United Slates
Environmental Protection
Agency
Office of
Solid Waste and
Emergency Resoonse
oEPA
DIRECTIVE NUMBER: 9841.2
TITLE: Final Penalty Policy for Sections 302, 303,
304, 311, and 312 of the Emergency Planning and Community
Right-to-know Act and Section 103 of the Comprehensive
Environmental Response, Compensation and Liability Act
APPROVAL DATE: June 13, 1990
EFFECTIVE DATE: June 13, 1990
ORIGINATING OFFICE: OWPE/OE
S FINAL
D DRAFT
LEVEL OF DRAFT
O~A — Signed by AA or OAA
0 B — Signed by Office Director
DC — Review & Comment
*
REFERENCE (other documents):
SWER OSWER OSWER
DIRECTIVE DIRECTIVE Dl
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&EPA
environmental Protection Agency
Washington. DC 20400
OSWER Directive Initiation Request
1. Directive Number
9841.2
2. Originator Information
Name of Contact Parson
Jeffrey S. Heimerman
Mail Code
OS-510
Office
OWPE
Telephone Code
475-7166
3'T1"e Final Penalty Policy for Sections 302, 303, 304, 311, and 312 of the Emergency
Planning and Community Right-to-know Act and Section 103 of the Comprehensive
Environmental Response, Compensation and Liability Act.
4. Summary ol Directive (include bnef statement of purpose)
The Directive provides guidance to EPA Regions on assessing civil administrative
penalties under EPCRA and CERCLA section 103.
5. Keywords
Penalties, EPCRA, CERCLA, Violations, Administrative Assessment
6a. Does This Directive SuperseoePrevious Uirective(s)?
b. Does It Supplement Previous Directive(s)?
X
No
No
Yes What directive (number, title)
Yes What directive (number, title)
Draft Level
A - Signed by AA/OAA
X B - Signed by Office Director
C - For Review & Comment
D - In Development
8. Document to be distributed to States by Headquarters? | | Yt»
No
Tnls Request Meets OSWER Directives System Format Standards.
9. Signature of Lead Office Directives Coordinator
&&
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sr4.
i •
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
JUN I 3 1990
MEMORANDUM
SUBJECT
FROM:
Transmittal of the Final Penalty Policy for CERCLA §103
and EPCRA §§302-312
Bruce M. Diamond, Director,
Office of Waste Programs En
cement
TO:
Michael jk Walker
Acting Associate Enforcement Counse
for Pesticides and Toxic Substan
Office of Enforcement
Addressees
The purpose of this memorandum is to transmit the Final
Penalty Policy for the Emergency Planning and Community Right-to-
Know Act (EPCRA) §§302-312 and CERCLA §103. This policy is
effective immediately and should be used to calculate penalties
in administrative complaints and used to determine the minimum
acceptable settlement amount in civil judicial cases.
This policy reflects input from a number of Headquarters and
Regional offices. Our thanks go out to all who provided their
comments and insights. It could not have been done without your
assistance.
Attachment
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ADDRESSEES
Regional Counsels, Regions I-x
Edward Cohley, Director
Environmental Services Division, Region I
Stephen Luftig, Director
Emergency & Remedial Response Division, Region II
Stephen Wassersug, Director
Hazardous Waste Management Division, Region III
Winston Smith, Director
Air, Pesticides and Toxics Management Division, Region IV
David Ullrich, Acting Director
Waste Management Division, Region V
Russell Rhoades, Director
Environmental Services Division, Region VI
Ronald Ritter, Director
Congressional & Intergovernmental Liaison, Region VII
Robert Duprey, Director
Hazardous Waste Management Division, Region VIII
Jeffrey Zelikson, Director
Hazardous Waste Management Division, Region IX
Charles Findley, Director
Hazardous Waste Division, Region X
David Buente, Chief, Environmental Enforcement Section, DOJ
Jim Makris, Director CEPPO
Lisa Friedman, Associate General Counsel
cc:
EPCRA Enforcement Contacts
Don Mackie, Region I
John Ulshoefher, Region II
Stephanie Branche, Region III
Henry Hudson, Region IV
Mark Horwitz, Region V
Steve Mason, Region VI
Ed Vest, Region VII
Eric Steinhaus, Region VIII
Sandy Carroll, Region IX
Walt Jasper/ Region X
ORC Contacts
Sam SilveTrmari, Region I
Angeles Rodriguez, Region I
Mathy Stanislaus, Region II
Dean Jerrehian, Region III
William Phillips, Region IV
Jim Morris, Region V
Hortense Haynes, Region VI
Diana Reed, Region VII
Jim Stearns, Region VIII
Bill Wick, Region IX
Joan Shirley, Region X
ORC Waste Branch Chiefs
Pam Hill, Region I
Wilkie Sawyer, Region II
Bill Early, Region III
Joan Boilen, Region IV
Lynn Peterson, Region V
Bennett Stokes, Region VI
Baerbel Schiller, Region VII
Sharon Metcalf, Region VIII
Bill Wick, Region IX
Barbara Lither, Region X
HQ Contacts
Sandra Connors, OE-Superfund
Vincent Giordano, OE-Toxics
John Averback, OGC
Kathy Jones, CEPPO
Jonathan Libber, OE-OCAPO
Betty Ojala, OE-Criminal
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OSWER DIR. #9841.2
Final Penalty Policy
for Sections 302, 303, 304, 311, and 312 of the
Emergency Planning and Community Right-to-Know Act
and
Section 103 of the
Comprehensive Environmental Response,
Compensation and Liability Act
United States Environmental Protection Agency
Office of Solid Waste and Emergency Response
Office of Waste Programs Enforcement
and
Office of Enforcement
[Jun« 13, 1990]
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TABLE OF CONTENTS
I. INTRODUCTION 1
II. STATUTORY REQUIREMENTS FOR ASSESSING ADMINISTRATIVE
PENALTIES UNDER CERCLA §109 AND EPCRA §325 3
III. ELEMENTS OF THE CIVIL PENALTY SYSTEM 6
A. Use of the Matrix 7
IV. DETERMINATION OF THE BASE PENALTY 8
A. Nature 8
i). Emergency Response Violations 9
ii) . Emergency Preparedness/Right-to-Know
Violations 9
B. Extent 10
i). Emergency Response Violations 10
ii). Emergency Preparedness/Right-to-know
Violations 12
C. Gravity 16 ^
i). Emergency Response Violations 16
ii). Emergency Preparedness/Right-to-know
Violations 17
D. Circumstances 18
V. ASSESSMENT OF MULTI-DAY PENALTIES 20
VI. CALCULATION OF PENALTY FACTORS RELATING TO THE
VIOLATOR 22
A. Ability To Pay/Continue In Business 22
B. Prior History of Violations 24
C. Degree of Culpability 25
D. Economic Benefit or Savings 27
E. Other Matters as Justice May Require 30
i). Delisting Reductions 30
ii) . Environmentally Beneficial Expenditures . 30
iii). Settlement Considerations 32
iv) . Documentation 32
VII. APPENDIX I 33
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OSWER DIR. #9841.2
I. INTRODUCTION
The Superfund Amendments and Reauthorization Act of 1986
(SARA) created the Emergency Planning and Community Right-To-Know
Act (EPCRA). EPCRA §325 authorizes the U.S. EPA Administrator to
issue orders compelling owners or operators of facilities to
comply with §§302(c) and 303(d) relating to Emergency Planning
and to assess penalties administratively for violations of §304
Emergency Notification, §311 Material Safety Data Sheets, §312
Emergency and Hazardous Chemical Inventory, §313 Toxic Chemical
Release Forms, §322 Trade Secrets, and §323(b) Provision of
Information to Health Professionals, Doctors and Nurses. The EPA
Administrator delegated this authority to the Regional
Administrators by EPA delegation No. 22-3 dated September 13,
1987. Delegation 22-3 was updated by the Administrator on
October 31, 1989.
SARA also amended the enforcement provision for violation of
§103(a) or (b) of the Comprehensive Environmental Response, \
Compensation, and Liability Act (CERCLA). CERCLA §103 (a) and (b)
require the person in charge of a facility or vessel to notify
the National Response Center (NRC) immediately after the release
of a hazardous substance in an amount that exceeds its reportable
quantity. CERCLA §109 authorizes the President to assess
penalties for violations of CERCLA §103(a) and (b) . This
authority has since been delegated to the Regional Administrators
through the EPA Administrator by EPA delegation No. 14-31 dated
September 13, 1987.
Because the reporting requirements for CERCLA §103(a) and
(b) and EPCRA §304 are similar ,and violations of these provisions
may arise out of the same set of facts, EPA has decided to
combine enforcement of these provisions where possible. Also,
EPA proposed in a formal rulemaking that all EPCRA extremely
hazardous substances (EHSs) be included on the CERCLA hazardous
substance list. When this is accomplished, releases required to
be reported under EPCRA 8304 will require notification of the
National Response Center (NRC) as well.
This penalty policy will provide guidance to Regional EPA
case development teams in assessing administrative penalties for
violations of CERCLA 8103(a) and (b) and EPCRA 88304, 311, and
312. This policy should also be used to develop internal
negotiation penalty figures for civil judicial enforcement
actions, other EPCRA provisions not covered by this policy
include §§313, 322, and 323. On December 2, 1988, the Office of
Pesticides and Toxic Substances (OPTS) issued penalty assessment
guidance for violations of 8313. The Office of Waste Programs
Enforcement (OWPE) is coordinating with OPTS to develop an
enforcement response policy for EPCRA 88322 and 323.
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OSWER DIR. 19841.2
This penalty policy provides a framework for assessing
penalties within the Agency's established goals of:
o fair and equitable enforcement of the regulated community
and appropriateness of the penalty to the gravity of the
violation committed;
o deterrence; and
o swift resolution of environmental problems.
This policy does not discuss whether or not an enforcement
action seeking a penalty is the correct enforcement response
given the specific violative condition. Rather, this policy
focuses on determining what the proper civil penalty should be
given that a decision has been made to pursue that line of
enforcement.
\
This policy is immediately applicable and should be used to
calculate penalties for all administrative actions concerning
violations of CERCLA §103(a) and (b) and violations of EPCRA
§§302, 303, 304, 311, and 312 instituted after the date of the
policy, regardless of the date of violation.
In civil judicial cases, EPA may use the policy to calculate
the minimum acceptable penalty amount for settlement purposes,
and may use the narrative penalty assessment criteria set forth
in the policy to argue for as high a penalty as the facts of a
case justify. EPA will revise these calculations as the case
progresses to the extent new facts arise which warrant different
evaluation of the penalty policy criteria.
Because this policy is intended to provide guidance in
assessing administrative and civil judicial penalties only, it
does not constitute a statement of EPA policy regarding the
appropriate circumstances in which the United States may
prosecute violations of CERCLA $103 and EPCRA S304, nor the
criminal sentence that a Court should impose upon conviction for
violations of either of these two provisions of Federal law.
The procedures set out in this document are intended solely
for the use of government personnel. They are not intended and
cannot be relied upon to create rights, substantive or
procedural, enforceable by any party in litigation with the
United States. The Agency reserves the right to act at variance
with this policy and to change it at any time without public
notice.
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OSWER DIR. #9841.2
II. STATUTORY REQUIREMENTS FOR ASSESSING ADMINISTRATIVE
PENALTIES UNDER CERCLA §109 AND EPCRA §325.
CERCLA §103(a) and (b) require the person in charge of a
facility or vessel from which a CERCLA hazardous substance has
been released in an amount that meets or exceeds its reportable
quantity (RQ) to immediately notify the NRC as soon as he/she has
knowledge of the release. Violation of the requirements of
CERCLA §103 may result in a Class I penalty not to exceed $25/000
per violation. CERCLA §109(a)(3) states that in assessing a
Class I penalty for violations of CERCLA §103, EPA must take into
account the "nature, circumstances, extent and gravity of the
violation or violations and, with respect to the violator,
ability to pay, any prior history of such violations, the degree
of culpability, economic benefit or savings (if any) resulting
from the violation, and other matters as justice may require."
violations of CERCLA §103(a) or (b) may also result in a
Class II penalty not to exceed $25,000 per day for each day the
violation continues. For second or subsequent violations, the
amount of the Class II penalty is not to exceed $75,000 for each
day in which the violation continues. CERCLA §109(b) states that
Class II penalties shall be assessed and collected in the same
manner, and subject to the same provisions, as in the case of
civil penalties assessed and collected after notice and
opportunity for hearing on the record in accordance with the
Administrative Procedure Act, 5 U.S.C. 554.
Under CERCLA §103(b)(3), any person who fails to notify the
appropriate agency of the United States Government or who submits
in such notification any information which he knows to be false
and misleading shall, upon conviction, be fined in accordance
with the applicable provisions of Title 18 of the U.S. Code or
imprisoned for not more than 3 years (or not more than 5 years
for a second or subsequent conviction), or both.
EPCRA §302 requires the owner or operator of a facility that
has present any extremely hazardous substances (EHSs) in amounts
that exceed the chemical-specific threshold planning quantity
(TPQ) to notify the State Emergency Response Commission (SERC)
that the facility is subjeot to the planning provisions of the
Act. For facilities with existing inventories of EHSs in excess
of the TPQs, the deadline for notification was May 17, 1987.
Thereafter, if a facility newly acquires an EHS in excess of the
TPQ, the owner or operator is required to notify the SERC and the
Local Emergency Planning Committee (LEPC) within 60 days. EPCRA
§325(a) authorizes EPA to issue orders compelling compliance.
The U.S. District Court has authority to enforce the order and
assess penalties of up to $25,000 per violation per day.
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OSWER DIR. #9841.2
Section 303(d) requires owners or operators subject to §302
to provide the LEPC with the name of a person who will act as the
facility emergency coordinator. Additionally, §303(d)(3)
requires the owner or operator to promptly supply information to
the LEPC upon request. The scope of the information request
encompasses anything necessary for developing and implementing
the emergency plan. EPA is authorized to issue orders compelling
compliance with §303(d). The U.S. District Court has authority
to enforce the order and assess penalties of up to $25,000 per
violation per day.
EPCRA §304(a) requires the owner or operator to notify
immediately the appropriate governmental entities for any release
that requires CERCLA notification and for releases of EPCRA §302
EHSs. The notification must be given to the SERCs for all States
affected by the release and to the community emergency
coordinators for the LEPCs for all areas affected by the release.
Additionally, EPCRA §304(c) requires any owner or operator who
has had a release that is reportable under EPCRA §304(a) to
provide, as soon as practicable, a follow-up written notice (or y
notices) updating the information required under §304(b).
Section 325(b)(l) authorizes EPA to assess a Class I penalty
of up to $25,000 per violation of any requirement of §304. EPCRA
§325(b)(l)(C) states that in determining the amount of any Class
I penalty assessed for a violation of §304, the Administrator
shall take into account the "nature, circumstances, extent and
gravity of the violation or violations and, with respect to the
violator, ability to pay, any prior history of such violations,
the degree of culpability, economic benefit or savings (if any)
resulting from the violation, and other matters as justice may
require."
Section 325(b)(2) authorizes the Administrator to assess a
Class II penalty for violations of §304 in an amount not to
exceed $25,000 for each day a violation continues. For second or
subsequent violations, the amount of the Class II penalty is not
to exceed $75,000 for each day in which the violation continues.
Any civil penalty under §325(b)(2) shall be assessed and
collected in the same manner, and subject to the same provisions
as in the case of civil penalties assessed and collected under
§16 of the Toxic Substances Control Act (TSCA). TSCA §16
mandates that EPA consider the same factors in assessing
penalties that are laid out in EPCRA 1325(b)(1)(C) and includes
the additional requirement for EPA to consider the effect on the
ability to continue to do business. EPA interprets EPCRA
§325(b)(2) to mean that the Agency must follow the procedural
aspects of TSCA §16 (i.e., using the Consolidated Rules of
Practice codified at 40 CFR Part 22) and consider §16 statutory
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OSWER DIR. #9841.2
factors for assessing penalties, but not any specific penalty
policies developed by the Agency under TSCA §16.
Under EPCRA §325(b)(4), any person who knowingly and
willfully fails to provide notice in accordance with section 304,
shall, upon conviction, be fined not more than $25,000 or
imprisoned for not more than two years, or both. In the case of
a second or subsequent conviction, such person shall be fined not
more than $50,000 or imprisoned for not more than 5 years, or
both.
EPCRA §311 requires that the owner or operator of a facility
who is required to prepare or have available a Material Safety
Data Sheet (MSDS) for a hazardous chemical under the Occupational
Safety and Health Act of 1970, shall submit to the SERC, LEPC,
and the fire department with jurisdiction over the facility, on
or before October 17, 1987 (or 3 months after the owner or
operator first becomes subject to OSHA), a MSDS for each such
chemical present at the facility in quantities equal to or *
greater than 10,000 pounds (or a list of such chemicals as
described in that section). If the hazardous chemical is a
listed EHS under §302, the threshold for reporting is 500 pounds
or the chemical-specific threshold planning quantity (TPQ),
whichever is less.
For facilities newly covered by EPCRA 9311 as a result of
the OSHA Hazard Communication Standard expansion to the non-
manufacturing sector, MSOSs or a list of MSOSs were required to
be submitted by September 24, 1988 to the SERC, LEPC and fire
department with jurisdiction over the facility. Construction
industry facilities, due to a court ordered delay, were required
to comply by April 30, 1989. Additionally, if a facility changes
its inventory and becomes subject to EPCRA §311, the facility
must report within 3 months.
Section 312 of EPCRA provides that the owner or operator of
a facility required to prepare or have available a MSDS for a
hazardous chemical under OSHA, shall submit to the SERC, LEPC,
and the fir* department with jurisdiction over the facility, by
March 1, 1988 (and thereafter annually), a completed emergency
and hazardous chemical inventory form containing the information
required under that section.
For non-manufacturing facilities that were newly covered by
the OSHA expansion, the first reporting deadline for EPCRA §312
was March 1, 1989. Facilities in the construction industry must
report for the first time by March 1, 1990. Additionally, if a
facility changes its inventory and becomes subject to EPCRA §312,
the facility must report by March 1 of the following year for the
previous year's inventory.
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OSWER DIR. #9841.2
EPCRA §325(c) states that any person who violates §§312 is
liable for a penalty in an amount not to exceed $25,000 for each
violation. For violations of §311, §325(c)(2) provides that the
violator is subject to a penalty in an amount not to exceed
$10,000 per violation. Section 325(c)(3) states that each day a
violation of §§311 or 312 continues constitutes a separate
violation. The statute provides no further guidance for
calculating penalties under §325(c) for violations of §§311 and
312. However, as a matter of policy, the Agency will use the
statutory factors listed in §325(b)(l)(C) as guidance in
calculating penalties for §§311 and 312.
III. ELEMENTS OF THE CIVIL PENALTY SYSTEM
The civil penalty system established in this document is
designed to comport with the requirements for assessing
administrative penalties established in CERCLA §109, 42 U.S.C.
9609 and EPCRA §325, 42 U.S.C. 11045. Penalties are to be y
determined in two stages. First, a preliminary deterrence (base)
penalty is calculated using the statutory factors1 that apply to
the violation (nature, circumstances, extent, and gravity).
After that base penalty is calculated, the statutory factors that
apply to the violator are considered (ability to pay/continue in
business, prior history of violations, the degree of culpability,
economic benefit or savings, and other matters as justice may
require). Together, the two calculations will yield a penalty
amount that considers all the statutory factors and is
appropriate for the violation. To determine the base penalty,
the following factors related to a violation are considered:
o The "Nature" of the violation;
o The "Extent" of the violation;
o the "Gravity" of the violation; and
o The "Circumstances" of the violation.
Thes« factors are incorporated into one matrix for CERCLA
§103 and EPCRA $302, §303, §304, and §312 violations and another
1 Note "statutory factors" apply as a matter of law only
to Class I penalties under CERCLA §109(a)(3) for violations of
CERCLA 103 and EPCRA §325(b)(1)(C) for violations of §304 only.
EPA applies them to Class II penalties and violations of EPCRA
§§302, 303, 311, and 312 as a matter of policy.
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OSWER DIR. #9841.2
matrix for §311 violations. Two matrices are used because of the
difference in the statutory maximum associated with the different
violations. For §311 the maximum daily amount is $10,000; for
CERCLA §103 and EPCRA §§302, 303, 304 and §312, the first
violation maximum daily amount is $25,000. The base penalty can
be calculated from the matrices in Table I (Infra. Page 20).
The penalty amounts in the matrix were established so that a
worst-case scenario violation could result in the statutory
maximum penalty being assessed. The Agency believes that the
amount of the chemical involved in the violation and the
timeliness of the required reports are both significant factors
in determining the appropriateness of a penalty. The penalty
calculation scheme in this policy assumes that the greater the
quantity of chemicals one uses in conducting business operations,
the more likely that a violation of the reporting requirements
will undermine the emergency planning, emergency response, and
right-to-know intentions of CERCLA §103 and EPCRA. It also
assumes that the greater the quantity of chemicals one uses in •,
conducting business operations, the more responsible one should
be for the safe handling of those chemicals in both emergency and
non-emergency situations. Thus, the penalty scheme in this
policy is equitable and should provide an appropriate level of
deterrence to would-be violators.
The two primary factors used to establish the penalty amount
in the matrix (gravity and extent) are equally weighted. Thus,
the matrices are symmetrical. The penalties range from 100% of
the statutory maximum penalty to 10%. The mid range penalty
cells reflect 66%, 33%, 25%, and 18% of the statutory maximum
penalty. Two penalty amounts are displayed in each cell of the
matrices, with the lower amount being 80% of the upper range of
the cell. These penalty amounts were developed under the
assumption that the violator has the ability to pay.
A. Use of the Matrix
The success of EPCRA is attained primarily through
voluntary, strict and comprehensive compliance with the Act and
its regulations. Deviation from the reporting requirements
weakens the expressed intent of the Act to allow communities to
plan for and respond to chemical emergencies and to allow
citizens guaranteed access to information on chemical hazards
present in their community.
Owners or operators of facilities are responsible for
ensuring that reports for each chemical required to be submitted
under $$304, 311, and 312 are submitted to all recipients on or
before the required deadline. Failure to submit the required .
report to any one of the recipients by the reporting deadline is
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OSWER DIR. #9841.2
a violation subject to the full penalty allowed by the applicable
section of EPCRA. For example, if Company X fails to submit a
§312 inventory form for its hazardous chemicals to all three
points of compliance (SERC, LEPC, fire department), it is liable
for three separate $25,000 per day penalties. The term "points
of compliance" refers to the specific entities designated to
receive submissions and notices under EPCRA.
In assessing penalties, EPA shall consider Respondent's
failure to submit required reports to each point of compliance as
separate violations. Accordingly, the matrix should be used for
each separate violation of a given section. A facility may
submit information on one chemical to each of the three
recipients at different times. Therefore, the extent factor may
be different for each violation resulting in different penalty
amounts. For first time violators, where the facts and
circumstances of the case warrant it, e.g., it is clear that the
respondent had no prior actual knowledge of the CERCLA §103 or
EPCRA reporting requirements, Regions have the option to assess \
one penalty for multi-point of compliance situations. For second
or subsequent violations, penalties should be assessed per point
of compliance.
The penalty amounts shown in Table I are meant for first
time offenders. For second or subsequent violations of CERCLA
§103 and EPCRA §304, the Acts authorize penalties of up to
$75,000 per violation per day. For these violations, treble the
amount shown at the appropriate position of the matrix. Second
and subsequent violations of §§311 and 312 may be addressed
through per day assessment of the base penalty found on the
matrix. (See also, the sections on multi-day penalties and prior
history of violations.)
IV. DETERMINATION OF THE BASE PENALTY
A. Nature
Nature describes the type of violation or requirement
violated. In the context of this penalty policy, it is used to
determine which specific penalty guidelines should be used to
determine appropriate matrix levels of extent and gravity. For
the purposes of the EPCRA and CERCLA reporting requirements,
there are basically two types of violations: emergency response
violations and emergency preparedness/right-to-Jcnow violations.
Emergency response violations are those in which the violator
failed to perform some function or duty during or after a release
of a CERCLA hazardous substance or an EPCRA extremely hazardous
substance (EHS). Emergency preparedness /right-to-Jcnow
violations are those in which the violator was required to submit
8
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OSWER DIR. #9841.2
notifications, information, or reports under the EPCRA statutory
or regulatory timeframes. The types of violations addressed by
this penalty policy include, but are not limited to:
i). Emergency Response Violations
o Failure to notify the National Response Center as required
under CERCLA §103(a) or failure to provide all of the
information required by statute or implementing regulations.
o Failure to notify all affected State Emergency Response
Commissions (SERCs) and the emergency response coordinators
for all affected local emergency planning committees (LEPCs)
immediately as required under §304(a) or failure to provide
all of the information required by statute or implementing
regulations.
o Failure to submit a written follow-up report to all affected.
State emergency response commissions (SERCs) and the
emergency response coordinators for all affected local
emergency planning committees (LEPCs) as soon as practicable
after the release as required under §304(c) or failure to
provide all of the information required by statute or
implementing regulations.
ii). Emergency Preparedness/Right-to-Know Violations
o Failure to notify the State Emergency Response Commission
that the facility is subject to the provisions of the Act as
required under EPCRA §302.
o Failure to inform the LEPC of the name of the facility
emergency coordinator as required under EPCRA §303(d)(l).
o Failure to notify the LEPC of any relevant changes at the
facility as required under §303(d)(2).
o Failure to provide information to the Local Emergency
Planning Committee (LEPC) upon request as required under
EPCRA 9303(d)(3).
3 Failure to submit Material Safety Data Sheets (MSDSs) or a
list of MSDSs (or failure to include a chemical on the list)
to each of the following: the appropriate LEPC; the SERC;
and the fire department with jurisdiction over the facility
as required under EPCRA {311(a).
:> Failure to submit a MSDS to the LEPC upon request as
required under EPCRA §311(c).
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OSWER DIR. #9841.2
o Failure to submit (or incomplete submission of) Emergency
and a Hazardous Chemical Inventory Form to each of the
following: the appropriate LEPC; the SERC; and the fire
department with jurisdiction over the facility as required
under EPCRA §312.
o Failure to provide Tier II information as described in EPCRA
§312(d) to a SERC, LEPC, or fire department upon request as
required under EPCRA §312(e).
B. Extent
The extent factor is used in this penalty policy to reflect
the amount of deviation from CERCIA or EPCRA and their regulatory
requirements. In other words, a violation may range from being
substantially in compliance with the provisions of CERCLA §103 or
EPCRA to being in total disregard of the requirement. Because y
the immediate notification requirements under CERCLA §103 and
EPCRA §304 simply require phone calls to the NRC, SERC, and LEPC
community emergency coordinator, deviation from the requirement
is mainly measured in terms of timeliness. The person providing
the notice must provide the information required in 40 CFR Part
355.40 (chemical identity, estimated quantity released,
time/duration of the release, etc.) to the extent known at the
time of notice and so long as no delay in notice or emergency
response results.
LEVEL 1: The violation deviates from the requirements of the
statute to such an extent that there is substantial
noncompliance.
LEVEL 2: The violation significantly deviates from the
requirements of the statute, but some of the
requirements are met.
LEVEL 3: The violation deviates somewhat from the requirements
of the statute, but there is substantial compliance.
i). Emergency Response Violations
Under both CERCLA and EPCRA, in the event of a reportable
release, notification of the proper authorities is required to
occur immediately after the owner, operator or person in charge
has knowledge of the release. The statutes, and regulations
codified at 40 CFR Parts 302 and 355, identify the information
required to be reported in the event of an accidental release. A
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OSWER DIR. #9841.2
delay in the notification, or incomplete notification, could
seriously hamper Federal and State response activities and pose
serious threats to human health and the environment. Thus, the
extent factor focuses on the notification and follow-up actions
taken by the respondent and the expediency with which those
actions were taken.
The statutes require that notification be made by the person
in charge (or owner or operator) immediately after he/she has
knowledge of a release of an RQ or more of a substance. Although
this policy does not define "immediate", it does establish
guidelines to assist Agency personnel in determining whether or
not an "immediate" standard was met. The immediate notification
is required to allow Federal, State, and local agencies to
determine what level of government response is needed and with
what urgency the response must take place. Early and effective
communication of the release event is crucial. At some point,
the delay in notification is the same as no notification at all.
For both the CERCLA and EPCRA notification requirements, EPA may*
assess the statutory maximum for any notification that does not
occur "immediately" after the "person in charge" (CERCLA) or the
"owner or operator" (EPCRA) has knowledge of the release. The
levels identified below reflect the benefit of expeditious
notification by discounting from the maximum statutory penalty
for the timeliness of the notification.
LEVEL 1:
CERCLA §103: No notification to the NRC within 2 hours after
the person in charge had knowledge that a
reportable quantity of a substance was released
unless extenuating circumstances existed that
prevented notification.
EPCRA §304(a): No notification to the appropriate SERC(s) and
LEPC(s) within 2 hours after the owner or operator
had knowledge of the release unless extenuating
circumstances existed that prevented notification.
EPCRA §304(c): No written follow-up report to the appropriate
SERC(s) and LEPC(s) within 2 weeks following the
release unless extenuating circumstances prevented
its submission.
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LEVEL 2:
CERCLA §103: No notification to the NRC within 1 hour (but
within 2 hours) after the person in charge had
knowledge that a reportable quantity of a
substance was released unless extenuating
circumstances prevented the notification.
EPCRA §304(a): No notification to the appropriate SERC(s) and
LEPC(s) within 1 hour (but within 2 hours) after
the owner or operator had knowledge of the release
unless extenuating circumstances prevented the
notification.
EPCRA §304(c): No written follow-up report to the appropriate
SERC(s) and LEPC(s) within 1 week (but within 2
weeks) following the release unless extenuating
circumstances prevented its submission.
LEVEL 3:
CERCLA §103: No immediate notification to the NRC, i.e.,
although notification occurred within one hour,
the facts and circumstances indicate that the
notification could have been made sooner then
actually made.
EPCRA §304(a): No immediate notification to the appropriate
SERC(s) and LEPC(s), i.e., although notification
occurred within one hour, the facts and
circumstances of the incident indicate that the
notification(s) could have been made sooner than
actually made.
EPCRA §304(c): No written follow-up report to the appropriate
SERC(s) and LEPC(s) as soon as practicable, i.e.,
although follow-up notification occurred within
one week, the facts and circumstances of the
incident indicate that the follow-up was not as
soon as practicable.
ii). Emergency Preparedness/Right-to-know Violations
The emergency preparedness/right-to-know provisions require
that owners or operators submit information to State and local
entities. For emergency preparedness/right-to-Jcnow violations,
the extent factor reflects the potential deleterious effect the
noncompliance has on the Agency's, SERC's or LEPC's ability to
implement the Act or the public's ability to access the
information. For each of these violations, the Agency could
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OSWER DIR. #9841.2
assess the statutory maximum for each violation on a per day
basis. However, the Agency can exercise discretion in penalizing
violations to set amount levels below the statutory maximum for
differences in the extent of the violation. Extent addresses the
timeliness and utility of reports submitted. Therefore, the
extent factor is used, in part, to provide some built-in
incentives for nonreporters to submit the required reports (self
confess) as soon as possible, albeit late, and to provide
incentives for submitters to fill out the forms in a manner
consistent with the statutory and regulatory requirements.
The goal of this part is to establish a standard for
timeliness and completeness. It will allow potential violators
to know by what standard penalties may be assessed should they
violate EPCRA. It will also promote Agency consistency in
assessing penalties by establishing uniform assessments for late
reporting and failure to report.
i
The matrix levels for measuring extent for the emergency
planning/right-to-know violations are as follows:
LEVEL l:
EPCRA §302:
EPCRA §303:
EPCRA §311:
Respondent fails to notify the SERC that it is
subject to the Act within 30 calendar days of the
reporting deadline.
Respondent fails to notify the LEPC within 30
calendar days of reporting obligation.
Respondent fails' to respond to Administrative
Order for §303(d)(3) within 30 calendar days of
required response date.
Respondent submits information in response to §303
information request, claims trade secret any
chemical identity, but fails to submit trade
secret substantiation to justify the claim
(thereby rendering the 8303 submission
substantively incomplete and potentially
fraudulent).
Respondent fails to submit MSDS for each required
hazardous chemical (or list of MSDSs) as required
by §311(a) to the SERC, LEPC, or fire department
within 30 calendar days of the reporting
obligation.
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EPCRA §312:
OSWER DIR. #9841.2
Respondent fails to include chemical on list
submitted.
Respondent submits MSDS or list claiming chemical
identity a trade secret, but fails to submit trade
secret substantiation to justify the claim
(thereby rendering the §311 submission
substantively incomplete and potentially
fraudulent).
Respondent fails to respond to request under
§311(c) within 30 calendar days of the reporting
obligation.
Respondent fails to submit Inventory Form to the
SERC, LEPC, or fire department within 30 calendar
days of reporting deadline.
Inventory form submitted fails to address each y
hazard category present at the facility.
Respondent fails to respond to request under
§312(e) within 30 calendar days of the reporting
obligation.
Respondent submits form that claims trade secret
status for chemical identification, but Respondent
fails to submit trade secret substantiation to
justify the claim (thereby rendering the §312
submission substantively incomplete and
potentially fraudulent).
LEVEL 2:
EPCRA §302:
EPCRA §303:
EPCRA §311:
Respondent fails to notify the SERC that it is
subject to the Act within 20 (but does within 30)
calendar days of reporting obligation.
Respondent fails to notify the LEPC within 20 (but
does within 30) calendar days of reporting
obligation.
Respondent fails to respond to an Administrative
Order within 20 (but does within 30) calendar days
of required response date.
Respondent fails to submit MSDS (or list of MSDSs)
to the SERC, LEPC, or fire department within 20
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OSWER DIR. #9841.2
(but does within 30) calendar days of reporting
obligation.
Respondent fails to respond to request under
§31l(c) within 20 (but does within 30) calendar
days of the reporting obligation.
Respondent fails to submit Inventory Form to the
SERC, LEPC, or fire department within 20 (but does
within 30) calendar days of reporting deadline.
Inventory fora submitted covers all hazard
categories present at the facility, but fails to
cover all hazardous chemicals present at the
facility during the preceding calendar year in
amounts equal to or greater than the reporting
thresholds. Respondent's failure to address all
of the hazardous chemicals renders the submission,
incomplete (i.e., all general locations not
supplied) or inaccurate (i.e., different ranges
apply).
Respondent fails to respond to request under
§312(e) within 20 (but does within 30) calendar
days of required response date.
LEVEL 3:
EPCRA §302
EPCRA §303:
EPCRA §311:
Respondent fails to notify the SERC within 10 (but
does within 20) calendar days of reporting
obligation.
Respondent fails to notify the LEPC within 10
does within 20) calendar days of reporting
obligation.
(but
Respondent fails to respond to an Administrative
Order within 10 (but does within 20) calendar days
of required response date.
Respondent fails to submit MSDS (or list of MSDSs)
to the SERC, LEPC, or fire department within 10
(but does within 20) calendar days of reporting
obligation.
Respondent fails to respond to request under
§311(c) within 10 (but does within 20) calendar
days of the reporting obligation.
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OSWER DIR. #9841.2
EPCRA §312: Respondent fails to submit Inventory Form to the
SERC, LEPC, or fire department within 10 (but does
within 20) calendar days of reporting deadline.
Respondent submitted form addresses all hazard
categories, but fails to meet the standard
required by the Statute or Rule.
Respondent fails to respond to request under
§312(e) within 10 (but does within 20) calendar
days of required response date.
C. Gravity
For the purposes of the emergency response violations,
gravity is determined by the amount of the substance involved in
the violation. CERCLA hazardous substances and EPCRA EHSs have
reportable quantities (RQs) that vary depending on the substance,
but range from 1 pound to 10,000 pounds. Reportable quantities
were established for hazardous substances to indicate an amount,
which if exceeded in a release, would require immediate
notification to the proper governmental authorities. The RQ
scale itself is a relative measure of the hazards posed by the
chemical and therefore the potential threat to human health and
the environment; the lower the RQ, the greater the potential
threat to human health and the environment. The greater the
amount released over the RQ, the greater the potential for the
need for immediate notification. Likewise, the greater the
amount stored on site, the greater the need for fire departments
and emergency planners to know of its existence and location
prior to any explosion or unpermitted release. The goal of
setting standards for the gravity component is to establish,
prospectively, the Agency's expectations for those who handle
hazardous and extremely hazardous chemicals.
i) . Emergency Response Violations
For emergency response violations, the Agency will penalize
a failure to notify relative, in part, to the amount by which the
RQ was exceeded. To determine gravity for emergency response
violations, use the following levels:
LEVEL A: The amount released was greater than 10 times the RQ;
LEVEL B: The amount released was greater than 5, but less than
or equal to 10 times the RQ;
LEVEL C: The amount released was greater than I, but less than
or equal to 5 times the RQ.
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OSWER DIR. 19841.2
ii). Emergency Preparedness/Right-to-know Violations
For the purposes of emergency preparedness/right-to-know
violations, the number and/or amount of the chemical(s) in excess
of the reporting threshold present at the facility forms the
basis for determining gravity. For §8311 and 312, the reporting
threshold for EHSs is 500 pounds or the EHS-specific threshold
planning quantity (TPQ), whichever is less. For other hazardous
chemicals, the reporting threshold is 10,000 pounds. Under §311,
a MSDS is required for each chemical over the threshold.
Alternatively, if a list is submitted, each chemical that
exceeded the threshold must be specifically identified on the
list. For §311 violations, the gravity levels are:
LEVEL A: Amount of hazardous chemical present at the facility at
any time during the reporting period was greater than
10 times the reporting threshold;
i
LEVEL B: Amount of hazardous chemical present at the facility at
any time during the reporting period was greater than
5, but less than or equal to 10 times the reporting
threshold;
LEVEL C: Amount of hazardous chemical present at the facility at
any time during the reporting period was greater than
1, but less than or equal to 5 times the reporting
threshold.
Under §312, if one or more hazardous chemicals are present
above thresholds at any time during the previous calendar year,
an owner or operator of the facility is required to submit an
Emergency and Hazardous Chemical Inventory Form, which may either
be aggregate information by hazard category (Tier I) or specific
information by chemical (Tier II). The form must report all
hazards by category and must include information on all hazardous
chemicals present at the facility during the previous calendar
year in amounts that meet or exceed thresholds. For §312, the
gravity levels are:
LEVEL A: For nonreporting situations: The amount of any
hazardous chemical not included in the report was
greater than 10 times the reporting threshold;
For reports timely submitted: 10 or more hazardous
chemicals, which were required to be included in the
report, were not included in said report.
LEVEL B: For nonreporting situations: The amount of any
hazardous chemical not included in the report was
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OSWER DIR. #9841.2
greater than 5, but less than or equal to 10 times the
reporting threshold;
For reports timely submitted: More than 5, but less
than 10 hazardous chemicals, which were required to be
included in the report, were not included in said
report.
LEVEL C: For nonreporting situations: The amount of any
hazardous chemical not included in the report was
greater than 1, but less than or equal to 5 times the
reporting threshold;
For reports timely submitted: 1-5 hazardous
chemicals, which were required to be included in the
report, were not included in said report.
Level C shall also apply to those submissions in which
respondent's submitted form addresses all hazard \
categories necessary and all hazardous chemicals
present above thresholds during the previous calendar
year, but otherwise fails to meet the standard required
by the Statute or Rule.
D. Circumstances
Circumstances refers to the potential consequences of the
violation. The main objectives of the emergency notification
provisions are to alert local, State, and Federal officials in
the event of chemical accidents so that an appropriate emergency
response action can be taken and to prevent injuries or deaths to
emergency responders from exposure to chemicals. The main
objectives of the emergency planning and community right-to-know
provisions are to assist local and State committees in planning
for emergencies and to make information on chemical presence and
hazards available to the public. Thus, a respondent's failure to
report in a manner that meets the standard required by the
Statute or rule could result in a situation where there is
potential for harm to human health and the environment. The
potential for harm may be measured by:
o the potential for emergency personnel, the community and/or
the environment to be exposed to hazards posed by
noncompliance, or
o the adverse effect noncompliance has on the statutory or
regulatory purposes or procedures for implementing the
CERCLA §103/EPCRA program.
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OSWER DIR. #9841.2
There are some requirements of the EPCRA or CERCIA programs
which, if violated, may not be likely to give rise directly or
immediately to a significant risk of exposure to hazards.
Nonetheless, these requirements are fundamental to the continued
integrity of the CERCLA and EPCRA programs. Violations of such
requirements may have serious implications and merit substantial
penalties where the violations undermine the statutory or
regulatory purposes or procedures for implementing the EPCRA or
CERCLA programs. Also, failure to provide the required
information denies citizens their right to information regarding
the chemical hazards that are present in the community.
After the extent and gravity of the violation have been
determined (placing the proposed penalty in a given cell on the
matrix), the circumstance factor is used to arrive at a specific
penalty within the range for that cell. To incorporate the
circumstances of the violation into the base penalty selection •,
process, the case development team may choose any amount between,
or including, one of the two end points for that cell. For
example, a violation of §312 has been determined to have a Level
1 extent and a Level B gravity placing the proposed penalty in
the matrix cell that contains the range of $16,500 - $13,200.
The circumstances of the violation indicate that the potential
for emergency personnel and the surrounding community to be at
risk of exposure in the event of a release was high (the
emergency personnel did not know of a chemical's presence and
could not plan for the safety of the surrounding community in the
event of a release). The case development team decides that the
maximum amount for that cell is the appropriate base penalty.
i
The selection of the exact penalty amount within each range
is left to the discretion of the enforcement personnel in any
given case. In determining the circumstance level, consideration
may be given to the relative proximity of the surrounding
population, to the effect the noncompliance has on the LEPC's
ability to plan for chemical emergencies, and any actual problems
that first responders and emergency managers encountered because
of the failure to notify (or submit reports) in a timely manner.
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OSWER DIR. #9841.2
Table I. Base Penalty Matrices
CERCLA §103 and EPCRA §§302, 303, 304 and
Extent
Level l:
Level 2:
Level 3 :
Extent
Level 1 :
Level 2 :
Level 3:
Level A
$25,000
20,000
16,500
13,200
8,250
6,600
EPCRA §311 Violations
Level A
$10,000
8,000
6,600
'5,280
3,300
2,640
Gravity
Level B
$16,500
13,200
6,250
5,000
4,500
3,600
Gravity
Level B
$6,600
5,280
2,500
2,000
1,800
1,440
312
Level C
$8,250
6,600
4,500
3,600
2500
2000
\
Level C
$3,300
2,640
1,800
1,440
1000
800
V.
ASSESSMENT OF MULTI-DAY PENALTIES
EPCRA 8325 and CERCLA §109 authorize the Agency to assess
penalties for violations on a per day basis. Two primary goals
exist for using per day assessments: added deterrence and the
need to receive the information sought. Use of a per day
assessment may promote an expeditious return to compliance by
creating disincentives for continued noncompliance and may be
appropriate deterrence for those with a history of violations.
A number of situations may arise that would warrant the
consideration of per day assessment of penalties. A violation
may be so egregious that the case development team feels that a
single day assessment will not be adequate. Situations where
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OSWER DIR. 19841.2
there is a continuing harm may also be cause for assessing
penalties on a per day basis. These situations may warrant the
assessment of the full base penalty (as calculated from the
matrix) for each and every day the violative condition exists.
Understanding that every case has its own peculiarities, the use
of per day penalties will be at the discretion of the case
development team. However, as with any other assessment, the
justification for using, or not using, per day penalties should
be incorporated into a memorandum to the case file.
Per day assessments can also be used in a more routine
fashion. As was stated previously, one reason to use a per day
assessment is to create incentives for violators to return to
compliance as expeditiously as possible. One method to promote
the expeditious return to compliance is to assess the base
penalty for a single day and an additional smaller penalty from
the date of the violation until the date of compliance.
Therefore, when a complaint is issued for a violation of §304 (c),.
§311, or §312 and the situation warrants it, the complaint may
seek a penalty based on calculations from the matrix and seek a
per day assessment of a smaller penalty (e.g., $400 per day for
each day the CERCLA §103 or EPCRA §304(a) notification, §304(c)
report, §311 MSDS, or §312 inventory form continues) from the
date of the violation until the required reports are submitted.
The case development team should require the respondent to send
EPA copies of required submissions to verify compliance. This
approach normally should be used for first time violators.
For second and subsequent violations, CERCLA §109 and EPCRA
§325 authorize the Agency to assess penalties of up to $75,000
per day for each and every day violations of CERCLA §103 and
EPCRA §§304(a) and 304(c) continue. Per day penalties may be
calculated by trebling the amount of the base penalty calculated
in the matrix and assessing that amount each day the violation
continues.
Section 325 of EPCRA does not authorize a special category
of penalties for second and subsequent violations of §§311 and
312. Using the per day assessment of penalties should be
adequate to handle second and subsequent violations of 18311 and
312. The per day assessment for a second or subsequent violation
should run from the date the violation began until the date the
violative condition ends. For second time violations, the base
penalty should be assessed for the first day of violation and 50
per cent of the calculated base penalty should be assessed for
every other day the violation continues. Third and subsequent
violations should be assessed the full statutory daily amount
(See also the section on Prior History of Violations).
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OSWER DIR. #9841.2
VI. CALCULATION OF PENALTY FACTORS RELATING TO THE VIOLATOR
The base penalty reflects the overall seriousness of the
violation. The reasons the violation was committed, the intent
of the violator, and other factors related to the violator are
not considered in choosing the appropriate penalty from the
matrix. However, any system for calculating penalties should
have enough flexibility to make adjustments for legitimate
differences between similar violations. CERCLA §109 and EPCRA
§325 require (for Class I violations of CERCLA §103 and EPCRA
§304) the Agency to consider certain factors related to the
violator. Specifically, in calculating a penalty the Agency must
consider ability to pay/continue in business, any prior history
of such violations, the degree of culpability, economic benefit
or savings (if any), and such other matters as justice may
require (See Footnote 1). These factors, while not exculpatory,
need to be considered in every penalty assessment.
With respect to settlement, before EPA considers adjusting •
the penalty contained in the complaint and applies the factors
relating to the violator, it may be necessary, under certain
circumstances, for enforcement personnel to recalculate the base
penalty. If new information becomes available after the issuance
of the complaint that makes it clear that the initial calculation
of the penalty contained in the complaint is in error,
enforcement personnel should adjust this figure (either up or
down). The basis for any recalculation of the base penalty made
at this time should be documented on the Penalty Calculation
Worksheet. For example, if after the issuance of the complaint,
information is presented that indicates that much less of the
chemical is involved than was believed when the complaint was
issued, it may be appropriate to recalculate the base penalty.
In applying the factors relating to the violator, it must be
kept in mind that the statutory maximums of $25,000 per violation
(§304 Class I penalty), $25,000 per violation per day (§304 Class
II penalty and §312) or $10,000 per violation per day (for §311)
cannot be exceeded for any violation no matter which adjustment
factors apply.
A. Ability To Pay/Continue In Business (Downward
Adjustment Only)
The Agency will generally not request penalties that are
clearly beyond the financial means of the violator. However, EPA
reserves the option, in appropriate circumstances, of seeking a
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OSWER DIR. #9841.2
penalty that might put a company out of business2. For example,
even when there is an ability-to-pay problem, it is unlikely that
EPA would reduce a penalty when a facility refuses to correct a
serious violation or where a facility has a long history of
violations. That long history would demonstrate that less severe
measures are ineffective.
As mentioned previously, the penalty amounts reflected in
the matrix assume that the violator has the ability to pay. The
financial ability adjustment will normally require that the
Agency receive a significant amount of information specific to
the violator. The case development team should assess this
factor after commencement of the negotiation with the violator as
more information becomes available. The burden to demonstrate
inability to pay, as with the burden to demonstrate any other
mitigating factor, rests with the violator. . If the violator
fails to provide sufficient information, then the case
development team should continue to assume ability to pay exists.
\
There are several sources available to assist the Regions in
determining a firm's ability to pay. The National Enforcement
Investigations Center (NEIC) can help obtain information
assessing the financial ability to pay of publicly held
corporations. Additionally, enforcement personnel should
acquaint themselves with the Office of Enforcement's ABEL, the
Agency's computer model that helps analyze ability to pay for
compliance, clean-up, and/or penalties. Although ABEL was
designed with privately held corporations in mind, it will soon
be expanded to include other forms of business entities and it
may serve as an adjunct to other programs available through NEIC
(e.g., the Superfund Financial Assessment System).
If an alleged violator raises the ability to pay argument as
a defense in its answer, or in the course of settlement
negotiations, it shall present sufficient documentation to permit
the Agency to establish such inability. Appropriate documents
will include the following, as the Agency may request, and will
be presented in the form used by the respondent in its ordinary
course of business:
Tax returns
Balance sheets
Income statements
Statements of changes in financial position
Statements of operations
2 Ability to continue in business must be considered, as
a matter of law, only when assessing penalties for violations of
EPCRA $304 under EPCRA §325(b)(2).
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OSWER DIR. #9841.2
Retained earnings statements
Loan applications, financing agreements, security
agreements
Annual and quarterly reports to shareholders and the
SEC, including 10 K reports
Such records are to be provided to the Agency at the
respondent's expense and must conform to generally recognized
accounting procedures. The Agency reserves the right to request,
obtain, and review all underlying and supporting financial
documents that form the basis of these records to verify their
accuracy. If the alleged violator fails to provide the necessary
information, and the information is not readily available through
other sources, then the violator will be presumed to have the
ability to pay.
B. Prior History of Violations (Upward Adjustment Only)
\
The Base Penalty Matrix is designed to apply to first time
offenders. Where a violator has a history of similar violations
under CERCLA and EPCRA at the same or a different site, this is
usually clear evidence that the previous penalty did not provide
sufficient deterrence. For the purposes of this policy, the
Agency interprets "prior violations'* to mean violations of CERCLA
(for releases) or EPCRA only. The following rules apply to
evaluating the history of prior violations:
o A prior violation is considered to be any act or omission
for which a formal enforcement response has occurred
regardless of whether or not respondent admits to the
violation (e.g. complaint, default judgment, consent decree,
or consent agreement/final order).
o To be considered a prior violation, the final order, default
judgment, or consent decree must have been entered within
five (5) years of the present violation.
o In the case of large corporations with many divisions or
wholly-owned subsidiaries, it nay be difficult to determine
whether a previous instance of noncompliance should trigger
upward adjustments to the base penalty. New ownership often
raises similar problems. In general, enforcement personnel
should begin with the assumption that if the same
corporation was involved, adjustments for history of
noncompliance should apply. 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
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OSWER DIR. #9841.2
compliance. " Consequently, the adjustment for history of
noncompliance should apply unless the violator can
demonstrate that the other violating facilities are
independent. In the case of wholly- or partially-owned
subsidiaries, the violation history of the parent
corporation shall apply to its subsidiaries and that of the
subsidiaries to the parent.
For the purposes of this penalty policy, a violation of 5313
will count as a prior violation if the §313 violation occurred in
one of the previous five years. The situation may arise where a
§313 enforcement action will lead to other EPCRA enforcement
actions being filed against the same facility arising from the
same set of facts. If the owner or operator entered into a
consent agreement with EPA for the §313 violation and in that
consent agreement certified their compliance with all of EPCRA
requirements and later they were found to be in violation of
§§302-312, the EPCRA §313 violation may be counted as a prior
violation. Also, if they falsely certify their compliance, the '
respondent could be criminally liable. If this situation arises,
contact the regional office that handles criminal investigations.
As noted in the section on multi-day assessments, for second
or subsequent violations of CERCLA §103 and EPCRA §304, a penalty
of up to $75,000 per violation per day is authorized. For second
or subsequent violations of these requirements, treble the amount
shown at the appropriate position in the base penalty matrix. If
the prior violation was for a non-§304 EPCRA requirement, the
case development team should consider assessing the base penalty
for each day of violation. For second time violations, the base
penalty should be assessed for the first day of violation and 50
per cent of the calculated base penalty should be assessed for
every other day the violation continues. Third and subsequent
violations should be assessed the full statutory daily amount
(See also the section on multi-day penalties).
C. Degree of Culpability (Upward or Downward Adjustment)
The existence of a violation is established without a
showing of failure to adhere to a standard of care. As with
other statutes, EPA pursues a policy of strict liability in
penalizing for a violation. Nonetheless, under the penalty
system in this policy, the base penalty may be increased,
decreased or remain the same depending on the violator's
culpability.
Two concepts that underlie culpability are the violator's
knowledge of the requirement and the violator's control over the
violative act. The lack of knowledge of a particular requirement
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OSWER DIR. #9841.2
would not necessarily reduce culpability. To do so would
encourage ignorance of the law. The test under CERCLA §103 and
EPCRA §§304, 311, and 312 will be whether the violator knew or
should have known of the CERCLA/EPCRA requirements or that the
general nature of his operation deals with hazardous chemicals.
A reduction in penalty based upon lack of knowledge may only
occur where a reasonably prudent and responsible person in the
violator's position would not have known that the conduct was
violative of CERCLA or EPCRA.
The amount of control that the violator had over how quickly
the violation was remedied is relevant in certain instances.
Specifically, if correction of the violative condition was
delayed by circumstance that the violator can clearly show were
not reasonably foreseeable and out of its control, the penalty
may be reduced.
The violator can manifest good faith by promptly identifying
and reporting noncompliance before the Agency detects the
violation. This situation may justify mitigation of a penalty.
Lack of good faith, on the other hand, can result in an increased
penalty. No downward adjustment should be made for the
respondent's efforts to comply after the Agency has detected a
violation. Indeed, failure to take such actions may justify
upward adjustment of the penalty.
If a respondent relies on written guidance by the state or
EPA that an activity will satisfy EPCRA or CERCLA §103
requirements and later it is determined that the activity does
not comply with EPCRA or CERCLA, a downward adjustment in the
penalty may be warranted, but only if the respondent can
substantiate its claim that it relied on those assurances in good
faith. On the other hand, claims by a respondent that "it was
not told" by EPA or the State that it was out of compliance
should not justify any downward adjustment of the penalty.
Any prior contact that EPA, the State or LEPC has had with
the respondent including, but not limited to, documented phone
contacts, Administrative Orders under EPCRA 58302 and 303,
Notices of Violation, warning letters, contact under EPCRA J313,
and/or respondent's attendance at EPCRA seminars may be used to
help determine the culpability of the respondent. Formal
enforcement actions against the respondent that result in
issuance of a consent decree, final order or default order should
be counted under the Prior History of Violations determination.
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OSWER DIR. 19841.2
For purposes" of CERCLA §103 and EPCRA §§304, 311 and 312,
three levels of culpability have been assigned:
Level 1: The violator had prior knowledge of EPCRA and its
reporting requirements as evidenced by its attendance
at an EPCRA seminar or workshop, or having been
previously contacted by EPA, the SERC, or LEPC through
a documented phone conversation concerning EPCRA, an
EPCRA informational letter, EPCRA warning letter, EPCRA
§313 activities, EPCRA Notice of Violation, etc. —
Increase the base penalty up to 25%.
Level 2: The violator did not comply either due to lack of
knowledge of the requirement, lack of management
requirements in systems, or failure to adhere to
internal procedures. — No adjustment to the base
penalty.
Level 3: The violator attempted to comply properly or self- '
confessed before the Agency detected the violation. —
Decrease the base penalty up to 25%.
It is anticipated that most cases will present Level 2
culpability. However, if it can be shown that the facility had
previous knowledge of EPCRA or had previously participated in an
EPCRA training or seminar or received any outreach literature,
notification, warning letter, etc., from EPA, the SERC, or LEPC
regarding EPCRA reporting requirements, a Level 1 culpability
ranking may be considered.
D. Economic Benefit or Savings
EPA should consider any economic benefit from noncompliance
that accrues to the violator when assessing penalties. Whenever
there is an economic incentive to violate the law, it encourages
noncompliance and thus weakens EPA's ability to implement the
Acts and protect human health and the environment. The violator
should not benefit from its violative acts. An economic benefit
component should be calculated and added to the base penalty (but
not to exceed the stautory maximum) when a violation results in
any economic benefit to the violator. However, the base penalty
cannot exceed the statutory maximum
For EPCRA §§304(c), 311, and 312 reporting violations, the
economic benefit or savings typically is derived from the
estimated cost of producing and submitting the reports. The
economic benefit derived from failure to provide emergency
notification (e.g., the cost of a phone call) is considered
negligible. The economic benefits for failure to submit i§311
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OSWER DIR. #9841.2
and 312 reports include the cost of producing the reports and any
filing fees that are imposed by States.
The Regulatory Impact Analysis (RIA) for the §§311/312
regulation establishes unit costs for producing the required
reports (see Table II, Page 30, Infra). These cost estimates
should be used unless more accurate data is available. Costs are
disaggregated into costs associated with rule familiarization,
establishment of filing systems, threshold effects, preparation
and submission of required reports. In using this information to
determine economic savings for multiple violations, the variable
costs should be counted once only and the fixed costs counted for
each chemical violation.
It is anticipated that most of the savings associated with
these violations in a number of cases may be negligible. In the
interest of simplifying and expediting the enforcement action,
enforcement personnel may forego calculating the economic benefit
if it appears to be less than $2,500. However, this decision \
should be documented in the narrative penalty justification kept
in the case file. If it looks to be close to, or above $2,500,
the economic benefit should be calculated using BEN. If the BEN
evaluation derives an economic benefit above $2,500, that amount
should be included in the penalty.
It is generally the Agency's policy not to settle cases for
an amount that is less than the economic benefit of non-
compliance. However, this civil penalty policy sets out four
general areas where settling the case for less than the economic
benefit may be appropriate. These include situations when:
o there are compelling public concerns that would not be
served by taking a case to trial;
o it is highly unlikely, based on the factors of the case as a
whole, that EPA will be able to recover the amount of the
economic benefit in litigation;
o the company has documented an inability to pay more than the
amount of the estimated economic benefit; or
o the economic benefit is insignificant (i.e., < $2,500).
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OSWER DIR. #9841.2
Table II. Coat Associated vith EPCRA §311 and §312 Reports
COSTS ASSOCIATED WITH §§311 AND 312 REPORTS
Fixed Unit Costs under §311
Copy, handle and mail MSDS $1.84
File MSDS $2.84
MSDS Cover Letter $14.56
$18.73
Fixed Unit Costs under f312
Decision on Tier I/II
Hazard Classification
Typing and QA/QC
Preparing forms
Copying & Mailing
$239.25
$7.48
$67.81
$6.18
$5.37
$326.09
Variable Unit Costs for Manufacturers
Employees
0-19
20-99
100 - 249
>250
§311
Rule Familiarization $43.50 $65.25 $99.78 $146.81
Filing System $400.88 $601.32 $901.98 $1352.97
Threshold Effects $27.20 $40.80 $61.19 $91.79
§312
Rule Familiarization $43.50 $65.25 $99.78 $146.81
* Unit cost* in the non-manufacturing sector for rule v: y
familiarization, filing system, and threshold effects for all
facility size categories are assumed to be comparable to the unit
costs in the manufacturing sector for the same activities in the
size category of 0 to 19 employees.
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OSWER DIR. #9841.2
E. Other Matters as Justice May Require
This policy acknowledges that no two cases are exactly
alike. Unique circumstances above and beyond those taken into
account by the factors discussed in the previous sections may be
significant in determining the appropriateness of a penalty. The
following discussions address some circumstances that may affect
the settlement penalty amount.
i). Delisting Reductions
If the Agency proposes the delisting of a chemical on the
extremely hazardous substance (EHS) list by a Federal Register
Notice, the Agency may settle cases involving the proposed
delisted chemical under terms which provide for a 25% deferral of
the initial penalty calculated for any EPCRA §§302, 303, 304,
311, or 312 violation involving that chemical. Note, that if the
chemical does become delisted, reporting obligations under §§311 .
and 312 may still apply, however, the applicable threshold would *
be the 10,000 pound threshold which normally applies to other
"hazardous chemicals" under the OSHA Hazard Communication
Standard. The deferral policy is only applicable to chemicals
proposed for delisting before or during the pendency of the
enforcement action. The penalty deferred becomes due and owing
30 calendar days after publication of the Agency's decision to
retain the chemical on the extremely hazardous substance list.
If the Agency's final published decision is to delist the
chemical, the deferral becomes a reduction in penalty which is in
addition to any other possible reductions possible in this
policy.
ii) . Environmentally Beneficial Expenditures
Instances may arise where a violator will offer to make
expenditures for environmentally beneficial projects above and
beyond those required by law. In these instances, it may be
appropriate to accept a lover penalty amount for settlement in
light of the totality of the agreement. The Agency, in settling
penalty actions in the U-S. District Courts under the Clean Air
and Water Acts, has determined that considering such expenditures
is consistent with the purpose of civil penalty assessment in
certain cases. The same rationale applies to penalties that are
assessed in administrative settlements. In the past, the Agency
has used its enforcement discretion to mitigate proposed
penalties for some environmentally beneficial projects proposed
and implemented by the respondent. In applying this penalty
policy, this mitigation is completely discretionary.
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OSWER DIR. #9841.2
This adjustment constitutes a basis for accepting a lower
cash penalty amount. Before any proposed adjustments are
incorporated into a settlement, the case development team should
ensure that all of the following conditions are met:
o No adjustments can be given for activities that currently
are or will be required under the current law or are likely
to be required under existing statutory authority in the
foreseeable future (e.g., through rulemaking).
o The majority of the project's environmental benefit should
accrue to the general public rather than to the source.
o The project cannot be something that the violator could
reasonably be expected to do as part of sound business
practices.
o EPA must not lower the amount it decides to accept in
penalties by more than the after tax net-present value of *
the project. (The after tax net-present value of a project
can be calculated on BEN.)
o The project proposed by the Respondent should promote the
goals of EPCRA: to increase emergency planning,
preparedness, and response or to increase public awareness
of EPCRA.
o Environmentally beneficial expenditures may include those
expenditures that go to a SERC or LEPC for a designated use
to further the goals of EPCRA.
o The mitigation for environmentally beneficial expenditures
may not reduce the penalty below the economic benefit of
noncompliance.
In all cases where alternative payments are accepted, the
case development team should document that each of the conditions
mentioned above are met and include this documentation in the
case file. Additionally, the case development team should take
into account the following:
o The project should not require a large amount of EPA
oversight;
o The project should receive stronger consideration if it
takes place in the locality in which the facility is
located;
o The company should agree that any publicity it disseminates
regarding its funding of the project oust include a
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statement that such funding is in settlement of a lawsuit
brought by EPA.
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 that are to be spent at the
Agency's discretion. The final order, decree or judgment should
state what financial penalty the violator is actually paying and
describe, as precisely as possible, the environmentally
beneficial project the violator is expected to perform.
iii).Settlement Considerations
Any reductions in penalties are to be made in accordance
with this penalty policy. In settling cases, if the case
development team wishes to enter into an agreement with the
company to an audit of the company's facility(ies), the consent .
agreement and consent order should contain related provisions. •
Any additional violations identified during the audit may be
assessed penalties in accordance with this penalty policy and may
include stipulated penalties. However, reductions for voluntary
disclosure may be made as appropriate.
iv). Documentation
Any mitigation of the proposed penalty must be documented in
the case file. A narrative justification and a revised penalty
calculation worksheet should document the amount of the penalty
mitigated and the justifications for the mitigation based on the
statutory factors. A penalty calculation worksheet and a
narrative explanation worksheet are included in Appendix I.
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OSWER DIR. 19841.2
VII. APPENDIX I
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PENALTY CALCULATION WORKSHEET
Respondent: Complaint DCN:.
Count #: Inspection Date:'
Chemical Name/CAS : RQ/TPQ:'
Violation:
NATURE: a) Emergency Response (CERCLA §103/EPCRA §304)
b) Planning/Right-to-know (§§302, 303, 311, 312)
EXTENT: Time passed from deadline to performance of required action in
hours or days, specify: or the amount of
deviation from the requirement. Matrix level
GRAVITY: 1) Amount of chemical involved in violation (Ibs.)
2) Divide amount in 1) by [RQ/TPQ/Threshold (circle
one) ] = . Matrix level
CIRCUMSTANCES: 1) Likelihood of exposure to hazards posed by
violation, or
2) Adverse effect violation has on implementing the
EPCRA program: High Medium Low ,
Specify choice of penalty amount from range listed
for the cell of the matrix .
1. Base Penalty $
2. Culpability (% increase or decrease +/~ )•$
3. Prior History: §§304/103: treble base amount
per day penalty
§§311/312: per day penalty
4. If per day, multiply line 1 by days of noncompliance....$
If treble, multiply Line 1 by 3 $
5. Add 1 ines 2 and 4 $
6. Economic gains from noncompliance $
7 . Add 1 ines 5 and 6 $
8. Other adjustments as justice may require $
9. Total penalty* (line 7 +/- line 8) $
*For first time violators, total penalty cannot exceed $25,000 per
violation per day or $10,000 per violation per day (for §311).
Repeat procedure for each violation.
Prepared by: Signature:.
Date: Page of.
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NARRATIVE EXPLANATION
Dat«:
[SECTION VIOLATED]
A. FACTORS THAT APPLY TO THE VIOLATION
NATURE:
EXTENT:
GRAVITY:
CIRCUMSTANCES:
B. FACTORS THAT APPLY TO THE VIOLATOR
ABILITY TO PAY:
PRIOR HISTORY OF VIOLATIONS:
DEGREE OF CULPABILITY:
ECONOMIC BENEFIT OR SAVINGS:
OTHER MATTERS AS JUSTICE MAY REQUIRE:
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