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"
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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
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8. Document to be distributed to States by Headquarters? H3Y** I 1^
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9. Sgnituri of Lud OMc« DirrfcUvi* Coordinator • .•••
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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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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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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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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
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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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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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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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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
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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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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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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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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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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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(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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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- 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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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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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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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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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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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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(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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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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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
-------
- 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.
-------
- 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
-------
- 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)
-------
<7
- 77 -
4. Recalculation of Penalty Based on New Information N/A
(attach additional sheets if necessary)
-------
- 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
-------
- 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)
-------
- 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
-------
- 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 %
-------
- 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.
-------
- 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.
-------
- 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)
------- |