the Clean Air Act, March 11, 1988.
This policy statement stands for the proposition that the business address
used by an asbestos demolition and renovation company may be used to identify
the "violating facility," rather than the address of the particular site involved in
the violating activity. The basis for this view is that the Congress intended, as
evidenced by the legislative history, for the Administrator to ban other facilities
owned by a convicted company where the other facilities are circumventing the
listing of the violating facility; the definition in Part 15 of "facility" includes the
business address of company and there is no requirement under CAA § 306 or
CWA § 508 that business address of the facility coincide with the address of the
sites where the violation occurred.
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In the fog Apple Wrecking case this policy was utilized and upheld by the
General Counsel. Other cases where this policy has been invoked include, e.g.,
a wetlands filling case.
4. Contractors
In addition to asbestos removal cases, certain convictions involve the
conviction of corporations and/or their employees who are responsible for
criminal violations under the CWA or CAA at facilities owned by other entities,
such as municipalities (such as municipally owned POTW), or the Federal
government. Similar to the asbestos removal cases, the issue arises as to whether
the contractor's operating office/division or headquarters should be listed. Unlike
asbestos removal cases, these cases are frequently complex and present unique
factual circumstances in terms of the relationship of the contractor to the facility.
Consequently, no single policy or position by OE can achieve a fair and equitable
result in all cases. Accordingly, a flexible analysis/procedure is described below
for determining whether the contractor's place of business should be listed.
The following is nonexclusive list of factors that are considered and
weighed in such cases. These factors are weighed in conjunction with the
concepts stated in the memorandum discussed above regarding listing asbestos
contractors.
* If the convicted party is a contractor, whether the contractor has
an address separate from the facility.
* If the convicted party is contractor, whether the contractor
continues to do business in the field for which its employees were
convicted.
* If the convicted party is a contractor, the degree of culpability on
the part of the owner of facility.
* Degree of knowledge/involvement of the contractor at the
contractor's division\HQ level.
* Extent to which interests of government will be unprotected if only
the site or facility where the violations took place is listed.
41 Extent to which other violations exist at other contractor operated
facilities.
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5. Independent Facilities
The definition of "facility", § 15.4, includes the following proviso:
Where a location or site of operations contains or includes more than one
building, plant, installation, or structure, the entire location or site shall
be deemed to be a facility except where the Assistant administrator
determines that independent facilities are located -in one geographical
area."
This provision has been invoked once in the course of a removal
petition. On September 30, 1991, in In the Matter of Exxon Corporation
(Exxon Company. USA..Linden and Bayonne. N.J.) (Contractor Listing
ML Docket No. 02-91-L034), the Assistant Administrator issued a
Determination Regarding Exxon Company USA's Petition for
Determination of Independent Facilities: Inter-Refinery Pipeline, Bayway
Refinery, and Bayonne Terminal.
The Assistant Administrator determined that petitioner's terminal,
refinery, and connecting pipeline were not independent facilities. The
pipeline ends were physically located at the terminal and refinery
respectively; management and employees at each were intertwined; and
the pipeline oil flow was controlled by both facilities. The three locations
were held to serve a unitary purpose.
IV. PROCEDURES FOR REMOVAL FROM THE LIST
A facility may be removed from the List in one of four ways. A facility may be
removed automatically if the conviction which was the basis for mandatory listing, or the
decision in the underlying enforcement action that was the basis for discretionary listing, is
reversed, or after one year on the List in some discretionary listing cases. A facility may also
be removed from the List following final Agency action as a result of a favorable decision by
the AA on the facility's request for removal; a favorable decision by a CE following the AA's
denial of the request to remove the facility from the List; or a favorable decision by the
Administrator if die CE denies the removal request.
Requests for removal will be processed by representatives of the EC(s), the ORC, the
regional program office, and the LO. The regional representatives acts as advocates for the
Region's position on the removal request. The representative(s) of the EC(s) will act as counsel
to both the Region and the LO. The LO is responsible for the adjudicative function and is the
recommending official to the decisionmaker, the AA. Each representative will be responsible
for ensuring that his or her office completes its responsibilities in a timely fashion, and that all
necessary reviews and acknowledgements from policy level officials within his or her office are
obtained.
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A. Automatic Removal
1. Mandatory Listing
a- Reversal Of Conviction. The owner, operator, or supervisor of
the facility is responsible'for informing the LO if any criminal
conviction which resulted in listing is overturned, and must
provide a certified copy of the judgment order reversing the
conviction.
Upon receipt of such an order and upon confirmation that
a legal basis for mandatory listing no longer exists, the LO follows
the steps set forth in the Listing Official's Removal Checklist,
found in Table Two. If there is a dispute concerning the effect of
a court order purportedly reversing a conviction, the dispute shall
be resolved by deeming the request to be a request for removal
based upon correcting the condition that gave rise to listing. The
procedures set forth at paragraph IV.B.4. (page 27) apply to such
requests. A further appeal which leads to reinstatement of the
judgment of conviction shall result in automatic relisting.
2. Discretionary Listing
a. Reversal Of Underlying Order. The clwner, operator, or
supervisor of the facility is responsible for informing the LO if any
order which was the basis for a determination to list has been
reversed, and must provide a certified copy of the document
evidencing the reversal of the prior order.
Upon confirmation that a legal basis for discretionary
listing no longer exists, the LO follows the steps set forth in the
Listing Official's Removal Checklist (Table Two). If there is a
dispute concerning the effect of a court order purportedly reversing
a prior order which was the sole basis for a discretionary listing
determination, the dispute shall be resolved by deeming the request
to be a request for removal based upon correcting the condition
that gave rise to listing. The procedures set forth at paragraph
IV.B.4. (page 27) apply to such requests. A further appeal which
leads to reinstatement of the judgment of conviction shall result in
automatic relisting.
b. Expiration Of One Year. A facility listed under §§ 15.11(a)(4),
(5), or (6), is eligible to be removed from the List after one year,
unless, within that one year period, the LO is informed that: (1)
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a basis for mandatory listing exists as a result of the conviction of
the owner, operator, or supervisor of the facility for violating
CAA § 113(c) or CWA § 309(c); or (2) a basis for discretionary
listing exists as a result of the facility's continuing or recurring
noncompliance with clean air or clean water standards, and: (a) a
state or local court has convicted any person who owns, operates,
or supervises the facility of a criminal offense on the basis of
noncompliance with clean air or clean water standards, §
15.11(a)(2); or (b) a federal, state, or local court has issued an
order or civil ruling as a result of noncompliance with clean air or
clean water standards, § 15.11(a)(3).
If, after a facility has remained on the List for one year, the LO
determines that the facility is entitled to removal from the List, the
LO follows the steps in the Listing Official's Removal Checklist
(Table Two).
B. Requests For Removal. Regardless of the. underlying basis for removal, and
regardless of whether listing was the result of the mandatory or discretionary
listing process, the removal process can be initiated by filing a request for
removal with the LO. The original recommending person, or any person who
owns, operates, or supervises a listed facility may file a request for removal with
the LO, § 15.22(a).
45-DAY PERIOD. As soon as the request is received, the LO:
(i) notes on the listing docket the date on which the request for removal
was filed; (ii) reviews the request to determine the basis upon which
removal is sought; and (iii) sends a letter to the person requesting removal
that acknowledges receipt of the request. The letter also notifies the
person requesting removal that the failure of EPA to respond to the
request for removal within 45 days of the date that EPA has all
information necessary to determine whether or not the request should be
granted (i.e., within 45 days after the administrative record is complete)
constitutes a denial of the request for removal, at which point a removal
hearing before a Case Examiner may be requested.
The Agency's goal is to process each request for removal before this 45-
day period expires. The 45-day period does not begin to run until the
administrative record is complete in order to permit EPA sufficient time
to analyze the often complex factual, technical and legal issues involved
in a request for removal. This interpretation also ensures that a petitioner
provides a complete removal request before it may presume that EPA has
denied its petition, and invoke its right to a hearing before a Case
Examiner, based on the passage of the 45-day decision period. It is based
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upon the Agency's interpretatiop that the Assistant Administrator should
be able to make a decision based on a complete administrative record,
before subsequent stages of administrative review are sought.
1. Removal Of Underlying Court Order. If the request for removal
is based upon the reversal of the court order which was the basis
for listing, then the LO follows the procedures in paragraphs
IV.A.l. (p. 22) or IV.A.2.a. (p. 23) above.
2. Expiration Of One Year (Discretionary Listing Only). If the
request for removal is based upon the expiration of one year in a
discretionary listing case under §§ 15.1 l(a)(4), (5), or (6), then the
LO follows the procedures in paragraphs IV.A.2.b. (p. 23) above.
3. Plan For Compliance (Discretionary Listing Only). If the request
for removal is based upon the facility's establishing a plan for
compliance which is acceptable to the AA, then the LO follows the
procedures described below.
a. Requests Filed By The Regional Office. If the request for
removal was filed by the regional office, the LO transmits
the request to the EC(s), the owner, operator, or supervisor
of the listed facility, and the original recommending person
in the discretionary listing case, asking them to submit their
comments on the request for removal and plan for
compliance, to the LO within 10 days.
b. Requests Filed Bv Others. If the request for removal was
filed by some person other than the staff of an EPA
regional office, the LO transmits a copy of the request for
removal to the EC(s), the RA, ORC, regional program
office, the owner, operator, or supervisor of the listed
facility, and the original recommending person in the
discretionary listing case6.
The LO notifies the Regional Counsel by telephone
that a removal request has been filed, and the Regional
Counsel designates a Regional attorney to represent the
6 The LO notifies the Regional Counsel by phone that a removal request has been filed and the Regional
Counsef designates a Regional attorney to represent the Agency o the removal request; the LO informs the ECs and
the owner, operator or supervisor of the listed facility (or its attorney) of who has been designated to represent the
Agency in regard to the removal request. The LO requests the ECs to submit their comments on the request for
removal and the plan for compliance to the designated Regional attorney within 10 days.
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25
Agency on the removal request; the LO informs the ECs
and the owner, operator, or supervisor of the listed facility
(or their attorney) who has been designated to represent the
Agency in regard to the removal request. The LO requests
the EC(s) to submit their comments on the request for
removal and plan for compliance to the designated Regional
attorney within 10 days.
c. Regional Office Prepares Formal Recommendation. At the
end of 10 days, the LO reviews all comments that have
been received, forwards copies of them to the regional
office for the region in which the facility is located, and
ask ORC to prepare and return to the LO within 15 days:
(1) a formal recommendation based on the regional
office's assessment of whether the request for
removal should be granted or denied, in light of the
facility's proposed plan for compliance;
(2) a memorandum summarizing the supporting
documentation for the formal recommendation; and
(3) the written acknowledgement of the Regional
Administrator or Deputy Regional Administrator
indicating that he or she has reviewed the formal
recommendation and submitted any comments on it
to the LO.
NOTE: Both Regional and HQ program staff for the
appropriate medium (air or water) play an important
role in advising on technical and factual issues, and
should be involved in the listing process, where
appropriate.
d. Verification of Correction of Conditions Which Gave Rise
To The Conviction: EPA policy requires that the Agency
verify in every case that the violating facility has corrected
the condition which gave rise to the conviction. This may
involve, for example, a compliance inspection by a
delegated state under the NPDES program, an inspection
by a local air control board under the asbestos NESHAPS
program, or an inspection by EPA's own personnel. The
EPA Regional attorney who represents the Agency in each
removal case should determine what type of inspection will
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26
be necessary promptly after receiving the removal request.
The CLP staff is available to assist in determining what
type of inspection will be appropriate, and regional staff
are encouraged to contact the CLP for assistance in this
area.
e. LO Drafts Determination. At the end of the 15-day period,
the LO receives the region's formal recommendation on the
request for removal and plan for compliance, and the
summary of supporting documentation, confirms that the
recommendation has been reviewed by the Regional
Administrator or Deputy RA, and drafts a determination
for the AA's signature.
f. Headquarters Review and Comment. After the draft
determination has been prepared, the LO transmits it for
review and comment, along with the summary of
supporting documentation, to: (1) the EC for Air, or
Water, or both; (2) the DCE, or DOCE, or both. Each
office must acknowledge that it has reviewed the document
and made any necessary comments before returning the
draft determination to the LO.
t
NOTE: The HQ program office (for air or water
enforcement, as appropriate) is also given the opportunity
to review and provide comments to the EC and to the LO
concerning the draft determination.
g. Decision Bv The AA. After the appropriate Headquarters
staff have reviewed and commented on the draft
determination, and any necessary revisions have been
made, the LO prepares a transmittal memorandum and
briefing memorandum that summarizes: (i) the history of
the case; (ii) the status of the case; (iii) the reasons for the
recommended determination; (iv) whether the RA, ORC,
and regional program office have expressed comments
agreeing with the draft determination; and (v) any problems
or special considerations. The LO sends the briefing
memorandum, the draft determination, and the summary of
supporting documentation, to the AA for his or her
decision.
If an oral briefing is requested, the LO schedules
the briefing, arranges for representatives of the EC(s),
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27
DOCE and OCAPO to be present, and offers the RA,
DRA, ORC, and regional program office an opportunity to
be present at the briefing, in person or by telephone.
(1) AA Grants Removal Based Upon Plan For
Compliance. If the AA approves the plan for
compliance, the LO follows the steps set forth in
the Listing Official's Removal Checklist (Table
Two).
(2) AA Denies Removal. If the AA does not approve
the plan for compliance and denies the request for
removal, the LO notifies the owner, operator, or
supervisor of the facility, and the recommending
person, EC(s), RA, ORC, regional program office,
the Director, OCAPO, and the DCE and DOCE,
that the request- for removal has been denied, and
notifies the facility of the opportunity to request,
within 30 days, a hearing before a Case Examiner,
§§ 15.22(c), 15.23(a).
4. The Condition Giving Rise To Listing Has Been Corrected. If the
request for removal is based on the facility having corrected the
condition that gave rise to listing, the LO follows the procedures
described below.
a. Requests Filed Bv The Regional Office. If the request for
removal was filed by the regional office, the LO transmits
the request to the EC(s), the owner, operator, or supervisor
of the listed facility, and the original recommending person
in discretionary listing cases, or the OCE in mandatory
listing cases. The LO informs the EC(s) and the owner,
operator, or supervisor of the listed facility, (or their
attorney), who has been designated to represent the Agency
in regard to the removal request. The LO requests the
EC(s) to submit their comments on the request for removal
to the designated Regional attorney within 10 days.
b. Requests Filed By Others. If the request for removal was
filed by some person other than the staff of an EPA
regional office, the LO transmits a copy of the request for
removal to the EC(s), the RA, ORC, regional program
office, the owner, operator, or supervisor of the listed
facility, and the original recommending person in
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28
discretionary listing cases, or the OCE in mandatory listing
cases. The LO notifies the EC(s) and the owner, operator,
or supervisor of the listed facility, (or their attorney), of
who has been designated to represent the Agency in regard
to the removal request. The LO requests the EC(s) to
submit their comments on the request for removal to the
designated Regional attorney within 10 days.
c. Region Prepares Formal Recommendation. The LO
reviews all comments that have been received, forwards
copies of them to the regional office for the Region in
which the listed facility is located, if necessary, and asks
the ORC to prepare and return to the LO:
(1) A formal recommendation, based upon the regional
office's assessment of whether the request for
removal should be granted or denied.7 The formal
recommendation must contain: (i) a background
section that summarizes the history and proposed
resolution of the case; (ii) specific factual findings
covering all major events in the case, and technical
tests that support the determination from the date of
the original violation to the present time, and all
expected events and test results, including any
environmental cleanup under a compliance plan
approved by EPA (any consent decree, probation
order, administrative order, performance guarantee,
or permit evidencing the compliance schedule
should be attached to the recommendation); and (iii)
a conclusion setting forth the recommendation.
(2) A document summarizing the supporting
documentation for the recommendation. The
summary of supporting documentation must: (i)
identify the source of all information available for
making the determination; (ii) identify all
inspections made and state whether they satisfy the
policy on independent verification; (iii) identify, in
accordance with the policy defining the condition,
the specific condition(s) that gave rise to listing and
7 See 'EPA Policy Regarding the Role of Corporate Attitude, Policies, Practice*, and Procedures In
Determining Whether To Remove A Facility From The EPA List of Violating Facilitiea Following A Criminal
Conviction', October 31, 1991, 52 Fed. Reg. 64785 (Dec. 12, 1991).
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29
the manner in which the condition has been or is
being corrected; (iv) describe the status of the
facility's efforts to correct the condition; and (v)
ensure that any comments by state or local
authorities are reflected; and
(3) The acknowledgment of the Regional Administrator
or Deputy RA that he or she has reviewed the
formal recommendation and summary of
documentation, and has made any necessary
comments.
NOTE: Both Regional and HQ program staff for the
appropriate medium (air or water) play an important
role in advising on technical and factual issues, and
should be involved in the listing process, where
appropriate.
d. LO Drafts Determination. The LO receives the formal
recommendation on the request for removal and the
summary of supporting documentation, confirms that he
recommendation has been reviewed by the RA or DRA,
notes on the summary of supporting documentation any
materials available at Headquarters, and prepares a draft
determination for the AA's signature.
e. • Headquarters Review. Once the draft determination has
been prepared, the LO transmits it for review and
comment, along with the summary of supporting
documentation, to the EC for Air, or Water, or both, and
the OCE. After each of these offices has acknowledged
that it has reviewed and commented upon the draft
determination and summary of documentation, those
documents are returned to the LO for any revisions the LO
deems necessary. The LO requests the ECs to respond
with their comments and concurrence within 3-5 business
days of receiving the draft determination.
NOTE: The HQ program office (for air or water
enforcement, as appropriate) is also given the opportunity
to review and provide comments to the EC and to the LO
concerning the draft determination.
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30
Decision Bv The AA. After the appropriate Headquarters
staff have reviewed and commented on the draft
determination, and any necessary revisions have been
made, the LO prepares a transmittal memorandum and
briefing memorandum that summarizes: (i) the history of
the case; (ii) the status of the case; (iii) the reasons for the
recommended determination; (iv) whether the RA, ORC,
and regional program office have expressed comments
agreeing with the draft determination; and (v) any problems
or special considerations. The LO sends the briefing
memorandum, the draft determination, and the summary of
supporting documentation to the AA for his or her
decision. The goal is for the A A to issue a decision or
request an oral briefing within 3-5 days of receiving the
draft determination.
If an oral briefing is requested, the LO schedules
the briefing, arranges for representatives of the EC(s),
OCE, and OCAPO to be present, and offers the RA, DRA,
ORC, and regional program office an opportunity to be
present at the briefing, in person or by telephone.
(1) AA Grants Removal. If the AA approves the
request for removal, the LO removes the facility
from the List; notifies the owner, operator, or
supervisor of the facility, the recommending person
(in discretionary listing cases), the EC(s), the OCE
(in mandatory listing cases), the RA, ORC, and
regional program office, of the effective date of
removal, pursuant to § 15.27; the LO also notifies
the General Services Administration (GSA) that the
facility is to be removed from the "Lists of Parties
Excluded From Federal Procurement or
Nonprocurement Programs."
(2) AA Denies Removal. If the AA denies the request
for removal, the LO notifies the owner, operator,
or supervisor of the facility, the recommending
person, EC(s), RA, ORC, regional program office,
the Director, OCAPO, and the DCE and DOCE,
that the request for removal has been denied. The
LO also notifies the facility of the opportunity to
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31
request, wjthin 30 days, a hearing before a Case
Examiner, §§ 15.22(c), 15.23(a).
5. Removal Hearing. The owner, operator, or supervisor of a listed facility,
or the original recommending person in the case of a facility listed under
the discretionary listing process, my file with the LO; within 30 calendar
days after the decision of the AA denying removal, a written request for
a removal hearing, § 15.23(a).
a. Removal Hearing Not Requested. If the LO does not receive a
request for a removal hearing within 30 calendar days after the
decision of the AA, the LO notifies: the owner, operator, or
supervisor of the facility; the original recommending person; the
AA; the Director, OCAPO; the DOCE; the EC(s); and the RA,
ORC, and regional program office, that the decision of the A A is
final Agency action on the request for removal, and that any
person who may make a request for removal may file a new
request for removal, based upon new information, § 15.23(b).
b. Removal Hearing Requested. If the LO receives a request for a
removal hearing within 30 days after the decision of the AA, the
LO does the following:
(1) AA Designates A Case Examiner. The A A designates a
Case Examiner, § 15.24. The Case Examiner may be any
EPA employee who has subject matter expertise, and who
was not involved in the underlying enforcement action or
listing action (except that the Case Examiner who served in
the listing proceeding involving the facility may serve as
Case Examiner in the removal hearing). The LO will
consult with the EC(s) to determine appropriate persons to
act as Case Examiners in removal hearings.
(2) Case Examiner Schedules Removal Hearing. The CE
schedules the removal hearing and notifies the owner,
operator, or supervisor of the facility, the LO, the original
recommending person, the federal, state, or local authority
responsible for enforcement of clean air or clean water
standards, and the listing case representatives (see § IV) of
the date, time, and place of the listing proceeding.
That notice letter also informs all parties of their
obligation to provide to all other parties at least 7 days
prior to the removal hearing, copies of all documents which
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32
they intend to submit at the removal hearing. It is the
responsibility of the CE to attempt to arrange the timing
and location of the listing proceeding so that it is
convenient for all parties to attend.
(3) CE Obtains Court Reporter. The LO retains the services
of a court reporter, § 15.24(a)(2), paid for by EPA.
(4) Removal Hearing Held. The removal hearing is conducted
in accordance with §§ 15.24(a)-(c). EPA will be
represented at the removal hearing by the EPA regional or
headquarters attorney responsible for the underlying
enforcement action.
(5) LO Obtains Decision Of CE. The Case Examiner issues
his or her written decision on whether to grant the request
for removal and files if with the LO as soon as practicable,
with a target of filing the decision no later than 30 days
after the conclusion of the removal hearing and any
supplementation of the record allowed by the CE, §
15.24(c).
c. LQ Sends Notice Of CE's Decision. The LO is responsible for
sending written notice of the CE's decision to the owner, operator,
or supervisor of the facility, the original recommending person,
the EC(s), the RA, ORC, and regional program office, and the
federal, state, or local authority responsible for enforcement of
clean air or clean water standards.
(1) If the Case Examiner grants removal, the LO removes the
facility from the List; notifies the owner, operator, or
supervisor of the facility, the recommending person (in
discretionary listing cases), the EC(s), the OCE (in
mandatory listing cases), the RA, ORC, and the regional
program office, of the effective date of removal, pursuant
to § 15.27. The LO also notifies the General Services
Administration (GSA) that the facility is to be removed
from the "Lists of Parties Excluded From Federal
Procurement or Nonprocurement Programs."
(2) If the Case Examiner denies removal, the LO notifies the
owner, operator, or supervisor of the facility, the original
recommending person, the EC(s), the RA, ORC, and the
regional program office, and the federal, state, or local
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33
authority responsible for the enforcement of clean air or
clean water standards, of the decision. The LO also
advises the facility of the opportunity to request the
Administrator to review the CE's decision, § 15.24(d), if
a written request for such review is filed with the LO
within 30 days after the date of the Case Examiner's
decision, § 15.25(a).
d. Administrator's Review Not Requested. If the LO does not
receive a written request for review within 30 days after the date
of the Case Examiner's decision, the LO sends a notice to the
owner, operator, or supervisor of the facility, the original
recommending person, the DCE and DOCE, the Director,
OCAPO, the EC(s), the RA, ORC, and regional program office,
and the federal, state, or local authority responsible for the
enforcement of clean air or clean water standards, informing them
that the CE's decision stands as final Agency action on the request
for removal, § 15.25(c), and that any person who may file a
request for removal may file a new request for removal based upon
new information.
e. Administrator's Review Requested. If the LO receives a timely
written request to have the decision of the Case Examiner
reviewed by the Administrator:
(1) The LO Transmits The Request For Administrator's
Review To ORC. The LO transmits a copy of the request
for Administrator's review to ORC. ORC is responsible
for obtaining comments from the EC(s) and the original
recommending person (if the recommendation to list was
filed by someone other than EPA), and any federal, state,
or local authority responsible for the enforcement of clean
air or clean water standards. Within 14 days of receiving
the copy of the request for Administrator's review, ORC
must prepare and return to the LO a reply brief, stating the
Agency's response to the facility's claims in the request for
Administrator's review. Generally, the attorney who
represented EPA at the removal hearing should prepare the
reply brief.
(2) LO Transmits Request To The Administrator. After the
reply brief has been received, the LO transmits to the
Administrator: (i) the Case Examiner's decision; (ii) the
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34
request for review; (iii) the reply brief; (iv) the comments
received; and (v) the entire record of the removal action.
(3) The Administrator Reviews The CE-'s Decision. The
Administrator reviews the Case Examiner's decision, based
upon the record of the removal hearing considered as a
whole, and issues a final decision as soon as practicable. §
15.25(b). The Administrator's decision is final Agency
action. Id.
f. The LO Obtains The Administrator's Decision. The Administrator
files his decision with the LO following review of the Case
Examiner's decision. Once filed with the LO, the Administrator's
decision is final Agency action on the request for removal, and the
LO does the following:
(1) If the Administrator affirms the CE's decision denying
removal, the LO notifies the owner, operator, or supervisor
of the facility, the original recommending person, the
EC(s), the RA, ORC, regional program office, and the
federal, state, or local authority responsible for the
enforcement of clean air or clean water standards, that the
Administrator's decision affirming the Case Examiner
stands as final Agency action denying the request for
removal, § 15.25(b), and that any person who may file a
request for removal may file a new request for removal
based on new information, § 15.25(d).
(2) If the Administrator reverses the Case Examiner and grants
the request for removal, the LO removes the facility from
the List; notifies the owner, operator, or supervisor of the
facility, the recommending person (in discretionary listing
cases), the EC(s), the OCE (in mandatory listing cases),
the RA, ORC, and the regional program office, of the
effective date of removal, pursuant to § 15.27; and notifies
the General Services Administration (GSA) that the facility
is to be removed from the "Lists of Parties Excluded From
Federal Procurement or Nonprocurement Programs."
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CL.2
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CL.2-1
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
CL.1-1
NW26 BBS
OFFICE OF ENFORCEMENT
AND COMPLIANCE
MONITORING
MEMORANDUM
SUBJECT:
FROM:
TO:
Guidance on Implementing the Discretionary Contractor
Listing Program
Thomas L. Adams, Jr.
Assistant Administrator for Enforcement
and Compliance Monitoring
Assistant Administrator for Air and Radiation
Assistant Administrator for Water
General Counsel
Inspector General
Regional Administrators, Regions i-X
Regional Counsels, Regions 1-X.
I. Purpose
This document establishes Agency policy and procedures for
implementing the discretionary contractor listing program in EPA
enforcement proceedings. It should be read in conjunction with
the final revisions to the contractor listing regulations (40 CFR
Part 15, 50 FR 36188, September 5, 1985), and the guidance document,
"Implementation of Mandatory Contractor Listing" (General Enforce-
ment Policy No. GM-32, August 8, 1984). The procedures-to be
followed in all contractor listing actions are contained in the
rule and are summarized in an Appendix to this document. This
policy applies only to discretionary listing proceedings and super-
sedes the "Guidance for Implementing EPA's Contractor Listing
Authority" (General Enforcement Policy No. GM-31, July 18, 1984).
The revisions tc the contractor listing regulationsr together
with this guidance document and other management initiatives, should
-encourage greater use of the Agency's listing authority and aiiwuld
expedite the process for listing a facility.
II. Background
The Clean Air Act (CAA), Section 306, and the Clean Water Act
(CWA), Section 508, as implemented by Executive Order 11738, authorize
EPA to prohibit facilities from obtaining federal government contracts,
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grants or loan* (including subcontracts, subgrants and subloans),
as a consequence of criminal or civil violations of the CAA or CWA.
Commonly called "contractor listing," this program provides EPA
with an effective administrative tool to obtain compliance with
the CAA and CWA where administrative or judicial action against a
facility has failed to do so.
On July 31, 1984, EPA proposed revisions to the contractor
listing regulations (40 CFR Part 15 (49 PR 30628)) to simplify and
clarify the procedural opportunities which EPA will provide to
parties to listing or removal actions and to provide for mandatory
(i.e., automatic) listing of facilities which give rise to criminal
convictions under Section 113(c)(l) of the CAA or Section 309(c)
of the CWA. Final rules were promulgated on September 5, 1985
(50 FR 36188).
III. Appropriate Cases for Discretionary Listing Recommendations
In numerous cases, initiation of a listing action has
proved to be effective in achieving more expeditious compliance
and case settlements. While regional offices should consider
making contractor listing recommendations in every case where
the criteria of 40 CFR Part 15 are met, listing is a tool to
be used in conjunction with other enforcement actions. (See IV.
Standard of Proof in Listing Proceedings, page 4.) The circumstanc
surrounding each case will dictate whether a listing action should
be initiated. In particular, use of listing may be appropriate in
the following cases:
A. Violations of Consent Decrees
Regional offices should strongly consider making listing
recommendations for all cases of noncompliance with consent decrees
under the CAA or CWA. The recommendation should be prepared at
the earliest possible time after the Region learns of noncompliance
with the decree, but no later than the filing of a motion to enforce
the decree. Initiation of the listing action should be supplementary
to, and not in lieu of* a motion to enforce the decree. Where a
consent decree covers CAA or CWA violations as well as violations
of other environmental statutes, such as the Resource Conservation
and Recovery Act (f"RA) or the Toxic Substances Control Act (TSCA)
(where EPA does not nave contractor listing authority), a listing
recommendation also should be considered.
B. Continuing or Recurring Violations Following
Filed Civil Judicial Action*
Where EPA has filed a civil judicial enforcement action, the
Regional Office should initiate a listing action at the earliest
possible time after it determines that: (1) noncompliance is
ongoing, (2) the defendant is not making good faith efforts to
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comply, and (3) an expeditious settlement does not appear likely.
For example, a" defendant may make a firm settlement offer that is
far below the economic savings it realized from its noncompliance,
making settlement unlikely*
Similarly/ where EPA initiates a multi-media civil enforcement
action against violations under the CAA or CWA and other environ-
mental statutes (such as RCRA or TSCA), and continuing water or
air compliance problems exist without good faith corrective efforts,
the Region should consider bringing a listing action. Therefore,
it is important that all CAA and CWA counts be included in a multi-
media enforcement action.
C. Violations of Administrative Orders
Where noncompliance continues after an administrative order
has been issued under the CAA or CWA, and the Regional Office
determines that the facility is not making sufficient efforts to
come into compliance, a listing recommendation should be considered.
Initiation of a listing action generally should not be in lieu.of
filing a civil judicial action to enforce the administrative order,
but should support the civil action. The Regional Office should
consider initiating a listing action at the same time that it
files the civil judicial action.
D. Multi-Facility Noncompliance within a Single Company
Contractor listing can be an effective tool to address a
pattern of noncompliance within a single company. Where continuing
or recurring CAA or CWA violations occur at two or more facilities
within the same company, and EPA previously has taken an enforcement
action against each, the Regional Office should consider making
listing recommendations in all such cases.
While each facility's continuing or recurring ndncompliance
must be proved separately (i.e., one may not use one violation from
branch facility A and one violation from branch facility B to
constitute the minimum two violations required), one listing recom-
mendation describing noncompliance at two or more facilities may be
submitted to the Assistant Administrator for the Office of Enforce-
ment and Compliance Monitoring (OECM). A joint listing proceeding
may be held concerning all facilities. Joit consideration of two
or more facilities' violati i will require fewer Agency resources
than listing each facility separately. It will also discourage
companies from switching government contracts from a listed facility
to another facility without taking steps to correct the violations
which gave rise to the listing.
To accomplish this, the Regional Office, with headquarters
staff support, should review the EPA enforcement docket to see if
a potential listing candidate has committed CAA or CWA violations
at other company facilities. Note that a company's facilities may
be known by the parent company name or by the names of company
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-4-
subsidiaries. - Regional offices may obtain information on
other coinpany-'facilities from Charlene Swibas, Chief, Information
Services Section, NEIC (FTS 776-3219), who will search EPA's
Facility Index System which lists this information for all EPA
regions, or provide a Dunn and Bradstreet report containing this
information.
The Region may also request data on administrative orders
issued against a company under the headquarters Permit Compliance
System (for CWA violations) and the Compliance Data System (for
CAA violations). In some cases EPA has issued administrative
orders and filed civil enforcement actions against company facil-
ities which are located in more than one region. Such multi-regiona
inquiries may be coordinated with the Headquarters participating
attorney and the Agency's Listing Official.
E. Other Circumstances Where Listing is Appropriate
The regulation provides two other situations where listing may
be appropriate. First, EPA can list a facility after it has issued
a Notice of Noncompliance under Section 120 of the CAA. The threat
of listing in combination with noncompliance penalties can impose a
sufficiently severe economic cost on a facility to encourage efforts
to achieve both compliance and quicker settlements. Second, Regi^na
Offices may recommend listing when a state or local court convic
any person who owns, operates, or leases a facility of a criminaj.
offense on the basis of noncompliance with the CAA or the CWA.
They also may recommend listing when a state or local court has
issued an injunction, order, judgement, decree (including consent
decrees), or other civil ruling as a result of noncompliance with
the CAA or CWA.
IV. Standard of Proof in Listing Proceedings
It will be the responsibility of the Office of'Regional
Counsel to represent the Agency at any listing proceeding (where
one is requested by the affected facility). According to 40 CFR
Section 15.13(c), "[t]o demonstrate an adequate basis for listing
a facility, the record must show by a preponderance of the evidence
that there is a record of continuing or recurring non-compliance
at the facility named in *.he recommendation to list and that the
requisite enforcement act i has been taken."
"Requisite enforcement action" can be established by reference
to an issued administrative or court order, or a filed civil judicia
action. "Continuing or recurring" violations are understood to
mean two or more violations of any standard at a facility, which
violations either occur or continue to exist over a period of time.
Such a violation occurs even when different standards are violate
and time has elapsed between violations. Thus, in a listing prc d
ing, it is not necessary to prove all violations of CAA or CWA
standards alleged in the underlying enforcement action. Nonethel
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the regional attorney must carefully review the sufficiency of the
evidence and evaluate anticipated defenses.
V. Fairness Concerns in EPA Use of Contractor Listing
It is the intent of this guidance document to encourage the
use of the Agency's contractor listing authority in appropriate
cases. However, it must be recognized that listing is a severe
sanction. Before making a recommendation in any case, the Regional
Office should determine that the continuing or recurring noncompli-
ance involves clearly applicable CAA or CWA standards. Likewise,
Agency enforcement personnel must be careful in using listing
terminology during discussions with defendants. During settlement
negotiations, for example, it is certainly proper for EPA to advise
a defendant of the range of available EPA enforcement authorities,
including contractor listing. However, EPA personnel must distin-
guish between a listing recommendation (made by a "recommending
person," usually the Regional Administrator, to the Assistant
Administrator for OECM), a notice of proposed listing by the Agency
to the affected facility (which is sent by the Listing Official
after a preliminary decision to proceed is made by the Assistant
Administrator for OECM), and a final decision to list which is made
either by an Agency Case Examiner at the end of a listing proceeding,
or by the Assistant Administrator for OECM if no listing proceeding
is requested. Where appropriate, EPA-personnel should explain that
the Regional Administrator's listing recommendation does not consti-
tute a final Agency decision to list.
VI. Press Releases on Contractor Listing Actions
EPA will use press releases and other publicity to inform
existing and potential violators of the CAA and the CWA that EPA
will use its contractor listing authority in appropriate situations.
The November 21, 1985, "Policy on Publicizing Enforcement Activities"
(GM-46), states that "[i]t is EPA policy to issue press releases when
the Agency: (1) files a judicial action or issues a major adminis-
trative order or complaint (including a notice of proposed contractor
listing and the administrative decision to list)...." As discussed
in that policy, the press release should be distributed to both the
local media in the area of the violative conduct and the trade
press of th« affected industry.
VII. Coordination with the Departm«ut of Justice
To ensure that information presented during a listing proceeding
will not compromise the litigation posture of any pending legal
action against a party, EPA will coordinate with the Department of
Justice (DOJ) before a recommendation to list is made to the Assis-
tant Administrator for OECM. If the recommending party is an EPA
regional office official, he or she shall coordinate with the
appropriate DOJ attorney before a recommendation is submitted to
the Listing Official. He or she shall also provide the DOJ attor-
ney's comments to the Listing Official as part of the recommendation
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-6-
package. If the recommending party is not an EPA official, the
Listing Official shall coordinate with the EPA Office of Regional
Counsel and the appropriate DOJ attorney before a recommendation
to list is presented to the Assistant Administrator for OECM.
VIII. Applicability of Contractor Listing to Municipalities
Municipalities are subject to listing under appropriate cir-
cumstances. State and local governments and other municipal bodies
are specifically identified by 40 CFR §15.4 as "persons" whose
facilities may be listed. The standards for recommending that a
municipal facility be listed are the same as those for listing
other facilities. Listing may not be the most effective enforce-
ment tool in many municipal cases because often the only federal
funds received by a municipal facility are grant funds to abate or
control pollution, which are exempted from the listing sanction by
40 CFR §15.5. However, listing still should be considered in cases
where a municipal facility receives nonexempt funds or where the
principles underlying the listing authority otherwise would be.
furthered by a recommendation to list.
IX. Use of Listing in Administrative Orders
Enforcement offices may wish to inform violating facilities
early in the enforcement process of the possibility of being Listt-
Many facilities do not know about the listing sanction; such knowl
edge may provide additional impetus for a facility to take steps
to come into compliance. For example, some EPA regions notify
facilities whose violations make them potential candidates for
Listing of this possibility in the cover letter which accompanies
an administrative order requiring them to take action to correct
their noncompliance.
X. Obtaining Information Concerning Government Contracts
Held by a Facility Under Consideration for Listing
After an EPA recommending person, usually the Regional
Administrator, has submitted a listing recommendation to the
Listing Official, the regional office attorney handling the
case may require the facility to provide a list of all federal
contract*, grants, and loans (incl *ing subcontracts, sub-
grants, ar. subloans). To insure that such a requirement is
not imposed prematurely, the regional office attorney should
require this information from a facility only after advising
the Listing Official of his or her intention to do so. Requiring
this information from the facility is not a prerequisite for
listing a facility.
Requiring this information from a facility may be accom-
plished by telephone or through a letter similar to the models
provided in Attachments D and E. Attachment D is a model letter
requesting information from a facility which is violating an
administrative order issued under the authority of the Clean
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-7-
Water Act for -violating its National Pollutant Discharge Elimination
System (NPDES)" permit. Attachment E is a letter to a facility
which EPA and the Department of Justice have filed a civil suit
against for violating the Clean Air Act. Regional office attorneys
may elect to have such a request letter serve as notification to
the facility that EPA is considering instituting a listing action,
or they may wish to inform the facility before sending such a
letter. Which approach is taken will depend on the regional office
attorney's judgment of the notification's effects on the overall
case against the facility.
XI. Headquarters Assistance in Preparing and Processing
Listing Recommendations
In order to encourage the use of the contractor listing author-
ity in appropriate cases, OECM staff have been directed to assist
regional offices in preparing listing recommendations. Attached
are model listing recommendations indicating the level of detail
and support that should be provided with recommendations. (See
Attachments A, B, and C for model listing recommendations.) Where
a listing recommendation is sufficient, the Assistant Administrator
for OECM will decide whether to proceed with the listing action
under Section IS.ll(c) (i.e., by directing the Listing Official to
issue a notice of proposed listing to the affected facility) within
two weeks after receiving the recommendation. Questions concerning
contractor listing may be directed to the Agency Listing Official,
Cynthia Psoras, LE-130A, FTS 475-878-5, E-Mail Sox EPA2261.
Attachments
cc: John Ulfelder
Senior Enforcement Counsel
Associate Enforcement Counsel for Air
Associate Enforcement Counsel for Water
Director, Office of Water Enforcement and Permits
Director, Stationary Source Compliance Division
Director, Office of Compliance Analysis and Program Operations
Director, NEIC
Director, Water Management Division (Regions I-X)
Director, Air Management Division (Regions I, III, V and IX)
Director, Air and Waste Management Division (Regions IT and VI)
Director, Air, Pesticides and Toxics M
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Appendix
The Listing Program and Final Revisions to 40 CFR Part 15
A. Mandatory Listing
If a violation at a facility gives rise to a criminal con-
viction under Section 113(c)(l) of the CAA or Section 309(c) of
the CWA, listing of the facility is mandatory (and effective upon
conviction under 40 CFR Section 15.10). As soon as a conviction
occurs, the Director of the Office of Criminal Enforcement,
within the Office of Enforcement and Compliance Monitoring (OECM),
must verify the conviction and notify the Listing Official. The
Listing Official sends written notification to the facility and
to the Federal Register. Both documents must state the basis for
and the effective date of the mandatory listing.
Removal from the mandatory list may occur only if: (1) the
Assistant Administrator certifies that the facility has corrected
the condition that gave rise to the criminal conviction under
Section 113(c)(l) of the CAA or Section 309(c) of the CWA, or (2)
a court has overturned the criminal conviction. The August 8,
1984, memorandum, "Implementation of Mandatory Contractor Listing,"
(GM-32) discusses the procedures for mandatory listing in more detai:
B. Discretionary Listing
1. Basis for Discretionary Listing
The following enforcement actions may serve as a basis for
discretionary listing if there is also a record of continuing or
recurring noncompliance at a facility:
a. A federal court finds any person guilty under Section
113(c)(2) of the CAA, if that person owns, leases,
or supervises the facility.
b. A state or local court convicts any person of a
criminal offense on the basis of noncompliance with
clean air or clean water standards if that person
owns, leases, or supervises the facility.
c. A federal, state, or local court issres an injunctior..
order, judgment, decree (including err cent decrees),
or other form of civil ruling as a result of nor.
compliance with the CWA or CWA at the facility.
d. The facility is the recipient of a Notice of
Noncompliance under Section 120 of the CAA.
e. The facility has violated an administrative order
under:
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' CAA Section 113 (a)
.* CAA Section 113(d)
* CAA Section 167
' CAA Section 303
• CWA Section 309 (a)
f. The facility is the subject of a district court
civil enforcement action under:
CAA Section 113(b)
CAA Section 167
CAA Section 204
CAA Section 205
CAA Section 211
CWA .-Section 309 (b)
2. The Discretionary Listing Process
a. Listing Recommendation and Notice of Proposed Listing
The discretionary listing process begins when a "recommending
person" files a listing recommendation with the Listing Official.
Recommending persons may include any member of the public, Region*1
Administrators, the Assistant Administrator for Air and Radiatior
the Assistant Administrator for Water/ the Associate Enforcement
Counsel for Air, the Associate Enforcement Counsel for Water, and
the Governor of any State. The recommendation to list: (1) state
the name, address, and telephone number of the recommending person;
(2) identifies the facility to be listed, and provides its street
address and mailing address; and (3) describes the alleged continuing
or recurring noncompliance, and the requisite enforcement action
(see 40 CFR Section 15. 1Kb)). The recommendation to list should
describe the history of violations in detail, including the specific
statutory, regulatory, or permit requirements violated. In addition,
regional offices may include as attachments to the listing recommen-
dation documents prepared for other purposes, such as complaints,
litigation reports, and other explanatory material which describes
the nature of the violations. (See Attachments for model listing
recommendations.)
The Listing Official must determine whether t - recommendation
meets th« requirements of "action 15. 1Kb). If the recommendation
is sufficient and the Assistant Administrator for OECM decides to
proceed und-r Section 15.11(c), the listing official will contact
the regional office to ensure that it still wishes to proceed. If
the decision is made to proceed, the listing official provides notice
of the proposed listing to the owner or operator of the affected
facility and provides the owner or operator of the facility 30
days to request a listing proceeding. A listing proceeding is
not a formal hearing; rather, it is an informal administrative
proceeding presided over by an Agency Case Examiner. If the facil-
ity's owner or operator requests a listing proceeding, the Listing
Official must schedule it and notify the recommending person and
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the owner or operator of the date, time, and location of
the proceeding^" The Assistant Administrator designates a
Case Examiner to preside over the listing over the listing
proceeding.^/
b. Listing Proceeding
The Federal Rules of Civil Procedure and Evidence are not
used during listing proceedings. The Agency and the facility may
be represented by counsel and may present relevant oral and written
evidence. With the approval of the Case Examiner, either party
may call, examine, and cross-examine witnesses. The Case Examiner
may refuse to permit cross-examination to the extent it would:
(1) prematurely reveal sensitive enforcement information which the
government may legally withhold, or (2) unduly extend the proceedings
in light of the usefulness of any additional information likely to
be produced (see Section 15.13(b>). A transcript of the proceeding
along with any other evidence admitted in the proceeding constitutes
the record. The Agency must prove each element of a discretionary
listing by a preponderance of the evidence (see Section 15.13(c)).
The Case Examiner must issue a written decision within 30
calendar days after the proceeding. The party adversely affected
may appeal the decision to the General Counsel. The appeal, which
is filed with the Listing Official, must contain a statement of:
(1) the case and the facts involved, (2) the issues, and (3)
why the decision of the Case Examiner is not correct based on
the record of the proceeding considered as a whole. The General
Counsel must issue a final decision, in writing, as soon as
practicable after reviewing the record. The Listing Official
then must send written notice of the decision to the recommending
person and to the facility, and must publish the effective date
of the listing in the Federal Register if the General Counsel
upholds the Case Examiner's decision to list.
c. Removal from the List of Violating Facilities'
Removal from the List of Violating Facilities can occur in
any of the following circumstances:
1. Upon reversal or other modification of the
criminal conviction decree, order, judgment, or
other civil ruling or finding which formed the
basis for the discretionary listing, where the
reversal or modification removes the basis tor the
listing;
I/ If the owner or operator of the facility does not make a timely
request for a listing proceeding, the Assistant Administrator will
determine whether to list the facility based upon the recommendation
to list and any other available information.
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2. If the Assistant Administrator for OECM
determines that the facility has corrected the
condition(s) which gave rise to the listing;
3. Automatically if, after the facility has
remained on the discretionary list for one year
on the basis of Section 15.11(a)(4) or Section
15.11(a)(5) and a basis for listing under Sections
15.11(a)(l), (2). or (3) does not exist; or
4. If the Assistant Administrator for OECM has
approved a plan for compliance which ensures
correction of the condition(a) which gave rise to
the discretionary listing.
The original recommending person or the owner or operator of
the facility may request removal from the list. The Assistant
Administrator for OECM then must review the request and issue a
decision as soon as possible. The Listing Official then must
transmit the decision to the person requesting removal.
If the Assistant Administrator for OECM denies a request for
removal, the requesting person may file a written request for a
removal proceeding to be conducted by a Case Examiner designated
by the Assistant Administrator. The Federal Rules of Civil
Procedure and Evidence are not used during a removal proceeding.
The Case Examiner's written decision must be based solely on the
record of the removal proceeding.
within 30 calendar days after the date of the Case Examiner's
decision, the owner or operator of the facility may file with the
Listing Official a request for review by the Administrator. The
Administrator will determine if the Case Examiner's decision is
correct based upon the record of the removal proceeding considered
as a whole. The Administrator then must issue a final written
decision.
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Attachment A
MODEL LISTING RECOMMENDATION
BASED ON ADMINISTRATIVE ENFORCEMENT ACTION
DATE: 10/01/86
SUBJECT: Recommendation to List Violating Facility
FROM: Regional Administrator, Region XI
TO: Cynthia Psoras
Listing Official
Legal Enforcement Policy Division (LE-130A)
The purpose of this memorandum is to recommend that
the [name of facility and type of operations conducted at
the facility] owned and operated by John Doe at [street
address, city and state] be placed on the EPA List of
Violating Facilities because of violations of clean air
standards. Information concerning the recurring violations
and the history of action taken thus far by the Agency is
set forth below. Copies of pertinent supporting materials
are attached. [Attach technical documents describing the
violation, the administrative order, and other documents
describing the enforcement action taken.]
This plant is subject to the New Source Performance
Standards (NSPS) for Asphalt Concrete Plants. 40 CFR Part
60, Subpart I (1986).
On July 5, 1985, the Region XI Director, Air Management
Division, notified [owner and operator] that on the basis
of performance tests conducted December 19, 1984, the
facility was in violation of 40 CFR 60.92(a)(l), in that
it was discharging gases into the atmosphere, and those
gases contained 256.5 milligrams of particulate matter per dry
standard cubic meter (0.114 grain per dry standard cubic foot)
The allowable discharge of particulate matter into the
atmosphere is 90 milligrams per dry standard cubic meter
(0.04 grain per dry standard cubic foot).
On August 14, 1985, the Region XI Regional Administrator
issued an Administrative Order pursuant to Section 113(a)(3)
of the Clean Air Act. That order required, in part, that
[name of facility] operate its [specific portion of the
plant or processes causing the violations] in compliance
with the NSPS for Asphalt Concrete PlanLs, 40 CFR Part 60,
Subpart I, and to conduct performance tests for emissions
of particulate matter within sixty days following the
effective date of the Administrative Order.
Performance tests were completed on September 1, 1985,
and the particulate emissions were 373.5 milligrams per dry
standard cubic meter (0.166 grain per dry standard cubic
foot). Thus, [name of facility] is not in compliance, and has
violated the Administrative Order. Further, the violation
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of the NSPS has been a continuing violation in that the
particulate;emissions have been greater than the permissible
limits since the December 19, 1985, test date.
The recommending person for this listing recommendation
is Regional Administrator, Region XI, EPA, Government
Office Building, City, 51st State; her telephone number is
(FTS) 123-4567.
This action is authorized under discretionary listing,
40 CFP 15.11(a)(4) (1986). It meets the regulations' two
requirements that: there is "continuing or recurring
noncompliance with clean air standards ... at the facility
recommended for listing" and that the facility has violated
an administrative order issued under Section 113(a) of
the Clean Air Act. '
If you have any questions, please contact Attorney, at
(FTS) 123-4568, or Engineer, at (FTS) 123-4569.
Attachments
[technical documents, Administrative Order,
documents describing the previous enforcement actions taken]
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Attachment B
MODEL LISTING RECOMMENDATION
BASED ON JUDICIAL ENFORCEMENT ACTION
MEMORANDUM
SUBJECT: Recommendation for Listing
FROM: Regional Administrator, EPA Region 12
TO: Cynthia Psoras
Listing Official
Legal Enforcement Policy Division, LE-130A
This is a recommendation that the [facility name and
address] be placed on the EPA List of Violating Facilities,
pursuant to Section 306 of the Clean Air Act, Executive
Order 11738, 40 CFR Part 15, and the October 1986 guidance
from the Assistant Administrator for Enforcement and Compliance
Monitoring. This action is authorized under 40 CFR 15.11(a)(6)
(1986). This recommendation is based on violations alleged
in the civil action currently being pursued against [facility
name] in the United States District Court for the Fifty
Second State. [Facility name] operates four coal-fired
boilers (boilers nos. 2-5) at the [facility] without adequate
air pollution control equipment.
As indicated in the attached counterclaim, motion for partial
summary judgment, and affidavits, [facility name] has been
in violation of the Federal New Source Performance Standards
(NSPS) for particulate emissions since startup of the boilers,
more than five years ago. The United States issued a notice
of violation to [facility name] regarding mass emission
violations at the [facility name] boilers nos. 2-5 on May 30,
1981. [Facility name] has not substantially modified the
particulate emission control system for these four boilers
since that time. Particulate stack testing conducted as
recently as January 1986 shows continuing violations of
the boilers. The complaint, attached to this memo, was
filed by defendant on June 15, 1985. The United States
then filed a counterclaim on August 1, 1985. The Government's
Motion for Partial Summary Judgment as to liability, filed on or
about December 12, 1985, was granted in part on April 8,
1986, wherein the court denied [facility name's] claim that
the four boilers were not covered by NSPS. The remainder
of the Motion, requesting judgment on the counterclaim for
enforcement, is pending before the court.
The [facility name] plant is located in [City and State]
which is a secondary nonattainment area for Total Suspended
Particulates.
The attached affidavits contain summaries of mass violations
at the [facility name's] boilers nos. 2-5. All data summarized
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were obtained from stack tests performed on the [facility name]
boilers by tKe [owner and operator corporation] and stack
tests performed by a consultant retained by the [owner and
operator corporation].
Based on the information contained above and in the
attachments to this recommendation/ I request that the
Assistant Administrator for Enforcement and Compliance Monitoring
find that there is adequate evidence of continuing or recurring
violations of Clean Air Act standards at the [facility name]
and place this facility on the EPA List of Violating Facilities
pursuant to the procedures set forth in 40 CFR Part 15.
For further information please contact Attorney on
(FTS) 987-654 or Technical Specialist (FTS) 987-655.
(Signed)
Regional Administrator
Attachments
[technical documents, consultant's report, documents describing
the judicial enforcement action]
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Attachment C
ATTACHMENT TO MODEL LISTING RECOMMENDATION
BASED ON JUDICIAL ENFORCEMENT ACTION
MEMORANDUM
SUBJECT: Attachment to Recommendation for Listing
FROM: Regional Administrator, EPA Region 12
TO: Cynthia Psoras
Listing Official
Legal Enforcement Policy Division (LE-103-A)
Description of Violations
The four coal-fired boilers at [facility name] are
subject to 40 CFR part 60, Subpart D, "Standards of
Performance for Fossil-Fuel-Fired Steam Generators for
which Construction is Commenced after August 17, 1971," and
40 CFR part 60, Subpart A, "General Provisions," which are
applicable to all categories of sources for which New Source
Performance Standards (NSPS) have been promulgated.
Subpart D includes emission limits for particulate
matter, opacity, sulfur dioxide and nitrogen oxides (40 CFR
§60.42). It also requires installation, calibration,
maintenance and operation of continuous emission monitoring ("CEM")
systems for opacity, sulfur dioxide and nitrogen oxides (40
CFR §45(a)). Each of the facility's boilers nos. 2, 3, 4, and
5 is subject to these emission limitations and CEM requirements.
When [owner and operator] constructed the facility's boilers
2-5 between 1978 and 1980, it equipped each of the boilers
with a double alkali venturi scrubber for combined control
of sulfur dioxide and particulate matter. These scrubbers suc-
cessfully control sulfur dioxide emissions but they have
never achieved the Subpart D particulate emission limit, 40
CFR §60.42(a) (1) . [Owner and operator] also equipped the
boilers with continuous monitoring systems for opacity, sulfur
dioxide and oxygen (it was exempt from the NOX CEM requirement,
pursuant to 40 CPR $60.45(b)(3)). The sulfur dioxide
monitoring system has never operated properly.
Subpart A includes requirements related to operation
and maintenance of CEM systems (40 CFR §60.13); notification
and recordkeeping (40 CFR $60.7) and performance testing
(40 CFR §60.8k). Under 40 CFR §60.13, all CEM systems
installed under applicable subparts must:
a. be installed and operational prior to conducting
performance tests (emissions tests) - §60.13(b);
b. Undergo a performance evaluation (monitor
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certification test) during or within 30 days of
the performance tests - §60.13(c);
c. undergo regular calibration and maintenance -
§60.13(d)(l).
[Facility name] violated all these provisions. It
never performed a monitor performance evaluation on, and
has never operated and maintained, Its sulfur dioxide GEM
system.
Under 40 CFR §60.7, owners and operators of NSPS sources
must:
•, *
a. Notify EPA of the anticipated date of initial
start-up of an affected facility postmarked not
less than 30 days prior to such date -.§60.7(a)(2)?
b. Notify EPA of the actual date of initial
start-up postmarked within 15 days of such date
$60.7(a)(3);
c. Submit quarterly reports of "excess emissions"
(emissions exceeding applicable emission limits)
as measured by continuous monitoring systems
- §60.7(c).
[Facility name] failed to notify EPA of the anticipated
or actual start-up of boilers 4 and 5. [Facility name] has
never submitted any excess emissions reports to EPA.
Under 40 CFR $60.8, owners/operators are required to
conduct performance tests of affected facilities not later
than 180 days after initial start-up. [Facility name]
violated this provision with respect to boilers 4 and 5.
It is [facility name's] customary practice to operate
one or more of the boilers during the winter heating season.
The steam that is generated is used for space heating and
production. The boilers are not operated, or are operated
using only natural gaa as fuel, in the warmer months. E -h
heating season since the NOV was issued (in August 1980),
boilers 2 and 3 have been regularly operated. Each day a
boiler is operated, particulate emissions from that boiler
exceed the limit, and violations of the CEM regulations
occur because the sulfur dioxide CEM remains inoperative.
This winter, [facility name] has informed us that they will not
operate the boilers using coal for fuel and will only use nature
gas. However, they have made no commitment to permanently
cease operating the boilers using coal.
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The Motion for Summary Judgment
On September 25, 1985, the District Court for the
Central District of the Fifty Second State ruled on EPA's
motiion for partial summary judgment with respect to the
Agency's counterclaim for enforcement. EPA's motion dealt
only with the alleged violations of the subpart D particulate
emissions limit. It did not deal with the monitoring,
notification and reporting violations. EPA introduced
into evidence six stack tests conducted on boilers nos. 2-5,
all of which showed the tested boiler to be exceeding the
limit. The court ruled that on the six days on which
those tests occurred, [facility name] violated the subpart
D particulate standard. Enclosed is a copy of the transcript
of the September 26, 1985, hearing on the Motion for Summary
Judgment. Judge X ruled from the bench following oral
argument by the parties. See pages 21-25. The judge
stated that he would issue a written order, but he has not
done so yet. We will furnish you with a copy upon receipt.
An evidentiary hearing is scheduled for March 1, 1985,
to establish days of violation other than the six stack
test days.
(signed)
Regional Administrator
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Attachment D
MODEL LETTER TO A FACILITY VIOLATING THE
CLEAN WATER ACT REQUESTING A LIST OF ITS
FEDERAL CONTRACTS, GRANTS, AND LOANS
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Mr. John Smith
President
XYZ Corporation
1000 Corporate Lane
Fifty Second State 12345
Dear Mr. Smith:
The XYZ Corporation was issued National Pollutant
Discharge Elimination System (NPDES) permit number FS0100524
by the Regional Administrator of EPA, Region XI, pursuant to
Title 33, United States Code, Section 1342. This permit
authorizes the discharge of pollutants into the Blue River
in accordance with the effluent limitations, monitoring
requirements, and other provisions of the permit. On May 6,
1986, EPA issued Administrative Order 186-1570 to the XYZ
Corporation pursuant to the authority granted under Title
33, United States Code, Section 1319(a)(3) for exceeding the
effluent limitations for biochemical oxygen demand and total
suspended solids. As discussed in our letter to you of July
6, 1986 you are currently in violation of this Administrative
Order.
Under the provisions of Title 33, United States Code,
Section 1368(a), a facility owned, leased, or supervised by a
"person" (defined to include a corporation such as XYZ Corpora-
tion) who commits "continuing or recurring" violations of the
Clean Water Act may be placed on a "List of Violating Facilities"
and prohibited from receiving Federal contracts, grants and
loans. Th« prohibition under Title 33, United States Code,
Section 1368(a) is implemented by the Environmental Protection
Agency (EPA) under regulations promulgated at Title 40 of
the Cod* of Federal Regulations Part 15, entitled "Adminis-
tra ''on of The Clean Air Act and Federal Water Pollution
Control Act with Respect to Federal Contracts, Grants, cr
Loans." These regulations state that a facility may be
placed on the "List of Violating Facilities" for a violation
of an administrative order under Title 33, United States
Code, Section 1319(a).
Under Title 33, United States Code, Section 1318, EPA
has authority to require the owner or operator of any point
source to make such reports and to provide such other infor-
mation as are deemed reasonably necessary to carry out the
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objectives of the Clean Water Act, Title 33, United States
Code, Section 1251 et seq.
Accordingly, for the purposes of implementing Title 33,
United States Code, Section 1368(a), EPA hereby invokes its
authority under Title 33, United States Code, Section 1318,
and requires XYZ Corporation, as the owner and operator of a
point source, identified in NPDES permit number FS0100524,
to provide the information specified below no later than 15
calendar days from receipt of this letter. The submittal
should be addressed to:
Regional Attorney
Office of Regional Counsel
U.S. Environmental Protection Agency
Region XI
Information to be Submitted to EPA
1. Identify, by contract number, contracting agency and con-
tract date, all Federal contracts held by the facility for
the procurement of personal property or nonpersonal services,
for which XYZ Corporation is either the prime contractor or
subcontractor .
2. Identify, by grant number, granting agency, and grant date,
all Federal grants received by the facility, including grants-in
aid, for which XYZ. Corporation is either the grantee (prime
recipient of a grant) or a subgrantee (the holder of an
agreement or an arrangement under which any portion of the
activity or program is being assisted under the grant).
3. Identify, by loan number, lending agency, and iQan date,
all Federal loans for which XYZ Corporation is a borrower
or subbor rower.
4. Identify, by bid number, agency and date, all bids submit-
ted by XYZ Corporation for future Federal contracts or
subcontract*.
5. Identify, by grant application number, agency and date, all
grant applications submitted by XYZ Corporation for any
future Federal grant or subgrant.
6. Identify, by loan application number, agency and date, all
loan applications submitted by XYZ Corporation for future
Federal loans or subloans.
7. Identify, by percentage estimate, the extent to which
XYZ Corporation's business is connected, in any degree, to
Federal contracts, grants and loans.
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8. Identify the effect, if any, of the prohibition of Title
33, United States Code, Section 1368(a), upon the business of
XYZ Corporation.
This inquiry does not constitute an official notification
that XYZ Corportion is under consideration for placement on
the "List of Violating Facilities." If deemed appropriate,
such a notice will be initiated by the Listing Official,
Office of Enforcement and Compliance Monitoring, EPA.
Under Title 33, United States Code, Section 1318(b), XYZ
Corporation may assert a business confidentiality claim
with respect to part or all of the information submitted to
EPA in the manner described at 40 C.F.R. § 2.203(b). Information
covered by such a claim will be disclosed by EPA only to the
extent, and by means of the procedures set forth in 40 C.F.R.
Part 2, Subpart B. If no such claim accompanies the information
when it is submitted to EPA, it may be made available to the
public by EPA without further notice to XYZ Corporation.
Care should be taken in ensuring that the response to this
letter is complete and accurate because Title 33, United
States Code, Section I319(c)(2) provides criminal penalties
for knowingly or willfully submitting false information to
EPA in any report required by the Clean Water Act. In addition,
Title 18, United States Code, Section 1001 provides criminal
penalties for knowingly or willfully submitting false
information to a federal official.
This information request is not subject to the approval
requirements of the Paperwork Reduction Act of 1980, Title 44
United States Code, Sections 3501 e_t seg.
Should you have any questions, please contact me, at (123)
456-7890.
Sincerely yours,
Regional Attorney
Region XI
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Attachment E
MODEL LETTER TO A FACILITY VIOLATING THE
CLEAN AIR ACT REQUESTING A LIST OF ITS
FEDERAL CONTRACTS, GRANTS, AND LOANS
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Mr. John Smith
President
ABC Corporation
1000 Corporate.Lane
Fifty Third State 12345
Dear Mr. Smith:
On May 5, 1986, in the Southern District of the Fifty
Third State, the Department of Justice instituted a civil
suit against the ABC Corporation for continuing and recurring
violations of Title 42, United States Code, Section 7413(b).
Title 40 of the Code of Federal Regulations, Part 15,
entitled "Administration of The Clean Air Act and Federal
Water Pollution Control Act with Respect to Federal Contracts,
Grants, or Loans," promulgated pursuant to Title 42, United
States Code, Section 7606(a) and Executive Order 11738 (38 FR
25161, September 12, 1973) authorize EPA to establish a "List
of Violating Facilities." Facilities on this List are prohibited
from receiving Federal contracts, grants, and loans. A facility
who commits "continuing or recurring" violations of the
Clean Air Act may be placed on the List. These regulations
state that a facility may be placed on the List after EPA,
through the Department of Justice, has filed a civil enforce-
ment action in federal court under Title 42, United States Code,
Section 7413{b).
Under Title 42, United States Code, Section 7414(a), EPA
has authority to require the owner or operator of any emission
source to make such reports and to provide such other infor-
mation ai are deemed reasonably nece <*ary to carry out the
objectives of the Clean Air Act, Title 42, United States
Code, Section 7401 <* seq.
Accordingly, for the purposes of implementing Title 42,
United States Code, Section 7606(a), EPA hereby invokes its
authority under Title 42, United States Code, Section 7414,
and requires ABC Corporation as the owner and operator of a
emission source, to provide the information specified below
no later than 15 calendar days from receipt of this letter.
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The submittal should be addressed to:
Regional Attorney
Office of Regional Counsel
U.S. Environmental Protection Agency
Region XI
Information to be Submitted to EPA
1. Identify, by contract number, contracting agency and con-
tract date, all Federal contracts held by this facility for
the procurement of personal property or nonpersonal services,
for which ABC Corporation is either the prime contractor or
subcontractor.
2. Identify, by grant number, granting agency, and grant date,
all Federal grants received by this facility, including
grants-in-aid, for which ABC Corporation is either the grantee
(prime recipient of a grant) or a subgrantee (the holder of
an agreement or an arrangement under which any portion of
the activity or program is being assisted under the grant)
3. Identify, by loan number, lending agency, and loan date,
all Federal loans for which ABC Corporation is a borrower
or subborrower.
4. Identify, by bid number, agency and date, all bids submit-
ted by ABC Corporation for future Federal contracts or
subcontracts.
5. Identify, by grant application number, agency and date, all
grant applications submitted by ABC Corporation for any
future Federal grant or subgrant.
6. Identify, by loan application number, agency and date, all
loan applications submitted by ABC Corporation for future
Federal loans or subloans.
7. Identify, by percentage estimate, the extent to which
ABC Corporation's t ciness is connected, in any degree, to
Federal contracts, grants and loans.
8. Identify the effect, if any, of the prohibition of Title
42, United States Code, Section 76Co(o), upon the business of
ABC Corporation.
This inquiry does not constitute an official notification
that ABC Corportion is under consideration for placement on the
"List of Violating Facilities." If deemed appropriate, such
a notice will be initiated by the Listing Official, Office
of Enforcement and Compliance Monitoring, EPA.
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Under Title 42, United States Code, Section 7414(c), ABC
Corporation may assert a business confidentiality claim with
respect to part or all of the information submitted to EPA in the
manner described at 40 C.F.R. § 2.203(b). Information covered
by such a claim will be disclosed by EPA only to the extent, and
by means of the procedures set forth in 40 C.F.R. Part 2,
Subpart B. If no such claim accompanies the information when
it is submitted to EPA, it may be made available to the public
by EPA without further notice to ABC Corporation.
Care should be taken in ensuring that the response to this
letter is complete and accurate because Title 42, United
States Code, Section 7413(c)(2) provides criminal penalties
for knowingly submitting false information to EPA in any
report required by the Clean Air Act. In addition, Title
18, United States Code, Section 1001 provides criminal penalties
for knowingly or willfully submitting false information to
a federal official.
This information request is not subject to the approval
requirements of the Paperwork Reduction Act of 1980, Title 44
United States Code, Sections 3501 et seq.
Should you have any questions, please contact me at (123)
456-7890.
Sincerely yours,
Regional Attorney
Region XI
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. O.C. 20460
301988
OFFICE OF
AIM AND RADIATION
MEMORANDUM
SUBJECT:
FROM:
TO:
Asbestos Contractor List!
John S. Seitz, Director
Stationary Source Compl
Office of Air Quality
nning and Standards
James T. Wilburn
Deputy Director
Air, Pesticides and Toxics Management Division
Region IV
I am writing in response to your April 1, 1988 memo
about the asbestos contractor listing policy. You raised
the concern that an asbestos cgntractor nay not remain in
violation for long enough to be listed, or may not stay
listed for very long since a contractor can petition for
de-listing upon demonstration of compliance. You pointed
out that most asbestos violations are short lived. Since
other air compliance staff may share your concern, I am
sending copies of this response to all air nanagement
division directors.
We discussed this problem in developing the new asbestos
contractor listing policy. We believe that the short duration
of most violations will not preclude EPA from using the
contractor, listing sanction effectively against those companies
which have repeated violations. Under 40 C.F.R. § 15.11 EPA
may place a facility on the list if EPA "determines that
there is a record of continuing or recurring noncompliance
with clean air (or water) standards" I T" (emphasis added).
If the facility violating the NESHAP is an asbestos
demolition and renovation (D&R) company, then the "facility"
to be listed is that asbestos D&R company. Contractor listing
is an appropriate sanction to use against asbestos D&R companies
with a history of several violations over a period of time.
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These violations may be at different demolition sites, as
long as the same company "facility" is responsible for the
violations. I/ Such a company has a "record of recurring
noncompliance" for the purposes of a listing action.
If an asbestos company has been placed on the list
in a discretionary listing action and then petitions to be
removed from the list, § 15.21 requires the Listing Official
to remove the facility from the list if the Assistant
Administrator has determined that "the condition(s) which
gave rise to the discretionary listing have been corrected"
or "the facility is on a plan for compliance which will
insure that the condition(s) which gave rise to the
discretionary listing will be corrected." The Office of
Enforcement and Compliance Monitoring has issued a policy
about what constitutes "correcting the condition giving rise
to listing".2/
In the case of an asbestos D&R company which has
repeatedly violated the asbestos NESHAP, we would not consider
that the company had demonstrated that it had "corrected the
condition giving rise to the listing" merely by sending
proper notice on its next job and/or using proper work practices
the next time an inspector visits the site. One day or
moment of compliance is no guarantee that the contractor will
be in compliance the next day or moment nor does it guarantee
correction of the conditions giving rise to the listing.
Where there have been recurring violations in the past, EPA
should require the company to demonstrate that it has taken
adequate steps to ensure that violations do not occur in the
future.
To illustrate this point, consider a power plant that
may have repeated, but not continuous, particulate violations.
The compliance provisions of a consent decree for a power
plant might require that the company install an ESP or bag-
house and, in addition, require that certain operation and
maintenance measures be taken and that quarterly reports of
GEM data be submitted to EPA to demonstrate that the power
plant is now operating in continuous compliance with the
standard.
!_/ For a more complete discussion defining asbestos D&R
company "facility", see "Defining 'Violating Facility1 for the
Purpose of Listing Asbestos Demolition and Renovation Companies,
March 11, 1988 at 11-13.
2_/ "Policy on Correcting the Condition Giving Rise to Listing
under the Contractor Listing Program", Attachment WW to the
Contractor Listing Protocols, October 8, 1987.
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Similarly, with an asbestos D&R company, we should
require a demonstration that steps have been taken to ensure
that the systemic problems which caused recurring violations
have been solved. Depending on the particular requirements
of the asbestos NESHAP that the company has been violating,
EPA could require the asbestos D&R company to do one or more
of the following:
0 Institute new office procedures which assure that
the required notices are sent out on time. Demonstrate
that this has been done by maintaining records of all
notices which have been sent and agree to an EPA audit
of these records.
0 Develop or have developed a written asbestos control
program such as the one in the attached model consent
decree provision II.
0 Develop and implement a training program for asbestos
D&R workers, and have every worker (including managers)
take the training course. Keep records of which workers
have taken the course.
0 Demonstrate to EPA that the company has the equipment
needed to comply with the NESHAP regulations, such as
water tank trucks with hoses and spray equipment and
metal drums for storing and disposing of asbestos.
Attached is a model consent decree with the language and
programs we suggest to demonstrate compliance. If you have
any suggestions for improvements, we would welcome them.
A discretionary listing action always has a prerequisite
enforcement action. If the defendant and EPA have agreed to
the terms of a consent decree which incorporates the needed
remedies before the company is listed, the recommending
Regional office may withdraw the Recommendation to List.
Once a company has been notified of a proposed listing, a
listing action is resolved only by a determination that the
conditions giving rise to the listing have been corrected.
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This determination may be based on a certification by the
Regional program office that the facility has taken all
necessary remedial action and is now in compliance, or it may
be based on a signed consent decree which obligates the company
to take the needed remedial action in the future.
I hope this discussion has addressed your concerns. If
you still have some questions about the asbestos D&R company
listing program, you may want to talk to Tracy Gipson in the
Contractor Listing Program (FTS 475-8780) or Charlie Garlow
or Justina Fugh in the Air Enforcement Division (FTS 475-7088
or 382-2864).
Attachments
Policy on Correcting the Condition Giving Rise to Listing
under the Contractor Listing Program
Model Consent Decree Provisions
cc: Air and Waste Management Division Director
Regi on 11
Air Management Division Directors
Regions I, III, and IX
Air and Radiation Division Director
Region V
Air, Pesticides, and Toxics Management Division Directors
Regionx IV and VI
Air and Toxics Division Directors
Regions VII, VIII, and X
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1987 Contractor Listing Protocols Attachment WW,
Policy on Correcting the Condition Giving Rise to
Listing Under the Contractor Listing Program,
(Thomas L. Adams, Jr. AA)
HAS BEEN SUPERCEDED
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ATTACHMENT 2
UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF LOUISIANA
UNITED STATES OF AMERICA, )
)
Plaintiff, )
)
v. )
)
AMALGAMATED PROPERTY OWNERS, ) Civil Action No.
)
INC. and )
)
XYZ DEMOLITION CONTRACTORS, )
)
INC., )
)
Defendants )
CONSENT DECREE
Plaintiff, United States of America, on behalf of the United
States Environmental Protection Agency ("EPA") , having filed a
Complaint alleging violations of the National Emission Standard
for Hazardous Air Pollutants ("NESHAP") for asbestos, codified at
40 C.F.R. §61.140 et ŁŁŁ., and the Clean Air Act, 42 U.S.C. §7401
et seq. . and requesting permanent injunctive relief and civil
penalties;
And Defendant having duly filed an Answer denying the claims
of the plaintiff; [if appropriate]
And Plaintiff and Defendant having agreed that settlement of
this action is in the public interest and that entry of this
Consent Decree without further litigation is the most appropriate
means of resolving this action and thus avoiding protracted
litigation costs and expenses;
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And Plaintiff and Defendant having moved this Court tc
this Consent Decree, subject to the provisions of 28 C.F.R.
NOW THEREFORE, before the taking of any testimony, upc
pleadings, without adjudication of any issue of fact or la;
with no finding or admission of liability against or by th<
Defendant, and upon consent of the parties to this Consent
it is hereby Ordered, Adjudged, and Decreed as follows:
I.
JURISDICTION
This Court has jurisdiction over the subject matter o
action under 28 U.S.C. §51331, 1345, and 1355, and 42 U.S.
$7413(b) and over the parties consenting to this.Consent D
Venue is proper in this Court. The Complaint states a cla
which relief may be granted against the Defendant.
II.
DEFINITIONS AND PARTIES
A. "Defendants" shall mean Amalgamated Property Owne.o,
Inc., and XYZ Demolition Contractors, Inc.
B. "Plaintiff" shall mean the United States of America and
the United States Environmental Protection Agency.
C. Terms used in this Consent Decree which are defi
42 U.S.C. S7412(a), 42 U.S.C. §7602, 40 C.F.R. §61.02, an
C.F.R. §61.141 shall have the meanings contained therein.
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D. Defendant Amalgamated Property Owners, Inc. (APO) is a
corporation organized under the laws of the State of Delaware.
APO owns property in several states, including the facility
identified in the Complaint in this action.
E. Defendant XYZ Demolition Contractors, Inc. (XYZ) is a
corporation organized under the laws of the State of Louisiana.
The company is engaged in the business of demolition throughout
various states including Louisiana. XYZ "operated" the facility
identified in the Complaint in that XYZ performed demolition
activities at the site.
F. Defendants are "persons" within the meaning of Section
302(e) of the Clean Air Act, 42 U.S.C. §7602(e).
III.
APPLICABILITY
A. The undersigned representatives of each party to this
Consent Decree certifies that he or she is fully authorized by
each party whom he or she represents to enter into the terms and
conditions of this Decree, and to execute and legally bind that
party to it.
B. The provisions of this Consent Decree shall apply to and
be binding upon the Defendants, as well as their officers,
directors, agents, servants, employees, successors, and assigns,
and all persons, firms and corporations having notice of this
Consent Decree and who are, or will be, acting pursuant to this
Consent Decree, or on behalf of, in concert with or in participa-
tion with the Defendant to this action in furtherance of this
Decree.
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C. The provisions of this Consent Decree shall apply to all
of Defendant APO's facilities in all states, territories, and
possessions of the United States of America.
D. The provisions of this Consent Decree shall apply to all
of Defendant XYZ's demolitions or renovations in all states,
territories, and possessions of the United States of America.
E. Defendants shall condition any and all contracts for
demolitions or renovations subject to this Decree during its
effective period on compliance with the terras of this Decree.
IV.
ALLEGATIONS
.A.' Plaintiff alleged that APO hired XYZ to demolish a scotch
tape store at 1000 Main Street in Plain Dealing, Louisiana. The
facility contained in excess of 80 linear meters of friable
asbestos material as defined in 40 C.F.R. §61.141, and therefore
the demolition operation was subject to the asbestos NESHAP, 40
C.F.R. §61.140 et seq.
B. Plaintiff alleged that XYZ commenced demolition of the
facility on or about March 17, 1987, without either Defendant
having submitted notice of the operation to EPA, in violation of
40 C.F.R. §61.146. Plaintiff further alleged that the Defendants
failed to comply with certain work practice requirements set
forth in 40 C.F.R §§61.147 and 61.152.
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V.
COMPLIANCE PROGRAM
A. Defendants shall comply with the requirements of the'
National Emission Standards for Hazardous Air Pollutants (NESHAP)
for asbestos in 40 C.F.R §61.140 e_t seq. Defendants shall submit
written notification for demolition or renovation operations to
be postmarked or delivered at least ten (10) days before each
demolition or renovation begins if the amount of asbestos is as
stated in 40 C.F.R §61.145(a), or at least twenty (20) days before
each demolition or renovation begins if the amount of asbestos is
as stated in 40 C.F.R. S61.145(b).
B. In the case of an emergency renovation as defined in 40
C.F.R. §61.141, Defendants shall provide written, notice to the
• . • . . ,
appropriate EPA regional office and the appropriate delegated
state or local air pollution control agency as early as possible
prior to the commencement of any renovation operation involving
asbestos. [Optional]
C. Defendant XYZ shall, on and after the date of entry of
the Consent Decree, implement the office procedure set forth as
Attachment 1 to this Consent Decree to ensure compliance with the
notice requirements for demolition and renovation operations
subject to the asbestos regulations, and shall use the notification
format set forth as Attachments 2 and 3 to comply with this
Consent Decree. [Optional, but suggested if there have been
notice violations.]
D. All notifications required by this Consent Decree shall
be sent by certified mail or hand delivery to the appropriate EPA
Regional office and the appropriate delegated stata or local air
pollution control agency. Defendants shall maintain records of
said notifications together with proof of mailing by certified
mail for the duration of this Decree.
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E. This Consent Decree in no way affects the Defendant's
responsibility to comply with any State, Federal or local laws or
regulations or any Order by the Court, including compliance with
all applicable NESHAPS requirements, and enforcement of any such
NESHAP requirements made applicable by reason of any revision of
the Clean Air Act and its implementing regulations.
[Optional provisions. Sections II (Notification), III
(Asbestos Control Program), and IV (Asbestos Training Program) of
the Geppert decree, attached, are recommended as targets for
settlement with contractors where appropriate, such as multiple
violations or situations in which the contractor has a large
number of work crews and inadequate centralized management of
them.]
VI.
CIVIL PENALTY
Defendants shall pay a total civil penalty (penalty in accord
with penalty policy). Said payment shall be in full satisfaction
of Plaintiff's claims alleged in the Complaint in this action.
Payment shall be made by cashier's or certified check payable to
"Treasurer of the United States of America" and tendered within
30 days after final entry of this Decree to the United States
Attorney for the Middle District of Louisiana, [Address]. Defen-
dants shall send a copy of the check to the Office of Regional
Coui.sel [Address] , and to the Land and Natural Resources Division,
U.S. Department of Justice [Address]. Civil penalty payments
under this decree are not tax deductible.
[Optional provisions. Sections VLB, VI.C, VIII, and IX of
the PC&J decree, attached, are recommended if it is necessary zo
provide for an installment schedule for payment of civil penalties
particularly if there is any concern about the solvency of the
defendant.]
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VII.
CONTRACTOR DEBARMENT AND SUSPENSION
[Optional provision. Section VII of the PC&J decree,
attached, may be a useful negotiating tool against contrac
which do business with the Federal government. However, t
Office of Inspector General, Suspension and Debannent Brai
475-8960) should be consulted prior to making any comroitm<
regarding suspension or debarment proceedings.]
VIII.
STIPULATED PENALTIES
[Applicable to items other than violations of the regulat
such as the training program r a.sbestos control, program
Geppert decree.]
A. Defendant XYZ shall pay stipulated penalties of
per day for each day of noncompliance with any provision
Sections of this Consent Decree.
B. All payments of stipulated penalties shall be mau« *o.n
thirty (30) days of the date of noncompliance by cashiers's or
certified check made payable to the "Treasurer of the United
States" and mailed to the United States Attorney for the Middle
District of Louisiana. A copy of the letter forwarding -•
check, together with a brief description of the noncorapl
shall be mailed to the Office of Regional Counsel, EPA R
and to the Land and Natural Resources Division, U.S. Dep_
of Justice.
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C. Nothing contained herein shall be construed to prevent
or limit the rights of the plaintiff to obtain any other remedy,
sanction, or relief which may be available to it by virtue of
Defendant's failure to comply with this Consent Decree, the Clean
Air Act, or the asbestos NESHAP.
IX.
FORCE MAJEURE
[Optional - may be inserted if demanded by Defendants. Section
IX of the Geppert decree, attached, is recommended.]
X.
TERMINATION
This Consent Decree shall terminate 3 years from the date of
its entry, provided the Defendant has complied with its terms.
The United States shall have the right to seek extension of this
period in the event of any violation of the Decree. The Court
will retain jurisdiction over this matter to enforce the provisions
of this Decree.
XI.
PUBLIC NOTICE
Each party consents to entry of this Consent Decree, subject
to the public notice and comment requirements of 28 C.F.R. §50.7.
XII.
COSTS
Each party shall bear its own costs.
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For Plaintiff - United States of America
Dated
F. HENRY HABICHT II
Assistant Attorney General
Land and Natural Resources Division
United States Department of Justice
Dated
THOMAS L. ADAMS, JR.
Assistant Administrator for
Enforcement and Compliance Monitoring
United States Environmental Protection
Agency
Dated;
Assistant United States Attorney
Middle District of Louisiana
Dated;
Trial Attorney
Land and Natural Resources Division
Environmental Enforcement Section
United States Department of Justice
Dated
For Defendant XYZ Demolition
Contractors, Inc.
Dated
For Defendant Amalgamated Property
Owners, Inc.
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ENTRY OF THE COURT
Judgment entered in accordance with the foregoing Consent
Decree this day of , 1987.
BY THE COURT:
United States District
Judge
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CL.3-2
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
MAR 11 1988
MEMORANDUM
SUBJECT:
FROM:
Listing Asbestos Demolition and Renovation Companies
Pursuant to section 306 of the Clean Air Act
Michael S. Alushin
Associate Enforcement'
Air Enforcement Divisi
John S. seitz, Directo
Stationary Source Compliance Division
Office of Air Qu/Ui-ty-^Planning
TO:
Terrell E. ffunt/ Director
Office of Enforcement Policy
office of compliance Analysis and Program Operations
Addressees
We urge you to consider listing, under Section 306 of the
Clean Air Act, contractors who are violators of the asbestos
demolition and renovation (DiR) standards, 40 C.F.R. Part 61,
Subpart M. Since significant amounts of federal money are
involved in asbestos removal, we think that you will find
that contractor listing can be an effective sanction against
recalcitrant violators. It will deprive then of the privilege
of contracting or subcontracting with federal agencies or with
any other entity which has received federal grants or loans
for asbestos removal.
Contractors convicted of criminal violations under S 113
(c)(l) will be automatically listed under the Mandatory Listing
provisions, 40 C.P.R. S 15.10. Under 40 C.F.R. S 15.11, EPA
has the discretion to list contractors who
0 have violated an administrative order under S 113(a) or
(d), S 167 or S 303,
0 have been issued a Notice of Noncompliance under S 120,
0 have been issued any form of civil ruling by a federal,
state or local court, as a result of noncompliance with
clean air standards,
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2.
0 have been convicted by a state or local court of any
criminal violations of the CAA or by a federal court
for criminal violations under S 113(c)(2) (for making
false statements, records or reports); or
0 have had a civil judicial enforcement action filed
against them in federal district court for CAA
violations.
Asbestos D&R contractors differ from the traditional
"stationary sources" of air pollution, because each job is
done at a different construction site, generally owned by
someone other than the asbestos D&R company. Therefore,
the enclosed legal memorandum was prepared to clarify the
application of the contractor listing regulations to asbestos
D&R contractors.
This memorandum addresses the question of whether the bus-
iness address of an asbestos D&R company may be listed as the
"violating facility" when placing an asbestos D&R company on
the List of Violating Facilities under Section 306 of the Clean
Air Act. It concludes that the business address of an asbestos
D&R company, rather than the address of the demolition site,
should be used to identify the "violating facility" when placing
an asbestos D&R company on the List of Violating Facilities.
We need your help to make this program a success. To get
off to a good start, establishing some clear precedents, we
need your nomination of candidates for listing. We hope to start
with contractors with both egregious substantive violations and
notice violations. If a nationwide or very large contractor
has distinct regional or other sub-divisions, you should consider
whether naming the smaller unit as the "listed facility" is
more appropriate (cf. page 6 of the enclosed legal memorandum
for a discussion of this aspect). Please contact Rich Biondi
in SSCD (382-2826) or Charlie Garlow (475-7088) or Justina Fugh
(382-2864) in OECM-Air to consult about potential candidates
for listing before sending a formal recommendation to list to
Headquarters.
Addressees:
Regional Counsels
Regions I-X
Air Management Division Directors
Regions I, III, & IX
Air and Waste Management Division Director
Region II
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3.
Air, Pesticides and Toxics Management Division Directors
Regions IV and VI
Air and Toxics Division Directors
Regions VII, VIII, and X
Air and Radiation Division Director
Region V
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I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
^ / WASHINGTON. D.C. 20460
'* . i".^
MAR 11 1988
ENFORCEMENT AND
COMPUANCk MONlTOHIfcG
MEMORANDUM
SUBJECT: Defining the "Violating Facility" for Purposes of
Listing Asbestos Demolition and Renovation Companies
Pursuant to Section 306 of the Clean Air Act
QUESTION PRESENTED: Can EPA use the business address or the
address of some other property used by an asbestos
i
demolition and renovation company to identify the
"violating facility" when placing the company on the
List of Violating Facilities?
ANSWER PRESENTED: The business address or the address of some
other property used by an asbestos demolition and
renovation company may be used to identify the
"violating facility," rather than the address of
the particular site involved in the violating activity,
when placing an asbestos demolition and renovation
company on the List of Violating Facilities. Under
the definition in S 15.4, the "facility" includes
"any ... location or site of operations ... to be
used in the performance of a contract, grant or loan."
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2.
DISCUSSION
Background
Section 306(a) of the CAA (42 U.S.C. S 7606(a)) prohibits
federal agencies from entering into any contract for goods,
materials or services with a person who has been convicted of
certain violations of the CAA if the contract is to be performed
at "any facility at which the violation which gave rise to such
conviction occurred if such facility is owned, leased or supervised
by such person." This section provides the statutory authority
for mandatory listing of CAA violators.
Section 306(c) of the CAA (42 U.S.C. S 7606(c)) is the
statutory basis for the discretionary listing of CAA violators.
It directs the President to issue an order:
(1) requiring each Federal Agency ... to effectuate the
purpose and policy of [the CAA] in such contracting
or assistance activities, and (2) setting forth pro-
cedures, sanctions, penalties, and such other provi-
sions ... necessary to carry out such requirement.
Section 508(c) of the Clean Water Act (CWA) (33 U.S.C. S 1368)
as amended on October 18, 1982, by Pub. L. 95-500, 52, contained
an almost identical provision.
These provisions were implemented by Executive Order 11,738,
issued on September 12, 1973 (38 Fed. Reg. 25,161). The Order
states that it is the policy of the Federal Government
to assure that each Federal agency empowered to enter
into contracts for the procurement of goods, materials,
or services and each Federal agency empowered to extend
Federal assistance ... shall undertake such procurement
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3.
and assistance activities in a manner that will result
in effective enforcement of the Clean Air Act and the
[Clean Water Act].
Exec. Order No. 11,738, 35 Fed. Reg. 25,161 (1973)
On April 16, 1975, EPA promulgated regulations at 40
C.F.R. Part 15 (40 Fed. Reg. 17,124) which provide procedures
for insuring that Executive Branch agencies conduct their
procurement and assistance programs in accordance with the
President's responsibility for ensuring compliance with CAA
and CWA standards. These regulations authorize EPA to suspend
or bar "facilities" which are violating the CAA or the CWA from
receiving Federal contracts or subcontracts, grants or loans,
by placing them on a List of Violating Facilities. The regula-
tions require mandatory listing of violating "facilities" after
the owner or operator is convicted for criminal violations
under S 113(c)(l) of the CAA or § 309(c) of the CWA. They
provide for discretionary listing of facilities where there are
continuing and recurring civil violations of the CAA or CWA.
The EPA List of Violating facilities is published in the
Federal Register twice a year and is updated in the Federal
Register whenever a facility is added to the list or removed
from the list. The List is also transmitted to Federal agencies
with assistance responsibilities and to the General Services
Administration, which publishes a consolidated list of barred,
suspended or ineligible contractors.
I/ These regulations were revised on September 5, 1985
(50 Fed. Reg. 36,188).
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4.
The Problem
The question which this memorandum addresses is what
is the "facility" to be placed on the List in the case of an
asbestos demolition and renovation company which has a history
of continuing and recurring violations of the National Emission
Standard for Asbestos (hereafter the Asbestos NESHAP) or which
is owned or operated by a person who has been convicted of a
criminal violation of the Asbestos NESHAP-.1/ Since asbestos
demolition and renovation companies provide services, it is
sometimes more difficult to identify the "facility" of an as-
bestos demolition and renovation company than it is to identify
the "facility" of a company which produces goods. Goods are
generally produced in one or more buildings owned or leased by
the producer. Sometimes services are provided at a location
owned or leased by the provider. In other cases, services are
provided at a location owned or leased by the purchaser of the
service.
Asbestos demolition and renovation companies which violate
the asbestos NESHAP regulations generally do so in the course
of performing a contract to demolish or renovate a building
which is owned or leased by someone else. If the contractor
violates the asbestos regulations, the violations are most
likely to occur at the demolition or renovation site. Listing
2/ Asbestos NESHAP regulations, issued pursuant to S 112
of the Clean Air Act, are codified at 40 C.F.R. Part 61,
§ 61.140 et seq.
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5.
the address of the property at which the demolition or renovation
work occurred as the "violating facility" would not accurately
identify the asbestos demolition and renovation company which
performed the work and, therefore, would not accomplish the
intended purpose of CAA S 306{a) — to assure that persons or
corporations convicted of a knowing violation of CAA standards
or limitations are ineligible to enter into Federal contracts
until the continuing or recurring violation has been corrected.2/
The issue is whether CAA § 306 and the regulations promul-
gated to implement this section, 40 C.P.R. Part 15, permit EPA
to list, as a "facility", the executive office (or similar
address) of the person (or company) providing the services and
taking the action that violated the CAA.
Definition of Facility
EPA regulations implementing the Contractor Listing Program
are found at 40 C.F.R. Part 15. Section 15.11 authorizes the
Listing Official to "place a facility on the List" under stated
conditions. Section 15.4 defines "facility":
"Facility" means any building, plant, installation,
structure, mine, vessel or other floating craft,
location or site of operations owned, leased or
supervised by an applicant, contractor, grantee,
or borrower to be used in the performance of a con-
tract grant or loan. Where a location or site of
operations contains or includes more than one build-
ing, plant, installation, or structure, the entire
location or site shall be deemed to be a facility,
V Of course, in cases where the owner of the building which
was renovated or demolished has also violated the asbestos
NESHAP, the building may also be listed as a "violating facility".
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6.
except where the Assistant Administrator determines
that independent facilities are located in one
geographic area, (emphasis added).
For the purposes of the Contractor Listing Program, the
"facility" of a company includes any location used by the com-
pany to produce the particular goods or provide the particular
services which the government may wish to purchase or assist
others to purchase under a particular contract.4/ To determine
whether a particular "building, plant, installation ... location
or site" is part of a "facility" at which a violation giving
rise to a criminal conviction occurred, or is part of a "facility"
which has a record of continuing or recurring noncompliance
with clean air (or water) standards, one should look at the
relationship of the "building, plant, installation ... location
or site," to the production of the goods or services which the
government might procure or assist others in procuring. Depend-
ing on circumstances, the relevant "facility" may or may not
include all locations owned by a company. If several different
locations are involved in manufacturing a particular product or
4_/ A different definition of "facility" is used in the Asbestos
NESHAP, 40 C.P.R. S 61.141. That definition should be used for
the purpose of determining whether the owner or operator an of
an asbestos demolition and renovation company complies with
the NESHAP. If the Agency determines that the owner or operator
of the company violated any of the requirements of the NESHAP,
then the definition in 40 C.F.R. S 15.4 should be used to
determine what the "violating facility" is.
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7.
in supplying a particular service, all of those locations
together make up the "facility".5/
The Legislative History
This definition of "facility" is consistent with the pur-
pose of § 306, which was designed to be a sanction available to
EPA against those who would provide goods and services to the
Federal government using noncomplying facilities. Section 306
of the CAA is derived from Senate bill S. 4358. Section 306(a)
of the Senate bill read as follows:
Sec. 306(a) Any person (1) required to comply with
an order issued by a Federal court pursuant to this Act
who fails to comply within the time period specified
in such order, or (2) convicted by a Federal court for
knowing violation of any applicable schedule or time-
table of compliance, emissions requirement, prohibition,
emission standard, or standard of performance, shall be
ineligible to enter into any contract with any Federal
agency for the procurement of goods, materials, and
services to perform such work at or with any facilities
subject to such action by the court which are owned,
leased or supervised by such person. Such ineligibility
shall continue until the Secretary [of HEW] certifies
compliance with such order, or that the conviction
giving rise to the violation has been corrected.
(emphasis added).
S. 4358, 91st Cong., 2d Sess. S 306 (1970).
V Where a company has several different divisions or factories
or regional offices, each producing particular goods or services
independently from each other, each would be a separate facility;
and if one of those divisions or factories or regional offices
is violating the CAA or the CWA, that particular unit of the
company is the only one that would be placed on the List of
Violating Facilities.
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8.
The Senate Committee on Public Works issued a report to
accompany S. 4358, in which the following explanation of Section
306 was given:
The committee considered proposals offered by
Senator Muskie and Senator Cook to assure that the
Federal Government does not patronize or subsidize
polluters in its procurement practices and policies.
Section 306 would make any person or corpora-
tion who fails to comply with a court order issued
under this Act or who is convicted of a knowing
violation of any schedule or timetable of compli-
ance, emission requirement, prohibition, emission
standard, or standard of performance, ineligible
for a Federal contract for any work to be done at
the polluting facility....
This section would be limited, whenever
feasible and reasonable, to contracts affecting
only the facility not in compliance, rather than
the entire corporate entity or operating division.
There might be cases where a plant could not
participate in a Federal contract due to a violation
but another plant owned by the same company might bid
and transfer other work to the first plant. This type
of action would circumvent the intent of this pro-
vision. In this case, the company's second facility
should also be barred from bidding until the first
plant returns to compliance.
There would also be instances where a second plant
within a corporation was seeking a contract unrelated
to the violation at the first plant. In such a case,
the unrelated facility should be permitted to bid and
receive Federal contracts, (emphasis added).
S. Kept. NO. 1196, 91st Cong., 2d Sess. 39 (1970).
Section 306 of S. 4358 was passed by the Senate without
change. A companion bill in the House, H.R. 17255, 91st Cong.,
2d Sess. (1970), had no provision about procurement policies.
In conference, the provision making persons convicted of knowing
violations of the CAA ineligible for Federal contracts or assis-
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9.
tance was retained. In lieu of the provision of the Senate
bill extending ineligibility to persons subject to, but not
complying with, court orders, the conference committee substi-
tuted a more general requirement that "the President shall
cause to be issued an order (1) requiring each Federal agency
... to effectuate the purpose and policy of this chapter in
such contracting and assistance activities,..."6/
The Executive Order
The President complied with this mandate by issuing
Executive Order No. 11,602 on June 29, 1971. E.O. No. 11,602
was superseded by Executive Order No. 11,738, on September 10,
1973.I/ Exec. Order 11,738 sets forth the following Federal
6_/ When the CAA amendments were reported out of the conference
committee, the conference report on Section 306 stated:
The conference substitute is more limited than
the Senate provision. It provides that persons con-
victed of a knowing violation of standards or limita-
tions shall be ineligible to enter into Federal con-
tracts until the Administrator certifies that the
violation has been corrected. The remainder of the
conference substitute follows the Senate amendment
by requiring the President to issue an order requiring
Federal agencies (1) to assist in the implementation
of this act and (2) to establish sanctions for non-
compliance.
Conference Report No. 1783 (to accompany H.R. 17255), 91st
Cong. 2d Sess. (Dec. 17, 1970), reprinted in 1970 U.S. Code
Cong. & Ad. News 5356, 5389.
I/ Exec. Order No. 11,738, 38 Fed. Reg. 25,161 (1973), amenJ-
ed Exec. Order 11,602, 36 Fed. Reg. 12,475 (1971), by adding t-.e
words "Federal Water Pollution Control Act" to S 1 and changi";:
references to "the Act" in SS 2, 4, 6 and 9 to "the Air Act"
and adding references to "the water Act." Exec. Order 11,738
also adds S 11, which requires that regulations issued pursuar.-.
to CWA S 508 shall be uniform with regulations issued pursua-r
to CAA S 306 to the maximum extent possible.
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10.
procurement policy:
Section 1. policy. It is the policy of the Federal
Government to improve and enhance environmental quality.
In furtherance of that policy, the program prescribed
in this Order is instituted to assure that Federal
agencies are empowered to enter into contracts for
the procurement of goods, materials or services Łr
to extend Federal assistance by way of grants or
contracts .in such a manner that will result in effec-
tive enforcement of the Clean Air Act ... and the
Federal Water Pollution Control Act. ... (emphasis
added) .
Section 2 of the Order states, in part:
(b) In carrying out his responsibilities under this
Order, the Administrator shall ... designate facili-
ties which have given rise to a* conviction for an
offense under section 113(c)(l) of the Air Act ...
[and] publish and circulate ... lists of those faci-
lities, together with the names and addresses of the
persons who have been convicted of such offenses ...
(emphasis added) .
Section 3 prohibits any Federal agency from entering into any
contract with or extending any assistance to any facility which
has been listed pursuant to CAA S 306. Section 4 requires that
all Federal procurement regulations
... issued by any agency of the Executive Branch shall
... be amended to require ... inclusion of a provision
requiring compliance with the Air Act, the Water Act,
and standards issued pursuant thereto in the facili-
ties in which the contract is to be performed, or
which are involved in the activity or program to re-
ceive assistance, (emphasis added).
Section 5 authorizes the Administrator of the Environmental
Protection Agency "to issue such rules, regulations, standards
and guidelines as he may deem necessary and appropriate to
carry out the purposes of this Order." Sections 1 and 5 of
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11.
Exec. Order 11,738, together with S 306(c) of the CAA (and
S 508(c) of the CWA), provide the authority for the discretion-
ary listing program. EPA's Contractor Listing regulations,
codified at 40 C.F.R. Part 15, implement the Executive Order.
Discussion
As defined in 40 C.F.R. S 15.4, a "facility" includes any
building, location, or site to be used in the course of perform-
ing the contract or loan. While the buildings or sites at
which work is performed are often also the buildings or sites
at which a violation occurs, the fact that the violation may
occur "off-site", i.e./ at a location owned or operated by a
customer, does not mean that such locations are not part of the
"facility" "to be used in the performance of" a contract. The
"facility" of a contractor also includes the business address
which the company uses in its contracts, even if the business
address is simply a post office box.
AS Congress recognized, a company may be violating the
CAA or CWA at one "facility" and have other complying "facilities'
which ace not involved in the production of the same goods and
services. Congress differentiated between entirely uninvolved
"facilities", on the one hand, and involved "facilities", e.g.,
where a sister "facility" "B" was used to circumvent a ban on
goods or services produced at "facility" "A".
The definition of "facility" in S 15.4 implements that
concept. If an asbestos demolition and renovation company has
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12.
two or more divisions which operate independently of each
other, each division would, at least presumptively, be a separate
"facility" under the definition found in S 15.4. If only one
of the divisions is convicted of criminal violations of the
asbestos NESHAP or if only one of the divisions has a record of
continuing or recurring noncompliance with the asbestos NESHAP,
only that division of the company would be placed on the List
of Violating Facilities, absent the kind of situation described
by Congress.
This is the only way that an asbestos demolition and reno-
vation "facility" can be defined which is consistent with the
intent of the statutes, the executive orders, and the regulations.
A contrary interpretation would fail to "effectuate the purpose
and policy of [the CAA] in [the government's] contracting and
assistance activities" as required by S 306. The "facility"
concept is intended to carry out, not to thwart, the intent of
S 306. While the business address of the "facility" will
often coincide with the address of the site where violations
occurred, there is no requirement in S 306 that it do so.
Listing is.intended broadly to sanction "persons" who continue
to violate the CAA by depriving them of access to Federal con-
tracts for goods and services and to federal grants and loans.
Congress did not intend to limit this sanction to contractors
who engage in violative conduct on property that they happen to
own or control. So long as the business address of the asbestos
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13.
demolition and renovation company is fairly associated with
the activity which is the violating conduct, that address may
be used to identify the "facility" to be placed on the List,
notwithstanding that additional, related work (and the actual
violations) occurred elsewhere.
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CL.4-1
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*l PBOrt
s UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
t WASHINGTON, D.C. 20460
08 1984
n
OFFICE OF
ENFORCEMENT AN?
COMPLIANCE MOwrrpKittG
MEMORANDUM
SUBJECT: Implementation of jjandatory Contractor Listing
FROM:
Courtney M.
Assistant Administrator for Enforcement
and Compliance Monitoring
TO: Assistant Administrator for Air and Radiation
Assistant Administrator for Water
Associate Enforcement Counsel for Air Enforcement
Associate Enforcement Counsel for Water Enforcement
Associate Enforcement Counsel for Criminal Enforcement
Assistant Attorney General for Land and Natural
Resources
Regional Counsels I-X
Introduction and Purpose
Pursuant to statutory requirements, the proposed revisions
to 40 CFR Part 15 require that the List of Violating Facilities
("the Lisr") automatically include any facility which gives rise
to a criminal conviction of a person under Section 113(c)(l) of
the Clean Air Act or Section 309(c) of the Clean Water Act.
Any facility on the List is ineligible to receive any non-exempt
Federal government contract, grant, or loan. Removal of a
facility from the List occurs only if I certify that the condition
giving rise to the conviction has been corrected or if a court
reverses or vacates the conviction. This memorandum establishes
the procedure to implement the mandatory portion of the contractor
listing program. V
V Guidance on implementation of the discretionary listing
authority issued on July 18, 1984.
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-2-
Procedure for Mandatory Listing
I. A federal district court must enter a guilty verdict or
guilty plea of a person under Section 113(c)(l) of the
Clean Air Act or Section 309(c) of the Clean Water Act.
The convicted person must own, operate, lease, supervise
or have a financial interest in the facility which gave
rise to the conviction. Note that criminal convictions
under Section 113(c)(2) of the Clean Air Act and criminal
convictions entered by a State or local court do not qualify
a facility for mandatory listing.
II. Upon notification of an entry of a guilty verdict or guilty
plea by the clerk of the district court, the Department of
Justice must immediately notify the Associate Enforcement
Counsel for Crimir.^1 Enforcement (LE-134E). This notification
must occur even if the defendant still awaits sentencing,
has moved for a ne. trial or a reduced sentence, or has
appealed the conviction.
III. The Associate Enforcement Counsel for Criminal Enforcement
must independently verify that the court has entered the
guilty verdict or guilty plea.
IV. Upon such verification, the Associate Enforcement Counsel
for Criminal Enforcement shall notify EPA's Listing Official
(LE-130A) in writing, of the name and location of the facility
and of the condition giving rise to the guilty verdict or
guilty plea.
V. The Listing Official shall then update the List by publishing
a notice in the- Federal Register, and shall notify the
Associate Enforcement Counsel for Air or Water; the appropriate
Regional Counsel; the Compliance Staff, Grants Administration
Division, Office of Administration and Resource Management;
the General Services Administration, and the facility. A
facility remains on the mandatory List indefinitely until
it establishes a basis for removal.
Procedure for Removal from the Mandatory List
I. Any person who owns, operates, leases, supervises, or has
a financial interest in the listed facility may file with
the Listing Official a request to remove that facility from
the List. The request must establish one of the following
grounds for removal:
A. The condition at the facility that gave rise to the
conviction has been corrected.
D. The conviction (not just the sentence) v?as reversed or
vacated.
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-3-
II. The Listing Official must transmit the request for removal
to the Assistant Administrator for OECM.
III. The Assistant Administrator for OECM, or her or his designee,
shall review the request for removal and shall consult the
appropriate Regional Counsel to determine whether the
condition at the facility giving rise to the conviction
has been corrected, or if the conviction has been reversed
or vacated.
IV. The Assistant Administrator for OECM shall determine as
expeditiously as practicable whether to remove the facility
from the list.
V. If the Assistant Administrator for OECM decides to remove
the facility from the list, a written notification of
such determination shall be sent to the facility and to
the Listing Official who shall promptly publish a notice
of removal in the Federal Register.
VI. If the Assistant Administrator for OECM decides not to
remove the facility from the List, the Listing Official
shall send written notice of the decision to the person
requesting removal. The notice shall inform the person
owning, operating, leasing, supervising or having a
financial interest in the facility of the opportunity
to request a removal hearing before a Case Examiner
(See 40 CFR Part 15 for the selection and duties of the
Case Examiner).
VII. If the Case Examiner, or the Administrator upon appeal of
the Case Examiner's decision, decides to remove the facility
from the List, the Listing Official shall be notified.
The Listing Official shall then promptly remove the facility
'from the List. If the Case Examiner or the Administrator
upon appeal, decides not to remove the facility from the
list, then the Listing Official shall send written notice
of the decision to the person requesting removal.
It is important to note that any decision regarding the
listing or removal of a facility from the List does not affect
any other action by any government agency against such a facility,
including debarment from government contracting.
I believe these procedures will enable us to conduct the
mandatory listing program in an efficient manner. If you have
any questions, please contact EPA's Listing Official, Allen J.
Danzig, at (FTS) 475-8777.
cc: Stephen Ramsey, DOJ
Belle DCvis, GAD/OARM
Judson W. Starr,/DOJ
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CL.4-2
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
a .
OFFICE OF ENFORCEMENT
MEMORANDUM
SUBJECT:
FROM:
TO:
EPA Policy Regarding The Role of Corporate Attitude, Policies, Practices, and
Procedures, In Determining Whether To Remove A Facility From The EPA List
of Violating Facilities Following A Criminal Conviction
Edward E. Reich
Acting Assistant Administrator
Assistant Administrator and General Counsel
Assistant Administrator for Air and Radiation
Assistant Administrator for Water
Regional Administrators
Regional Counsels
Regional Air & Water Division Directors
Enforcement Counsels for Air and Water
Director, Office of Criminal Enforcement
I.
Introduction
This guidance memorandum clarities EPA policy concerning the role of corporate
attitude1, policies, practices, and procedures in determining whether, in mandatory contractor
listing cases3, the condition giving rise to a criminal conviction has been corrected. Clean Air
Act ("CAA") \ 306 and Gean Water Act ("CWA") § 508 require correction of the condition
1 The term 'corporate attitude* refers to all organizational defendants, not only to incorporated enucm
2 Although discretionary listing is outside the scope of this guidance, evaluation of corporate utirude.
policies, practices, and procedures may be applied appropriately in discretionary listing cases as well.
1
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giving rise to the conviction as a prerequisite for removal of a facility owned, operated, or
supervised by a convicted person from the EPA List of Violating Facilities ("the List").
II. Background
In 1990, EPA formally recognized that the condition leading to a conviction under CWA
§ 309(c) or CAA § 113(c) could include a convicted environmental violator's corporate attitude,
policies, practices, and procedures regarding environmental compliance. In the Matter of
Valmont Industries. Inc.. (ML Docket No. 07-89-LO68, Jan. 12, 1990) ("Valmont"). In
Valmont. the decisions of both the Assistant Administrator for Enforcement (AA) and the EPA
Case Examiner established the principle that the presence of a poor corporate attitude regarding
compliance with environmental standards, thus creating a climate facilitating the likelihood of
a violation, may be part of the condition giving rise to the conviction which must be corrected
prior to removal of the facility from the List. 40 CFR § 15.20.
Valmont was convicted of crimes of falsification and deception. The AA determined that
not only was Valmont required to correct the physical conditions which led to its conviction, but
that it also was required to demonstrate that it had implemented appropriate corporate policies,
practices, and procedures, designed to ensure that the mere appearance of compliance with
environmental standards was not put above actual compliance with those standards. The Case
Examiner later affirmed the use of the corporate attitude standard in determining whether the
condition leading to listing has been corrected.
Following Valmont. EPA has applied the corporate attitude test in other cases where
facilities have requested removal from the List, including cases involving knowing or negligent
conduct, not involving deliberate deception. See. Colorado River Sewage System Joint Venture.
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(ML Docket No. 09-89-L047, August 20, 1991); Zarcon Corp. (ML Docket No. 09-89-L058,
Aug. 1, 1990); Sellen Construction Co. (ML Docket No. 10-89-L073, June 13, 1990). This
memorandum clarifies the extent to which corporate attitude may be a relevant factor in cases
involving knowing or negligent criminal conduct, which does not involve willful falsification or
deception. It also clarifies the criteria which will be applied by EPA in determining whether the
condition giving rise to a conviction has been corrected in a given case.
The purposes of this guidance are to inform the public and the regulated community,
thereby facilitating greater compliance with environmental standards; to formally restate criteria
applied in EPA contractor listing cases over the past two years; and to provide EPA personnel
with a readily available summary of EPA policies which will enable them to evaluate contractor
listing cases.
in. Scope of Application
The corporate attitude, policies, practices, and procedures of a listed facility's owner,
operator, or supervisor will always be relevant when a facility that has been listed as the result
of a criminal conviction requests removal from the List. How significant a factor the corporate
attitude, policies, practices, and procedures will be depends upon the degree of intent involved
in the violation at issue. The degree of intent shall be determined (for purposes of removal from
the List) by the AAJ, with reference to the facts of, and the nature of the conduct involved in,
1 The Assistant Administrator will, is in all contractor listing removal cases, give considerable weight co the
recommendation of the EPA Region in which the listed facility is located.
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each case. This shall not be determined solely by the nature or title of the crime4, or by the
terms or language contained in any plea agreement.
In every case involving fraud, concealment, falsification, or deliberate deception, proof
of change of corporate attitude must be demonstrated over an appropriate and generally
substantial period of time, commensurate with the seriousness of the facts involved in the
violation(s) (see Section IV).
In most cases involving knowing misconduct, proof of change of corporate attitude must
also be demonstrated over an appropriate period of time, commensurate with the seriousness of
the facts involved in violation(s) (even if there was not affirmative fraud or concealment). There
may be some extremely rare cases in which knowing conduct (not involving affirmative fraud
or concealment) may be deemed to be relatively minor. In such rare cases, proof of change of
corporate attitude may not be a significant factor.
In cases involving criminal negligence, proof of change in corporate attitude may be
significant as it relates to ensuring prevention of further negligent violations. (E.g., in a
negligent discharge case, proof of change of corporate attitude may be demonstrated by
educating and training employees on proper treatment and disposal requirements and practices).
In cases of serious negligence1, more significance may be placed on demonstrating proof of
4 E.g., a conviction for 'negligent discharge* of pollutants under Clean Water Act 9 309(c) may be a minor
violation requiring minimal proof of change of corporate attitude, or it may be a significant violation reflecting
knowing or deliberate conduct, requiring more substantial proof of such change. The determination will be made
on the facts of each case. Criminal defendants and prosecutors frequently agree to enter a plea to a misdemeanor.
rather than go to trial on more serious felony charges which may be supported by the facts.
1 Cases involving convictions for criminal negligence may include a wide range of conduct, from relatively
minor' e.g., accidental spillage of a can of paint, up to potentially disastrous, e.g., failure to train employees
properly and to respond to oil leak detection systems, which results in a massive oil spill. The label of 'negligence*
alone does not adequately describe the nature and severity of the criminal conduct in a given case.
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change of corporate attitude, before a facility will be removed from the List. In other cases of
negligent violations6, a limited set of minor violations may exist which constitute criminal
conduct resulting in conviction, but in which minimal significance will be placed on
demonstrating proof of change of corporate attitude, policies, practices, and procedures.
In addition, a case may arise in which the violations which gave rise to listing occurred
considerably before the request for removal. Nevertheless, as set forth at section IV., infra, to
warrant removal, proof of change of corporate attitude for an appropriate continuing period of
time, until the removal request is granted, is required if the crime involved fraud, or deliberate
falsification or concealment, knowing misconduct (unless minor), or serious negligent violations.
If a listed facility is sold (after the conduct which gave rise to the conviction or listing),
the new owner of that facility is obligated to demonstrate that appropriate and effective corporate
policies, practices, and procedures are in place, in accordance with the criteria and factors
outlined in this guidance, before the facility will be removed from the List.
IV. Criteria For Demonstrating Proof Of Change in Corporate Attitude
In cases where proof of change of corporate attitude is relevant to determining whether
the condition giving rise to a criminal conviction has been corrected, factors to which EPA will
look include, but are not limited to, the following7:
A. Whether the owner, operator, or supervisor of the [listed facility] has put
in place an effective program to prevent and detect environmental problems and
violations of the law. An "effective program to prevent and detect environmental
problems and violations of the law" means a program that has been reasonably
designed, implemented, and enforced so that it will be effective in preventing and
detecting environmental problems or violations, and criminal conduct.
' E.g., accidental spillage of paint into a storm sewer.
7 These criteria are adapted from the proposed U.S. sentencing guidelines for organizational defendants.
5
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The hallmark of an effective program is that the organization exercises due
diligence in seeking to prevent and detect environmental problems or violations,
or criminal conduct. Due diligence requires, at a minimum, that the organization
has taken at least the following types of steps to assure compliance with
environmental requirements.
1. The organization must have written policies defining the standards and
procedures to be followed by its agents or employees'.
2. The organization must have specific high-level persons, not reporting to
production managers, who have authority to ensure compliance with those
standards and procedures.
3. The organization must have effectively communicated its standards and
procedures to agents and employees, e.g., by requiring participation in
training programs and by the dissemination of publications.
4. The organization must establish or have established an effective program
for enforcing its standards, e.g., monitoring and auditing systems designed
to prevent or detect noncompliance; and a well-publicized system, under
which agents and employees are encouraged to report, without fear of
retaliation, evidence of environmental problems or violations, or criminal
conduct within the organization.
5. The standards referred to in paragraph 1, above, must have been
consistently enforced through appropriate disciplinary mechanisms.
6. After an offense or a violation has been detected, the organization must
immediately take appropriate steps to correct the condition giving rise to
the listing (even prior to the conviction or listing). The organization must
also take all reasonable steps to prevent further similar offenses or
violations, including notifying appropriate authorities of such offenses or
violations, making any necessary modifications to the organization's
program to prevent and detect environmental problems or violations of
law, and discipline of individuals responsible for the offense or violation.
This may include conducting an independent environmental audit to ensure
that there are no other environmental problems or violations at the facility.
* Although specifics will be determined on » case-by-case basis, with reference to the conduct
the violation, examples include, but are not limited to, training on company rules. EPA requiranau
standards and considerations, and standards of criminal liability.
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B. The precise actions necessary for an effective program to prevent and detect
environmental problems or violations of law will depend upon a number of factors.
Among the relevant factors are:
1. Size of organization: The requisite degree of formality of a program to
prevent and detect violations of law or environmental problems will vary
with the size of the organization; the larger the organization, the more
formal the program should typically be.
2. Likelihood that certain offenses may occur because of the nature of its
business: If, because of the nature of an organization's business, there is
a substantial risk that certain types of offenses or violations may occur,
management must have taken steps to prevent and detect those types of
offenses or violations. For example, if an organization handles toxic
substances, it must have established standards and procedures designed to
ensure that those substances are handled properly at all times.
3. Prior history of the organization: An organization's prior history may
indicate types of offenses or violations that it should have taken actions to
prevent. Recurrence of misconduct similar to that which an organization
has previously committed casts doubt on whether it took all reasonable
steps to prevent such misconduct.
An organization's failure to incorporate and follow applicable industry practice or the
standards called for by any applicable governmental regulation weighs against a finding
of an effective.program to prevent and detect violations of law or environmental
problems.
C. EPA will also consider additional voluntary environmental cleanup, or pollution
prevention or reduction measures performed, above and beyond those required by
environmental statutes or regulations, and voluntary compliance with pending
environmental requirements significantly before such compliance is actually required.
In cases where probation is imposed by the sentencing court, the term of probation will
be presumed to be an appropriate period of time for demonstrating a change of corporate
attitude, policies, practices, and procedures9. This presumption may be rebutted by either the
owner, operator, or supervisor of the listed facility, or by the government, upon a demonstration
9 The presumption is derived from the determination, which will already have been made by the sentencing
court, that the convicted person's criminal conduct justifies a period of supervision and oversight by the court, i.e..
probation.
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that the probation term is not an appropriate time in which to demonstrate such change. If
probation is not imposed in the criminal case, the AA shall determine, after a request for
removal from the List is filed, what is an appropriate period of time in which to demonstrate that
the condition leading to conviction has been corrected. This determination shall be based upon
the facts of each case.
The time required to demonstrate a change of corporate attitude, policies, practices, and
procedures shall be presumed to be an appropriate period, as determined by the AA,
commensurate with (a) the nature, extent, and severity of the violations (including the length of
time during which the violations occurred), and (b) the complexity and extent of remedial action
necessary to ensure that appropriate policies, practices, and procedures (including, but not
limited to, any necessary employee education or training programs) have been completed. At
a minimum, the period of time shall be sufficient to demonstrate successful performance,
consistent with those policies, practices, and procedures, including consideration of steps which
were taken prior to conviction or listing..
The policies and procedures set out in this document are intended for the guidance of
government personnel and to inform the public. They are not intended, and cannot be relied
upon, to create any rights, substantive or procedural, enforceable by any party in litigation with
the United States.
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SE.1
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SE.1-1
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i UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
**«?'
JJL2A
omci or ENFOftciMttrr
ANDCOMFtUNCX
MONITOKINO
MEMORANDUM
SUBJECT: Form of Settlement of Civil Judftial Cases
FROM: Courtney M.
Assistant Administrator for Enforcement
and Compliance Monitoring (LE-133)
TO: Regional Counsels
Associate Enforcement Counsels
This memorandum is intended to confirm the Agency's
general policy regarding the form of settlement of civil
judicial enforcement cases. The need for a statement of Agency
policy on the form of settlement recently arose because a cat*
had been settled without a consent decree, and the defendant
later refused to abide by the terms of the informal settlement.
In order to make sure that the problem does not recur/ OECM is
reducing this policy to writing.
Agency policy is that after a complaint is filed, all civil
judicial cases should be settled only (1) by consent decree, or
(2) where appropriate, by a stipulation of dismissal. This
second approach should be utilized only when the settlement
requires payment of a penalty, and the penalty has been paid in
tull at the time of settlement. In such cases, the continued
jurisdiction provided by a consent decree is not needed or
required. This form of settlement policy is the established
practice of the Department of Justice, and all EPA enforcement
attorneys should continue to abide by it.
Extraordinary and compelling circumstances may arise when
EPA, in consultation with DOJ, might wish to settle a case with-
out the use of a consent decree or a stipulation of dismissal.
If such a situation arises, then the involved Agency attorneys
should obtain my advance concurrence before representing to
the defendants any willingness to settle a case without either
a consent decree or stipulation of dismissal.
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/»-,. -••». uwuumenbs snouia n* n*-m>^/-^.i *'wfjr wt
Office following ny concurrence in ?he setM ^ D°cktt Contro1
appropriate data can be entered. settlement so that the
cc: F. Henry Habicht, II
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SE.1-2
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C 20460
AUGI4I987
THE ADMINISTRATOR
MEMORANDUM
SUBJECT: Final Guidance on Use of Alternative Dispute
Resolution Techniques in Enforcement Actions
TO: Assistant Administrators
Regional Administrators
I . Purpose
Attached is the final guidance on the use of alternative
dispute resolution (ADR) techniques in enforcement actions. This
guidance has been reviewed by EPA Headquarters and Regional
offices, the Department of Justice, as well as by representatives
of the regulated community. We have also sought the advice of
leading ADR professionals, including many of the renowned partici-
pants at a recent Colloquium on ADR sponsored by the Administrative
Conference of the United States.
The reaction to the draft guidance has been overwhelmingly
favorable and helpful. In response to comments, the guidance more
clearly distinguishes the uses of binding and non-binding techniques,
emphasizes the need to protect the confidentiality of conversations
before a neutral, and includes model agreements and procedures for
the use of each ADR technique.
II. Use of ADR
As the guidance explains, ADR involves the use of third-party
neutrals to aid in the resolution of disputes through arbitration,
mediation, mini-trials and fact-finding. ADR is being used increas-
ingly to resolve private commercial disputes. EPA is likewise
applying forms of ADR in various contexts: negotiated rulemaking,
RCRA citing, and Superfund remedial actions. ADR holds the promise
of lowering the transaction costs to both the Agency and the
regulated community of resolving applicable enforcement disputes.
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I view ADR as a new, innovative and potentially more effective
way to accomplish the results we have sought for years using
conventional enforcement techniques. We retain our strict adherence
to the principle that the regulated community must comply with the
environmental laws. The following tasks will be undertaken to
enable the Agency to utilize ADR to more effectively and efficiently
foster compliance:
Training. Some within the Agency may fear that using less
adversarial techniques to resolve enforcement actions implies that
the agency will be seeking less rigorous settlements. This is not
the case. We must train our own people in what ADR is, what it is
not, and how it can help us meet our own compliance objectives. We
plan to accomplish this by making presentations at national program
and regional counsel meetings, and by consulting on particular cases.
Outreach. We must also make an affirmative effort to demon-
strate to the regulated community that EPA is receptive to sugges-
tions from them about using ADR in a given case. Nominating
a case for ADR need not be viewed as a sign of weakness in either
party. After we have gained experience, we plan to conduct a
national conference to broaden willingness to apply ADR in the
enforcement context.
Pilot Cases. Ultimately, the value of ADR must be proven by
its successful application in a few pilot cases. ADR is being used
to resolve an important municipal water supply problem involving
the city of Sheridan, Wyoming. Two recent TSCA settlements also
utilized ADR to resolve disputes which may arise in conducting
environmental audits required under the consent agreements. Beyond
these, however, we need to explore the applicability of ADR to
additional cases.
III. Action and Follow-Up
I challenge each of you to help in our efforts to apply ADR
to the enforcement process. I ask the Assistant Administrators to
include criteria for using ADR in future program guidance, and to
include discussions of ADR at upcoming national meetings. I ask
the Regional Administrators to review the enforcement actions now
under development and those cases which have already been filed to
find cases which could be resolved by ADR. I expect each Region
to nominate at least one case for ADR this fiscal year. Cases
should be identified and nominated using the procedure set forth
in the guidance by September 4, 1987
Lee M. Thomas
Attachment
cc: Regional Enforcement Contacts
Regional Counsels
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GUIDANCE ON THE USE OF ALTERNATIVE DISPUTE RESOLUTION
IN EPA ENFORCEMENT CASES
United States Environmental Protection Agency
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TABLE OF CONTENTS
Guidance on the Use of Alternative Dispute Resolution (ADR)
in EPA Enforcement Cases
Pages
I. INTRODUCTION " 1
II. ALTERNATIVE DISPUTE RESOLUTION METHODS 2
III. CHARACTERISTICS OF ENFORCEMENT CASES
SUITABLE FOR ADR 4
A. Impasse or Potential for Impasse 5
B. Resource Considerations 5
C. Remedies Affecting Parties Not Subject to an
Enforcement Action 6
IV. PROCEDURES FOR APPROVAL OF CASES FOR ADR 6
A. Decisionmakers 7
B. Case Selection Procedures 7
1. Non Binding ADR . 8
2. Binding ADR 8
V. SELECTION OF A THIRD-PARTY NEUTRAL 8
A. Procedures for Selection 8
B. Qualifications for Third-Party Neutrals 9
1. Qualifications for Individuals 10
2. Qualifications for Corporations and Other
Organizations 11
VI. OTHER ISSUES 12
A. Memorialization of Agreements 12
B. Fees for Third-Party Neutrals 12
C. Confidentiality 12
D. Relationship of ADR to Timely and Appropriate and
Signi f icant Noncompliance Requirements 14
VII. PROCEDURES FOR MANAGEMENT OF ADR CASES 14
A. Arbitration 14
B. Mediation 15
C. Mini-trial 17
D. Fact-finding 18
VIII. ATTACHMENTS
A. Attachment A: Letter of Nomination of Case for Mediation
B. Attachment B: Letter of Nomination of Case for Binding
Resolution
C. Attachment C: Arbitration Procedures
D. Attachment D: Mediation Protocols
E. Attachment E: Agreement to Institute Mini-Trial Proceeding
F. Attachment F: Agreement to Institute Fact-Finding
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GUIDANCE ON THE USE OF ALTERNATIVE DISPUTE RESOLUTION
I~N EPA ENFORCEMENT CASES
I. INTRODUCTION
To effect compliance with the nation's environmental laws,
the United States Environmental Protection Agency (EPA) has
developed and maintained a vigorous judicial and administrative
enforcement program. Cases instituted under the program must be
resolved, either through settlement or decision by the appro-
priate authority, as rapidly as possible in order to maintain
the integrity and credibility of the program, and to reduce the
backlog of cases.
Traditionally, the Agency's enforcement cases have been
settled through negotiations solely between representatives of
the Government and the alleged violator. With a 95 percent
success rate, this negotiation process has proved effective,
and will continue to be used in most of the Agency's cases.
Nevertheless, other means of reaching resolution, known col-
lectively as alternative dispute resolution (ADR), have evolved.
Long accepted and used in commercial, domestic, and labor disputes,
ADR techniques, such as arbitration and mediation, are adaptable
to environmental enforcement disputes. These ADR procedures
hold the promise for resolution of some of EPA's enforcement
cases more efficiently than, but just as effectively as, those
used in traditional enforcement. Furthermore, ADR provisions
can also be incorporated into judicial consent decrees and consent
agreements ordered by administrative law judges to address
future disputes.
EPA does not mean to indicate that by endorsing the use of
ADR in its enforcement actions, it is backing away from a strong
enforcement position. On the contrary, the Agency views ADR as
merely another tool in its arsenal for achieving environmental
compliance. EPA intends to use the ADR process, where appropriate,
to resolve enforcement actions with outcomes similar to those
the Agency reaches through litigation and negotiation. Since
ADR addresses only the process (and not the substance) of case
resolution, its use will not necessarily lead to more lenient
results for violators; rather, ADR should take EPA to its desired
ends by more efficient means.
ADR is increasingly becoming accepted by many federal
agencies, private citizens, and organizations as a method of
handling disputes. The Administrative Conference of the United
States has repeatedly called for federal agencies to make greater
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-2-
use of ADR techniques, and has sponsored numerous studies to
further their use by the federal government. The Attorney
General of the United States has stated that it is the policy
of the United States to use ADR in appropriate cases. By
memorandum, dated February 2, 1987, the Administrator of EPA
endorsed the concept in enforcement disputes, and urged senior
Agency officials to nominate appropriate cases.
This guidance seeks to:
(1) Establish Policy - establish that it is EPA policy
to utilize ADR in the resolution of appropriate civil
enforcement cases.
(2) Describe Methods - describe some of the applicable
types of ADR, and the characteristics of cases which
might call for the use of ADR;
(3) Formulate Case Selection Procedures - formulate
procedures for determining whether to use ADR in
particular cases, and for selection and procurement
of a "third-party neutral" (i.e., mediators,
arbitrators, or others employed in the use of ADR);
(4) Establish Qualifications - establish qualifications
for third-party neutrals; and
(5) Formulate Case Management Procedures - formulate
procedures for management of cases in which some
or all issues are submitted for ADR.
II. ALTERNATIVE DISPUTE RESOLUTION METHODS
ADR mechanisms which are potentially useful in environ-
mental enforcement cases will primarily be mediation and nonbind-
ing arbitration. Fact-finding and mini-trials may also be helpful
in a number of cases. A general description of these mechanisms
follows. (See also Section VIII, below, which describes in
greater detail how each of these techniques works.) Many other
forms of ADR exist, none of which are precluded by this guidance.
Regardless of the technique employed, ADR can be used to resolve
any or all of the issues presented by a case.
A. Mediation1 is the facilitation of negotiations by a
person not a party to the dispute (herein "third-party neutral")
who has no power to decide the issues, but whose function is to
1 For further information on the mediation role of Clean Sites Inc.,
see guidance from the Assistant Administrator, Office of Solid
Waste and Emergency Response and Assistant Administrator, Office
of Enforcement and Compliance Monitoring on the "Role of Clean
Sites Inc. at Superfund Sites," dated April 24, 1987.
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assist the parties in reaching settlement. The mediator serves
to schedule and structure negotiations, acts as a catalyst between
the parties, focuses the discussions, facilitates exchange between
the parties, and serves as an assessor - but not a judge - of
the positions taken by the parties during the course of negotia-
tions. With the parties' consent, the mediator may take on
additional functions such as proposing solutions to the problem.
Nevertheless, as in traditional negotiation, the parties retain
the power to resolve the issues through an informal, voluntary
process, in order to reach a mutually acceptable agreement.
Having agreed to a mediated settlement, parties can then make
the results binding.
B. Arbitration involves the use of a person — not a party
to the dispute — to hear stipulated issues pursuant to procedures
specified by the parties. Depending upon the agreement of the
parties and any legal constraints against entering into binding
arbitration, the decision of the arbitrator may or may not be
binding. All or a portion of the issues — whether factual,
legal or remedial — may be submitted to the arbitrator. Because
arbitration is less formal than a courtroom proceeding, parties
can agree to relax rules of evidence and utilize other time-saving
devices. For the present, EPA appears to be restricted by law
to use binding arbitration only for small CERCLA cost recovery
cases. We are conducting further research regarding its use to
decide factual issues.
C. Fact-finding entails the investigation of specified
issues by a neutral with subject matter expertise, and selected
by the parties to the dispute. The process may be binding or
nonbinding, but if the parties agree, the material presented
by the fact-finder may be admissible as an established fact in
a subsequent judicial or administrative hearing, or determinative
of the issues presented. As an essentially investigatory process,
fact-finding employs informal procedures. Because this ADR
mechanism seeks to narrow factual or technical issues in dispute,
fact-finding usually results in a report, testimony, or established
fact which may be admitted as evidence, or in a binding or advisory
opinion.
D. Mini-trials permit the parties to present their case, or
an agreed upon portion of it, to principals who have authority
to settle the dispute (e.g., vice-president of a company and a
senior EPA official) and, in some cases as agreed by the parties,
to a neutral third-party advisor. Limited discovery may precede
the case presentation. The presentation itself may be summary
or an abbreviated hearing with testimony and cross-examination
as the parties agree. Following the presentation, the principals
reinstitute negotiations, possibly with the aid of the neutral
as mediator. The principals are the decisionmakers while the
third-party neutral, who usually has specialized subject matter
expertise in trial procedures and evidence, acts as an advisor
on potential rulings on issues if the dispute were to proceed to
trial. This ADR mechanism is useful in narrowing factual issues
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—4 —
or mixed questions of law and fact, and in giving the principals
a realistic view of the strengths and weaknesses of their cases.
III. CHARACTERISTICS OF ENFORCEMENT CASES SUITABLE FOR ADR
This section suggests characteristics of cases which may be
most suitable for use of ADR. These characteristics are neces-
sarily broad, as ADR may theoretically be used in any type of
dispute. Enforcement personnel can use these characteristics to
make a preliminary assessment of whether ADR should be considered
for use in a particular case, including a discrete portion or
issue in a case.
ADR procedures may be introduced into a case at any point
in its development or while pending in court. However, it is
preferable that ADR be considered as early as possible in the
progress of the case to avoid the polarizing effect which frequently
results from long and intense negotiations or the filing of a
lawsuit. ADR should, therefore, be considered prior to referral
of a case to DOJ. Indeed, the threat of a referral may be used
as an incentive to convince the other parties to utilize an
appropriate ADR technique.
Notwithstanding the preference for consideration and use
of ADR at an early stage in the progress of a case, there are
occasions when ADR should be considered after a case has been
referred and filed in court. This is particularly true when the
parties have reached an apparent impasse in negotiations, or the
court does not appear to be willing to expeditiously move the
case to conclusion through establishing discovery deadlines,
conducting motions hearings or scheduling trial dates. In such
cases, introduction of a mediator into the case, or submission
of some contested facts to an arbitrator may help to break the
impasse. Cases which have been filed and pending in court for a
number of years without significant movement toward resolution
should be scrutinized for prospective use of ADR.
In addition to those circumstances, the complexity of legal
and technical issues in environmental cases have resulted in a
recent trend of courts to appoint special masters with increasing
frequency. Those masters greatly increase the cost of the litigation
and, while they may speed the progress of the case, the parties
have little direct control over the selection or authority of
the masters. The government should give careful consideration
to anticipating a court's desire to refer complex issues to a
master by proposing that the parties themselves select a mediator
to assist in negotiations or an arbitrator to determine some
factual issues.
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The following characteristics of cases which may be candidates
for use of some form of. ADR are not intended to be exhaustive.
Agency personnel must rely upon their own judgment and experience
to evaluate their cases for potential applications of ADR. In all
instances where the other parties demonstrate their willingness to
use ADR, EPA should consider its use. Sample characteristics of
cases for ADR^:
A. Impasse or Potential for Impasse
When the resolution of a case is prevented through impasse,
EPA is prevented from carrying out its mission to protect and
enhance the environment, and is required to continue to commit
resources to the case which could otherwise be utilized to address
other problems. It is highly desirable to anticipate and avoid,
if possible, the occurrence of an impasse.
Impasse, or the possibility for impasse, is commonly created
by the following conditions, among others:
(1) Personality conflicts or poor communication among
negotiators;
(2) Multiple parties with conflicting interests;
(3) Difficult technical issues which may benefit from
independent analysis;
(4) Apparent unwillingness of a court to rule on matters
which would advance the case toward resolution; or
(5) High visibility concerns making it difficult for the
parties to settle such as cases involving particularly sensitive
environmental concerns such as national parks or wild and scenic
rivers, issues of national significance, or significant adverse
employment implications.
In such cases, the involvement of a neutral to structure,
stimulate and focus negotiations and, if necessary, to serve as an
intermediary between personally conflicting negotiators should be
considered as early as possible.
B. Resource Considerations
All enforcement cases are important in that all have, or
should have, some deterrent effect upon the violator and other
members of the regulated community who hear of the case. It is,
therefore, important that EPA's cases be supported with the
ADR is not considered appropriate in cases where the Agency is
contemplating criminal action.
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level of resources necessary to achieve the desired result.
Nevertheless, because of the size of EPA's enforcement effort,
it is recognized that resource efficiencies must be achieved
whenever possible to enable EPA to address as many violations as
possible.
There are many cases in which utilizing some form of ADR
would achieve resource efficiencies for EPA. Generally, those
cases contain the following characteristics:
(1) Those brought in a program area with which EPA has had
considerable experience, and in which the procedures, case law
and remedies are relatively well-settled and routine; or
(2) Those having a large number of parties or issues where
ADR can be a valuable case management tool.
C. Remedies Affecting Parties not Subject to an Enforcement Action
Sometimes, the resolution of an underlying environmental problem
would benefit from the involvement of persons, organizations or
entities not a party to an impending enforcement action. This is
becoming more common as EPA and the Congress place greater emphasis
on public participation in major decisions affecting remedies in
enforcement actions. Such cases might include those in which:
(1) A state or local governmental unit have expressed an
interest, but are not a party;
(2) A citizens group has expressed, or is likely to express
an interest; or
(3) The remedy is likely to affect not only the violator,
but the community in which the violator is located as well (e.g.,
those cases in which the contamination is wide-spread, leading
to a portion of the remedy being conducted off-site).
In such cases, EPA should consider the use of a neutral very
early in the enforcement process in order to establish communication
with those interested persons who are not parties to the action,
but whose understanding and acceptance of the remedy will be
important to an expeditious resolution of the case.
IV. PROCEDURES FOR APPROVAL OF CASES FOR ADR
This section describes procedures for the nomination of
cases for ADR. These procedures are designed to eliminate confusion
regarding the selection of cases for ADR by: (1) integrating the
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selection of cases for ADR into the existing enforcement case
selection process; and (2) creating decision points and contacts
in the regions, headquarters, and DOJ to determine whether to
use ADR in particular actions.
A. Decisionmakers
To facilitate decisions whether to use ADR in a particular
action, decision points in headquarters, the regions and DOJ
must be established. At headquarters, the decisionmaker will
be the appropriate Associate Enforcement Counsel (AEC). The AEC
should consult on this decision with his/her corresponding head-
quarters compliance division director. At DOJ, the decisionmaker
will be the Chief, Environmental Enforcement Section. In the
regions, the decisionmakers will be the Regional Counsel in con-
sultation with the appropriate regional program division director.
If the two Regional authorities disagree on whether to use ADR
in a particular case, then the Regional Administrator (RA) or
the Deputy Regional Administrator (DRA), will decide the matter.
This decisionmaking process guarantees consultation with and
concurrence of all relevant interests.
B. Case Selection Procedures
Anyone in the regions, headquarters, or DOJ who is partici-
pating in the development or management of an enforcement action,
or any defendant or PRP not yet named as a defendant, may suggest
a case or selected issues in a case for ADR.3 Any suggestion,
however, must be communicated to and discussed with the appropriate
regional office for its consent. The respective roles of the AECs
and DOJ are discussed below. After a decision by the Region or
litigation team to use ADR in a particular case, the nomination
should be forwarded to headquarters and, if it is a referred
case, to DOJ. The nominations must be in writing, and must
enumerate why the case is appropriate for ADR. (See Section III
of this document which describes the characteristics for selection
of cases for ADR.) Attachments A and B are sample case nomination
communications. Attachment A pertains to nonbinding ADR, and
Attachment B pertains to binding ADR.
Upon a determination by the Government to use ADR, Government
enforcement personnel assigned to the case (case team) must
approach the PRP(s) or other defendant(s) with the suggestion.
The case team should indicate to the PRP(s) or defendant(s) the
factors which have led to the Agency's recommendation to use
3 Nomination papers should always be deemed attorney work product
so that they are discovery free.
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ADR, and the potential benefits to all parties from its use.
The PRP(s) or other defendant(s) should understand, nevertheless,
that the Government is prepared to proceed with vigorous litigation
in the case if the use of a third-party neutral fails to resolve
the matter. Further, for cases which are referrable, the defendant(s)
should be advised that EPA will not hesitate to refer the matter
to DOJ for prosecution.
1. Nonbinding ADR
For mediation, mini-trials, nonbinding arbitration, and
other ADR mechanisms involving use of a third-party neutral as a
nonbinding decisionmaker, regions should notify the appropriate
AEC and, if the case is referred, DOJ of: (1) its intent to use
ADR in a particular case, and (2) the opportunity to consult
with the Region on its decision. Such notification should be in
writing and by telephone call. The AEC will consult with the
appropriate headquarters program division director. The Region
may presume that the AEC and DOJ agree with the selection of the
case for ADR unless the AEC or DOJ object within fifteen (15)
calendar days of receipt of the nomination of the case. If
either the AEC or DOJ object, however, the Region should not
proceed to use ADR in the case until consensus is reached.
2. Binding ADR
For binding arbitration and fact-finding, and other ADR
mechanisms involving the use of third-party neutrals as binding
decisionmakers, the appropriate AEC must concur in the nomination
of the case by the Region. In addition, DOJ must also concur in
the use of binding ADR in referred cases. Finally, in non-CERCLA
cases which may involve compromise of claims in excess of $20,000
or where the neutral's decision will be embodied in a court order,
DOJ must also concur. Without the concurrence of headquarters
and DOJ under these circumstances, the Region may not proceed
with ADR. OECM and DOJ should attempt to concur in the nomina-
tion within fifteen (15) days of receipt of the nomination.
Under the Superfund Amendments and Reauthorization Act (SARA),
Pub. L. No. 99-499, §122(h)(2)(1986), EPA may enter into binding
arbitration for cost recovery claims under Section 107 of CERCLA,
provided the claims are not in excess of $500,000, exclusive of
interest. Until regulations are promulgated under this section,
EPA is precluded from entering into binding arbitration in cost
recovery actions. Accordingly, Attachment C is not yet appropriate
for use in cases brought under this section. It is, however, avail-
able for use in nonbinding arbitration.
V. SELECTION OF A THIRD-PARTY NEUTRAL
A. Procedures for Selection
Both the Government and all defendants must agree on the need
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for a neutral in order .to proceed with ADR. In some situations
(e.g., in a Superfund case), however, the parties may proceed with
ADR with consensus of only some of the parties depending on the
issue and the parties. Once agreed, the method for selecting
the neutral and the actual selection in both Superfund and other
cases will be determined by all parties involved with the excep-
tion of cases governed by §107 of CERCLA. To help narrow the
search for a third-party neutral, it is useful, although not
required, for the parties to agree preliminarily on one or more
ADR mechanisms. OECM is available to help at this point in the
process, including the procurement of in-house or outside persons
to aid the parties in selecting an appropriate ADR mechanism.
In Section VIII below, we have indicated some of the situations
where each ADR mechanism may be most appropriate. Of course, the
parties are free to employ whichever technique they deem appropriate
for the case. Because the ADR mechanisms are flexible, they are
adaptable to meet the needs and desires of the parties.
The parties can select a third-party neutral in many ways.
Each party may offer names of proposed neutrals until all parties
agree on one person or organization. Alternatively, each party
may propose a list of candidates, and allow the other parties to
strike unacceptable names from the list until agreement is
reached. For additional methods, see Attachments C, D, and E.
Regardless of how the parties decide to proceed, the Government
may obtain names of qualified neutrals from the Chief, Legal
Enforcement Policy Branch (LEPB) (FTS 475-8777, LE-130A, E-Mail
box EPA 2261), by written or telephone request. With the help
of the Administrative Conference of the U.S. and the Federal
Mediation and Conciliation Service, OECM is working to establish
a national list of candidates from which the case team may select
neutrals. In selecting neutrals, however, the case team is not
limited to such a list.
It is important to apply the qualifications enumerated below
in section V.B. in evaluating the appropriateness of a proposed
third-party neutral for each case. Only the case team can decide
whether a particular neutral is acceptable in its case. The
qualifications described below provide guidance in this area.
At any point in the process of selecting an ADR mechanism or
third-party neutral, the case team may consult with the Chie_f,
LEPB, for guidance.
B. Qualifications for Third-Party Neutrals
The following qualifications are to be applied in the
selection of all third-party neutrals who may be considered for
service in ADR procedures to which EPA is a party. While a
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third-party neutral should meet as many of the qualifications as
possible, it may be difficult to identify candidates who possess
all the qualifications for selection of a third-party neutral.
Failure to meet one or more of these qualifications should not
necessarily preclude a neutral who all the parties agree would
be satisfactory to serve in a particular case. The qualifications
are, therefore, intended only as guidance rather than as pre-
requisites to the use of ADR. Further, one should apply a greater
degree of flexibility regarding the qualifications of neutrals
involved in nonbinding activities such as mediation, and a stricter
adherence to the qualifications for neutrals making binding
decisions such as arbitrators.
1. Qualifications for Individuals
a. Demonstrated Experience. The candidate should
have experience as a third-party neutral in arbitration, mediation
or other relevant forms of ADR. However, other actual and active
participation in negotiations, .judicial or administrative hearings
or other forms of dispute resolution, service as an administrative
law judge, judicial officer or judge, or formal training as a
neutral may be considered. The candidate should have experience
in negotiating, resolving or otherwise managing cases of similar
complexity to the dispute in question, e.g., cases involving
multiple issues, multiple parties, and mixed technical and legal
issues where applicable.
b. Independence. The candidate must disclose any
interest or relationship which may give rise to bias or the
appearance of bias toward or against any party. These interests
or relationships include:
(a) past, present or prospective positions with or financial
interests in any of the parties;
(b) any existing or past financial, business, professional,
family or social relationships with any of the parties
to the dispute or their attorneys;
(c) previous or current involvement in the specific dispute;
(d) past or prospective employment, including employment as
a neutral in previous disputes, by any of the parties;
(e) past or present receipt of a significant portion of the
neutral's general operating funds or grants from one or
more of the parties to the dispute.
The existence of such an interest or relationship does not
necessarily preclude the candidate from serving as a neutral,
particularly if the candidate has demonstrated sufficient
independence by reputation and performance. The neutrals with
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the most experience are most likely to have past or current
relationships with some parties to the dispute, including the
Government. Nevertheless, the candidate must disclose all
interests, and the parties should then determine whether the
interests create actual or apparent bias.
c. Subject Matter Expertise. The candidate should
have sufficient general knowledge of the subject matter of the
dispute to understand and follow the issues, assist the parties
in recognizing and establishing priorities and the order of
consideration of those issues, ensure that all possible avenues
and alternatives to settlement are explored, and otherwise serve
in the most effective manner as a third-party neutral. Depending
on the case, it may also be helpful if the candidate has specific
expertise in the issues under consideration.
d. Single Role. The candidate should not be serving
in any other capacity in the enforcement process for that particular
case that would create actual or apparent bias. The case team
should consider any prior involvement in the dispute which may
prevent the candidate from acting with objectivity. For example,
involvement in developing a settlement proposal, particularly
when the proposal is developed on behalf of certain parties, may
preclude the prospective neutral from being objective during
binding arbitration or other ADR activities between EPA and the
parties concerning that particular proposal.
Of course, rejection of a candidate for a particular ADR
activity, such as arbitration, does not necessarily preclude
any role for the candidate in that case. The candidate may
continue to serve in other capacities by, for example, relaying
information among parties and presenting offers on behalf of
particular parties.
2. Qualifications for Corporations and Other Organiza-
tions. 4 Corporations or other entities or organizations which
propose to act as third-party neutrals, through their officers,
employees or other agents, in disputes involving EPA, must:
(a) like unaffiliated individuals, make the disclosures
listed above; and
(b) submit to the parties a list of all persons who, on
behalf of the corporation, entity or organization, will
or may be significantly involved in the ADR procedure.
These representatives should also make the disclosures
listed above.
4 For further guidance regarding Clean Sites Inc., see guidance
from the Assistant Administrator, Office of Solid Waste and
Emergency Response and Assistant Administrator, Office of
Enforcement and Compliance Monitoring on the "Role of Clean Sites
Inc. at Superfund Sites," dated April 24, 1987.
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In selecting a thi-rd-party neutral to resolve or aid in the
resolution of a dispute to which EPA is a party, Agency personnel
should remain at all times aware that the Agency must not only
uphold its obligation to protect public health, welfare and the
environment, but also develop and maintain public confidence
that the Agency is performing its mission. Care should be taken
in the application of these qualifications to avoid the selection
of third-party neutrals whose involvement in the resolution of
the case might undermine the integrity of that resolution and
the enforcement efforts of the Agency.
VII. OTHER ISSUES;
A. Memorialization of Agreements
Just as it would in cases where ADR has not been used, the
case team should memorialize agreements reached through ADR in
orders and settlement documents and obtain DOJ and headquarters
approval (as appropriate) of the terms of any agreement reached
through ADR.
B. Fees For Third-Party Neutrals
The Government's share of ADR costs will be paid by Head-
quarters. Contact LEPB to initiate payment mechanisms. Because
such mechanisms require lead time, contact with LEPB should be
made as early as possible after approval of a case for ADR.
It is EPA policy that PRPs and defendants bear a share of
these costs equal to EPA except in unusual circumstances. This
policy ensures that these parties "buy in" to the process. It
is important that the exact financial terms with these parties
be settled and set forth in writing before the initiation of ADR
in the case.
C. Confidentiality
Unless otherwise discoverable, records and communications
arising from ADR shall be confidential and cannot be used in
litigation or disclosed to the opposing party without permission.
This policy does not include issues where the Agency is required
to make decisions on the basis of an administrative record such
as the selection of a remedy in CERCLA cases. Public policy
interests in fostering settlement compel the confidentiality of
ADR negotiations and documents. These interests are reflected
in a number of measures which seek to guarantee confidentiality
and are recognized by a growing body of legal authority.
Most indicative of the support for non-litigious settlement
of disputes is Rule 408 of the Federal Rules of Evidence which
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renders offers of compromise or settlement or statements made
during discussions inadmissable in subsequent litigation between
the parties to prove liability. Noting the underlying policy
behind the rule, courts have construed the rule to preclude
admission of evidence regarding the defendant's settlement of
similar cases.5
Exemption protection under the Freedom of Information Act
(FOIA), 15 U.S.C. §552, could also accommodate the interest in
confidentiality. While some courts have failed to recognize the
"settlement negotiations privilege,"6 other courts have recognized
the privilege.'
In addition to these legal authorities and policy arguments,
confidentiality can be ensured by professional ethical codes.
Recognizing that promoting candor on the parties' part and
impartiality on the neutral's part is critical to the success of
ADR, confidentiality provisions are incorporated into codes of
conduct as well as written ADR agreements (See Attachment D).
The attachment provides liquidated damages where a neutral reveals
confidential information except under court order.
Furthermore, confidentiality can be effected by court order,
if ADR is court supervised. Finally, as many states have done
See Scaramuzzo v. Glenmore Distilleries Co., 501 F.Supp. 727
(N.D. 111. 1980), and to bar discovery, see Branch v. Phillips
Petroleum Co., 638 F.2d 873 (5th Cir. 198TJ. Courts have
also construed labor laws to favor mediation or arbitration
and have therefore prevented third-party neutrals from being
compelled to testify. See, e .g. , N . L . R . B . v. Joseph Macaluso,
Inc., 618 F.2d 51 (9th Cir. 1980) (upholding N.L.R. B. 's
revocation of subpoena issued to mediator to avoid breach of
impartiality) .
See, e.g. , Center for Auto Safety v. Department of Justice, 576
See, e.g. , Center or Auto Safe
F.Supp. 739, 749 (D.D.C. 1983).
See Bottaro v. Hatton Associates, 96 F.R.D. 158-60 (E.D.N.Y 1982)
(noting "strong public policy of favoring settlements" and public
interest in "insulating the bargaining table from unnecessary
intrusions"). In interpreting Exemption 5 of the FOIA, the Supreme
Court asserted that the "contention that [a requester could] obtain
through the FOIA material that is normally privileged would create
an anomaly in that the FOIA could be used to supplement civil
discovery. ...We do not think that Congress could have intended
that the weighty policies underlying discovery privileges could
be so easily circumvented." United States v. Weber Aircraft,
104 S.Ct. 1488, 1494 (1984).
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statutorily, EPA is considering the promulgation of regulations
which further ensure th.e confidentiality of ADR proceedings.
D. Relationship of ADR to Timely and Appropriate and
Significant Noncompliance Requirements
The decision to use ADR would have no particular impact under
the "timely and appropriate" (T&A) criteria in a case where there
is already an administrative order or a civil referral since the
"timely and appropriate" criteria would have been met by the
initiation of the formal enforcement action. In the case of a
civil referral, the 60-day period by which DOJ is to review and
file an action may be extended if ADR is used during this time.
The decision to use ADR to resolve a violation prior to the
initiation of a formal enforcement action, however, would be
affected by applicable "timely and appropriate" criteria (e.g.,
if the violation fell under a program's Significant Noncompliance
(SNC) definition, the specific timeframes in which compliance
must be achieved or a formal enforcement action taken would
apply). The use of ADR would not exempt applicable "T&A"
requirements and the ADR process would normally have to proceed
to resolve the case or "escalate" the enforcement response.
However, since, "T&A" is not an immutable deadline, that ADR
is being used for a particular violation would be of central
significance to any program management review of that case (e.g.,
the Deputy Administrator's discussion of "timely and appropriate"
enforcement during a regional review would identify the cases in
which ADR is being used.)
VIII. PROCEDURES FOR MANAGEMENT OF ADR CASES
This section elaborates on the various ADR techniques: How
they work, some problems that may be encountered in their use,
and their relationship to negotiation and litigation. For each
ADR technique, we have provided, as an attachment to this guidance,
an example of procedures reflecting its use. These attachments
are for illustrative purposes only, and do not represent required
procedures. The specific provisions of the attachments should
be adapted to the circumstances of the case or eliminated if not
applicable.
A. Arbitration
1. Scope and Nature
As stated in Section II, above, arbitration involves the
selection by the parties of a neutral decisionmaker to hear
selected issues and render an opinion. Depending on the parties'
agreement, the arbitrator's decision may or may not be binding.
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For the present-, EPA appears to be restricted by law to use
binding arbitration only for small CERCLA cost recovery cases.
We are conducting further research regarding its use to decide
factual issues. Included as Attachment C are draft generic
arbitration procedures for formal arbitration. To conduct less
formal proceedings, the parties may modify the procedures.
2. Use
Arbitration is most appropriate in resolving routine cases
that do not merit the resources required to generate and process
a civil judicial referral. It may aid in resolving technical
disputes that are usually submitted to the courts or administrative
law judges (ALJs), which disputes require subject-matter expertise
which federal district court judges and ALJs may lack.8
B. Mediation
1. Scope and Nature
Mediation, an informal process, is entered into voluntarily
by the parties to a dispute and in no way binds them beyond their
own agreement. More than the other ADR processes, mediation is
best viewed as an extension of the direct negotiation process
begun by the parties. As in direct negotiation, the parties
continue to control the substance of discussions and any agree-
ment reached. In mediation, however, the mediator directs and
structures the course of discussions.
The mediation format varies with the individual style of the
mediator and the needs of the parties. Initially, the mediator is
likely to call a joint meeting with the parties to work out ground
rules such as how and when meetings will be scheduled. Included
as Attachment D are generic mediation protocols for use and
adaptation in all EPA mediations. Most of the items covered in
the attachment would be useful as ground rules for most EPA
enforcement negotiations. Ordinarily, mediators will hold a
series of meetings with the parties in joint session, as well as
with each party. In joint meetings, the mediator facilitates
discussion. In separate caucuses, the mediator may ask questions
or pose hypothetical terms to a party in order to clarify its
position and identify possible areas for exchange and agreement
with the opposing party. Some mediators will be more aggressive
than others in this role; they may even suggest possible settlement
alternatives to resolve deadlocks between the parties. In general,
however, the mediator serves as a facilitator of discussions and
abstains from taking positions on substantive points.
Arbitration is specifically authorized under Section 107 of CERCLA
for cost recovery claims not in excess of $500,000, exclusive of
interest.
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There are no external time limits on mediation other than
those imposed by the parties or by external pressures from the
courts, the community or public interest groups. In all cases,
the Government should insist on a time limit for the mediation
to ensure that the defendants do not use mediation as a stalling
device. The Government should also insist on establishing points
in the process to evaluate progress of the mediation. As the
parties approach settlement terms through mediation, final authority
for decisionmaking remains the same as during direct negotiations,
i.e., requirements for approval or concurrence from senior managers
are applicable.
2. Use of Mediation
Mediation is appropriate for disputes in which the parties
have reached or anticipate a negotiation impasse based on, among
other things, personality conflicts, poor communication, multiple
parties, or inflexible negotiating postures. Additionally,
mediation is useful in those cases where all necessary parties are
not before the court (e.g., a state which can help with the funding
for a municipality's violation). Mediation is the most flexible
ADR mechanism, and should be the most widely used in Agency disputes.
3. Withdrawal from Mediation
As a voluntary and unstructured process, mediation proceeds
entirely at the will of the parties and, therefore, may be concluded
by the parties prior to settlement. A determination to withdraw
from mediation should be considered only when compelling factors
militate against proceeding. If the mediation has extended
beyond a reasonable time period (or the period agreed upon by
the parties) without significant progress toward agreement, it
may be best to withdraw and proceed with direct negotiations or
litigation. Withdrawing from mediation might also be considered
in the unlikely event that prospects for settlement appear more
remote than at the outset of the mediation. Finally, inappropriate
conduct by the mediator would warrant concluding the mediation
effort or changing mediators.
4. Relation to Litigation
In the ordinary case, prior to referral or the filing of an
administrative complaint, the time limits for mediation could be
the same as those for negotiation. In contrast to normal
negotiations, however, the parties may agree that during the
time period specified for mediation, litigation activities
such as serving interrogatories, taking depositions, or filing
motions may be suspended. In filed civil judicial cases, where
the court imposes deadlines, it will be necessary to apprise the
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court of the parties' activities and to build ADR into the court's
timetable. For agreements relating ADR activities to ongoing
litigation, see paragraph 17 of Attachment E.
C. Mini-Trial
1. Scope and Nature
Like other ADR techniques, the mini-trial is also voluntary
and nonbinding on the parties. In the mini-trial, authority for
resolution of one or more issues rests with senior managers who,
representing each party in the dispute, act as decisionmakers.
In some cases a neutral referee is appointed to supervise the
proceedings and assist the decisionmakers in resolving an issue
by providing the parties with a. more realistic view of their
case. In addition, the neutral's presence can enhance public
acceptability of a resolution by effectively balancing the
interests of the Government and the defendant.
The scope and format of the mini-trial are determined solely
by the parties to the dispute and are outlined in an initiating
agreement. Because the agreement will govern the proceedings,
the parties should carefully consider and define issues in advance
of the mini-trial. Points that could be covered include the
option of and role for a neutral, issues to be considered, and
procedural matters such as order and schedule of proceedings and
time limits. Attachment E is a sample mini-trial agreement.
The mini-trial proceeds before a panel of decisionmakers
representing the parties and, in some cases, a neutral referee.
Preferably, the decisionmakers will not have participated directly
in the case prior to the mini-trial. The defendant's represen-
tative should be a principal or executive of the entity with
decisionmaking authority. EPA's representative should be a
senior Agency official comparable in authority to the defendant's
representative. In some cases, each side may want to use a
panel consisting of several decisionmakers as its representatives.
The neutral referee is selected by both parties and should have
expertise in the issues under consideration.
At the mini-trial, counsel for each side presents his or her
strongest and most persuasive case to the decisionmakers in an
informal, trial-like proceeding. In light of this structure,
strict rules of evidence do not apply, and the format for the
presentation is unrestricted. Each decisionmaker is then afforded
the unique opportunity to proceed, as agreed, with open and
direct questioning of the other side. This information exchange
allows the decisionmakers to adjust their perspectives and posi-
tions in light of a preview of the case. Following this phase
of the mini-trial, the decisionmakers meet, with or without
counsel or the neutral referee, to resolve the issue(s) or case
presented, through negotiation.
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2. Role of the Neutral
The neutral referee may serve in more than one capacity
in this process, and should be selected with a clearly defined
concept of his or her role. The most common role is to act as
an advisor to the decisionmakers during the information exchange.
The neutral may offer opinions on points made or on adjudication
of the case in litigation, and offer assistance to the decision-
makers in seeing the relative merits of their positions. The
neutral's second role can be to mediate the negotiation between
the decisionmakers should they reach an impasse or seek assistance
in forming an agreement. Unless otherwise agreed by the parties,
no evidence used in the mini-trial is admissible in litigation.
3. Use
As with mediation, prior to referral or the filing of an
administrative complaint, the time limits for a mini-trial would
be the same as those for negotiation. The parties usually agree,
however, that during the time period specified for a mini-trial,
litigation activities such as serving interrogatories, taking
depositions, or filing motions may be suspended except as otherwise
agreed. In general, mini-trials are appropriate in cases involving
only a small number of parties, and are most useful in four kinds
of disputes:
1. Where the parties have reached or anticipate reaching
a negotiation impasse due to one party's overestimation, in the
view of the other party, of the strength of its position;
2. Where significant policy issues exist which would
benefit from a face-to-face presentation to decisionmakers (without
use of a neutral);
3. Where the issues are technical, and the decisionmakers
and neutral referee have subject-matter expertise; or
4. Where the imprimatur of a neutral's expertise would
aid in the resolution of the case.
D. Fact-finding
1. Scope and Nature
Binding or nonbinding fact-finding may be adopted voluntarily
by parties to a dispute, or imposed by a court. It is most
appropriate for issues involving technical or factual disputes.
The primary purpose of this process is to reduce or eliminate
conflict over facts at issue in a case. The fact-finder's role
is to act as an independent investigator, within the scope of the
authority delegated by the parties. The findings may be used in
reaching settlement, as "facts" by a judge or ALJ in litigation,
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or as binding determinations. Like other ADR processes involving
a neutral, a resolution based on a fact-finder's report will have
greater credibility with the public.
The neutral's role in fact-finding is clearly defined by an
initial agreement of the parties on the issue(s) to be referred
to the fact-finder and the use to be made of the findings or
recommendations, e.g., whether they will be binding or advisory.
Once this agreement is framed, the role of the parties in the
process is limited and the fact-finder proceeds independently.
The fact-finder may hold joint or separate meetings or both with
the parties in which the parties offer documents, statements, or
testimony in support of their positions. The fact-finder is also
free to pursue other sources of information relevant to the
issue(s). The initial agreement of the parties should include a
deadline for receipt of the fact-finder's report. Attachment F
is a sample fact-finding agreement.
The fact-finder issues a formal report of findings, and
recommendations, if appropriate, to the parties, ALJ or the
court. If the report is advisory, the findings and recommenda-
tions are used to influence the parties' positions and give
impetus to further settlement negotiations. If the report is
binding, the parties adopt the findings and recommendations as
provisions of the settlement agreement. In case of litigation,
the findings will be adopted by the judge or ALJ as "facts" in
the case.
2. Relation to Litigation
Decisions regarding pursuit of litigation when fact-finding
is instituted are contingent upon the circumstances of the case
and the issues to be referred to the fact-finder. If fact-find-
ing is undertaken in connection with an ongoing settlement
negotiation, in most cases it is recommended that the parties
suspend negotiations on the issues requiring fact-finding until
the fact-finder's report is received. If fact-finding is part
of the litigation process, a decision must be made whether to
proceed with litigation of the rest of the case or to suspend
litigation while awaiting the fact-finder's report.
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ATTACHMENT A
MEMORANDUM
SUBJECT: Nomination of U.S. v. XYZ Co. for Non-binding
Alternative for Dispute Resolution
FROM: Deputy Regional Administrator
TO: Associate Enforcement Counsel
for Hazardous Waste Enforcement
Chief, Environmental.Enforcement Section
Department of Justice
This memorandum is to nominate U.S. v. XYZ Co. for alterna-
tive dispute resolution (ADR). The case is a CERCLA enforcement
action involving multiple PRPs as well as a number of complex
technical and legal issues. The RI/FS and the record of decision
have both been completed. We anticipate that the PRPs are inte-
rested in settling this matter and, we believe, a trained mediator
will greatly aid negotiations. The members of the litigation
team concur in this judgment.
We understand that if you object within 15 days of the receipt
of this letter, we will not proceed with ADR in this case without
your approval. We do believe, however, that ADR is appropriate
in this action. We look forward to working with your offices in
this matter.
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ATTACHMENT B
MEMORANDUM
SUBJECT: Nomination of United States v. ABC Co. for Binding
Alternative Dispute Resolution
FROM: Deputy Regional Administrator
TO: Associate Enforcement Counsel for Water Enforcement
Chief, Environmental Enforcement Section
Department of Justice
This memorandum requests concurrence in the use of a binding
fact-finding procedure in United States v. ABC Co. The case
involves the following facts:
ABC Co. owns and operates a specialty chemical production
and formulation facility. Wastewater streams come from a variety
of production areas which change with product demand. Because
of these diverse processes, the company's permit to discharge
wastewater must be based on the best professional judgment of
the permit writer as to the level of pollution control achievable.
The company was issued an NPDES permit in 1986. The permit
authorizes four (4) outfalls and contains limits for both conven-
tional and toxic organic pollutants. The effluent limitations of
the permit incorporate the Best Available Technology requirements
of the Clean Water Act (CWA).
EPA filed a civil lawsuit against the company for violating
effluent limits of the 1986 permit. As part of the settlement of
the action, the company was required to submit a compliance plan
which would provide for modification of its existing equipment,
including institution of efficient operation and maintenance
procedures to obtain compliance with the new permit. The settle-
ment agreement provides for Agency concurrence in the company's
compliance plan.
The company submitted a compliance plan, designed by in-house
engineers, which proposed to slightly upgrade their existing
activated sludge treatment system. The company has claimed that
this upgraded system provides for treatment adequate to meet the
permit limits. EPA has refused to concur in the plan because EPA
experts believe that additional treatment modifications to enhance
pollutant removals are required to meet permit limits on a con-
tinuous basis. This enhancement, EPA believes, is possible with
moderate additional capital expenditures.
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A fact-finding panel, consisting of experts in utility,
sanitation and chemical engineering, is needed to assess the
adequacy of the treatment system improvements in the compliance
plan in satisfying permit requirements. Resolution of this
issue by binding, neutral fact-finding will obviate the
expenditure of resources needed to litigate the issue.
We request your concurrence in the nomination of this case
for fact-finding within fifteen (15) days. We look forward to
hearing from you.
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ATTACHMENT C
ARBITRATION PROCEDURES*
SUBPART A - GENERAL
1. Purpose
This document establishes and governs procedures for the
arbitration of EPA disputes arising under [insert applicable
statutory citations].
2. Scope and Applicability
The procedures enunciated in this document may be used to
arbitrate claims or disputes of the EPA regarding [insert
applicable statutory citations and limitations on scope, if
any. ]
SUBPART B - JURISDICTION OF ARBITRATOR, REFERRAL OF CLAIMS,
AND ARBITRATOR SELECTION
1. Jurisdiction of Arbitrator
(a) In accordance with the procedures set forth in this
document, the Arbitrator is authorized to arbitrate
[insert applicable categories of claims or disputes.]
(b) The Arbitrator is authorized to resolve disputes
and award claims within the scope of the issues
presented in the joint request for arbitration.
2. Referral of Disputes
(a) EPA [insert reference to mechanism by which EPA has
entered into dispute, e.g., after EPA has issued
demand letters or an administrative order], and one
or more parties to the case may submit a joint request
for arbitration of [EPA's claim, or one or more issues
in dispute among the parties] [a group
authorized to arbitrate such matters, e.g., the National
Arbitration Association (NAA)] if [restate any general
limitations on scope]. The joint request shall include:
A statement of the matter in dispute; a statement of
the issues to be submitted for resolution; a statement
that the signatories consent to arbitration of the
dispute in accordance with the procedures established
by this document; and the appropriate filing fee.
(b) Within thirty days after submission of the joint request
for arbitration, each signatory to the joint request shall
individually submit to the National Arbitration Association
Regulations applicable to section 112 of SARA are currently
being prepared.
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two copies of a written statement which shall include:
(1) An assertion of the parties' positions in the
matter in dispute;
(2) The amount of money in dispute, if appropriate;
(3) The remedy sought;
(4) Any documentation which the party deems necessary
to support its position;
[(5) A statement of the legal standard applicable to
the claim and any other applicable principles of
law relating to the claim;]
(6) The identity of any known parties who are not
signatories to the joint request for arbitration;
and
(7) A recommendation for the locale for the arbitral
hearing.
A copy of the statement shall be sent to all parties.
3. Selection of Arbitrator
(a) The NAA has established and maintains a National Panel of
Environmental Arbitrators.
(b) After the filing of the joint request for arbitration, the
NAA shall submit simultaneously to all parties to the
dispute an identical list of ten [five] names of persons
chosen from the National Panel of Environmental Arbitrators.
Each party to the dispute shall have seven days from the
date of receipt to strike any names objected to, number
the remaining names to indicate order of preference, and
return the list to the NAA. If a party does not return
the list within the time specified, all persons named
shall be deemed acceptable. From among the persons
who have been approved on all lists, and if possible, in
accordance with the designated order of mutual preference,
the NAA shall invite an Arbitrator to serve. If the
parties fail to agree upon any of the persons named, or
if acceptable Arbitrators are unable to serve, or if for
any other reason the appointment cannot be made from the
submitted lists, the NAA shall make the appointment from
among other members of the Panel without the submission
of any additional lists. Once the NAA makes the appointment,
it shall immediately notify the parties of the identity
of the Arbitrator and the date of the appointment.
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(c) The dispute shall be heard and determined by one
Arbitrator, unless the NAA decides that three Arbitrators
should be approved based on the complexity of the issues
or the number of parties.
(d) The NAA shall notify the parties of the appointment of the
Arbitrator and send a copy of these rules to each party.
A signed acceptance of the case by the Arbitrator shall
be filed with the NAA prior to the opening of the hearing.
After the Arbitrator is appointed, all communications
from the parties shall be directed to the Arbitrator.
(e) If any Arbitrator should resign, die, withdraw, or be
disqualified, unable or refuse to perform the duties of the
office, the NAA may declare the office vacant. Vacancies
shall be filled in accordance with the applicable provisions
of this Section, and unless the parties agree otherwise,
the matter shall be reheard.
4. Disclosure
(a) A person appointed as an Arbitrator under the above section.
shall, within five days of receipt of his or her notice of
appointment disclose to the NAA any circumstances likely
to affect impartiality, including [those factors listed in
section V.B. of the accompanying guidance]
(b) Upon receipt of such information from an appointed
Arbitrator or other source, the NAA shall on the same day
communicate such information to the parties and, if it
deems it appropriate, to the Arbitrator and others.
(c) The parties may request within seven days of receipt of
such information from the NAA that an Arbitrator be
disqualified.
(d) The NAA shall make a determination on any request for
disqualification of an Arbitrator within seven days after
the NAA receives any such request. This determination
shall be within the sole discretion of the NAA, and its
decision shall be final.
5. Intervention and Withdrawal
(a) Subject to the approval of the parties and the Arbitrator,
any person [insert applicable limitations, if any, e.g.
any person with a substantial interest in the subject of
the referred dispute] may move to intervene in the arbitral
proceeding. Intervening parties shall be bound by rules
that the Arbitrator may establish.
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(b) Any party may for good cause shown move to withdraw from
the arbitral proceeding. The Arbitrator may approve such
withdrawal, with or without prejudice to the moving party,
and may assess administrative fees or expenses against
the withdrawing party as the Arbitrator deems appropriate.
SUBPART C - HEARINGS BEFORE THE ARBITRATOR
1. Filing of Pleadings
(a) Any party may file an answering statement with the NAA no
later than seven days from the date of receipt of an
opposing party's written statement. A copy of any
answering statement shall be served upon all parties.
(b) Any party may file an amended written statement with
the NAA prior to the appointment of the Arbitrator. A
copy of the amended written statement shall be served
upon all parties. After the Arbitrator is appointed,
however, no amended written statement may be submitted
except with the Arbitrator's consent.
E(c) Any party may file an answering statement to the amended
written statement with the NAA no later than seven days
from the date of receipt of an opposing party's amended
written statement. A copy of any answering statement
shall be served upon all parties.]
2. Pre-hearing Conference
At the request of one or more of the parties or at the
discretion of the Arbitrator, a pre-hearing conference with the
Arbitrator and the parties and their counsel will be scheduled in
appropriate cases to arrange for an exchange of information,
including witness statements, documents, and the stipulation
of uncontested facts to expedite the arbitration proceedings.
The Arbitrator may encourage further settlement discussions
during the pre-hearing conference to expedite the arbitration
proceedings. Any pre-hearing conference must be held within
sixty days of the appointment of the Arbitrator.
3. Arbitral Hearing
(a) The Arbitrator shall select the locale for the arbitral
hearing, giving due consideration to any recommendations
by the parties.
(b) The Arbitrator shall fix the time and place for the
hearing.
(c) The hearing shall commence within thirty days of the
pre-hearing conference, if such conference is held, or
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within sixty [thirty] days of the appointment of the
Arbitrator, if no pre-hearing conference is held. The
Arbitrator shall notify each party by mail of the
hearing at least thirty days in advance, unless the parties
by mutual agreement waive such notice or modify the terms
thereof.
(d) Any party may be represented by counsel. A party who
intends to be represented shall notify the other parties
and the Arbitrator of the name and address of counsel at
least three days prior to the date set for the hearing at
which counsel is to appear. When an arbitration is
initiated by counsel, or where an attorney replies for
the other parties, such notice is deemed to have been
given.
(e) The Arbitrator shall make the necessary arrangements for
making a record of the arbitral hearing.
(f) The Arbitrator shall make the necessary arrangements for
the services of an interpreter upon the request of one or
more of the parties, and the requesting parties shall
assume the cost of such service.
(g) The Arbitrator may halt the proceedings upon the request of
any party or upon the Arbitrator's own initiative.
(h) The Arbitrator shall administer oaths to all witnesses
before they testify at the arbitral hearing.
(i) (1) A hearing shall be opened by the recording of the
place, time, and date of the hearing, the presence
of the Arbitrator and parties, and counsel, if any,
and by the receipt by the Arbitrator of the written
statements, amended written statements, if any, and
answering statements, if any. The Arbitrator may, at
the beginning of the hearing, ask for oral statements
clarifying the issues involved.
(2) The EPA shall then present its case, information and
witnesses, if any, who shall answer questions posed
by both parties. The Arbitrator has discretion to
vary this procedure but shall afford full and equal
opportunity to all parties for the presentation
of any material or relevant information.
(3) Exhibits, when offered by any party, may be received
by the Arbitrator. The names and addresses of all
witnesses, and exhibits in the order received, shall
be part of the record.
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(j) The arbitration may proceed in the absence of any party
which, after notification, fails to be present or fails
to obtain a stay of proceedings. If a party, after
notification, fails to be present, fails to obtain a
stay, or fails to present information, the party will be
in default and will have waived the right to be present
at the arbitration. A decision shall not be made solely
on the default of a party. The Arbitrator shall require
the parties who are present to submit such information as
the Arbitrator may require for the making of a decision.
(Jc) Information and Evidence
(1) The parties may offer information as they desire,
subject to reasonable limitations as the Arbitrator deems
appropriate, and shall produce additional information as
the Arbitrator may deem necessary to an understanding and
determination of the dispute. The Arbitrator shall be
the judge of the relevancy and materiality of the information
offered, and conformity to legal rules of evidence shall
not be necessary.
(2) All information shall be introduced in the presence
of the Arbitrator and all parties, except where any of
the parties has waived the right to be present pursuant
to paragraph (j) of this section. All information
pertinent to the issues presented to the Arbitrator for
decision, whether in oral or written form, shall be made
a part of the record.
(1) The Arbitrator may receive and consider the evidence
of witnesses by affidavit, interrogatory or deposition,
but shall give the information only such weight as the
Arbitrator deems appropriate after consideration of any
objections made to its admission.
(m) After the presentation of all information, the Arbitrator
shall specifically inquire of all parties whether they
have any further information to offer or witnesses to be
heard. Upon receiving negative replies, the Arbitrator
shall declare the hearing closed and minutes thereof
shall be recorded.
(n) The parties may provide, by written agreement, for the
waiver of the oral hearing.
(o) All documents not submitted to the Arbitrator at the
hearing, but arranged for at the hearing or by subsequent
agreement of the parties, shall be filed with the Arbitrator.
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All parties shall be given an opportunity to examine
documents.
4. Arbitral Decision
(a) The Arbitrator shall render a decision within thirty [five]
days after the hearing is declared closed except if:
(1) All parties agree in writing to an extension; or
(2) The Arbitrator determines that an extension of the
time limit is necessary.
(b) The decision of the Arbitrator shall be signed and in
writing. It shall contain a brief statement of the basis
and rationale for the Arbitrator's determination. At the
close of the hearing, the Arbitrator may issue an oral
opinion which shall be incorporated into a subsequent written
opinion.
(c) The Arbitrator may grant any remedy or relief within the
scope of the issues presented in the joint request for
arbitration.
(d) The Arbitrator shall assess arbitration fees and expenses
in favor of any party, and, in the event any administra-
tive fees or expenses are due the NAA, in favor of the
NAA.
(e) If the dispute has been heard by three Arbitrators, all
decisions and awards must be made by at least a majority,
unless the parties agree in writing otherwise.
(f) If the parties settle their dispute during the course of
the arbitration, the Arbitrator, upon the parties' request,
may set forth the terms of the agreed settlement.
(g) The Arbitrator shall mail to or serve the decision on
the parties.
(h) The Arbitrator shall, upon written request of any party,
furnish certified facsimiles of any papers in the Arbitrator's
possession that may be required in judicial proceedings
relating to the arbitration.
SUBPART D - APPEALS, FEES AND OTHER PROVISIONS
1. Appeals Procedures
(a) Any party may appeal the award or decision within thirty
days of notification of the decision. Any such appeal
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shall be made to the [insert "Federal district court for
the district in which the arbitral hearing took place" or
"Chief Judicial Officer, U.S. Environmental Protection
Agency"].
(b) The award or decision of the Arbitrator shall be binding
and conclusive, and shall not be overturned unless achieved
through fraud, misrepresentation, abuse of discretion,
other misconduct by any of the parties, or mutual mistake
of fact. [Insert "No court shall" or "The Chief Judicial
Officer shall not"] have jurisdiction to review the award
or decision unless there is a verified complaint with
supporting affidavits attesting to specific instances
of such fraud, misrepresentation, abuse of discretion,
other misconduct, or mutual mistake of fact.
(c) Judgment upon the arbitration award may be entered in
any Federal district court having jurisdiction. The award
may be enforced in any Federal district court having
jurisdiction.
(d) Except as provided in paragraph (c), no award or decision
shall be admissible as evidence of any issue of fact or
law in any proceeding brought under any other provision
of [insert applicable statutory acronyms] or any other
provision of law, nor shall any prearbitral settlement be
admissible as evidence in any such proceeding. Arbitration
decisions shall have no precedential value for future
arbitration, administratiave or judicial proceedings.
Administrative Fees, Expenses, and Arbitrator's Fee
(a) The NAA shall prescribe an Administrative Fee Schedule
and a Refund Schedule. The schedules in effect at the
time of filing or the time of refund shall be applicable.
The filing fee shall be advanced by the parties to the
NAA as part of the joint request for arbitration, subject
to apportionment of the total administrative fees by the
Arbitrator in the award. If a matter is withdrawn or
settled, a refund shall be made in accordance with the
Refund Schedule.
(b) Expenses of witnesses shall be borne by the party presenting
such witnesses. The expense of the stenographic record
and all transcripts thereof shall be prorated equally
among all parties ordering copies, unless otherwise
agreed by the parties, or unless the Arbitrator assesses
such expenses or any part thereof against any specified
party in the award.
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(c) The per diem fee for the Arbitrator shall be agreed upon
by the parties and the NAA prior to the commencement of
any activities by the Arbitrator. Arrangements for
compensation of the Arbitrator shall be made by the NAA.
(d) The NAA may require an advance deposit from the parties
to defray the Arbitrator's Fee and the Administrative
Fee, but shall render an accounting to the parties and
return any balance of such deposit in accordance with
the Arbitrator's award.
3. Miscellaneous Provisions
(a) Any party who proceeds with the arbitration after know-
ledge that any provision or requirement of this Part
has not been complied with, and who fails to object
either orally or in writing, shall be deemed to
have waived the right to object. An objection, whether
oral or written, must be made at the earliest possible
opportunity.
(b) Before the selection of the Arbitrator, all oral or
written communications from the parties for the Arbitra-
tor's consideration shall be directed to the NAA for
eventual transmittal to the Arbitrator.
(c) Neither a party nor any other interested person shall
engage in ex parte communication with the Arbitrator.
(d) All papers connected with the arbitration shall be served
on an opposing party either by personal service or United
States mail, First Class, addressed to the party's attorney,
or if the party is not represented by an attorney or the
attorney cannot be located, to the last known address of
the party.
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ATTACHMENT D
MEDIATION PROTOCOLS
I. PARTICIPANTS
A. Interests Represented. Any interest that would be
substantially affected by EPA's action in
[specify case] may be represented. Parties may
group together into caucuses to represent allied
interests.
B. Additional Parties. After negotiations have begun, addi-
tional parties may join the negotiations only with the
concurrence of all parties already represented.
C. Representatives. A representative of each party or
alternate must attend each full negotiating session.
The designated representative may be accompanied by such
other individuals as the representative believes is
appropriate to represent his/her interest, but only the
designated representative will have the privilege of
sitting at the negotiating table and of speaking
during the negotiations, except that any repre-
sentative may call upon a technical or legal adviser
to elaborate on a relevant point.
II. DECISIONMAKING
A. Agendas. Meeting agendas will be developed by consensus.
Agendas will be provided before every negotiating
session.
B. Caucus. A caucus can be declared by any participant at
any time. The participant calling the caucus will inform
the others of the expected length of the caucus.
III. SAFEGUARDS FOR THE PARTIES
A. Good Faith. All participants must act in good faith in
all aspects of these negotiations. Specific offers,
positions, or statements made during the negotiations
may not be used by other parties for any other purpose
or as a basis for pending or future litigation. Personal
attacks and prejudiced statements are unacceptable.
B. RighttoWi thdraw. Parties may withdraw from the
negotiations at any time without prejudice. Withdrawing
parties remain bound by protocol provisions on public
comment and confidentiality.
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C. Minutes. Ses'sions shall not be recorded verbatim.
Formal minutes of the proceedings shall not be kept.
D. Confidentiality and the Use of Information
(1) [All parties agree not to withhold relevant information,
If a party believes it cannot or should not release
such information, it will provide the substance of
the information in some form (such as by aggregating
data, by deleting non-relevant confidential informa-
tion, by providing summaries, or by furnishing it
to a neutral consultant to use or abstract) or a
general description of it and the reason for not
providing it directly.]
(2) [Parties will provide information called for by this
paragraph as much in advance of the meetings as
possible.]
(3) The entire process is confidential. The parties and
the mediator will not disclose information regarding
the process, including settlement terms, to third
parties, unless the participants otherwise agree. The
process shall be treated as compromise negotiation
for purposes of the Federal Rules of Evidence and
state rules of evidence. The mediator will be
disqualified as a witness, consultant or expert in
any pending or future action relating to the subject
matter of the mediation, including those between
persons not parties to the mediation. Failure to
meet the confidentiality or press requirements of
these protocols is a basis for exclusion from the
negotiations.
(4) The mediator agrees that if he/she discloses informa-
tion regarding the process, including settlement terms,
to third parties without the participants' agreement,
except as ordered by a court with appropriate juris-
diction, he/she agrees to the following as liquidated
damages to the parties:
(a) Removal from the case;
(b) Removal from any EPA list of approved neutrals;
and
(c) Payment of an amount equal to [at a
minimum, the amount of the mediator's fee].
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IV. SCHEDULE
A. Time and location. Negotiating sessions will initially
be held ^___^ [insert how often]. The first
negotiating session is scheduled for
Unless otherwise agreed upon, a deadline of
months for the negotiations will be established.
The location of the meetings will be decided by the
participants.
B. Discontinue if unproductive. The participants may dis-
continue negotiations at any time if they do not appear
productive.
V. Press
A. [Joint Statements. A joint press statement shall be
agreed to by the participants at the conclusion
of each session. A joint concluding statement shall
be agreed to by the participants and issued by the
mediator at the conclusion of the process. Participants
and the mediator shall respond to press inquires within
the spirit of the press statement agreed to at the
conclusion of each session.]
B. [Meetings with the Press. Participants and the
mediator will strictly observe the protocols regarding
confidentiality in all contacts with the press and
in other public forums. The mediator shall be
available to discuss with the press any questions on
the process and progress of the negotiations. No
party will hold discussions with the press concerning
specific offers, positions, or statements made during
the negotiations by any other party.]
VI. MEDIATOR
A neutral mediator will work with all the parties to
ensure that the process runs smoothly.
VII. APPROVAL OF PROPOSALS
Partial Approval. It is recognized that unqualified
acceptance of individual provisions is not possible
out of context of a full and final agreement. However,
tentative agreement of individual provisions or portions
thereof will be signed by initialing of the agreed
upon items by the representatives of all interests
represented. This shall not preclude the parties from
considering or revising the agreed upon items by mutual
consent.
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B.
Final Approval. Upon final agreement, all representatives
shall sign and date the appropriate document. It is
explicitly recognized that the representatives of the
U.S. EPA do not have the final authority to agree to any
terms in this case. Final approval must be obtained
from [insert names of proper officials].
VIII. EFFECTIVE DATE
These protocols shall be effective upon the signature of the
representatives.
For the U.S. Environmental Protection Agency
Signature
Date
For
[Name of violator]
Signature
Date
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Attachment E
AGREEMENT TO INSTITUTE MINI-TRIAL PROCEEDINGS
The United States Environmental Protection Agency (EPA)
and XYZ Corporation, complainant and respondent, respectively,
in the matter of XYZ Corp., Docket No. , agree to
the alternative dispute resolution procedure set forth in
this document for the purpose of fostering the potential
settlement of this case. This agreement, and all of the
actions that are taken pursuant to this agreement, are
confidential. They are considered to be part of the settlement
process and subject to the same privileges that apply to
settlement negotiations.
1. The parties agree to hold a mini-trial to inform
their management representatives of the theories, strengths,
and weaknesses of the parties' respective positions. At the
mini-trial, each side will have the opportunity and responsibility
to present its "best case" on all of the issues involved in
this proceeding.
2. Management Representatives of both parties, including
an EPA official and an XYZ official at the Division Vice
President level or higher, will attend the mini-trial. The
representatives have authority to settle the dispute.
3. A mutually selected "Neutral Advisor" will attend the
mini-trial. The, Neutral Advisor will be chosen in the
following manner. By , [insert date] the parties
shall exchange a list of five potential Neutral Advisors
selected from the list of candidates offered by
[insert neutral organization]. The potential candidates
shall be numbered in order of preference. The candidate who
appears on both lists and who has the lowest total score
shall be selected as the Neutral Advisor. If no candidate
appears on both lists, the parties shall negotiate and shall
select and agree upon a Neutral Advisor by
[insert date].
4. The fees and expenses of the Neutral Advisor will be
borne equally by both parties. [However, if the Neutral
Advisor provides an opinion as to how the case should be
resolved, and a party does not follow the recommended
disposition of the Neutral Advisor, that party shall bear the
Advisor's entire fees and expenses.]
5. Neither party, nor anyone on behalf of either party,
shall unilaterally approach, contact or communicate with the
Advisor. The parties and their attorneys represent and
warrant that they will make a diligent effort to ascertain
all prior contact between themselves and the Neutral Advisor,
and that all such contacts will be disclosed to counsel for
the opposing party.
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6. Within 10 days" after the appointment of the Neutral
Advisor, mutually agreed upon basic source material will be
jointly sent to the Neutral Advisor to assist him or her in
familiarizing himself or herself with the basic issues of the
case. This material will consist of neutral matter including
this agreement, the complaint and answer, the statute, any
relevant Agency guidance, a statement of interpretation and
enforcement policy, the applicable civil penalty policy, and
any correspondence between the parties prior to the filing
of the complaint.
7. All discovery will be completed in the
[insert number] working days following the execution of this
agreement. Neither party shall propound more than 25 inter-
rogatories or requests for admissions, including subparts;
nor shall either party take more than five depositions and
no deposition shall last more than three hours. Discovery
taken during the period prior to the mini-trial shall be
admissible for all purposes in this litigation, including
any subsequent hearing before [a federal judge or administrative
law judge] in the event this mini-trial does not result in a
resolution of this dispute. It is agreed that the pursuit
of discovery during the period prior to the mini-trial shall
not restrict either party's ability to take additional discovery
at a later date. In particular, it is understood and agreed
that partial depositions may be necessary to prepare for the
mini-trial. If this matter is not resolved informally as a
result of this procedure, more complete depositions of the
same individuals may be necessary. In that event, the partial
depositions taken during this interim period shall in no way
foreclose additional depositions of the same individual regarding
the same or additional subject matter for a later hearing.
8. By , [insert date] the parties shall
exchange all exhibits they plan to use at the mini-trial,
and send copies at the same time to the Neutral Advisor. On
the same date the parties also shall exchange and submit to
the Neutral Advisor and to the designated trial attorney for
the opposing side: (a) introductory statements no longer than
25 double-spaced pages (not including exhibits), (b) the
names of witnesses planned for the mini-trial, and (c) all
documentary evidence proposed for utilization at the mini-tial.
9. Two weeks before the mini-trial, if he or she so
desires and if the parties agree, the Neutral Advisor may
confer jointly with counsel for both parties to resolve any
outstanding procedural questions.
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10. The mini-trial proceeding shall be held on ,
and shall take day(s). The morning proceedings shall begin
at a.m. and shall "continue until a.m. The afternoon's
proceedings shall begin at
A sample two day schedule follows:
p.m. and continue until
p.m.
Day 1
8:30 a.m. -
12:00 Noon -
1:00 p.m. -
2:30 p.m. -
4:00 p.m. -
12:00 Noon
1:00 p.m.
2:30 p.m.
4:00 p.m.
5:00 p.m.
Day 2
8:30 a.m - 12:00 Noon
12:00 Noon - 1:00 p.m.
1:00 p.m. - 2:30 p.m.
2:30 p.m. - 3:00 p.m.
3:00 p.m. - 4:30 p.m.
4:30 p.m. - 4:45 p.m.
4:45 p.m. - 5:00 p.m.
EPA's position and case presentation
Lunch*
XYZ's cross-examination
EPA's re-examination
Open question and answer period
XYZ's position and case presentation
Lunch*
EPA's cross-examination
XYZ's re-examination
Open question and answer period
EPA's closing argument
XYZ's closing argument
*Flexible time period for lunch of a stated duration.
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11. The presentations at the mini-trial will be informal.
Formal rules of evidence will not apply, and witnesses may
provide testimony in the narrative. The management repre-
sentatives may question a witness at the conclusion of the
witness' testimony for a period not exceeding ten minutes
per witness. In addition, at the conclusion of each day's
presentation, the management repesentatives may ask any
further questions that they deem appropriate, subject to the
time limitations specified in paragraph 10. Cross-examination
will occur at the conclusion of each party's direct case
presentation.
12. At the mini-trial proceeding, the trial attorneys
will have complete discretion to structure their presentations
as desired. Forms of presentation include, but are not
limited to, expert witnesses, lay witnesses, audio visual
aids, demonstrative evidence, and oral argument. The parties
agree that there will be no objection by either party to
the form or content of the other party's presentation.
13. In addition to asking clarifying questions, the Neutral
Advisor may act as a moderator. However, the Neutral Advisor
will not preside like a judge or arbitrator, nor have the
power to limit, modify or enlarge the scope or substance of
the parties' presentations. The presentations will not be
recorded, but either party may take notes of the proceedings.
14. In addition to counsel, each management representative
may have advisors in attendance at the mini-trial, provided
that all parties and the Neutral Advisor shall have been
notified of the identity of such advisors at least ten days
before commencement of the mini-trial.
15. At the conclusion of the mini-trial, the management
representatives shall meet, by themselves, and shall attempt
to agree on a resolution of the dispute. By agreement, other
members of their teams may be invited to participate in the
meetings.
16. At the request of any management representative,
the Neutral Advisor will render an oral opinion as to the
likely outcome at trial of each issue raised during the mini-
trial. Following that opinion, the management representatives
will again attempt to resolve the dispute. If all management^.
representatives agree to request a written opinion on such
matters, the Neutral Advisor shall render a written opinion
within 14 days. Following issuance of any such written
opinion, the management representatives will again attempt
to resolve the dispute.
17. If the parties agree, the [adminstrative law judge or
federal district court judge] may be informed in a confidential
communication that an alternative dispute resolution procedure
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is being employed, but neither party shall inform the
[administrative law judge or federal district court judge]
at any time as to any aspect of the mini-trial or of the
Advisor. Furthermore, the parties may file a joint motion to
suspend proceedings in the [appropriate court] in
this case. The motion shall advise the court that the suspension
is for the purpose of conducting a mini-trial. The court will
be advised as to the time schedule established for completing
the mini-trial proceedings. Written and oral statements
made by one party in the course of the mini-trial proceedings
cannot be utilized by the other party and shall be inadmissible
at the hearing of this matter before the [administrative law
judge or federal district court judge] for any purpose,
including impeachment. However, documentary evidence that
is otherwise admissible shall not be rendered inadmissible
as a result of its use at the mini-trial.
18. Any violation of these rules by either party will
seriously prejudice the opposing party and be prima facie
grounds for a motion for a new hearing; and to the extent
that the violation results in the communication of information
to the [administrative law judge or federal district court judge]
contrary to the terms of this agreement, it shall be prima
facie grounds for recusal of the [administrative law judge or
federal district court judge]. Moreover, notwithstanding the
provisions of Paragraph 4 above, any violation of these rules
by either party will entitle the opposing party to full
compensation for its share of the Neutral Advisor's fees and
expenses, irrespective of the outcome of any administrative
or court proceeding.
19. The Neutral Advisor will be disqualified as a hearing
witness, consultant, or expert for either party, and his or her
advisory response will be inadmissible for all purposes in
this or any other dispute involving the parties. The Neutral
Advisor will treat the subject matter of the presentations
as confidential and will refrain from disclosing any trade
secret information disclosed by the parties. After the
Advisor renders his or her opinion to the parties, he or she
shall return all materials provided by the parties (including
any copies) and destroy all notes concerning this matter.
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Dated:
Dated:
By:
Attorney for United States
Environmental Protection
Agency
By:
Attorney for XYZ
Corporation
Affirmation of Neutral Advisor:
I agree to the foregoing provisions of this Alternative
Dispute Resolution Agreement.
Dated:
Signed:
Neutral Advisor
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ATTACHMENT F
UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
In the Matter of )
XYZ Corporation, ) Docket No.
Respondent )
AGREEMENT TO INSTITUTE FACT-FINDING PROCEDURES
A. General Provisions
1. Purpose
2. Definitions
B. Guidelines for Conduct of Neutral Fact-finding
1. Scope and Applicability
2. Jurisdiction of Neutral Fact-finder
3. Selection of Neutral Fact-finder
4. Information Regarding Dispute
5. Determination of Neutral Fact-finder
6. Confidentiality
7. Appeals Procedures
8. Administrative Fees, Expenses, and Neutral Fact-finder's Fee
9. Miscellaneous Provisions
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A. GENERAL PROVISIONS
1. Purpose
This agreement contains the procedures to be followed
for disputes which arise over [state issue(s)].
2. Definitions
Terms not defined in this section have the meaning given by
[state applicable statute(s) and section(s)].
All time deadlines in these alternative dispute resolution (ADR)
procedures are specified in calendar days. Except when
otherwise specified:
(a) "Act" means [state applicable statute(s) and citation in
U.S. Code].
(b) "NAO" means any neutral administrative organization
selected by the parties to administer the requirements of
the ADR procedures.
(c) "Neutral Fact-finder" means any person selected in accordance
with and governed by the provisions of these ADR procedures.
(d) "Party" means EPA and the XYZ Corporation.
B. GUIDELINES FOR CONDUCT OF NEUTRAL FACT-FINDING
1. Scope and Applicability
The ADR procedures established by this document are
for disputes arising over [state issue(s)].
2. Jurisdiction of Neutral Fact-finder
In accordance with the ADR procedures set forth in this
document, the Neutral Fact-finder is authorized to issue
determinations of fact regarding disputes over [state
issue(s)], and any other issues
authorized by the parties.
3- Selection of Neutral Fact-finder
The Neutral Fact-finder will be chosen by the parties in
the following manner.
(a) The parties shall agree upon a neutral adminis-
trative organization (NAO) to provide services to the
parties as specified in these ADR procedures.
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The parties shall jointly request the NAO to provide
them with a list of three to five (3-5) potential Neutral
Fact-finders. Either party may make recommendations
to the NAO of qualified individuals. Within ten (10)
days after the receipt of the list of potential Neutral
Fact-finders, the parties shall numerically rank the
listed individuals in order of preference and simultane-
ously exchange such rankings. The individuals with
the three (3) lowest combined total scores shall be
selected as finalists. Within ten (10) days after such
selection, the parties shall arrange to meet with and
interview the finalists. Within ten (10) days after
such meetings, the parties shall rank the finalists in
order of preference and exchange rankings. The individual
with the lowest combined total score shall be selected
as the Neutral Fact-finder.
(b) The NAO shall give notice of the appointment of the
Neutral Fact-finder to each of the parties. A signed
acceptance by the Neutral Fact-finder shall be filed
with the NAO prior to the initiation of fact-finding
proceedings.
(c) If the Neutral Fact-finder should resign, die, withdraw,
or be disqualified, unable, or refuse to perform the
duties of the office, the NAO may, on proof satisfactory
to it, declare the office vacant. Vacancies shall be
filled in accordance with the applicable provisions
of this section, and the dispute shall be reinitiated,
unless the parties agree otherwise.
4. Information Regarding Dispute
(a) Within ten (10) days after the selection of the Neutral
Fact-finder, basic source material shall be jointly
submitted to the Neutral Fact-finder by the parties.
Such basic source material shall consist of:
1) an agreed upon statement of the precise nature of
the dispute,
2) the position of each party and the rationale for it,
3) all information and documents which support each -
party's position, and
4) [describe additional material].
(b) Thereafter, for a period of ^_ days, the Neutral
Fact-finder shall conduct an investigation of the issues
in dispute. As part of such investigation, the Neutral
Fact-finder may interview witnesses, request additional
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-4-
documents, reque.st additional information by written
questions, and generally use all means at his or her
disposal to gather the facts relevant to the disputes as
he or she determines. The Neutral Fact-finder shall be
the sole determiner of the relevancy of information.
Conformity to formal rules of evidence shall not be
necessary.
5. Determination of Neutral Factfinder
(a) The Neutral Fact-finder shall render a determination
within days of the time limitation specified
in Section B. 4~Tb) above, unless:
(1) Both parties agree in writing to an extension;
Cor
(2) The Neutral Fact-finder determines that an
extension of the time limit is necessary.]
(b) The determination of the Neutral Fact-finder shall be
signed and in writing. It shall contain a full statement
of the basis and rationale for the Neutral Fact-finder's
determination.
(c) If the parties settle their dispute prior to the deter-
mination of the Neutral Fact-finder, the Neutral Fact-finder
shall cease all further activities in regard to the
dispute upon receipt of joint notice of such settlement
from the parties.
(d) The parties shall accept as legal delivery of the deter-
mination the placing of a true copy of the decision in
the mail by the Neutral Fact-finder, addressed to the
parties' last known addresses or their attorneys, or by
personal service.
(e) After the Neutral Fact-finder forwards his or her deter-
mination to the parties, he or she shall return all
dispute-specific information provided by the parties
(including any copies) and destroy notes concerning
this "matter.
6. Confidentiality
(a) The determination of the Neutral Fact-finder, and all
of the actions taken pursuant to these ADR procedures,
shall be confidential and shall be entitled to the
same privileges that apply generally to settlement
negotiations.
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-5-
(b) The Neutral Fact-finder shall treat the subject matter
of all submitted information as confidential, and
shall refrain from disclosing any trade secret or
confidential business information disclosed as such
by the parties. [If XYZ has previously formally claimed
information as confidential business information (CBI),
XYZ shall specifically exclude the information from
such CBI classification for the limited purpose of
review by the Neutral Fact-finder.]
(c) No determination of the Neutral Fact-finder shall be
admissible as evidence of any issue of fact or law in any
proceeding brought under any provision of [state statute]
or any other provision of law.
7. Appeals Procedures
(a) Any party may appeal the determination of the Neutral
Fact-finder within thirty days of notification of
such determination. Any such appeal shall be made to
the [Chief Judicial Officer, U.S. Environmental Protec-
tion Agency, or district court judge].
(b) The determination of the Neutral Fact-finder shall be
binding and conclusive, and shall not be overturned
unless achieved through fraud, misrepresentation,
other misconduct by the Neutral Fact-finder or by any
of the parties, or mutual mistake of fact. The [admin-
istrative law judge or federal district court judge]
shall not have jurisdiction to review the determination
unless there is a verified complaint with supporting
affidavits filed by one of the parties attesting to
specific instances of such fraud, misrepresentation,
other misconduct, or mutual mistake of fact.
8. Administrative Fees, Expenses, and Neutral Fact-finder's Fee
(a) The fees and expenses of the Neutral Fact-finder, and
of the NAO, shall be borne equally by the parties.
The parties may employ additional neutral organizations
to administer these ADR procedures as mutually deemed
necessary, with the fees and expenses of such organizations
borne equally by the parties.
(b) The NAO shall prescribe an Administrative Fee Schedule
and a Refund Schedule. The schedules in effect at the time
of the joint request for fact-finding shall be applicable.
The filing fee, if required, shall be advanced by the
parties to the NAO as part of the joint request for
fact-finding. If a matter is settled, a refund shall
be made in accordance with the Refund Schedule.
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-6-
(c) Expenses'of providing information to the Neutral Fact-finder
shall be borne by the party producing such information.
(d) The per diem fee for the Neutral Fact-finder shall be
agreed upon by the parties and the NAO prior to the
commencement of any activities by the Neutral Fact-finder.
Arrangements for compensation of the Neutral Fact-finder
shall be made by the NAO.
9. Miscellaneous Provisions
(a) Before the selection of the Neutral Fact-finder, all oral
or written communications from the parties for the Neutral
Fact-finder's consideration shall be directed to the NAO
for eventual transmittal to the Neutral Fact-finder.
(b) All papers connected with the fact-finding shall be served
on the opposing party either by personal service or United
States mail, First Class.
(c) The Neutral Fact-finder shall be disqualified from acting
on behalf of either party, and his or her determination
pursuant to these ADR procedures shall be inadmissible
for all purposes, in any other dispute involving the
parties.
(d) Any notification or communication between the parties,
or with and by the Neutral Fact-finder shall be confidential
and entitled to the same privileges that apply generally
to settlement negotiations.
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SE.1-3
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I 5W2 1 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
V^"^/ WASHINGTON. D.C. 20460
'«i •MI*''
APR I 3 ;:3
MEMORANDUM
SUBJECT: Process for Conducting Pre-Referral settlement
Negotiations on Civil Judicial Enforcement Cases
FROM: /^Thomas L. Adams, Jr.
Assistant Administrator for Enforcement
and Compliance Monitoring
TO: Regional Administrators
Deputy Regional Administrators
Regional Counsels
Associate Enforcement Counsels
HQ Compliance Office Directors
This memorandum transmits to you an agreement between EPA
and the Department of Justice on an authoritative process for
conducting pre-referral settlement negotiations of non-Superfund
civil judicial enforcement cases. A separate process, reflecting
the same basic concepts but recognizing the unique features of
Superfund, is being developed jointly by OECM, OWPE and the
Department of Justice.
This agreement addressess one of the judicial enforcement
streamlining initiatives identified by EPArs newly-formed
Enforcement Management Council at recent meetings in Easton,
MD. The major objective of this initiative is to promote
efficient and expeditious resolution of civil enforcement cases
on appropriate terms. The mechanism developed for doing this
is the attached set of protocols, which establish a process for
providing * legional office with pre-authorization to negotiate
settlement with a potential defendant on behalf of the United
States before resorting to the full-scale referral/litigation
process. Typically/ a Region will have the option of deciding
whether to invoke this procedure for a given case or to proceed
immediately to the referral process.
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* UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. DC 20460
'*«*•"• MAR-9 1968
Honorable Roger J. Marzulla
Acting Assistant Attorney General
Land and Natural Resources Division
U.S. Department of Justice
Washington, D.C. 20530
tiCk 0«
Dear Roger:
This letter requests your concurrence in the enclosed
"Process for Conducting Pre-Referral Settlement Negotiations"
which EPA and the Department of Justice will employ as part of
our joint efforts to streamline the United States1 civil judicial
environmental enforcement program.
This initiative is intended to build on successes we have
seen in pilot projects using pre-referral settlement negotiations.
More specifically, the primary intent of establishing in a
formal manner these joint procedures is:
1. " to expedite the resolution of civil enforcement cases '
on satisfactory terms which support the public interest, and
2. to allow the United States to accomplish this objective
in a resource-efficient manner.
To these ends, the procedures established here identify
appropriate milestones and timetables for conducting pre-referral
settlement negotiations which are reasonable management targets
in straightforward environmental enforcement cases.V The more
routine the case (i.e., no complicated factual issue's or unusual
terms of settlement), the more likely the government will be
able to apply this framework for expeditious, efficient case
resolution.
*J This process does not apply to Superfund cases. Pre-referral
negotiations procedures, taking into account specific statutory
requirements, will be developed separately. EPA and the
Department have agreed to evaluate the potential for adapting
these procedures to the Superfund context.
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-2-
Please note that Regional Counsels will receive workload
credit for a case which a Region has opened for negotiation
with a mini-lit report under these protocols, even if EPA has
not formally referred the case with a full-scale lit report to
DOJ for filing. Regional Counsels, however, are responsible
for having their docket clerks make appropriate case entries on
EPA's Enforcement DOCKET system in the "Cases Opened" category.
These cases would move to the "Cases Initiated" category once
the Region forwards to DOJ a full lit report or settlement
document foe filing.
Naturally, as an Agency we will have to pay close attention
to implementation of this process to ensure that it is successful
in achieving settlements on appropriate terms more expeditiously.
Thanks in advance for your cooperation as we move forward to
implement these procedures.
Attachment
c'c: Jim Barnes, EPA HQ
Roger Harzulla, DOJ
David Buente, DOJ
Jerry Bryan, EPA HQ
Tom Gallagher, EPA-NEIC
Sally Mansbach, EPA HQ
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-2-
The guidance identifies the areas which a Region must
address in a mini-lit report to initiate the pre-referral
negotiation process. All participating offices will need to
work together to strike an appropriate balance in deciding how
ir,jch detail this information should cover to facilitate informed
review or quick filing if negotiations break down, yet still
allow for productive negotiations to commence quickly. In
most cases. Regional submission of a draft consent.decree based
upon available program-specific models is likely to produce
easier, quicker approval of proposed settlement terms and final
consent decrees.
It will remain important for representatives of all
participating offices to maintain continuous, open lines of
communication to permit these procedures to attain their
objectives. Offices still will work out their respective roles
on a case-by-case basis, although this guidance sets out norms
to help make these determinations. Furthermore, the appropriate
Assistant Section. Chief at DOJ will be responsible for working
out the extent of U.S. Attorney involvement in pre-referral
negotiation activities consistent with these procedures and
time lines. In any event, it remains crucial for EPA and the
Department to monitor the use of these procedures diligently to
affirm that they indeed result in a more effective, efficient
enforcement effort. We nevertheless understand that because we
have pressed to institute these new procedures quickly, both
EPA and the Department will need additional time to modify
computer systems to track adequately adherence to these protocols.
Thank you for the Department's support of our mutual work
in this area. Please indicate your approval of this process
in the signature blank below and return a copy of your signed
approval to me, or give me a call if you have any
questions.
Sincerely,
Thomas L. Adams, Jr.
Assistant Administrator for Enforcement
and Compliance Monitoring
Enclosure
I concur in the enclosed "Process for Conducting Pre-Referral
Negotiations.*
Roger J. Marzalla (Date)
Acting Assistant Attorney General
Land and Natural Resources Division
U.S. Department of Justice
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PROCESS FOR CONDUCTING PRE-REFERRAL
SETTLEMENT NEGOTIATION
Should a Region wish to use this process, the RA or his/her
delegate will initiate the process as is done presently for
referrals by sending simultaneously to OECM, the HQ Prograrr.
Compliance Office and DOJ a mini-lit report/case summary
(typically 5-10 pages) which summarizes:
a. defendant and its enforcement history
b. summary of violation(s) at issue or cause of action
(including known environmental impact)
c. summary of available evidence
d. noteworthy legal and equitable defenses
e. significant contacts with defendant (by EPA and/or the
State)
f. any legal or other significant action by the State,
local agencies, or citizen groups
g. proposed terms of settlement—present view of bottom
line, (including up-front and stipulated penalties,
scope of relief, compliance schedule and any releases
of liability) supporting rationale, and penalty
calculation in accordance with the penalty policies
h. legal, policy or other issues/strategic considerations
of primary significance to the government or bearing
on appropriate terms of settlement or the conduct of
litigation
i. milestones for negotiation and filing, covering all
parties to the lawsuit
j. potential for criminal prosecution or investigation
k. what participation the Region requests from HQ and
DOJ in negotiations beyond what these procedures call
for.
A proposed draft consent decree to use to open negotiations
must accompany the mini-lit report. EPA's computer DOCKET
system will begin tracking these cases once the Region sends
its mini-lit report to HQ and
I/ As an alternative to filing a mini-lit report at the start
of this process and a full lit report later on if negotiations
do not reach a timely settlement, a Region may choose instead
to file a full lit report at the start of the process, and
follow that with a simple update if pre-referral negotiations
do not croduce a settlement.
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-2-
II. DOJ, OECM and the Program office will provide comments on
the proposed case, their interest in oarticipating because
of national issues, terms of settlement, further contact
point, and negotiation/litigation strategy to the Region
within 21 days.2/ of receipt. Participating offices should
initially conve"y or subsequently confirm their comments
in writing, if necessary, comments will also address
whether unique circumstances in a case indicate that the
proposed pre-referral settlement negotiation process is
not appropriate for the case. HQ Offices will coordinate
during their review and wherever possible, OECM will
consolidate the comments into a coordinated response. A
simultaneous discussion among all litigation team members
may be particularly helpful to identify and resolve
outstanding issues. Upon response, the Region will have
authority to negotiate a settlement consistent with
pre-approved terms.
a. The region will keep HQ and DOJ apprised of changes in
the course of negotiations to the extent there is a desire
to deviate from key pre-approved terms (e.g. bottom-line
.penalty, scope of relief, compliance schedule and
requirements, releases of liability) and will circulate to
the HQ and DOJ contacts for clearance successive re-drafts
of the decree before forwarding these redrafts to opposing
counsel, consistent with present practice for post-filing
negotiations. HQ and DOJ contacts will have a seven-day
target, but sooner if possible, for responding to re-drafts
in which the Region has clearly identified changes from
prior versions. Regions should also keep HQ and DOJ
generally informed of the status of ongoing negotiations.
b. If settlement in principle is not reached within
90 days of the latter of DOJ/HQ responses to the mini-lit
report, the Region will, within 30 days, submit a full lit
report to DOJ (copy to OECM and HQ program office), unless
otherwise agreed. The Regional Counsel, in consultation
with the appropriate Regional Division Director, may
invoke a 30-day extension to the 90-day period in exceptional
cases upon consultation with the appropriate OECM Associate
Enforcement counsel. Moreover, at any point in this
90-day period, the Regional Counsel, in consultation with
the appropriate Regional Division Director, may "remove" a
cast from this process for the purpose of placing it on a
filing track. In such a situation, the case will be
handled as a normal referral and the Region will submit
the full litigation report.
2/ All time periods are in calendar days
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-3-
c. DOJ will have a management target of filing the case
within 45 days of receipt of a complete lit report unless
new issues emerge based upon more complete case development
or unless the case is settled in principle before that
deadline.
d. If settlement in principle is reached, the Region will
within 20 days submit a final draft consent decree to HQ
and DOJ for review. HQ/DOJ will review and comment to the
Region within 15 days of receipt. Within 45 days of
HQ/DOJ response (unless otherwise agreed), the Region will
submit a signed consent decree with cover letter explaining
the rationale supporting the settlement to HQ (copy to
DOJ) for approval.
III. EPA HQ will, within 21 days from receipt of a signed
consent decree with supporting documentation/rationale,
act on (approve or disapprove) civil settlements which are
within preapproved terms as initially set forth or as
modified over the course of negotiations.
IV. Simultaneous with submission to EPA HQ, Regions will send a
copy of the consent decree to DOJ to initiate a simultaneous
review. DOJ will have a management target of 21 days from
receipt of a signed consent decree from EPA HQ to act on
(lodge or disapprove) civil settlements which are within
pre-approved terms as initially set forth or modified over
the course of negotiations.
V. DOJ will have a management target of 45 days from the date
of lodging to move a court for entry of a consent decree,
assuming no significant public comment. If 45 days cannot
be met because of significant public comment, DOJ and EPA
will agree on a process and timetable for response.
A flow chart of the proposed time lines is attached to assist
the reader. The procedures set out in this document are intended
solely for the guidance of government personnel. They are not
intended and may not be relied upon to create any rights,
substantive or procedural, enforceable by any party in litigation
with the United states. The United States reserves the right
to act at variance with these procedures and to change them at
any time tilth out public notice.
Attachment
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PRE-REPERRAL SETTLEMENT NEGOTIATIONS TIME LINE
>DAY 186***
Mini-Lit
Report to
•OBCM
•DOJ
•HQ Prog
Ofc.
Full
*• 30 Days Litigation
p[ Rpt. to
if DOJ and HQ
SI
I
Comment O[
By HO and N[
21 days DOJ To 90 days*
Regions
SI
K
P|»*
I
R(
El
M
Cf Final CD
Hi 20 Draft CD 1 15 HQ/DOJ 45 Submit to
days To Hp/DOjIdavs Resp. davs HQ t DOJ
Case
45 davs Filed
HQ C.D
21 AppV. 21 Lodfje
days to DOJ davs w/CT
I—
The Regional Counsel, in consultation with the appropriate Regional Division Director, may invoke a 30-day extension
to this 90-day period in exceptional cases upon consultation with the appropriate Associate Enforcement counsel
••SIP - Settlement in principle
•^These total times do not account for the time it takes to transmit reports or final settlement documents between
offices. The total times also may be extended by 30 days where an extension to the negotiating period is invoked.
->DAY 278
***
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SE.1-4
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'-'MTED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460 '\~ '
Mtf 22BB5
Om. i (»l ivt,*.; ».:%
MONIIOftlV.
MEMORANDUM
SUBJECT: Enforcement Settlement Negotiations
-
PROM: Richard H. Mays*
Senior Enforcemeft Counsel / f
TO: Regional Counsels
«•
During the past year, a number of Regions have submitted
settlements for OECM approval that had been communicated to and
tentatively agreed upon with a defendant without Headquarters
knowledge, involvement or approval. In some of these instances^
'defendants were told that the Region was willing to settle for
no penalty, where a penalty was clearly in keeping with Agency
policy.
A copy of all draft settlement agreements should be
transmitted by the Regional Counsel to the appropriate Associate
Enforcement Counsel for review before it is presented to the
defendant. This policy has been set forth in two memoranda by
the Assistant Administrator for Enforcement and Compliance
Monitoring. See "Implementation of Direct Referrals for Civil.
Cases Beginning December 1, 1983," and "Headquarters Review and
Tracking of Civil Referrals.*
The basis for this policy is the need for the Agency to
speak with one voice which reflects a national as well as
Regional perspective. Tbtis purpose is frustrated if individual
staff members or Regional offices unilaterally establish an
Agency negotiation settlement position which may be contrary
to Agency policy or positions taken in other casess, OECM
review ensures consistency of Agency positions in all settlements.
Failure to follow that policy could also lead to potentially
embarrassing changes of position in a case, since no enforcement
settlement can be final until the Assistant Administrator for
Enforcement and Compliance Monitoring has signed it.
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-2-
-A primary purpose of OECM review is to ensure that Agency
policies and guidelines are being followed, it is not our
purpose or desire to substitute our judgment for that of the
Region or to "nitpick" the Region's product when it follows
Agency policy. OECM will approve an Agency settlement position
or draft decree that falls within existing, broad policy
boundaries. In the absence of existing policy on a particular
issue, OECM will approve a position that will promote — or
not hinder — the Agency's enforcement efforts in other cases.
The vast majority of Regional recommendations conform to
Agency guidance and are approved. Nevertheless, in the recent
past a number of Regional settlement positions that had already
been communicated to and tentatively agreed upon with the
defendant have been presented to our office, placing OECM and
the Region in a potentially embarrassing position. These cases
are appearing with increasing frequency, and it is clear that
they can interfere with the effectiveness of the Agency's
enforcement effort, and create inconsistent results and
precedents.
Consequently, OECM will not assign any weight to Regional
recommendations that Headquarters should approve a settlement
position made without prior authorization because it already
had been communicated to the defendant. If such a proposed
settlement contravenes Agency policy, if it would establish
bad precedent for future cases, or if it would produce results
inconsistent with those obtained in previously-approved
settlements, it will be returned to the Region for further
negotiations.
cc: Courtney M. Price, Assistant Administrator, OECM
Deputy Regional Administrators
Associate Enforcement Counsels
Regional Water Program Division Directors
Regional Waste Program Division Directors
Regional Air Program Division Directors
Headquarters Program Compliance Office Directors
David Buente, Department of Justice
Linda Fisher, Office of the Administrator
LaJuana Wilcher, Office of the Deputy Administrator
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SE.1-5
-------
.,l V,
* A
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
**t WASHINGTON. D.C. 20460 /"j\^ -4b\U
SŁ. \-s
161964
Off ICt Of
ENFORCEMfNTAND
COMPLIANCE MOMTOHIN&
MEMORANDUM
SUBJECT: Policy Against "No Action" Assurances
FROM: Courtney M. Price
Assistant Administrator for Enforcement
and Compliance Monitoring
TO: Assistant Administrators
Regional Administrators
General Counsel
Inspector General
This memorandum reaffirms EPA policy against giving
definitive assurances (written or oral) outside the context of
a formal enforcement proceeding that EPA will not proceed with
an enforcement response for a specific individual violation of
an environmental protection statute, regulation, or other
legal requirement.
'No action" promises may erode the credibility of EPA's
enforcement program by creating real or perceived inequities
in the Agency's treatment of the regulated community. This
credibility is vital as a continuing incentive for regulated
parties to comply with environmental protection requirements.
In addition, any commitment not to enforce a legal
requirement against a particular regulated party may severely
hamper later enforcement efforts against that party, who may
claim good-faith reliance oh that assurance, or against other
parties who claim to be similarly situated.
This policy against definitive no action promises to
parties outside the Agency applies in all contexts, including
assurances requested:
0 both prior to and after a violation has been committed;
0 on the basis that a State or local government is
responding to the violation;
-------
* on the basis that revisions to the underlying legal
requirement are being considered;
e on the basis that the Agency has determined that the
party is not liable or has a valid defense;
0 on the basis that the violation already has been
corrected (or that a party has promised that it will
correct the violation); or
0 on the basis that the violation is not of sufficient
priority to merit Agency action.
'*- > *
The Agency particularly must avoid no action promises
relating either to violations of judicial orders, for which a
court has independent enforcement authority/ or to potential
criminal violations/ for which prosecutorial discretion rests
with the United States Attorney General.
As a general rule/ exceptions to this policy are warranted
only
0 where expressly provided by applicable statute or
regulation (e.g., certain upset or bypass situations)
0 in extremely unusual cases in which a no action
assurance is clearly neccessary to serve the public
interest (e.g./ to allow action to avoid extreme risks
to public health or safety/ or to obtain important
information for research purposes) and which no other
mechanism can address adequately.
Of course/ any exceptions which EPA grants must be in an area
in which EPA has discretion not to act under applicable law.
This policy in no way is intended to constrain the way in
which EPA discusses and coordinates enforcement plans with
state cr local enforcement authorities consistent with normal
working relationships. To the extent that a statement of EPA's
enforcement intent is necessary to help support or conclude an
effective state enforcement effort/ EPA can employ language
such as the following:
•EPA encourages State action to resolve violations of
the Act and supports the actions which (State)
is takina to address the violations at issue. To the extent
that the State action does not satisfactorily resolve the
violations, EFA may pursue its own enforcement action.
n
-------
I am requesting that any definitive written or oral no
action commitment receive the advance concurrence of my office.
This was a difficult decision to reach in light of the valid
concerns raised in comments on this policy statement; neverthe-
less/ we concluded that Headquarters concurrence is important
because the precedential implications of providing no action
commitments can extend beyond a single Region* We will attempt
to consult with the relevant program office and respond to any
formal request for concurrence within 10 working days from the
date we receive the request. Naturally, emergency situations
can be handled orally on an expedited basis.
All instances in which an EPA official gives a no action
promise must be documented in the appropriate case file. The
documentation must include an explanation of the reasons
justifying the no action assurance.
Finally, this policy against no action assurances does not
preclude EPA from fully discussing internally the prosecutorial
merit of individual cases or from exercising the discretion it
has under applicable law to decide when and how to respond or
not respond to a given violation, based on the Agency's normal
enforcement priorities.
cc: Associate Enforcement Counsels
OECM Office Directors
Program Compliance Office Directors
Regional Enforcement Contacts
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SE.2
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SE.2-1
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3 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
F» ,«^
MEMORANDUM
SUBJECT: Multi-Media Settlements-^ef Enforcement Claims
FROM: James M. Strocfc. _/
Assistant Administrator'
TO: Regional Administrators, Regions I - X
Regional Counsel, Regions I - X.
Associate Enforcement Counsel
Program Compliance Office Directors
.A. PURPOSE
The purpose of this memorandum is to provide guidance which
explains 1) EPA policy strongly disfavoring judicial and
administrative settlements of enforcement cases which include
releases of potential enforcement claims under statutes which are
not named in the complaint and do not serve as the basis for the
Agency bringing the enforcement action, and 2) how approval for
any multi-media settlements of enforcement claims should be
obtained in civil judicial enforcement cases in the Region and at
Headquarters.
B. DISCUSSION
As a general rule, a settlement of a hazardous waste
enforcement action, for example, may include a covenant not to
sue providing the settling party with protection from subsequent
civil enforcement action under some or all provisions of CERCLA
and/or RCRA» 1 Similarly, a Clean Water Act enforcement
settlemea&joay expressly settle EPA claims under some or all
provisio«B»f the Clean Water Act. A settlement which extends to
potentiaSKgWl enforcement claims under any statute(s) outside of
the progfiHemedium under which the case was brought, e.g. . a CWA
release-nira CERCLA case, or a release in a CERCLA case under all
1 The United States generally gives covenants not to sue,
not releases, in the CERCLA context. This guidance, however,
uses the terms "covenant not to sue" and "release"
interchangeably. Use of the word "release" is not intended to
signify any differing effect of the settlement but is merely used
for ease of exposition.
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statutes administered by EPA, should not be given except under
exceptional circumstances, because it is standard EPA policy that
releases, when granted, should be no broader than the causes of
action asserted in the complaint. 2
Although defendants often seek releases broader than the
specific medium at issue in the case, multi-media releases for
single-medium enforcement cases are strongly discouraged and win
be granted only in exceptional cases. A proposal to enter into
such a settlement will undergo close scrutiny at both the
Regional and Headquarters -level. When deciding whether to
entertain a request for a multi-media release, the Region should
consider the following factors:
1) The extent to which EPA is in a position to know whether
it has a cause of action warranting further relief against the
settling party under each of the statutes included in the
release. If, after investigation, it is determined that no cause
of action exists, then it is somewhat more likely that the
release might be considered;
2) Whether the settlement provides adequate consideration
for the broader release. If the relief to be obtained under the
settlement includes appropriate injunctive relief and/or
penalties for any actual or potential violation/cause of action
under the other media statutes, then it is somewhat more likely
that the release might be considered; and
3) Whether the settling party is in bankruptcy. If the
relief obtained through the settlement is all the Agency can
obtain from the settling party, and the settling party will be
ceasing operations, then it is somewhat more likely that the
multi-media release might be considered if the settlement is
otherwise favorable to the Government. This rationale is far
more persuasive in the Chapter 7 or Chapter 11 liquidation
context than in the Chapter 11 reorganization context.
In addition, the only possible statutory releases or
covenants not to sue that EPA will grant are for statutes
administ«nag* by EF*t.- Multi-media settlements should not grant
releasesaaKfcBedVint broad terms such as "all statutes
2 l^nmilti-media causes of action have been asserted
in the United States* complaint, then settlement of and
releases under all statutes involved in the action would not be
unusual, provided that appropriate relief is obtained under each
statute. Such settlements would, however, require the
concurrence of all Regional and Headquarters media offices
involved, as described in Part C below.
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administered by EPA." Rather, all such releases should
specifically name the EPA-statutes included in the release.
Further, releases should not include broad statements reaching
beyond EPA-administered statutes such as "all claims or causes
of action of the United States." A settlement should also not
release any common law claims EPA may have, because it is not
clear what, if any, Federal common law exists in the
environmental area, and thus a release of this kind is of
undefined scope. Similarly, State law claims should not be
released by the Federal government, since it is unclear what, if
any, Federal causes of action derive from State law. Moreover,
as a matter of practice and policy, we should not purport to bind
States when they are not directly involved in our enforcement
cases. •* As .always, releases may be granted only for civil
liability, not for criminal liability. 4
C. PROCEDURES
All settlements involving multi-media resolution of
enforcement claims require the approval of the appropriate EPA
official(s) consistent with Agency delegations of authority. For
civil judicial enforcement cases specifically, all multi-media -
settlements, including all CERCLA settlements resolving claims
under other EPA-administered statutes, require the approval or •'
concurrence of the AA-OECM. 5 In any case in which the Region
wishes to propose to the AA-OECM that EPA enter into such a
settlement, certain procedures must be followed.
3 Ordinarily, State claims are independent of Federal
enforcement authorities and are not compromised by settlement
under the Federal authorities.
-•s.-'" •*. • *.
4 Releases should' also be drafted in accordance with the
policy and practice of each medium involved. In most enforcement
actions, this means that the release is based upon information
known to EPA at the time of the settlement and does not extend to
undefined future violations or site conditions.
5 ?p^;administrative enforcement cases which include multi-
media re-jMMoa, the Regions similarly should obtain the
concurrenefrof' all EPA officials (at Headquarters or in the
Region, as the case may be) consistent with the relevant EPA
delegations covering administrative settlements under each
statute included within the release. (If all authorities
included within the release are delegated to the Regions, then no
Headquarters concurrence is needed.) Of course, some
administrative settlements with multi-media releases will also
require approval by the Department of Justice when a DOJ role is
established by statute.
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First, cross-media consultation among all affected Regional
program offices and Office of Regional Counsel branches must be
undertaken. This consultation should involve joint investigation
as to whether there are any actual or potential causes of action
under any statute under which a release is contemplated. An
appropriate investigation, for example, is likely to include a
check of all relevant files, a determination of whether a field
inspection is warranted, and, if so, an inspection, and an
inquiry to State program and legal counterparts to ensure that
EPA is not unknowingly settling or waiving any potential claims
it may have based upon relevant and available information. In
the event that an appropriate cross-media investigation cannot be
undertaken, a release for any uninvestigated medium cannot be
given.
Second, when the settlement is referred to Headquarters for
approval or concurrence, the Regional Administrator's cover
memorandum to the AA-OECM should highlight the existence of the
multi-media settlement or release. It should also include a
statement by the Regional Administrator (or any other Regional
.official delegated responsibility to approve the settlement on
behalf of the Region) that the Region has evaluated all possible
claims under all EPA-administered statutes included within the
release and, after diligent inquiry, has determined that, to the
best of its knowledge, no claims exist, or, if any claims do
exist, that it is in the best interest of the Agency to settle
the claims in the manner included in the proposed settlement. If
claims do exist, the RA's memorandum should explain why the
settlement is in the best interests of the Agency.
Lastly, the OECM Division for the program area that has the
lead in the settlement must take certain steps to ensure that
the other affected OECM Divisions and their program counterparts
at Headquarters do not object to the multi-media release. The
lead Associate Enforcement Counsel should provide a copy of the
settlement, the RA's cover memorandum, and any other relevant
supporting material from the Region (e. o. . in the case of a
CERCLA settlement, the Ten Point Settlement Analysis) to all
other OECM. Associates who are responsible for any statutes
includeA^^tlie'- release with a request for written concurrence
within $HPĄS« Each Associate should in turn consult with, and,
if partaHSCandard procedure, obtain the concurrence of, his/her
HeadquajSjBfe program counterpart on the settlement. The lead
AssociatS^SSd his/her staff should coordinate all OECM comments
or requests for;a-iditional information from the Region to help
avojLd presenting the Region with conflicting comments or
requests.
After all necessary concurrences have been received, the
lead Associate Enforcement Counsel will transmit the settlement
to the AA-OECM for final action, with a copy of all Headquarters
concurrences attached to the package. Although OECM will strive
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to meet its standard 35-day turnaround time for civil judicial
settlement referrals, because multiple Headquarters offices are
involved, the Regions should expect that multi-media release
settlements may take greater time to be reviewed and approved by
Headquarters than single-medium settlements. To assist OECM in
obtaining concurrences as expeditiously as possible, the Region
should actively consult with the lead OECM Division during
negotiations so that OECM will have advance notice of the cross-
media release issue and will be able to consult with other OECM
Divisions before the settlement is referred to the AA-OECM.
D. DISCLAIMER
This memorandum and any internal office procedures adopted
for its implementation is intended solely as guidance for
employees of the U.S. Environmental Protection Agency. It does
not constitute a rulemaking and may not be relied upon to create
a right or a benefit, substantive or procedural, enforceable at
law or in equity, by any person. The Agency may take action at
variance with this memorandum or its internal implementing
.procedures.
If your staff has any questions on this matter, please ask
them to contact Sandra Connors of OECM-Waste at 382-3110.
cc: Richard B. Stewart, Assistant Attorney General, Land and
Natural Resources Division, U.S. Department of Justice
David T. Buente, Chief, Environmental Enforcement Section,
Land and Natural Resources Division, U.S. Department of
Justice
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SE.2-2
-------
. 2-2.
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON O.C 20460
FEB 25
MEMORANDUM
SUBJECT: Interim Policy on the Inclusion ot Pollution Prevention
and Recycling Provisions in Enforcement Settlements
FROM: Janes M. Stfoc>
Assistant Ada*nisti
TO: Regional Administrators
Assistant Administrators
General Counsel
This memorandum transmits the final interim policy on the
use of pollution prevention and recycling conditions in Agency
consent orders and decrees (see Attachment). It reflects your
extensive comments on the draft version distributed on
September 25, 1990, as well as the subsequent work of the
Pollution Prevention/Settlement Policy Workgroup.
This interim policy is part of the Agency's overall strategy
to make pollution prevention a major component of all Agency
programs. It encourages the use of pollution prevention and
recycling conditions in enforcement settlements, either as
injunctive relief or as "supplemental environmental projects'"
incidental to the correction of the violation itself. When a
pollution prevention condition is considered as a supplemental
project, this interim policy should be used in conjunction with
the recently-issued Policy on the Use of Supplemental Enforcement
Prelects in EPA Settlements (February 12, 1991).
This interim policy is effective immediately and should be
used whenever a pollution prevention condition is being
considered as part of a consent order or decree. Each national
media compliance program may decide whether to develop its own
more specific pollution prevention settlement guidance or
continue to use this general guidance. The Agency plans to
develop final guidance in FY 1993, after gaining further
experience in negotiating pollution prevention settlement
conditions.
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-2-
I am confident that this interim policy win help the Agency
secure the additional protection of human health and the
environment which pollution prevention offers. Any questions you
or your staff may have regarding its' implementation should be
addressed—to Peter Rosenberg, the Workgroup Chairperson (Office
of Enforcement, 382-7550).
Attachment
cc: Deputy Administrator
Associate Deputy Administrator
Deputy Regional Administrators
Regional Counsels
Regional Program Division Directors
Program Compliance Directors
Associate Enforcement Counsels
OE Office Directors
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INTERIM EPA POLICY ON TjiE INCLUSION OF POLLUTION PREVENTION
AND RECYCLING PROVISIONS IN ENFORCEMENT SETTLEMENTS
I. Purjose
This document provides Agency enforcement personnel with a
generic interim policy and guidelines for including pollution
prevention and recycling provisions in administrative or
judicial settlement agreements. It encourages pollution
prevention and recycling both as a means of returning to
compliance and as supplemental environmental projects by offering
several incentives while preserving effective deterrence and
accountability for compliance and environmental results.
II. Background
The Agency defines pollution prevention as the use of
procedures, practices, or processes that reduce or eliminate the
generation of pollutants and wastes at the source. Pollution
prevention encompasses both the concepts of volume reduction and
toxicity reduction. /I Within the manufacturing sector, examples
of pollution prevention include such activities as input
substitution or modification, product reformulation, process
modification, improved housekeeping, and on-site closed-loop
recycling. The Agency's "hierarchy" of environmental protection
practices consists of pollution prevention, followed by
traditional recycling, treatment and control, respectively. /2
The Office of Enforcement's Pollution Prevention Action
Elan (June 30, 1989), states that a strong enforcement program
can promote pollution prevention goals by enhancing the desire of
the regulated community to reduce its potential liabilities and
resulting costs of resolving noncvapliance. An emphasis on
preventing pollution at the source can help reduce or. eliminate
I/ See the forthcoming Pollution Prevention Policy Guidance.
especially pps. 3-6, for a full discussion of the considerations
underlying the Agency's definition of pollution prevention. Both
the Guidance and th« Pollution Prevention Act of 1990
(P.L. 101 - 508) exclude "end of pipe* recycling from the formal
definition of pollution prevention.
2/ Although non-closed loop (i.e., "end-of-pip«") recycling
occupies *&• second tier of the "hierarchy" behind pollution
prevention, it will, because of its environmental benefit, be
included within the scope of this interim policy.' All elements
of this policy will apply to such recycling to the same extent as
use and production substitution activities which constitute the
formal definition of pollution prevention.
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root causes of some violations and thereby increase the prospects
for continuous compliance in the future. /3
In acfdition to this "indirect" incentive for pursuing
pollution prevention, the Action Plan recognized that pollution
prevention could be directly achieved by initiating
enforcement actions against individual noncompliers. The Agency
is constrained from requiring (i.e., imposing unilaterally)
pollution prevention activities in the absence of statutory
regulatory, or permit language. Until the Agency commences an
enforcement action, respondents are generally free to choose how
they will comply with Federal environmental requirements.
However, once a civil or administrative action has been
initiated, the specific means of returning to compliance are
subject to mutual agreement between the Agency and the
respondent. 4/ The settlement process can be used to identify
and implement pollution prevention activities consistent with the
Agency's overall enforcement approach.
The Office of Enforcement chaired a workgroup, which
included representation by the Program Compliance Offices and
Regions III, IV, and vili, to develop an interim policy on the
use of pollution prevention conditions in enforcement
settlements. In addition, OE and the Programs will receive
funding from the Office of Pollution Prevention for technical
support to develop and evaluate pollution prevention proposals in
settlements in FY 1991-2 and to evaluate their utility for
promoting long-term compliance and for permanently reducing the
level of pollutants or toxic discharges into the environment.
III. Statement of Interim Policy
It shall be a policy of the Environmental Protection Agency
to favor pollution prevention and recycling as a means of
achieving and maintaining statutory and regulatory compliance and
of correcting outstanding violations when negotiating enforcement
settlements. While the use of pollution prevention conditions is
not mandatory (for either a program/Region to propose or for a
defendant/respondent to accept), Agency negotiators are strongly
encoraged to try to incorporate pollution prevention conditions
in single end multi-media settlements when feasible. The policy
is applicable.to both civil and criminal enforcement settlements
involving private entities. Federal facilities or municipalities.
3/ Office of•Enforcement Pollution Prevention Action Plan, page 2
V Note that some pollution prevention-related activities, e.g.,
environmental auditing, can be sought.as injunctive relief in
appropriate circumstances. See, Final EPA Policy on the
Inclusion of Environmental Auditing Provisions in Enforcement
Settlements fGM-521
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Among the types of situations which favor the use of
pollution prevention conditions in enforcement settlements are:
a. recur*ing patterns of violations which are unlikely to be
corrected by additional "add on" controls or improved
operations and maintenance, and elimination or substitution
offers the best prospects for the 'permanent return to
compliance;
b. proposed solutions which do not create environmental problems
in other media (i.e., have no negative cross-media impacts);
c. effluent emissions or discharges for which technically
and economically feasible pollution prevention options
have been identified;
•
d~ violations which involve one or more pollutants listed on the
target list of 17 chemicals the Agency will emphasize as
part of the implementation of its Pollution Prevention
Strategy (see appendix A for list of chemicals).
Pollution prevention settlement conditions can either be
specific activities which correct the violation or activities
which will be undertaken in addition to thosa necessary to
correct the violation.
The interim policy should be implemented in concert with the
Agency's new Pollution Prevention Guidance and Pollution
Prevention Strategy, as well as Office of Enforcement policy
documents, including the EPA Policy on the Inclusion of
Environmental Auditing Provisions in Enforcement Settlements (GM-
52); A Framework for Statute-Specific Approaches to Penalty
Assessments; Implementing EPA/a Policy on Civil Penalties (GM—
22,), and the newly issued Supplemental Environmental Projects
Policy (February 12, 1991), which amends the "alternative
payments" section of GM-22; the Office of Enforcement's Pollution
Prevention Action Plan (6/30/89); and the Manual on, Monitoring
and Enforcing Administrative and Judicial -Order^ (2/14/90). /5
A. Pollution Prevention as a Means of Correcting the Violation
By dilfin.ition, a use/source reduction or recycling activity
which '"•pgnrn?' 'tnc original" violation will be media and facility
specificv^MftieTi conducting settlement negotiations, the Agency
shall consider whether it is appropriate (e.g., technically and
economically feasible) to correct the violations) through
implementation of source reduction or recycling activities.
5/ These documents are available through the Office of
Enforcement General Enforcement General Policy Compendium
and/or the Enforcement Docket Retrieval System (EDRS).
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Examples include compliance With permit requirements by switchi-g
from a high to a lower toxic solvent which reduces excessive
emissions or discharges or by recycling effluent. /6
Pollution prevention conditions may be proposed by either
the Agency or the respondent. Inclusion of any condition rests
upon the outcome of mutual negotiations between the two sides.
B. Pollution Prevention Conditions "Incidental" to thft
Correction of the Violation
During negotiations to resolve the violation, the Agency
also may consider as settlement conditions supplemental pollution
prevention projects in addition to the specific actions or
injunctive relief needed to correct the violation. Potential
examples include phasing out a pollutant within a specific period
of time or a commitment by a facility to change production
technology at more than one facility.
Pollution prevention settlement conditions which do not
by themselves correct the violation will usually be negotiated
as "supplemental environmental projects" and, as such, are
subject to the criteria described in the recently-issued policy
on the use of supplemental projects which amends part of the
Aqenevwide Framework for Civil Penalties (GM-22) /7. The
decision to consider, accept, or reject such projects rests
exclusively with the Agency.
IV. Specific Elements of the Interim Pollution Prevention Policy
A. Timelines for Implementing Pollution Prevention Conditions
EPA's enforcement policy calls for the "expeditious"
return of the violator to compliance. /8 As a general rule,
6/ A firm could theoretically return to compliance by reducing
the scope of operations, i.e., by producing less and, therefore,
reducing its discharge or emissions. Although this may return
a facility to compliance, it—is not "pollution prevention" within
the Agency's definition nor the scope of this interim policy.
• Jjf
7/ Th« fcaMLrJ»gupplenental environmental prolect* replaces the
tern "alternative payments* used in GM-22. Th« Agency has
recently issued a new policy on the us* of th«s* projects,
Guidelines for Evaluating Supplemental Environngntal Proieets.
which replaces the section on "alternative payments* on pps. 23-
27 of GM-22. It provides detailed guidance on the "scope" of
eligible supplemental projects, including, ones which are related
to pollution prevention. Also see section IV B2. below.
8/ Civil Penalty Policy Framework (GM-22), page 13
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there shall be no significant ("significant" to be defined by
each program) extension of the "normal" tine period for returning
to compliance. Under no circumstances will a respondent be
granted additional tine to correct the violation in exchange for
his conduct of a supplemental environmental project, (see IV B 2,
below). For example, a facility which exceeds its effluent limit
would have to return to compliance within the "normal" time
period the NPDES program estimates for facilities of that size
and type. This time period would not be extended if, as part of
the overall settlement, the respondent also agreed to establish a
sludge recycling system.
If a pollution prevention activity is presented as the means
of correcting the violation, however, the Agency settlement team
has some additional flexibility in negotiating an implementation
schedule, given that pollution prevention alternatives sometimes
add an element of complexity to a facility-specific compliance
strategy, especially if it involves new or innovative technology.
The length of time which is deemed to be "expeditious" is
ultimately a "best judgment" decision on the part of the EPA
negotiators. It should be based upon their assessment of the
ecological and public health-related risks and benefits involved
in providing the additional time to return to compliance.
While Federal negotiators should consider the following
factors in deciding whether to use innovative pollution
prevention technology as injunctive relief at any time, they
become even more relevant when deciding whether to extend the
"normal" timeline for resolving a violation. If a decision is
made to extend the timeline, the Federal negotiators should also
establish interim milestones and controls to assure the adequate
protection of public health and the environment while the
pollution prevention relief is being implemented, (cf. Section C,
below):
1. Seriousness of the Violation
Both the aggregate amount and toxicity of excess emissions
or discharges affect the decision whether to extend the
compliance timeline. Some violations (e.g., those which meet
"imminent1*and substantial" endangeraent definitions) must be
correoted'-frrf quickly aa possible, even when that involves
foregoing a pollution prevention approach in favor of traditional
treatment technology. Even when the violation has a much less
potentially adverse impact. Federal negotiators should
consider whether the risk allows a longer tiaeframe .
2. Aggregate Gain in "Extra* Pollution Prevention
Schedules should be extended only where there is an
important net permanent reduction in the overall amount or
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toxicity of the pollution as. a result of a pollution prevention
project which requires a longer timeline to implement than would
"end-of-pipe" controls. (Note: This consideration is appropriate
only when a longer compliance timeline is at issue since', "all
other things being equal," the Agency would prefer a pollution
prevention approach to traditional treatment and/or disposal.)
3. Reliability/Availability of the
The pollution prevention technology being used to implement
the injunctive relief should (ideally) have been successfully
applied or tested at other facilities. While not intended to
discourage the use of innovative prevention or reduction
technologies, the more "experimental" or "untried" the
technology, the more rigorous Federal negotiators should be about
extending the "normal" compliance timeline. The technology
should also avoid the cross-transfer of pollutants.
4 . Applicability ot the Technology
The Federal negotiators should be more willing to extend the
compliance timeline if the pollution prevention technology is
applicable to other facilities, so that, if successful, the
lessons learned can be disseminated industry-vide.
5. Compliance-related Considerations
. The pollution prevention approach offers the best prospects
for a permanent return to compliance.
B. Penalty Assessments
1 . General Considerations
Under EPA's general framework for assessing civil penalties
(GM-22) and its program-specific applications, most: formal
enforcement actions are concluded with a penalty. The two
elements of the penalty calculation are the gravity of the*
violation and the economic benefit of nonconpliancet The former
can be adjusted upward or downward depending several factors.
The latter sets the.penalty~*f"loor." /9
The. wAJVJnqnega of a respondent to correct the violation
via a DO 1 lift ion prevention project can be one of the assessment
factors u««d to ad^^Mt the "gravity" component of the Penalty.
The defendant/respondent's willingness to comply with permit
requirements through pollution prevention activities can be
seen as a "unique factor" (e.g., public policy
9/ See OE's Guidance on Calculating the Economic Benefit of
Noncoopliance for a Civil Penalty Assessment, (GM-33)
10/ GM-22 pps. 3-4 :'
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considerations) which may warrant an adjustment of the'gravity-
based penalty factor consistent with program-specific penalty
policies-
Calculation of the economic benefit of noncompliance may
have particular consequences for the inclusion of pollution
prevention conditions in settlements. For example, two of the
variables used by the BEN Model to calculate the penalty are
the time expected to elapse from the date of che violation until
the date of compliance (i.e., the estimated future date at which
the facility would be expected to return to full compliance)
and the expected cost of returning to compliance, /ll. This
calculation could create a disincentive for a respondent to
correct the violation with pollution prevention technology
(i.e., the longer the facility is expected to be out of
compliance and the higher the cost of returning to compliance,
the larger the economic benefit of noncompliance and, ultimately,
the larger the penalty).
In order to eliminate this possible disincentive, the
penalty amount should be calculated using the costs and
timeframes associated with both the pollution prevention approach
and the conventional way of correcting the violation. The final
penalty will be the smaller of the two calculations, so long as
the Federal negotiators have decided to allow the "longer"
timeframe for returning to compliance. However, the settlement
agreement should also provide for stipulated penalties in the
event the violation is Qfii corrected or exceeds its compliance
schedule.
»
Several other criteria currently contained in GM-22 will
continue to apply to pollution prevention projects. For example,
a minimum cash penalty shall always be collected (subject to
program-specific guidance), regardless of the value of the
project, and it generally should not be less than the economic
benefit of noncompllance.
2. Supplemental Environmental prpje}c,ti3
When settling an enforcement action, the Agency also may
seek additional relief in the form of activities which remediate
the advo^eV health or environmental consequences of the original
violationEE? The size of the final assessed penalty may reflect
the commitment of the defendant/respondent to undertake these
"supplemental environmental projects".
As noted previously, the Agency's recently issued Policy on
the Use of Supplemental Environmental Projects, which amends and
supersedes GM-22's discussion on "alternative payments,"
identifies pollution prevention projects as one of five general
ll/ GM-22, pps. 6-10
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categories of projects eligible for consideration. /12. In
order to be part of the consent order or decree, a proposed
supplemental pollution prevention project must meet all of the
criteria discussed in the policy, including those which relate to
the "scope" of the projects, the amount of penalty reduction, and
oversight requirements.
One important criterion involves the "nexus" between the
violation and the supplemental project. Nexus," which is defined
as "an appropriate...relationship between the nature of the
violation and the environmental benefits to be derived from the
type of supplemental environmental project," helps assure that
the supplemental project furthers the Agency's statutory mandate
to clean up the environment and deter violations of the law. 713
The policy also states that, while studies are generally not
eligible mitigation projects, this prohibition will be modified
slightly only for pollution prevention studies. 14/ The policy
specifically exempt pollution prevention projects from the "sound
business practices" limitation which are in effect for the four
other categories of supplemental environmental projects./IS
Federal negotiators who are considering the adoption of
supplemental pollution prevention projects should refer
specifically to the Policy on the Use of Supplemental
Environmental Prelects to make sure that the proposed pollution
prevention project meets all applicable criteria.
C. Tracking And Assessing Compliance With the Terms of the
Settlement
<
The Agency places a premium on compliance with the terms of
its settlements and several documents exist which outline
procedures for enforcing final orders and decrees, which may
range from modification of the order to stipulated penalties and
12/ The five categories cover pollution prevention, pollution
reduction, environmental restoration, environmental auditing, and
public awareness.
13/ Policy^ a- 1. The extended discussion of "nexus* and example
of supplemental projects which meet the "nexus* requirement are
on pps. 3 -HI.
14/ Policy..p. 9
15/ ŁoJLiŁY,.pps. 8-9
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motions to enforce the order- and contempt of Court.
A more difficult situation arises when the respondent —
despite"his best "good faith efforts" — fails to successfully
implement a pollution prevention activity which is required to
correct the violation (e.g., is the injunctive relief).
Ultimately, the respondent must be responsible for full
compliance. If the pollution prevention approach does not work.
he will be required to return to compliance through traditional
means.
. In order to make sure that the violation is corrected (as
well as minimize any additional liabilities which nay accrue to
the defendant/respondent) the consent order or deerea will state
that any pollution prevention project which ig used to
achieve compliance with a legal standard nuafc hav« a "fall-back"
schedule requiring the use of an proven technology aqrreed to by
all parties to the settlement and which vill be implemented, if
necessary, by a tine certain. The settlement agreement also
should establish a systematic series of short term milestones so
that preliminary "warning signs* can be triggered promptly and
issues raised. If the Agency decides that the "innovative"
pollution prevention approach will not succeed, the "traditional"
remedy must be implemented according to the set schedule. Under
these circumstances, as long as the "fall-back* ttraditionall
remedy is implemented on schedule, the defendant/respondent vill
only have to pay an additional penalty equal to the economic
benefit of the further delay in compliance, offset by the actual
expenditures incurred as a result of the unsuccessful effort to
comply through pollution prevention. If the actual expenditures
on pollution prevention equal or exceed the incremental economic
benefit of noncompliance using conventional controls, there would
be no additional penalty.
D. Deleyations and Level of Concurrence
Settlement conditions which involve more than one program
or Region (e.g., a multi-media or multi-facility case) usually
require additional oversight, and the estimated amount of time
and resources required for_effective oversight is one criteria
which the Agency vill use'to determine whether to include the
project in. the settlement agreement. The respondent should
shoulder 410 much of the direct, costs as feasible, (e.g., pay for
16/ The respondent's failure to carry out a pollution prevention
activity which is a supplemental project shall be dealt with
through procedures outlined in CM-22 and the Supplemental
Environmental Projects Policy (e.g., reimposition of the full
civil penalty and/or the assessment of stipulated penalties
contained in the settlement once the Government determines that
the conditions have not been fulfilled).
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10
an independent auditor to monitor the status of the project and
submit periodic reports, including a final one which evaluates
the success or failure of the project).
Each Region should develop its own coordination procedures
for negotiating and overseeing a nulti-media pollution prevention
condition which affects only that Region (i.e., applies only to
the specific facility or other facilities within the Region).
The extent of coordination/concurrence required for a
pollution prevention settlement which involves more than one
Region will vary according to the nature and complexity of the
proposal. The negotiation team should at a minimum notify and
coordinate with other affected Regions about pollution prevention
conditions which would have an impact on facilities in those
Regions (e.g. an agreement for the respondent to conduct*
environmental audits; or an agreement for solvent substitution at
other facilities not in violation).
»
However, the negotiation team would have to receive
the concurrence of all affected Regions if the proposed pollution
prevention condition involved significant oversight resources or
activities (e.g., if it required major construction or process
changes). For this type of situation, the settlement team must
notify all affected Regions that it is considering the inclusion
of such conditions as part of a proposed settlement prior to the
completion of the negotiations. These Regions will then have the
opportunity to comment on the substance and recommend changes to
the scope of the proposal. Each entity will have to concur with
the pollution prevention condition and agree to provide the
necessary oversight in order for it to be included in the
settlement agreement. The Programs and Regions must also agree .
on their respective tracking and oversight responsibilities
before lodging the consent order or decree.
The Headquarters compliance programs and the Office of
Enforcement will be available to help Regions coordinate this
concurrence process, and to help the parties reach a consensus on
oversight roles and responsibilities, where necessary.
Concurrence by the Headquarters program office and the Office of
Enforcement will be mandatory only where it is already required
by existing delegations or for supplemental projects as described
V. Organisational' Issues
A. Copies of Settlements.
The Regio&s IshoulJd send copies
of settlements with pollution
; *ftlV 4%W^AWM9 ^»t*W%**** «V*M* *»Wf^**V9 ^** *»^» wT«^^«^««» — — —— ^^ —
prevention conditions to "the" respective national compliance
officer (consent 'order) or Associate Enforcement Counsel (consent
decree) for insertion to the Enforcement Docfcet Retrieval System
-------
11
(EDRS). In addition, the Region should enter a brief descriptive
summary of the settlement (1-2 pages) into the Pollution
Prevention Information Clearinghouse (PPIC, 1-800-424-9346)
enforcement settlement file which is being established. This will
enable all the Programs and Regions to have "real time"
information about pollution prevention settlements which have
been executed, and will enable the Office of Enforcement and the
programs to conduct an overall assessment of the impact of
pollution prevention conditions in Agency settlements as part of
the process of developing a final settlement policy in FY 1993.
B. Media-Specific Policies
The media programs and Regions have begun to implement their
own pollution prevention strategies. Since they are still
gaining experience in identifying and applying source reduction
technologies to enforcement situations, and developing the
technology and resources to track and evaluate these conditions,
this interim policy adopts a phased approach that encourages,
but does not require, them to try to incorporate pollution
prevention conditions on a case-by-case basis where they enhance
the prospects for long-term compliance and pollution reduction.
Each national program manager may decide whether to develop
its own specific pollution prevention guidance (consistent with
this interim guidance) or continue to use the general interim
guidance. Program-specific guidance should discuss when to
include pollution prevention conditions in settlements, and
describe the categories of violations for which pollution
prevention "fixes" are most encouraged and the specific types of
source reduction or recycling activities considered appropriate
for that program. The National Program Manager may also adopt
additional reporting or concurrence requirements beyond those
described in this interim policy. The Programs can develop
specific policies on their own schedule, utilizing this general
interim policy until they do so.
-------
INDUSTRIAL TOXICS PROJECT
17 TARGET CHEMICALS
1988 tRI Reporting Year
(in Pounds)
Chemical MMM •
BENZENE
CADMIUM * COMPOUNDS
CARBON TinUCMLOMOC
CHLOROFORM
CHROMIUM * COMPOUNDS
CYANIDE ft COMPOUNDS
OCHLOROMCTHANC
lŁAO * COMPOUNDS
MERCURY * COMPOUNDS
METHYL ETHYL KETONE
METHYL MOBUTVL KETONE
NICKEL 4 COMPOUNDS
IZnUCHLOROeTMYLEME
IOUIENE
I.I.I.TRICHLOROCTHANE
TRICHUMIOETHVLENE
XYLENES
UAPKKyctoT"
V visas
:'. JHM96M)
iijSMxno*
4.IS9C'2
747.000*
523.600*
asijoss *•'•*.
4I#.600°
504.100*
2.2 16.000 e>''2
1.026 C"'5
462.000*
205.300*
e 1 2
100.000 "
497.700 *
6.300.000 *
723.700 *
200.000 b
6.572.000 M
Import*
1966
(taOMfte)
956.800 b
5.512 e'2
IM.OOO *
27.000 b
912.700 C*U
26.600 *4
25.000*
374.600 "2
760 C-1'2
20.000 "
20.000 "
C 12
320.000 ' '
1 19.000 b
866.600 b
22.000 b
13.000 "
225.000 b>/
ttuatti
•1
FacNM*
453
166
64
166
1.662
355
1.525
1.277
43
2.264
933
1.253
660
3.606
3.516
666
3.167
R«toa»
loAk
26.117.9!
119.4
3.663.12
22.974. IJ
1. 181.41
1.961.21
126.796.21
2.567.70
25.62
127.675.7;
30.523.69
539.66
32.277.37,
73.752.712
70.420.901
49.071.464
55.866.584
•. Synttetc Organic ChamicaJs. USHC. 1969. Pubkcaton 02219
b. Monrovia* Chemical Product Synopsis. Manruvrito Chemical Products C
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1
Supplemental Environmental
A. Introduction
In settlement of environmental enforcement cases, the United
States will insist upon terms which require defendants to achieve
and maintain compliance with Federal environmental laws and
regulations. In certain instances, additional relief in the form
of projects remediating the adverse public health or environment-
al consequences of the violations at issue may be included in the
settlement to offset the effects of the particular violation
which prompted the suit. As part of the settlement, the size of
the final assessed penalty may reflect the commitment of the
defendant/respondent to undertake environmentally beneficial
expenditures ("Supplemental Environmental Projects").
Even when such conditions serve as a basis for considering a
Supplemental Environmental Project, the Agency's penalty policies
will still require the assessment of a substantial monetary
penalty according to criteria described in A Framework for
Statute-Specific Approaches to Penalty Assessments: Implementing
EPA'S Policy on civil Penalties (GM-22), generally at a level
which captures the defendant/respondent's economic benefit of
noncompliance plus some appreciable portion of the gravity
component of the penalty. Each administrative settlement in
which a "horizontal" Supplement -onmental Project or
substitute performance is propose- •. t« below) must be approved
by the Assistant Administrator for Enforcement, and, where
required by the Agency's delegations policy, the media Assistant
Administrator. Judicial settlements, including any of the
projects described herein, will continue to require the approval
of the Assistant Administrator for Enforcement and also be
approved by the Assistant Attorney General for the Environment
and Natural Resources Division.
EPA will expand its approach to Supplemental Environmental
Projects while also maintaining a nexus (relationship) between
the original violation and the supplemental project. EPA may
approve a supplemental project so long as that project furthers
the Agency's statutory mandates to clean up the environment and
deter violations of the lav.1 Accordingly, supplemental projects
1 A supplemental project cannot be used to resolve
violations at a facility other than the facility or facilities
which are the subject of the enforcement action. This would run
counter to deterrence objectives, since it would effectively give
a company a penalty "break" for violations at one facility for
undertaking what amounts to legally required, compliance efforts
at another facility. Such a scenario would operate to reward
recalcitrance, poor-management practices, and non-compliance.
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may be considered if: (1) violations are corrected through
actions to ensure future compliance; (2) deterrence objectives
are served by payment of a substantial monetary penalty as
discussed above; and (3) there is an appropriate "nexus" or
relationship between the nature of the violation and the
environmental benefits to be derived from the supplemental
project.
All supplemental projects must improve the injured
environment or reduce the total risk burden posed to public
health or the environment by the identified violations. The five
categories of permissible supplemental activities are pollution
prevention, pollution reduction, environmental restoration,
environmental auditing projects, and public awareness projects
which are directly related to addressing compliance problems
within the industry within which the violation took place. EPA
negotiators should make it clear to a defendant/respondent
interested in proposing a supplemental project that the Agency is
looking only for these types of projects (cf. section F, below).
t
Under no. circumstances will a defendant/respondent be given
additional time to correct the violation and return to compliance
in exchange for the conduct of a supplemental project.
B. Categories of Supplemental Environmental Projects
Five categories of projects will be considered as potential
Supplemental Environmental Projec- -~t to meeting the
additional criteria described in . _..g sections.
1. Pollution Prevention Projects
Consistent with the Agency.'s. forthcoming Pollution
Prevention Policy Statement and Pollution Prevention Strategy, a
pollution prevention project substantially reduces or prevents
the generation or creation of pollutants through use reduction
(i.e., by changing industrial processes, or by substituting
different fuels or materials) or through application of closed-
loop processes. A project_.w.hich substantially reduces the
discharge of generated pollutants through innovative recycling
technologies may be considered a pollution prevention project if
the pollutants are kept out of the environment in perpetuity.
2. Pollution Reduction Projects
A pollution reduction project is defined as a project which
goes substantially beyond compliance with discharge limitations
to further reduce the amount of pollution that would otherwise be
discharged into the environment. Examples include a project that
reduces the discharge of pollutants through more effective end-
of-pipe or stack removal technologies; through improved operation
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and maintenance; or recycling of residuals at the end of the
pipe.1
Sometimes an acceptable pollution reduction project may
encompass an "accelerated compliance project". For instance,
assuming there is a statutory or regulatory schedule for
pollution phaseout or reduction (or is likely to be proposed in
the foreseeable future, e.g., an upcoming rulemaking), if a
defendant/respondent proposes to complete a phaseout or reduction
at least 24 months ahead of time, and such proposal for
accelerated compliance can be demonstrated to result in
significant pollution reduction (i.e., one can objectively
quantify a substantial amount of pollution reduction due to the
accelerated compliance) then such a proposal may proceed to be
evaluated according to the rest ••' -he appropriateness qriteria
below. In addition, if the de .ant/respondent substitutes
another substance for the one ~eing phased out, he has the burden
to demonstrate that the substance is non-polluting, otherwise no
supplemental environmental project will be allowed and, indeed,
additional liability may accrue.
3. Projects Remediating Adverse Public Health or
Environmental Consequences (Environmental Restoration
Projects)
An environmental restoration project is defined as a project
that not only repairs the damage done to the environment because
of the violation, but which goes beyond repair to enhance the
environment in the vicinity of the violating facility.
4. Environmental Auditing Projects
Environmental Auditing that represents general good business
practices are not acceptable supplemental projects under this
policy (cf. Section E).' However, such a project may be
considered by the Agency if the defendant/respondent undertakes
additional auditing practices, designed to seek corrections to
' where the obligation to reduce the pollution is already
effective, or is subject to an "as soon as practicable"
or comparable standard, a proposal to further reduce
pollution would not fulfill the definition of a pollution
reduction project, and would not be appropriate.
' It should be noted that the Agency has the authority to
require an environmental audit as an element of injunctive
relief when it deems it appropriate given ,the fact pattern
surrounding the violation subject to the usual limits on"the
scope of injunctive relief.
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existing management and/or environmental practices whose
deficiencies appear to be contributing to recurring or potential
violations. These other potential violations may encompass not
only the-violating facility, but other facilities owned and
operated by the defendant/respondent, in order to identify, and
correct as necessary, management or environmental practices that
could lead to recurring or future violations of the type which
are the basis for the enforcement action.'
Audit projects which fall within the scope of this policy
can be justified as furthering the Agency's legitimate goal of
encouraging compliance with and avoiding, as well as detecting,
violation of federal environmental laws and regulations. Such
audits will not, however, be approved as a supplemental project
in order to deal with similar, obvious violations at other
facilities.
5 m Enforcement~Related Environmental Puhllc Awareness
Projects
These projects are defined as publications, broadcastsr
or seminars which underscore for the regulated community the
importance of complying with environmental laws or disseminate
technical information about the means of complying with
environmental laws. Permissible public awareness projects may-
included sponsoring industry-wide seminars directly related to
correcting widespread or prevalent violations within an industry,
e.g., a media campaign funded by the violator to discourage fuel
switching and tampering with automobile pollution control equip-
ment or one which calls for the defendant/respondent to organize
a conference or sponsor a series of public service announcements
describing how violations were corrected at a facility through
the use of innovative technology and how similar facilities could
also implement these production changes.
Public Awareness Projects directly serve Agency deterrence
objectives and contribute indirectly to Agency enforcement
efforts. Though they are not subject to the nexus requirement
applicable to other supplemental environmental projects, they
must be related to the type-of violations which are/were the
subject of the underlying lawsuit. Defendants/respondents who
fund or implement a public awareness project must also agree to
publicly state in a prominent manner that the project was
undertaken as part of the settlement of a lawsuit brought by the
Agency or a State. These projects will be closely scrutinized to
ensure that they fulfill the legitimate objectives of this policy
in all respects.
* Of course, this requirement is subject to the
qualifications of footnote 1.
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6. Projects Not Allowed as Supplemental Projects
Several types of projects, which have been proposed in the
past, would no longer be approveable Supplemental Environmental
Projects. Examples of projects that would not be eligible
include:
1. general educational or environmental awareness-
raising projects (e.g., sponsoring public seminars
about, or inviting local schools to tour, the
environmental controls at a facility; promoting
recycling in a community); , • *•
2. contribution to research at a college or
university concerning the environmental area of
noncompliance or concerning any other area of
environmental study;
3. a project unrelated to the enforcement action, but
otherwise beneficial to the community e.g.,
contribute to local charity).
C. "Nexus" (Relationship) of Supplemental Environmental Project
to the Violation
The categories of Supplemental Environmental Projects
described above (except for Public Awareness Projects) may be
considered if there is an appropriate "nexus" or relationship
between the nature of the violation and the environmental
benefits to be derived from the type of supplemental project.
For example, the "nexus" between the violation and an
environmental restoration project exists when it remediates
injury caused by the same pollutant at the same facility giving
rise to the violation. Such projects must further the Agency's
mission as defined by appropriate statutory mandates, including
the purpose sections of the various statutes under which EPA
operates. The Agency will evaluate whether the required "nexus"
between the pollutant discharge violation and the project exists.
1. Requirements for Remediation Projects
Examples of circumstances presenting an appropriate nexus
include:
a. A project requiring the purchase of wetlands which then
act to purge pollutants unlawfully discharged in
receiving waters. In this example, EPA will evaluate
whether the required "nexus" between the pollutant
discharge violations and the wetlands to be purchased
can be established. EPA will evaluate the nexus
between the project and the violation in terms of both
-------
geography and the pollution treatment benefits of the
wetlands.
b. A project which calls for the acquisition and
— preservation of wetlands in the immediate vicinity of
wetlands injured by unlawful discharges, in order to
replace the environmental services lost by reason of
such injury.
c. A "restoration" project, such as a stream sediment
characterization or remediation program to determine
the extent and nature of pollution caused by the
violation and to formulate and implement a plan for
remediating sediment near the facility. Such a stream
sediment characterizati:- • restoration project, if
obtainable as injuncti _ief pursuant to the
statutory provisions ox cne Clean Hater Act in the
particular case, would not be approveable as a
supplemental project.
2. Nexus for Pollution Prevention/Pollution Reduction/
Environmental Restoration/Environmental Auditing
Pro jects
The "nexus" for pollution prevention, pollution reduction,
environmental restoration and environmental auditing projects may
either be vertical or horizontal, as described below.
a. Vertical "Nexus*
A "vertical" nexus exists when the supplemental project
operates to reduce pollutant loadings to a given environmental
medium to offset earlier excess loadings of the same pollutant in
the same medium which were created Jay-the violation in question.
Even if the violations are corrected by reducing pollutant
loadings to the levels required by law, further reductions may be
warranted in order, to alleviate the risk to the environment or
public health caused by past excess loadings. Typically, such
projects follow a violation back into th* manufacturing process
to address the root cause of_the pollution. Such reductions may
be obtained from the source responsible for the violation or, in
appropriate cases, may be obtained fro» another source, either
upstream, up gradient or upwind of the responsible source.
For example, if pollutants were discharged in violation of
the Clean Water Act from a facility at a certain point along a
river, an acceptable pollution reduction project would be to
reduce discharges of that same pollutant at an upstream facility
on the same river. Another classic example of a "vertical"
pollution prevention activity is the alteration of a production
process at a facility which handles a portion of the
manufacturing process antecedent to that which caused the
-------
violation of the regulatory requirement in a way that yields
reductions or total elimination of the residual pollutant
discharges to the environmental media assaulted by the violation.
Both of -these examples present the necessary nexus between the
violation and the supplemental project.
b. Horizontal "Nexus"
A "horizontal" nexus exists when the supplemental project
involves either (a) relief for different media at a given
facility or b) relief for the same medium at different
facilities. The nexus between supplemental projects in this
category and the violation must be carefully scrutinized. The
nexus will be met only if the supplemental project would reduce
the overall public health or environmental risk posed by'the
facility responsible for the violation or enhances the prospects
ror reducing or eliminating the likelihood of future violations
substantially similar to those which are the basis for the
enforcement action. Approval of such projects is appropriate
only where the terns of the settlement insure that the
defendant/respondent will be subject to required injunctive
relief prescribed by the compliance and deterrence policies
stated in the various Acts and their implementing regulations.
In those circumstances, the Agency believes the required nexus to
the statutory goals has been met.
Following are examples of a. j projects demonstrating
a "horizontal" nexus to the violation:
1. Violations of the Resource Conservation and Recovery Act
(RCRA) or the Clean Water Act may have exposed the
neighboring community to increased health risks because of
drinking water contamination. In addition to correcting
these violations, it may be appropriate to reduce toxic air
emissions from the same facility in order to compensate for
the excess health risk to the community which resulted from
the RCRA or CWA violations.
2. A supplemental project-is proposed which reduces pollutant
discharges at a defendant/respondent's other facilities
within the same air quality basin or water shed as at the
facility which violated legal requirements applicable to
releases of the same pollutant. In this case, the overall
supplemental project would be designed to reduce the overall
health or environmental risk posed by related operations to
the environment or to the health of residents in the same
geographic vicinity by reducing pollutant discharges to the
air basin or watershed and to compensate for past excess
discharges.
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3. A supplemental project i"s proposed which reduces pollutant
discharges at a defendant/respondent's other (non-
violating) facility(ies). Such a project would be
apprpveable where the violating and non-violating facilities
are engaged in the same production activities and use the
same production processes, where appreciable risks of
violations and legal requirements applicable to releases
of that same pollutant substantially similar to those at
the violating facility are posed by the non-violating
facility(ies), and where the defendant/respondent can
establish that significant economies of scale would be
achieved by incorporating pollution prevention process
changes at both the violating and non-violating facilities.
Alternatively, the settlement could call for the defendant/
respondent to substitute input chemicals across all such
facilities (e.g., replace higher toxic solvents with* lower
toxic solvents at all paint manufacturing plants) or to
reduce the emissions loadings of particular emissions at all
such facilities as part of a NESHAPS settlement.. Such
projects would, therefore, reduce the overall health or
environmental risk posed by such operations to the
environment or to the health of residents in the same
geographic vicinity.
4. In settlement of a Toxic Substances Control Act (TSCA)
PMN (premanufacture notification) violation for
manufacturing a polymer without providing formal advance
notice at a facility, the defendant/respondent could
establish a closed loop recycling system to reduce the
amount of that facility's product manufacturing waste which
must be sent to a RCRA Subtitle C landfill. Operating the
facility in violation of T?"% created a rrsk of unwarranted
health or environmental i.-._ . If TSCA penalty and
injunction requirements have oeen met, then the supplemental
project could be justified on the grounds that it would
compensate for this unwarranted risk by reducing the overall
health or environmental risk presented by the facility.
After the project category and "nexus" criteria have been
met, a potential supplemental project must also meet the
criteria described in the following sections, below. Most of
the conditions below applied in the past, but some are new.
All of these conditions must be met before a supplemental
project may be accepted.
D. Status of the Enforcement Action/Compliance History of
Defendant/Respondent
Any defendant/respondent against whom the Agency has-taken
an enforcement action may propose to undertake a supplemental
project at any time prior to resolution of the action, although
-------
the Agency should consider both the status of the litigation/
administrative action and the resources that have been committed
to it beTore deciding whether to accept it. In addition, the
respondent's enforcement .history and capability to successfully
complete the project must be examined during evaluation of a
supplemental project proposal.
The Agency negotiators must also consider whether the
defendant/respondent has the technical and economic resources
needed to successfully implement the supplemental project. In
addition, a respondent who is a repeat offender may be a less
appropriate respondent from which to receive and evaluate a
supplemental project proposal than a.first time violator.
•
E* Main Beneficiary of a Supplemental Environmental Project
The Federal Government's sole interest in considering
supplemental projects is to ameliorate the adverse public health
and/or environmental impacts of violations. Projects are not
intended to reward the defendant/respondent for undertaking
activities which are obviously in his economic self-interest
(e.g., update or modernize a plant to become more competitive).
Therefore, as a general rule, these projects will usually not be
approved when they represent a "sound business practice" , i.e.,
capital expenditures or management improvements for which the
Federal negotiators may reasonably conclude that the regulated
entity, rather than the public, is likely to receive the substan-
tial share of the benefits which accrue from it.
The only exception to the prohibition against acceptance of
a supplemental project which represents a "sound business
practice" is for a pollution prevention,project. Although a
pollution prevention project can be viewed as a "sound business
practice" since (by definition) it is designed both to make
production more efficient and reduce the likelihood of
noncompliance, it also has the advantage of potentially providing
significant long-term environmental and health benefits to the
public. Therefore, the "sound business practice" limitation will
be waived only, for pollution prevention projects if the Federal .
negotiators decide, after due consideration and upon a clear
demonstration by the defendant/respondent as to what the public
health and/or environmental benefits would be, that those
benefits are so substantial that the public interest would be
best served by providing additional incentives to undertake the
project.
F. Extent to Which the Final Assessed Penalty can Reflect a
Supplemental Environmental Project
Although supplemental projects may directly fulfill EPA's
-------
10
goal of protecting and restoring the environment, there is an
important countervailing enforcement goal that penalties
should have the strongest possible deterrent effect upon the
regulated, community. Moreover, the Agency's penalty policies
require the assessment of a substantial monetary penalty
according to criteria described in "Implementing EPA's Policy on
Civil Penalties" (GM-22), generally at a level which captures the
defendant/respondent's economic benefit* of noncompliance plus
some appreciable portion of the gravity component of the
penalty.*
In addition, EPA must not lower the amount it decides to
accept in penalties by more than the after-tax amount the
violator spends on the project. EPA should calculate the net
present after tax value of the supplemental project at the time
that the assessed penalty is being calculated. If a supplemental
project is approved, a portion of the gravity component of the
penalty may be mitigated by an amount up to the net present
after-tax cost of the supplemental project, depending on the
level of environmental benefits to the public.
G. Supplemental Environmental Projects for Studies
Supplemental Environmental Projects for studies will not be
allowed without an accompanying commitment to implement the
results. First, little or no environmental benefit may result in
the absence of implementation. Second, it is also quite possible
that this type of project is one which the violator could
reasonably be expected to do as a 'sound business practice".
Pollution prevention, pollution reduction and environmental
restoration studies, as well as environmental audits, are defined
narrowly for purposes of meeting Supplemental Environmental
Project policy guidelines. They will only, be eligible as
supplemental projects if they are a part of an Agency-approved
set of actions to reduce, prevent, or ameliorate the effects of
pollution at the respondent's facility (e.g., a comprehensive
* Where a violation is found which did not confer a
significant economic benefit, e.g. a failure to notify, the
settlement must still include payment of a penalty which at least
captures a portion of the proposed gravity component.
* If a defendant/respondent can establish through use of
documents and affidavits sworn under penalty of perjury that it
cannot afford to pay the civil penalty derived from use of the
appropriate civil penalty policy, the Agency will consider
entering into an "ability to pay settlement" for less than the
economic benefit of non-compliance.
-------
11
waste minimization or emissions reduction program). The amount
attributable to a supplemental project may include the costs of
necessary studies. Nonetheless, a respondent's offer to conduct
a study, without an accompanying commitment to implement the
results, will not be eligible for penalty reduction. In
considering the applicability of a proposed study, the Agency
negotiators will consider the likelihood of success, i.e.,
substantial pollution reduction or prevention, in making a
determination.
While studies are not by themselves eligible supplemental
environmental projects, to encourage pollution prevention, EPA
will make a limited exception to this general approach for
pollution prevention studies. Such <^:dies will be eligible for
a penalty offset when they are n-* Tency-approved set of
pollution prevention activitis y and are designed to
correct the violation (e.g., a .. , ..asibility study, waste
minimization opportunity assessment, or waste reduction audit).
f
The size of the penalty offset may include the costs of the
studies. The commitment to conduct the study also must be
tangible (e.g., the project completed on schedule, etc.). The
U.S. must have the authority to review the completed study to
decide whether it is technologically and/or economically feasible
to implement the results. Should the U.S. decide that the
results can be implemented but the defendant/ respondent is
unwilling to do so, the "offset" for the pollution prevention
study will be rescinded and the final assessed penalty must be
paid in full (cf. Section J. on payment assurance).
H. Substitute Performance of Supplemental Environmental
Projects
A supplemental environmental project which meets the other
criteria of this policy may consist in part or whole of
substitute performance by an entity or entities other than the
violator. Such a substitute must bear a reasonable geographical
or media-specific relationship to the underlying violation. This
substitute performance must.be assured through agreements which
are enforceable by EPA, and may consist of agreements for
emissions limits, process design or input changes, natural
resource preservation or conservation easements, or other means
of achieving compliance with the terms of the proposed
supplemental environmental project. In the event a violator
proposes acceptable substitute performance/ EPA will credit the
violator with an amount up to the net after tax cost of the
project as if it were being performed by the violator. The
violator, will, however, remain responsible for the performance
of the project or the payment of the penalty offset if substitute
performance is not completed.
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12
I. Level of Concurrence
There may be practical problems in administering cross-
media and/or cross-regional projects. Staff allocations for
oversight requirements will necessarily increase, as will the
level of resources needed for tracking purposes since tracking a
supplemental project is more complex than tracking whether a
payment is made. In addition, the likelihood of new issues
emerging due to noncompliance with the conditions of the project
is significant.
The extent of coordination/concurrence for a supplemental
project which involved more than one Region will vary according
to the nature and complexity of the proposal. All affected
Regions must be notified about a supplemental project: which would
have only a modest impact on facilities in those Regions "(e.g., a
commitment to undertake an environmental audit at all of the
defendant/respondent's facilities across the country). However,
all affected Regions would have to concur in a proposed
supplemental project which would involve significant oversight
resources or activities (e.g., a pollution prevention activity
which required major construction or process changes). Also, all
affected EPA parties must be consulted on their respective
oversight responsibilities. As stated previously, judicial
settlements, including any of the projects described herein, will
continue to require the approval of the Assistant Administrator
for Enforcement and also be approved by the Assistant Attorney
General for the Environment and N-t-ral Resources Division.
Each proposed administrative settlement which has a
"horizontal" nexus to the violation or which involves substitute
performance also must be approved by the Assistant Administrator
for Enforcement and, where required by the Agency's delegations
policy, the media Assistant Administrator.
J. Oversight/Tracking
Supplemental Environmental Projects may require third-party
oversight. In such cases,-these oversight rosts should be borne
by the respondent, and it must agree as a part of the settlement
to pay for an independent, third-party auditor to monitor the
status of the supplemental project. The auditor will be required
by the settlement to submit specific periodic reports, including
a final report evaluating the success or failure of the
supplemental project, and the degree to which the project
satisfied these guidelines. All reports must be submitted to
EPA. Upon request, EPA may provide copies of the reports, or
copies of portions of the reports, to the respondent. The timing
and amount of reports released to the defendant/respondent* shall
be at EPA's sole discretion.
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13
Obviously, a certain aaount of government oversight will be
required to monitor compliance with the terms of an agreement
that contains a supplemental project. "Horizontal" pollution
preventiori""or pollution reduction supplemental projects which
involve more than one Region (e.g., production changes at riore
than one facility) may require additional oversight, and the
estimated amount of time and resources required for effective
oversight is another criteria which the negotiators should use to
determine whether to include the project in the settlement
agreement.
The consent order or decree shall specify overall timeliness
and milestones to be net in implementing the supplemental
project. If the defendant/respondent does not comply
satisfactorily with the terms of the supplemental project, he
shall be liable for the amount by which the assessed penalty was
reduced (with applicable interest). The consent order or decree
should contain a mechanism for assuring prompt payment, e.g.,
through stipulated penalties consistent with the other, sections
of this policy or, if appropriate, the posting of a bond (in the
amount by which the assessed penalty was reduced) to be forfeited
if the supplemental project is not fully implemented.
K. Documenting Approval Of Supplemental Environmental Project
. Proposals
In all cases where supplemental projects are approved as
part of the settlement, the case file should contain
documentation showing that each of the appropriateness criteria
listed above have been met in that particular case. A copy of
the evaluation and approval document shall be sent to the Office
of Enforcement and the National Compliance Officer concurrent
with the approval of the Regional Administrator, or other
authorized approving official, and to the Assistant Attorney
General for the Environment and Natural Resources Division.
L. Coverage of this Policy
This document revises"ahd supercedes the appropriate
sections of the Agency's general civil penalty policy (GM-22),
and constitutes Agency policy relating to supplemental environ-
mental projects. Media-specific penalty policies will be revised
as soon as possible to be consistent with it. During this
interim period, in the event of any conflict between this general
policy and a media-specific policy, this policy is controlling.
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5
Attachment B
UNfTED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
MEMORANDUM
SUBJECT: Creation of an Agency Workgroup on Multi-media
Enforcement
FROM: James M.
Assistant Jdornistrator
TO: Deputy Regional Administrators
Headquarters Compliance Office Directors
OE Headquarters Managers
Regional Counsels
In Fiscal Year 1990, the Agency set a new course for
Enforcement in the Enforcement Four Year Strategic Plan. Several
elements of that plan call for a more holistic, multi-media
approach to enforcement. This included better targeting of
enforcement resources on geographic areas, pollutants, industries
or companies of concern, innovative enforcement settlement
conditions which address broader environmental management and
pollution prevention concerns and systematic screening of cases,
employing new, integrated databases. This direction was given
increased impetus by the Administrator's stated goal that 25% of
enforcement activities include multi-media elements. Despite the
broad consensus that EPA needs to adopt more of a multi-media
perspective in its actions, our management systems are ill-
suited to acknowledging the full benefits of these efforts.
The Deputy Administrator has directed the Office of
Enforcement to lead an agency-wide workgroup to address
implementation issues in the Agency's multi-media/cross-program
enforcement approaches. The workgroup will play a vital role in
helping tta agency realize the vision set forth in the
Enforcement Four Year Strategic Plan and the Administrator's goal
that 25% of our enforcement activities have multi-media elements.
The workgroup recommendations will be reviewed with the
Enforcement Management Council. On an ongoing basis, the
workgroup will also serve to maintain an awareness of the
progress of the'Regions and share results.
p; ;•? 3 j._ , r
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I. Mission
1- The workgroup will begin immediately to develop
recommendations for implementation beginning next fiscal year, or
sooner if appropriate, definitions, accountability, resource
allocation and systems improvements to further foster multi-
media enforcement. Issues that should be addressed include:
o ;::iould we revise the definition of the Administrator's
multi-media goal so that it drives us in the right
direction? What changes or clarifications are needed?
• * • .. f
o How should we further define the role of- States in
meeting the goal?
•
o What barriers must be eliminated to achieve the goal?
o How can we usefully assess how close we are to meeting the
goal?
o How can we recognize and reward success?
o Do we have sufficient funding and resource
incentives for conducting multi-media inspections?
what funding incentives night be needed to foster
more multi-media enforcement action?
o How can we credit Regions for different types of
cases, (e.g. "weighted beans" not necessarily in a
workload sense but in the sense of public accounting)?
The workgroup will review regional -transition plans submitted at
the end of February, and work closely with Regions throughout the
year to identify both implementation and record-keeping issues
they are encountering in trying to portray their progress. Ideas
and approaches should be shared with other Regions.
2- In discharging its responsibility, the workgroup will review
the end-of-year progress reports from each Region on how well
they did In implementing the multi-media goal of the Agency.
3- The workgroup will establish criteria and a process for
recognizing and rewarding exemplary Regional multi-media activity
based upon the end of year progress reports.
4- The workgroup will help design a means of evaluating regional
implementation of the case screening guidance and make
recommendations for ensuring that: 1) the process is
accomplishing its purpose without adverse impact on regional
enforcement operations, and 2) it focuses multi-media attention
on appropriate violations and sources.
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II. Composition
Headquarters
Chair Office of Compliance Analysis and
Program Operations (3) representatives
on budget, accountability and planning
National Enforcement Investigations
Center
Associate Enforcement Counsels (2 Branch
Chiefs)
Office of Policy, Planning and •
Evaluation (Program Evaluation
Division)
*
Office of Water Enforcement and Permits
office of Waste Programs Enforcement
Office of Compliance Monitoring
Stationary Source Air Compliance
Division
Regions
We will seek representative Branch Chiefs from Regional
Counsel, Air, Water, Waste, Toxics, Management, and
Environment Service Divisions, and are proposing this mix
with representatives from all Regions. Individuals will be
selected in consultation with our Lead Region, Region I, and
with the approval of Regional Management.
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SE.2-3
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
''-- / WASHINGTON. D.C. :o460
Gn-Sl
MEMORANDUM
SUBJECT: Final EPA Policy on the Inclusion of Environmental
Auditing Provisions in Enforcement Settlements
FROM: Thomas L. Adams, Jr.
Assistant Administrator for Enforcement
and Compliance Monitoring
TO: Addressees
On July 17, 1986, this Office circulated a draft EPA
Policy on the Inclusion of Environmental Auditing Provisions
in Enforcement Settlements. I am pleased to report that Agency
comments were almost uniformly supportive of the draft as
written. Attached please find a final version of the policy,
including summaries of the known auditing settlements that
Agency personnel have achieved to date and several model audit
provisions that Agency negotiators may use as a starting point
in fashioning settlements that address the circumstances of
each case.
I believe that the inclusion of environmental auditing
provisions in selected settlements offers EPA the ability
to accomplish more effectively its primary mission, namely,
to secure environmental compliance. Accordingly, I would
like to renew last July's call for EPA's Offices of Regional
Counsel and program enforcement offices to consider including
audit provisions in settlements where the underlying cases
meet the criteria of the attached policy statement.
Inquiries concerning this policy should be directed to
Neil Stoloff, Legal Enforcement Policy Branch, FTS 475-8777,
E-Mail box 2261, LE-130A • Thank you for your consideration of
this important matter.
Attachments
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-2-
Addresseess
Assistant Administrators
Associate Administrator for Regional Operations
General Counsel
Associate Enforcement Counsels
Director, Office of Criminal Enforcement and Special Litigation
Director, Office of Compliance Analysis and Program Operations
Headquarters Compliance Program Division Directors
Director, NEIC
Regional Administrators, Regions I-X
Regional Counsels, Regions I-X
Regional Compliance Program Division Directors, Regions I-X
Principal Regional Enforcement Contacts, Regions I-X
Enforcement Policy Workgroup
cc: Administrator
Deputy Administrator
John Ulfelder
David Buente, Department of Justice (DOJ)
Nancy Firestone, DOJ
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THE POLICIES AND PROCEDURES ESTABLISHED IN THIS DOCUMENT ARE
INTENDED SOLELY AS GUIDANCE FOR GOVERNMENT PERSONNEL. THEY ARE
NOT INTENDED, AND CANNOT BE RELIED UPON, TO CREATE ANY RIGHTS,
SUBSTANTIVE OR PROCEDURAL, ENFORCEABLE BY ANY PARTY IN LITIGATION
WITH THE UNITED STATES. THE AGENCY RESERVES THE RIGHT TO ACT
AT VARIANCE WITH THESE POLICIES AND PROCEDURES AND TO CHANGE
THEM AT ANY TIME WITHOUT PUBLIC NOTICE.
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EPA POLICY ON THE INCLUSION OF ENVIRONMENTAL AUDITING
PROVISIONS IN ENFORCEMENT SETTLEMENTS
I. Purpose
The purpose of this document is to provide Agency enforce-
ment personnel with general criteria for and guidance on selecting
judicial and administrative enforcement cases in which EPA will
seek to include environmental auditing provisions among the
terms of any settlement. This document supplements the "Guidance
for Drafting Judicial Consent Decrees."_!_/
II. Background
On July 9, 1986, EPA announced its environmental auditing
policy statement (Attachment A) which encourages the regulated
community's use of environmental auditing to help achieve and
maintain compliance with environmental laws and regulations.^/
That policy states that "EPA may propose environmental auditing
provisions in consent decrees and in other settlement negotiations
where auditing could provide a remedy for identified problems
and reduce the likelihood of similar problems recurring in the
future."3/
In recent years, Agency negotiators have achieved numerous
settlements that require regulated entities to audit their
operations. (Attachment B is a representative sample of the
auditing settlements that the Agency has achieved to date.)
These innovative settlements have been highly successful in
enabling the Agency to accomplish more effectively its primary
mission, namely, to secure environmental compliance. Indeed,
auditing provisions in enforcement settlements have provided
several important benefits to the Agency by enhancing its
ability to:
0 Address compliance at an entire facility or at all
facilities owned or operated by a party, rather than
just the violations discovered during inspections;
and identify and correct violations that may have gone
undetected (and uncorrected) otherwise.
0 Focus the attention of a regulated party's top-level
management on environmental compliance; produce corporate
policies and procedures that enable a party to achieve
and maintain compliance; and help a party to manage
pollution control affirmatively over time instead of
reacting to crises.
0 Provide a quality assurance check by verifying that
existing environmental management practices are in
place, functioning and adequate.
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. -2-
III. Statement of Policy
It is the policy of EPA to settle its judicial and admin-
istrative enforcement cases only where violators can assure the
Agency that their noncompliance will be (or has been) corrected.4/
In some cases, such assurances may, in part, take the form of ~~
a party's commitment to conduct an environmental audit of its
operations. While this would not replace the need for correction
of the specific noncompliance that prompted an enforcement
action, EPA nonetheless considers auditing an appropriate part
of a settlement where heightened management attention could
lower the potential for noncompliance to recur. For that
reason, and as stated in the Agency's published policy,
"[environmental auditing provisions are most likely to be
proposed in settlement negotiations when:
A pattern of violations can be attributed, at least in
part, to the absence or poor functioning of an environ-
mental management system; or
0 The type or nature of violations indicates a likelihood
that similar noncompliance problems may exist or occur
elsewhere in the facility or at other facilities operated
by the regulated entity."^/
This policy is particularly applicable in cases involving
the owner or operator of extensive or multiple facilities,
where inadequate environmental management practices are likely
to extend throughout those facilities.6/ Nevertheless, even
small, single-facility operations may face the types of compliance
problems that make an audit requirement an appropriate part of
a settlement.
The environmental statutes provide EPA broad authority to
compel regulated entities to collect and analyze compliance-
related information.7/ Given this statutory authority, and
the equitable grounds for imposing a requirement to audit
under the circumstances outlined in this policy statement,
such a requirement may be imposed as a condition of settlement
or, in the absence of a party's willingness to audit voluntarily,
sought from a court or administrative tribunal.
EPA encourages state and local regulatory Agencies that
have independent jurisdiction over regulated entities to consider
applying this policy to their own enforcement activities, in
order to advance the consistent and effective use of environ-
mental auditing.8/
a. Scope of the Audit Requirement
In those cases where it may be appropriate to propose an
environmental audit as part of the remedy, negotiators must
decide which type(s) of audit to propose in negotiations. This
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-3-
determination will turn on the nature and extent of the environ-
mental management problem, which could range from a specific
management gap at a single facility 9/ to systematic, widespread,
multi-facility, multi-media environmental violations.!^/ In
most cases, either (or both) of the following two types of
environmental audits should be considered:
1. Compliance Audit; An independent assessment of the
current status of a party's compliance with applicable statutory
and regulatory requirements. This approach always entails a
requirement that effective measures be taken to remedy uncovered
compliance problems and is most effective when coupled with a
requirement that the root causes of ndncompliance also be
remedied.ll/
2. Management Audit; An independent evaluation of a
party's environmental compliance policies, practices, and
controls. Such evaluation may encompass the need for;
(1) a formal corporate environmental compliance policy, and
procedures for implementation of that policy; (2) educational
and training programs for employees; (3) equipment purchase,
operation and maintenance programs; (4) environmental compliance
officer programs (or other organizational structures relevant
to compliance); (5) budgeting and planning systems for environ-
mental compliance; (6) monitoring, recordkeeping and reporting
systems; (7) in-plant and community emergency plans; (8) internal
communications and control systems; and (9) hazard identifica-
tion and risk assessment.12/
Whether to seek a compliance audit, a management audit, or
both will depend upon the unique circumstances of each case. A
compliance audit usually will be appropriate where the violations
uncovered by Agency inspections raise the likelihood that
environmental noncompliance exists elsewhere within a party's
operations. A management audit should be sought where it
appears that a major contributing factor to noncompliance is
inadequate (or nonexistent) managerial attention to environmental
policies, procedures or staff ing. 1_3/ Both types of audits
should b« sought where both current noncompliance and shortcomings
in a party's environmental management practices need to be
addressed.14/
In cases where EPA negotiators determine that an acceptable
settlement should include an audit provision, the attached
model provisions 15/ may be used as a starting point in fashion-
ing a settlement tailored to the specific circumstances of each
case. The model provisions are based on settlements addressing
a broad range of circumstances that give rise to audits.
3. Elements of Effective Audit Programs. Most environ-
mental audits conducted pursuant to enforcement settlements
should, at a minimum, meet the standards provided in "Elements
of Effective Environmental Auditing Programs," the Appendix to
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-4-
the Agency's published policy on auditing. Those elements
include:
' Explicit top management support for environmental auditing
and commitment to follow-up on audit findings.
0 An environmental audit team separate from and independent
of the persons and activities to be audited.
8 Adequate team staffing and auditor training.
e Explicit audit program objectives, scope, resources
and frequency.
* A process which collects, analyzes, interprets and docu-
ments information sufficient to achieve audit objectives.
0 A process which includes specific procedures to promptly
prepare candid, clear and appropriate written reports
on audit findings, corrective actions, and schedules
for implementation.
0 A process which includes quality assurance procedures
to ensure the accuracy and thoroughness of environmental
audits.16/
Agency negotiators may consult EPA's program and enforcement
offices and the National Enforcement Investigations Center,
which can provide technical advice to negotiators in fashioning
auditing provisions that meet the needs of both the party and
the regulatory program(s) to which it is subject. Additional
information on environmental auditing practices can be found in
various published materials.17/
A settlement's audit requirements may end after the party
meets the agreed-upon schedule for implementing them. Neverthe-
less, ~ne Agency expects that most audit programs established
through settlements will continue beyond the life of the settle-
ment. After the settlement expires, the success of those
programs may be monitored indirectly through the routine inspec-
tion process.
b. Agency Oversight of the Audit Process
In most cases, resource and policy constraints will pre-
clude a high level of Agency participation in the audit process.
Several successful audit settlements indicate that the benefits
of auditing may be realized simply by obtaining a party's
commitment to audit its operations for environmental compliance
or management problems (or both), remedy any problems uncovered,
and certify to the Agency that it has done so.ljB/ Other recent.
Agency settlements, also successful, have entailed full disclosure
of the auditor's report of findings regarding noncompliance,
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-5-
and even access to the company records which the auditors
examined.19/ Audit settlements that require either self-
cert ificaTTon or full disclosure of audit results may require
a party to submit to the Agency an environmental management
or"compliance plan (or both) that addresses identified problems,
to be implemented on an enforceable schedule.20/
These approaches require the Agency neither to devote
significant resources to oversight of the audit process nor to
depart from its traditional means of enforcing the terras of
consent decrees and agreements. Although it may—and will—
evaluate audit proposals in terms of the elements described
in §111.a.3. above, in all but the most extreme cases 21/
the Agency will not specify the details of a party's internal
management systems. Rather, an independent audit represents
one step a violator can take toward assuring the Agency that
compliance will be achieved and maintained.22/
Considerations such as the seriousness of the compliance
problems to be addressed by an audit provision, a party's
overall compliance history, and resource availability will
dictate the extent to which the Agency monitors the audit
process in particular cases. Thus, it will usually be approp-
riate to withhold approval of an audit plan for a party with
an extensive history of noncompliance unless the plan requires:
8 Use of an independent third-party auditor not affiliated
with the audited entity;
8 Adherence to detailed audit protocols; and
0 More extensive Agency role in identifying corrective
action.23/
c. Agency Requests for Audit-Related Documents
The various environmental statutes provide EPA with broad
authority to gain access to documents and information necessary
to determine whether a regulated party is complying with the
requirements of a settlement.^4/ Notwithstanding such statutory
authority. Agency negotiators should expressly reserve EPA's
right to review audit-related documents.25/
d. Stipulated Penalties for Audit-Discovered Violations
Settlements which require a party to report to EPA audit-
discovered violations may include stipulations regarding the
amount of penalties for violations that are susceptible to
prediction and are promptly remedied, with the parties reserving
their respective rights and liabilities for other violations.26/
This policy does not authorize reductions of penalty amounts
below those that would otherwise be dictated by applicable
penalty policies, which take into account the circumstances
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-6-
surrounding violations in guiding the calculation of appropriate
penalty amounts. It is therefore important that stipulated
penalties only apply to those classes of violations whose
surrounding circumstances may be reasonably anticipated. The
application of stipulated penalties to violations discovered
during an audit is consistent with Agency policy.27/
e. Effect of Auditing on Agency Inspection and Enforcement
1. Inspections
The Agency's published policy on auditing states that
"EPA will not promise to forgo inspections, reduce enforcement
responses, or offer other such incentives in exchange for
implementation of environmental auditing or other sound environ-
mental practice. Indeed, a credible enforcement program provides
a strong incentive for regulated entities to audit."28/
Consistent with stated Agency policy, the inclusion of
audit provisions in settlements will not affect Agency inspec-
tion and enforcement prerogatives. On the contrary, a party's
incentive to accept auditing requirements as part of a settlement
stems from the Agency's policy to inspect and enforce rigorously
against known violators who fail to assure the Agency that
they are taking steps to remedy their noncompliance. Auditing
settlements should explicitly provide that Agency (and State)
inspection and enforcement prerogatives, and a party's liability
for violations other than those cited in the underlying enforce-
ment action (or subject to stipulated penalties), are unaffected
by the settlement.29/
2. Civil Penalty Adjustments
Several audit settlements achieved to date have mitigated
penalties to reflect a party's agreement to audit. In view of
EPA's position that auditing fosters environmental compliance,
EPA negotiators may treat a commitment to audit as a demonstra-
tion of the violator's honest and genuine efforts to remedy
noncompliance. This may be taken into account wher. calculating
the dollar amount of a civil penalty.^Ł/ In no case will a
party's agreement to audit result in a penalty amount lower
than the economic benefit of noncompliance.
For judicial settlements wnere penalties are proposed to
be mitigated in view of audit provisions, negotiators should
coordinate with the Department of Justice (DOJ) to ensure
consistency with applicable DOJ settlement policies.
3. Confidentiality
EPA does not view as confidential per se audit-related
documents submitted to the Agency pursuant to enforcement
settlements. Such documents may, however, contain confidential
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-7-
business information (CBI). Auditing provisions should indicate
that EPA will treat such information in the same manner that
all other CBI is treated. 3_1/ Where appropriate, negotiators
may consider defining in advance which categories of audit
information will qualify for CBI treatment .32_/ Such determina-
tions shall be concurred in by the Office of General Counsel,
in accordance with 40 CFR Part 2.
The Freedom of Information Act (FOIA) may provide additional
bases for protecting privileged information from disclosure. 33/
However, determinations under FOIA are within the sole discretion
of the Agency and therefore are not an appropriate subject of
negotiation.
IV. Coordination of Multi-Facility Auditing Settlements
When negotiating with a party over facilities located in
more than one EPA region, Agency personnel should consult with
affected regions and states to ensure that pending or planned
enforcement actions in other regions will not be affected by
the terms of an audit settlement. This may be done directly
(e.g. , pursuant to existing State/EPA Enforcement Agreements)
or with the assistance of OECM's Legal Enforcement Policy
Branch (LEPB), which will serve as a clearinghouse for infor-
mation on auditing in an enforcement context (contact: Neil
Stoloff, LEPB, FTS 475-8777, LE-130A, E-Mail Box EPA 2261).
In most cases, however, auditing settlements that embrace
facilities in more than one region will affect neither the
Agency's inspection and enforcement prerogatives nor a. party's
liability for violations other than those which gave rise to
the underlying enforcement action. ^4_/ Accordingly, inter-office
consultation in most cases will be necessary only for informa-
tional purposes. Some multi-facility settlements will fall
within the scope of the guidance document, "Implementing
Nationally Managed or Coordinated Enforcement Actions. "35/
Such settlements should be conducted in accordance with that
document and the memorandum, "Implementing the State/Federal
Partnership in Enforcement: State/Federal Enforcement 'Agree-
ments. '
Attachments
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-8-
FOOTNOTES
1. EPA General Enforcement Policy No. GM-17, October 19, 1983.
2. 51 Fed. Reg. 25004 (1986).
3. 51 Fed. Reg. 25007 (1986).
4. See "Working Principles Underlying EPA's National Compliance/
Enforcement Programs," at 7 (EPA General Enforcement Policy
No. GM 24, November 22, 1983).
5. 51 Fed. Reg. 25007 (1986).
6. See, e. g., Owens-Corning Fiberglas Corp., Attachment B,
p. 1; and Attachments D-F.
7. See, e.g., the Clean Air Act (CAA) §§113 and 114, the Clean
Water Act (CWA) §§308 and 309, and the Resource Conservation
and Recovery Act (RCRA) §§3007 and 3008.
8. See 51 Fed. Reg. 25008 (1986).
9. See, e.g., BASF Systems Corp., Attachment 3, p. 3.
10. See Attachment F.
11. See Attachment C.
12. See Attachment D.
13. See Chemical'Waste Management, Inc., Vickery, Ohio and
Kettleman Hills, California facilities, Attachment B, pp. 1
and 2 respectively; and Attachment D.
14. See Attachments E and F.
15. Attachments C-G.
16. See 51 Fed. Reg. 25009 (1986).
17. See, e.g., "Current Practices in Environmental Auditing,"
EPA Report No. EPA-230-09-83-006, February 1984; "Annotated
Bibliography on Environmental Auditing," September 1935,
both available from EPA's Office of Policy, Planning and
Evaluation, Regulatory Reform Staff, PM-223, FTS 382-2685.
18. See, e.g., Crompton and Knowles Corp., Attachment B, p. 1;
and Attachments' C-E) . ""
19. See, e.g., Chemical Waste Management, Inc., Vickery, Ohio
and Kettleman Hills, California facilities, Attachment B,
pp. 1 and 2 respectively; and Attachment E.
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-9-
20. See, e.g., United States v. Georgia Pacific Corp., Attachment
B, p. 2; Attachment D, §B.3; and Attachment F, §§6(1) and 9.
21. See, e.g., Attachment 0.
22. See, e.g., Potlatch Corp., Attachment 3, p. 1; and Attach-
ment C.
23. See Attachment F.
24. See, e.g., CAA §114, CWA §308, RCRA §3007, CERCLA §103,
the Toxic Substances Control Act §8, and the Federal Insec-
ticide, Fungicide and Rodenticide Act §8.
25. See, e.g., Attachment F, §IV, "Access to Documents."
26. See Attachment F, §§22, 23, 24, 34, and Appendix 2.
27. See "Guidance for Drafting Judicial Consent Decrees," at 22
(EPA General Enforcement Policy No. GM-17, October 19, 1983).
28. 51 Fed. Reg. 25007 (1986).
29.. See Attachment C, §A.3; Attachment D, §B; Attachment E,
§CT3; and Attachment F, §34.
30. See 51 Fed. Reg. 25007 (1986); EPA's Framework for Statute-
Specific Approaches to Penalty Assessments, General Enforce-
ment Policy No. GM-22, at p. 19; and applicable medium-
specific penalty policies, e.g., TSCA Settlement with
Conditions, November 15, 1983^
31. See "Guidance for Drafting Judicial Consent Decrees," at 23
(EPA General Enforcement Policy No. GM-17, October 19, 1983).
32. See Attachment F, §§5(2), 14, and 15.
33. See, e.g., 5 U.S.C. §552(b)(4), which encompasses voluntarily
submitted information the disclosure of which would impair
a Government interest such as EPA's interests in the settle-
ment of cases and in ensuring compliance with statutes
under its authority.
34. See Attachment F, §25.b.
35. General Enforcement Policy No. GM-35, January 4, 1985.
36. General Enforcement Policy No. GM-41, June 26, 1984.
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SUMMARY OF ATTACHMENTS
ATTACHMENT A; Environmental Auditing Policy Statement,
51 Fed. Reg. 25004, July 9, 1986.
ATTACHMENT B: Representative Sample of Environmental Auditing
Settlements Achieved to Date, revised 10/9/86.
Attachment C; Model Environmental compliance audit provision,
with requirement for certification of compliance.
Attachment D; Model Environmental management audit provision,
with requirement for submission of plan for improvement of
environmental management practices, to be completed on an
enforceable schedule.
Attachment E; Model Environmental compliance and management
audit provision, with all audit results submitted to EPA, all
Agency enforcement prerogatives reserved.
Attachment F; Model Environmental compliance and management
audit provision, with extensive Agency oversight, audit results
disclosed, stipulated penalties applied to most prospective
violations, and all Agency enforcement prerogatives reserved
for other violations. [Most appropriate for party with an
extensive history of noncompliance.]
Attachment G; Model Emergency environmental management reorgan-
ization provision. [Appropriate for cases where a party's
environmental management practices are wholly inadequate and
action is necessary without waiting for the results of an
audit.]
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Wednesday
July 9, 1986
Part IV
Environmental
Protection Agency
Environmental Auditing Policy Statement;
Notice
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25004
Federal Register / Vol. 51. No. 131 / Wednesday. July 9. 1986 / Notices
•NVIRONMENTAL PROTECTION
-'NCY
, E-fRL-304«-«l
Environmental Auditing Policy
Statement
AGENCY: Environmental Protection
Agency (EPA).
ACTION: Final policy statement.
SUMMARY: It is EPA policy to encourage
the use of environmental auditing by
regulated entities to help achieve and
r.j.ntam compliance with
environmental laws and regulations, as
well as to help identify and correct
unregulated environmental hazards.
ZPA first published this policy as
'.-.tenm guidance on November 8.1985
:0 FR 46504). Based on comments
received regarding the interim guidance.
v.e Agency is issuing today's final
policy statement with only minor
changes.
This final policy statement
specifically:
.• Encourages regulated entities to
i-*velop. implement and upgrade
•>r.vi:cr.rnental auditing programs:
• Drscusses when the Agency may or
- iv not request audit reports:
"xplains how EPA's inspection and
..-cement activities may respond to
regulated entities' efforts to assure
o; — pliance through auditing:
• Endorses environmental auditing at
.V'leral facilities:
• Encourages state and local
-.v.Tcn.T.ental auditing initiatives: and
• Outlines elements of effective audit
-•-•;rams.
Environmental auditing includes a
v.i.-iety ofcompliar.ee assessment
:-:':hmques which go beyond those
'.- yj!!y required and are used to identify
•ct.ai ar.d potential environmental
:-.:b!ams. Effective environmtntal
v:d:ting can lead to higher levels of
. •. orall compliance and reduced risk to
•..man health and the environment EPA
-. -.dorses the practice of environmental
-..ijif.r.g and supports its accelerated
;- by regulated entities to help meet
the joals of federal, state and local
••-viror.T.ental requirements. However.
••••> existence of an auditing program
...-•*» not create any defense to. or
. -e.-wise iirr.it. the responsibility of any
• juiated entity to comply with
,:r!:cable regulatory requirements.
5r::es are encouraged to adopt these
-ilar and equally effective policies
der to advance the use of
r.-'.-.ror.mental auditing on a consistent.
".ationwide basis.
SATES: This final policy statement is
elective July 9.1986.
FOR FURTHER INFORMATION CONTACT:
Leonard Fleckenstein. Office of Policy.
Planning and Evaluation. (202) 382-
2726;
or
Cheryl Wasserman. Office of
Enforcement and Compliance
Monitoring. (202) 382-'550.
SUPPLEMENTARY INFORMATION:
ENVIRONMENTAL AUDITING
POLICY STATEMENT
I. Preamble
On November 8. 1985 EPA published
an Environmental Auditing Policy
Statement, effective as interim guidance.
and solicited written comments until
January 7.1986.
Thirteen commenters submitted
written comments. Eight were from
private industry. Two commenters
represented industry trade associations.
One federal agency, one consulting firm
and one law firm also submitted
comments.
Twelve commenters addressed EPA
requests for audit reports. Three
comments per subject were received
regarding inspections, enforcement
response and elements of effective
environmental auditing. One commenter
addressed audit provisions as remedies
in enforcement actions, one addressed
environmental auditing at federal
facilities, and one addressed the
relationship of the policy statement to
state or local regulatory agencies.
Comments generally supported both the
concept of a policy statement ar.d the
interim guidance, but raised specific
concerns with respect, to particular
language and policy issues in sections of
the guidance.
General Comments
Three commenters found the interim
guidance to be constructive, balanced
and effective at encouraging more and
better environmental auditing.
Another commenter. while
considering the policy on the whole to
be constrjctive. feit '.hat r.ew and
identifiable auditing "incentives" should
be offered by EPA. Based on earlier
comments received from industry. EPA
believes most companies would not
support or participate in an "incentives-
based" environmental auditing program
with EPA. Moreover, general promises
to forgo inspections cr reduce
enforcement responses :n exchange for
companies' adoption cf environmental
auditing programs—the incentives"
most frequently menticned in this
context—are fraught w.;h legal and
policy obstacles.
Several commer.tj.-s expressed
concern that states or localities might
use the interim guidance to require
auditing. The Agency disagrees that the
policy statement opens the way for
states and localities to require auditing.
No EPA policy can grant states or
localities any more (or less) authority
than they already possess. EPA believes
that the interim guidance effectively
encourages voluntcry auditing. In fact.
Section U.S. of the policy states:
"because audit quality depends to a
large degree on genuine management
commitment to the program and its
objectives, auditing should remain a
voluntary program."
Another commenter suggested that
EPA should not expect an audit to
identify all potential problem areas or
conclude that a problem identified in an
audit reflects normal operations and
.procedures. EPA agrees that an audit
report should clearly reflect these
realities and should be written to point
out the audit's limitations. However.
since EPA will not routinely request
audit reports, the Agency does not
believe these concerns raise issues
which reed to be addressed in the.
policy statement.
A second concern expressed by the
same commenter was that EPA should
acknowledge that environmental audits
are only part of a successful
environmental management program
and thus should not be expected to
cover every environmental issue or
solve all problems. EPA agrees and
accordingly has amended the statement
of purpose which appears at the end of
this preamble.
Yet another commenter thought EPA
should focus on environmental
performance results (compliance or nen-
ccmpliance). not en the processes or
vehicles used to achieve those results. In
general. EPA agrees with this statement
and will continue to focus on
environmental results. However. EPA
also believes that such results can be
improved through Agency efforts to
identify and encourage effective
environmental management practices.
and will continue to encourage such
practices in non-regulatory ways.
A final general comment
recommended that EPA should sponsor
seminars for small businesses en how to
start auditing programs. EPA agrees that
such seminars would be useful.
However, since audit semma.-s already
are available from several private sec::r
organizations. EPA does not beiieve .t
should intervene in that market, with the
possible exception of seminars for
government agencies, especially t'ederal
agencies, for which EPA has a bread
mandate under Executive Order ;:CS3 to
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25005
provide technical assistance for
environmental compliance.
Requests far Reports
EPA received 12 comments regarding
Agency requests for environmental audit
reports, far more than on any other topic
in the policy statement. One commenter
felt that EPA struck an appropriate
balance between respecting the need for
self-evaluation with some measure of
privacy, and allowing the Agency
enough flexibility of inquiry to
accomplish future statutory missions.
However, most commenters expressed
concern that the interim guidance did
not go far enough to assuage corporate
fears that EPA will use audit reports for
environmental compliance "witch
hunts." Several commenters suggested
additional specific assurances regarding
the circumstances under which EPA will
request such reports.
One commenter recommended that
EPA request audit reports only "when
the Agency can show the information it
needs to perform its statutory mission
cannot be obtained from the monitoring.
compliance or other data that is
otherwise reportable and/or accessible
to EPA. or where the Government deems
an audit report material to • criminal
investigation." EPA accepts this
recommendation in part. The Agency
believes it would not be in the best
interest of human health and the
environment to commit to making a
"showing" of a compelling information
need before ever requesting an audit
report. While EPA may normally be
willing to do so. the Agency cannot rule
out in advance all circumstances in
which such a showing may not be
possible. However, it would be helpful
to further clarify that a request for an
audit report or a portion of a report
normally will be made when needed
inf01 ration is not available by
alternative means. Therefore. EPA has
revised Section ULA^ paragraph two
and added the ports*: "and usually
made where the inloraation needed
cannot be obtained from monitoring.
reporting or other data otherwise
available to the Agency."
Another commenter suggested that
(except in the case of criminal
investigations) EPA should liwt
requests for audit documents to specific
questions. By including the phrase "or
relevant portions of a report" in Section
I1I.A.. EPA meant to emphasize it would
not request an entire audit document
when only a relevant portion would
suffice. Likewise. EPA fully intends not
to request even a portion of a report if
needed information or data can be
otherwise obtained. To further clarify
this point EPA has added the phrase.
"most likely focused on particular
information needs rather than the entire
report" to the second sentence of
paragraph two. Section III-A.
Incorporating the two comments above,
the first two sentences in paragraph two
of final Section III.A. now read: "EPA's
authority to request an audit report, or
relevant portions thereof, will be
exercised on a case-by-case basis where
the Agency determines it is needed to
accomplish a statutory mission or the
Government deems it to be material to a
criminal investigation. EPA expects such
requests to be limited, most likely
focused on particular information needs
rather than the entire report, and usually
made where the information needed
cannot be obtained from monitoring.
reporting or other data otherwise
available to the Agency."
Other commenters recommended that
EPA not request audit reports under any
circumstances, that requests be
"restricted to only those legally
required." that requests be limited to
criminal investigations, or that requests
be made only when EPA has reason to
believe "that the audit programs or
reports are being used to conceal
evidence of environmental non-
compliance or otherwise being used in
bad faith." EPA appreciates concerns
underlying all of these comments and
has considered each carefully. However.
the Agency believes that these
recommendations do not strike the
appropriate balance between retaining
the flexibility to accomplish EPA's
statutory missions in future, unforeseen
circumstances, and acknowledging
regulated entities' need to self-evaluate
environmental performance with some
measure of privacy. Indeed, based on
prime informal comments, the small
number of formal comments received.
and the even smaller number of advene
comments. EPA believes the final policy
statement should remain largely
unchanged from the interim version.
Elements of Effective Environmental
Auditing
Three commenters expressed
concerns regarding the seven general
elements EPA outlined in the Appendix
to the interim guidance.
One commenter noted that were EPA
to further expand or more fully detail
such elements, programs not specifically
fulfilling each element would then be
judged inadequate. EPA agrees that
presenting highly specific and
prescriptive auditing elements could be
counter-productive by not taking into
account numerous factors which vary
extensively from one organization to
another, but which may still result in
effective auditing programs.
Accordingly, EPA does not plan to
expand or more fully detail these
auditing elements.
Another commenter asserted that
states and localities should be cautioned
not to consider EPA's auditing elements
as mandatory steps. The Agency is fuiK
aware of this concern and in the Lntenrr
guidance noted its strong opinion that
"regulatory agencies should not attempt
to prescribe the precise form and
structure of regulated entities'
environmental management or auditing
programs." While EPA cannot require
state or local regulators to adopt this or
similar policies, the Agency docs
strongly encourage them to do so. both
in the interim and final policies.
A final commenter thought the
Appendix too specifically prescribed
what should and what should not be
included in an auditing program. Other
commenters. on the other hand viewed
the elements described as very general
in nature. EPA agrees with these other
commenters. The elements are in no
way binding. Moreover. EPA believes
that most mature, effective
environmental auditing programs do
incorporate each of these general
elements in some form, and considers
them useful yardsticks for those
considering adopting or upgrading audit
programs. For these reasons EPA has
not revised the Appendix in today's
final policy statement.
Other Comments
Other significant comments addressed
EPA inspection priorities for. and
enforcement responses to. organizations
with environmental auditing programs.
One commenter. stressing that audit
programs are internal management
tools, took exception to the phrase in the
second paragraph of section III.B.I. of
the interim guidance which states that
environmental audits can 'complement
regulatory oversight. By using the word
'complement' in this context. EPA does
not intend to imply that audit reports
must be obtained by the Agency in order
to supplement regulatory inspections.
'Complement' u used in a broad sense
of being in addition to inspections and
providing something (i.e. self-
assessment) which otherwise would be
lacking. To clarify this point EPA has
added the phrase "by providing self-
assessment to assure compliance" after
"environmental audits may complement
inspections" in this paragraph.
The same commenter also expressed
concern that, as EPA sets inspection
priorities, a company having an audit
program could appear to be s 'poor
performer' due to complete and accurst.
reporting when measured against a
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Federal Register / Vol. 51. No. 131 / Wednesday. July 9. 1985 / Notices
company which reports something less
than required by law. EPA agrees that it
• tiportant to communicate this fact to
icy and state personnel and will do
*.,. However, the Agency does not
believe a change in the policy statement
is necessary.
A further comment suggested EPA
should comrr.it to lake auditing
programs into account when assessing
a!! enforcement actions. However, in
order to maintain enforcement flexibility
•jnder varied circumstances, the Agency
cannot promise reduced enforcement
responses to violations at all audited
facilities when oiher factors may be
overriding. Therefore the policy
statement continues to state that EPA
rr.ny exercise its decretion to consider
Auditing programs as evidence of honest
ind genuine efforts to assure
^mpliance. which would then be taken
..-.:o account in fashioning enforcement
responses to violations.
A final commentcr suggested the
phrase "expeditiously correct
rnvironmenial problems" not be used in
the eifurcement context since it implied
EPA would use an entity's record of
i.or-pcting nonregulated matters when
•r. aluatir.g regulatory violations. EPA
did not intend for such an inference to
he made. F.PA intended the term
ironmental problems" to refer to the
rlying circumstances which
c: iiniually lead up to the violations. To
i.l.infy this point. EPA is revising the
first two sentences of the paragraph to
•Ahir.h th:s comment refers by changing
">."••. :rormental problems" to "violations
ar.J underlying environmental
pr.-V.pTis" in the first sentence and to
•-.deriving environmental problems" in
I rip second sentence.
In j separate development EPA is
pn:?arir!3 .in update of its January 1984
r'-idercl Fcc::'.:!:es Compliance Strategy.
-.\htch is -pferenced in section III. C. of
•he audi'.'.r.j policy. The Strategy should
re crr.pieted and available on request
:'.-m EPA's Office of Federal Activities
:.i:rr >l\s year.
??A "hanks dl! commenters for
.-"•r-i:n'-:p.s :o :he Novembers. 1985
- ulir.iV.or1.. Today's notice is being
• -.ued to r.t'orm regulated entities and
"-c 2i:h!ic cf EPA's final policy toward
••••v.-r-rrer.tal auditing. This policy was
". t'lnced to help (a) encourage
.- :..!a!ed entities to institutionalize
•••"wtive.audit practices as one means of
•".proving compliance and sound
-.-. ironmental management, and (b)
. :de internal EPA actions directly
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2500-
performance of the facility lies with top
management, which therefore has a
strong incentive to use reasonable
means, such as environmental auditing.
to secure reliable information of facility
compliance status.
EPA does not intend to dictate or
interfere with the environmental
management practices of private or
public organizations. Nor does EPA
intend to mandate auditing (though in
certain instances EPA may seek to
include provisions for environmental
auditing as part of settlement
agreements, as noted below). Because
environmental auditing systems have
been widely adopted on a voluntary-
basis in the past, and because audit
quality depends to a large degree upon
genuine management commitment to the
program ana its objectives, auditing
should remain a voluntary activity.
III. EPA Policy on Specific
Environmental Auditing Issues
A. Agency Requests for Audit Reports
EPA has broad statutory authority to
request relevant information on the
environmental compliance status of
regulated entities. However. EPA
believes routine Agency requests for
audit reports3 could inhibit auditing in
the long run. decreasing both the
quantity and quality of audits
conducted. Therefore, as a matter of
policy. EPA will not routinely request
environmental audit reports.
EPA's authority to request an audit
report, or relevant portions thereof, will
be exercised on a case-by-case basis
where the Agency determines it is
needed to accomplish a statutory
mission, or where the Government
deems it to be material to a criminal
investigation. EPA expects such
requests to be limited, most likely
focused on particular information needs
rather than the entire report, and usually
made where the information needed
cannot be obtained from monitoring.
reporting or other data otherwise
available to the Agency Examples
would likely include situations where:
audits are conducted under consent
decrees or other settlement agreements:
a company has placed its management
practices at issue by tailing ;hem as a
defense: or state of mind or intent are a
relevant element of inquiry, such as
during a criminal investigation. This list
' An "environmental audit repor" n i written
report wr.ich cand:dly and thorough!) prescnti
(:nd:nss from a review, conducted ai pan of an
environmental audit a> described in fiction II.A., of
facility environmental performance and practices.
An audit report la not a lubititute for compliance
monnonng reports or other reports or records which
may be required by EPA or other regulatory
agenciei.
is illustrative rather than exhaustive.
since there doubtless will be other
situations, not subject to prediction, in
which audit reports rather than
information may be required.
EPA acknowledges regulated entities'
need to self-evaluate environmental
performance with some measure of
privacy and encourages such activity.
However, audit reports may not shield
monitoring, compliance, or other
information that would otherwise be
reportable and/or accessible to EPA.
even if there is no explicit 'requirement
to generate that data.4 Thus, this polic;,
does not alter regulated entities' existing
or future obligations to monitor, record
or report information required under
environmental statutes, regulations or
permits, or to allow EPA access to that
information. Nor does this policy alter
EPA's authority to request and receive
any relevant information—including tha'
contained in audit reports—under
various environmental statutes (e.g..
Clean Water Act section 308. Clean Air
Act sections 114 and 208) or in other
administrative or judicial proceedings
Regulated entities also should be
aware that certain audit findings may by
law have to be reported to government
agencies. However, in addition to any
such requirements. EPA encourages
regulated entities to notify appropriate
State or Federal officials of findings
which suggest significant environmental
or public health risks, even when not
specifically required to do so.
B. EPA Response to Environmentcl
Auditing
1. General Policy
EPA will not promise to forgo
inspections, reduce enforcement
responses, or offer other such incentives
in exchange for implementation of
environmental auditing or other sound
environmental management practices.
Indeed, a credible enforcement program
provides a strong incentive for regulated
entities to audit.
Regulatory agencies have an
obligation to assess source compliance
status independently and cannot
eliminate inspections for particular firms
or classes of firms. Although
environmental audits may complement
inspections by providing self-
assessment to assure compliance, they
are in no way a substitute for regulatory
oversight. Moreover, certain statutes
(e.g. RCRA! and Agency policies
establish minimum facility inspection
frequencies to which EPA will adhere
However. EPA will continue to
address environmental problems on :<
priority basis and will consequent!.
inspect facilities with poor
environmental records and practicr--
more frequently. Since effective
environmental auditing helps
management identify and promp:
correct actual or potential probien:-
audited facilities' environment*!
performance should improve Thi..-
while EPA inspections of se!f-ajdi f .
facilities will continue, to the e\u -.. :
compliance performance is cor.? ct ••
in setting inspection priorities, fa:.:.
with a good compliance history rr. j\ : •
subject to fewer inspections
In fashioning enforcement respon?*-
to violations. EPA policy is :o take in:.
account, on a case-by-case baas, :hi-
honest and genuine effort? rf reiviicti
entities to avoid and promptly ccrrcr1
violations and underlying envircrmr:"
problems. When reoulated er.::t:e? !..-
reasonable precautions to avr:tj
noncompliance. expecr.ionsiy co"-. ••
underlying environment! problem?
discovered through audits or other
means, and implement measures to
prevent their recurrence. EPA may .
exercise its discretion to consider such
actions as honest and at.-.ui.-.e efforts'
assure compliance. Sjch. considerate-
applies particularly when a recuiat^:
entity promptly reports violations c:
compliance data which c'.herv.-;se w---
not required to he recorded cr rep.-r'i :
to EPA.
2. Audit Provision? as Remedies :r.
Enforcement Actions
EPA may propose environment.::
auditing provision? ;.-. consent decre-?
and in other se'.'.Ierr.ent negotiations
where auditing co.:d provide b re-r.-vc;.
for identified problems and re-j-ce the
likelihood of similar problems recur::.-.:
in the future.4 Er.v-.ror.rr.ental audit-.rtj
provisions are most !.*e!y to be
proposed in settlement negotiations
where:
• A pattern of violations can be
attributed, at least in part, to the
absence or poor funct.ontr.g of an
environmental management system: or
• The type or nature of violations
indicates a likelihood that similar
noncompliance problems may exist 'j:
occur elsewhere in the fac;:.i\ or at
other facilities operated by the resj-lats-
entity.
• See. for siamoie. 'Duties 10 Report or Duclose
Information on 'nt Environmental Aspects of
Business Act:vit». Environmental Law Institute
report to EPA. finai report. September 1965.
* EPA is developing auii^cp for ^st *M Aaenc;
negotiators in structure inprcunaif er.viror.mer.-.
audit provisions for consent zecrtes and oir.er
settlement negotiations
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Federal Register /-Vol. 51. No. 131 / Wednesday, July 9. 1986 / Notices
Through this consent decree approach
' other means. EPA may consider
•-encourage effective auditing by
K.. owned sewage treatment works
II'G. ..a|. POTWs often have
rorr.pliance problems related to
•ipe.-H-.ion and maintenance procedures
•A^'ch can be addressed effectively
•r.vjii^h the use of environmental
r;Li:-;r;2. Under its National Municipal
I'-iLcx EPA already is requiring many
POTU's ;o develop composite correction
'j;.!ns to identify and correct compliance
pro'nlrms.
C. Environmental Auditing at Federal
r-;c:,'i!;es
EPA encourages all federal agencies
-nb]ect to environmental laws and
•°>nlatiop.s to institute environmental
Citing systems to help ensure the
• Jequacy of internal systems to achieve.
-:.imtam and monitor compliance.
F'..".v;ronmental auditing at federal
r.tuilities can be an effective supplement
to EPA and state inspections. Such
federal facility environmental audit
proi^rans should be structured to
promptly identify environmental
problems and expenditiously develop
•icrhedules for remedial action.
To the extent feasible. EPA will
ivide technical assistance to help
1 agencies design and initiate
.ograms. Where appropriate. EPA
Aili enter into agreements with other
ij'rncies to clarify the respective roles.
•.•^pons'.biluies and commitments of
• •.i'-.h agency in conducting and
r->?ondir.i; to federal facility
'•••.\ ror.rr.ental audits.
vV;;h rrspect to inspections of self-
•r:::;'.ed facilities (see section III.B.I
i'we) and requests for audit reports
.--'e section III.A above). EPA generally
v.;'.! respond to environmental audits by
> inral facilities in the same manner as
:; Jo::s for other regulated entities, in
V.**pir.-j with the spirit and intent of
~. \*cu:ive Order 12088 and tht EPA
."•".'ere/ Fcc:lU:es Camplianc* Strategy
January1984. update forthcoming in
Lite 1986). Federal agencies should.
however, be aware that the Freedom of
'..-.formation Act will govern any
disclosure of audit reports or audit-
janerared information requested from
'"•• -J^ral asonr.ies by the public.
'.Vhen federal agencies discover
•^r.ificant violations through an
-•nv.ronmental audit. EPA encourages
•h-*m to subm:t the related audit findings
o.J remedial action plans expeditiously
:o ;he applicable EPA regional office
X 'sponsibie state agencies, where
.nate) even when not specifically
quired to do so. EPA will review the
audit findings and action plans and
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23009
An effective environmental auditing
system will likely include the following
general elements:
I. Explicit top management support for
environmental auditing and
commitment to follow-up on audit
findings. Management support may be
demonstrated by a written policy
articulating upper management support
for the auditing program, and for
compliance with all pertinent
requirements, including corporate
policies and permit requirements as well
as federal, state and local statutes and
regulations.
Management support for the auditing
program also should be demonstrated
by an explicit written commitment to
follow-up on audit findings to correct
identified problems and prevent their
recurrence.
II. An environmental auditing function
independent of audited activit:es. The
status or organizational locus of
environmental auditors should be
sufficient to ensure objective and
unobstructed inquiry, observation and
testing. Auditor objectivity should net
be impaired by personal relationships.
financial or other conflicts of interest.
interference with free inquiry or
judgment, or fear of potential
retribution.
III. Adequate team staffing and
auditor training. Environmental auditors
should possess or have ready access to
the knowledge, skills, and discipline?
needed to accomplish audit objectives
Each individual auditor should comply
with the company's professional
standards of conduct. Auditors, whether
full-time or part-time, should maintain
their technical and analytical
competence through continuing
education and training.
IV. Explicit audit program obied:\'es.
scope, resources and frequency. At a
minimum, audit objectives should
include assessing compliance with
applicable environmental laws and
evaluating the adequacy of internal
compliance policin. procedures and
personnel training programs to ensure
continued compliance.
Audits should be based on a process
•••'uiv.1. provides auditors: all corporate
policies, permits, and federal, state, and
local regulations pertinent to the facility:
and checklists or protocols addressing
specific features that should be
evaluated by auditors.
Explicit written audit procedures
generally should be used for planning
audits, establishing audit scope.
examining and evaluating audit findings.
communicating audit results, and
following-up.
V. A process which collects, analyzes.
interprets and documents information
sufficient to achieve audit objectives.
Information should be collected before
and during an onsite visit regarding
environmental compliance)/).
environmental management
effectiveness^), and other matters (J|
related to audit objectives and scope.
This information should be sufficient.
reliable, relevant and useful to provide a
sound basis for audit findings and
recommendations.
a. Sufficient information is factual.
adequate and convincing so th?.t a
prudent, informed person would be
likely to reach the same conclusions as
the auditor.
b. Reliable information is the best
attainable through use of appropriate
audit techniques.
c. Relevcr.t information supports audit
findings and recommendations and is
consistent with the objectives for the
audit.
d. Useful information helps the
organization meet its goals.
The audit process should include a
periodic review of the reliability ar.d
integrity of this information and the
means used to identify, measure.
classify and report it. Audit procedures.
including the testing and sampling
techniques employed, should be selec'.ec
in advance, to the extent practical, and
expanded or altered if circumstances
warrant. The process of collecting.
analyzing, interpreting, and
documenting information should provide
reasonable assurance that audit
objectivity is maintained and audit goals
are met.
VI. A process which includes specific
procedures to promptly prepare candid.
clear and appropriate written reports on
audit findings, corrective actions, and
schedules for implementation.
Procedures should be in place to ensure
that such information is communicated
to managers, including facility and
corporate management, who can
evaluate the information and ensure
correction of identified problems.
Procedures also should be in place for
determining what internal findings are
reportable to state or federal agencies.
VII. A process which includes qua:::v
assurance procedures to assure the
accuracy and thoroughness of
environmental audits. Quality assurance
may be accomplished through
supervision, independent internal
reviews, external reviews, or a
combination of these approaches.
Footnotes to Appendix
(71 A comprehensive assessment of
compliance with federal environments!
regulations requires an analysis of faciii(>
performance against numerous
environmental statutes and irv.piemcntinc
regulations. These statues mcl-cr
Resource Conservation and Recovery Ar
Federal Water Pollution Conirol Act
Clean Air Act
Hazardous Materials Transportation Ac;
Toxic Substances Coniro! Act
Comprehensive Environment.*! Res?ur.s<.
Compensation and Lability Act
Safe Drinking Water A*.:
Federal Insecticide. Funcicice and
Rodenncide Act
Marine Protection. Research .mil Suncsunr.i--
Act
I'ramum Mill Tailings RaJ jl:iv: Conir. '. A. •
In addition, state ar.ci loc^l anvcrr.mi--.- .!.••
likely to hive their own environment; ;uu-
Many states have been dtlrtaitu Ou:nrr:--.
administer federal programs Mar. inrV
governments' building, fire s
codes also have environmental rpq-j.rfr.r-- •
relevant to an audit eval.ut;cr
(2) An environmental auri.: cciuld ai> -.\.
beyond the type of ccmpiunce asses = -:i -•
normally conducted dur.r.g rejuU:"\
inspections, for example, by evai.a' -.•:
policies and pracfces rpgard',i-j; .:' «:.»••-
t^ey are part of tne en\;:cr.rr.eir.... v> «•(•— •
tne operating and na:ntt-nar-.:.<> pi-jrei:. •:••
Specifically, audits car, evaluate t.-.r f\>.-- •
\\hir.h systems or proced-rrs:
1. Develop organization*' er.\ i.-unmtn•.-.'.
policies which: a. implement rp'ju'.o'.or;.
requirements: b. provide tr.ar.jser.rr.i
guidance for environmental hu.*.;:-< -• i
specifically addressed in rec-'.^1 •• ?
2. Train and motivate fac'.!::> re-«r;. .-' ••
work in an envtronmentaliy-oCC!-p:.:':>;i
manner and to understand ani .::-.?.•- « •-
government regulations and the PT: ••. <•
environmental policy:
3. Communicate relevant crv. •?----.
developments expeciiiuusK to '..-. -.-..
other personnel:
4 Communicate effectives A •-
government and the public reg*:~.-. ;••.- .-
environmental incidents:
5. Require third parties wr>r>:r; •"•'• w •-
on behalf of the organization to .', .• *• .'?
environmental procedures.
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25(nO Federal Register / Vol. 51. No. 131 / Wednesday, [uly 9. 1986 / Notices
». Make proficient personnel available «(
me» to carry out environmental'
illy emergency) procedures):
irporate environmental protection
-.i>j .men operating procedure* .
4. Apply besi management practice* and
•Pfrati-.g procedures. including "good
••isrkeepma," lechmques:
•' Institute p:e\er.!ive and corrective
• •• v-.Tunr.H systems (o minimize actual and
••' •••:i;:l envirnnmentdi harm:
:n '.'niize best dvaiiable process and
i-.V'i! ter.hnolosies:
' '. C'5i! most-effective «dr-.pi:ng and
•.::•.•:• rrvj techniques, lest methodi.
.-^kt-^ping systems or reporting protocols
• •• -"rf "•.mimum lesnl requircmerts):
'.1 Ev.ii-i lie causes behind any serious
,-\ ir::irrrr.t
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Attach-ent 3
Revised 10/17/86
A REPRESENTATIVE SAMPLE OF
ENVIRONMENTAL AUDITING SETTLEMENTS ACHIEVED TO DATE*
REGION II:
Crompton and Knowles Corporation, Consent Agreement and Final
Order (CAFO), II TSCA-PCB-82-0108, 1/28/86. Compliance audit
of 28 facilities, covering TSCA PCB requirements, with certifica-
tion of compliance. EPA attorney: Randye Stein, FTS 264-8157.
REGION V:
BASF Wyandotte Corporation, CAFO, TSCA-V-C-410, 4/25/86.
In settlement of a premanufacture notification action under TSCA,
BASF agreed to conduct an audit (actually called a "review") of
all chemicals subject to TSCA §5 inventory requirements that
are produced, imported or used by 13 BASF facilities. BASF also
agreed to certify that (1) all chemicals manufactured by or
imported/purchased from its parent or an affiliate company are
listed on the TSCA Chemical Substances Inventory? and (2) to the
best of its knowledge, all chemicals purchased from unrelated
parties are listed on the TSCA inventory. EPA attorney: Art
Smith, FTS 886-4253.
Chemical Waste Management, Inc. (Vickery, Ohio facility), CAFO,
TSCA-V-C-307, RCRA-V-85R-019, 4/5/85. Management audit covering
all RCRA and TSCA requirements. Audit also addresses personnel
training, spill response, operations and maintenance, interim
stabilization, and quality control and assurance. EPA attorneys:
Rodger Field, FTS 886-6726; Michael Walker, FTS 475-8697.
Detroit Metropolitan (Wayne County Airport), CAFO, TSCA-V-C-468,
7/30/86.PCB compliance audit of all facilities with certification
of compliance and submission of inventory of each facility which
specifies general location and quantity of all PCBs and PCB items
subject to the requirements of 40 CFR Part 761. EPA attorney:
Dorothy Attermayer, FTS 886-6776.
Michigan Department of Mental Health, CAFO, TSCA-V-C-231, 1/4/85.
PCB compliance audit of all facilities, with certification of
compliance. EPA attorney: Michael Walker, FTS 475-8697.
Michigan Department of Corrections, CAFO, TSCA-V-C-187, 10/9/83.
PCB compliance audit of all facilities, with certification of
compliance. EPA attorney: Michael Walker, FTS 475-8697.
Owens-Corning Fiberglas Corporation, CAFO, TSCA-V-C-101, 6/8/84.
PCB compliance audit of 63 facilities, with certification of
compliance. EPA attorney: Michael Walker, FTS 475-3697.
* Note: Some of the settlements identified herein may not fall
within the strict definition of "environmental auditing" but
contain requirements sufficiently similar to auditing to
warrant their inclusion.
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Potlatch Corporation, CAFO, TSCA-V-C-137, 8/31/83. PCB compliance
audit of all facilities, with certification of compliance. EPA
attorney: David Sims, FTS 353-2094.
Ren Plastics, an operating unit of Ciba-Geigy Corp. (E. Lansing,
Michigan), CAFO, TSCA-V-C-411, 2/12/86. CAFO requires review of
the chemicals manufactured by Ciba-Geigy plants with certification
that all chemicals are on the TSCA inventory. Respondent also
agreed to conduct an environmental seminar for plant personnel
with a section on TSCA compliance; respondent intends to continue
refining its employee training program. EPA attorney: Dorothy
Attermeyer, FTS 886-6776.
REGION VI:
USA v. Georgia-Pacific Corporation, Nos. 84-457-B and 85-136-B
(D.LA., entered 2/6/86).Clean Air Act Consent Decree requires
implementation of compliance plan produced by presettlement
audit, covering CAA National Emissions Standard for vinyl chloride.
EPA attorney: Elliott Gilberg, FTS 382-2864.
REGION IX:
Chemical Waste Management, Inc. (Kettleman Hills, California
facility), CAFO, RCRA-0984-0037, TSCA-09-84-0009, 11/7/85.
Management audit covering all RCRA and TSCA requirements. Audit
also addresses personnel training, spill response, operations and
maintenance, interim stabilization, and quality control and
assurance. EPA attorneys: Bill Wick, FTS 454-8039; Keith Onsdorff,
FTS 382-3072.
REGION X:
Allstate Insurance Company, CAFO, X83-09-09-2614, 5/25/84. PCB
audit of 140 buildings nationwide, formulation of PCB inspection
plan and guidelines to be distributed to facility managers, and
follow-up training conferences and review of program implementation.
EPA attorneyi Ted Rogowski, FTS 399-1185.
Bonneville Power Administration, Memorandum of Agreement with
EPA,2/20/85.MOA provides for: (1) training of personnel
conducting TSCA inspections, CERCLA preliminary assessments, and
sit*» investigations; (2) conduct of environmental audits covering
TSCA PCB requirements; (3) testing and evaluation of facilities
to determine status of compliance with TSCA and to assess threatened
or actual release of "hazardous substances" as defined by CERCLA;
and (4) remedial actions to be taken based upon risk assessment
that utilizes criteria and information in the National Contingency
Plan. EPA attorney: Ted Rogowski, FTS 399-1185.
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Chem Security Systems, Inc. (Arlington, OR), CAFOs, TSCA 1085-
07-42-2615P, 12/26/85; and RCRA 1085-06-08-3008P, 12/2/85.
Four compliance audits (performed quarterly over a one-year period),
covering all RCRA requirements and PCB requirements under TSCA.
EPA attorney: Barbara Lither, FTS 399-1222.
Crown Zellerbach Corporation, CAFO, X83-06-08-2614, 11/30/83.
Settlement provides for refinement of existing corporate-wide
compliance program for TSCA PCB requirements, including certification
of compliance. EPA attorney: Ted Rogowski, FTS 399-1185.
Roseburg Lumber Company, CAFO, X83-05-02-2614, 1/10/85. Settlement
provides for development of a training program and manual describing
PCB compliance requirements and procedures; and a program to bring
12 facilities into full compliance with TSCA PCB requirements
within one year of settlement. EPA attorney: Ted Rogowski,
FTS 399-1185. *
Washington State University, CAFO, X83-05-02-2614, 5/30/84.
Settlement provides for development of guidance manual for employees
regarding proper handling of PCBs, followed by training sessions
to ensure employees' familiarity with PCB compliance procedures.
EPA attorney: Ted Rogowski, FTS 399-1185.
HEADQUARTERS:
American Petrofina Company of Texas, Nos. 1217 and 1293, 9/5/85.
Consolidated Clean Air Act Settlement Agreement requires institu-
tion of annual visitation program by Respondent to verify the
existence of proper unleaded gasoline handling procedures at all
branded gasoline retail outlets. EPA attorneys: Rich Kozlowski,
FTS 382-2633; Rich Ackerman, FTS 382-4410.
Ashland Oil, Inc. (Catlettsburg, KY refinery), No.
(E.D. Kentucky, entered ). Clean Water Act consent
decree requires the performance of a "Wastewater Treatment System
Engineering Study" by an independent party and the implementation
of those recommendations agreed upon by the parties. Settlement
also mandate* the commencement of a "Best Management Practices
Study" in order to minimize potential significant releases;
includes the development of a toxicity testing and control plan
and establishes a stipulated penalty schedule for daily and
monthly violations of effluent limits contained in Defendant's
NPDES permit. EPA attorney: Joseph Moran, FTS 475-8185.
BASF Systems Corporation, CAFO, TSCA-85-H-04, 5/28/86.
Environmental management audit and development of procedures for
handling chemical substances imported from BASF's German parent
corporation. BASF will pay a stipulated penalty of $10,000 per
"safe" chemical not listed on the TSCA Chemical Inventory. EPA
will apply the TSCA PMN penalty policy to violations for unregis-
tered "bad" chemicals discovered in the "review" process. EPA
attorney: Michael Walker, FTS 475-8697.
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Chapman Chem. Co., et al., FIFRA 529, et a^., Filed 9/30/85.
The industry parties to the settlement agreement agreed to imple-
ment and participate in a voluntary Consumer Awareness Program
to provide users of treated wood products with use, handling,
and precautionary information. The focus of the program is a
Consumer Information Sheet which contains language approved by
the Agency. Industry agreed to conduct an audit of the program
within a year after settlement and to submit the results of
the audit to EPA within 30 days of its completion. EPA attorney:
Cara Jablon, FTS 382-2940.
Chemical Waste Management, Inc. (Emelle, Alabama facility), CAFO,
TSCA-84-H-03, 12/19/84.Management audit covering all RCRA and
TSCA requirements. Audit also addresses personnel training,
spill response, operations and maintenance, interim stabilization,
and quality control and assurance. EPA attorneys: Keith Onsdorff,
FTS 382-3072; Alex Varela, FTS 475-8690; Arthur Ray, FTS 382-3050.
*
Conoco Inc. and Kayo Oil Company, CAA (21D-449, 520, 596, 709,
and 710,8/31/83,Settlement Agreement requires (or confirms):
(1) revision of Conoco's Jobber Franchise Agreement to include
provision for unleaded gasoline sampling on a quarterly basis at
each Conoco Jobber retail outlet; (2) all drivers of Conoco
company cars to certify that no tampering has occurred which
would allow the introduction of leaded gasoline into a vehicle
requiring unleaded gasoline; (3) posting of public information
notices designed to inform Kayo customers of problems related to
fuel switching; and (4) training to inform Kayo employees of
EPA unleaded fuels regulations. EPA attorneys: Rich Kozlowski,
FTS 382-2633; Rich Ackerman, FTS 382-4410.
Department of Defense, Federal Facility Compliance Agreement,
12/30/83.Agreement covers all DoD facilities where PCBs are
stored for disposal; establishes compliance plan designed to
achieve and maintain compliance with all applicable PCB storage
and disposal requirements. EPA attorney: Deeohn Ferris,
FTS 475-8690.
Diamond Shamrock Corporation, CAFO, TSCA-85-H-03, 7/15/85.
Compliance audit of 43 facilities, covering all TSCA requirements.
EPA attorneys: Deeohn Ferris, FTS 475-8690; Bob Pittman, FTS
475-8690.
General Electric Co. (Waterford, NY facility), No. 84-CV-681
(N.D.N.Y.,entered ). Clean Water Act consent decree
requires the implementation of an engineering study to insure
compliance with Defendant's N/SPDES permit. Settlement also
requires monthly progress reports to be submitted to EPA with
provisions for stipulated civil penalties for discharge violations.
EPA attorney: Joseph Moran, FTS 475-8185.
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Mac Oil Company d/b/a Circle Oil, No. FOSD-1908, 5/21/85. Clean
Air Act Settlement Agreement requires: (1) institution of an
unleaded gasoline sampling and testing program at all facilities
receiving unleaded gasoline from Respondent; (2) inspections of
the gasoline pumps at all facilities to which Respondent delivers
gasoline to determine compliance with nozzle, label and warning
sign requirements; and (3) maintenance of a company unleaded
gasoline policy that informs all employees, agents and common
carriers of gasoline handling and compartment labeling procedures.
EPA attorney: Dean Uhler, FTS 382-2947.
National Convenience Stores, Inc. d/b/a Stop 'n Go, Nos. FOSD-1140
and FOSD-1404,8/16/84.Consolidated Settlement Agreement requires:
(1) institution of a program for compliance with EPA unleaded fuels
regulations at all retail gasoline outlets that Respondent operates
under any name, including periodic verification that nozzle require-
ments are met; and (2) submission to EPA of a Certificate of Compliance.
EPA attorney: Rich Kozlowski, FTS 382-2633.
Phillips Petroleum Company, Consolidated Clean Air Act Settlement
Agreement,3/11/85.Settlement requires Phillips to: (1) estab-
lish, implement and maintain a program for unleaded gasoline
quality assurance among its branded marketers and retailers;
(2) conduct a threephase program of sampling unleaded gasoline at
all branded retail outlets in the United States; (3) conduct annual
inspections of ten percent of its branded retail outlets in the
United States for compliance with EPA unleaded gasoline regula-
tions; (4) at the time of contract renewal, review with its
marketers and retailers their contractual obligations pertaining
to the sale, handling, and distribution of unleaded gasoline; and
(5) conduct a review of its Unleaded Gasoline Quality Assurance
Program after the first year of operation and submit a written
report to EPA assessing the program's effectiveness in improving
the quality of unleaded gasoline and reducing the potential or
actual number of violations of the regulatory limits for lead.
EPA attorney: Rich Kozlowski, FTS 382-2633.
R.I. Marketing, Inc., No. FOSD-1611, 10/5/84. Clean Air Act
Settlement Agreement requires institution of a fuel switching
preventative action program, at each of approximately 200 retail
outlets, designed to prevent leaded gasoline from being introduced
into vehicles requiring unleaded fuel. EPA attorney: Rich
Kozlowski, FTS 382-2633.
Savoca's Service Center, Inc., No. FOSD-2101, 10/17/85. Clean Air
Act Settlement Agreement requires institution of a fuel switching
preventative action program, at all retail outlets, designed to
prevent leaded gasoline from being introduced into vehicles
requiring unleaded fuel. EPA attorney: Rich Kozlowski, FTS
382-2633.
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Union Carbide Corporation, CAFO, TSCA-85-H-06, 2/26/86. Settlement
provides for development of a training program emphasizing ore-
manufacture notification requirements under TSCA, followed by
a test program to monitor responses for compliance with TSCA.
EPA attorney: Alex Varela, FTS 475-8690.
United American Fuels, Inc., No. FOSD-1578, 12/18/84. Clean Air
Act Settlement Agreement requires implementation of a fuel additive
quality control and testing program. EPA attorney: Rich Kozlowski,
FTS 382-2633.
USA v. Parma, Ohio, No. C-85-208, (N.D. Ohio, February 28, 1985).
Clean Air Act Consent.Judgment requires Defendant to: (1) replace
catalytic converters that had been removed illegally; (2) inspect
(periodically for two years) all city vehicles for tampering with
emission controls; (3) tune-up and test (periodically for two
years) all city vehicles for emissions; (4) report all tampering
found to EPA and take appropriate remedial measures; (5) train
mechanics in compliance with EPA standards; (6) distribute pamph-
lets discussing tampering and fuel switching to all households in
Parma, Ohio; and (7) display for one year posters cautioning
against tampering and fuel switching. EPA attorney: Debra
Rosenberg, FTS 382-2649.
USA v. State of Maine, No. 84-C152-B (D. Maine, November 19, 1985).
Clean Air Act Consent Decree requires State to (1) inspect all
Maine Forest Service vehicles for tampering with emission control
devices, and correct deficiencies; (2) inspect each gasoline
fueling facility owned or operated by the Maine Department of
Conservation for compliance with label, notice and nozzle size
requirements, and correct deficiencies; (3) publicize to Maine
Forest Service personnel and the public the importance of comply-
ing with mobile source requirements; and (4) implement fully the
catalytic converter and inlet restrictor inspection program
mandated by State law, and audit at least 90 percent of licensed
inspection facilities to verify compliance. EPA attorney:
Richard Friedman, FTS 382-2940.
Note: The settlements identified herein relating to mobile source
enforcement under the Clean Air Act are representative of approxi-
mately 200 such settlements that have been achieved to date.
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A Note Concerning Application of the Model Provisions
Attachments C-G represent model provisions for the
incorporation of environmental auditing requirements within
enforcement settlements. These models are based upon medium-
specific settlements and necessarily reflect the circumstances
surrounding those settlements. Accordingly, Agency negotiators
should not hesitate to alter them as necessary to meet the
needs of a particular case. An attempt has been made to
fashion the models in such a manner that they can be used
in any enforcement settlement; however, some language has
been retained which applies to only one or two EPA programs.
Even where specific language is found to be inapposite, the
general headings under which such language is found should
provide helpful guidance to Agency personnel in identifying
the categories of issues which a particular type of auditing
settlement should address.
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Attachment C
MODEL ENVIRONMENTAL COMPLIANCE AUDIT PROVISION FOR CONSENT
DECREES OR AGREEMENTS
A.I. Defendant/Respondent shall, within sixty days after
the effective date of this Decree/Agreement [and where a contin-
uing audit requirement is appropriate, add: and not less often
than annually thereafter for a five-year period], audit the
status of [applicable statutory] compliance at the [site of
facility(ies)] and take prompt remedial action against all
violations found.
A.2. Defendant/Respondent .shall, within sixty days after
completion of the compliance audit required by paragraph 1,
submit to EPA's [name of EPA office overseeing compliance with
Decree/Agreement] a certification that, to the best of its
knowledge, Defendant/Respondent is in compliance with all
[applicable statutory and regulatory] requirements or has
developed a schedule for achieving compliance subject to EPA
approval.
A.3. Nothing in this Decree/Agreement shall preclude EPA
from instituting enforcement actions against Defendant/Respon-
dent for any violations of [applicable statutory and regulatory]
requirements which are not cited within the Complaint giving
rise to this Decree/Agreement.
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Attachment D
MODEL ENVIRONMENTAL MANAGEMENT AUDIT PROVISION FOR CONSENT
DECREES OR AGREEMENTS
B.I. Defendant/Respondent shall propose to EPA's [name of
EPA office overseeing compliance with Decree/Agreement] by
written submittal to [name of Agency contact] within thirty (30)
days of the effective date of this Decree/Agreement, the scope
of work for the services of a [third party or internal] auditor
who shall be expert in environmental auditing, environmental
management systems and [applicable statutory program(s)] management
operations. Such auditor shall be independent of and in no way
responsible to production management. This scope of work and
auditor shall be agreed upon by EPA and Defendant/Respondent in
writing, prior to the auditor's commencing the performance of
the professional services more fully set forth below. The
auditor will be retained and the scope of work will be designed
to review and make recommendations regarding the improvement of
Defendant's/Respondent's environmental compliance and management
policies, practices, and systems at the [site of facility(ies)]
and in the Defendant's/Respondent's corporate offices having
responsibility Cor supervision of compliance activities at such
facility(ies).
2. Within one hundred twenty (120) days after agreement
upon the scope of work and the auditor, the auditor shall
submit a written Environmental Audit Report to the Defendant/
Respondent. This Report shall:
a. Identify and describe the existing facility
environmental management operations and the corporate offices
responsible for overall company-wide environmental compliance
and management syst-ems, policies and prevailing practices as
they affect [applicable statutory and regulatory] compliance
at the [site of facility(ies)].
b. Evaluate such operations and systems, practices
and policies and identify and describe fully the perceived
weaknesses in such operations and systems, practices and policies
by comparing them, to the extent practicable, to:
i. their ability to promote compliance with
[applicable statutory and regulatory] requirements;
ii. the existing practices, programs and policies
of other [applicable industry] corporations operating within
the continental United States, including consideration of the
available literature and consultant's experience pertinent to
regulatory compliance programs, practices and policies currently
operative in the [applicable industry] in the continental
United States;
iii. the history of [facility] operations in terms
of the facility's(ies') compliance programs, compliance record
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-2-
and environmental management practices over the previous five
years [or longer if necessary or relevant].
The auditor shall apply its expertise and judgment
to the foregoing information, using such factors as the auditor
believes to be relevant and appropriate, which factors shall
be stated in the report.
c. Based on the evaluation required in paragraphs
2.a. and b. above, the auditor shall identify and describe
fully with supporting rationales the perceived areas, if any,
where Defendant's/Respondent's environmental management systems,
practices and policies may be improved as they affect the
[facility(ies)] regarding [applicable statutory] compliance
obligations, listing specific options for any improvements at
the [facility{ies)] in the following areas:
i. environmental compliance program management
operation, staffing, education and experience reguirements.
ii. compliance management budget, lines of authority
to Defendant's/Respondent's corporate offices responsible for
overall company-wide environmental compliance and management
systems, policies, and practices, and relationship to the
operating facility(ies) manager.
iii. personnel training for individual employee
compliance obligations and [applicable medium-specific
activities].
iv. Operations and Maintenance (O&M) procedures for
[applicable medium-specific pollution control] equipment.
v. evaluation of [applicable industry] operations
and pollution control equipment in terms of adequacy of
design and compatibility with [applicable medium-specific
substances] being passed through such equipment.
vi. quality and thoroughness of implementation of
all waste and wastewater [or other pollutant source] analysis
plans for both incoming and outgoing waste [or other pollutant]
streams, whether directly discharged, emitted, released to the
ambient environment, or conveyed off-site in bulk shipments.
vii. preparation of Quality Assurance and
Quality Control programs for sampling and analysis and
for environmental testing procedures, including [facility(ies)]
laboratories and contract laboratories for [facility(ies)].
viii. preparation of records needed to provide the
[facility(ies)] management with an adequate data base to accurately
determine compliance with all applicable statutory and regulatory
requirements, with particular attention to waste (or other
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-3-
pollutant] generation (including quantity and chemical composi-
tion), movements, treatment, and ultimate disposition by location
of waste [or other pollutant] source, handling points and final
disposition. This evaluation shall encompass proposals for
state-of-the-art data management systems providing timely
access to all of the above records to be maintained by an
onsite computer.
ix. preparation of self-monitoring reports required
to be filed with the State and EPA.
x. preparation and review of Incident Reports
evaluating causes of [applicable medium-specific pollution
control] equipment malfunctions, improper [applicable medium-
specific substances] handling, or breakdowns, with specific
recommendations for corrective steps and preventive O&M, along
with procedures for reporting these recommendations to corporate
headquarters.
3. Within 30 days after Defendant's/Respondent's receipt
of the Audit Report, Defendant/Respondent shall submit to EPA
that portion of the Audit Report which contains the recommenda-
tions of the auditor, together with a report of Defendant's/
Respondent's good faith evaluation of each option it has selected
for adoption and the reasons for rejecting other options. The
report by Defendant/Respondent shall set forth the specific
actions the company shall take and a schedule, not to exceed
sixty (60) days [or longer if necessary] from the date that EPA
receives and evaluates the schedule, for implementation of the
recommendations adopted by Defendant/Respondent.
4. Any failure by Defendant/Respondent to meet the schedule
for implementing the audit program set forth in this Decree/
Agreement shall result in stipulated penalties of [$ ) (in
addition to whatever sanctions the court/ALJ may impose for
contempt), payable by Defendant/Respondent to the U.S. Treasury,
for each day such schedule is not met.
B. Nothing in this Decree/Agreement shall preclude EPA from
instituting enforcement actions against Defendant/Respondent
for any violations of [applicable statutory and regulatory]
requirements which are not cited within the Complaint giving
rise to this Decree/Agreement.
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Attachment E
MODEL ENVIRONMENTAL COMPLIANCE AND MANAGEMENT AUDIT PROVISION
FOR CONSENT DECREES AND AGREEMENTS
C.I. Defendant/Respondent shall conduct environmental
audits of its facility(ies) [of appropriate frequency and
duration] in accordance with the Audit Workplan attached hereto
as Exhibit B [company specific; not included]. The first such
audit shall commence on or about three months from the effective
date of this Decree/Agreement. Each of the audits shall be
completed in accordance with the schedule set forth in the
Audit Workplan.
2. The performance standard of each such audit is to
complete a detailed and professional investigation as set forth
in the Audit Workplan of the facility's recordkeeping practices
and environmental management operations during the [applicable
period]. In accordance with the Audit Workplan, the following
audit reports shall be prepared and submitted, with copies of
supporting documentation, to EPA within thirty days following
the initiation of each such audit:
a. A report on all [pollutants] whose locations (as
reported in the facility records) differ from their observed
physical location or whose physical locations cannot be corrob-
orated by existing records kept at the facility.
b. A report of all quantity variations (of 10% or more
by volume or weight, or any variation in piece count) between
[pollutants] received and [pollutants] disposed of at the
facility.
c. A report on Defendant's/Respondent's activities at
the facility in terms of whether or not they comply with the
procedures required under the [Pollutant] Analysis Plan for
[pollutant] acceptance. Defendant/Respondent shall include
with this report the results of a minimum of three laboratory
(including Defendant's/Respondent's laboratory) analyses of
blind standards (i.e., pre-analyzed samples whose concentrations
are unknown to the laboratories participating in the audit) to
be provided by the audit team to evaluate Defendant's/Respondent's
ability to quantify representative hazardous constituents in
various media.
d. A report of any observed deviations from Defendant's/
Respondent's written operating procedures, including documentation
on any untimely response to the repair and/or replacement of
deteriorating or malfunctioning [pollutant] containers, structures,
or equipment.
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-2-
e. Recommendations as to potential significant improve-
ments and/or modifications which should be made to Defendant's/
Respondent's operating procedures to achieve compliance with
(applicable statutory and regulatory] requirements.
3. Nothing in this Decree/Agreement shall preclude EPA
from instituting enforcement actions against Defendant/Respondent
for any violations of [applicable statutory and regulatory]
requirements which are not cited within the Complaint giving
rise to this Decree/Agreement.
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Attachment ?
MODEL ENVIRONMENTAL COMPLIANCE AND MANAGEMENT AUDIT PROVISION
FOR CONSENT DECREES AND AGREEMENTS*
TABLE OF CONTENTS
Page
I. PRELIMINARY STATEMENT
Purposes of Consent Decree/Agreement 1
II. DEFINITIONS 1
III. GENERAL AUDIT PROCEDURES
Preliminary Matters
Scope of Work 6
Establishment of Trust 6
Selection of Audit Firm 7
Audit Seminar 7
Observation of EPA Protocols 7
Review of Work Plan 7
Facilities to be Audited 8
IV. FACILITY COMPLIANCE AUDITS
Records to be Examined 9
Records Relevant to Compliance
with RCRA 9
Records Relevant to Compliance
with TSCA 9
Records to be Examined by the
Audit Firm 9
Access to Documents 10
* This provision is only appropriate for a party with an exten-
sive history of noncompliance. It requires a high level of
Agency oversight. As an internally developed document that
has not been subjected to the negotiation process, the provi-
sion is more susceptible than other model provisions to the
give and take of negotiation. While the provision only
addresses requirements under RCRA and TSCA, audit provisions
under other statutes may be crafted by using as a framework
the headings contained in this provision.
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TABLE OF CONTENTS (Continued)
Page
Tentative Observance of CBI Claims 11
Preservation of Records 11
Examination of Groundwater Monitoring
Information 11
Audit Schedule/Agency Access to
Defendant' s Facilities 11
Facility Audit Reports 11
Correction of Violations/Submission of
Compliance Plans 12
V. PENALTIES AND CORRECTIVE ACTION
For Missed Audit Deadlines 12
For Violations of RCRA/TSCA
Payment of Penalties 12
Unlisted Violations 13
Uncorrected or New
Violations 13
VI. RESERVATION OF RIGHTS
Reservation of States' and Local Govern-
ments' Right to Inspect 13
Reservation of Agency's Right
to Relief 14
VII. MANAGEMENT SYSTEMS AUDIT
• Corporate Management Systems Report 14
Corporate Management Report and Plan 14
/III. MISCELLANEOUS TERMS
Submission of Reports 14
Effective Date of Decree/Agreement 15
ii
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TABLE OF CONTENTS (Continued)
Page
Notice 15
Modification 15
Dispute Resolution 15
Continuing Jurisdiction of the District
Court/Administrative Law Judge 15
Relation to RCRA Permitting Process 15
Violations Not Covered by RCRA or TSCA.... 16
Continuing Audit Requirement 16
DEFENDANT'S/RESPONDENT'S FACILITIES Appendix 1
PENALTY SCHEDULE Appendix 2
CORPORATE MANAGEMENT SYSTEMS REPORT
PROTOCOL Appendix 3
111
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Attachment ?
MODEL ENVIRONMENTAL COMPLIANCE AND MANAGEMENT AUDIT- PROVISION
FOR CONSENT DECREES AND AGREEMENTS*
TABLE OF CONTENTS
Paqe
I. PRELIMINARY STATEMENT
Purposes of Consent Decree/Agreement 1
II. DEFINITIONS 1
III. GENERAL AUDIT PROCEDURES
Preliminary Matters
Scope of Work 6
Establishment of Trust 6
Selection of Audit Firm 7
Audit Seminar 7
Observation of EPA Protocols 7
Review of Work Plan 7
Facilities to be Audited 8
IV. FACILITY COMPLIANCE AUDITS
Records to be Examined 9
Records Relevant to Compliance
with RCRA 9
Records Relevant to Compliance
with TSCA 9
Records to be Examined by the
Audit Firm 9
Access to Documents 10
* This provision is only appropriate for a party with an exten-
sive history of noncompliance. It requires a high level of
Agency oversight. Based on a draft settlement document, the
provision reflects a pro-Agency bias and thus is more suscep-
tible than other model provisions to the give and take of
the negotiation process. While the provision only addresses
requirements under RCRA and TSCA, audit provisions under
other statutes may be crafted by using as a framework the
headings contained in this provision.
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TABLE OF CONTENTS (Continued)
Page
Public Access to Records 10
Assertion of Confidential Business
Information Claims 10
Tentative Observance of CBI Claims 11
Preservation of Records 11
Examination of Groundwater Monitoring
Information 11
Audit Schedule/Agency Access to
Defendant's Facilities 11
Facility Audit Reports 11
Correction of Violations/Submission of
Compliance Plans 12
V. PENALTIES AND CORRECTIVE ACTION
For Missed Audit Deadlines 12
For Violations of RCRA/TSCA
Payment of Penalties 12
Unlisted Violations 13
Uncorrected or New
Violations 13
VI. RESERVATION OF RIGHTS
'Reservation of States' and Local Govern-
ments ' Right to Inspect 13
Reservation of Agency's Right
to Relief 14
VII. MANAGEMENT SYSTEMS AUDIT
Corporate Management Systems Report 14
Corporate Management Report and Plan 14
ii
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TABLE OF CONTENTS (Continued)
Page
VIII. MISCELLANEOUS TERMS
Submission of Reports 14
Effective Date of Decree/Agreement 15
Notice 15
Modification . 15
Dispute Resolution 15
Continuing Jurisdiction of the District
Court/Administrative Law Judge 15
Relation to RCRA Permitting Process 15
Violations Not Covered by RCRA or TSCA.... 16
Continuing Audit Requirement 16
DEFENDANT ' S/RESPONDENT ' S FACILITIES Appendix 1
PENALTY SCHEDULE Appendix 2
CORPORATE MANAGEMENT SYSTEMS REPORT
PROTOCOL Appendix 3
111
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1. Purposes of Consent Decree/Agreement. In order to
achieve th« mutual goal of ensuring full compliance with applicable
environmental laws, regulations, and permits by Defendant's/
Respondent's active facilities in an efficient and coordinated
manner, Defendant/Respondent and EPA hereby enter into a Consent
Decree/Agreement under which:
(1) independent auditors to be retained by EPA and
paid for by Defendant/Respondent shall, subject to EPA
oversight, audit each facility and report to both
parties on their assessment of Defendant's/Respondent's
compliance with RCRA and TSCA and their implementing
permits, rules and regulations;
(2) the independent auditors shall perform an analysis
of Defendant's/Respondent's environmental management
systems, practices and policies, as they affect inter-
facility and intra-facility transactions (as defined
in Paragraphs 5(11) and 5(12) of this Decree/Agreement);
(3) Defendant/Respondent shall pay penalties for
violations of the aforementioned statutes, permits,
rules and regulations according to the Penalty Schedule
set forth as Appendix 2 to this Decree/Agreement; and
.(4) EPA shall accept the penalties provided in Appendix
2 as full and complete settlement and satisfaction of
any of its civil claims for violations detected by
the audit firm (with certain exceptions as set forth
in Paragraphs 23, 24, and 25 of this Decree/Agreement).
TERMS OP SETTLEMENT
DEFINITIONS
5. Whenever the following terms are used in this Decree/
Agr««m»nt, the definitions specified herein shall apply:
(1) Compliance Report and Plant A document to be
submitted by Defendant/Respond«nt to EPA, pursuant to
Paragraph 19 of this Decree/Agreement, which:
(a) describes in full detail every corr4ctive
action taken in response to a Facility
Audit Report;
(b) in the case of violations which are not
corrected within 60 days of submittal of
the Facility Audit Report, describes every
action to be taken in response to any
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violations or findings in the Facility
Audit Report; and
(c) certifies under oath the accuracy of
information contained in the Compliance
Report and Plan.
(2) Confidential Business Information (CBI)
(a) Information/Documents Determined Not to Be
Entitled to CBI Protection. It is agreed
between the parties that portions of docu-
ments containing the following information
shall not be eligible for CBI treatment:
(i) The fact that any chemical waste was
disposed of at any Defendant/Respondent
facility.
(ii) The location of disposal of any chemical
waste at any Defendant/Respondent facility.
(iii) Any information contained or referred
to in any manifest for any chemical
waste disposed of at any Defendant/
Respondent facility.
(iv) The identity and quantif •-•• -hemical
waste disposed of at any ...-.-c./Respcndent
facility.
(v) Any monitoring data or analysis of
monitoring data pertaining to disposal
activities at any Defendant/Respondent
facility, including monitoring data
from any well, whether or not installed
pursuant to 40 C.F.R. Part 265, Subpart
F, or 40 C.F.R. Part 254, Subpart F
(RCRA Groundwater Monitoring Requirements).
(iv) Any permit applications submitted to
EPA or to any state pursuant to federal
or state statute or regulation.
(vii) Any information regarding planned im-
provements in the treatment, storage or
disposal of chemical wastes at any
Defendant/Respondent facility.
(viii) Any hydrogeologic or geologic data.
(ix) Any groundwater monitoring data.
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(x) Any contingency plans, closure plans,
or post-closure plans.
(xi) Any waste analysis plans.
(xii) Any training and/or inspection manuals
and schedules.
(xiii) Any point source discharge or receiving
water monitoring data.
(b) The status of information not listed in Section
(a) above shall be determined in accordance with
40 CFR Part 2, which provides for CBI treatment of
information where:
(i) Defendant/Respondent has taken reasonable
measures through the issuance and
observance of company-wide policies and
procedures to protect the confidentiality
of the information, and that it intends
to continue to take such measures;
(ii) The information is not, and has not been,
reasonably obtainable without Defendant's/
Respondent's consent by other persons
(other than governmental bodies which
are bound by and observing Defendant's/
Respondent's claims of CBI as to that
information) by use of legitimate means
(other than discovery based on a showing
of special need in a judicial or quasi-
judicial proceeding);
(iii) Disclosure of the information is likely
to cause substantial harm to Defendant's/
Respondent's competitive position.
(3) Corporate Management Report and Plan; A document
•ubmitted by Defendant/Respondent to EPA, pursuant to
Paragraph 27 of this Decree/Agreement, describing in
full detail what actions Defendant/Respondent has
taken or will take to implement the findings of the
Corporate Management Systems Report.
(4) Corporate Management Systems Report; A fully
integrated separate report prepared pursuant to the
Corporate Management Systems Report Protocol set
forth in Appendix 3 of this Decree/Agreement and
submitted by Defendant/Respondent to EPA pursuant
to Paragraph 26 of this Decree/Agreement.
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(5) Corrective Action; Any action taken by Defendant/
Respondent in order to come into compliance with any
federal, state or local statutory or regulatory
requirement for the treatment, storage, or disposal
of any Hazardous Substance.
(6) Facility Audit Reports; Reports to be submitted
by the Audit Firm to EPA, pursuant to Paragraph 19
of this Decree/Agreement, which:
(a) describe in detail the procedures followed
in the facility audit, the facility itself,
the regulatory history of the facility,
and the facility's current compliance
status;
(b) describe in detail each violation detected
during the audit;
(c) provide any other information which, in
the judgment of the Audit Firm, merits
Agency review;
(d) for each violation reported, provide the
relevant statutory or regulatory section;
the particular area of the facility where
the violation was found (if appropriate);
the dates during which the violation
occurred or existed (if it can reasonably
be determined); and any other relevant or
appropriate information.
(7) Hazardous Substances; Those materials meeting
the definition contained in the Comprehensive
Environmental Response, Compensation, and Liability
Act ("CERCLA"), 42 U.S.C. §§9601 et seq., §9601(14).
(8) Hazardous Wastes: Those materials meeting the
definition contained in 42 U.S.C. §6903(5) and the
regulations promulgated at 40 C.F.R. Part 261.
(9) Independent Audit Firm ("Audit Firm"): A firm
selected by EPA, pursuant to Paragraph 6 of this
Decree/Agreement, for the purpose of performing the
Facility Compliance and Management Systems Audits
described herein. For the purpose of this Decree/
Agreement, the Independent Audit Firm must exercise
the same independent judgment that a Certified Public
Accounting firm would be expected to exercise in
auditing a publicly held corporation. In addition,
the Independent Audit Firm must:
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(a) not own stock in Defendant/Respondent
or any parent, subsidiary, or affiliated
corporation;
(b) have no history of participation in any
previous contractual agreement with
Defendant/Respondent or any parent, subsidiary,
or affiliated corporation; and
(c) have no other direct financial stake in
the outcome of the Facility Compliance or
Management Systems Audits outlined in
this Decree/Agreement.
(10) Inter-facility Transactions; Any letters,
contracts, memoranda, or other communications between
two or more offices or facilities owned or operated
by Defendant/Respondent.
(11) Intra-facility Transactions; Any letters,
contracts, memoranda, or other communications between
two or more locations or offices at a single Defendant/
Respondent Facility.
(12) Manifest: The shipping document EPA form
8700-22 and, if necessary, EPA form 8700-22A (as
required by 40 C.F.R. Part 262) or equivalent.
(13) New Violation; Any statutory or regulatory
violation not reported in the Facility Inspection
Report.
(14) Plaintiff; The United States of America, for
the Administrator of the United States Environmental
Protection Agency (collectively, "the Agency" or
"EPA").
(15) Records; Any Defendant/Respondent or consultant
report, document, writing, photograph, tape recording
or other electronic means of data collection and
retention which bears upon Defendant's/Respondent's
compliance with EPA, state and local rules and regulations
(16) Facility; Any facility which treats, stores, or
disposes of hazardous waste as those terms are defined
at 42 U.S.C. $§6903(3), 6903(33), and 6903(34).
(17) Uncorrected Violation; Any violation reported
in a Facility Inspection Report which remains
uncorrected for 60 days or more after the completion
and submission of the Facility Inspection Report
pursuant to Paragraph 19 of this Decree/Agreement.
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GENERAL AUDIT PROCEDURES
6. Preliminary Matters
(1) Scope of Work
(a) Defendant/Respondent shall submit to the Agency
within thirty (30) days of the effective date of this
Decree/Agreement the Scope of Work for audits of the
Defendant/Respondent facilities listed in Appendix
1 for RCRA and TSCA violations. EPA shall have
thirty (30) days from the date of receipt of this
Scope of Work and proposed Audit Firm to submit to
Defendant/Respondent in writing any proposed modifi-
cations in the scope of work.
(b) Defendant/Respondent shall have fifteen (15)
days from the date of receipt of EPA's proposed modifi-
cations within which to submit in writing its comments
upon those proposed modifications.
(b) Within ten (10) days of receipt of Defendant's/
Respondent's comments, the Agency shall issue its
final decision as to the Scope of Work, which shall
be binding upon Defendant/Respondent.
(2) Establishment of Trust
(a) Within thirty (30) days of the date of this
Decree/Agreement, Defendant/Respondent shall establish
an irrevocable trust fund ("Trust"), the form and
text of which shall be approved by EPA. If no fund
is approved by EPA within thirty (30) days of the
date of this Decree/Agreement, a form supplied by EPA
shall be used. The Trustee shall be a bank selected
by Defendant/Respondent, which must be approved by EPA.
(b) The Administrator of EPA shall have special
power of appointment (and the only power of appoint-
OMnt) over all income and all assets of the Trust.
That power may be exercised only to make appointments
of funds in accordance with this Decree/Agreement.
If, at the conclusion of all tasks set forth in this
Decree/Agreement, there remains trust income or
assets which have not been appointed by exercise of
such special power, then all such remaining unappointed
assets shall be delivered forthwith to Defendant/
Respondent. Defendant/Respondent shall fund the
Trust by placing $ ^__^ in the hands of the
Trustee within forty-five (45) days after the date of
this Decree/Agreement.
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(3) Selection of Audit Firm
(a) Within forty-five (45) days after the date of
this Decree/Agreement, EPA shall notify Defendant/
Respondent of its selection of a proposed Audit Firm.
Defendant/Respondent shall have fifteen (15) days from
the date of receipt of EPA's proposed Audit Firm to
accept, reject, or comment upon this selection.
Reasons for which Defendant/Respondent may reject the
proposed Audit Firm are limited to lack of sufficient
national reputation; inexperience in performing
environmental compliance and management audits;
inadequate staffing levels; and failure to qualify as
an Independent Audit Firm as defined in Paragraph
5(10) of this Decree/Agreement.
(b) In the event EPA and Defendant/Respondent are
unable to agree on selection of an Audit Firm, the
parties shall submit to Dispute Resolution as set
forth in Paragraph 32 of this Decree/Agreement.
7. Audit Seminar. Before the Audit Firm begins the
audits, and within 60 days of the date EPA and Defendant/
Respondent agree upon the Scope of Work and Audit " - *s
described above, the Agency shall conduct a semino..
employees of the Audit Firm who are to conduct the auuits.
This seminar shall serve the purpose of assuring that the Audit
Firm employees who will be conducting the audits are familiar
with all protocols required by Agency policies and procedures
to be utilized in conducting compliance audits. The Agency
may conduct the audit seminar at the National Enforcement
Investigations Center (NEIC) near Denver, Colorado or at the
Audit Firm's office. The Agency shall not be responsible for
transportation, lodging or other costs associated with attendance
by the audit firm employees at the seminar.
8. Observation of EPA Protocols. The Audit Firm shall
be required by contract with Defendant/Respondent to observe
the protocols presented at the audit seminar. Such protocols
include but are not limited to: (1) NEIC's Multi-Media Com-
pliance Aadit Procedures; (2) the EPA Office of Administration's
Environmental Auditing Protocol; (3) the NEIC Policy and Procedure
Manual; and (4) the Corporate Management Systems Report Protocol
provided in Appendix 3 of this Decree/Agreement (See Paragraph
26 below).
9. Review of Work Plan.
(1) Within 30 days of the Audit Seminar, the Audit
Firm shall submit to Defendant/Respondent and EPA a
proposed Work Plan which shall specify the Audit
Firm's plan for implementing the Scope of Work. Said
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-8-
Work Plan shall include the auditing protocols to be
used by the Audit Firm; a schedule for conducting
facility audits and completion of all other tasks
set forth in the Scope of Work; and the names and
resumes of those Audit Firm employees who will be
primarily responsible for performance of the tasks
set forth in the Scope of Work. The proposed Work
Plan shall not specify the order of audits or otherwise
provide Defendant/Respondent with advance notice of
specific audits.
(2) EPA and Defendant/Respondent shall have 30 days
from the date of receipt of the proposed Work Plan to
submit in writing any proposed revisions to the proposed
Work Plan.
(3) The Audit Firm shall have fifteen (15) days from
the date of receipt of these revisions within which
to submit in writing its comments on these proposed
revisions.
(4) Within ten (10) days of receipt of the Audit
Firm's comments, EPA shall issue its final decision
as to the work plan, which shall be binding on both
Defendant/Respondent and the Audit Firm.
(5) The provisions of this Paragraph shall also be
set forth as provisions of the contract between
Defendant/Respondent and the Audit Firm for the
performance of the subject audits.
10. Facilities to be Audited. The Audit Firm shall,
subject to the provisions set forth herein, conduct comprehensive
RCRA/TSCA Compliance Audits (see Paragraphs 11 through 25) and
a Management Systems Audit (see Paragraphs 26 and 27) of the
facilities listed in Appendix 1 of this Decree/Agreement.
The designation of RCRA/TSCA as the primary areas of audits
shall not prohibit the Audit Firm from auditing and reporting
violations of any other environmental statutes or regulations
should those violations come to the attention of the Audit Firm
audit team during the inspections. Notice of individual
facility audits shall be provided to NEIC at least thirty (30)
days prior to scheduled visits. Advance notice of individual
facility inspections shall not be provided to Defendant/Respondent
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FACILITY COMPLIANCE AUDITS
Review of Records
11. Records to be Examined.
a. Records Relevant to Compliance with RCRA.
Facility audits may include a review of any facility
record of Defendant/Respondent or its predecessors
from November 1980. Other records pre-dating
November 1980 which bear on the facility's compliance
after November 1980 may also be examined, but
only to the extent that they are necessary to
render judgment regarding any event occurring
after November 1980.
b. Records Relevant to Compliance with TSCA.
Facility audits may include a review of any facility
record of Defendant/Respondent or its predecessors
from April 1978 which is relevant to compliance
with TSCA and its implementing regulations.
Other records pre-dating April 1978 which bear on
the facility's compliance after April 1978 may
also be examined, but only to the extent that they
are necessary to render judgment regarding any
event occurring after April 1978.
c. Records to be Examined by the Audit Firm. Records
to be examined include but are not limited to:
(1) all records required by federal, state or
local law to be maintained by Defendant/Respondent.
(2) facility operating records, including but not
limited to waste profile sheets, containing waste
pre-acceptance data, receiving logs, analytical
verification data, waste tracking data for intra-
facility movement of received wastes or wastes
generated on-site, waste storage data, waste
treatment data, and data reflecting the disposition
of received wastes.
(3) corporate and facility guidelines, policies
and internal operating rules pertaining to facility
operations, inspections, personnel training, and
recordkeeping procedures.
(4) corporate guidelines, policies and internal
operating rules pertaining to emergency response,
site closure, and postclosure activities.
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CS) applications, licenses, permits and approvals
(including state permits and approvals), RCRA opera-
tion plans, or other regulatory documents pertaining
to on-site activities at the facility.
(6) environmental monitoring plans for the facility.
(7) waste treatability studies.
(8) PCB operations plans, letters of approval,
pumping logs, and records pertaining to the processing
or handling of transformers, capacitors, and/or
any other PCB articles, itens and containers.
(9) manifests for wastes entering or leaving any
Defendant/Respondent facility.
(10) records of use, maintenance and decommissioning
of vehicles used on-site and/or off-site for the
transportation of RCRA/TSCA wastes to, from, and
within any Defendant/Respondent facility.
(11) vehicle washing records.
(12) any effluent data, including data on any direct
discharge to surface water or any discharge to a
publicly ownevl treatment facility, which Defendant/
Respondent is required to keep pursuant to any
federal, state, or local permit or regulation.
12. Access to Documents. The Audit Firm and representatives
of the Agency, including contractors, shall have full, unfettered
access to all documents bearing upon compliance with RCRA or TSCA
kept at each facility or at Defendant's/Respondent's corporate
headquarters, regardless of whether these records are deemed
by Defendant/Respondent to constitute CBI or deemed by the
Audit Firm to indicate or support a violation. The Defendant/
Respondent shall retain and make available to EPA copies of
any Defendant/Respondent document(s) examined by the Audit Firm
which indicate or support any violation detected during the
audit program. The Audit Firm shall prepare and provide to EPA
a full and complete index of all document? th?.«- it examines to
ensure that the Defendant/Respondent retains these records for
subsequent EPA inspection.
13. Public Access to Records. Each document submitted
by Defendant/Respondent to the Audit Firm or EPA pursuant to
this Decree/Agreement shall be subject to public inspection
unless it is determined by EPA (following a claim made by Defendant/
Respondent) to be CBI in accordance with Paragraphs 5(2) and
14 of this Decree/Agreement.
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14. Assertion of Confidential Business Information Claims.
a. Defendant/Respondent recognizes that EPA will
treat as TSCA CBI only that information claimed confidential
which EPA uses for purposes related to TSCA.
b. Claims that information is CBI shall be made on
or before the date on which such information is provided to
the Audit Firm or EPA.
15. Tentative Observance of CBI Claims. Any information
claimed by Defendant/Respondent and asserted to meet the criteria
set forth in Paragraph 5(2) will be treated by EPA as confidential
in accordance with 40 C.F.R. §§2.201 through 2.215 and any
relevant special confidentiality regulations at 40 C.F.R. §§2.301
et seq. pending any final determination that the information is
not CBI.
16. Preservation of Records. Defendant/Respondent shall
preserve all Records examined by the Audit Firm for three years
after submission of its Corporate Management Report and Plan to
EPA (See Paragraph 27 below). Nothing in this provision shall
authorize destruction of any document required by law or regula-
tion to be preserved for any period of time in excess of three
years.
17. Examination of Groundwater Monitoring Information.
The Audit Firm shall be required to examine and submit to EPA
groundwater monitoring plans and data for each Defendant/Respon-
dent facility listed in Appendix 1 of this Decree/Agreement.
18. Audit Schedule/Agency Access to Defendant's/
Respondent's Facilities"!All audits by the Audit Firm of the
sites listed in Appendix 1 of this Decree/Agreement shall be
completed within 180 days of EPA approval of the Work Plan as
described in Paragraph -9 above. Representatives of the Agency,
including contractors, may accompany audit teams from the
Audit Firm on site audits performed by the Audit Firm and
oversee the performance of the audits by the audit teams for
the purpose of ensuring that the audit procedures and protocols
required by the contract are followed.
19. Facility Audit Reports. As each separate facility
audit is completed, the Audit Firm shall, no later than 30
days thereafter, simultaneously submit to Defendant/Respondent
and the Agency a copy of a Facility Audit Report as defined in
Paragraph 5(7). The failure of the Facility Audit Report to
include all of the required information for any violation
specified in the report shall not be grounds for avoidance of
any penalty which is payable under the Penalty Schedule set
forth in Appendix 2. The Agency shall not be bound by any
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determination of the Audit Firm indicating that Defendant/
Respondent is in compliance with any applicable statutory or
regulatory requirement.
20. Correction of Violations/Submission of Compliance Plans.
In addition to paying the penalties set forth in the"Penalty
Schedule below, Defendant/Respondent shall:
(1) correct any violation indicated within a Facility
Audit Report as soon as is physically possible.
(2) No later than 60 days after it has r- eived an
individual Facility Audit Report, submi_ ;o the Agency
a Compliance Report and Plan.
The Agency shall not be bound by any Defendant/Respondent
determination that it has achieved compliance, that the compliance
was physically impossible to achieve, or that the times for correc-
tive actions proposed by Defendant/Respondent to achieve compliance
are reasonable. All corrective actions mandated by this Decree/
Agreement shall be undertaken in accordance with applicable
federal, state and local law.
PENALTIES AND CORRECTIVE ACTION
21. For Missed Audit Deadlines. Defendant/Respondent shall
pay the following stipulated penalties for any failure by Defendant/
Respondent to comply with any time requirement set forth in this
Decree/Agreement:
Period of Failure to Comply Penalty per Day of Delay
1st day through 14th day $ 5,000.00
15th day through 44th day $10,000.00
45th day and beyond $15,000.00
For Violations of RCRA/TSCA
22. Payment of Penalties. For every violation of RCRA
or TSCA reported in each Facility Audit Report, Defendant/
Respondent shall pay a penalty based on the Penalty Schedule
provided as Appendix 2 of this Decree/Agreement. The listing
of the violation in a Facility Audit Report shall be conclusive
and binding on Defendant/Respondent, and the amount set forth in
the Penalty Schedule shall be due and payable by certified check
to the "Treasurer of the United States." The check shall be
remitted to:
[appropriate EPA lockbox address]
within 30 days of receipt of the applicable Facility Inspection
Report. Penalties shall accrue from the date the violation is
determined to have begun to the date such violation is corrected
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or abated. Subject to the rights reserved in Paragraph 25
below, EPA will not take further enforcement action on those
violations for which penalties are paid and corrective action
taken in compliance with this Decree/Agreement.
23. Unlisted Violations. In the event that the audit
firm reports statutory or regulatory violations other than those
listed in Appendix 2, Defendant/Respondent shall correct such
violations as soon as is physically possible. In addition, the
parties will, for a period of 60 days following receipt of the
Facility Audit Report in which such unlisted violations are
contained, attempt to settle by negotiation the appropriate
remedy and penalties Defendant/Respondent shall pay for such
unlisted violations. In such negotiations, the parties will
compare each unlisted violation to the most similar listed
violation, if possible. In the event of failure of the parties
to achieve settlement of unlisted violations within 60 days,
EPA shall be free to take any enforcement measure authorized
by law.
24. Uncorrected or New Violations. Beginning on the date
EPA receives a Facility Audit Report, Defendant/Respondent
shall have sixty (60) days to correct violations cited therein.
For any previously reported violation discovered to be uncorrected
at the end of such sixty (60)-day-period, Defendant/Respondent
shall pay a. civil penalty of $25,000 per day for each day of
continued noncompliance unless, within sixty (60) days,
Defendant/Respondent has notified the Agency in accordance
with Paragraph 20 that compliance is physically impossible and
has obtained a final decision from the Agency verifying such
physical impossibility. If, during the audit period or during
the first post-audit inspection, the Agency discovers violations
which were not reported to the Agency by the Audit Firm, for
such violations Defendant/Respondent shall pay a civil penalty
as set forth in the Penalty Schedule (Appendix 2). In addition,
the Agency reserves the right to initiate civil or criminal
action (or both) with regard to any previously reported and
uncorrected violation and any violation not previously reported.
25. Reservation of Rights.
a. Reservation of States' and Local Governments'
Right to Inspect Defendant's/Respondent's Facilities.
Nothing in this Decree/Agreement shall limit the
authority of EPA or any state or local government
to enter and inspect any Defendant/Respondent
facility.
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b. Reservation of Agency's Right to Seek Relief.
Except as provided in Sections 21 through
24 above/ nothing in this Decree/Agreement shall
be construed to limit the ability of the United
States to take any enforcement action authorized
by law.
MANAGEMENT SYSTEMS AUDIT
26. Corporate Management Systems Report. No later than
60 days after the last Facility Audit Report is submitted to
Defendant/Respondent and EPA, the Audit Firm shall submit to
Defendant/Respondent and EPA a Corporate Management Systems
Report as defined in Paragraph 5(4) of this Decree/Agreement.
27. Corporate Management Report and Plan. No later than
90 days after it has received the Corporate Management Systems
Report, Defendant/Respondent shall submit to the Agency its own
Corporate Management Report and Plan describing in full detail
what actions it has taken or will take to implement the findings
of the Corporate Management Systems Report.
MISCELLANEOUS TERMS
28. Submission of Reports. Any reports produced by the
Audit Firm, including Facility Audit Reports and the Corporate
Management Systems Report, shall be submitted simultaneously
to EPA and Defendant/Respondent. The Audit Firm shall not
share draft copies of such reports with Defendant/Respondent
unless such drafts are simultaneously submitted to EPA. The
requirements of this Paragraph shall be set forth as a requirement
in the contract between Defendant/Respondent and the Audit Firm
for the performance of the audits described herein. .
29. Effective Date of Decree/Agreement. This Decree/
Agreement shall be considered binding and in full effect upon
approval toy the Federal district court judge/administrative
law judge to whom this matter has been assigned.
30. Notice. All s"hmissions and notices required by this
Order shall be sent to the following address(es):
[insert address(es) of EPA office(s) overseeing Decree/Agreement]
31. Modification. This Decree/Agreement may be modified
upon written approval of all parties hereto, and concurrence of
the Federal District Court Judge/administrative law judge
assigned to this matter.
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32. Dispute Resolution.
(1) The parties recognize that a dispute may arise
between Defendant/Respondent and EPA regarding plans,
proposals or implementation schedules required to be
submitted, regarding tasks required to be performed
by Defendant/Respondent pursuant to the terms and
provisions of this Decree/Agreement, or regarding
whether Defendant/Respondent has incurred liability
to pay stipulated penalties under Paragraphs 19
through 24. If such a dispute arises, the parties
will endeavor to settle it by good faith negotiations
among themselves. If the parties cannot resolve the
issue within a reasonable time, not to exceed thirty
(30) calendar days, the position of EPA shall prevail
unless Defendant/Respondent files a petition with the
court/administrative law judge setting forth the
matter in dispute. The filing of a petition asking
the court/administrative law judge to resolve a
dispute shall not extend or postpone Defendant's/
Respondent's obligations under this Decree/Agreement
with respect to the disputed issue.
(2) In presenting any matter in dispute to the court/
administrative law judge, Defendant/Respondent shall
have the burden of proving that EPA's interpretation
of the requirements of this Decree/Agreement are arbi-
trary, capricious, or otherwise not in accordance with
the law.
33. Continuing Jurisdiction of the District Court/Adminis-
trative Law Judge.The district court/administrative forum in
which this Decree/Agreement is entered shall retain jurisdiction
until all obligations set forth herein are satisfied.
34. Relation to RCRA Permitting Process. Notwithstanding
any other provision of this Decree/Agreement, EPA hereby reserves
all of its rights, powers and authorities pursuant to the
provision* of 42 U.S.C. §§6901 e_t seq. (RCRA) governing permits
for facilities, and the regulations promulgated thereunder.
35. Violations Not Covered by RCRA or TSCA. No stipulated
penalty or other remedy agreed to shall cover or apply to
non-RCRA, non-TSCA violations. The parties shall be left to
their respective rights, liabilities and defenses with regard
to these matters.
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36. Continuing Audit Requirement. For the five-year-period
beginning on the date that Defendant/Respondent submits to the
Agency the Corporate Management Report and Plan required by
Paragraph VII. 27. of this Decree/Agreement, Defendant/Respondent
shall conduct comprehensive audits not less often than annually
of the compliance of its facilities with [applicable statutory
and regulatory requirements). After the initial audit by a
third party consultant (as required by this Decree/Agreement),
such audits may be conducted by such a consultant or by an
independent audit staff of the company not responsible to
production management. Reports of the results of such audits
shall be furnished to the [appropriate corporate environmental
official and plant manager). Within thirty (30) days after
completion of each final annual audit report, Defendant/Respondent
shall submit to EPA a report of incidents of noncompliance
identified by the audit and steps that will be taken to correct
any continuing noncompliance and prevent future incidents of
noncompliance.
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Appendix 1
DEFENDANT'S/RESPONDENT'S FACILITIES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
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Appendix 2
PENALTY SCHEDULE
RCRA Violation
I. Groundwater Monitoring
40 C.F.R. §§ 264.91 and
265.91
II. Unsaturated Zone Monitoring
40 C.F.R. §S 264.97 through
264.100 and 265.92 through
265.94
III. Waste Analysis Plans:
Content and Implementation
40 C.F.R. $S 264.13U) and (b),
and 265.13(a) and (b)
IV. Bulk -Liauids in Landfill
40 C.F.R. §§ 264.314(a)
and 265.314(a)
V. Containerized Liquids
Disposal in Landfill
40 C.F.R. SS 264.314(b)
and 265.314(b)
VI. Waste Tracking within
TSD facility
40 C.F.R. § 264.222
VII. Maintenance of Minimum
Freeboard level for
Surface Impoundment
40 C.F.P. S 264.226(c)
VIII. Ignitable/Reactive
Disposal in Landfill
40 C.F.R. SS 264.312
and 265.312
IX. Land Disposal (direct
application to unlined
surface soils) of non-
biodegradeable wastes
40 C.F.R. S§ 264.272(a)
and 265.272(a)
Penalty
$22,500.00
per missed sampling event
$22,500.00
per missed sampling event
$25,000.00
$22,500
per day of occurrence
$22,500.00
per day of occurrence
$25,500.00
$6,500.00
per freeboard violation
$9,500.00
per cell, per day
$22,500.00
per day
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RCRA Violation
X. Trial test of waste
compatibility prior
to discharge into
surface impoundment
40 C.F.R. S 265.225
XI. Trial test of waste
solidification process
prior to landfill
40 C.F.R. §265.402
XII. Failure to control wind
dispersal of land treatment
waste disposal zones
40 C.F.R. §§ 264.272(e)
and 265.273(f)
XIII. Incompatible wastes placed
into surface impoundment
40 C.F.R. §§ 264.230
and 265.230
XIV. Unauthorized expansion of
TSD facility during
Interim status
40 C.F.R. §270.72
XV. Closure of Units w/o
demonstration of
compliance.with facility
closure plan
40 C.F.R. §§ 264.113
and 265.113
XVI. Inadequate closure/
port-closure inspec-
tion/maintenance plans
40 C.F.R. §§ 264.112
and 265.112
XVII.. Absence of post-closure
groundwater monitoring
program
40 C.F.R. §§ 264.117(a)(1)
and §265.117(a)(2)
Penalty
522,500.00
per day of event
$22,500,00
per day
$22,500.00
per unit
$22,500.00
per day
$20,000.00
per day or as
needed to recapture
all profits gained
$25,000.00
per unit
$15,000.00 per unit
$22,500.00 per day
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RCRA Violation
XVIII. Failure to update closure/
post closure plan cost
estimates
40 C.F.R. §§ 264.144(c)
and 265.114(c)
XIX. No schedule included
for closure activities
40 C.F.R. §§ 264.112(a)
and 265.112(a)
XX. Inadequate Part A
Applications, absence
of identified operating
units
40 C.F.R. §270.13
XXI. Inadequate Part B
Application
40 C.F.R. $270.14
XXII. Absence of complete
facility Inspection
Plan, units omitted
40 C.F.R. §§ 264.15(b)
and 265.15(b)
XXIII. Failure to record
on facility inspections
reports repairs or
remedial measures taken
40 C.F.R. SS 264.15(b)
and 265.15(d)
XXIV. Failure to inspect
freeboard levels
of surface impoundments
40 C.F.R. SS 264.226(b),
(c) and 265.226(a)
XXV. Operating Record
Omissions failure
complete grid maps
of landfilled lifts
of waste
40 C.F.R. SS 264.309
and 265.309
Penalty
$3,000.00 per day
$6,500.00 per plan
milestone omitted
$9,500.00 per unit
not properly identified
$9,500.00 per unit
not properly identified
$2,250.00
per unit emitted,
per day
$2,250.00
per omission
$2,250.00
per occurrence
$2,250.00
per omission
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RCRA Violation
XXVI. Failure to record on-site
generated hazardous wastes
i.e. truck washing facility
40 C.F.R. § 262.4Kb)
XXVII. No training provided
to employee assigned to
do waste analyses
40 C.F.R. §§ 264.16
and 265.16
XXVIII. No analyses performed
on materials added to
on-site waste piles
40 C.F.R. S 265.252
XXIX. Records not provided
to Agency
within 48 hours of reauest.
40 C.F.R. §§ 264.74
and 265.74
XXX. Fence not installed
around all operating
areas of TSD facility
40 C.F.R. §§ 264.14
and 265.14
XXXI. Emergency Contingency
Plan Inadequacies
40 C.F.R. §§ 264.52
and 265.52
XXXII. Failure to Meet
Financial Responsibility
Requirements
4Q C.F.R. Part 264, Subpt. H
and Part 265, Subpt. H
Penalty
$9,500.00
per unrecorded event
$3,000.00
per untrained
employee
$22,500.00
per event
$6,500.00 per day
of delay
$1,000.00
$2,225.00
per component
deficiency
$25,000.00
per day of delay
TSCA Violation
Penalty
XXXIII. Improper Disposal of PCBs
40 C.F.R. S§ 761.60 (a)-(d).
—1,100 or more gallons
or 750 or more cubic
feet of PCS contaminated
material.
$25,000.00 per day,
per violation
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TSCA Violation
—220-1,000 gallons or
150-750 cubic feet of
PCB contaminated
material
—less than 220 gallons or
150 cubic feet of PCB
contaminated material
XXXIV. Failure to Dispose of PCBs
by Jan. 1, 1984.
40 C.F.R. § 761.65(a)
—1,100 or more gallons
or 750 or more cubic
feet of PCB contaminated
material.
—220-1,100 gallons or
150-750 cubic feet of
PCB contaminated
material.
—less than 220 gallons or
150 cubic feet of PCB
contaminated material.
XXXV. Failure to Dispose of PCBs
within one year of removal
from service.
40 C.F.R. § 761.65(a)
--1,100 or more gallons
or 750 or more cubic
feet of PCB contaminated
material.
—220-1,100 gallons or
150-750 cubic feet of
PCB contaminated
material.
—less than 220 gallons or
150 cubic feet of PCB
contaminated material.
XXXVI. Improper Processing of PCBs
40 C.F.R. § 761.20(a)
Penalty
S17,000.00 per day,
per violation
$5,000.00 per day,
per violation
525,000.00 per day,
per violation
$17,000.00 per day,
per violation
$5,000.00 per day,
per violation
$25,000.00 per day,
per violation
$17,000.00 per day,
per violation
$5,000.00 per day,
per violation
$20,000.00 per day,
per violation
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TSCA Violation
XXXVII. Improper Distribution of
PCBs (sale) in commerce.
40 C.F.R. § 761.20(a)
XXXVIII. Improper treatment and
testing of waste oils.
40 C.F.R. §§ 761.60(g)(2)(i)
and (ii)
XXXIX. Improper Use of PCBs
40 C.F.R. § 761.20(a)
XXXX. Improper use of PCBs
(road oiling; dust
control; sealants)
40 C.F.R. § 761.20(d)
XXXXI. Improper use of PCBs
- Transformers
40 C.F.R. § 761.30U)
- Capacitors
40 C.F.R. § 761.30(1)
- Heat transfer systems
40 C.F.R. S 761.30(d)
XXXXII. PC3 Storage Violations
- 40 C.F.R. S 761.65(b)
(facility criteria)
- 40 C.F.R. S 761.65(c)(7)(ii)
(spill plan development)
- 40 C.F.R. § 761.65(c)(8)
(management of liquids
in storage)
XXXXIII. Recordkeeping Violations
(storage for disposal)
40 C.F.R. S 761.180(a)
XXXIV. Recordkeeping violations
(disposal facilities)
Incinerators
40 C.F.R. S 761.180(c)
Chemical waste landfills
40 C.F.R. § 761.180(d)
Penalty
$20,000.00 per day,
per violation
$25,000.00 per day,
per violation
$25,000.00 per day,
per violation
$25,000.00 per day,
per violation
$20,000.00 per day,
per violation
$15,000.00 per day
per violation.
$10,000.00 per day,
per violation
$15,000.00 per day,
per violation
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xxxxv.
TSCA Violation
Marking Violations
40 C.F.R. § 761.40U)
Penalty
$15,000.00 per day,
per violation
XXXXVI. Failure to Date PCB Items
placed into storage
40 C.F.R. § 761.180(a)
$5,000.00 per day,
per violation
XXXXVII. Violation of any condition
of a PCB chemical waste
landfill (40 C.F.r 5 761.75)
or incinerator C.F.R.
§ 761.70) apr ._ation approval
$25,000.00 per day,
per violation
XXXXVIII. Failure to decontaminate
PCB container, tanker
trucks, etc.
40 C.F.R. § 761.79
$25,000.00 per day,
per violation
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Appendix 3
CORPORATE MANAGEMENT SYSTEMS REPORT PROTOCOL
The Corporate Management Systems Report shall:
(1) Identify and describe the existing facility waste manage-
ment operations and the Environmental Management Department's
systems, policies and prevailing practices as they affect
Defendant's/Respondent's corporate compliance with RCRA and
TSCA.
(2) Evaluate such operations, systems, practices, and policies
and identify and describe fully the perceived weaknesses in
such operations, systems, practices, and policies by comparing
them, to the extent practicable, to the existing practices,
programs and policies of other RCRA and TSCA waste management
corporations operating within the continental United States and
to generally accepted corporate management practices.
(3) Based on the evaluation required in paragraphs (1) and (2)
above, the consultant shall identify and describe fully with
supporting rationales the perceived areas, if any, where Defen-
dant's/Respondent's inter- and intra-facility waste management
operations and corporate to operating level environmental
management systems, practices and policies may be improved.
The Corporate Management Systems Report shall list specific
options for improvements in the following areas:
(a) Corporate data management practices pertaining
to the following items:
i. compliance budgets;
ii. staffing;
iii. training;
iv. auditing;
v. incident reporting, including but not limited to
manifest exception reports and any unpermitted
disposal, release, or discharge;
vi. quality assurance test reporting;
vii. quality control reporting;
viii. generator waste profile reports, facility pre-
acceptance reports, and acceptance analysis as
these items compare to each facility's stated
basis for accepting or rejecting individual
waste loads; and
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ix. facility mass balance records reflecting the
internal disposition of all wastes received
for final disposal.
(b) Corporate data evaluation practices, capabilities
and policies pertaining to reports to and from compliance
officers, internal and external environmental audits, regulatory
agency notices of violation and all other compliance data
documents which when evaluated may lead to changes in TSD
operating procedures or directives by corporate management to
modify any individual or multi-facility TSD facility operating
procedures.
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Attachment 3
MODEL EMERGENCY ENVIRONMENTAL MANAGEMENT REORGANIZATION PROVISION
FOR CONSENT DECREES OR AGREEMENTS
E.I. The objective of this provision is to provide a manage-
ment structure at the corporate headquarters level that will
ensure that comprehensive environmental policies and procedures
are developed by top management and fully implemented company-wide
at all facilities.
2. Defendant/Respondent shall propose to EPA's [name of
EPA office overseeing compliance with Decree/Agreement] by
written submittal to [name of Agency contact] within thirty
(30)'days of the effective date of this Decree/Agreement, a
plan for reorganization of the corporate management structure
with respect to environmental affairs. This reorganization
proposal shall be agreed upon by EPA and Defendant/Respondent
in writing, prior to implementation of the reorganization.
a. The management plan shall provide for the creation of
a new position of Director, Environmental Affairs [or other
appropriate title] to exercise the responsibilities set forth
herein. The Director, Environmental Affairs shall report
directly to [a corporate Vice President or other appropriate
top management official not directly responsible for manufacturing/
production activities]. The position shall at all times be
filled by an experienced executive with a background in [approp-
riate industrial field] and in environmental management and
compliance.
b. It shall be the responsibility of the Director,
Environmental Affairs to develop appropriate corporate environ-
mental policies and procedures and to oversee their implementation
at all company facilities to ensure compliance with applicable
Federal, State and local environmental statutes and regulations.
In the development of such policies and procedures, the recom-
mendations of the environmental audit conducted at the [facility]
by an outside consultant as described herein shall be given
full consideration.
c. Defendant/Respondent shall also establish such addi-
tional technical and support positions reporting directly to
the Director, Environmental Affairs as are necessary to meet
the objective of this provision. Neither the Director nor
staff shall be assigned additional responsibilities not related
to environmental compliance. Defendant/Respondent shall provide
adequate budgetary support to the environmental staff.
3. Within ninety (90) days of EPA's approval of the environ-
mental management plan, the company shall appoint the Director,
Environmental Affairs and appropriately qualified staff.
4. Within two hundred seventy (270) days of EPA's approval of
the environmental management plan, the Director, Environmental
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Affrairs shall complete development and begin the implementation
of appropriate corporate environmental policies and procedures
to meet the objective of this provision.
f
5. Within eighteen (18) months of the effective date of
this Decree/Agreement, Defendant/Respondent shall fully implement
the corporate environmental policies and procedures at all
company facilities. This shall include any necessary organiza-
tional, or personnel changes at the individual facility level.
6. Recognizing the corporate responsibility to maintain
compliance with all applicable environmental statutes and
regulations, Defendant/Respondent agrees to maintain a permanent
corporate environmental management staff. The organization,
makeup and functions of this staff may be modified from time
to time as dictated by changes in corporate facilities or
operations or the requirements of environmental statutes and
reaulations.
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