Environmental Protection
          Agency
            Clt.ct ol
            Solid Wast* and
            Emergency Response
  &EPA
DIRECTIVE NUMBER: OSWER Directive # 9900.1A
TITLE: 199° RCRA Civil Penalty Policy
                           , 1990
                           , 1990
APPROVAL DATE: • October
EFFECTIVE DATE: October
ORIGINATING OFFICE: Office of Enforcement
m FINAL
D DRAFT
 LEVEL OF DRAFT
               — Signed by AA or OAA
             D B — Signed by Office Director
             DC — Review & Comment
          REFERENCE (other documents):
S WER      OSWER      OS WER
  DIRECTIVE   DIRECTIVE   Dl

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           UnitidSuies
           Environmental Protection
           Agency
             i

             Officf ol
             Solid Witt* tnd
             Em«rg*ncy Hdponst
  &EPA
 DIRECTIVE NUMBER: OSWER Directive # 9900.1A

 TITLE: !990 RCRA Civil Penalty Policy



 APPROVAL DATE: October  , 1990

 EFFECTIVE DATE: October  ' 199°

 ORIGINATING OFFICE: Office of Enforcement

 E FINAL

 D DRAFT

  LEVEL OF DRAFT

   (29~A — Signed by AA or OAA
   D B — Signed by Office Director
   DC — Review & Comment

REFERENCE (other documents):
S WER      OSWER      OS WER
  DIRECTIVE   DIRECTIVE    Dl

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&EPA"
                           Unfttd SUtw £nvlronm«nul Prol*oJon Agancy
                                 •n; DC 20«0
                 OSWER Directive Initiation Request
             .Qir»dfc« Number

              9900.1A
                                2. Origlhilor Information
      Nim« of Contact Pin on
           Karin Leff
      3. TiUt	
                            MaJICodi
                            OS-320
                                                         382-3618
       1990 RCRA Civil Penalty Policy
      4. Sumnu/y ol Oi/ictiv« (Indud* brief mtemtnt of purpos*)
       The document gives guidance on how to'calculate and document civil
       penalties for administrative and' civil judicial proceedings
       at settlement.
      5. Keywords
           penalty policy, multi-slay 'ptehaJties,  gravity-based penalties
      6*. Oois This Oirtcuv* Suptrscdt Previous OwieUv«(j)7
      b.OofsKSuppltmini Previous Olrtctivf(s)?
                                r—l
                                ).•  .|
                                         .No
                                               .	.
Y««'   What dlr*c(k« (numbV, tltli)
 9900.1 FINAL FCRA CIVIL PENALTY
 POLICY
Y«»   Whit oVactiv* (numbtr. t»«)
       . Or«n Ltv«l
          A-S/gntdbyAM>AA    | . | B-Sign*dbyOMwDirector.
                                            C - Fot Rtvltw & Comment
                     0-l*0«v«(opm«
           8. Document to be distributed to States by Headquarters?  H3Y**   I   1^
ThU R«qu.it M«tU OSWEH Olr«etlv«i Syittm Format Sljndird*.
9. Sgnituri of Lud OMc« DirrfcUvi* Coordinator • .•••
10. Natnt and TiUt o< Approvin((/0/I|CUJ
OaU
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     EPA Form 13tS-17 (Riv. $-17) Previous «£Uon* «r« obsdlitc.-
   OSWER          OSWER               OSWER              (
VE     DIRECTIVE         DIRECTIVE        DIRECTIVE

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                              United States Environmental Protection Agency
             L                            Washington, D.C. 20460

                                                FACT SHEET

                               1990 REVISED RCRA CIVIL PENALTY POLICY

        t-'i .r -red by the U.S.  EPA Office of Enforcement - RCRA Division, ana the Office of
        Solid Waste and Emergency Response - Office of Waste Programs Enforcement
 EPA ACTION:

 PURPOSE:




 BACKGROUND:
CALCULATING
THE PENALTY:
EPA is issuing the revised RCRA Civil Penalty Policy (RCPP or the Policy).

EPA is issuing the revised RCPP to ensure that civil penalties in both civil judicial
and  administrative cases  reflect the gravity of  RCRA violations,  deter non-
compliance, eliminate economic  incentives to violate the law, and  are well
documented.

The first RCRA penalty policy, issued in 1984, applied to administrative penalties
only.  The  1984 policy was intended, among other things, to ensure that RCRA civil
penalties were fair, consistent, and appropriate to the gravity (seriousness) of  the
violation.  These goals are continued in the new RCPP, which EPA revised based
on six years of experience implementing the 1984 policy.

Both the Inspector General's September 18, 1989 Consolidated Report  on RCRA
penalties, and the Agency's own 1990 RCRA Implementation Study concluded that
the RCRA  program must  propose and collect higher penalties.  The new RCPP
addresses  this concern by providing for increased, but fair penalties.
Pursuant to the new RCPP, the penalty for a violation is calculated in four steps.
They are:

        1)      determining the appropriate gravity-based penalty based on the
               'probability of harm* posed by the violations, and its 'extent of
               deviation from regulatory requirements';
        2)      calculating a multiday component to address the violation's duration
               (in accordance with the policy);
        3)      adjusting the overall gravity-based penalty  based on individual
               factors; and
        4)      calculating  and recapturing  the  'economic  benefits from non-
               compliance* obtained by the violator.
MAJOR CHANGES
IN THE 1990 POLICY:

o      The moat significant changes in the new RCPP concern how multiday penalties are calculated.
       The Poicv establishes three classifications of violations for multiday penalties based on the relative
       gravity of the violations. These categories, which apply to days 2-180 of continuing violations, are
       "mandatory", 'presumed*, and  'discretionary*  (see attachment).  When multiday penalties are
       presumed to be appropriate, they must be imposed  unless case-specific factors supporting the
       decision not to  assess multiday penalties are documented.  Multiday penalties for days 180 + of
       all violations are discretionary.

o      For the first time, the RCPP will apply to civil judicial settlements.  It will continue to apply to both
       administrative complaints and settlements, as well.

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J^S S / / / I /
x^X / ' / / I
/ / / I I
The RCPP requires enforcement personnel to document their penalty calculations and  supporting
evidence for t>oth proposed penalties and settlement amounts in the case files.  The Regions will
be required to send their penalty calculation worksheets to  EPA Headquarters for periodic review
and analysis.  This will help ensure that the RCPP is being implemented properly.

                       Where a multiday penalty is sought, the Policy requires it to be calculated
                       using a multiday penalty matrix.  The dollar amounts in each cell m the
                       multiday matrix range from 5% to  20% of the corresponding cell in the
                       gravity-based penalty matrix.
             \ \ \\.'^''*.
              \  \  \ XX
       \  \ \ \

The RCPP contains explicit guidance on how to select the appropriate cell  in the gravity-based
matrix, how to calculate economic benefit, when to require multiday penalties and how to apply
mitigating factors to reduce/increase a penalty-  The policy also includes  several detailed sample
penalty calculations as guidance.  Persons interested in knowing more  about these topics are
encouraged to review the RCPP itself.

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                           Attachment
                     - MULTIDAY PENALTIES -
Potential
   for.
  Ham;
             MULTIDAY GRAVITY-BASED PENALTY MATRIX

                           Extent of Deviation
                       From Regulatory Requirement

MAJOR
MODERATE
MINOR
MAJOR
M.
M.
Pr.
MODERATE
M.
Pr.
Dis.
MINOR
Pr.
Dis .
Dis.
                 Key:  "M" means, "Mandatory"
                       "Pr." means, "Presumed"
                       "Dis." means, "Discretionary'

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RCRA CIVIL PENALTY POLICY
                         October 1990

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                   RCRA CIVIL PENALTY POLICY
                        TABLE OF CONTENTS
    I.   Summary of the Policy.	1
   II.   Introduction	 4
  III.   Relationship to Agency Penalty Policy	6
   IV.   Documentation and  Release of  Information	6
    V.   Relationship Between  Penalty  Amount Sought in an
        Administrative Complaint and  Accepted in Settlement 10
   VI.   Determination of Gravity-Based Penalty	 12
        A.  Potential for  Harm	13
        B.  Extent of Deviation  from  Requirement	17
        C.  Penalty  Assessment Matrix.	18
 VII.   Multiple and Multi-Day Penalties	.19
        A.  Penalties for  Multiple Violations	19
        B.  Penalties for  Multi-Day Violations	22
        C.  Calculation  of the Multi-Day Penalty	23
Vlli.   Effect of Economic Benefit of Noncompliance	25
       A.  Economic  Benefits of  Delayed Costs and	26
              Avoided Costs
       B.  Calculation of Economic Benefit	 .27
  IX.  Adjustment Factors and Effect of Settlement	30
       A.  Adjustment Factors	30
       B.  Effect of Settlement	40
   X.  Appendix	41
       A.  Penalty Computation Wor)csheet	41
       B.  Ben Worksheet	.47
  XI.  Hypothetical Applications of  th« Penalty Policy	48

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                     RCRA CIVIL PENALTY POLICY


 I.    SUMMARY  OF  THE  POLICY

      The  penalty calculation system established through EPA's
 RCRA  Civil  Penalty Policy consists of (1) determining
 a gravity-based  penalty for a particular violation, from a
 penalty assessment matrix, (2) adding a "multi-day" component,  as
 appropriate,  to  account for a violation's duration, (3) adjusting
 the sum of  the gravity-based and multi-day components, up or
 down,  for case specific circumstances, and (4) adding to this
 amount the  appropriate economic benefit gained through non-
 compliance.   More specifically, the Revised RCRA Civil Penalty
 Policy establishes the following penalty calculation methodology:

 Penalty Amount - gravity-based * multiday  + adjust- + economic
                     component   component  - ments   -  benefit

      In administrative civil penalty cases. EPA will perform two
separate  calculations under this policy: (1) to determine an
appropriate amount to seek in the administrative complaint and
subsequent  litigation, and,(2) to explain and document the
process by which the Agency arrived at the penalty figure it has
agreed to accept in  settlement.  The methodology for these
calculations  will differ only in that no downward adjustments
 (other than those reflecting a violator's good faith efforts to
comply with applicable requirements) will usually be included in
the calculation  of the proposed panalty for the administrative
complaint.  In those instances where the respondent or reliable
information demonstrates prior to the issuance of the complaint
that applying further downward adjustment factors  (over and above
those reflecting a violator's good faith efforts to comply) is
appropriate,  enforcement personnel may in their discretion  (but
are not required to) make such further downward adjustments in
the amount of the penalty proposed in the complaint.

     In determining  the amount of the penalty to be included in
the complaint, enforcement personnel should consider all  possible
ramification* posed  by the violation and resolve any doubts
(e.g., as to  the application of adjustment factors or  the
assumptions underlying the amount of the economic benefit enjoyed
by the violator) against the violator in a manner consistent with
the facts and findings so as to preserve EPA's ability to
litigate  for  the strongest penalty possible.  It should be  noted
that assumptions underlying any upward adjustments or refusal  to
apply downward adjustments in the penalty amount are  subject to
revision later as new information becomes available.

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      J.n  civil  jmflicial cases. EPA will 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 should the case go to
 trial, and  will prepare  a calculation which applies this policy
 to lay out  the rationale behind any penalty amount the Agency
 agrees to accept  in  settlement.

      Two factors  are considered in determining the gravity-based
 penalty  component:

      o     potential for harm; and

      o     extent of deviation from a statutory or regulatory
            requirement.

 These two factors constitute the seriousness of a violation under
 RCRA, and have been  incorporated into the following penalty
 matrix from which the gravity-based component will be chosen:

                              MATRIX

                   Extent of Deviation from Requirement
Potential
  for
 Harm

MAJOR
MODERATE
MINOR
MAJOR,
$25,000
to
20,000
$10,999
to
8,000
$2,999
to
1,500
MODERATE
$19,999
to
15,000
$7,999
to
5,000
$1,499
to
500
MINOR
$14,999
to
11,000
$4,999
to
3,000
$499
to
100
     The) policy also explains how to  factor  into the  calculation
of the gravity component the presence of multiple  and aulti-day
(continning) violations.  The policy  provides  that for days  2
through ISO of multi-day violation*,  multi-day penalties  are
mandatory, presumed, or discretionary, depending on the "potential
for harm" and "extent of deviation" of the violations. For  each
day for which multi-day penalties are sought,  the  penalty amounts
must be determined using the multi-day penalty matrix. The
penalty amounts in ths multi-day penalty matrix rang* from 5%  to
20% (with a minimum of $100 per  day)  of the  penalty amounts  in
the corresponding gravity-based  matrix cells.   Regions also  retal
discretion to impose multi-day penalties  (1) of up to $25,000  per
day, when appropriate under the  circumstances, and (2) for days
of violation after the first  180, as  needed  to achieve deterrence.

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       Where a company has derived significant savings  or profits
 by its failure to comply with RCRA requirements,  the amount of
 economic benefit from noncompliance gained by the violator will
 be calculated and added to the gravity-based penalty amount.
 The Agency has developed and made available to Agency  personnel a
 computer model that can quickly and accurately calculate economic
 benefit - BEN.

       After the appropriate gravity-based penalty amount
 (including the multi-day component)  has been determined, it may
 be adjusted upward or downward to reflect particular
 circumstances surrounding the violation.   Except  in the unusual
 circumstances outlined in Section VIII the amount of any economic
 benefit enjoyed by the violator is not subject to adjustment.
 When adjusting the gravity-based penalty amount the following
 factors should be considered:

       o   good faith efforts to comply/lack of good faith
           (upward or downward adjustment);

       o    degree of willfulness and/or negligence (upward or
           downward adjustment);

       o    history of noncompliance (upward adjustment);

       o    ability to pay (downward adjustment);

       o    environmental  projects to be undertaken by the violator
             (downward adjustment); and

       o    other  unique factors, including but not limited to
           the  risk and cost of  litigation (upward or downward
             adjustment).

     These  factors  (with the exception of (i)  upward adjustment
factors such as  history  of noncompliance,  and (ii) the statutory
downward adjustment factor reflecting a violator's good  faith
efforts to  comply)  should usually be considered after  the penalty
in the complaint has been proposed,  i.e.,  during  the settlement
stage.

    A detailed discussion of the policy follows.   In addition,
this document  includes a few hypothetical cases where  the step-
by-step assessment  of penalties is illustrated.  The steps
included are choosing the correct penalty cell on the  matrix,
calculating the  economic benefit of noncompliance, where
     1    For more information regarding the BEN model, call the
Office of Enforcement Policy  located within the Office of
Enforcement, at 475-8777.

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                               - 4 -


 appropriate,  and  adjusting  the penalty assessment on the basis of
 the  factors  set forth  above.

 II.   INTRODUCTION

      To  respond to  the problem of improper management of
 hazardous  waste,  Congress amended the Solid Waste Disposal Act
 with the Resource Conservation and Recovery Act (RCRA)  of 1976.
 Although the Act  has several objectives, Congress' overriding
 purpose  in enacting RCRA was to establish the basic statutory
 framework  for a national system that would ensure the proper
 management of hazardous waste.  Since 1976, the Solid Waste
 Disposal Act  has  been  amended by the Quiet Communities Act of
 1978, P.L. 95-609,  the Used Oil Recycling Act of 1980,  P.L.
 96-463,  the  Hazardous  and Solid Waste Amendments of 1984, P.L.
 98-221,  the  Safe  Drinking Water Act Amendments of 1986, P.L.
 99-39, the Superfund Amendments and Reauthorization Act of 1988,
 P.L.  99-499,  and  most  recently, the Medical Wast* Tracking Act of
 1988, P.L. 100-582.  For simplicity and convenience, the Solid
 waste Disposal Act, as amended, will hereinafter be referred to
 as "RCRA."

     Section  3008(a) of RCRA,  42 U.S.C. §6928(a), provides that
 if any person has violated  or  is in violation of a requirement of
 Subtitle c,  the Administrator  of the Environmental Protection
Agency (EPA)  may, among other  options, issue an order assessing a
 civil penalty of  up to $25,000 per day for each violation.
 Section  3008(a)(3), 42 U.S.C.  §6928(a)(3), provides that any
 order assessing a penalty shall take into account:

           o    the  seriousness of the violation, and

           o    any  good faith  efforts to comply with the
               applicable requirements.

Section  3008(g) applies to  civil judicial enforcement  actions
and establish** liability to the United State* for civil
penalties  of  up to  $25,000  per day for *ach violation  of  Subtitle
c.

This document *«t*  forth the Agency'* policy  and  internal
guideline* for determining  penalty amount* which  (1) should be
sought in  administrative complaint* filed under RCRA2


     2   This policy i* in  no  way  intended to limit the penalty
amount*  sought in civil judicial action*.  In civil judicial
action*  brought pursuant to RCRA the United State* will at its
discretion continue to file complaint*  requesting up to the
statutory  maximum civil penalty amount  and to litigate for the
maximum  amount justifiable  on  the  facts of the case.

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                               - b -

 and  (2) would be acceptable in settlement of administrative and
 judicial enforcement actions under RCRA.   This  policy also
 governs civil penalty calculations under  the Medical Waste
 Tracking Act of 1988, 42 U.S.C.  § 6922  et seq..  and supersedes
 the guidance document entitled,  "Applicability  of RCRA Penalty
 Policy to LOIS Cases (November 16,  1987).   It does not, however,
 apply to penalties assessed under Subtitle I (UST) of RCRA, 42
 U.S.C. § 6991 fii sea.

      The purposes of the policy are to  ensure that RCRA civil
 penalties are assessed in a fair and consistent manner; that
 penal-.ies are appropriate for the gravity of the violation
 committed;  that economic incentives for noncompliance with RCRA
 requirements are eliminated; that penalties are sufficient to
 deter persons from committing RCRA violations;  and that
 compliance  is expeditiously achieved and  maintained.

      This document does not address Whether assessment of a civil
 penalty is  the correct enforcement response to  a particular
 violation.   Rather,  this document focuses on determining the
 proper civil penalty amount that the Agency should obtain once a
 decision  has been made that a civil penalty is  the proper
 enforcement remedy to pursue.   For guidance on  when to assess
 administrative penalties,  enforcement personnel should consult
 the RCRA  Enforcement Response Policy, December  21, 1987.  The
 Enforcement Response Policy provides a  general  framework for
 identifying violations and violators of concern as well as
 guidance  on selecting the appropriate enforcement action n
 response  to various  RCRA violators.

     The  1990  RCRA Civil Penalty Policy is immediately applicable
 and should  be  used to calculate  penalties sought in all RCRA
 administrative complaints or accepted in  settlement of both
 administrative  and  judicial civil  enforcement  actions brought
 under the statute  after the date of the policy,  regardless of the
date of the violation.   To the maximum  extent practicable, the
 policy shall also  apply to the settlement of administrative and
 judicial enforcement actions instituted prior to but not yet
 resolved a« of the date the policy is issued.

     The procedures  set out in this document are intended solely
 for the guidance) of  government personnel.   They are not  intended
and cannot  be)  relied upon to create rights, substantive  or
procedural,  enforceable by any party in litigation with  the
United States.   The  Agency reserves the right to at variance with
this policy and  to change it at  any time  without public  notice.

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                              - 6 -
 III. RELATIONSHIP TO AGENCY PENALTY POLICY

     The RCRA Civil Penalty Policy sets forth a system for
 pursuing penalties consistent with the established goals  of the
 Agency's civil penalty policy which was issued on February 16,
 1984.  These goals consist of:

      o  Deterrence;

      o  Fair and equitable treatment of the regulated
         community; and

      o  Swift resolution of environmental problems.

 The RCRA penalty policy also adheres to the Agency policy's
 framework for assessing civil penalties by:

      o  Calculating a preliminary deterrence amount
         .consisting of a gravity component and a component
         reflecting a violator's economic benefit of
         noncompliance; and

      o  Applying adjustment factors to account for
         differences between cases.

 IV. DOCUMENTATION AND RSLPA.S.E OF INFORMATION

      A. DOCUMENTATION FOR PENALTY SOUGHT IN ADMINISTRATIVE
         COMPLAINT/LITIGATION

       In order to support the penalty proposed in the complaint,
 enforcement personnel must include in the case file an
 explanation of how the proposed penalty amount was calculated. As
 a sound case management practice in administrative cases,  a case
 "record" file should document or reference all factual
 information on which EPA will need to rely to support the  penalty
amount sought la the complaint.  Full documentation of the
 reasons and rationale for the penalty complaint amount is
 important to axpaditious, successful administrative enforcement
of RCRA violations.  The documentation should  include all
 relevant information and documents which  served as  the basis  for
the penalty complaint amount and vara raliad upon by the Agency
decision-maker,  in general, only final documents,  but not
preliminary documents, such as drafts and internal  memoranda
 reflecting earlier deliberations, should  ba  included  in  the
 record file.  All documentation supporting tha panalty
calculation should ba in the record  file  at  the  time  the
complaint is issued.  The documentation should ba supplemented  to

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                                                         9
                               - 7 -

  include a justification for any adjustments to the penalty  amount
  in the complaint made after initial issuance of the complaint,  if
  such adjustments are necessary.

      Additionally, Agency regulations governing administrative
  assessment of civil penalties, at 40 CFR 22.14(a)(5)  and (c) ,
  require that the complaint contain a statement which sets forth
  the Agency's basis for requesting the actual amount of  the
  penalty being sought.  To ensure that RCRA administrative
  complaints comply with the statute and the rules,  as long as
  sufficient facts are alleged in the complaint, enforcement
 personnel may plead the following:

      Based upon the facts alleged in this Complaint and upon
      those factors which the Complainant must consider  pursuant
      to Section 3008(a)(3)  of the Resource Conservation and
      Recovery Act (RCRA),  42 U.S.C.  §6928(a)(3)  (as discussed in
      the RCRA Civil Penalty Policy), including the seriousness  of
      the violations,  any good faith efforts by the respondent to
      comply with applicable requirements, and any economic
      benefit accruing to the respondent, as well as such other
      matters as justice may require, the Complainant proposes
      that  the Respondent be assessed the following civil penalty
      for the violations alleged in this Complaint:

                Count  1 	 $25,000
                Count  2	 $80,000

      Enforcement personnel  may use the above general language in
the complaint,  but  must be  prepared to present at the pre-hearing
conference or evidentiary hearing more detailed information
reflecting the specific factors weighed in calculating  the
penalty proposed in the complaint.  For example, evidence of
specific instances  wh«r« the violation actually did,  could  have,
or still might result in harm could be presented to the trier of
fact to illustrate  the potential for harm factor of the penalty.
Experience also suggests that the Agency may be called  upon,
before the hearing, to present to the trier of fact and the
respondent the) penalty computation worksheet supporting the
proposed penalty amount sought in the complaint.

     Usually the record supporting the penalty amount specified
in the complaint should include a penalty computation worksheet
which explains the  potential for harm, extent of deviation  from
statutory or  regulatory requirements, economic benefit  of non-
          See Citv of Kalamazoo Water Reclamation Plant.
CWA-AO-01-89 (March  16,  1989),  where the Administrative Law
Judge required EPA to provide its penalty computation worksheet
to respondent during the prehearing exchange.

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                               -  8  -


 compliance,  and any adjustment factors applied (e.g., good faith
 efforts to comply).   Also  the  record should include any
 inspection reports and other documents relating to the penalty
 calculation.

   B.  DOCUMENTATION OF PENALTY  SETTLEMENT AMOUNT

   Until settlement discussions or  pre-hearing information
 exchange are  held with the respondent, mitigating and equitable
 factors and overall  strength of  the Agency's enforcement case may
 be difficult  to assess.  Accordingly, preparation of a penalty
 calculation worksheet for  purposes of establishing the Agency's
 settlement position  on penalty amount may not be feasible prior
 to the  time that negotiations  with the violator commence.  Once
 the violator  has presented the Region with its best arguments
 relative to penalty  mitigation the Region may, at its discretion,
 complete a penalty calculation worksheet to establish its initial
 "bottom line"  settlement position.  However, at a minimum, prior
 to final approval of any settlement, whether administrative or
 judicial,  enforcement personnel  should complete a final worksheet
 and narrative  explanation  which  provides the rationale for the
 final settlement amount to be  included in the case file for
 internal management  use and oversight purposes only.  As noted
 above enforcement personnel may, in arriving at a penalty
 settlement amount, deviate significantly from the penalty amount
 sought  in an  administrative complaint, provided such discretion
 is  exercised  in accordance with  the provisions of this policy.

   C.  RELEASE  OF INFORMATION

   Release of  information to members of the public relating to the
use of  the 1990 RCRA Civil Penalty Policy in enforcement cases  is
governed by the Freedom of Information Act  (FOIA)
5 USC §552, and the  Agency regulations implementing  that act,
40  CFR  Part 2.   FOZA as implemented through Agency regulations,
sets forth procedural and  substantive requirements governing the
disclosure) of  information  by Federal agencies.  While the Agency
maintains) a policy of openness and freely discloses  much of what
is  requested by the  public, there  are a number of exemptions  in
FOIA which allow the Agency to withhold and protect  from
disclosure) certain documents and information  in appropriate
c i rcumstances.

  In ongoing enforcement cases,  documents and other  material  that
deal with establishing the appropriate amount of  a civil  penalty
 (particularly  penalty computation  worksheets) may be covered by
two different  FOIA exemptions.  Documents that  support  or relate
to  the  amount  of the civil penalty the Agency would  be  willing to
accept  in settlement are likely  to fall within  the  scope of  these
exemptions and in many cases can be withheld.   Documents that
support  or relate to the amount  of a  penalty the  Agency has

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                               - 9 -


  proposed  in an administrative complaint may also qualify for
.  protection under the exemptions.

     FOIA, Exemption 7, as codified at 40 CFR 2.118(a)(7),  allows
  such documents to be withheld if release could reasonably be
  expected to interfere with an enforcement proceeding.   This
  exemption extends to all stages of law enforcement activities,
  from initial investigation to completion.  Once  the enforcement
  action has been completed, however,  this exemption can  no longer
  be used to withhold information.  Nonetheless,  there is
  potentially another avenue under FOIA which may  be used in
  appropriate circumstances to protect sensitive documents.

   FOIA, Exemption 5, as codified at 40 CFR 2.118(a)(5),  protects
  from disclosure Agency documents and information that are
 classified as attorney work product, as well as  pre-decisional
 deliberative documents.  The attorney work product privilege
 protects sensitive decisions and recommendations made in
 analyzing and choosing appropriate enforcement options,  and
 planning legal strategy,  in response to violations of legal
 requirements.   Such documents must be prepared in anticipation of
 litigation by,  or at the direction of, an attorney.  The purpose
 of  the  deliberative process privilege is to preserve the quality
 of  Agency decisions by encouraging honest and frank discussion
 within  the Agency.   The process of developing penalty
 calculations  may  fall within the parameters of both attorney  work
 product and deliberative process;  thus,  withholding under FOIA
 Exemption 5 may be appropriate.

  An important distinction between the two exemptions  discussed
 is  that the protective scope of Exemption 5 does not end when the
 enforcement process is completed.   Thus,  under Exemption 5,
 penalty calculations may be protected from disclosure at any
 time.

  The Agency may  waive the protection afforded by FOIA  and
 release exempt documents in its discretion in appropriate cases,
 without jeopardizing future use of a FOIA exemption in  another
 case.   Such discretionary waivers should be made on a case-by-
 case basic, balancing the public interest served by allowing  the
 release and the Agency's policy of openness against the harm  to
 the Agency  caused by release.   Generally, such releases should
 only be made when settlement will be facilitated.  Because issues
 relating to FOIA  and application of its exemptions require
 special attention,  the Regional Freedom of Information  Act
Officer or appropriate attorney in the Office of Regional Counsel
 should  be consulted whenever any request is made by a member  of
the public  relating to the application of the RCRA Penalty Policy
 in general or  in  a  specific enforcement action.

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                              - 10 -


        The penalty computation worksheet to be included in the
 case file is attached.  (See; Section X, Appendix.)

 V.     RELATIONSHIP BETWEEN  PENALTY AMOUNT SOUGHT IN AN
       ADMINISTRATIVE  COMPLAINT AND ACCEPTED IN SETTLEMENT

       When read together, 40 C.F.R. 22.14(a) and (c) suggest that
 the  Agency must include  in  any administrative complaint filed
 pursuant  to RCRA Section 3008(a)  a proposed penalty (the dollar
 amount of which has been determined in accordance with the
 applicable Agency penalty policy) and a statement of the
 reasoning behind this proposed penalty.  Indeed, in several cases
 such a requirement has been imposed on the Agency in
 administrative  enforcement  actions subject to the 40 C.F.R. Part
 22 hearing procedures.4   The penalty policy not only facilitates
 compliance with the cited regulations by requiring that
 enforcement personnel calculate a proposed penalty  (and include
 this amount and the underlying rationale for adopting it in the
 complaint),  but also  establishes  a methodology for calculating
 penalty amounts which would be acceptable to EPA in settlement of
 administrative  and judicial enforcement actions.  The Agency
 expects that the dollar  amount of the proposed penalty included
 in the administrative complaint will often exceed the amount of
 the  penalty the Agency would accept in settlement.  This may be
 so for several  reasons.

       First,  at the time the complaint is filed, the Agency will
 often  not be aware of mitigating  factors (then known only  to the
 respondent)  on  the basis of which the penalty may be adjusted
 downward.   Second,  it is appropriate that the Agency have  the
 enforcement discretion to accept  in settlement a lower penalty
 than it has sought in its complaint, because in settling a case
 the  Agency is able to avoid the costs and risks of  litigation.
Moreover  respondents  oust perceive that they face some
 significant risk of higher  penalties through litigation to have
appropriate incentives to agree to penalty amounts  acceptable  to
the  Agency in settlement.
     4   See. KatMon  Bros.  Inc.  v.  EPA.  839 F.  2d 1396,  (10th
Cir. Feb. 22, 1988), in which the court held that administrative
reviews of the default penalty amount for a FIFRA violation were
inadequate because  they failed to analyze the factual basis for
the civil penalty;  and Environmental Protection Corporation V.
Thomas. No.87-447,  slip op.  (E.O. Cal.  July 14,  1988), where the
court held that  40  CFR 22.14(a)  requires that the Agency provide
defendants with  the factual  basis and rationale for the Agency's
penalty determination  for a  RCRA violation, so as to allow the
person being penalized an opportunity to mount a defense in the
matter.

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                                                         9
                              - 11 -


       Therefore, Agency enforcement  personnel  should, as
 necessary, prepare two separate penalty calculations for each
 administrative proceeding — one  to  support  the  initial proposed
 penalty included in the complaint and  the  other  to be placed in
 the administrative file as support for the final penalty amount
 the Agency accepts in settlement.  5 In calculating the amount of
 the proposed penalty to be included  in the administrative
 complaint, Agency personnel should total (1) the gravity-based
 penalty amount (including any multi-day component) and  (2) an
 amount reflecting upward adjustments 6 of  the  penalty and
 subtract from this sum an amount  reflecting  any  downward
 adjustments in the penalty based  solely on respondent's "good
 faith efforts 7 to comply with  applicable  requirements" about
 which the  Agency is aware.   This  total should  then be added to
 the amount of any economic benefit accruing  to the violator.  The
 result will be the proposed penalty  the Agency will seek in its
 complaint.
      5    In  judicial  actions  it will generally  only be  necessary
to calculate a  penalty  amount to  support any  penalty  the Agency
is to accept in settlement.   The  United States  is, of course,
free  to argue to the  court  in judicial actions  that the penalty
figure it seeks is  consistent with  the rationale  underlying  the
penalty policy.

      6   while  the  Agency may at  this early juncture  have  limited
knowledge of facts  necessary  to calculate any upward  adjustments
in the penalty  it should be remembered that amendments  to  the
complaint (including  the amount of  the proposed penalty) may be
made  after an answer  is filed only  with the leave of  the
presiding officer.  See 40 C.F.R. 22.14(d).

      7   Since  Section  3008(a)(3) of RCRA requires that a
violator's   "good faith efforts to  comply with  applicable
requirements" b« considered by the  Agency in  assessing  any
penalty, it  ic  appropriate that this factor be  weighed  in
calculating  the proposed penalty  based on information available
to EPA.  While  Section  3008(a)(3) also requires that  the Agency
weigh the seriousness of the  violation in assessing a penalty,
this  requirement is satisfied by  including a  gravity-based
component which reflects the  seriousness  (i.e., the potential  for
harm  and extent of  deviation  from applicable  requirements) of  the
violation.   As  noted  above, enforcement personnel may in their
discretion further  adjust the amount of the proposed  penalty
downward where  the  violator or information obtained  from other
sources has  convincingly demonstrated prior to  the time EPA files
the administrative  complaint  that application of  additional
downward adjustment factors is warranted.

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                              - 12 -

      The  methodology  for  determining and documenting the penalty
 figure  the  Agency accepts in settlement should be basically
 identical to  that employed in  calculating the proposed penalty
 included  in the  complaint,  but should also include consideration
 of  (1)  any  new and relevant information obtained from the
 violator  or elsewhere, and (2) all  other downward adjustment
 factors (in addition  to the "good faith efforts" factor weighed
 in  calculating the proposed penalty appearing in the complaint).

      It may be noted  here that the  RCRA Penalty Policy serves as
 guidance  not  only to  Agency personnel charged with responsibility
 for calculating  appropriate penalty amounts for RCRA violations
 but also  under 40 CFR §22.27(b) to  judicial officers presiding
 over  administrative proceedings at  which proper penalty amounts
 for violations redressable under RCRA Sections 3008(a) and  (g)
 are at  issue.  Such judicial officers thus have discretion  to
 apply most  of the upward  or downward adjustment factors described
 in  this policy in determining  what  penalty should be imposed on a
 violator.   However, judgments  as to whether a penalty should be
 reduced in  settlement because  (l) the violator is wining to
 undertake an  environmental project  in settlement of a penalty
 claim,  or (2) the Agency  faces certain  litigative risks in
 proceeding  to hearing or  trial, are decisions involving matters
 of policy and prosecutorial discretion which by their nature are
 only  appropriate to apply in the context of settling a penalty
 claim.  It  is therefore contemplated that decisionmakers  in
 administrative proceedings would not adjust penalty amounts
 downward  based upon their assessment of either the litigative
 risks faced by the Agency or a violator's willingness to
 undertake an  environmental project  in lieu of paying part of a
 penalty.

VI .    DETERMINATION OF GRAVITY-BA.fiFP PP31ALTY AMOUNT

      RCRA Section 3008(a)(3) states that the seriousness  of a
violation must be taken into account  in assessing a penalty for
the violation.   The gravity-based component  is a measure  of the
 seriousness of a violation.  The  gravity-based penalty  amount
 should tM determined  by examining two factors:

      o  potential for harm; and

      o  extent of deviation from  a  statutory or  regulatory
        requirement.

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                              - 13 -
 A.    POTENTIAL FOR HARM

       The RCRA requirements  were  promulgated  in order to prevent
 harm to human health and the environment.  Thus, noncompliance
 with any RCRA requirement can result  in a situation where there
 is a potential for harm to human  health or the environment.  Even
 violations such as recordkeeping  violations create a risk of hara
 to the environment or human  health by jeopardizing the integrity
 of the RCRA regulatory program.   Accordingly, the assessment of
 the potential for harm resulting  from a violation should be based
 on two factors:

          o  the  risk of human or  environmental exposure to
             hazardous waste  and/or hazardous  constituents
             that may be posed by  noncompliance, and

           o the  adverse effect noncompliance  may have on
             statutory or regulatory purposes  or procedures for
             implementing the RCRA program.

 1.   Risk  of Exposure

       The  risk of exposure presented  by a given violation depends
 on  both the likelihood that  human or  other environmental
 receptors  may be  exposed to  hazardous waste and/or hazardous
 constituents  and  the degree  of such potential exposure.
 Evaluating the risk  of exposure may be simplified by considering
 the  factors which follow below.

       a.   Probability of Exposure

       Where a  violation involves  the  actual management of waste,
 a penalty  should  reflect the probability that th« violation could
 have resulted  in,  or has resulted in  a release of hazardous waste
 or constituents,  or  hazardous conditions creating a threat of
 exposure to hazardous waste  or waste  constituents.  The
 determination of  the likelihood of a  release  should be based on
 whether the integrity and/or stability of the waste management
 unit is likely to have been  compromised.

       Some  factors to consider in making this determination
would be:

    o evidence of release (e.g.,  existing soil or groundvater
      contamination)

    o evidence of waste mismanagement (e.g.,  rusting
      drums),  and

    o adequacy of provisions for  detecting and" preventing

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                              - 14 -


       a  release  (e.g.,  monitoring equipment and inspection
       procedures).

       A  larger penalty  is presumptively appropriate where the
 violation  significantly impairs the ability of the hazardous
 waste  management  system to prevent and detect releases of
 hazardous  waste and  constituents.

       b.   Potential  Seriousness of Contamination

       When calculating  risk of exposure, enforcement
 personnel  should  weigh  the harm which would result if the
 hazardous  waste or constituents were in fact released to the
 environment.

       Some factors to consider in making this determination would
 be:

    o  quantity and toxicity of wastes (potentially)
       released

    o  likelihood  or  fact of transport by way of
       environmental  media (e.g., air and groundwater),
       and

    o  existence,  size,  and proximity of receptor
       populations (e.g., local residents, fish, and wildlife,
       including threatened or endangered species) and sensitive
       environmental  media (e.g., surface Waters and
       aquifers).

 In considering the risk of exposure, the emphasis  is  placed on
 the potential for harm  posed by a violation rather than on
whether harm actually occurred.  The presence or absence of
direct harm in a noncompliance situation is something over which
the violator may have no control.  Such violators  should not be
 rewarded with lover  penalties simply because the violations
happened not to have resulted in actual harm.
      There are some requirements of  the RCRA program which,  if
violated, may not be likely to give rise directly  or immediately
to a significant risk of contamination.  Nonetheless, all
regulatory requirements are fundamental to  the  continued
integrity of the RCRA program.  Violations  of such requirements
may have serious implications and merit substantial penalties
where the violation undermines the statutory or regulatory
purposes or procedures for implementing the RCRA program.   Some
examples of this kind of regulatory harm  include:

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                              - 15 -


           o failure to notify as  a generator or transporter of
             hazardous  waste, and/or owner/operator of a
             hazardous  waste  facility pursuant to section 3010

           o failure to comply with financial assurance
             requirements

           o failure to submit a timely/adequate Part B applica-
             tion

           o failure to respond to a formal information request

           o operating  without a permit or interim status

           o failure to prepare or maintain a manifest

           o failure to install or conduct adequate groundwater
             monitoring.

3 .  Genera^

      a.   Evaluating the Potential for Harm

      Enforcement personnel should evaluate whether the potential
for harm is  major,  moderate, or minor in a particular situation.
The degree  of potential harm represented by each category is
defined as:

         MAJOR  (1)  the violation poses or may pose a
         substantial risk of exposure of humans or other
         environmental  receptors to hazardous waste or
         constituents;  and/or

                (2)  the actions have or may have a substantial
         adverse effect on statutory or regulatory purposes or
         procedures for implementing the RCRA program.
         *WRHUn*B (!) *«• violation poses or may pose a
         significant risk of exposure of humans or other
         environmental receptors to hazardous waste or
         constituents; and/or

                 (2) the actions have or may have a
         significant adverse effect on statutory or regulatory
         purposes or procedures for implementing the RCRA
         program.

         MINOR   (i) the violation poses or may pose a relatively
         low risk of exposure of humans or other environmental
         receptors to hazardous waste or constituents; and/or

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                              - 16 -


                  (2)  the  actions  have or may have a small
          adverse effect on  statutory or regulatory purposes or
          procedures  for implementing the RCRA program.

        The  examples  which follow  illustrate the differences
 between major,  moderate,  and minor  potential for harm.   Just as
 important as  the violation  involved are the case specific factors
 surrounding the violation.  Enforcement personnel should avoid
 automatic classification  of particular violations.

       b.  Examples

 1.  Mai or Potential  for Harm

       40  CFR  §265.143  requires that owners or operators of
 hazardous waste facilities  establish financial assurance to
 ensure  that funds will be available for proper closure of
 facilities.   Under §265.143(a)(2),  the wording of a trust
 agreement establishing financial  assurance for closure must be
 identical to  the wording  specified  in 40 CFR §264.151(a)(1).
 Failure to  word the  trust agreement as required may appear
 inconsequential.  However,  even a slight alteration of the
 language  could  change  the legal effect of the financial
 instrument  so that it  would no longer satisfy the intent of the
 regulation  thereby preventing the funds from being available for
 closure.  Such  a facility could potentially become another
 abandoned hazardous  waste site.   When the language of the
 agreement differs from the  requirement such that  funds would not
 be available  to close  the facility  properly, the  lack of
 identical wording would have a substantial adverse effect on the
 regulatory  scheme (and, to  the extent the closure process is
 adversely affected,  could pose a  substantial risk of exposure).
 This violation  would therefore be assigned to the mfljojc  potential
 for harm  category.

 2.  Moderate  Potential for  Harm

      Under 40  CFR f262.34, a generator may accumulate  hazardous
waste on-sit« for 90 days or less without having  interim status
or a permit provided that,  among  other requirements, each
container or  tank of vasts  is marked clearly with the words
 "Hazardous  Waste."   In a  situation  where a generator is storing
compatible  wastes, has labeled half of its containers,  and has
clearly identified its storage area as a hazardous waste storage
area, there is  some  indication that the unlabeled containers hold
hazardous waste.  However,  because  there  is a  chance that  the
unlabeled containers could  be  removed  from the storage  area, and
because it  would be  difficult to  determine whether hazardous
waste had been  stored  for more than 90 days, this situation poses
a significant likelihood  of exposure to hazardous waste (although

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                                                           9
                              - 17 -


 the likelihood is not as great  as  it  would be  if neither the
 storage area nor any of the containers were marked).  The
 moderate potential for harm category  would be  appropriate in this
 case.

 3.   Minor Potential for Harm

       Owners or operators of hazardous waste facilities must,
 under  40 CFR §265.53,  submit a  copy of their contingency plans to
 all police departments,  fire departments, hospitals, and state
 and local emergency response teams that may be called
 upon to provide emergency services.   If a facility has a complete
 contingency plan,  including a description of arrangements agreed
 to  by  local entities  to  coordinate emergency services (§265.52),
 but had failed  to  submit copies of the plan to all of the
 necessary agencies, this would  create a potential for harm.
 Enforcement personnel  would need to examine  the impact that
 failure to  send the plan to the necessary agencies would have on
 these  agencies'  ability  to respond in an emergency situation.  If
 a complete  plan existed  and arrangements with  all of the local
 entities  had been  agreed to,  the likelihood of exposure and
 adverse  effect  on  the  implementation  of RCRA may be relatively
 low.   The minor potential  for harm category could be appropriate
 for  such  a  situation.

       B.  EXTENT OF DEVIATION FROM REQUIREMENT

       The "extent  of deviation" from  RCRA and  its regulatory
 requirements relates to  the degree to which the violation renders
 inoperative the  requirement violated. In any violative situation,
a range of  potential noncompliance with the subject requirement
exists.   In other  words, a violator may be substantially in
compliance with  the provisions  of the requirement or it may have
totally disregarded the  requirement (or a point in between).
In determining the  extent  of the  deviation, the following
categories should  be used:

         M2JQB*  the violator deviates from requirements of the
         regulation or statute  to such an extent that most  (or
          important aspects)  of  the requirements are not net
         resulting in substantial noncompliance.

       *  MODERATE;  the  violator significantly deviates from the
         requirements of the regulation or statute  but some of
         the requirements  are implemented as intended.

       •  MINOR:  the violator deviates somewhat from the regula-
         tory or statutory requirements but most  (or all
         important aspects)  of  the requirements are met.

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                              - 18 -


       A few examples  will help demonstrate how a given violation
 is  to  be placed  in  the  proper category:

 Example 1 - Closure Plan

       40 CFR §265.112 requires that owners or operators of
 treatment,  storage, and disposal  facilities have a written
 closure plan.  This plan must identify the steps necessary to
 completely or partially close the  facility at any point during
 its intended operating  life.  Possible violations of the
 requirements of  this  regulation range from having no closure plan
 at  all  to having a  plan which is  somewhat inadequate (e.g.,  it
 omits  one minor  step  in the procedures 'for cleaning and
 decontaminating  the equipment while complying with the other
 requirements).   Such  violations should be assigned to the "major"
 and "minor" categories  respectively.  A violation between these
 extremes might involve  failure to  modify a plan for increased
 decontamination  activities as a result of a spill on-site and
 would be assigned to  the moderate  category.

 Example  2  - Failure to  Maintain Adequate Security

      40 CFR §265.14  requires that owners or operators of
 treatment,  storage, and disposal  facilities take reasonable care
 to  keep  unauthorized  persons from entering the active portion of
 a facility  where injury could occur.  Generally, a physical
 barrier  must be  installed and any access routes controlled.

      The range  of  potential noncompliance with the security
 requirements is  quite broad.  In  a particular situation,  the
 violator may prove  to have totally failed to supply any security
 systems.  Total  noncomplianc* with regulatory requirements  such
 as  this  would result  in classification into the malor category.
 In  contrast,  the violation nay consist of a small oversight such
 as  failing  to lock  an access route on a single occasion.
 Obviously,  the degree of noncompliance in the latter situation  is
 less significant.   With all other factors being equal, the  less
 significant noncompliance should  draw a smaller penalty
 assessment.   In  the matrix system this is achieved by choosing
 the minor category.


      C.  PENALTY ASSESSMENT MATRIX

      Each  of th« above factors—potential  for  harm  and  extent  of
deviation from a requirement-forms on* of the axes of  tha penalty
 assessment  matrix.  Tha matrix has nina cells,  aach  containing  a
 penalty  ranga.   Tha spacific call is chosen aftar datarmining
which category (major,  moderate,  or minor)  is appropriate for the

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 potential for harm factor,  and which categojry is appropriate for
 the extent of deviation  factor.  The complete matrix is
 illustrated below:

               Extent of Deviation from Requirement
 Potential
   for
  Harm

MAJOR
MODERATE
MINOR
MAJOR
$25,000
to
20,000
$10,999
to
8,000
$2,999
to
1,500
MODERATE
$19,999
to
15,000
$7,999
to
5,000
$1,499
to
500
MINOR
$14,999
to
11,000
$4,999
to
3,000
$499
to
100
      The lowest cell  (minor potential for harm/minor extent of
deviation) contains a  penalty range from $100 to $499.  The
highest cell  (major potential for harm/major extent of deviation)
is limited by the maximum statutory penalty allowance of $25,000
per day for each violation.

      The selection of the exact penalty amount within each cell
is left to the discretion of enforcement personnel in any given
case.  The range of numbers provided in each matrix cell serves
as a "fine tuning" device to allow enforcement personnel to
better adapt the penalty amount to the gravity of the violation
and its surrounding circumstances.  In selecting a dollar figure
from this range it is  appropriate to consider such factors as the
seriousness of the violation (relative to other violations
falling within the saae matrix cell), efforts at remediation or
the degree of cooperation evidenced by the facility (to the
extent this factor is  not to be accounted for in subsequent
adjustments to the penalty amount), the size and sophistication
of the violator, the number of days of violation, and other
relevant matters.  For guidance on recalculation of the gravity
based penalty based on new information see Section IX A.2.

VII.   MVLTIPItE AFP MULTI-DAY PENALTIES

       A.  PENALTIES FOR MULTIPLE VIOLATIONS

       In certain situations, EPA may find that a particular firm
has violated several different RCRA requirements.  A  separate
penalty should be sought in a complaint and obtained  in

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                              - 20 -


 settlement or litigation  for  each separate violation that results
 from an independent act (or failure to act) by the violator and
 is  substantially distinguishable  from any other charge in the
 complaint for which a penalty is  to be assessed.  A given charge
 is  independent of,  and substantially distinguishable from, any
 other charge when it requires an  element of proof not needed by
 the others.   In many cases, violations of different sections of
 the regulations constitute independent and substantially
 distinguishable violations.   For  example, failure to implement a
 groundwater  monitoring program, 40 CFR $265.90, and failure to
 have a written closure plan,  40 CFR §265.112, are violations
 which can be proven only  if the Agency substantiates different
 sets of factual allegations.   In  the case of a firm which has
 violated both of these sections of the regulations-, a separate
 count should be charged for each violation.  For litigation or
 settlement purposes,  each of  the violations should be assessed
 separately and the  amounts added  to determine a total penalty to
 pursue.

       It is  also possible that different violations of the same
 section of the regulations could  constitute independent and
 substantially distinguishable violations.  For example, in the
 case  of a  firm which has  open containers of hazardous waste in
 its  storage  area, 40 CFR  §265.173(a), and which also ruptured
 these  or different  hazardous  waste containers while moving them
 on  site,  40  CFR §265.173(b),  there are two independent acts.
 while  the  violations are  both of  the same regulatory section,
 each  requires distinct elements of proof.  In this situation, two
 counts  with  two separate  penalties would be appropriate.  For
 penalty purposes, each of the violations should be assessed
 separately and the  amounts totalled.

       Penalties for multiple  violations also should be sought in
 litigation or obtained in settlement where one company has
violated the same requirement in  substantially different
 locations.   An example of this type of violation is failure to
clean up discharged hazardous waste during transportation, 40 CFR
 §263.31.   A  transporter who did not clean up waste discharged  in
two separate locations during the same trip should be charged
with  two counts.  In these situations the separate locations
present separate and distinct risks to public health and  the
environment.   Thus,  separate  penalty assessments are justified.

      Similarly,  penalties for multiple violations are
appropriate  when a  company violates the  same  requirement  on
separate occasions  not cognizable as multi-day  violations (See
Section  vil.B.)   An example would be the case where  a  facility
fails  for  a  year to take  required quarterly  groundwater
monitoring samples.

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                              - 21 -
       In general, penalties for multiple  violations may be less
 likely to be appropriate where the  violations are not independent
 or substantially distinguishable.   Where  a charge derives from or
 merely restates another charge,  a separate penalty may not be
 warranted.   For example, if a corporate owner/operator of a
 facility submitted a permit application with a cover letter,
 signed by the plant manager's secretary,  but failed to sign the
 application,  40 CFR §270.11 (a), and  also thereby failed to have
 the appropriate responsible corporate officer sign the
 application,  40 CFR §270.11 (a)(l)  the owner/operator has
 violated the  requirement that the application be signed by a
 responsible corporate officer.   EPA has the discretion to view
 the violations resulting from the same factual event, failure to
 sign the application at all,  and failure  to have the person
 legally responsible for the permit  application sign it, as posing
 one legal risk.   In this situation, both  sections violated should
 be  cited in the complaint,  but one  penalty, rather than two, may
 be  appropriate to pursue in litigation or obtain in settlement,
 depending upon the facts of a case.   The  fact that two separate
 sections were  violated may  be taken into  account in choosing
 higher  "potential for harm" and  "extent of deviation" categories
 on  the penalty matrix.

      There are instances where  a company's failure to satisfy
 one  statutory  or regulatory requirement either necessarily or
 generally leads  to the violation of numerous other independent
 regulatory  requirements.  Examples  are the case where (1) a
 company  through  ignorance of  the law  fails to obtain a permit or
 interim  status as required  by Section 3005 of RCRA and as a
 consequence runs afoul of the numerous other  (regulatory)
 requirements imposed on it  by 40 CFR  Part 265, or  (2) a company
 fails to  install groundwater  monitoring equipment as required by
 40 CFR §§ 265.90 and 265.91 and  is  thus unable to comply with
 other requirements of Subpart F  of  Part 265  (e.g., requirements
 that it develop  a sampling  plan, keep the plan at the facility,
 undertake quarterly monitoring,  prepare an outline of a
groundwater quality assessment program, etc.).  In cases such as
 these where multiple violations  result from a single initial
transgression, assessment of  a separate penalty for each
distinguishable  violation may produce a total penalty which  is
disproportionately high.  Accordingly, in the specifically
 limited circumstances described, enforcement personnel have
discretion to  forego separate penalties for certain
distinguishable  violations, so long as the total penalty  for all
 related violations is appropriate considering the gravity of the
offense and sufficient to deter  similar future behavior and
 recoup economic  benefit.

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                              - 22 ,-

      B.    PENALTIES  FOR MULTI-DAY VIOLATIONS

      RCRA  provides EPA with  the authority to assess in
 administrative  actions or  seek in court civil penalties of up to
 $25,000  per  day of non-compliance for each violation of a
 requirement  of  Subtitle C  (or the regulations which implement
 that  subtitle).  This language explicitly authorizes the Agency
 to  consider  the duration of  each violation as a factor in
 determining  an  appropriate total penalty amount.  Accordingly,
 any penal.ty  assessed should  consist of a gravity-based component,
 economic benefit component,  and to the extent that violations can
 be  shown or  presumed to have continued for more than one day, an
 appropriate  multi-day component.  The multi-day component should
 reflect  the  duration of the  violation at issue, subject to the
 guidelines set  forth in Section VII C., below.

      After it has been determined that any of the violations
 alleged  has  continued for  more than one day, the next step is to
 determine the length of time each violation continued and whether
 a multi-day  penalty  is mandatory, presumed, or discretionary.  In
 most  instances,  the  Agency should only seek to obtain multi-day
 penalties, if a  multi-day  penalty is appropriate, for the number
 of  days  it can  document that the violation in question persisted.
 However, in  some circumstances reasonable assumptions as to the
 duration of  a violation can  be made.  For example, a violation by
 an  owner/operator of a land  disposal facility for operating after
 it  had lost  interim  status pursuant to RCRA §3005(e)(2) can
 generally be deemed  to have  begun on November 8, 1985, and
 continued at least until the time of the last inspection in which
 it  was determined the facility was being operated without interim
 status.  In  the  case where an inspection reveals that a facility
 has no groundwater monitoring wells in place it can be assumed,
 in  the absence  of evidence to the contrary, that the facility has
 never had any wells.  Here the violation can be treated as having
commenced on the day that  vast* management operations triggering
the Part 265, subpart F requirements began or the effective date
of the regulations,  whichever is  later.  A multi-day penalty
could then b* calculated for the  entire period  from the date the
 facility vasj required to have wells in place until the date  of
 the inspection  shoving they  did not.

     Conversely, in  cases  where there  is no statutory  or
 regulatory deadline  from vhich it may be assumed compliance
obligations  began to run,  a  multi-day penalty  should  account only
 for each day for vhich information  provides a  reasonable  basis
         Where EPA determines that a violation persists,
enforcement personnel may  calculate  the penalty  for a period
ending on the date of compliance or  the date the complaint is
filed, provided documentation  (or a  reasonable assumption) to
support such a finding  is  available.

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                              - 23 -

 for concluding that a violation has occurred.  For example, if art
 inspection revealed that unlabeled drums of hazardous wastes were
 being stored by a generator  for more than 90 days in violation of
 40 CFR 262.31 and 262.34,  enforcement personnel should allege irn
 the complaint and present evidence as to the number of days eacri
 violation lasted.   Documentation  in a case such as this might
 consist of an admission from a facility employee that drums were
 stored improperly for a certain number of days.  In such a case.
 a multi-day penalty would then be calculated for the number of
 days stated.

      C.    CALCULATION OF THE MULTI-DAY PENALTY

      After the duration of the violation has been determined, the
 multi-day component of the total  penalty is calculated, pursuant.
 to the Multi-Day  Matrix,  as  follows:

 (l)   Determine the gravity-based  designations  for the violation.
 e.g.,  major-major,  moderate-minor, or minor-minor.

 (2)   Determine,  for the specific  violation, whether multi-day
 penalties  are  mandatory,  presumed, or discretionary, as follows:

      Mandatory multi-day penalties;  Multi-day penalties are
 mandatory  for  days 2-180 of  all violations with the following
 gravity-based  designations:   major-major, major-moderate,
 moderate-major.  The  only  exception is when they have been
 waived,  in  "highly unusual cases" with prior Headquarters  (HQ)
 consultation,  as described below.  Multi-day penalties for days
 131-r  are discretionary.

      Presumption  in favor  of multi-day penalties:  Multi-day
 penalties are  presumed appropriate for days 2-180 of violations
 with  the  following gravity-based  designations:  major-minor,
 moderate-moderate,  minor-major.   Therefore, multi-day penalties
 must  be sought, unless case-specific facts overcoming the
 presumption for a  particular violation are documented carefully
 in the CAM files.  The presumption may be overcome for one  or
 more  day*.  Multi-day penalties for days 181+  are discretionary.

      Discretionary multi-dav penalties;  Multi-day penalties are
discretionary,  generally,  for all days of all  violations with the
 following gravity-based designations:  moderate-minor, minor-
moderate, minor-minor.   In these  cases, multi-day penalties
should be sought where case-specific facts support such an
assessment.  Discretionary multi^day penalties may be  imposed for
some  or all days.   The bases for  decisions to  impose or  not
 impose any  discretionary multi-day  penalties must  be documented
 in the case files.

 (3)   Locate the corresponding cell  in  the  following  Multi-Day
Matrix.  Multiply  a dollar amount selected  from the  appropriate

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                              -  24  -

cell  in the multi-day matrix  (or, where appropriate,  a  larger
dollar amount not to exceed $25,000)  by the number of days  the
violation  lasted.   (Note: the duration used in the multi-day
calculation is the  length of the violation minus one  day, to
account for the  first day of violation at the gravity-based
penalty rate).
MULTI-DAY MATRIX OF MINIMUM DAILY PENALTIES (in dollars)

                                 Extent of Deviation
 Potential

    for

   Harm

MAJOR
MODERATE
MINOR
MAJOR
$5,000
to
1,000
$2,200
to
400
$600
to
100
MODERATE
$4,000
to
750
$1,600
to
250
$300
to
100
MINOR
$3,000
to
550
$1,000
to
150
$100
     The dollar figure to be multiplied by the number of days of
violation will generally be selected from the range provided in
the appropriate multi-day cell.  The figure selected should not
be less than the lowest number in the range provided.  Selections
of a dollar figure from the range of penalty amounts can be made
at the Region's discretion based on an assessment of case-
specific factors, including those discussed below.

     In determining whether to assess multi-day penalties for
days 2-lfO of violations for which multi-day penalties are
presumed appropriate or are discretionary, as well as for days
iso-i- of all violations, as well as in selecting the appropriate
dollar figure from the range of penalty amounts in the multi-day
matrix, the Regions must analyze carefully the specific facts of
the case to determine that the penalties selected are
appropriate.  This analysis should be conducted in the context  of
the penalty policy's broad goals of  (1) ensuring fair and
consistent penalties which reflect the seriousness  (gravity) of
violations, (2) promoting prompt and continuing compliance,  and
(3) deterring future non-compliance.

     Additional factors which may be relevant  in analyzing  these
factors in the context of a specific case  include  the  seriousness

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                              - 25 -

 of the violation relative to other  violations  falling within the
 same matrix cell,  efforts at remediation  or the promptness and
 degree of cooperation evidenced by  the  facility (to the extent
 not otherwise accounted for in  the  proposed penalty or settlement
 amount),  the size  and sophistication  of the violator, the total
 number of days of  violation,  and  other  relevant considerations.
 All of these factors must be analyzed in  light of the overriding
 goals of  the penalty policy to  determine  the appropriate
 penalties in a specific case.

      As discussed  above,  this penalty policy permits a Region to
 waive multi-day penalties,  when mandatory for  a violation, in a
 "highly unusual case."   Such a  waiver may be exercised only with
 prior Headquarters (HQ)  consultation.   Because EPA has determined
 that  almost all continuing "major"  violations  warrant multi-day
 penalties,  it is anticipated that such  waivers will be sought
 very  infrequently.

      While  this policy  provides general guidance on the use ^of
 multi-day penalties,  nothing in this  policy precludes or should
 be  construed to preclude  the assessment of penalties of up to
 $25,000 for each day after the  first  day  of any given violation.
 Particularly in circumstances where significant harm has in fact.
 occurred  and immediate  compliance is  required  to avert a
 continuing  threat  to human health or  the  environment, it may be
 appropriate to  demand the statutory maximum.

 VIII.  EFFECT OF ECONOMIC BENEFIT OF  NONCOMPLIANCE

      The  Agency civil penalty policy  mandates  the recapture of
 any significant economic  benefit  of noncompliance that accrues to
 a violator.   Enforcement  personnel  shall  evaluate the economic
 benefit of  noncompliance  when penalties are calculated.  A
 fundamental  premise  of  the policy is  that economic incentives  for
 noncompliance are  to be eliminated.   If violators are allowed  to
 profit by violating  the law,  there  is little incentive to comply.
 Therefor*,  it is incumbent on all enforcement  personnel to
 calculate economic benefit.   In accordance with the goals of the
Agency policy,  the RCRA civil Penalty Policy sets forth the RCRA
 requirements;.   An  "economic benefit component  should be
 calculated  end  added to the gravity-based penalty component when
 a violation results  in  "significant"  economic  benefit to the
 violator,  as  defined below.

     The  following are  examples of  regulatory  areas  for which
violations  are  particularly likely  to present  significant
economic benefits:   groundwater monitoring/  financial
requirements, closure/post-closure, surface  impoundment
retrofitting, improper  land disposal  of restricted waste, clean-
up of discharges, part  B  submittals,  and  minimum  technology
requirements.

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                              - 26 -

      For certain RCRA requirements  the economic benefit of
 noncompliance may be relatively  insignificant  (e.g., failure to
 submit a report on time).   In  the  interest of  simplifying and
 expediting an enforcement  action,  enforcement  personnel may
 forego calculating the benefit component where it appears that
 the  amount of the component is likely to be less than $2,500 for
 all  violations alleged in  the  complaint.  However, this decision
 should be documented on the Penalty  Computation Worksheet.

      It is generally the Agency's  policy not to settle cases
 (i.e..  the penalty amount)  for an  amount less  than the economic
 benefit of noncompliance.   However,  the Agency civil penalty
 policy explicitly sets out three .general ares  where settling the
 total  penalty amount for less  than  the economic benefit may be
 appropriate.   The RCRA policy  has  added a fourth exception for
 cases  where ability to pay is  a  factor.  The four exceptions are:


           o  the economic  benefit  component consists of an
              insignificant amount  (i.e.. less  than  $2,500);

           o  there are compelling  public concerns that would not
              be served by  taking a  case to trial;

           o  it is unlikely, based  on the facts of  the particular
              case as a whole,  that  EPA will be able to recover
              the economic  benefit  in litigation;

           o  the company has documented an inability to pay the
              total proposed penalty.


     If  a  case is settled  for  less  than the economic benefit
component,  a  justification must  be  included on the  Penalty
Computation Worksheet in Section X,  under the  heading, "Economic
Benefit."

     A.    ECONOMIC BENEFIT OF  DELAYED COSTS AND AVOIDED COSTS

     Compliance/enforcement personnel should examine  two  types of
economic bHMfit from noncompliance in determining  the economic
benefit  component:


           o  benefit from  delayed  costs; and

           o  benefit from  avoided  costs.

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                              - 27 -


        Delayed costs are expenditures  which have been deferred by
 the violator's failure to comply  with  the  requirements. The
 violator eventually will have to  spend the money in order to
 achieve compliance.  Delayed costs  are the equivalent of capital
 costs.  Examples of violations  which result in savings from
 delayed costs are:

          o failure  to timely install ground-water monitoring
            equipment;

          o failure  to timely submit  a  Part B permit application;
            and

          o failure  to timely develop a waste analysis plan.

        Avoided costs are expenditures  which are nullified by the
 violators's failure to comply.  These  costs will never be
 incurred.   Avoided  costs include  the usual operating and
 maintenance costs which would include  any  annual periodic costs
 such as leasing monitoring equipment.   Examples of violations
 which  result in savings from avoided costs are:

          o  failure  to perform annual and semi-annual
            ground-water monitoring sampling and analysis;

          o  failure  to use registered medical waste
            transporters;

          o  failure  to perform waste  analysis before adding
            waste to tanks,  waste  piles, incinerators; and

          o  failure  to install secondary containment around a
            tank, where such a containment  is never installed
            because  the violator chooses closure rather than
            correction and continued  operation.

        B.   CALCULATION OF ECONOMIC BENEFIT

    .   Because  the savings that are derived from delayed costs
differ  from those derived from avoided costs, the economic
benefit froa delayed and  avoided  costs are calculated in a
different manner.   For avoided costs,  the  economic benefit equals
the cost of complying with the requirements, adjusted to reflect
anticipated rate of return and income  tax  effects on the company.
For delayed costs,  the economic benefit does not equal the cost
of complying with the requirements,  since  the violator will
eventually have to  spend  the money to  achieve compliance.  The
economic benefit for delayed costs consists of the amount of
interest on the unspent money that reasonably could have been
earned by the  violator during noncompliance.  If noncompliance

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                              - 28 -


 has  continued  for more than  a  year, compliance/enforcement
 personnel  should calculate the economic benefit of both the
 delayed  and  avoided  costs for  each  year.

       Since  the  fall of 1984,  it  has been Agency policy to use
 the  BEN  computer model to calculate the economic benefit of
 noncompliance.   The  model can  perform a calculation of economic
 benefit  based  on delayed/avoided  costs with as few as only seven
 data inputs  (see first seven below).  The rest of the data inputs
 consist  of optional  data items and  standard values already
 contained  in the program (see  Ben Worksheet in Section X).  The
 following  is a list  and short  explanation of each input.

                          INPUTS


      1.  CASE NAME - Self explanatory.

 **    2.  INITIAL CAPITAL INVESTMENT - This is essentially a
         depreciable investment such as the initial cost of
         equipment.

 **    3.  ONE-TIME NONDEPRECIABLE  EXPENDITURE - This is an
         expense that will only be  incurred once and does not
         involve capital investments.  It may or may not be tax
         deductible,  but it  is not  depreciable.  Some examples
         are reporting requirements, purchase of land, or permit
         application costs and fees.

 **    4.  ANNUAL  OPERATION AND  MAINTENANCE - This expense
         category is for routine  annual expenses such as the
         costs of operating  equipment, cost of leasing
         equipment,  or cost  of annual insurance premiums.

 *     5.  FIRST MONTH OF NONCOMPLIANCE - Self explanatory.

 * .    6.  COMPLIANCE  DATE - This could be off in the  future.
         Th« kay is  to make  a  reasonable estimate.   (For TSD
         facilities  this date  could be the date on which the
         facility certifies  closure rather than the date on
         which compliance is achieved).

 *     7.  PENALTY PAYMENT DATE  - Again, this may be  in  the
         future.   Enforcement  personnel should make  a  reasonable
         estimate for date of  payment.

+     8.  USEFUL  LIFE OF EQUIPMENT - Here the model  accounts  for
         the fact that the equipment  purchased  in input two  has a
         useful  life of limited duration.  The model assumes it
         will last 15 years, then it  must  be  replaced,  however
         the model is being  adjusted  to address  this matter.

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                                 -  29  -

       9.  MARGINAL INCOME TAX RATE -. This is the rate  at-which  the
           last dollar of earnings was taxed.  It almost always  will
           be the highest tax rate, as most businesses  meet  the
           maximum rate quickly.

      10.  ANNUAL INFLATION RATE - Self explanatory.

      11.  DISCOUNT RATE - This is the rate of return the  violator
           expects to obtain on its investment.   The  money needed f:r
           pollution control was invested in something  else  and  we
           assume the rate of return was the discount rate.

      12.  AMOUNT OF LOW INTEREST FINANCING - This is the  amount = :
           subsidized financing for pollution control equipment.  ~'~ ,z
           almost always is 0.

      *     Required Input
      **    Required if Applicable
      +     Standard Values Available

      As  noted above,  the BEN model may be used to calculate only the
 economic benefit accruing to a violator through delay  or  avoidance cf
 the  costs of  complying with applicable requirements  of RCRA and its
 implementing  regulations.   There are instances in which the BEN
 methodology either cannot compute or will fail to capture the actual
 economic benefit of noncompliance.  In those instances, it  will be
 appropriate for  the Agency to  include in its penalty analysis a
 calculation of economic benefits in a manner other than those prcvii^i
 for  in the BEN methodology.  A recurring example is  the case where 2-
 entity unlawfully operated a land disposal facility  without inter:r.
 status and thus  has reaped profits as a proximate result  of the
 violation which  are greater than the costs the defendant  would  have
 incurred by taking the further actions needed to avoid losing interim
 status.   In such  a case,  the economic benefit component of  the
 penalty  calculation would include the profits proximately attributable
 to the violation  of the applicable RCRA requirement. 9/   In contrast.
 consider a large  manufacturing facility which,  but for the  storage cf
 a few drums of wastes over 90  days,  is otherwise in  compliance  wit.-.
 RCRA.  The facility's profits,  earned almost entirely  as  a  result cf
 lawful activity,  would not be  considered properly attributable  to tr.e
 facility's noncoapliance.   Thus,  care must be taken  to insure that
 any calculation of profits included in an alternative  economic
 benefit  component of  the penalty calculation does not  include profits
 attributable to lawful operations of the facility or delayed or
 avoided  costs already accounted for in the BEN calculation.

     Enforcement  personnel should have a copy of the revised BEN
 User's Manual (May  1987).   The manual describes how  to use  BEN,
 a computer program  that calculates the economic benefit  for any
 type of  entity.   It  is designed to aid enforcement personnel with
     V    Of course, penalties  may not exceed the statutory
raaximim of $25,000 per day  of noncompliance.   42 U.S.C. § 6928.

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                            •  - 30 -


 procedures  for entering data  in BEN, and to explain the program's
 results.10   BEN supersedes previous methodologies used to
 calculate the  economic  benefit for civil penalties.

        The  economic  benefit formula provides a reasonable
 estimate of the economic benefit  of noncompliance.  If a
 respondent  believes  that the  economic benefit it derived frcn
 noncompliance  differs from the estimated amount, it should
 present all relevant information  documenting its actual savings
 to  enforcement personnel at the settlement stage.

 IX.  ADJUSTMENT FACTORS AND EFFECT OF SETTT.FMENT

        A.   ADJUSTMENT FACTORS

 1.  Background

        As mentioned  in  Section VI of this document, the
 seriousness of the violation  is considered in determining the
 gravity-based  penalty component.  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
 cell from the  matrix.   However, any system for calculating
 penalties must have  enough flexibility to make adjustments that
 reflect legitimate differences between separate violations of the
 same provision.  RCPA §3008(a)(3) states that in  assessing
 penalties,  EPA must  take into account any good faith efforts to
 comply  with the applicable requirements.  The Agency civil
 penalty policy sets  out several other adjustment  factors to
 consider.   These include the  degree of willfulness and/or
 negligence,  history  of  noncompliance, ability to  pay,  and other
 unique  factors.  This revised RCRA  policy also  includes an
 additional  adjustment factor  for  environmental projects
 undertaken  by  the respondent.
     10   Enforcement personnel  arc encouraged to use whatever
cost documentation  im available  to calculate RCRA compliance
costs, (e.g., contractors  and commercial brochures).   If it is
disputed, the burden  will  then shift to the respondent to present
cost documentation  to the  contrary to be entered and run in BEN.
Data provided by respondent relating to economic benefit should
not be run in BEN unless its accuracy and legitimacy have been
verified by the Region.  Additionally, OSW's Guidance Manual:
Cost Estimates for  Closure and Post-Closure Plans, November,
1986, provides information regarding cost estimates for input
data for BEN.

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                               -  31 -


 2.  Recalculation of Penalty Amounjt

       Before EPA considers mitigating the penalty contained in
 the complaint and applies the adjustment factors, it may be
 necessary, under certain circumstances,  for  enforcement personnel
 to recalculate the gravity-based or  economic benefit component of
 the penalty figure.   If new information  becomes available after
 the issuance of the complaint which  makes it clear that the
 initial calculation of the penalty contained in the complaint is
 in error,  enforcement personnel  should adjust this figure.
 Enforcement personnel should document on the Penalty Computation
 Worksheet  the basis  for recalculating the gravity-based or
 economic benefit component of the penalty sought in litigation or
 obtained in settlement.

       For  example,  if after the  issuance of  the complaint,
 information is presented which indicates that much less waste is
 involved than was believed when  the  complaint was issued, it may
 be  appropriate to recalculate the gravity-based penalty
 component.   Thus,  if enforcement personnel had originally
 believed that the violator had improperly stored ten barrels of
 acutely  hazardous wastes but it  was  later determined that only a
 single container of  characteristic hazardous waste was improperly
 stored,  it  may be appropriate to recalculate the "potential for
 harm" component of the gravity-based penalty from "major" to
 "moderate"  or "minor."

      On the other hand,  if enforcement  personnel initially
 believed a  violator  had  fully complied with  a specified
 requirement but subsequently determine that  this is not the case,
 it  would be appropriate  to amend the complaint as necessary to
 add a new count,  and revise the  total penalty amount upward to
 account  for this previously undiscovered violation.  Likewise, if
 new information shove that a previously  known violation is more
 serious  than initially thought,  an upward revision of the penalty
 amount may  be required.     >
      Furthermore,  if the violator presented new information
which established that the work performed was technically
inadequate or useless (e.g., the violator drilled wells in the
wrong spot or did not dig deep enough),  it  may be aore
appropriate to keep the gravity-based  penalty as originally
calculated and evaluate whether it would be appropriate to
mitigate the penalty based on the  "good  faith efforts" adjustment
factor.

      When information is presented which makes it clear that the
gravity-based or economic benefit  penalty component is in error,
enforcement personnel may, of course,  choose to formally amend

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                              - 32 -


 the  complaint  to  correct  the original penalty component,  as well
 as carefully document  the basis for the recalculation on the
 Penalty  Computation  Worksheet  in  the enforcement file.

 3.   Application of Adjustment  Factors

   The adjustment factors can  increase, decrease or have no
 effect on  the  penalty  amount obtained from the violator.
 Adjustments should generally be applied to the sum of the
 gravity-based  and multi-day components of the penalty for a given
 violation.  Note, however, that after all adjustment factors have
 been applied the  resulting penalty shall not exceed the statutory
 maximum  of $25,000 per day of  violation.  As indicated
 previously, all supportable upward adjustments of the penalty
 amount of  which EPA  is aware ordinarily should be made prior to
 issuance of the complaint, while  downward adjustments (with the
 exception  of those reflecting  good faith efforts to comply)
 should generally  not be made until after the complaint has been
 issued,  at which  time  the burden  of persuasion that downward
 adjustment is  proper should be placed on respondent.  Enforcement
 personnel  should  use whatever  reliable information on the
 violator and violation is readily available at the time of
 assessment.

  Application  of  the adjustment factors is cumulative, i.e.. more
 than one factor may  apply in a case.  For example, if the base
 penalty  derived from the  gravity-based and multi-day matrices is
 $109,500,  and  upward adjustments  of 10% will be made for both
 history  of noncompliance  and degree of willfulness and/or
 negligence, the total  adjusted penalty would be $131,400
 ($109,500  + 20%).

  For any  given factor (except ability to pay and litigative
 risk) enforcement personnel can,  assuming proper documentation,
adjust the SUB of the  gravity-based and multi-day penalty
components for any given  violation up or down  (1) by as much as
 25% of that sum in ordinary circumstances or  (2)  from 26%  to 40%
of that  s*m, in unusual circumstances.  Downward  adjustments
based on inability to  pay or litigative risk will vary  in  amount
depending  on the  individual facts present in a given case  and  in
certain  circumstances  may be applied to the economic benefit
component.

  However, 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.  Moreover,  allowing  a violator
to benefit from noncompliance  punishes those  who  have complied by
placing  them at a competitive  disadvantage.   For  these  reasons,
the Agency should at a minimum, absent the  special  circumstances
enumerated in  section  VIII, recover any  significant economic

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                                                       9
                              - 33 -
 benefits resulting from failure to comply with  the  law.  if
 violators are allowed to settle for a penalty less  than their
 economic benefit of noncompliance, the goal  of  deterrence  is
 undermined.  Except in extraordinary circumstances, which  include
 cases where there are demonstrated limitations  on a respondent's
 ability to pay or very significant litigative risks, the final
 adjusted penalty should also include a significant  gravity-based
 component beyond the economic benefit component.

   Finally,  as has been noted above,  it is intended  that only
 Agency personnel,  as distinct from an administrative law judge
 charged with determining an appropriate RCRA penalty, will
 consider adjusting the amount of a penalty downward based  on the
 litigative  risks confronting the Agency or the  willingness of a
 violator to undertake an environmental project  in settlement of a
 penalty claim.   This is because these factors are only relevant
 in the settlement context.

   The  following  discussion  of the adjustment factors to consider
 is consistent with the general Agency civil  penalty policy issued
 in 1984.

   (a)  Good  Faith Efforts To Comply/Lack Of Good Faith

   Under § 3008(a)(3)  of RCRA,  good faith efforts to comply with
 applicable  requirements must ba considered in assessing a
 penalty.  The violator can  manifest good faith  by promptly
 identifying  and  reporting noncompliance or instituting measures
 to  remedy the violation before the Agency detects the violation.
 Assuming self-reporting is  not required by law  and  the violations
 are expeditiously  corrected,  a violator's admission or correction
 of  a violation prior to detection may be cause  for  mitigation of
 the penalty,  particularly where the violator institutes
 significant  new  measures to prevent recurrence.
 Lack of good  faith,  on the  other hand,  can result in an increased
 penalty.

    No  downward  adjustment  should b« made if the good  faith
 efforts to comply  primarily consist of coming into  compliance.
Moreover, no  downward adjustment should be made because
 respondent lacks knowledge  concerning either applicable
 requirements  or  violations  committed by respondent. EPA will
also apply a  presumption against downward adjustment for
respondent's  efforts  to comply or otherwise  correct violations
after the Agency's detection of violations (failure to undertake
such measures may  be  cause  for upward adjustment as well as
multi-day penalties),  since the amount set in the gravity-based
penalty component  matrix assumes good faith  efforts by a
respondent to comply  after  EPA discovery of  a violation.

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                              - 34 -


       If a respondent reasonably  relies on written statements by
 the state or EPA that an activity will satisfy RCRA requirements
 and it later is determined that the activity does not comply with
 RCRA,  a downward adjustment in the penalty may be warranted if
 the respondent relied on those assurances in good faith.  Such
 claims of reliance should be substantiated by sworn affidavit or
 some other form of affirmation.   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 be cause for any downward adjustment
 of  the penalty.

       (b)   Degree of willfulness  and/or negligence

       While "knowing" violations  of RCRA will support criminal
 penalties pursuant to Section 3008(d), there may be instances of
 heightened culpability which do not meet the criteria for
 criminal  action.   In cases where  civil penalties are sought for
 actions  of this type,  the penalty may be adjusted upward for
 willfulness and/or negligence.  Conversely, although
 RCRA is  a strict liability statute, there may be instances where
 penalty mitigation may be justified based on the lack of
 willfulness and/or negligence.

       In  assessing the degree of  willfulness, and/or negligence,
 the  following  factors should be considered, as well as any others
 deemed appropriate:

          o how much control the violator had over the
            events constituting the violation;

          o the foreseeability of  the events constituting the
            violation;

          o whether the violator took reasonable precautions
            against the events constituting the violation;

          o whether the violator knew or should have known  of
            tlM hazards associated with the conduct; and

          o whether the violator knew or should have known  of  the
            legal requirement which was violated.

      It  should be noted that this  last factor,  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 reaedied  also  is  relevant in certain
circumstances.   Specifically, if  correction of the environ-

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                              - 35 -


 mental problem was delayed by factors which the violator can
 clearly show were not reasonably  foreseeable and out of his or
 her control and that of his or  her agents,  the penalty may be
 reduced.

       (c)   History of noncompliance  (upward adjustment only)

       Where a party previously  has violated RCRA or State
 hazardous  waste law at the same or a  different site, this is
 usually clear evidence that the party was not deterred by the
 previous enforcement response.  Unless the  current or previous
 violation  was caused by factors entirely out of the control of
 the violator,  this is an indication that the penalty should be
 adjusted upwards.

        Some of the factors that enforcement personnel should
 consider are the  following:

         o how similar the previous violation was;

         o how recent the  previous violation was;

         o the number of previous  violations; and

         o violator's response  to  previous  violation(s)
            in  regard to correction of problem.

       A violation generally should be considered "similar" if
 the Agency's or State's previous enforcement response should have
 alerted the party  to a particular  type of compliance problem.  A
 prior violation of the saae  RCRA or State requirement would
 constitute a similar violation.  Nevertheless, a history of
 noncompliance  can  be established even in the absence of similar
 violations, where  there is a pattern  of disregard of
 environmental  requirements contained  in RCRA or another statute.

       For purposes  of this  section,  a "prior violation" includes
 any act or oaiMion  for which a formal or informal enforcement
 response has occurred fe.a..  EPA or State notice of violation,
 warning letter, complaint, consent agreement, final order,  or
 consent decrees).

      It also  includes any act  or  omission  for which the violator
 has previously  been  given  written  notification, however informal,
 that the Agency believes a violation  exists.

       In  the case of large  corporations with many divisions or
wholly-owned subsidiaries,  it is sometimes  difficult to determine
whether a  previous instance  of  noncompliance should  trigger the
adjustments described in this section. New ownership often
 raises similar  problems.   In making this determination,

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                              - 36 -


 enforcement personnel  should  attempt to ascertain who in the
 organization had control  and  oversight responsibility for
 compliance with RCRA or other environmental laws.  The violation
 will  be considered part of  th« compliance history of any
 regulated party whose  officers had  control or oversight
 responsibility.

        In general,  enforcement personnel should begin with the
 assumption that if the same corporation was involved, the
 adjustments for history of  noncompliance should apply.  In
 addition,  enforcement  personnel should be wary of a party
 changing operators or  shifting responsibility for compliance to
 different persons or entities as  a  way of avoiding increased
 penalties.   The Agency may  find a consistent pattern of
 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 noncompliance  probably should apply unless the
 violator can demonstrate  that the other violating corporate
 facilities  are independent.

       (d)   Ability to  Pay (downward adjustment only)

      The  Agency generally  will not assess penalties that are
 clearly beyond the means  of the violator.  Therefore, EPA should
 consider the ability of a violator  to pay a penalty.  At the same
 time, it is important  that  the regulated community not see the
 violation  of environmental  requirements as a way of aiding a
 financially troubled business.  EPA reserves the option, in
 appropriate circumstances,  to seeJc  penalties that might put a
 company out of business.  It  is unlikely, for example, that EPA
 would reduce a penalty where  a facility refuses to correct a
 serious violation.   The same  could  be said for a violator with a
 long history of  previous  violations.  That long history would
 demonstrate that less  severe  measures are ineffective.

      The burton to demonstrate inability to pay rests on the
 respondent,  *• it does with any mitigating circumstances.  Thus,
 a company's inability  to  pay  usually will be considered at the
 settlement  stag*,  and  then  only if  the issue is  raised by the
 respondent.   If the respondent fails to fully provide sufficient
 information,  then compliance/enforcement personnel  should
disregard this factor  in  adjusting  the penalty.

      There are  several sources available to assist the Regions
 in determining a firm's ability to  pay.  First,  the Region  should
consult the Agency's guidance on  D«t«rmining a Violator's Ability
 to Pay  A Civil  Penalty, Dec 16, 1986.  Second, th«  National
 Enforcement Investigations  Center (NEIC) can help obtain
 information assessing  the ability to pay of publicly held

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                               -  37 -
 corporations.  ABEL, the Agency's computer model  is  available to
 help analyze inability to pay claims.   Although ABEL was designed
 with privately held corporations in mind,  it  can  be  used as one
 possible way to analyze other forms of business entities,
 including partnerships, and it may serve  as an adjunct to other
 programs available through NEIC (e.g.,  the Superfund Financial
 Assessment System).

       When EPA determines that a violator cannot  afford the
 penalty prescribed by this policy,  or  that payment of all or a
 portion of the penalty will preclude the  violator from achieving
 compliance or from carrying out remedial  measures which the
 Agency deems to be more important than the deterrence effect of
 the penalty (e_.jg., payment of penalty  would preclude proper
 closure/post-closure),   the following  options should be
 considered in the  order presented:

          o  Consider an installment payment plan  with
             interest.

          o  Consider a  delayed payment schedule with interest.
             Such a schedule might even be contingent upon an
             increase in sales or some  other indicator of
             improved business.

          o  Consider straight penalty  reductions  as  a last
             recourse.

      As  indicated above,  the amount of any downward adjustment
 of  the penalty  is  dependent on the  individual facts  of the case
 regarding the financial capability  of  the defendant/respondent
 and the nature  of  the violations at issue.

      (e)  Environmental Projects (downward adjustment only)

      Under  certain  circumstances the  Agency  may  consider
 adjusting the penalty amount downward  in  return for  an agreement
 by the violator to undertake an appropriate environmentally
 beneficial project.  The following  criteria are provided to
 determine the) appropriateness of the use  of environmentally
 beneficial mitigation projects in settlement*.  Mitigation
 projects  serve  as  an incentive to settlement  and  shall be allowed
 only in prelitigation agreements (prior to the actual hearing),
 except in extraordinary circumstances.  EPA will  consider on a
 case-by-case basis accepting only those projects  that satisfy all
 the following criteria.

      (i)  The  activity must be initiated in  addition to all
 statutory and regulatory compliance obligations,  and not be used
 for penalty mitigation  in any other enforcement action.  The
project may not  be a substitute for full  compliance; rather,  it

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                              - 38 -


 must be designed to provide an  environmental benefit beyond the
 benefits of full compliance and may  not be part of the company's
 normal business practice or a project the company was already
 planning to do.

       (ii)   In order to attain  the deterrent objectives of the
 civil penalty policy,  penalty reductions shall reflect the actual
 cost of undertaking the activity, taking into account the tax
 benefits that accrue.   With consideration of tax benefits, the
 actual cost of the project  to the respondent shall equal or
 exceed the  value of the mitigation.  If the respondent fails to
 complete the agreed upon project, the settlement document should
 provide that a commensurate amount of any previous downward
 adjustment  of the penalty be reinstated.  For more information
 enforcement personnel  should consult th« Guidance on Calculating
 After Tax Net Present  Value of  Alternative Payments, Oct, 28,
 1986,  General Enforcement Policy Compendium, GM-51, or the Office
 of  Enforcement Policy.

       (iii)   The activity must  demonstrate a good-faith
 commitment  to statutory compliance and environmental improvement.
 One  test  of good faith is the degree to which the violator takes
 the  initiative to identify  and  propose specific, potential
 mitigation  projects.   In addition, the project must be primarily
 designed  to benefit the environment  and general public rather
 than  to benefit the violator or any  governmental unit.

       (iv)   Mitigation based on the  defendant's activity must not
 detract significantly  from  the  general deterrent effect of the
 settlement  as a whole.   In  the  settlement context the government
 should continue to consider mitigation projects as the exception
 rather than the rule.   Efforts  should be made to eliminate any
 potential perception by the regulated community that the
 government  lacks the resolve to impose significant penalties for
 substantial  violations.   The government should seek penalties in
 conjunction with mitigation activities which deter both the
 specific violator and  also  the  entire regulated community.
Accordingly,  every settlement should include a substantial
monetary penalty component.

       (v)   Judicially-enforceable consent decrees must meet  the
statutory and public interest criteria for consent decrees and
cannot contain provisions which would be beyond the power of the
court to order under the particular  statute which had been
violated.   Additional  guidance  on the appropriate scope of relief
might be found in the  statute,  the legislative history or the
 implementing regulations.

       (vi)   The activity or project  Bust require  little  EPA
oversight.   The project should  be designed to minimize  the need
 for EPA monitoring of  implementation.

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                                - 39 -

      (vii)  Any settlement which  includes  a  mitigation project shall
 require that any public statement by  the violator regarding the
 environmental or general public benefits of  the project must incluie
 a statement that funding for the  project is  in partial settlement cf
 an enforcement case brought by EPA.

      (viii)   Qualifying activities  must provide a discernable
 response to the perceptible risk  or harm caused by the violations
 which are the focus of the government's enforcement action.  The
 activity is most likely to be an  acceptable  basis for mitigating
 penalties if it closely addresses the  environmental effects of t.r.e
 violations.

      Other Considerations

      The Agency should exercise case-by-case judgment in deciding
 whether to accept a mitigation project based upon the above criteria
 and,  should  consider the difficulty of monitoring the implementation
 of the  proposed project in light  of the anticipated benefits of the
 project.   Any final cross-media guidance on  environmental projects
 should  be consulted to determine  if they supplement or supersede the
 "Environmental  Projects" section  of this penalty policy.  In
 particular,  the Agency is currently developing cross-media guidance
 on penalty mitigation projects, to  supersede the "Alternative         •
 Payments"  section of the Agency's February 16, 1984 penalty policy
 (GM-22).   When  the final guidance is  issued,  penalty mitigation
 projects  under  all statute-specific penalty  policies will be required
 to conform to the new guidance.

      (f)   Other unique factors

     This  policy allows an adjustment  for  factors which may arise on
 a  case-by-case  basis.   When developing its settlement position, EPA
 should  evaluate every penalty with  a view  toward the potential for
 protracted litigation and attempt to ascertain the maximum civil
 penalty the  court or administrative law judge is likely to award if
 the case proceeds to hearing or trial.  The  Agency should take into
 account,  inter  alia,  the inherent strength of the case, considering,
 for example,  the probability of proving violations, the probability
 that th« government's legal arguments  will be accepted, the
 opportunities which exist to establish a useful precedent or send a
 signal to the regulated community,  the availability and potential
 effective)!)*** of the government's evidence,  including witnesses, and
 the potential strength of the violator's equitable and  legal
 defenses.  Where the Agency determines that  significant  litigative
 risks exist,  it aay also take into  account any disproportionate
 resource outlay involved in litigating a case that  it might  avoid by
 entering into a settlement.   Downward  adjustments of  the  proposed
 penalty for  settlement purposes may be warranted depending  on  the
Agency's assessment of these litigation considerations.   The extent
of the adjustments will depend, of  course, on the  specific  litigation
considerations  presented in any particular case.  The August 9,  1990
memorandum,  "Documenting Penalty  Calculations and Justifications  in
 EPA Enforcement Actions," discusses further  the  requirements for
 legal and  factual "litigation risk" analyses.

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                                - 40 -

      However,  where the  magnitude of  the resource outlay necessary -z
 litigate i* the only significant litigation consideration dictating
 downward adjustment in the  penalty  amount, the Agency should still
 obtain  a penalty which not  only recoups the economic benefit the
 violator has enjoyed, but includes  an additional amount sufficient tc
 create  a strong economic disincentive against violating applicable
 RCRA  requirements.

      If lengthy settlement  negotiations cause the violation(s) to
 continue significantly longer  than  initially anticipated, the initial
 proposed penalty amount  should be increased, as appropriate, with a
 corresponding  amendment  of  the complaint.  The revised figure would
 be calculated  in accordance with this policy, and account for the
 increasing  economic benefit and protracted non-compliance.

      B.   EFFECT OF SETTLEMENT

      The Consolidated Rules of Practice for the Assessment of Civil
 Penalties incorporates the  Agency policy of encouraging settlement of
 a proceeding at any time as long as the settlement  is consistent witr.
 the provisions  and  objectives  of RCRA and  its regulations.  40 CFR
 §22.18(a).   If  the  respondent  believes that it is not liable  or that
 the circumstances of its case  justify mitigation of the penalty
 proposed in  the complaint,  the Rules  of Practice allow  it to  requed^
 a settlement conference.                                          ^P

      In many cases,  the fact  of a  violation will be  less of  an  iss-e
 than the amount of  the proposed penalty.   Once the  Agency has
 established  a prima facie case, the burden is always  on the violatcr
 to justify any  mitigation of the proposed  penalty.  The raitigaticr,
 if any,   of the  penalty proposed in  the complaint should  follow the
guidelines  in the Adjustment Factors  section of this  document.

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                              - 41 -

 X.   APPENDIX

 A.   PENALTY COMPUTATION WORKSHEET

 Company  Name	

 Address
 Requirement  Violated
                   PENALTY AMOUNT FOR COMPLAINT

 1.   Gravity based penalty from matrix	
      (a)  Potential for harm.,
      (b)  Extent of Deviation.
2.   Select an amount from the appropriate multiday
       matrix cell	
3.   Multiply line 2 by number of days of violation minus
       1 (or other number, as appropriate (provide narrative
       explanation) ]	 	
4.   Add line 1 and line 3	

5.   Percent increase/decrease for good faith.

6.   Percent increase for willfulness/
       neg 1 igence	
7.    Percent increase for history of
       noncompliance	
8.*  Total lines 5 thru 7	

9.    Multiply line 4 by line 8  .

10.  Calculate economic benefit.
11.  Add lines 4, 9 and 10 for penalty amount	  _
       to be inserted in the complaint


*  Additional downward adjustments, where  substantiated by
   reliable information, may be accounted  for  here.

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                              - 42  -•
Company Hame   	
Address
Requirement Violated
                    SETTLEMENT PENALTY AMOUNT
1.   Gravity based penalty from matrix	
      (a)  Potential for harm..
      (b)  Extent of deviation.
2.   Select an amount from the appropriate multiday
     matrix cell	 .
3.   Multiply line 2 by number of days of violation minus
     l [or other number as appropriate (provide narrative
     'explanation) ].....	
4.   Add line 1 and line 3	
5.   Percent increase/decrease for good faith	
6.   Percent increase for willfulness/negligence...
7.   Percent increase for history of noncompliance
8.    Percent increase/decrease for other unique factors
     (except litigation risk) 	
9.    Add 1ines 5, 6, 7, and 8  	
10.   Multiply line 4 by line 9	
11.   Add lines 4 and 10 	
12.   Adjustment amount for environmental project
13.   Subtract line 12 from line 11	
14.   Calculate economic benefit	
IS.   Add lines 13 and 14  	
16.   Adjustment amount for ability-to-pay  	

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                              - 43 -



17. Adjustment amount for  litigation risk.

18.  Add lines 16 and 17	
19.   "Subtract line 18 from line 15 for.
       final settlement amount
This procedure should be repeated for each violation

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                              - 44 -
                      NARRATIVE EXPLANATION
 1.   Gravity  Based  Penalty

 (a)   Potential  for Kara
 (b)  Extent of Deviation
                        .(attach additional sheets if necessary)
 (c)  Multiple/Multi-day
                        .(attach additional sheets if necessary)
                          (attach additional sheets if necessary)
2.  Adjustment Factors  (Good faith, willfulness/negligence,
history of compliance,  ability to pay, environmental credits, and
other uniqu* factors oust be justified, if applied.)
(a)  Good Faith
     11 A separate "Narrative Explanation*  should be attached to
the Penalty Computation Worksheet*  for  both the  complaint  amount
and settlement amount.  Where the discussion of  a given  element
of a penalty to be included  in  the  Narrative Explanation
supporting the settlement amount will duplicate  that appearing  in
the Narrative Explanation supporting the complaint  amount,  the
earlier discussion may simply be incorporated by reference.

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                              - 45 -
 (b)   Willfulness/Negligence
                         .(attach  additional  sheets  if necessary)
 (c)  History of Compliance
                        .(attach additional  sheets  if  necessary)
(d)   Ability to pay_
                         (attach additional  sheets  if  necessary)
(e)   Environmental Project
                        .(attach additional  sheets  if  necessary)
(f)   other Unique Factors
                         (attach additional  sheets if necessary)
                         (attach additional sheets if necessary)

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                              -  46  -






3.   Economic Benefit
                         (attach additional sheets if necessary)
4.  Recalculation of Penalty Based on New Information
                        (attach additional sheets if necessary)

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                               - 47 -

 B. BEN WORKSHEET 12
 1.  Case Name
     Requirement Violated
 2.    Initial Capital Investment/Year Dollars
 3.    One Time Expenditure/Year Dollars
      a.   Tax Deductible
      b.   Not Tax Deductible
 4.    Annual Operating and Maintenance
       (O&M)  Expenses Year Dollars
 5.    Date of Noncompliance
 6.    Date of Compliance
 7.    Anticipated Date of  Penalty Payment
 8.*   Useful  Life of  Pollution
      Control Equipment
 9.*   Marginal  Income Tax Rate
       (On Time  Case)
 10.*  Marginal  Income Tax Rata
       (Delayed  Compliance Case)
 11.*  Inflation Rate
 12.*  Discount  Rate
 13.*  LOW Interest Financing
      LOW Interact Rata
      corporate Oobt Rata
14.  Economic Banafit Penalty Component
*  See standard value froa BEN modal
     12  A separate "BEN Worksheet-  should ba attached to the
Penalty Computation Worksheets  for both the coaplaint amount and
settlement amount.

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                              - 48 -




       A.  FyffTTiE i

       (1)  Violation

         Company A operated a  facility at which it was generating
 one waste and storing a different waste generated by a since
 discontinued process,   these  wastes which company A had managed
 at its facility for years were  first listed as hazardous wastes
 under RCRA in 1987.   As a result, Company A became subject to
 regulation under Subtitle C of  RCRA on the effective date of the
 regulation which was November 5,  1987.  In a notification timely
 provided  to EPA pursuant to RCRA  Section 3010(a), Company A
 indicated  that it only generated  hazardous waste, without
 mentioning storage.   This notification was never amended or
 supplemented.   During an inspection on January 10, 1989, an
 employee  revealed that Company  A  had also been storing another
 kind  of waste in containers,  on site for years.  RCRA Section
 3010(a) provides that notification of waste management activities
 must  be provided to  EPA within  90 days of the promulgation of
 regulations listing  a substance as a hazardous waste subject to
 Subtitle C of RCRA.   40 CFR 262.34 provide* that a generator may
 only  store hazardous waste on-site for 90 days without obtaining
 a permit or interim  status.   Thus, beginning on February 3, 1988
 (90 days after November 5,  1987), Company A was in violation of
 (1) the requirement  that it notify the Agency pursuant to RCRA
 Section 3010(a)  of its activity as a storer of hazardous waste,
 and  (2) the requirement imposed by RCRA Section 3005 that it
 obtain interim status or a permit for its storage activity.
 Failure to notify and operating without a permit or interim
 status constitute independent or  substantially distinguishable
 violations.   Each violation would be assessed separately and the
 amounts totalled.  The inspectors indicated that Company A's
 storage area was secured and  that, in general, the facility was
 well managed.   However, there were a number of violations of the
 interim status) standards.  The  complaint issued to Company A
 assessed penalties for the Part 265 violations) as veil as the
 statutory  violations.   For simplification, this example will
discuss the 1940S and 13010 violations only.  Below is a
discussion of- the methodology used to calculate the amount of  the
penalty proposed in  the complaint, followed by a discussion of
 the methodology used to calculate the amount of the penalty to be
accepted in settleaent.

      (2)  Seriousness:

   (a) Failure to Notify: Potential  for Harm.   Moderate  -
EPA was prevented from knowing  that hazardous waste was
being stored at the  facility.  However, because  Company A
notified EPA that it was a generator, EPA did know that

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                                - 49 -

 hazardous waste was handled at the  facility, but was unaware of the
 extent of those activities and the  risks posed by them.  The
 violation may have a significant  adverse effect on the statutory
 purposes or procedures for implementing the RCRA program.  Extent cf
 Deviation.   Moderate - although  Company A did notify the Agency cr.a~
 it was a generator,  it did not notify  EPA that it stored hazardous
 waste, and it did not notify EPA  as to all of its activities.
 Company A significantly deviated  from  the requirement?

      (b)  Operating without a permit:   Potential for Harm.  Major -
 The fact that the facility generally was well managed is irrelevant
 as to the potential  for harm for  operating without a permit.  This
 situation may pose a substantial  risk  of exposure, and may have a
 substantial adverse  effect on the statutory purposes for implemer.cirr
 the RCRA program.   Extent  of Deviation.  Major - substantial
 noncompliance with the requirement  because Company A did not notify
 EPA that  it stored hazardous waste,  and did not submit a Part A
 application.

 (3)   Gravity-based Penalty                       v

      (a)  Failure  to  notify.  Moderate potential for harm and moderate
 extent of deviation  lead one to the cell with the range of $5,000 to
 $7,999.   Enforcement personnel selected the mid-point, which is
 $6,500.

      (b)  Operating without a permit.   Major potential for harm and
 major  extent  of deviation  lead one  to  the cell with the range of
 $20,000 to $25,000.   Enforcement  personnel selected the midpoint,
 which  is  $22,500.

      (c)  Penalty  Subtotal:  $6,500 + $22,500 - $29,000

 (4)  Multi-dav Penalty Assessment

      (a)   Failure  to notify.   Moderate potential  for harm and
moderate  extent of deviation lead one  to presume  that multi-day
penalties  are appropriate.   The applicable cell ranges  from  $250 to
$1,600.  The mid-point is  $925.   [Based on an assessment of  relevant
 factors (e.g., the seriousness of the  violation relative to  others
falling vithin the same matrix cell, the degree of cooperation
evidenced fcf the  facility,  the number  of days of  violation)  the  mid-
point  in  tfc* range of available multi-day penalty amounts was
selected.> ETA was  able to document that the violation continued
from February 2,  1988,  to  the date  of  the inspection  on January  10,
1989,  for  a total  of 343 days (minus 1st day).   (The  inspection
prompted the Company to immediately file a Section  3010(a)
notification and  Part A permit application.]  The Region elected not
to place a  180 day cap on  multi-day penalties.   Penalty Subtotal:
$925 x 342  - $316,350.

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                                - 50 -

      (b)   Operating without a  permit.  Major potential for harm and
 major extent of deviation result  in mandatory multi-day penalties.
 The applicable cell ranges from $1,000 to $5,000.  The mid-point is
 $3,000.   [Based on an assessment  of such relevant factors as those
 noted in  (4)(a),  above,  the mid-point in the range of available
 multi-day penalty amounts was  selected.]  The violation continued
 from February 2,  1988,  to January 10, 1989, for a total of 343 days
 (minus one day).   The Region elected not to place a 180 day cap on
 multi-day penalties.   Total Penalty Subtotal: $3,000 x 342 *
 $1,026,000.

 (5)   Economic Benefit of Noncoapllance

      The  economic benefit obtained by Company A through its failure
 to  notify pursuant to RCRA Section 3010(a) consists of savings on
 mailing and  personnel costs which are negligible.  However, the
 economic  benefit  the  company obtained as a result of its failure to
 obtain a  permit or interim status is not insignificant. This
 violation allowed the company  to  avoid or delay the costs of filing
 a Part A  permit application and the costs of complying with
 regulatory requirements  regarding storage of hazardous wastes in
 containers.   In a BEN analysis (copy omitted for purposes of this
 example),  the Region  calculated the economic benefit to Company A
 $9,000.

 (6)   Application  of Adjustment Factors  for Computation of the
       Complaint  Amount

      (a)   Good faith  efforts to comply.  Prior to issuing the
 complaint, EPA had only  limited discussions with the facility.  Sines
 neither these discussions nor  the inspector's observations  indicated
 any effort had been made to correct the violations prior to
 notification  of violations by  EPA, no downward adjustment for good
 faith efforts to  comply  was made. Similarly no evidence of lack of
good  faith was apparent.

      (b)   Degree  of willfulness and/or  negligence.   In the  absence of
any affirmative presentation by the facility warranting downward
adjustment (and consistent with the policy of  resolving any
uncertainty about the application of  downward  adjustment  factors
against tip violator  when computing the complaint amount),  the Region
only  considered information which might support  an upward adjustment.
Available) information did not  support an upward  adjustment.

      (c)   History of  noncompliance.   Ho evidence has been produced
thus  far  that Company A  has had any similar  previous violation at
this  site.  The facility in question  is the  only facility owned or
operated  by Company A.   Therefore, no upward adjustment shall be made
 for the violations cited above.

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                              - 51 -


       (d)  Other adjustment factors.   Since this computation was
 designed to produce a penalty figure  to  be proposed in the
 complaint, the Region did not consider any other downward
 adjustment factors.  No additional basis for upward adjustment
 was uncovered.

 (7)  Final Complaint Penalty Amount

     Gravity base  +  Multiday  +  Economic Benefit » Penalty
      $29,000       $1,342,350    $9,000          $1,380,350

 (8)  Settlement Adjustments

       During settlement discussions Company A presented
 Information which it felt warranted adjustment of the penalty.
 After issuance of the complaint no new information came to light
 which supported recalculation of  the  gravity-based, multi-day, or
 economic  benefit components of  the penalty proposed in the
 complaint.

       After consideration of the  seriousness of the violations
 and in order to set penalties at  a level which would allow it to
 achieve compliance quickly (but nevertheless deter future
 similar violations),  the Region elected  to place a 180 day cap on
 multi-day penalties.   Multiday  Penalty Subtotal:  ($925 + $3000) x
 179  -  $702,575.

       (a)   Good faith efforts to  comply.  At settlement
 negotiations  Company A presented  a written but explicitly non-
 binding opinion dated October 30, 1987 from the Director of EPA's
 Office of Solid Waste (OSW)  indicating that the waste which
 Company A stored did not come within  the ambit of the regulation
 listing new wastes,  which became  effective on November 5, 1987.
 other  information indicated that  six  months later the Assistant
 Administrator for Solid Waste and Emergency Response formally
 renounced  the view contained in the Director's opinion, that
 Company A probably was aware of this  action, and that the company
 had  failed  to provide EPA with  either a  Section 3010(a)
 notification or a Part A permit application even after it likely
 knew that  it* storage activities  ware subject to Subtitle C
 regulation.   In viav of these unusual facts - i.e., that the
company had for roughly a third of the duration of tha violation
actad  in apparant good faith ralianca on tha opinion of
tha Director  of  OSW indicating  its storad wastas wara not subject
 to regulation -  tha Ragion dacidad to adjust tha panalty  for  both
violations  downward by 30% ($29,000 •»• $702,575) x  30% •
 $219,472.50.

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                              - 52 -
       (b)  Degree of willfulness and/or negligence.  No evidence
relative to this factor was presented for consideration.

       (c)  History of non-compliance.  No new information
relevant to this adjustment factor came to light after issuance
of the complaint.

       (d)  Ability to pay.  Company A raised and documented that
it has cash flow problems.  It did not convince EPA that the
penalty should be mitigated.  An installment plan was accepted by
both parties as a means of payment.  Total penalty remained
unchanged.                              '

       (e) Environmental Projects    ,  :   -
The company did not propose any projects.

       (f)  Other unique factors
No other unique factors existed in this case.

(9)   Final settlement penalty amount:

      Gravity Multi-   Downward       Economic  Total
      base    day      Adjustment     Benefit   Penalty


      $29,000 + $702,575 - $219,472.50 + $9,000 -  $521,102.50

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                              - 53 -
 A.   PENALTY  COMPUTATION WORKSHEET
 Company Name  Company A
 Address	.
 Requirement  Violated   42 U.S.C. 6930fal. Failure to notify of
                hazardous waste management activities
                   PENALTY AMOUNT FOR COMPLAINT

 1 .  Gravity based penalty  from matrix .................. S6, 500

       (a)  Potential for harm ................... . ....... Moderate

       (b)  Extent of Deviation. . . . . ..................... Moderate

2.  Select an amount from  the appropriate multiday
       matrix cell ........... ........................... S925_

3.  Multiply line 2 by number of  days of violation
       minus l..($925 X 342) ..................... , ...... S316.350

4.  Add line l and line 3 .............................. S322.85Q

5.  Percent increase/decrease for good faith .......... .N/A

6.  Percent increase for willfulness/
      negl igence .............. . ......................... N/A

7.  Percent increase for history  of
       noncompliance .................................... N/A_

8.* Total line* 5 thru 7 ............................... HZA

9 .  Multiply lin« 4 by line  8 ..... .................... tiZA

10. Calculate IconoBic Benefit ................
ll. Add lines 4, 9 and 10 for penalty amount ........... $322.950
      to be inserted in the coaplaint


*  Additional downward adjustment* where  substantiated by
reliable information may be accounted for here.

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                                - 54 -

                          JATION TO  SUPPORT  COMPLAINT AMOUNT
 1.   Gravity Based Penalty
 (a)   Potential for Harm Moderate  -  EPA was prevented  from knowing
 that hazardous waste vas being  atorad at the  facility.  However.
 because Company A notified EPA  that it was a  generator. EPA did kr.cv
 that hazardous waste was handled  at the facility, but was unaware cf
 the  extent of those activities  and  the risk posed bv  them.  The
 violation mav have a significant  adverse effect on the  statutory
 purposes or procedures for implementing the RCRA
 program.
                      .(attach  additional  sheets  if necessary)
 (b)   Extent of  Deviation Moderate  -  Although  Company A  did notify the
 Agency  that it  was  a  generator,  it did  not  notify  EPA that it stored
 hazardous  waste.  While  there  was  partial compliance. Company A
 significantly deviated  from the  reouirement.
                      .(attach  additional  sheets  if  necessary)
 (c)  Multiple/Multi-day  Moderate  potential  for harm  and  moderate
extent of deviation  lead  one  to  presume  that multi-day penalties are
appropriate.  There  are no  case-specific facts  which  would  overccr.e
the presumption.   The  applicable cell  ranges from S250 to SI.600.
The midpoint  is  S925.   Based  on  an assessment of relevant factors
 (e.g.. the  seriousness of the violation  relative to others  falling
within the  same  matrix cell,  the decree  of cooperation evidenced by
the facility, the,  nuiflfrgr  °^ days of violation) .  the mid-point in the
available range  was  selected.  The violation persisted for  343  days.
                     .(attach additional sheets if necessary)
2.  Adjustment  Factors  (Good faith,  willfulness/negligence,  history
of compliance,  ability  to pay,  environmental credits,
and other tmiqu«  factors  must be justified,  if applicable.)

(a)  Good Faith  Neither  discussions with the facility nor the
inspector's observations  indicated anv effort had been P*de to
correct violations prior  to notification of violations bv EPA.
no downward adluatment  for aooxl faith efforts to COaDlY Vflg
Similarlv. no avidanea  of lack of aood faith was apparent.
                       (attach additional sheets if necessary)

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                                                              oO •
                               - 55 -
 (b)  Willfulness/Negligence No evidence relative to this  factor
 was presented for consideration.	
                         .(attach additional sheets if  necessary)
 (c)   History of Compliance No evidence relative to this
 adjustment factor was presented for consideration.   There  is  no
 evidence of similar previous violations at this (the Company's
 only)  facility.	
                         (attach additional sheets if necessary)
 (d)   Ability to pay No evidence relative to this factor was
 presented  for consideration.	
 (e) Environmental  Project.
                         (attach  additional sheets if necessary)
                                 N/A
(f)  Other Unique Factors.
                         .(attach  additional sheets if necessary)
                                N/A
                          (attach  additional sheets if necessary)
3.   Economio Benefit Although  there  is some economic benefit
enough  not, to include in the  calculation.
                          (attach  additional sheets if necessary)
4.  Recalculation of Penalty  Based on New Information.
                          (attach  additional sheets if necessary)

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                              - 56 -

 Company  Name  Company  A	
 Address
 Requirement  Violated  40 U.S.C. 6930fal. Failure to notify of
                 hazardous waste management activities
                    SETTLEMENT PENALTY AMOUNT
 1.  Gravity based penalty from matrix	.36.500
       (a)  Potential  for harm	Moderate
       (b)  Extent of  Deviation^	Moderate
2.  Select an amount  from the appropriate multiday
      matrix cell		S925
3.  Multiply line 2 by number of days of violation
      minus 1. ($925 X 179)	S165.575
4.  Add line 1 and line 3	S172.075
5.  Percent increase/decrease for good faith	-30%
6.  Percent increase/decrease for
      willfulness/negligence	.N/A
7.  Percent increase  for history
      of noncompliance	N/A
8.  Percent increase/decrease for
      other unique factors  	N/A
      (except litigation risk)
9.  Add line* S, 6, 7, and  8	-30%
10. Multiply HIM 4 by line 9	ssi.«22.50
11. Add lines 4 and 10	si2Q.4S2.so
12. Adjustment amount  for environmental
      project
13. Subtract line 12  from  line  11	....$120.452.59
14. Calculate economic benefit	rfin
15. Add lines 13 and  14	S12Q.452.5Q

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                              -  57  -

16. Adjustment amount for ability-to-pay	-0-
17. Adjustment amount for litigation risk	-0-
18.  Add lines 16 and 17	-0-
19.   Subtract line 18 from line 15 for	Si20.452.so
       final settlement amount

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                                - 58 -

          NARRATTVf;  EXPLANATION TO SUPPORT SETTLEMENT AMOUNT

 1.   Gravity Based Penalty

 (a)   Potential for Harm Moderate  -  EPA was prevented  from knowing
 that hazardous waste vaa being stored  at  the  facility.  However.
 because Company A notified EPA that it was a  generator. EPA did kr.c;
 that hazardous waste vaa handled  at the facility, but was unaware c:
 the  extent  of those activities and  the risk posed by  them.  The
 violation mav have a significant  adverse  effect on the statutory
 purposes or procedures for implementing the RCRA program.
                      .(attach additional  sheets  if  necessary)
 (b)   Extent of Deviation Moderate  -  Although  Company  A did  notify th
 Agency  that it was a generator,  it did  not  notify  EPA that  it stcrsd
 hazardous  waste.   While there  was  partial compliance. Company A
 significantly deviated from the  requirement.
                      .(attach additional  sheets  if  necessary)
 (c)  Multiple/Multi-day Moderate  potential  for harm and moderate
 extent of deviation lead one  to presume  that  multi-day  penalties are
 appropriate.   There are no case-specific facts which would  overccr.g
 the presumption.   The applicable  call  ranges  from S250  to SI.600.
 The midpoint  is  S925.  Based  on an assessment of  relevant factors
 (e.g.. the  seriousness of the violation  relative  to others  falling
 within the  same  matrix cell,  the  degree  of  cooperation  evidenced by
 the facility,  the  nyjufa^r of davs  of violation) . the raid point in ths
 available range  waa selected.  The violation  persisted  for  343  days.
 The Region  determined that the total penalty  would have sufficient
 deterrent impact if multidav  penalties were assessed onlv  for the
 minimum 180 dav  period pre.ff"«ed under  the penalty policy,  rather tha:
 for the full  343 fminus 11  dava of violation.          	
	(attach additional sheets if necessary)

2.  Adjustment  Factors  (Good faith,  willfulness/negligence,  history
of compliance,  ability  to pay,  environmental credits,
and other unique factors must be justified, if applicable.)

(a)  Good Faith At  settlement negotiations Company A presented a
written but explicitly  non-binding opinion dated October 30. 199?,
from the Director of EPA's Office of Solid W««te fQSWK indicating
that the waste  which Company A stored did not come within
ambit of the regulation listing new wastes, which became
effective on November S. 1989.   Qth«r information Indjcattd.
6 months later  the. Assistant Administrator for Solid Waste and

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                              - 59 -
 Emergency Response formally renounced the  view contained  in the
 Director's opinion,  that Company A was probably aware  of  this
 action,  and that the Company had failed to provide  EPA with
 either a S3010 fa)  notification or a Part A permit application
 even after it likely knew that its storage activities  were
 subject to Subtitle  C regulation.   In view of  these unusual facts
 - i.e..  that the company had for rouahlv a third of the duration
 of the violation acted in apparent good faith  reliance on the
 opinion of the Director of OSW indicating  its  stored wastes were
 not subject to regulation - a downward adjustment of 30%  in the
 amount of the penalty is appropriate.	

                       (attach additional sheets if  necessary)
 (b)  willfulness/Negligence  No  evidence  relative  to  this  factor
 was presented  for consideration.   Evidence  that Company A
 knowingly  failed  to  comply with notification/permitting
 requirements after the  Agency had  clarified its regulatory
 interpretation was not  deemed so persuasive as to warrant a
 finding that the  company  had acted willfully.
                         (attach  additional  sheets  if necessary}
(c)  History of Compliance  No new  information relevant  to  this'
adjustment factor came  to light  after  issuance of the complaint*.
There is no evidence of similar  previous  violations  at  this  (the
company's only) facility.	.	
                        .(attach  additional  sheets if necessary)
(d)  Ability to pay Company A  raised  and documented that it has

should be nifci^ated.  An  installment  plan was accepted by the
Agency.	
(e)  Environmental Project
                         (attach  additional sheets if necessary)
                          (attach  additional she«ts if necessary)

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                              - 60 -
(f)  Other Unique Factors.
                               N/A
                         .(attach additional sheets if necessary)
3.  Economic Benefit Although there is some economic benefit
gained from the above cited violation  (i.e.. personnel costs and
postage for notification forms!. such costs are negligible
enough not to include in the calculation.	

                         (attach additional sheets  if necessary)
4.   Recalculation of Penalty Based on New Information.
                              N/A
                          (attach additional sheets  if  necessary)

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                                                         9
                              - 61 -



                 A.   PENALTY COMPUTATION  WORKSHEET

 Company Name Company A,	
 Address       	
 Requirement Violated  42  U.S.C.  6925. Operating without a permit
                       or  interim status


                   PENALTY AMOUNT FOR COMPLAINT

 1 .   Gravity based penalty from matrix .................. S22 . 500

       (a)   Potential  for  harm .......... .....~7... ........ Major

       (b)   Extent of  Deviation. . . ....................... Manor

 2 .   Select  an amount  from the appropriate multiday
       matrix cell ............................... ....... S3 .000  -

 3.   Multiply line 2 by number of days of violation
       minus l..($3000 x  342) ............. . ............ SI. 026. OOP

 4.   Add line 1 and line 3 ........... . .................. Si. 048. 500

 5.   Percent increase/decrease for good  faith ........ . . .N/A

 6.   Percent increase  for  willfulness/
      negl igence .... ................................... N/A

 7.   Percent increase  for  history of
       noncompliance .................................. N/A
8.* Total lines 5 thru 7

9.  Multiply line 4 by line 8  ...

10. Calculate! Economic Benefit ............... ..... ..... $9.000

11. Add lines 4, 9 and 10 for penalty  aaount ........... Si.os7.soo
      to be inserted in the complaint


*  Additional downward adjustments where  substantiated by
reliable information nay be accounted  for here.

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                                - 62 -

           NARRATIVE  EXPLANATION TO  SUPPORT COMPLAINT AMOUNT
 l.  Gravity  Based Penalty

 (a)   Potential  for Kara Manor  - The  fact that the facility general1'
 was veil managed  is irrelevant as to the potential for harm for
 operating without a permit.  This situation mav pose a substantial
 risk  of exposure  and may have  a substantially adverse effect on the
 statutory purposes for implementing the RCRA Program.
                          (attach additional sheets if necessary)
 (b)  Extent of  Deviation Maior  - Substantial noncompliance with the
 requirement was found because Company A did not notify EPA that it
 stored hazardous waste, and did not submit a Part A application.
                         (attach  additional sheets  if necessary)
(c)  Multiple/Multi-day Major potential  for harm and maior extent sf
deviation result  in mandatory multi-day  penalties.  The applicable
cell ranges  from  SI.OOP to  S5.000.  The  midpoint is $3.000.   Based cr.
an assessment of  relevant factors  (e.g.. the  seriousness  of  the
violation relative to others falling within the same matrix  cell, the
degree of cooperation evidenced bv the facility, and the  number of
days of violation) the aid  point in the  available  range was  selected.
The violation persisted for 342 days.	  	

                        (attach additional sheets  if necessary)
2.  Adjustment Factors  (Good  faith,  willfulness/neqligence,  history
of compliance, ability  to pay,  environmental  credits,  and other
unique factors must b«  justified,  if applicable.)

(a)  Good Fftith Neither discussions  with the  facility nor the
inso«et:Qgt« Qj»««rv>tiQn« indicate  anv effort  had been made to correct
violation* prior to notification of  violations bv EPA,  Thus no
downward «d1u«ta«nt for good  faith efforts to CQttP.lv WftS made,
was also no avidane*  of a  lack of  aood faith.	
                          (attach additional sheets if necessary)

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                              - 63 -
 (b)  Willfulness/Negligence No evidence relative  to  this  factor
 was presented for consideration.	
                           .(attach additional  sheets  if  necessary)
 (c)   History of Compliance No evidence has  been  produced  thus  far
 that Company A has had anv similar previous violations  at this
 site.   The facility in question is the only facility owned or
 operated bv Company A.   Therefore,  no upward adjustment shall  be
 made on the basis  of oast compliance history..
                         .(attach additional  sheets  if necessary)
 (d)  Ability to pay  No  evidence  relative  to  this  factor was
 presented  for consideration.	
 (e) Environmental Project,
                         (attach  additional  sheets if necessary)
                                 N/A
                         .(attach  additional  sheets if necessary)
(f)  Other Unique Factors,
                                N/A
                         .(attach  additional  sheets if necessary)
3.  Economic B«n«fit Bv  failing  to obtain interim status fthe
least expensive, action available to it under th« statutel  Company
                complying with  the  regulatory requirements
relative to storage of hazardous  wastes in containers.  In a BEN
analysis (copy omitted for purposes of this example)  the Region
found that these costs amounted to  39.000^	
                       attach  additional sheets if necessary)

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                              - 64 -
4.   Recalculation of  Penalty  Based  on  New Information,
                         M/A
                         .(attach  additional  sheets  if  necessary)

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                              - 65 -
 Company Name Company A
 Address
 Requirement Violated 40  U.S.C.  6925. Operating without a permit
                      or  interim status
                     SETTLEMENT  PENALTY AMOUNT


 1.   Gravity  based  penalty  from  matrix .................. S22 . 500

       (a)  Potential  for harm    ........................ Mai or

       (b)  Extent  of  Deviation .......................... Malor

 2.   Select an amount  from  the appropriate multiday
      matrix cell ....................................... S3. OOP

 3.   Multiply line  2 by number of days of violation
      minus 1. . (§3,000 x 179) ........................... S537.000

 4.   Add line 1  and line 3 ............................... S559.500

 5.   Percent increase/decrease for good faith ........... -30%

 6.   Percent increase/decrease for
      willfulness/negligence
7.  Percent increase for history of
      noncompliance ..................................... N/A

8.  Percent increase/decrease for
      other unique factors  ............................. N/A
      (except litigation risk)

9.  Add linos 5, 6, 7, and  8 ....... .................... -30%

10. Multiply line 4 by line 9 ..... . ................... -S167.85Q

11. Add lines 4 and 10 ....................... ...... ---- S391.650
12. Adjustment amount for environmental
      project
13. Subtract line 12 from line  11	S391.

14. Calculate economic benefit	• • -$9.000

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                              -  66  -


15. Add line* 13 and 14 .......... ... ................... S400.650

16. Adjustment amount for ability-to-pay. . . ............ -0-

17 . Adjustment amount for litigation risk .............. -0-

18.  Add lines 16 and 17 ---- .....
19.   subtract line 18 from line 15 for .............. . . .S400.650
       final settlement amount

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                                 -  67  -

           KARRATJVE EXPLANATION TO SUPPORT SETTLEMENT AMOUNT

 1.  Gravity Based Penalty

 (a)  Potential for Harm Malor - The fact that the facility  general 1-
 was well managed is irrelevant as to the potential for harm for
 operating without a permit.   This situation mav pose a substantial
 risk of exposure and mav have a substantially adverse effect  on  the
 statutory purposes for implementing the RCRA Program.	
                          .(attach additional sheets if necessary)
 (b)   Extent of Deviation Manor - Substantial noncomoliance with  the
 requirement was found because Company A did not notify EPA that  it
 stored hazardous waste,  and did not submit a Part A application.
                        .(attach additional sheets if necessary)
 (c)  Multiple/Multi-day Major potential  for harm and major extent cf
deviation  result  in  mandatory multi-dav  penalties.   The applicable
cell ranges  from  Si.OOP to  S5.00Q.   The  midpoint is S3.OOP.   Based ~-
an assessment  of  relevant  factors  (e.g..  the seriousness of the
violation  relative to  others  falling within the same matrix cell,  ths
degree of  cooperation  evidenced  by  the facility,  and the number  of
davs of violation) the mid  point in the  available range was selected.
The violation  persisted for 342  davs.  The Region determined that tht
total penalty  would  have sufficient deterrent impact if raultidav
penalties  were assessed only  for the minimum 180 dav period mandated
bv the penalty policy  rather  than the full 342 davs of violation.
                           (attach additional sheets if necessary)
2.  Adjustment Factors  (Good  faith,  willfulness/negligence,  history
of compliance, ability  to  pay,  environmental credits,  and other
unique factors must be  justified,  if applicable.)

(a)  Good Faith At settlement negotiations Company A presented
a written hot: explicitly non-binding opinion dated October 30.
1987. fr«n fehe Director of EPA's  Office of Solid Waste fOSVn .
indicating that the waste  which Company A stored did not come
within the ambit of the regulation listing new wastes, which
became effective on November  5. 1987.	Qthtr inrorMtiQIl -Indicated
that 6 months later the Assistant Administrator for Solid Waste and

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                              - 68 -
 Emergency Response formally renounced  the  view  contained  in the
 Director's opinion,  that Company A wa^ probably aware of  this
 action,  and that the company had failed to provide EPA with
 either a $3010 fa)  notification or a Part A permit application
 even  after it likely knew that its  storage activities were
 sublect  to Subtitle C regulation.   In  viev of  these unusual fact:
 -  i.e.  that the company had for roughly a  third of the duration
 of the  violation acted in apparent good faith  reliance on the
 opinion of the Director of OSW indicating  its  stored wastes were
 not subject to regulation - it is  appropriate  to adjust the
 penalty for this violation downward bv
 30*.	
 (attach additional  sheets if necessary)
 (b)  Willfulness/Negligence No evidence relative  to  this  factor
was presented  for consideration.
                          ,(attach additional  sheets if necessary)
(c)  History of Compliance No new information relevant to this
adjustment factor  came to  light after issuance^f the complaint.
                          (attach additional  sheets if necessary)
(d)  Ability to pay Company A raised and docmn^ntad that it has
cash flow problems.   It did not convince EPA that the penalty
should be mitigated.   An installment plan vaa accepted by the
Aoencv.                                                      	
(e) Environment*!  Project.
                         (attach additional sheets if necessary)
                                 If/A
                         .(attach additional sheets if necessary)
(f)  other Unique Factors.
                               JI/A.
                         .(attach additional sheets if necessary)

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                              - 69 -


3.  Economic Benefit  Bv failing  to obtain interim status  (the
least expensive option available  to it under the statute)  Company
A avoided or delayed the costs of filing a Part A permit
application and complying with the regulatory requirements
relative to storage of hazardous  wastes in containers.  In a BEN
analysis (copy omitted for purposes of this example) the Region
found that these costs amounted to S9.0QO.	
                         (attach additional sheets if necessary)
4.  Recalculation of Penalty Based on New Information,
                        N/A
                         .(attach additional sheets if necessary)

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                                - 70 -

      A.

      (1)

 Company  B failed to prevent entry of persons onto the active porticr.
 of its surface impoundment facility.   A  portion of the fence
 surrounding the area had been accidentally  knocked down during
 construction on the new wing of the facility on October 30, 1988, and
 had never been replaced.  Several children  have entered the active
 portion  of the facility.  40 CFR §265.14.   An  inspection by EPA cr.
 March 15,  1989, revealed that the damaged area of the fence still
 needed to be replaced.   The complaint  issued to Company A assessed
 penalties for the violation of failing to provide adequate security
 pursuant  to 40 CFR § 265.14.   Below is a discussion of the
 methodology used to calculate the penalty amount proposed in the
 complaint,  followed by  a discussion of the  methodology used to
 calculate the penalty amount to be accepted in settlement.

      (2)   Seriousness:   Potential for  Harm.  Major - Some children
 already have entered the area; potential for harm due to exposure to
 waste  is  substantial because of the lack of adequate security around
 the  site.   Extent of Deviation.   Moderate - there is a fence, but a
 portion of  it has been  knocked down.   Significant degree of
 deviation,  but part of  the requirement was  implemented.

      (3)   Gravity-based Penalty:   Major  potential for harm and
 moderate  extent of deviation yield the penalty range of $15,000  r=
 $19,999.   The midpoint  is $17,500.

      (4)   Multi-Dav Penalty Assessment

      (a)   Failure to provide security.  Major  potential for harm and
 moderate extent of deviation result in mandatory multi-day penalties.
 The  applicable cell ranges from $750 to  $4,000.  The midpoint is
 $2,375.   [Based on an assessment of relevant factors  (e.g., the
 seriousness  of the violation relative  to others  falling within the
 same matrix  cell,  the degree of cooperation evidenced by the
 facility, the number of days of violation)  the mid-point  in the  range
of available multi-day  penalty amounts was  selected.]  EPA documented
that the violation continued from October  30,  1988,  to March  15,
 1989, a total of 136 day* (minus one day).  Total Penalty:  $2,375  x
 135  - $320,435.

      (b)   Penalty Subtotal!   $17.500 + 5320.625  • $338.125

      (5)   Economic benefit of noneompllance.

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                              - 71 -


 Since Company B reaped an economic benefit by failing to repair
 the fence,  a BEN worksheet should be completed.  For information
 describing  each of the inputs see Section VIII.B.  For purposes
 of the above violation,  the following input data should be
 furnished:

            1.   (EPA v.  Company  81. the case name
            2.   fSlOO.OOO).  the  initial capital investment of
                replacing the fence
            3.   -0-.  there are no one time expenditures
            4.   -0-.  no annual operating and maintenance  (O&M
                expenses  have been identified
            5.   3/1989.  the date of the inspection
                documenting noncompliance
            6.   4/1990.  the date of compliance
            7.   6/1990.  the anticipated date of penalty
                payment


The above data  was  entered into the BEN model which yielded an
economic benefit  amount  of $12,743  (see attached BEN worksheet
and printout).

(6)  Application  of Adjustment  Factors For Computation of the
Complaint Amount

       (a) Good  faith efforts to comply.  At the time of
computation  of  the amount of the penalty to be proposed  in the
complaint no information (i) relative to the violator's good
faith efforts to  comply  or (ii) indicative of lack of good faith
was available.

      (b)  Degree of willfulness and/or negligence.  Little
evidence as  to  application of this factor was available.

      (c) History of non-compliance.  Company B had on two
previous occasions been  cited in writing for failure to  prevent
public access to  the active portion of the facility.  While such
previous violations had  been corrected, they indicate that
Company B had not been adequately deterred by prior notice of
similar violations.  The SUB of the gravity/multi-day penalty
components is adjusted upwards  by 15% because of the company's
history of noncoopllance.

($17,500 * $320,625) X 15% - $50,718.75

      (d)  Other  ad-lustment factors.  Consistent with the general
policy of delaying consideration of downward adjustment  factors
(other than  that  relating to good faith efforts  to comply)  until
the settlement  stage,  the Region reviewed available  information

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                              - 72 -


 only to  see  if  it  supported  further upward adjustment of the
 penalty  amount.  No  information supporting further upward
 adjustment was  uncovered.

 (7)   Final Complaint Penalty Amount

       Gravity base    Multiday     Economic benefit   Upward Adj.
       $17,500     +   $320,625  +    $12,743        +  $50,718.75

       =  Total  Penalty:  $401,586.75

 (8)   Settlement Adjustments

       During settlement discussions Company B presented
 information which  it felt warranted adjustment of the penalty.
 After issuance  of  the complaint no new information came to light
 which supported recalculation of  the gravity-based, multi-day,
 or economic benefit  components of the penalty proposed in the
 complaint.

       (a)  Good faith efforts to  comply.  Company B gave evidence
 at settlement of labor problems with security officers and
 reordering and  delivery delays for a new fence.  After issuance
 of the complaint,  Company B  was very cooperative and stated that
 a new fence would  be installed and that security would be
 provided for by another company in the near future.  Even though
 the company was very cooperative, its actions were only those
 required under  the regulations.   No justification for mitigation
 for good faith  efforts to comply  exists..  No change in penalty.

       (b)  Decree  of willfulness  and/or negligence.  If the
 evidence presented by Company B with respect to reordering delays
 had been convincing,  it night arguably have served as a basis  for
 finding that the company acted without willful disregard of the
 regulation (or  should not have been charged multi-day penalties
 at a  rat* so high  as t&Kt established during computation of the
 complaint aaooBt).   However, such claims of unavoidable delay  are
 easily made «ad must be vieved with skepticism.  The company's
 evidence on this] point was unconvincing since the security  and
 fencing could have been easily provided by other suppliers.

      While the fact that the  fence was knocked down accidentally
might  indicate  a lack of willfulness, the company's  failure to
take  remedial action for 136 days argues against a downward
adjustment.  The violation may even have become a willful one
when  left uncorrected. But  in the  absence of more  information
about precautionary  steps the company took prior  to  the accident
and the extent  of  the violator's  knowledge of  the  regulations, no
adjustment was  made.

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                              - 73 -
       (c)   History of non-compliance.   The Region was  confronted
 with no reason to rethink the previous upward adjustment  of  the
 penalty based on past violations of a  similar nature.

       (d)   Ability to pay.   The Company made no  claims regarding
 ability to pay.

       (e)   Environmental  projects.   The company  did  not propose
 any environmental projects.

       (f)   Other unique factors.  No other unique factors existed
'in  this case.

 (9)  Final  Settlement  Penalty Amount

                  Upward       Economic    Total
Gravity base     Multi-day    Adjustment   Benefit    Penalty
 $17,500       +  $320,625   + $50,718.75 + $12,743  -  $401,586.75

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                              - 74 -


            PENALTY COMPUTATION  WORKSHEET


 Company Name Company B (DC 5456)
 Address      402 M.  street.  s.W.
               Washington.  D.C.2Q2SA
 Requirement Violated 40 CFR $265.14.  failure to prevent entry


                     PENALTY AMOUNT FOR COMPLAINT

 l.   Gravity based penalty from matrix	S17, 500
       (a)   Potential for harm	 Mai or

       (b)   Extent of Deviation	Moderate

 2.   Select  an  amount from the appropriate multiday
       matrix cell	S2375

 3.   Multiply line 2  by number of days of violation
       minus l.($2375 X 135).	$320.625

 4.   Add line 1 and line 3	S338.125

 5.   Percent increase/decrease for good faith	N/A

 6.   Percent increase for willfulness/
       negl igence	N/A

 7.   Percent increase for history of noncompliance	15%

 8.*  Total lines 5 thru 7	 . 15%_

 9.  Multiply line 4  by lin« 8 	S50.718.75

 10.  Calculate  Economic Benefit	S12.743

 11. Add lin««  4,  9 and 10 for penalty aaount
      to be inserted in the complaint	SAOI.586.75


 *  Additional  downward adjustment* where substantiated by
reliable information may b« accounted for here.

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                                - 75 -

                     EXPLANATION TO  SUPPORT  COMPLA!
 1.   Gravity Based Penalty

 (a)   Potential for Harm Maior - Some children  have  already entered '
 the area; potential for harm due to exposure to waste  is substantial
 because of the lack of adequate security around the site.
                        (attach additional  sheets  if necessary)
 (b)   Extent of Deviation Moderate -  There  is  a  fence,  but a
 substantial portion of  it has  been knocked down.  There  is a
 significant degree  of deviation,  but part  of  the  requirement
 has  been  implemented.
                      (attach  additional  sheets  if  necessary)
 (c)  Multiple/Multi-day  Multi-day  penalties  are  mandatory  for
major-moderate violations.   Based on  consideration  of  relevant
factors  (e.g.. number of davs  of violation  and  degree  of  cooperation
evidenced by  the  facility)  the mid-point  in the available range  in
the multi-dav matrix was selected.  The violation can  be  shown to
have persisted for  135
                       (attach additional  sheets  if  necessary)
2.  Adjustment Factors  (Good  faith, willfulness/negligence,  history
of compliance, ability  to pay,  environmental  credits,  and  other
unique factors must be  justified,  if  applied.)

(a)  Good Faith.  No information  indicating a lack of  good faith
or of qoo^ faith efforts bv the violator to comply is  available.
(b)  willfuln«s»/M«glig«nc«
                          (attach  additional  sheets if necessary)
                          (attach  additional sheets if necessary)

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                              - 76 -
 (c)   History of Compliance Company  B had on two previous
 occasions  been cited in writing  for failure to prevent public
 access  to  the active portion  of  the facility.  While such
 previous violations  had been  corrected, they  indicate that
 Company B  has not  been adequately deterred bv prior notice of
 similar violations.   Hence, the  pftflflltv is adjusted upward 15%,
                         (attach  additional sheets  if necessary)
 (d)  Ability to pay	   N/A
                         (attach  additional  sheets  if necessary)
 (e)  Environmental  Project 	N/A
(f)  Other Unique  Factors
                         (attach  additional  sheets  if  necessary)
                        .(attach additional sheet* if necessary)
3.  Economic Benefit  Conpanv B has gained an economic benefit
from failing to  install  a new fence.   See the BEN WorKshMt for
the data input into the  BEN model which calculated an economic
benefit of S12.743.                                   	
                        (attach additional sheets if necessary)

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                                                      <7
                              -  77  -
4.  Recalculation of Penalty Based on New Information     N/A
                        (attach additional sheets if necessary)

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                             - 78 -
                          BEN worksheet
1.   Company B
     Requirement Violated: 40 CFR <265.14
5,
6
7,
Initial Capital Investment/
Year Dollars
One Time Expenditure/Year
Dollars
a.  Tax Deductible
b.  Not Tax Deductible
Annual Operating and
Maintenance (O&M) Expenses/
Year Dollars
Date of Noncompliance
Date of Compliance
Anticipated Date of Penalty
Payment
                                                  BEN Inputs
                                                  100.000
8.*  Useful Life of Pollution
     Control Equipment
9.*  Marginal Income Tax Rate
     (On Time Case)
10.* Marginal Income Tax Rate
     (Delayed Compliance case)
11.* Inflation Rate
12.* Discount Rate
13.* Low interest Financing
     Low Interest Rate
     Corporate Debt Rate
3. 1989
4.1990

6.1990
14.  Economic Benefit  Penalty  Component
*  See standard value  from  BEN model

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                              - 79 -
 THE ECONOMIC BENEFIT OF A  13 MONTH DELAY AS
 OF THE PENALTY PAYMENT DATE, 15 MONTHS AFTER
 THE INITIAL DATE  OF  NONCOMPLIANCE
      12743
 >»»»»  THE  ECONOMIC SAVINGS CALCULATION ABOVE
            USED THE  FOLLOWING VARIABLES:
 USER  SPECIFIED VALUES

 1.  CASE NAME -  HYPO
 2.  INITIAL CAPITAL  INVESTMENT -          $   100000
 3.  ONE-TIME NONDEPRECIABLE EXPENDITURE   $   - 0  -
 4.  ANNUAL O&M EXPENSES -                 $   - 0  -
 5.  FIRST MONTH OF NONCOMPLIANCE -        S   3,1989
 6.  COMPLIANCE DATE  -                     $   4,1990
 7.  PENALTY PAYMENT  DATE -                $   6,1990
       1989 DOLLARS
 STANDARD VALUES

 8.  USEFUL LIFE OF POLLUTION CONTROL
      EQUIPMENT -
 9.  MARGINAL INCOME TAX RATE FOR THE
       ON-TIME CASE -
10.  MARGINAL INCOME TAX RATE FOR THE
       DELAY CASE
11.  ANNUAL INFLATION RATE -
12.  DISCOUNT RATE -
13.  AMOUNT OF LOW INTEREST FINANCING
15 YEARS

38.50 %

 38.50 %

  3.40 %
 17.50 %
     0 %

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                              - 80 -
 Company Name  Company B (DC  5456)
 Address       402  M.  Street.  S.W.
               Washington.  D.C.2Q2S4
 Requirement  Violated  40  CFR  < 265. 14. Failure to prevent entry


                    SETTLEMENT PENALTY AMOUNT


 1.  Gravity  based  penalty  from matrix.. ...... . ....... S17 . 500

       (a)  Potential  for harm    . ... .................. Mai or

       (b)  Extent  of  Deviation ....... . ................ Moderate

 2.  Select an amount  from  the appropriate multiday
      matrix cell. . . ....... .......... ....... ....... . . .52 .375

 3.  Multiply line  2 by number of days of violation
      minus  1 ($2,375 X  135) ......................... S32Q.62S

 4.  Add line 1 and line  3 ............................ S338. 125

 5 .  Percent  increase/decrease for good faith ......... N/A

 6.  Percent  increase/decrease for
      willfulness/negligence. .... .................... N/A

 7.  Percent  increase  for
      history of noncompliance ....................... 15%

8 .  Percent  increase/decrease for
      other unique factors .......................... N/A
      (except litigation risk)
9.  Add line» 5, 6, 1 , and  8

10. Multiply UM 4 by line 9 ........................ sso.7ia.75

ll. Add line* 4 and 0.... ............................ S3aa.843.75

12 . Adjustment aaount for environmental .............. N/A_
      project

13. Subtract line 12  from line  11  ................... S3aa.843.75

14 . Calculate economic benefit ...... . ................ S12.743

15. Add lines 13 and  14 ...... ---- . ................... $4Q1. 58$.75

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                              - 81 -
16. Adjustment amount for ability-to-pay	N/A
17. Adjustment amount for litigation risk	N/A
18.  Add lines 16 and 17	- 0 -
19.   Subtract line 18 from line 15 for	S401.586.75
       final settlement amount
This procedure should be repeated for each violation.

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                                - 82 -

      NARHATI7B BTPT^MVTION TO SUPPORT  SETTLEMgMT AMOtTMT

 1.   Gravity Based Penalty

 (a)   Potential for Harm Mai or - some children  have already  entered
 the  area;  potential for harm due  to exposure to waste  is substantial
 because of the lack of adequate security  around the  site.
                       _(attach  additional  sheets  if necessary)
 (b)   Extent  of  Deviation Moderate  -  There  is  a  fence,  but  a
 substantial  portion of  it has  been knocked down.   There  is a
 significant  decree of deviation, but part  of  the  retirement
 has  been  implemented.    	  '	
                     .(attach additional  sheets  if  necessary)
 (c)  Multiple/Multi-day   Multiday penalties  are  mandatory  for
major-moderate violations.   Based on  consideration of  relevant
factors  (e.g.. number of  days  of  violation and degree  of coooeratic:
evidenced bv the  facility)  the mid-point  in  the  available  range  ir:
the multi-dav matrix  was  selected.  The violation can  be shovn to
have persisted for  135 days.	
                      .(attach  additional  sheets if necessary)
2.  Adjustment Factors  (Good  faith,  willfulness/negligence,  history
of compliance, ability  to  pay,  environmental credits,  and other
unique factors must  b«  justified,  if applied.)

(a)  Good Faith*  Coataanv  B gave evidence of labor problems with
security attlcmr  and reordering and  delivery delavs in obtaining a
new fences  A^^r issuing  the complaint.  Company B stated that a new
                                                               was
very coop^irativa.  its,  actions were only those required under the
regulations.  Me -Justification for mitigation for good faith efforts
to comply exists.	.
                          (attach additional sheets if necessary)

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                              - 83 -


 (b)   willfulness/Negligence.   While  the fact that  the  fence was
 knocked down accidentally might indicate a  lack of willfulness.
 the  Comoanv/3 failure to take remedial  action for  136  days argues
 against a downward adjustment.   The  violation mav  even have
 become a willful  one when left  uncorreeted.   But in  the absence
 of more information about precautionary steps the  company may
 have taken prior  to the accident  and the extent of the violators
 knowledge of the  regulations,  no  adjustment  was made.	


                                 (additional  sheets if  necessary)
 (c)  History of  Compliance  Company  B  had  on  two  previous
 occasions been cited  in writing  for failure  to prevent  public
 access to the active  portion  of  the facility.  While  such
 previous violations had been  corrected, they indicate that
 Company B has not been adequately deterred bv prior notice  of
 similar violations.   Hence, the  penalty is adjusted upward  15%.
                         (attach additional  sheets  if  necessary)
(d)  Ability to pay	n/A
(e)   Environmental Project
                        .(attach additional  sheets  if  necessary)
                        .(attach additional  sheets if necessary)
(f)   Other Uniqu* Factors 	N/A
                        .(attach additional  sheets if necessary)

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                              - 84 -
3.  Economic Benefit Company B has gained an economic benefit
from failipq to install a new fence.  See the BEN Worksheet for
the data input into the BEN model which calculated an economic
benefit of S12.743.  	   	          	        	
                        (attach additional sheets  if necessary)
4. Recalculation of Penalty Based on New  Information     N/A.
                        .(attach  additional  sheets if necessary)

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                              - 85 -
                          BEN Worksheet
 1.    Company  B
      Requirement Violated: 40 CFR <265.14
5

6.

7,
 Initial Capital Investment/
 Year Dollars

 One Time Expenditure/Year Dollars
 a.  Tax Deductible
 b.  Not Tax Deductible

 Annual Operating and
 Maintenance (O&M) Expenses/
 Year Dollars

 Date of Noncompliance

 Date of Compliance

Anticipated Date of Penalty
 Payment
                                       BEN Inputs

                                             100.000
8.*  Useful Life of Pollution
     Control Equipment

9.*  Marginal Income Tax Rate
     (On Time Case)

10.* Marginal Income Tax Rate
     (Delayed Compliance Case)

11.*  Inflation Rate

12.* Discount Hate

13.* Low Interest Financing

     Low Interest Rate

     Corporate Debt Rate
3.1989

4.1990


6.1990
14.   Economic Benefit Penalty Component

*  See standard value froa BEN model

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                              - 86 -
THE ECONOMIC BENEFIT OF A  13 MONTH DELAY AS
OF THE  PENALTY  PAYMENT DATE, 15 MONTHS AFTER
THE INITIAL DATE OF NONCOMPLIANCE
   S  12743
           THE ECONOMIC SAVINGS CALCULATION ABOVE
            USED THE FOLLOWING VARIABLES:
 USER SPECIFIED VALUES

 1.  CASE NAME -  HYPO
 2.  INITIAL CAPITAL INVESTMENT -         $  100000
 3.  ONE-TIME NONDEPRECIABLE EXPENDITURE  $   - 0 -
 4.  ANNUAL O&M EXPENSES *                $   - 0 -
 5.  FIRST MONTH OF NONCOMPLIANCE -       $   3,1989
 6.  COMPLIANCE DATE -                    $   4,1990
 7.  PENALTY PAYMENT DATE -               $   6,1990
       1989  DOLLARS
 STANDARD VALUES

 8.  USEFUL LIFE OF POLLUTION CONTROL
      EQUIPMENT -
 9.  MARGINAL INCOME TAX RATE FOR THE
       ON-TIME CASE -
10.  MARGINAL INCOME TAX RATE FOR THE
       DELAY CASE
11.  ANNUAL INFLATION RATE -
12.  DISCOUNT RATE -
13.  AMOUNT OF LOW INTEREST FINANCING
15 YEARS

38.50 %

 38.50 %

  3.40 %
 17.50 %
     0 %

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                              - 87 -
 c.  fvYAMPLE 3

 (1)  Violation

       Company C,  an owner/operator of  several permitted
 commercial treatment facilities,  regularly  receives a large
 volume of diverse types of RCRA hazardous wastes at its Evanston
 facility.  Upon receipt of the  wastes, Company C's Evanston
 facility immediately treats them  and sends  the treatment residues
 off-site for land disposal at another  company's facility, Company
 Z.

       Between December 16,  1988 and December 18, 1989, Company
 C's Evanston facility received  one shipment per month of liquid
 F002 spent solvent wastes  from  various generators.  Each shipment
 consisted of two  55-gallon drums,  but  the composition and
 concentration level of hazardous  constituents in each drum was
 different due to  the highly variable process that generated the
 waste.   The Evanston facility did not  test  the wastes before or
 after  treating them,  and its existing  waste analysis plan did
 not  require any such testing or other  analysis to determine if
 wastes are restricted.   The Evanston facility properly manifested
 the  12 monthly shipments of wastes sent off-site to Company Z,
 but  it did not know until  June  18,  1989 that it was required by
 40 C.F.R.  §  268.7  to send  a land  disposal restrictions  (LDR)
 notification and  certification  with each shipment of waste.  At
 that time,  it began sending § 268.7 forms routinely stating that
 the  treatment residues were eligible for land disposal.

      On  October  30,  1989,  an EPA inspector at Company Z found
 that 24 drums  of  Company C's F002  solvents  were unlawfully
 disposed  in Company Z's landfill.   EPA determined that the
 unlawfully disposed wastes had  been sent to Company Z in 1989
 from the  Evanston  facility.   Company Z's landfill did not meet
 minimum technological  requirements and was  leaking hazardous
 constituents into the  ground water, the only source of drinking
 water for thsj area.  The unlawfully disposed drums contained
 concentration* of  P002  solvents in excess of the applicable Part
 268 LDR treatment  standards.

      Although four separate violations are identified  in
 (a) through  (d) below,  only the first  two violations  (in  (2)  (a)
and  (b) below)  are discussed for  purposes of this Example.  Below
 is a discussion of the  methodology used to  calculate the penalty
amount for the  complaint followed by a discussion of the
methodology used to calculate the settlement amount.

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                              - 88 -
 ( 2 )   Seriousness :

       (a)  Failure to Send Accurate § 268. 7 (b) Notifications and
 Certifications:

       Potential  for Harm.  Major - Because Company c did not
 notify the receiving facility, Company Z, that the waste was
 prohibited from  land disposal, Company Z was unaware that the
 wastes were required to be further treated before land disposal.
 The violation may have a substantial adverse effect on the
 purposes or procedures for implementing the RCRA program.  The
 violation  may also pose a substantial risk of exposure to
 hazardous  waste.

       Extent of Deviation.  Major - Initially, Company C did not
 merely prepare and send deficient § 268.7 notifications/
 certifications.  Rather, it completely failed to prepare and send
 such  forms  for the first six months.  During the next six months,
 Company C  sent unverified certifications.  In each instance,
 Company C  substantially deviated from the applicable requirement.

       (b)   Failure to Test Restricted Wastes as Required by
 §§ 268'. 7 (to)  and 264.13(a):
      Potential for Harm.  Major - Company C's complete failure
to test the wastes prevented  it from determining that the wastes
were ineligible for land disposal, which contributed to the
actual disposal in a leaking  unit above the area's sole source of
drinking water.  The violation has a substantial adverse effect
on the procedures for  implementing the LDR program because
testing to assure compliance  is critically important.  The
violation may also pose a substantial risk of exposure to
hazardous vasts.

      Extent of Deviation.  Major - Company C's vasts analysis
plan is deficient in not explicitly requiring any testing to
determine if wastes are restricted, as evidenced by the resulting
shipments fro* Company C which failed to  identify their waste as
restricted.  Such deficiency  is particularly significant where
the vastes are very diverse,  as is the case here, because in the
absence of reliable test results it is very difficult,  if not
impossible, for Company C to  comply vith  the S  264.13
requirement that the operator obtain "all the  information vhich
must be knovn to [manage] the vasts in accordance vith .  .  . Part
268."

       (c) Treating Hazardous Waste Prior to Obtaining Adequate
Waste Analysis Data as Required by  S  264. 13 (a):  Potential  for
Harm - Major.  Extent  of Deviation  - Major.

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                               -  89  -

        (d)  Failure to Maintain § 268.7 Paperwork in  Operating
 Record as Required by § 264.73(b):   Potential  for Harm  -
 Moderate.  Extent of Deviation - Major.

 (3)  Gravity-based Penalty

       (a)  Failure to Send Accurate §  268.7(b)  Notifications and
 Certifications:  Major potential for harm and  major  extent of
 deviation leads one to the cell  with the range of $20,000 to
 $25,000.   The raid-point is $22,500.

       (b)  Failure to Test Restricted  Wastes as Required by §§
 268.7(b)  and 264.l3(a):  Major potential  for harm and major extent
 of deviation leads one to the cell  with  the range of $20,000 to
 $25,000.   The raid-point is $22,500.

       Total  Penalty Per Shipment:   $22,500  + $22,500 »  $45,000.

       Since  these violations were repeated  once every month for
 12 months, the above penalty figure should  be  multiplied by 12,
 to yield  a total  penalty (prior  to  application of adjustment
 factors,  addition of multi-day component,  and  addition  of
 economic  benefit  component)  as follows:

       Penalty Subtotal:  $45,000  x 12 = $540,000.

 (4)  Multi-day Penalty Assessment - Because each violation is
 viewed  as independent and noncontinuous,  no multi-day assessment
 was  made.

 (5)  Economic Benefit of Noncoapliance - Company C avoided a
 number of costs in coaaitting the violations noted in (2)(a) and
 (b)  above.  These included (i) the  costs of forms and labor
 necessary to  complete the forms  notifying and  certifying to
 Company Z that the wastes were or were not  appropriate  for land
 disposal, and (ii)  the costs of  waste  analysis necessary to
 determine the eligibility of the wastes  for land disposal.  A BEN
 analysis'(copy omitted for purposes of this example)  of these
 avoided ooerts was performed  and  indicated that Company  C reaped
 an economic benefit of $12,500 froa its  failure to comply with
 the  two requirements  in  question ($2,500 for the violations
     13  where, as here, a facility has through a  series  of
independent acts repeatedly violated  the  saae  statutory or
regulatory requirement, the violations may begin to closely
resemble multi-day violations in their number  and  similarity to
each other.  In these circumstances,  enforcement personnel have
discretion to treat each violation after  the first in the series
as multi-day violations (assessable at the rates provided in the
multi-day matrix), if to do so would  produce a aore equitable
penalty calculation.

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                              - 90 -

 specified  in  (2)(a)  and  $10,000 for the violations noted in
 (2Mb) ) -1*

 (6)   Application  of  Adjustment Factors for Computation of the
 Complaint  Amount

       (a)   Good  faith  efforts to  comply  - As soon as Company C's
 Evanston facility learned of its  obligation to submit § 268.7
 forms,  it  began  submitting'such forms.  However, evidence
 demonstrates  that efforts to comply were weak because Company C
 made  no effort to ensure the accuracy of such submissions.  Even
 if such submissions  had been accurate, Company C's actions would
 have  been only those required by  the regulations.  No justifica-
 tion  for mitigation  for good faith efforts to comply exists.  No
 change  in the $540,000 penalty.

       (b)   Degree of wilfulness and/or negligence - The prior
 knowledge of  the  § 268.7 requirements by Company C's other
 facilities  is evidence of negligence because a prudent company
 would advise  all  its facilities of the appropriate requirements,
 especially  after  one of the company's other facilities recently
 had been found liable  for similar violations.  Based on these
 facts, an upward  adjustment in the amount of the penalty of 10%
 is justified.  $540,000 x 10% =• $54,000.

       (c)   History of  noncompliance.  No evidence demonstrating
 that Company  C has had any similar previous violations at the
 Evanston facility has  been presented.  However, Company C
 operates other commercial treatment facilities, at least one of
 which recently has been found liable for similar violations.
 Based on these factors, an upward adjustment in the penalty is
 justified.  However, because the  upward adjustment is accounted
 for in (6Mb) above, such adjustment will not be duplicated here.

       (d)   Other  a
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                              - 91 -                      '

 downward adjustments.   At the  same  tine  no  reason to adjust
 penalty amount upward  based on  the  remaining  adjustment factors
 was evident.

 (7)  Final Complaint Penalty Amount

                        Upward            Economic       Total
       Gravity base  Adjustment         Benefit        Penalty
         $540,000   +   $54,000       •»•     $12,500   =    $606,500

       Since a penalty  of  $606,500 would  exceed the statutory
 maximum for 24 violations (24 x $25,000  = $600,000), the  penalty
 amount to be  sought in the complaint was adjusted downward to
 $600,000.

 (8)    Settlement Adjustments

       After issuance of the complaint  the Region uncovered no
 basis  for  recalculating the gravity-based,  multi-day, or  economic
 benefit  components of  the penalty sought in the complaint.
 However, based on  information available  to  it (including  that
 provided by Company C)  the Region did  consider certain downward
 adjustments in the penalty amount.

       (a)   Good faith  efforts to comply.  The company did not
 present  and the Region did not  find any  grounds for reconsidering
 its  initial conclusion that downward adjustment based on  the
 company's  good faith efforts at compliance  was not justified.

       (b)   Degree  of willfulness and/or  negligence.  Although the
 company  argued that its lack of knowledge regarding land  ban
 requirements  indicated a  lack of willfulness  during the first 6
 months the  violations  continued, the Region declined to adjust
 the penalty downward because to do so  would encourage or  reward
 ignorance  of  the law.

       (C)   History of  non-compliance.  No reason was presented to
 address  this  issue differently  than it had  been in computing the
 complaint  amount of the penalty.

       (d)   Ability to  pav.   Company C  made  no claims regarding
 ability  to  pay.

       (e)   Environmental  projects.  Company C did not propose any
 environmental  projects.

       (f)   other Unique Factors.  In reviewing its  liability case
 against  Company C  the  Region determined  that  there  were major
weaknesses  in  its  ability (i) to tie a number of  the  24 drums
discovered  at  Company  Z's landfill  to  Company C,  and  (ii) to snow
that all the drums  contained F002 solvent.  The Region  concluded
that in  light  of these evidentiary  weaknesses it  was  unlikely

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                                - 92 -

that it would be able to obtain through litigation the amount of
the penalty it had sought  in the complaint.  Since these
evidentiary difficulties adversely affected the Region's ability
to prove violations related to  4 of the 12 (or one-third of the)
monthly shipments, the Region decided that for settlement
purposes it was willing to forego roughly one-third of the total
proposed penalty amount.  Accordingly, the Region decided to
adjust the amount of the penalties sought for the violations
identified in 2(a) and (b) above downward by $100,000 each based
on litigative risk.

(9)  Final Settlement Penalty Amount:

Gravity-   Upward        Economic       Downward       Total
Base       Adjustment    Benefit        Adjustment     Penalty

$540,500  + $54,000  +    $12,500  -     $200,000  »  $406,500

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                              - 93 -
 A.   PENALTY COMPUTATION WORKSHEET
 Company Name Company C  - Evanston  Facility
 Address
 Requirement Violated   40  CFR  J268.7(to) Failure to send accurate
 notifications  and  certifications	

                   PENALTY AMOUNT FOR COMPLAINT
 1.  Gravity based  penalty from matrix..($22,500 x 121..$270.000
       (a)   Potential for  harm	manor
       (b)   Extent  of Deviation	major
 2.  Select  an  amount from the appropriate multiday
       matrix  cell.	N/A_
 3.  Multiply line  2 by number of days  of violation
       minus 1	,,	N/A
 4 .  Add line 1 and  line 3	S270.000
 5.  Percent  increase/decrease for good faith	N/A
 6.  Percent  increase for  willfulness/
      negl igence	10%_
 7.  Percent  increase for  history of
       noncompliance	N/A_
8.* Total lines 5 thru 7..	io*_
9.  Multiply lint) 4 by line 8 	$21.000
10. calculate) Iconoaic Benefit	S2.SOQ
11. Add lines 4, 9 and 10  for penalty  amount	$299.soo
      to be inserted in the complaint

*  Additional downward adjustments where substantiated by
reliable information may  be accounted  for here.

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                              - 94 -



       NARRATIVE  EXPLANATION TO SUPPORT COMPLAINT

 1.   Gravity  Based  Penalty

 (a)   Potential for Harm Maior -  Because Company C did not notify
 the  receiving facility. Company  Z.  that the waste was prohibited
 from land disposal.  Company 2 was unaware that the wastes were
 repaired to  be further  treated before land disposal.  The
 violation may have a substantial adverse affect on the purposes
 or procedures for  implementing the  RCRA program.  In addition.
 the  violation creates a potential for harm because it hinders
 Company Z's  ability  to  adequately characterize the waste in order
 to assure that it  is properly managed.  (Note, however, that
 Company Z has an independent regulatory obligation to
 characterize and properly manage wastes it receives.  Thus.
 Company C's  violation is one factor contributing to the potential
 for  harm, rather than the sole factor creating such risks.1
                         (attach additional sheets if necessary)
(b)  Extent of Deviation Manor  -  Initially. Company C did not
merely prepare and send deficient $268.7 notifications/
certifications.  Rather it completely  failed to prepare and send
such forms for the first six months.   During the next six months
Company C sent unverified certifications.   In each instance.
Company C substantially deviated  from  the  applicable requirement
                        .(attach  additional  sheets  if necessary)
(c)  Multiple/Multi-day  Because  each violation  is properly
viewed as independent  and noncontinuous.  no  multi-day  assessment
is warranted.  Because the violation was  repeated 12 times,  the
   \v:
                         (attach additional sheets if necessary)
2.  Adjustment Factors  (Good faith,  willfulness/negligence,
history of compliance,  ability to pay,  environmental credits,  and
other unique factors must  be justified, if applied.)

(a)  Good Faith As  soon as Company C's Evanston facility l«arn«.d
of ita obligation to submit 268.7 forms, it b«flan submitting guch.
{SOUL	However, evidence  demonstrates that efforts to CQmPlY
were weak because Company  C made no effort to «n»urt th« accuracy
of such submissions.  Even if such submissions had bun
accurate. Company C'a actions would have been only thoat

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                              - 95 -
 by the regulations.  Mo -Justification for mitigation  for  good
 faith efforts to comply exists.	.	

                           (attach additional  shears if  necessary)
 (b)   Willfulness/Negligence No evidence of willfulness  has  been
 presented but the prior knowledge of the 268.7  requirements bv
 Company C'a other facilities is evidence of negligence  because a
 prudent company would advise all its facilities of  the
 appropriate requirements,  especially after one  of the company/s
 other facilities recently  had been found liable for similar
 violations.   Based on these facts,  an upward adjustment in  the
 amount of 10% is Justified.	
                        .(attach  additional  sheets  if  necessary)
 (c)  History of  Compliance  No  evidence  demonstrating that  Company
 C has had anv similar  previous violations  at  the  Evanston
 facility has been  presented.   However.  Company C  operates  other
 commercial treatment facilities,  at  least  one of  which recently
 has been found liable  for similar violations.   Based on these
 factors, an upward adjustment  in  the penalty  is "Justified.
 However, because the upward adjustment  is  accounted  for in 2.fb)
 above, we will not duplicate such adjustment  here.
(d)  Ability to pay
                         (attach additional  sheets  if  necessary)
                               N/A
(e)   Environmental Project
                         (attach additional  sheets if necessary)
(f)   Other Unique Factors
                         (attach additional  sheets if necessary)

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                              - 96 -
                        .(attach additional sheets if necessary)
3.  Economic Benefit Company C has reaped an economic benefit by
avoiding the costs of materials and labor necessary to send
proper notifications/certifications to Company 2.  A BEN analysis
(copy omitted for purposes of this example) indicates the
economic benefit of this violation amounted to S2.500.
                        _(attach additional sheets  if necessary)
4.  Recalculation of Penalty Based on New  Information
                         (attach additional sheets  if  necessary)

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                              - 97 -
 Company Name Company c -  Evanston Facility
 Address    	
 Requirement  Violated   40 CFR  <268.7fbl  Failure to send accurate
 notifications  and  certifications

                    SETTLEMENT PENALTY AMOUNT
 1.   Gravity  based  penalty from matrix .......... . ....... S27Q.ooo
       (a)  Potential  for harm   .................. ...... Major
       (b)  Extent  of  Deviation ....................... . .
2.  Select an amount from the appropriate multiday
      matrix cell .......... ............................. N/A
3.  Multiply line 2 by number of days of violation
      minus 1 ........................................... N/A
4.  Add line 1 and line 3 ..................... ......... S270.000
5.  Percent increase/decrease for good faith ........... K/A
6.  Percent increase/decrease for
      willfulness/negligence ............................ 10%
7.  Percent increase for
      history of noncompliance .......................... N/A
8 .  Percent increase/decrease for
      other unique factors  ............................. H/A
      (except litigation risk)
9.  Add line* 5, 6, 7, and 8
10. Multiply HIM 4 by line 9
11. Add lint* 4 and 10 ........................... ...... .§297. OOP.
12 .  Adjustment amount for environmental
      project
13. Subtract line 12 from lin«  11  ...................... $2.97.09.0.
14. Calculate economic b«n«fit .......................... §2.500
15. Add lines 13 and 14 ................................. 3299.50°.

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                              - 98  -

16. Adjustment amount for ability-to-pay	N/A
17. Adjustment amount for litigation risk	.-S100.000
18.  Add lines 16 and 17	N/A
19.   Subtract line 18 from line 15 for	.5199.500
       final settlement amount
This procedure should be repeated for each violation.

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                               -  99  -


       NARRATIVE fiypLAMATIOK TO SUPPORT SETTUJfiiKT AMOUNT

 1.  Gravity Based Penalty

 (a)  Potential for Harm. Halor - Because Company C did not notify
 the receiving facility. Company Z.  that the waste was prohibited
 from land disposal. Company Z was unaware that the wastes  were
 required to be further treated before land disposal.   The
 violation may have a substantial adverse affect on the purposes
 or procedures for implementing the RCRA program.  In  addition.
 the violation creates a potential for harm because it hinders
 Company Z's ability to adequately characterize the waste in order
 to assure that it is properly managed.  (Note, however,  that
 Company 2 has an independent regulatory obligation to
 characterize and properly manage wastes it receives.   Thus.
 Company C's violation is one factor contributing to the potential
 for harm,  rather than the sola factor creating such risks.)
                         (attach additional sheets if necessary)
 (b)   Extent of Deviation.  Maior - Initially.  Company C did not
 merely  prepare and send deficient <26fl.7 notifications/
 certifications.   Rather it completely failed  to prepare and send
 such  forms  for the first six months.   During  the next six months
 Company C sent unverified  certifications.   In each instance.
 Company C substantially deviated from the applicable requirement.
                        .(attach additional sheets if necessary)
 (c)  Multiple/Multi-day.  Because each violation is properly
viewed as  independent and noncontinuous.  no multi-day assessment
is warranted.   Because the violation was  repeated 12 times, the
gravity-based penalty amount is multiplied bv 12.
                        .(attach additional sheets if necessary)
2.  Adjustment Factors (Good faith,  willfulness/negligence,
history of compliance,  ability to pay,  environaental credits, and
other unique factors  must be justified, if applied.)

(a)  Good Faith. As soon as Company C/s Evanston facility learned
of its obligation  to  subait 268.7 foras. it b«aan submitting such
forma.  However, evidence demonstrates that efforts to comply
were weak because  Company C made no effort to ensure the accuracy
of such submissions.   Even if such submissions hat} been
accurate. Company  C's actions vould hav« b««n only those required,

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                             - 100 -


by the regulations.  No "Justification for mitigation for good
faith efforts to comply exists.	

                           (attach additional sheets if necessary!
 (b)  Willfulness/Negligence As indicated above, lack of knowledge
 of the legal requirement  is not a basis for reducing the penalty.
 To do so would encourage  ignorance of the lav.  No evidence of
 willfulness has been presented but the prior knowledge of the
 268.7 requirements by Company C*a other facilities is evidence of
 negligence because a prudent company would advise all its
 facilities of the appropriate requirementa. •specially after one
 of the company's ether facilities recently had been found liable
 for similar violations.   Based on these facts, an upward
 adjustment in the amount  of 10% ia ^uatlfied.
                        .(attach additional sheets if necessary)
(c)  History of Compliance. No evidence demonstrating that
Company C has had any similar previous violations at the Evanstcn
facility has been presented.  However. Company C operates other
commercial treatment facilities, at least one of which recently
has been found liable for similar violations.  Based on these
factors, an upward adjustment in the penalty is Justified.
However, because the upward adjustment is accounted for in  2.(b)
above, we will not duplicate such adjustment here.
(d)  Ability to pay.
                        .(attach additional  sheets  if  necessary)
                               N/A
(e)   Env ironaontal Proj«ct
                        .(attach  additional sheets if necessary)
                         (attach additional sheets if necessary)

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                              - 101 -


 (f)   other Onioue Factors Based on the  litigation  risk  posed  bv
 (I)  the Aaencv/s inability to show (i)  that  all  24  drums  were
 Company C/s and (ii)  that a^j flr^ms contained  F002  solvent.
 the  Region decided to accept in settlement a smaller penalty  than
 that proposed in the  complaint.   Since  the aforementioned
 evidentiary weaknesses adversely affected one  third of  the  12
 counts  in  the complaint,  the Region reduced  the  proposed  penalty
 amount  bv  rouohlv one third or SlOO.OOO.
                        .(attach  additional  sheets  if  necessary)
3.  Economic Benefit Company C  has  reaped  an  economic  benefit  bv
avoiding the costs of materials and labor  necessary  to send
proper notifications/certifications to Company  Z.  A BEN  analysis
(copy omitted for purposes of this  example) indicates  the
economic benefit of this violation  amounted to  S2.500.
                        .(attach additional  sheets  if  necessary)
4.  Recalculation of Penalty Based on New  Information
                        N/A
                        .(attach additional  sheets  if necessary)

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                             -  102 -
 PENALTY  COMPUTATION WORKSHEET

 Company  Name Company C - Evanston Facility
 Address  	•	
 Requirement Violated  40 CFR <264.13fal & 268.7fbi. Failure to
                      test restricted wastes
                   PENALTY AMOUNT FOR COMPLAINT

1.  Gravity based penalty  froa matrix. . ($22,500 x 12) . .S270.ooo

       (a)  Potential for harm    .............. ............ maior

       (b)  Extent of Deviation   .......................... maior

2 .  Select an amount from  the appropriate oultiday
      matrix cell ........................ . ................ N/A

3.  Multiply line 2 by number of days of violation
      minus 1 .................... ......... ................ K/A

4.  Add line 1 and line 3 ....... ........ ................. S270.ooo

5 .  Percent increase/decrease for good faith

6.  Percent increase for willfulness/
      negl igence ..... ........ ...".". ..................
7.  Percent increase for history of noncompliance ........ N/A

8.* Total lines 5 thru 7 ............ . .................... io%_

9 .  Multiply line 4 by line 8  . .......................... $2.7,000

10. Calculate Economic Benefit ....................... ---- Sio.ooo

11. Add line* 4, 9 and 10  for  penalty aaount ............. 1397, 0.00
      to be inserted in the coaplaint


*  Additional downward adjustments where substantiated by
reliable information aay be accounted for here.

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                              - 103 -
                         ITION TO SUPPORT COMPLAINT AMOUNT


 1.    Gravity Based Penalty

 (a)    Potential for Harm  Major - Company 0*9 complete  failure to
 test the wastes prevented  Company 2  from determining that the
 wastes were ineligible for land disposal,  which contributed to
 the  actual disposal in a leaking unit above  the area's  sole
 source of drinking water.   The violation has a substantial
 adverse effect on the procedures for implementing the LDR program
 because testing to assure  compliance is  critically important.
                          .(attach additional  sheets  if  necessary)
 (b)   Extent  of  Deviation  Major -  Company  C's waste  analysis plan
 is  substantially  deficient in not explicitly requiring  any
 testing to determine  wastes are restricted, as  evidenced by the
 resulting shipments from  Company  C which  failed to  identify their
 waste as restricted.   Such deficiency ia  particularly
 significant  where the wastes are  very diverse as is the case
 here, because it  is very  difficult,  if not  impossible,  to comply
 with  the S264.13  recruirement that the operation obtain  "all of
 the information which must be known to [manage1  the waste in
 accordance with ... Part  268."	;	
                        (attach  additional  sheets  if  necessary)
(c)  Multiple/Multi-day Because  each violation  is  properly viewed
as independent and noncontinuoua.  no multi-day  assessment is
warranted.  Because the violation  was  repeated  12  tines, the
gravity-based penalty amount ia  multiplied  bv 12.
                         (attach  additional  sheets  if necessary)
2.  Adjustment Factors  (good  faith,  willfulness/negligence,
history of compliance,  ability  to  pay,  environmental credits,
and other unique factors must be justified,  if applied.)

(a)  Good Faith No good faith efforts to comply have been made.

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                             - 104 -
                          .(attach additional sheets if necessary)
 (b)  Willfulness/Negligence No evidence of willfulness has been
 presented, but the prior knowledge of the 368.7 requirements by
 Company C's other facilities is evidence of negligence because a
 prudent company would advise all its facilities of the
 appropriate requirements, especially after one of the company's
 other faciliti.es recently had been found liable for similar
 violations.  Based on these factors, an upward adjustment in the
 amount of 10% is justified.

 (c)  History of Compliance No evidence demonstrating that Company
 C has had any similar previous violations at the Evanston
 facility has been presented.  However. Company C operates other
commercial treatment facilities, at least on* of which recently
has been found liable for similar violations.  Based on these
 factors, an upward adlustaent in the penalty is Justified.
However, because the upward adjustment is accounted for in  2.fb^
above,  we will not duplicate such adjustment here.	

                          (attach additional sheets if necessary)
(d)   Ability to pay
                              N/A
                          .(attach additional sheets  if necessary)
(e)   Environmental Project,
                              H/A
                           (attach additional  sheets if necessary)
(f)   Other Unique Factor*
                               JLO.
                           (attach  additional «heet« if necessary)

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                             - 105 -
3.   Economic Benefit Company C reaped an economic benefit bv
avoiding the costs of waste analysis needed to determine the
eligibility of the wastes for land disposal.  A BEN analysis
(CODY omitted for purposes of this example) indicates the
economic benefit attributable to these violations is S10.OOP.
	(attach additional sheets if necessary)

4.   Recalculation of Penalty Based on New Information 	
                              N/A
                          (attach additional sheets if necessary)

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                             - 106 -
Company Ham* Company c - Evanston Facility
Address      •	
Requirement Violated  40 CFR «264.l3fai t <268.7(bl  Failure to
                      test restricted wastes
                    SETTLEMENT PENALTY AMOUNT
1.  Gravity based penalty from matrix. . ($22,500 x 12) . .5270.000
       (a)  Potential for harm   . . ............. . ........ Mai or
       (b)  Extent of Deviation ....... .... ..... .... ...... Maior
2.  Select an amount from the appropriate multiday
      matrix cell ................. ...................... N/A
3.  Multiply line 2 by number of days of violation
      minus 1 ........................................... N/A
4.  Add line 1 and line 3 ...................... ........ S270.QOO
5.  Percent increase/ decrease for good faith ........... N/A
6.  Percent increase/ decrease for
      willfulness/negligence ........ . ............... ... .10%
7.  Percent increase for
       history of violation
8 .   Percent increase/decrease for
      other unique factors
      (except litigation risk)
9.  Add lint* 8, 6, 7, and 8	141
10. Multiply line 4 by line 9	527.000
11. Add line* 4 and 10	$297.009
12. Adjustment amount for environmental.	H/A_
      project
13. Subtract line 12 from line 11  	$.29.7.0™
14. Calculate economic benefit	.$10.000

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                              -  107  -

15. Add lines 13 and 14 ................................ S307.ooo
16. Adjustment amount for ability-to-pay ............... K/A
17. Adjustment amount for litigation risk ............ . . -SlOO. OOP
18.  Add lines 16 and 17 ....... .
19.   Subtract line 18 from line 15 for ................. $207.000
       final settlement aaount
This procedure should be repeated for each violation.

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                              -  108  -



 NARRATIVE EXPLANATION TO SUPPORT SETTLEMENT AMOUNT

 1.     Gravity Based Penalty

 (a)    Potential  for Harm Major - Company C's complete failure to
 test the  wastes  prevented Company Z from determining that the
 wastes were  ineligible for land disposal, which contributed to
 the  actual disposal in a leaking unit above the area's sole
 source of drinking  water.  The  violation has a substantial
 adverse effect on the procedures for implementing the LDR program
 because testing  to  assure compliance is critically important.


                          (attach additional sheets if necessary)
 (b)  Extent of  Deviation Major  - Company C'a waste analysis plan
 is substantially deficient  in not explicitly requiring anv
 Besting to determine wastes are restricted, aa evidenced bv the
 resulting shipments from Company C which failed to identify their
 waste as restricted.  Such  deficiency  is particularly
 significant where the wastes are very  diverse aa  is the case
 here, because it is very difficult,  if not  impossible, to comply
 with the S264f.31fal requirement that the operation obtain "all of
 the information which must  be known  to rmanage 1 the waste in
 accordance with ... Part 268."
                        (attach additional sheets  if  necessary)
(c)  Multiple/Multi-day Because each violation  is properly viewed
as independent and noncontinuoua. no multi-day  assessment is
warranted.  Because the violation va«  repeated  12 times, the
gravity-based penalty amount  is multiplied bv 12.
                         (attach  additional  sheets if necessary)
2.  Adjustment Factors  (good  faith, willfulness/negligence,
history of cesjplianc*,  ability  to  pay,  environmental credits,  and
other unique factors Bust be  justified,  if applied.)

(a)  Good Faith No good faith efforts to comply have been made.
                           (attach additional «he«t« if necessary)

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                              - 109 -


  (b)  Willfulness/Negligence A3 indicated above,  lack of knowledge
 of the legal requirement In not a basis for reducing the penalty.
 To do so would encourage ignorance of the lav.   No evidence of
 willfulness has been presented, but the prior knowledge of the
 268.7 requirements by Company C*s other facilitiea ia evidence of
 negligence because a prudent company would advise all its
 facilities of the appropriate requirements,  especially after one
 of the company's other facilities recently had been found liable
 for similar violations.   Based on these factors,  an upward
 adjustment in the amount of 10% ia justified.

 (c)   History of Compliance No evidence demonstrating that Company
 C has had anv similar previous violations at the Evanston
 facility has been presented.   However. Company C operates other
 commercial treatment facilities,  at least one of which recently
 has  been found liable for similar violations.  Baaed on thesg
 factors,  an upward adjustment in the penalty is Justified.
 However,  because the upward adjustment ia accounted for in 2
 above, we will not duplicate such adjustment here.
 (d)  Ability  to  pay
                          _(attach additional sheets if necessary)
                               N/A
                           (attach additional sheets if necessary)
 (e)  Environmental  Project,
                               M/A
                          .(attach additional sheets if necessary)
( f )  Other "Ht^pi^ Factors Baaed on th« litigation rialc posed bv

Compan  C'»       i*  fchat all  dgtiaa contained FQ02 eolvent. the
Region decide*! to accept  In settlement a «»aller penalty tftan had
been proposed in the eoapleint.   S^nc* the aforenentioned
evidentiary vea)cne««e«  adversely affaeted tha Aaencv** ability to
prove one third of the  12 count* in our coaplalnt. the Region
reduced the proposed penalty bv  rouahlv ona third or S1QQ.QQQ. -
                           (attach additional sheets if necessary)

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                              -  110 -
3.  Economic Benefit Company C rasped an economic benefit bv
avoiding the costs of vaate analysis needed to determine the
eligibility of the wastes for land disposal.  A BEN analysis
fcopv omitted for purposes of this example) indicates the
economic benefit attributable to these violations is Sio.QQO.
                         .(attach additional »h««ts if necessary)
4.   Recalculation of Penalty Based on New Information
                          (attach additional sheets if necessary)

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