FPA
OECM
OWEP
CLEAN WATER ACT
Compliance/Enforcement
Compendium
Volume II
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IV. A.
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IV. CIVIL LITIGATION
A. GENERAL
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IV.A.I.
"Professional Obligations of Government Attorneys", dated
April 19, 1976. See GM-2.*
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IV.A.2.
"General Operating Procedures for EPA's Civil Enforcement
Program", dated July 6, 1982. See GM-12.*
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IV. A. 3.'
"Clearance of Significant Enforcement Pleadings", dated January 25, 1983,
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*
/>» 4^*1 7\
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, DC 20460
25 JAN 1983
OFFICE OF
UEGAC AND ENFORCEMENT COUNSEL
MEMORANDUM
SUBJECT: Clearance of Significant Enforcement Pleadings
FROM: Robert M. Perry &?S. .7* ^*r, &Z~~~*2~— --
Associate Administrator and General^Counsel
TO: All Regional Counsels
e
All Attorneys ^__
Office of Enforcement Counsel =£
N, O
-* rn
Attached are copies of memoranda dated December 2 and -a O
October 21, 1982, setting forth procedures .for clearance of131
significant pleadings in defensive cases. These procedures1^3
ensure that the Deputy General Counsel and I have an j^J
opportunity to review all such pleadings before they are
filed.
The Office of Legal and Enforcement Counsel must speak
with one legal voice. Accordingly, I have decided to extend
similar review procedures to significant enforcement pleadings.
A revised concurrence request form is attached which will be
used for all pleadings, whether filed in defensive or
enforcement cases. Please follow the procedures outlined
below.
1. Michael Brown's October 27 memorandum describes
defensive pleadings which require review. The same pleadings
require review in enforcement cases.
2. The time deadlines in paragraph 2, and the procedures
in paragraph 3, of the October 27 memorandum apply to
enforcement pleadings. However, a copy of the draft pleading
and the concurrence request form should be forwarded to the
Senior Litigator through the appropriate Associate Enforcement
Counsel rather than through the Associate General Counsel.
The Senior Litigator will submit the pleadings to me through
the Enforcement Counsel.
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-2-
3. As with defensive pleadings, these procedures apply
•to significant-enforcement pleadings drafted in regional
offices as well as , in headquarters. The December 2 memorandum
applies, except that Regional Counsels will deal with the
appropriate Associate Enforcement Counsel rather than the
Associate General Counsel. Complaints need not be cleared
under this system, because they are already subject to review
as part of the referral process.
Attachments"
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CV.A.4.
"Regional Counsel Reporting Relationship", dated August 3, 1983. See GM-
16.
••/•*?'
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IV.A.5,
"Implementing Nationally Managed or Coordinated Enforcement
Actions", dated December 26, 1984. See GM-35.*
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IV.A.6. -
IV.A.10.
IV.A.6. "Guidance on Choosing Among Clean Water Act Administrative, Civil
and Criminal Enforcement Remedies", distributed August 28, 1987.
This document is reproduced at III.B.4., this compendium.
IV.A. 7. "Guidance on State Action Preemption Civil Penalty Actions under
the Federal Clean Water Act", distributed August 28, 1987. This
document is reproduced at III.B.5., this compendium.
IV.A.8. "Guidance on "Claim-Splitting" in Enforcement Actions under the
Clean Water Act", distributed August 28, 1987. This document is
reproduced at III.B.6., this compendium.
IV.A.9. "Guidance on Retroactive Application of New Penalty Authorities
under the Clean Water Act", distributed August 28, 1987. This
document is reproduced at III.B.7., this compendium.
IV.A.lO. "Guidance on Effect of Clean Water Amendment Civil Penalty
Assessment Language", distributed August 28, 1987. This document
is reproduced at III.B.8., this compendium.
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IV.A.11.
"Issuance of Guidance Interpreting 'Single Operational upset"1, dated
September 27, 1989.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, O.C. 20460
SEP27B89
OfFCECF
ENFORCEMENTAND
COMPLIANCE MONITORING
MEMORANDUM '
SUBJECT: Issuance of Guidance Interpreting "Single Operational
Upset"
FROM: Robert G. Keiss
Associate Enforcement Counsel
for water
Keith A. onsdorff
Associate Enforcement Counsel
for Criminal
James R. ElderJ^K
Director f
Office of freer Enforcement
and Permits
TO: Addressees
Attached is the final guidance document presenting the
Agency's interpretation of the "Single Operational Upset" (SOU)
provisions that were added to the Clean Hater Act by Congress via
the Water Quality Act of 1987, now codified as CWA f« 309 (c) (5),
(d), and (g)(3), 33 U.S.C. if 1319(c)(5), (d) , and (g) (3) . It is
the purpose of this Guidance to provide EPA enforcement personnel
with an Agency interpretation of the SOU provisions for use in
determining under what circumstances SOU will apply to reduce the
statutory liability of a CWA violator.
This Guidance document was distributed in draft for comment
on April 21, 1989. Comments were received from nine EPA Regional
offices, the National Enforcement Investigations Center, the Office
of Criminal Enforcement Counsel, the Office of General Counsel, and
the Department of Justice, Land and Natural Resources Division.
The comments were generally very favorable and .the Guidance has
been revised pursuant to those comments. In particular, there was
nearly unanimous agreement with the approach to the interpretation
•of SOU set forth in the Guidance. Agreement was unanimous that SOU
may not be limited to violations of technology-based effluent
limitations.
flrntM en S»eys*s Paoff
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The Guidance set out in the attached document represents th
Agency's authoritative interpretation of the Single Operationa.
Upset provisions contained in the Water Quality Act of 1987. it
is intended primarily for the use of government personnel. .It is
not intended, and cannot be relied upon, to create any rights,
substantive or procedural, enforceable by any party in litigation
with the United States. The Agency reserves the right to change
this guidance at any time without public notice.
We encourage all Regions to discuss any instance in which SOU
arises in an enforcement context with us. Please call either
Daniel Palmer, OECM-Water, (LE-134W), FTS 382-2849, Richard Kinch,
OWEP, (EN-338), FTS 475-8319, or, for potential criminal cases,
call Bette Ojala, OCEC, (LE-134X), FTS 475-9663.
Attachment
Addressees:
Regional Counsels, Regions Z-X
Water Division Directors, Regions Z-X
ORC Water Branch Chiefs, Regions Z-X
Regional Water Management Compliance Branch Chiefs,
Regions Z-X
Ed Reich, OECM
Paul Thomson, OECM
Enforcement Director, KEZC
Edmund J. Struzesfci, NEZC
Susan Lepow, OGC
Ruth Bell, OGC
Richard Kozlowski, OWEP
Bette Ojala, OCEC
Ivy Main, OGC
David Buente, DOJ
Assistant Chiefs, DOJ Environmental Enforcement
OECM Water Attorneys
Philip Yeany, ORC, Region ZZZ
David Rankin, Region V
Hugh Barrel, Region ZX
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GUIDANCE INTERPRETING
CLEAN WATER ACT SECTIONS 309^1^51. 309 fdl •. and 309fO)(3
SINGLE OPERATIONAL tTPSCT
I. Introduction and Summary of Content?
Congress, in amending the Clean Water Act in 1987 (via the
Water Quality Act of 1987), qualified the administrative, civil,
and criminal enforcement sections of the statute with the '
following language:
For purposes of this subsection, a single operational upset
which leads to simultaneous violations of more than one
pollutant parameter shall be treated as a single violation.
Clean Water Act it 309(c)(S), 309(d), and 309(g)(3), 33 U.S.C. §§
1319(0(5,), 1319(d), and 1319 (g) (3). The effect of this language
is to limit, under certain circumstances, the penalty liability
of violators of the Clean Water Act. "Simultaneous" violations
of multiple pollutant parameters, established by an NPDES permit,
categorical standards, or local limits, each of which is
attributable to the same "single operational upset," are to be
counted as only one violation.
The term "upset" has been defined by regulation, 40 C.F.R.
5 122.41(n), as an affirmative defense which, if affirmatively
raised and proved, completely relieves a regulatee of liability.
However, the term "single operational upset" ("SOU") has
absolutely no history predating its use in the Water Quality Act.
It is therefore the purpose of this guidance to interpret single
operational upset (SOU) for purposes of application by the
Environmental Protection Agency in pursuing penalties under
Sections 309(c), (d) and (g) of the CWA.
Following are the chief conclusions reached in this
.guidance:
«.
1. A "single operational upset" is defined in this guidance
as:
An exceptional incident which causes simultaneous,
unintentional, unknowing (not the result of a knowing
art or emission), temporary noncompliance with more
than one Clean Water Act effluent discharge pollutant
parameter. Single operational upset does not include
Clean Water Act violations involving discharge without
an NPDES or locally issued permit or noncompliance to
the extent caused by improperly designed or inadequate
treatment facilities.
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2. At the sentencing stag* in a criminal prosecution, or at
the remedy stag* in a civil enforcement proceeding (judicial
or administrative), violations of multiple pollutant
parameters, resulting from a single operational upset, will
be taken together in the aggregate in determining the
maximum criminal fine, the maximum term of imprisonment, or
the maximum civil penalty, which may be imposed or assessed,
for each day during which the defendant has been found
guilty of a criminal offense, or during which the defendant
(or respondent) has been found liable for civil violations.
3. This definition of Single Operational Upset applies
equally in the civil judicial, administrative, and criminal
contexts. Nonetheless, the extent of the availability of
SOU to limit penalty liability is less extensive in the
criminal context due to the requirement that the exceedance
must have been unintentional and unknowing. This
requirement eliminates the availability of SOU for "knowing11
criminal violations, CWA | 309(c)(2), (3), and (4).
4. Unintentional and unknowing operator error that results
in the occurrence of an SOU event may justify a limitation
on liability. SOU differs in this regard from the upset
defense, which does not recognize operator error as a basis
for raising the defense. The availability of SOU for
exceedances caused by unintentional operator error and for
negligent acts or omissions is necessary in order to give
SOU any practical application in the criminal enforcement
context.
5. "Simultaneous" is defined in this guidance as all
pollutant parameter exceedances attributable to a specific
single operational upset that occur during a single day.
Each day that such exceedances continue is considered to be
an additional day of violation subject to additional
penalties.
6. "Pollutant parameter" is defined as all effluent
limitations and non-numeric limitations regulating the
content or amount of a ragulatae's direct or indirect
discharge. These parameters may be contained in an NPDES
permit, a locally issued permit or other control mechanism
established in accordance with the pretreatment regulations,
40 C.F.R. Part 403, categorical pretreatment standards, etc.
The basis upon which the pollutant parameter is established
is irrelevant, i.e., one may claim SOU to limit liability
for exceedances of water quality-based, technology-based, or
otherwise derived pollutant parameters.
7. SOU serves to limit a CWA regulatee's potential
liability for exceedances of multiple pollutant parameters
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in situations where a regulatee who usually complies with
applicable effluent limits experiences an extraordinary,
temporary, and unintended "upset" event, i.e., some kind of
unusual interference with the industrial or municipal
treatment system, that results in noncompliance with more
than one effluent limitation. Under these circumstances,
EPA enforcement personnel, in calculating the maximum
allowable statutory penalty, will treat violations of
multiple pollutant parameters on a single day, attributable
to a specific SOU event, as one violation. It must be
stressed that an event will not constitute an upset for
purposes of the SOU limitation on liability unless the
regulatee can demonstrate a norm of compliance with his
permit effluent limitations.
8. In order to claim SOU, the "upset" event must be
exceptional, i.e. a non-routine, unusual malfunction of a
facility's usual proper and adequate operation. The event
must not be business as usual.
9. SOU is not available to limit liability where pollutant
parameter exceedances result from the installation of
inadequate treatment facilities or faulty design of the
treatment facilities. SOU is also not available to limit
liability of those who violate the CWA by discharging
without a permit, where a permit is legally required.
10. SOU is not available to limit the liability of any
regulated entity who, personally or by its agents or any
persons in any way associated with the regulated entity,
intentionally or knowingly causes violations of pollutant
effluent parameters.
11. The regulatee subject to a CWA enforcement action bears
the burden of coming forward with the claim that an SOU
event occurred causing the exceedances in question. The
regulatee also bears the burden of proving, by a
preponderance of the evidence, the occurrence of the sou
event and its relationship to the effluent limitation
exceedances in question.
12. A regulatee may not claim SOU if he/she fails to take
timely corrective and/or mitigative action where possible or
practicable to reduce the effect of the upset event.
II. Deriving a Definition of "Single Operational Unset*
The term "single operational upset" has no history prior to
its use in the Water Quality Act of 1987. It has ho history as a
statutory or regulatory term of art, nor does the term have a
single, precise, or authoritative common meaning. Therefore, .in
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interpreting the meaning of SOU, EPA looks to three sources: t..
legislative history of the Hater Quality Act, the regulatory
definition of "upset," and the plain meaning of the words in the
SOU provisions. He will look first to the legislative history.
A. The Legislative History of the Water Quality Act of 1987
Although the Clean Water Act was not amended until February
4, 1987, in the 100th Congress, the evolution of the Water
Quality Act to its final fora took place primarily in the 99th
Congress. Representative Howard introduced H.R. 8, the water
Quality Renewal Act of 1985, on January 3, 1985. The Senate
bill, S. 1128, was introduced May 14, 1985. Neither the House
nor the Senate bill as originally presented contained a provision
similar to the single operational upset provision. However, the
amended H.R. 8 reported out of the House Committee on Public
Works and Transportation contained the following language in its
administrative penalties provision:
The Administrator or the Secretary nay not assess a
civil penalty under this subsection against any person
with respect to a violation if the Administrator or the
Secretary, as the case may be, has assessed a civil
penalty under this subsection against such person with
respect to the same violation or a violation having
substantially the same cause or arising out of
substantially the same conditions.
The Committee report on H.R. 8 contained the following
discussion:
If a series of closely related violations occurs due to
a single operational upset which leads to simultaneous
violations of several pollutant.parameters over a
period of several days, EPA may bring one enforcement
action, subject to the $125,000 maximum. EPA may not
seek to evade the $125,000 maximum by, for example,
•bringing separate enforcement actions for each of these
simultaneous violations. However, EPA is free to bring
separate actions for individual violations (or groups
of violations) which are not of this nature. H.R. Rep.
No. 189 at 33, 99th Cong., 1st Sess. (July 2, 1985)
However, the House Committee bill and report are not,
strictly speaking, part of the legislative history of the Water
Quality Act, because the 100th Congress, which actually passed
'
•if A
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the legislation, did not incorporate them by reference, as it did
various other bills, reports, and debates.
On September 4, 1985, Congress passed a motion to agree to a
conference. The conference report was filed on October 15, 1986.
The bill reported out of committee contained the single
operational upset provisions, affecting civil, administrative and
criminal penalty assessment, as they appear in the Water Quality
. Act as finally passed. The Conference report provides the
following discussion:
The [House] amendment provides that a civil penalty may
not be assessed with respect to a violation if a
penalty has been assessed with respect to the same
violation or a violation having substantially the same
causa, (bracketed word inserted) H.R. Rep. No. 1004,
99th Cong., 2d Sess., 132 Cong. Rec. H10569 (Oct. 15,
1986).... For all three classes of penalties covered
by the conference substitute—criminal, judicial civil,
and administrative civil - the conference substitute
provides that a single operational upset which leads to
simultaneous violations of more than one pollutant
parameter in an NPDES permit shall be treated as a
single violation. H.R. Rep. No. 1004, 99th Cong., 2d
Sess., 132 Cong. Rec. R10570 (Oct. 15, 1986).
Representative Snyder, a ranking minority member of the
House Committee on Public Works and Transportation, referring to
the SOU provisions, stated, "Under these penalty provision [sic],
multiple violations which stem from a single cause should be
considered as one 'violation' for penalty assessment purposes.1*
H.R. Rep. No. 1004, 99th Cong., 2d Sess., 132 Cong. Rec. H10932
(October 15, 1986). Rep. Snyder did not identify the nature of
the "single cause" in this statement but from the plain language
of the statute it is clear that it must be an "operational
upset."2
1 See "Guidance on 'Claim-Splitting' in Enforcement Actions
Under the Clean Hater Act," August 28, 1987, for a discussion of
the application of the $125,000 statutory cap on administrative
(class ZZ) penalties in the context of a series of violations.
2 Rep. Snyder could not have meant that any. single cause
that results in multiple violations is to be considered as one
violation for penalty assessment purposes. Zf Any. cause would
suffice to limit penalty liability, then failure to install
necessary wastewater treatment equipment would constitute a
single cause for which penalty liability could be limited.
Failure to install treatment equipment is not an "operational
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Subsequently, S. 1128 was signed in both the House and the
Senate on October 23, 1986. The bill was vetoed by President
Reagan on November 6, 1986. In the 100th Congress, the identical
bill, redesignated U.R. 1, was again passed by both houses of
Congress and was again vetoed by the President, on January 30,
1987. However, five days later, on February 4, 1987, Congress
voted to over-ride the President's veto and the Water Quality Act
of 1987 became law.
Since H.R. 1 was identical to the conference bill placed
before the President in the 99th Congress, the legislative
history pertaining to that legislation was incorporated by
reference. Sen. Chafee stated:
Therefore, the statement of managers on that bill [S.
1128], which is found in Report No. 99-1004, contains
the primary legislative history on this bill. That
statement of managers, as explained by conferees on the
floor of the House and Senate last October, should be
viewed by courts as the most authoritative statement of
congressional intent. 133 Cong. Rec. S746 (daily ed.
Jan. 14, 1987) (statement of Sen. Chafee).
Specifically, the legislative history includes the conference
report, and the Senate debate on the conference report, as well
as the report of the Environment Committee on the committee billj
S.1128 and the Senate debate on the committee bill. 133 Cong.
Rec. S734-735 (daily ed. Jan. 14, 1987) (statement of Sen.
Mitchell).
The legislative history is thus largely a restatement of the
single operational upset provision. No discussion is found in
Congressional debate. At most, the discussion in the conference
report shows that the Conference Committee restated the previous
House concept of penalty limitation as a single operational upset
concept. Congress deleted the term "substantially the same
cause11 at the same time. The change indicates that it was
Congress's intent that only a cause related to a single
operational upset could operate to limit liability. The
Conference Committee also incorporated the concept of
simultaneity, which operates to further limit the violations
which may be treated as a single violation.
The new wording added by the Conference Committee indicates
the importance of the term "single operational upset" and of the
upset," nor is it at all likely that Congress would have desired
to limit a polluter's liability in this situation. The statute
must be construed as written, limiting liability where the cause
of multiple violations was single "operational upset."
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simultaneity concept. Nonetheless/ Congress provided no guidance
on what it aeant by these terms. It is therefore, primarily, the
regulatory definition of upset and the plain statutory language
that form the basis for EPA's interpretation of the SOU
provisions.
• B. Regulatory Definition of Upset and the Unset Defense
The term "upset" has been defined by regulations promulgated
by the Environmental Protection Agency. 40 C.F.R. § 122.41 (n).
These regulations were developed in response to the Federal
Circuit Court decision in Marathon Oil v. Environmental
Protection Agency. 564 F.2d 1253 (9th Cir. 1977). In Marathon
oil, the court held that EPA was required to insert a special
"upset" provision into the permit of each of the defendants in
the case. The court concluded that a facility using proper
technology operated in an exemplary fashion would not necessarily
be able to comply with its technology-based effluent limitations
one hundred percent of the time. Further, the Act only required
dischargers to meet effluent limitations by application of "best
available technology." Therefore, lack of a mechanism providing
an excuse from liability for those rare circumstances when a
violation occurs that the discharger could not avoid set a
standard higher than that set by the Clean Water Act.
Based on the decision in Marathon oil. EPA elected to
require by regulation that all federally-issued NPOES permits.
afford dischargers who have violated technology-based effluent
limitations in their permit a limited "upset defense." The
regulation defining upset states:
"Upset" means an exceptional incident in which there is
unintentional and temporary noncompliance with
technology based permit effluent limitations [or
categorical Pretreatment Standards] because of
factors beyond the reasonable control of the permittee
[or Industrial User]. An upset does not include
. noncompliance to the extent'caused by operational
error, improperly designed treatment facilities,
3 States are not required to include an upset provision in
state-issued pollution discharge elimination system permits under
ft 510 of the Act, 33 U.S.C. ft 1370, which allows states to adopt
or enforce more stringent standards. sierra club v. Union oil
Co.. 813 F.2d 1480 (9th Cir. 1987). £fift alas V,S. V| BP QJli
inc.. No. 86-0792 (E.D.Pa. July 29, 1988)(order granting
government's motion for partial summary judgment)("Absent
incorporation by either [defendant's federal or state issued]
permit of the upset defense . . . , the defense is unavailable to
defendant.n)
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inadequate treatment facilities, lack of preventive
maintenance, or careless or improper operation.
40 C.F.R. §5 122.41(n) and 403.16(a).
The intent of the upset defense, as defined in the
regulations, is to provide those who violate technology-based
effluent limitations (contained in a federally-issued NPDES
permit or categorical pretreataent standards) with an affirmative
defense to allegations of permit noncompliance, if the exceedance
results from an exceptional,- unintentional incident which is
beyond the control of the party who discharges in violation of
his permit. A party who successfully claims upset is not legally
liable for the exceedances at issue, and has not violated the
CWA, his NPOES permit, or categorical pretreatment standards.
An analysis of the SOU provisions in the Water Quality
Act and their application to the various enforcement sections to
which they were appended, makes it doubtful that Congress
intended single operational upset to have exactly the same
definition as regulatory upset. If SOD and regulatory upset are
given the same definition, two major problems arise. First, the
regulatory upset defense would render SOU almost meaningless,
providing a complete defense in the same situations where SOU
would serve only to limit a violator's liability. Second, the
regulatory definition of upset is inapplicable in the criminal
context. Criminal liability is predicated on proving certain
levels of culpability, either negligent or knowing. The
regulatory upset defense, by definition, is unavailable in those
situations where the event causing the violations is attributable
to negligence or greater culpability on the part of the
regulatee. Therefore, if one applies the regulatory definition
of upset 4o SOU in the 309 (c) criminal context, no criminal
defendant will ever be able to avail himself of the SOU
limitation on liability.
Because the regulatory definition of upset cannot
effectively apply to SOU, it is necessary to interpret this
statutory provision based primarily upon the plain meaning of the
words in the provision and a determination of how the provision
can effectively be interpreted to limit the extent of statutory
liability for certain violations of the CWA.
C.Plain Meaning of the words in the Single Operational Upset
Provisions
1. The phrase "single operational upset,* simply con-
strued, refers to a singular event, arising from some kind of
operational failure, that results in an "upset." An upset, in
industry terms; is an unusual event that temporarily disrupts the
usually satisfactory operation of a system. In the context of
SOU, an event, to constitute an upset, must disrupt the system in
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such a way that it results in violation of multiple pollutant
parameters.
2. "Simultaneous violations," resulting from an SOU, a~e
violations that occur at precisely (or nearly) the same time, and
result from the same cause, i.e., the same upset event.
3. "Pollutant parameters" are the effluent limitations
established in an NPDES or state-issued pollutant discharge
permit or categorical standards or other standards (i.e. local
limits) applying to indirect dischargers (industrial users).
III. Definitions
A. "Single Operational Unset"
Following is the definition of Single Operational
Upset which EPA enforcement personnel should use in the Civil
Judicial and Administrative, and criminal contexts (CWA §§
309(d), 309(g)(3), and 309(c)(5)):
An exceptional incident which causes simultaneous,
unintentional, unknowing (not the result of a knowing
act or omission), temporary noncompliance with more
than one Clean Water Act effluent discharge pollutant
parameter. Single operational upset does not include
Clean Water Act violations involving discharge without
an NPOES or locally issued permit or noncompliance to -
the. extent caused by improperly designed or inadequate
treatment facilities.
B. "Exceptional"
In order to qualify as an SOU eventt an incident must be
"exceptional," i.e./ the incident must not be business as usual,
but must be a non-routine malfunctioning of an otherwise
generally compliant facility. The regulatee must normally be in
compliance with applicable effluent limitations. See Section
IV.D. below.
C. "Simultaneous"; Counting Violations Where a Single
Operational Upset is Involved
The statutory language refers to "simultaneous violations"
of more than one pollutant parameter. For purposes of the sou
provisions, violations of more than one pollutant parameter shall
be considered to be simultaneous if they occur during a single
day, and result from the same operational upset event. In other
words, all violations attributable to a specific SOU that occur
during a single day will be counted as only one violation for
purposes of determining the maximum penalty allowed under the
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CWA. Therefore, if an SOU results in the exceedance of more tru
one permit pollutant parameter, and these exceedances continue
for only one day, only one violation will be counted, if a
violation attributable to one SOU continues for two days, two
violations will be counted, and so on.
•' ' v,
Congress, in establishing statutory penalty limits, set
those limits on a per day, per violation basis. See CWA 5§
309(c) (1)(B) and (2)(B), 309(d), and 309(g)(2). Under the CWA,
each day that an effluent limitation exceedance or other CWA
violation continues is a new day of violation, for which the
regulatee may be assessed an additional day's statutory maximum
penalty. The SOU provisions do not breach this "per day, per
violation" rule. SOU does not seek to limit the counting of
violations so that multiple davs of violation caused by an sou
event is counted as only one violation, but rather, that the
violation of multiple parameters ia counted as only one violation
for the purpose of determining the maximum allowable penalty.
Therefore, in defining "simultaneous,11 it is correct and in
compliance with Congress's desire that each day of violation
caused by an SOU event be counted as a separate violation.
D. "Unintentional"
The requirement that the noncompliance with effluent
parameters have been "unknowing and unintentional" restricts the
availability of the SOU limitation on liability to upset events
other than those caused by the regulatee or his agents or other:.
associated with the regulatee who knowingly intend to commit the
act that caused or led to violations of the CWA. For the purpose
of defining SOU, there is no distinction drawn between a
violation "intentionally" caused and a violation "knowingly"
caused. See IV.C. below.
E. "Temporary"
The requirement that noncompliance with effluent limitations
be "temporary" concerns the requirement that the regulatee takes
corrective and/or mitigative action on an expedited basis
following the SOU event. See IV.B. below.
P. "Pollutant Parameter"
For purposes of the SOU provisions, the term "pollutant
parameter" shall include all pollutant4 numerical effluent
limitations and non-numerical limitations regulating the content
or amount of a regulatee's discharge, such as flow limitations,
visible solids, etc. The term does not include permit or
4 "Pollutant" is defined at § 502(6) of the Act, 33 U.S.C
1362(6).
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regulatory conditions not directly relating to pollutant
regulation, such as requirements to report, monitor, perform
studies, complete tasks on schedule, pretreatment program
implementation, etc.
The statute itself restricts the application of SOU to .
violations of pollutant parameters. Therefore, liability for
violations involving discharge without a permit may not be
limited by a claim of SOU.
SOU, unlike the regulatory upset defense, is not limited to
violations of technology-based effluent parameters and-applies
equally to water quality-based effluent parameters. Congress, in
enacting the three SOU provisions, did not make any distinction
between the bases upon which effluent limitations, are formulated,
and there appears to be no basis upon which to make this
distinction in this guidance.
IV. Application of Single Operational Upset to Limit Liability
A. To Claim SOU, the Incident Must be Exceptional
To qualify for the SOU limitation, the "upset" Incident must
be exceptional: a non-routine, unusual malfunction, breakdown or
disruption of a facility's usual proper and adequate operations.
It follows from Congress's use of the words "single" and "upset"
that a single operational upset cannot be business as usual. (The
concept of single operational upset is similar to that of
regulatory upset in this regard.)
B. To Claim SOU, a Discharger Must Normally Achieve its
Effluent Limitations
Several exceedances stemming from the same cause may
constitute evidence that the underlying cause or event was not an
"upset," i.e. an unusual or exceptional malfunction of an
ordinarily well functioning operation. Such a series of
exceedances indicates that proper equipment may not have been
installed, that the facility might be, as a matter of course,
improperly operated, or that the design of the facility is
deficient. It would also indicate that the discharger/violator
had notice that there was a problem with its treatment facility
and failed to take action to mitigate and avoid further
breakdowns leading to exceedances. Therefore, violations of the
CWA by dischargers who are frequently, repeatedly, ordinarily or
predictably not in compliance are not due to an ?upset" within
the meaning of "single operational upset," even if associated
with an equipment breakdown or operational.failure.
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12
C. To Claim SOU, the Exeeedanee of Effluent Parameters MuL.
Have Been Unintentional and Unknowing
Only noncompliance with pollutant effluent parameters that
were unintended and unknowing are subject to the SOU limitation
on liability. This conclusion has a limiting effect on the
availability of SOU to limit liability, particularly in the
criminal context.
CWA $ 309(c)'(l) makes certain "negligent" violations
criminal misdemeanor offenses. CWA § 309(c)(2), (3), and (4)
make certain "knowing" violations criminal felony offenses.
The position of the Agency is that the state of mind a
defendant must have had in order to be convicted of a felony is
"general intent," not "specific intent." This means that the
United States need not prove that a defendant specifically
intended by his acts or omissions to violate the law, but that he
must have consciously or knowingly committed (or omitted) an act
that caused or led to the violation. (Of course, intentional
violations committed by one who has "specific intent" are also
punishable under the Clean Water Act penalty provisions.)
Congress could not have intended that knowing violations
could be mitigated at sentencing through use of the single
operational upset provision. Zn addition, it is contrary to the
ordinary meaning of the word "upset" to include events which are
intentionally or knowingly caused. Finally, in cases in which
the felony provisions apply, it is the "knowing" acts or
omissions which "cause" or "lead to" the violations, not any
equipment breakdown which may have been associated with such
illegal acts. Thus, the SOU provision does not apply to mitigate
sentencing of felony violations of the Clean Water Act, although
it may apply to sentencing for misdemeanor violations
(negligence).
D. An Upset Event Caused bv Unintentional Operational Error
Careless or Improper Operation is Subject to the SOU
Limitation on Liability
The upset defense is defined by regulation so that it may
not be raised if either operational error (intentional or
unintentional) or careless or improper operation was the cause of
the effluent limitation exceedances at issue. SOU, on the other
hand, is defined so that it may be claimed where operational
error or careless or improper operation was unknowingly or
unintentionally committed.
This deviation from the regulatory upset, definition is
necessary in order to give SOU practical application in the
criminal enforcement context. Criminal liability under the Clean
Water Act is premised on either a "negligent" or "knowing" level.
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13
of culpability. CWA § 309(c)(l) and (2). If any exceedance that
is either intentional or knowing or caused by "error," or
"careless" or "improper" operation were to be excluded from the
definition of SOU, no situation in which one could be both
criminally culpable (minimally negligent) and able to raise the
SOU limitation on liability (less than negligent) would exist.
In order to give SOU meaning in the CWA criminal context as set
forth in the Act, its application has been expanded to cover
effluent parameter exceedances that are caused by negligence
attributable to the regulatee.
E. To Claim SOU, the Facility Must be Properly Designed and
provide Adequate Treatment
Violations which occur because adequate treatment technology
has not been installed is not an upset as defined in the1
regulations, particularly because poor design and inadequate
treatment do not constitute the type of exceptional circumstances
that qualify an event as an SOU or upset. EPA enforcement
personnel should take the same approach to interpreting the SOU
provisions. Any other result improperly limits the penalty
liability of those who have not installed proper treatment
equipment and indirectly penalizes those who have done so.
Therefore, to successfully claim SOU, a violator must demonstrate
that a facility is properly designed and that it provides
adequate treatment.
F. SOU Mav Not Be Claimed Where the Clean Water Act
Violation is Discharge Without a Permit
Because it is a prerequisite to claiming the SOU limitation
on liability that violations of multiple pollutant parameters
have been exceeded, SOU can not be available to a. respondent or
defendant in an enforcement action brought for discharge without
a permit. Absent a permit (or some other similar control
mechanism;, there are no pollutant parameters established for the
respondent or defendant to have exceeded.
G. Requirement That the Violator Take Tiaelv Corrective
and/or Mitigative Measures Where Possible or Practicable
in Order to Claim SOU
The regulatory upset defense is not available where a
noncompliance situation exists or is allowed to continue to
exist, when corrective or mitigative measures were possible or
practicable but were not taken. 40 C.F.R. 8 122.41(n)(3)(iv).
EPA enforcement personnel should take the same approach to
interpreting single operational upset. The SOU provisions shall
not be construed to provide relief to regulatees who fail to take
timely mitigative or corrective measures to minimize the effects
caused by the SOU nor shall continuing days of violations,
originally caused by an SOU, be equitably attributable to the SOU
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if the violator ,has not taken whatever corrective or mitigative
actions are necessary to prevent the continuing violations, see
40 C.F.R 5 122.41(d) (duty to mitigate). This requirement is
necessary to compel regulatees who experience an upset event to
immediately correct the problem and not allow the violations to
continue for an entire day (a day during which no additional
penalties will accrue, if additional violations are attributable
to the upset event). Congress certainly did not intend to
establish a limitation on liability that grants a regulatee the
right to violate at will, even for a single day. Implying such
an intent on Congress is contrary to the logic and purpose of the
Clean Water Act and would make a mockery of Congress's carefully
devised regulatory scheme.
H. Procedural Requirements
1. The Nature of Single Operational Upset
The SOU provisions create a) a sentencing factor, in the
criminal context, to be considered by the sentencing judge; and
b) an equitable factor pertaining to appropriate relief, in the
civil (judicial or administrative) context, to be considered by
the judge or presiding officer. As such, the issue of whether an
SOU provision applies is not a matter which should be presented
to or considered by a jury in a criminal or civil judicial case,
and it need not be addressed in a charging document or civil
complaint.
2. Establishing the Elements of SOU
Zf a respondent or defendant in an administrative, civil or
criminal enforcement action believes that certain simultaneous
violations of more than one pollutant parameter were caused by a
single operational upset, respondent or defendant is responsible
for asserting this claim. Respondents and defendants are in the
best position to produce information relating to whether given
violations resulted from an SOU event. A claim of occurrence of
an SOU is relevant to the size of the penalty imposed, not the
liability of an alleged violator, therefore SOU need not be
raised until the assessment of the penalty or sentencing phase of
the proceeding.
The respondent or defendant, to successfully assert the SOU
limitation on liability, must demonstrate, through properly
signed, contemporaneous operating logs, or other relevant
evidence, that:
a) A single operational upset occurred;
b) The permittee or violator has taken, in a timely
fashion, all corrective and/or mitigative
'-{
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'.'•-. 15 ' •
measures where possible or practicable. (See
Section IV(G) above.)
Where a respondent or defendant has provided EPA with
prior notice of an SOU condition (e.g., in accordance with the 24
hour notice requirements of 40 C.F.R. 122.41(1)(6)) presumably
administrative and judicial decision-makers will give appropriate
weight to such prior notice in determining whether the occurrence
of an SOU has been proved.
3. Burden of Proof on Respondent/Defendant
Where a respondent or defendant desires to claim the
protection of a statutory exception or exemption, such as SOU, it
is fair, reasonable, and within the Constitutional Due Process
Clause to require the claimant to come forward with some evidence
of its applicability, and to require the defendant to bear the
burden of proof. Although the "burden of persuasion" is not
often placed on defendants or respondents, particularly in
criminal cases, it does not offend notions of fundamental
fairness to place such a burden on defendants in this context, to
prove "by a preponderance of the evidence" that SOU should apply.
The information required to establish the occurrence of an sou
event is within the possession and control of the claimant.
Further, the NPDES regulations already require reporting of many
noncompliance incidents. To require that the Agency determine
whether a single operational upset has occurred, and whether the
prerequisites to its assertion have been met would be quite
burdensome and would be contrary to the intent of Congress that
enforcement actions should not be bogged down in administrative
determinations or shoving of fault. See A Legislative History of
the Clean Water Act of 1977, 95th Cong., 2d Sess. (1978) at
464-5.
Z. Counting Violations Where a Single Operational Unset is
Involved
When an SOU results in the exceedance of multiple daily
maximum pollutant parameters, only one violation will be counted
for each day that the exceedance attributable to the SOU
continueso Thus, an SOU that results in three days of
noncomplinnce with one or more permit effluent parameters will be
counted an three violations in determining the statutory maximum
penalty.
The counting of violations becomes more complicated when,
for example, a permit contains both daily maximum effluent
discharge limits and monthly (or weekly) average discharge
limits. Ths violation of a monthly average limitation is counted
as one day of violation for each day in the month, e.g. 30 days
of violation in a 30 day month. See. Gwaltnev of Smithfield v.
Chesapeake Bav Foundation. 791 F.2d 304, 314-15 (4th Cir.
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16
1986), vacated on other grounds. 484 U.S. 49 (1987). The
question therefore arises about hov to count the number of
violations where an SOU event causes exceedance of multiple
monthly averages or a combination of daily maximums and monthly.
averages.
•In -counting monthly average violations in the SOU context,
EPA enforcement personnel should abide by these rules:
1) If a monthly average limitation would not have been
exceeded but for the effluent limitation exceedances caused
by a specific SOU event, then that monthly average violation
merges with violations of any other pollutant parameter
exceedances caused by the same SOU event. This rule applies
to daily maximum parameter exceedances that are caused by
the SOU and to each day of each monthly average parameter
exceedance that would not have occurred but for the
exeeedances caused by the SOU event. For example, if
monthly average parameters for pollutants A and B are
exceeded during the same month, as a result of the same sou
event, and neither parameter would have been exceeded but
£££ discharges resulting from that SOU event, then only one
violation per day will be counted during that entire month
(assuming no other violations occurred during the month).
Further, if daily maximum violations are also attributable
to the same SOU event, sJ^iH only one violation per day is,
counted for each day in the month; and
2) If the monthly average pollutant parameters in the above
example would have been exceeded regardless of discharges
caused by an SOU event, the number of violations are counted
differently because multiple monthly average exceedances do
not merge, and multiple violations per day are still to be
counted for purposes of calculating the statutory penalty.
This is true of both daily maximum parameter exeeedances and
days of monthly average exceedance. For example, if monthly
average parameters for pollutants A and B are exceeded
during the same month, and these monthly average exceedances
would have occurred regardless of any SOU event that
occurred during that month, two violations will be counted
for each day during that month. If daily maximum
exceedances occur during that month and are attributable to
the SOU event, they do not merge with the corresponding days
of monthly average violation either.
For further examples of counting violations on the context
of an SOU, see Appendices 1 and 2, below.
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V. Single Operational Unsafe Versus Regt-la»3rv rase*:. Hov -he
Two Concepts Differ
Because the.regulatory upset defense and single
operational upset are similar concepts, it is helpful to conpare
then and to examine the ways in which they substantively and
procedurally differ. Following is a comparison of the tvo
concepts focusing on their differences:
A. The -purpose and effect of single operational upset
differs from the purpose- and effect of the regulatory upset
defense. SOU provides that EPA, in determining the maximum
penalty liability of a regulatee/. is to count as one violation
all those violations of multiple pollutant parameters stemming
from a single operational upset. The result is that a
regulatee's liability is limited to $25/000 per day ($10,000 per
day administratively)/ regardless of the number of pollutant
parameters violated.
Regulatory upset fas defined in EPA regulations/ 40 C.F.R. §
122.41(n)) differs in that its successful assertion constitutes a
complete affirmative defense (rather than a mere limitation on
total liability) to noncompliance with effluent limitations.
B. Single operational upset is available as a limitation on
liability for noncompliance with both technology-based and water
quality-based effluent limitations. This is not true of the
regulatory upset defense/ which applies only to violations of
technology-based effluent discharge limitations.
C. Single Operational Upset need not be mentioned in an
NPDES permit/ either federal or state issued/ for a violator to
claim this liaitation~on liability in a federal enforcement
action for penalties. The regulatory upset defense/ on the
But sea Natural Resources Defense Council v.EPA. 859 F.2d
156 (C.A.O.C. 1988). In this decision the circuit court has
compelled EPA to conduct further proceedings to determine whether
to extend the upset defense to violations of water-quality based
effluent limitation*. Id./ 210. The court explicitly states
that EPA need not extend the upset defense to violations of
water-quality based effluent limitations if it chooses not to do
so. Id. i 209. While EPA is making this determination/ the upset
regulation*, as they apply to violations of technology-based
standards/ remain in effect. Id./ 210.
6 In a state enforcement action/ brought in accordance with
a state water protection statute, an upset defense will only be
available if provided for by state law, regulation/ or as a NPDES
permit provision. Similarly/ the 'SOU limitation on liability
does not apply to enforcement actions brought in accordance with
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18
contrary, must be expressly included in a state issued permit tc
be raised as an affirmative defense in a federal enforcement
action. This limitation on raising the regulatory upset defense
does not apply to a holder of a federally issued permit.7
D. The regulatory upset defense is not available where the
noneomplianee is caused by operational error, improperly designed
or inadequate treatment facilities, lack of preventative
maintenance, or careless or improper operation. The upset
regulation also requires that the incident or event leading to
the exceedances be exceptional and that the resultant
noneomplianee be both unintentional and temporary.
"Upset," in the context of single operational upset, picks
up some of these limitations based on the common understanding of
the type of event that constitutes an industrial operational
upset. The event must be exceptional or unusual, and it must be
unintentional and unknowing. Further, pollutant parameter
exceedances caused by failure to properly design and failure to
install adequate treatment facilities can not constitute an SOU.
Unlike the upset defense, in the SOU context operator error mav
be the basis of an SOU claim. See IV.D, infra. ^^
E. To assert the regulatory upset defense, a regulatee must
give prior notice to EPA or the state in accordance with 40
c.F.R. §8 122.4l(n)(3)(iii) and 122.41(1)(6). A regulatee is T
required to give prior notice of the SOU event in order to latt
assert the SOU limitation on liability.
/
F. Respondents and defendants may claim, in the same
judicial or administrative action, both regulatory upset and
single operational upset. If the upset defense is successfully
claimed, single operational upset is not applicable to those
violations since the respondent or defendant would be absolved of
liability for the violations at issue.
state law, unless the state law contains an SOU provision.
States may provide for more strict enforcement, including greater
penalty liability, than is provided by federal law.
On the contrary, the federal government, even when it
enforces against violations of state issued NPDES permits, must
allow an SOU claim because the federal government always sues
under the Clean Water Act which contains the SOU provision.
7 See Marathon Oil v. EPA. 564 F.2d 1253 ' (9th Cir. 1977);
but see U.S. v. BP Oil. Inc.. No. 86-0792 (E.D.Pa. July 27,
1988)(order granting government's motion for partial summary
judgment) ("Absent incorporation ... of the upset defense [into
either an EPA or state issued NPDES permit], the defense is
unavailable to defendant**) .
• -V c~-
• • •••• L
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VIII. Conclusion
Single Operational Upset operates to limit the statutory
liability of Clean Water Act regulatees under a strictly defined
set of circumstances. If a regulatee's usually well functioning
process is somehow "upset" resulting in exceedances of multiple
pollutant parameters, the statutory liability for those
exceedances will be calculated as if only one pollutant parameter
had been exceeded. The "upset" must be an extraordinary event,
not routine or'if any way usual, it oust not have been an
intended result of the regulatee's action or inaction, and it
must not be attributable to inadequate treatment facilities or
faulty design of those facilities.
The regulatee who chooses to assert SOU in order to limit
his potential CWA liability has the burden of raising this claim.
In so doing, the regulatee must demonstrate that he/she took
timely corrective and/or mitigative measures if possible or
practicable to limit the environmental effect of the SOU event.
IX. pffeet of Guidance
This guidance establishes the Agency's authoritative
interpretation of the Single Operational Upset provisions set
forth in the Water Quality Act of 1987. It is primarily intended
for the use of government personnel. It is not intended, and
cannot be relied upon, to create any rights, substantive or
procedural, enforceable by any party in litigation with the
United States. The Agency reserves the right to change this
guidance at any time without public notice.
In addition, the Agency's application of this guidance in
formulating an appropriate Clean Water Act penalty, done in
anticipation of litigation, is likely to be exempt from
disclosure under the Freedom of Information Act. As a matter of
public interest, the Agency may release this information in some
cases.
X. Contact
For farther information, please contact Daniel Palmer,
Attorney/Advisor in the Office of Enforcement and Compliance
Monitoring - Water Division (FTS 382-2849).
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APPENDIX I
EXAMPLES OF THE APPLICATION QT SINGLE OPERATIONAL tTPSET-
CALCULATING PENALTIES
/ ' '
A metal finisher encounters an operational problem--a
chelating agent is released to the wastewater in excess of
enforceable effluent limitations. The release of the pollutants
was an exceptional and unintended event and was not attributable
to faulty design or inadequate treatment facilities, and the
violator took timely corrective action. Consequently, the
violator in this case may claim SOU to limit his liability.
Because the vastewater contains significant concentrations of
chelated chromium, copper, and nickel, effluent parameters for,
all three pollutants are violated. These violations continue for
3 days. Assume that EPA is seeking civil penalties at $25,000
per day for each violation.
A. Daily Maximum Violations
No SOU Limitation on Liability
The above example displays 3 violations (one for each
pollutant parameter violated), each violation continuing for 3
days. The statutory maximum penalty is calculated by multiplying
3 violations x 3 days x $25,000 per day for each violation—for a
total of $225,000.
SOU Limitation on Liability
Where the SOU limitation on liability applies, the three
pollutant parameter violations are counted as one violation for
purposes of calculating statutory penalties. This would not
impact "per day" penalties. The statutory maximum penalty in
this context is therefore calculated by multiplying 1 violation
(due to the single operational upset) x 3 days x $25,000 per day
for each violation—a total of $75,000.
B. Monthly Average Violations
v In addition to the daily maximum violations, monthly average
violation* may also be counted. Assume the exceedances
attributable to the SOU also resulted in the violation of the
monthly average discharge limitation for each of the three
pollutants.
No SOU Limitation on Liability
«
Where no SOU is involved, the penalty for monthly
average violations is calculated by multiplying the number of
parameters violated (3) x 30 days per month x $25,000 per day—a
total of $2,250,000. To this number is added the penalty
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calculated for the daily maximum violations ($225,000), for a
grand total of $2,475,000.
Single Operational Upset
Application of SOU to limit liability for monthly average
violations turns on the question of whether the monthly average
pollutant parameter would not have been violated but for the
daily maximum exceedances that resulted from the SOU event. If
all of the monthly average parameters would not have been
violated feiii IfflC the exceedances resulting from the sou event,
then only one violation is counted for each day during the month
that the monthly averages were violated, e.g. 30 days x 1
violation/day x $25,000/violation - $750,000 penalty. The da:
maximum violations that resulted from the SOU are not counted
separately.
If the monthly average pollutant parameter exceedances would
have occurred regardless of the SOU event, then the violations of
the monthly average parameters do not merge. Rather than
counting one violation per day for each day in the month for the
monthly average exceedances, three violations are counted. The
penalty for the daily maximum parameter exceedances, still
limited by the SOU, is added to the penalty calculated for the
monthly average violations. Therefore, in this example, the
statutory maximum penalty equals 30 days x 3 monthly average
violations/day x $25,000/violation + 3 days x 1 daily maximum
violation/day x $25,000, for a total penalty of $2,325,000.
C. Changes in parameters violated
Modify the example by having the "single operational upset1*
cause the following: one chromium violation on day 1, one
chromium and one copper violation on day 2, and one nickel
violation on day 3, as well as a violation of the monthly average
for chromium.
No Single operational Upset Limitation on Liability
To calculate this penalty, the penalties for daily maximum
and average violations for each parameter are added together. For
chromium there is 1 daily maximum violation x two days x $25,000
per day for each violation— a total of $50,000. Zn addition, for
chromium there is 1 monthly average violation x 30 days x $25,000
per day for each violation— a total of $750,000. For copper there
is 1 daily maximum violation x 1 day x $25,000 per violation for
each day— a total of $25,000. Likewise, for nickel there is 1
daily maximum violation x 1 day x $25,000 per violation for each
day— a total of $25,000. This results in a grand total of
$850,000.
Sincrle operational Upset Limitation
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Again, the calculation of the penalty where an SOU is
involved depends on whether the monthly average violation would
not have been violated but .fjjr. the exceedance attributable to the
SOU event; It this violation would not have occurred but for the
SOU related exceedances, all of the days .of daily maximum
exceedance merge with the days of monthly average exceedance,
therefore the penalty is equal to 30 days x 1 violation per day x
$25,000, for a penalty of $750,000.
Zf the monthly average violation would have occurred
regardless of the SOU related exceedance, then the days of daily
maximum exceedances do not merge with the days of monthly average
exceedance. In this example, the penalty, in this instance, is
computed by adding to the 30 days of monthly average violation
the three daily maximum violations (the two violations on day two
counted as one due to the SOU limitation) for a total penalty of
$750,000 ••» $75,000 - $825,000.
D. Violations not Associated With a Single Operational
Upset
Assume that an SOU occurs resulting in violations as
described in part A, above. In addition to the violations
described above, on day 2 the cyanide treatment system fails, due
to some cause other than a single operational upset, resulting in
a one day violation of the cyanide limit.
In this situation, the cyanide exceedance would not merge
with any other exceedance, either daily maximum or monthly
average, and would bm counted as an additional $25,000 to be
added to the penalty.
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•T-% —
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APPENDIX 2
Mora Examples of Calculating Penalties in tha Context of a
Single Operational Upset
Consider the following scenario: during a single month,
Regulate* x, who owns and operates Facility X, and who possesses
an NFDES permit regulating discharges from Facility X,
experiences five separate and distinct SOU events. These events
occur on days 1-2, 10, 17, 23,and 29. The SOU events cause all
of the permit effluent limitation exceedances that take place
during this month. All the procedural preconditions for claiming
SOU have been satisfied including efforts to mitigate.
Regulatee X's NPDES permit controls discharges for two
pollutants, but establishes two parameters for each pollutant, a
daily maximum and a monthly average. The sampling for pollutant
A is taken daily, but for pollutant B samples are taken weekly.
on day 1, SOU Event Z causes two days of violation of
the daily maximum effluent limitation for pollutant A, but not
pollutant B. (Pollutant B was sampled on these days. The
quantity of the discharge on both days was 77 Ibs/day). Although
Regulatee X takes all feasible mitigative steps the violation
continues for two days. On each of these days the daily maximum
limitation for pollutant A is violated. On day one the
concentration of the discharge is 40 mg/1; on day two it is 35
mg/1. These violations are so severe that, at month's end,
averaging the 30 pollutant A samples taken during the month, it
is determined that the monthly average would not have been
exceeded BUT FOR these two days of exceedance, caused by this SOU
event.
It is also determined at month's end that the monthly
average limit for pollutant B has been exceeded but, in this
case, the monthly average would have been exceeded regardless of
the exceedances caused by the SOU event that occurred on days one
and two.
On day 10, SOU Event ZZ causes a violation of the daily
maximum effluent limitation for pollutant B (105 Ibs/day). This
is known because a sample was taken on this day. At month's end,
it is determined that the monthly average limitation for
pollutant B would not have been exceeded but for the exceedance
of Pollutant B caused by this SOU event.
On day 17, SOU Event ZZZ occurs. Zt does not cause an
exceedance of either the daily maximum or monthly average
limitations for pollutant A. Zt is unknown whether the daily
maximum or monthly average limitations for .pollutant B are
exceeded because no sample of Pollutant B was taken on this day.
On day 23, SOU Event ZV causes violations of the daily
maximum limitations for both pollutants A (5.0 mg/1) and B (115
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Ibs/day), both of which were sampled. At month's end it is •
determined that the monthly averages for both of these polluta
would not have been violated but for the exceedanees caused by
this SOU event.
On day 29, SOU Event V occurs. It does not cause a
violation of the daily maximum effluent limitation for either
pollutant A or B but the levels of the pollutants exceed the
monthly average limitation. As determined at month's end, the
monthly average limitation for Pollutant A would have been
violated regardless of this exceedance, as a result of the
exceedanees caused by SOU event Z. The monthly average
limitation for Pollutant B was exceeded by an amount such that
the average for the month would not have been violated but for
this discharge. >
sou Event
X
II
III
IV
V
Day
1 '
2
1
2
10
10
17
17
23
23
29
29
Pollutant
A
A
B
B
A
•. B
A
B.
A
B
A
B
Limit fpailv/Mthlyl
2.0/1.5 mg/1
2.0/1.5 mg/1
100/75 Ibs/day
100/75 Ibs/day
2.0/1.5 mg/1
100/75 Ibs/day
2.0/1.5 mg/1
100/75 Ibs/day
2.0/1.5 mg/1
100/75 Ibs/day
2.0/1.5 mg/1
100/75 Ibs/day
Discharge
40 mg/1
35 mg/1
77 Ibs/day
77 Ibs/day
1.2 mg/1
105 Ibs/day
1.0 mg/1
NOT SAMTI
5.0 mg/1
115 Ibs/day
1.6 mg/1
. 98 Ibs/day
Counting the Violation*
SOU Event Z: The only pollutant parameter violated is for
Pollutant A. Therefore, there is on* daily maximum violation on
each of day* on* and two. In addition, the monthly average for
Pollutant A is exceeded and would not have been exceeded but for
the discharges related to SOU event I. In this case, for
Pollutant A, the monthly average violation on days one and two
merge with the daily maximum violation on those two days* The
total number of days of violation of Pollutant A, for both the
daily maximum and monthly average violations, is 30.
The daily maximum limitation for Pollutant B is NOT violated
on either day that SOU Event I is ongoing. Further, the monthly
-------
average violation for Pollutant B would have been violated
regardless of the violations attributable to SOU Event I.
Consequently, these days of monthly average violation do not
merge with the days of violation of Pollutant A.
SOU Event XX: The daily maximum and monthly average parameters
for Pollutant B are violated as a result of this SOU event. The
monthly average parameter for Pollutant B would not have been
violated BUT FOR the exceedance caused by SOU Event XX.
Therefore, the'daily maximum violation on day 10 (the date of sou
Event XX) and the day of monthly average violation for this date
merge, leaving a grand total of 30 days of violation attributable
to SOU event XX. These days of monthly average violation do not
merge with the days of monthly average violation of Pollutant A,
caused by SOU Event 1, because the exceedances were caused by
different SOU events.
SOU Event XXX: The only issue presented by SOU Event XXX is what
effect, if any, does an SOU event whose consequences are unknown,
have on the determination of which pollutant parameter
exceedances merge. The answer is that without sampling data, a
regulatee will not be able to limit its liability based on the
occurrence of an SOU event.
SOU Event XV: The daily maximum and monthly average parameters
for both Pollutants A and B are exceeded. Both monthly averages
would not have been exceeded but for this SOU Event. As a
result, all of these violations merge, for a total of 30 days of
violation attributable to this SOU event. (Of course, the
greatest number of days of monthly average violation that may
occur in a given month is equal to the number of days in the
month. Therefore/ a* is the case here, because the monthly
average was already determined to have been violated for both
pollutants, no additional days of monthly average violation
actually accrue, although one more day of daily average violation
is tallied for this month.
SOU Event Vi The discharges caused by SOU Event V result in
exceedance of the monthly average parameters for Pollutants A and
B. As determtn+d at month's end, the monthly average parameter
for Pollutant A would have been violated regardless of the
exceedance caused by this SOU event. The monthly average
parameter for Pollutant B would not have been violated BUT FOR
the exceedance caused by SOU Event V. consequently, no days of
violation for pollutant A and B merge as a result of SOU Event v.
-------
APPENDIX 3
COMPARISON OF THE SINGLE OPERATIONAL UPSET LIMITATION
ON LIABILITY ANL THE REGULATORY UPSET DEFENSE
REGULATQBY UPSET
EFFECT: Certain exceedances
not considered to be
violations.
Must be present as provision
in state issued permit.
Available only where
are of technology-based
effluent limitations.
Same.
Not available where permit
limitations are based c
water quality standards.
Prior notice is explicitly
required.
Incident must be excep-
tional t unintentional,
and unavoidable.
Same.
OPERATIONAL UPSET
DEFENSE
EFFECT: In calculation of
penalty liability, certain
violations are counted as >
one violation;
Available by statute, no permit
permit provision necessary
in either state or federally
issued permit.
Available where violations are
violations
of either water quality or
technology-based effluent
limitations.
Proper pollution controls must
be in place (including proper
design and adequate treatment).
Available where permit limita-
tions are based on water
quality standards.
Prior notice not an explicit
requirement of proof.
Incident must be exceptional
and unintentional (unknowing),
but not necessarily unavoidable.
Condition must be temporary (i.e.
necessity to tales timely
corrective and/or mitigative
measures where possible or
practical).
Lack of prsventative maintenance
may not be the basis for a
claim of SOU.
Unless "knowing" or "intentional",
contributing operator error and
careless or improper operation
may be the cause of a single
operational upset.
Same.
Contributing operator error,
and careless or improper
operation may not be a
cause of a single
operational upset.
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IV.A.12.
"Guidance on Section 1 of the Civil Justice Reform Executive
Order No. 12778", April 8, 1993.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
• OFFICE OF ENFORCEMENT
APR 81993
MEMORANDUM
SUBJECT: Guidance on Section 1 of the Civil Justice Reform
^cutive Order No. 12778
Acting Deputy Assistant Administrator
TO: .Regional Counsel, Regions I-X
Enforcement Counsel
Attached is the Office of Enforcement's Guidance on
Section 1 of the Civil Justice Reform Executive Order No. 12778.
This Guidance reflects the comments of 'the Enforcement Counsel/
Regional Counsel and the Environmental Enforcement Section of the
Justice Department's Environment and Natural Resources Division.
Please direct any questions with respect to this Guidance to
my Special Assistant Linda Breggin. She can be reached at ^
(202) 260-4931.
Attachment
cc: John Cruden
Howard Corcoran
~Ti ?nmss on P.ec/dec ?acer
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GUIDANCE ON SECTION 1 OF THE CIVIL JUSTICE REFORM
EXECUTIVE ORDER NO. 12778
The following is the Office of Enforcement's (OE) Guidance
on the implementation of Section 1 of the Civil Justice Reform
Executive Order ("Executive Order") entitled "Guidelines to
Promote Just and Efficient Government Civil Litigation." Only
those subsections of Section 1- that impact on the procedures to
be followed in processing cases and case referrals in affirmative.
Environmental Protection Agency (EPA) enforcement cases handled
by OE and the Off ices of Regional Counsel are addressed in this
Guidance. This Guidance does not govern administrative actions
which are covered by Section 3 of the Executive Order. This OE
Guidance on Section 1 of the Executive Order should be used as a
supplement to the Guidance issued by the Department of Justice
(DOJ).1
I. Section Ifa); Pre-filing Notice of a Complaint
Section 1(a)'requires that prior to the filing of a
complaint either litigation counsel3 or the referring agency must
make a "reasonable effort" to notify the disputants about the
nature of the dispute and attempt to achieve settlement.
DOJ's Guidance provides that if pre-filing settlement
efforts by government counsel require information in the
possession of proposed defendants, litigating counsel or client
agency counsel may request such information from defendants as a
condition to settlement efforts.3 If proposed defendants refuse
or fail to provide such information upon request within a
reasonable time, counsel shall have no further obligation to
attempt to settle the case prior to filing.
1 See DOJ Memorandum of Guidance on Implementation of the
Litigation Reforms of Executive Order No. 12778. 58 Fed. Reg.
6,015 (Jan. 25, 1993).
2 For purposes of this Guidance,, it is assumed that
Agency attorneys do not serve as litigation counsel except in
cases that are part of the Pilot Program. OE may issue
additional guidance on the Executive Order in the event that an
Agency attorney becomes litigation counsel due to DOJ's failure
to file a complaint within a reasonable time, as set out in
Section 9 of the Memorandum of Understanding Between DOJ and EPA.
* OE encourages its attorneys to request information
regarding a defendant's ability to pay in appropriate cases.
-------
As described below in further detail, OE encourages Regional
Counsel to provide notice and attempt to achieve settlement with
proposed defendants. In the event, however, that notice is not
given prior to referral, DOJ will provide the notice and make the
attempt to. achieve settlement.
The procedures outlined below should be followed by OE
Headquarters and Regional attorneys (herein referred to
collectively as "attorneys'*) in implementing Section l(a) of the
Executive Order.
A. Exceptions to Notice Requirements:
• Attorneys should ensure that the exceptions to the pre-
filing notice requirements, which are set out in
Section 7(b) of the Executive Order, do not apply. A
check list is attached hereto which contains the six
circumstances under which pre-filing notice is not *
required. This check list should be used in each case
before providing.notice to a proposed defendant, and
should be maintained in the case file. In brief, the
circumstances under which notice is not required are as
follows: •
1. In actions to seize or forfeit assets subject to
forfeiture or in actions to seize property;
2. in bankruptcy, insolvency, conservatorship,
receivership, or liquidation proceedings;
3. in actions in which the assets that are the
subject of the action or the assets that would
satisfy the judgment are subject to flight,
dissipation, or destruction;
. 4. in actions in which the defendant is subject
to flight;
5. in actions in which "exigent circumstances make
.providing such notice impracticable or such notice
would otherwise defeat the purpose of the
litigation, such as in actions seeking temporary
restraining orders or preliminary injunctive
relief";
6. "in those limited classes of cases where the
Attorney General determines that providing such
notice would defeat the purpose of the
litigation."
- 2 -
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B. Pre-referral Negotiation ("PRN") Policies
The Agency has issued two PRN policies. See Memorandum
from James M. Strock and Don R. Clay on Pre-Referral
Negotiation Procedures for Superfund Enforcement Cases
dated October 12, 1990; Memorandum from Thomas L.
Adams, Jr. entitled "Process for Conducting Pre-
. Referral Settlement Negotiations on Civil Judicial
Enforcement Cases11 (memo transmits Agreement between
EPA and. DOJ on the Process for Conducting Pre-Referral
Settlement Negotiation) dated April 13, 1988.
1. In order to satisfy the notice requirements of the
Executive Order, Regional Counsel may opt to
follow existing PRN policies. The time frames set
out in the PRN Policies should be strictly
followed. The pre-filing notice and settlement
requirements of the Executive Order are met when
PRN is pursued but fails to result in the
settlement of a case.
2. In the alternative, the streamlined notice
procedures outlined in Section D below may be
followed in routine cases, in order to comply with
the pre-filing notice and settlement requirements
of Section l(a) of the Executive Order.
a. However, PRN procedures must be followed,
rather than the streamlined procedure, if the
PRN Policies provide that formal PRN is
mandatory. See, e.g.. October 12, 1990
Policy ("procedures are hereby required for
all judicial settlements providing for
privately-financed remedial activities").
C. Statutorily Required Notice .
For those cases that are governed by a law or
regulation that contains requirements with respect to
.notice or settlement negotiations, attorneys should
adhere to the procedures set out in the governing
statutory or regulatory provisions. See, e.g.. Section
122(e) of CERCLA, 42 U.S.C. S 9622(e).4
4 In those cases in which the governing statute requires
that the State be named as a party even though the State is not
the real party in interest, notice does not need to be given to
the State because the State lacks the authority to settle the
case. See, e.g. . Section 309(e) of the Clean Water Act, 33
U.S.C. § 1319(e).
'- • . - 3 - . • •
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D. Notice Procedures.
The following notice procedures should be followed in
those routine cases5 in which the Regional Counsel has
determined that PRN procedures will not be followed and
that there are no applicable statutory notice
provisions.
1. OE recommends, in the interest of expediting the
filing of enforcement cases, that Regional Counsel
provide notice and attempt to reach settlement
with potential defendants.6 If a Regional'Counsel
elects to provide.the requisite notice, notice
should be provided as soon as possible. Cases
should not be referred to DOJ until notice and the
attempt to achieve settlement have been completed.
If a Regional Counsel defers to DOJ and does not
provide notice prior to the time of referral, the
Agency's interests will be best served if notice
is given by DOJ as expeditiously as practicable
after referral, and in a time frame consistent
with the Memorandum of Understanding between EPA
and DOJ.
2. In providing notice, Regional Counsel should
inform the proposed defendant that it must advise
EPA in writing within 14 days that it desires to
enter into a settlement and the precise terms of
its offer. See attached model notice letter. In
the event that the proposed defendant does not
avail itself of .this opportunity, the case must be
referred to DOJ.
3. As early as possible in the negotiation process,
potential defendants should be presented with a
draft consent decree which conforms to all
applicable national standards and guidance, and
which sets -out the terms of a settlement. OE will
develop, in consultation with Regional and Program
, offices, model consent decrees which should be
5 Routine case are those cases which: .1) raise no issues
of first impression; 2) are single media cases; 3) seek penalties
where the statutory maximum is under Si million; 4) can be
referred directly to DOJ rather than through Headquarters. See
GM-69; "Expansion of Direct Referral of Cases to the Department
of Justice," January 14, 1988.
6 In order to expedite coordinated filing, OE strongly
encourages the Regional Counsel to provide notice in cases that
are part of cluster filings or initiatives.
• . - 4 - ' '
-------
used to the extent possible. Consent decree terms
not previously approved by EPA and DOJ should be ,
approved by Enforcement Counsel, in consultation
with the appropriate Assistant Section Chief at
DOJ.
4. OE will respond to Regional requests for approval
of bottom line penalty amounts and settlement.
positions within 35 calendar days of receiving the
requests. Regional requests should include a full
. description of the defendant, violations, evidence
relied upon, law, injunctive relief, and economic
benefit and gravity penalty analyses. A copy
should also be forwarded to the appropriate ' .
Assistant Section Chief at DOJ.
5. Regional Counsel or Enforcement Counsel should
make telephonic contact with the appropriate
Assistant Section Chief at DOJ, in an effort to
seek informal concurrence on the Agency's proposed
settlement positions. DOJ non-concurrence should
be promptly reported to OE for final resolution.
6. If a settlement in principle is reached within 30
days of the first meeting with the potential
defendant, the Regional Counsel may grant the
litigation team an additional 45 days within which
to reach agreement on the.final terms of the
Consent Decree. If necessary, Regional Counsel
may extend, with the concurrence of the Director
of Civil Enforcement, the settlement period for up
to 30 additional days. Agreements in principle
should be promptly reported to DOJ.
7. If a final settlement is not reached within the
designated time period, the case must be referred
to DOJ. All settlements are subject to approval .
of the Assistant Administrator for Enforcement
and/or the Assistant Attorney General for the
Environment and Natural Resources Division at DOJ,
per the'applicable settlement delegations.
• Complaints should be filed as expeditiously as
possible after pre-filing negotiations with
proposed defendants have failed, and in a time
frame consistent with the Memorandum of
Understanding between EPA and DOJ.
8. If a case is referred to DOJ, the following
information regarding compliance with the
Executive Order must be provided in the litigation
report:
-. 5 -
-------
a. Specific considerations that make it
unreasonable or unnecessary under the
Executive Order to engage in pre-filing
negotiations;
b. Documentation of any attempts to provide
notice and achieve settlement, including
copies of the notice letters, and the terms
of any settlement offers; . •
c. Descriptions of any consultations with, or
concurrences from, OE or DOJ regarding
proposed settlement positions;
d. The Agency's specific recommendations for
injunctive, monetary (including economic
benefit of non-compliance), or other relief
and a statement of the Agency's minimum
settlement requirements (including pollution
prevention, audit or other. "SEP-type",
relief), based on the information available
at the time of referral.
II. Section 1 fb^ t. Settlement Conferences
Section l(b) requires litigation counsel to evaluate
settlement possibilities and make reasonable efforts to reach
settlement throughout litigation. In order to assist DOJ in
complying with the Executive Order and to expedite filing and
resolution of civil complaints, attorneys should coordinate
through the appropriate management structure, including through
the Regional Counsel and the appropriate OE Enforcement Counsel,
to develop initial settlement positions, as well as to provide
periodic updates to DOJ on the Agency's settlement positions.
These updates should set out the Agency's desired relief and
minimum settlement requirements.
III. Section Ifc); Alternative Methods of Resolving the_Dlspute
in Litigation .
Section l(c) provides that in situations in which the use
of an alternative dispute resolution (ADR) technique may
contribute to the prompt, fair and efficient resolution of a
dispute, litigation counsel, in consultation with the referring
agency, should suggest the use of an appropriate ADR technique to
private parties. Section l(c) does not apply to any action to
seize or forfeit assets subject to forfeiture, or to any debt
collection'cases (including any action for civil penalties and
taxes) involving an amount in controversy less than $100,000. In
addition, although authorizing the use of arbitral techniques,
the Executive Order prohibits the use of binding arbitration or
any other equivalent ADR technique.
- 6 -'
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In order to comply with this requirement, attorneys should
include in the litigation reports that accompany all referrals to
DOJ the following information:
1) Identification of any ADR technique(s) that have been
used or proposed by the Agency or proposed defendants
to attempt resolution of the dispute prior to referral;
2) Description of the status of any ADR used;
3) An identification of'ADR technique(s), if any, that the
Agency believes may be useful in attempting to resolve .
the dispute either before or after the filing of a -
complaint. See Final Guidance on Use of Alternative
Dispute Resolution Techniques in Enforcement Actions ,
(August 14, 1987); Arbitration Procedures for Small
Superfund Cost Recovery Claims (54 Fed. Reg. 23,174
(1989)); and related policy statements.
IV.. Section-Ifd) fl);.. Disclosure of Core Information
Section l(d)(1) requires litigation counsel, under certain
circumstances, to* make reasonable efforts to arrange with other
parties for a mutual exchange of a disclosure statement
containing core information relevant to the dispute. Core
information is defined as "the names and addresses of people
having information that is relevant to the proffered claims and
defenses, and the location of .documents most relevant to the
case/" Core information should not be disclosed in cases while a
dispositive motion is pending. In addition, Section l(d) does
not apply to any action to seize, or forfeit assets subject to
forfeiture, or to any debt collection cases (including any action
for civil penalties and taxes) involving an amount in controversy
less than $100,000. DOJ's Guidance explains that litigation
counsel "should emphasize that the government is willing to be
bound to exchange core information as defined in the section if,
and only.if, other parties agree to disclose the same core
information and the court adopts the agreement as a stipulated
order." .
f • • . .
DOJ's Guidance provides that referrals to DOJ from the
Agency.should include core information. The identification of
the"location of the documents should be specific enough to enable
litigation counsel to locate and retrieve the documents, and
should specify the name, business address and telephone number of
the custodians of the documents. The identification of people
having information that is relevant to the claims and defenses
should include, if possible, last-known telephone numbers. The
Guidance provides that n[l]itigation counsel is entitled to rely
in good faith on the representations of agency counsel as to the
existence, extent, and location of bore information."
-------
DOJ's Guidance further states that in those cases in which
the scope of judicial review is limited to the'agency's
administrative record, it is sufficient to provide the location
of the administrative record and afford defendants access to the
record. See, e.g.. Section 113(j) of CERCLA, 42 U.S.C. S 9613(j)
(judicial review of remedy decision limited to the administrative
record compiled by EPA).
The Executive Order and DOJ Guidance confirm the
requirements of the Agency's Model Litigation Report which
already requires attorneys to include core information in every •
litigation report. See Model Litigation Report SS 12e and 12f.
V. .Section Ifd)f2); Review of Proposed Document Requests
Section l(d)(2) requires agencies that serve as litigation
counsel to establish a coordinated procedure for the conduct and
review of document discovery in federal civil judicial
litigation. The Executive Order requires that the procedure
include review by a senior lawyer prior to service or filing of
the request to determine "that the request is not cumulative or
duplicative, unreasonable, oppressive, unduly burdensome or
expensive, taking into account the requirements of the
litigation, the amount in controversy, the importance of the
issues at stake in the litigation, and whether the documents can
be obtained from some other source that is more convenient, less
burdensome or less expensive."
In order to meet the requirements of Section l(d)(2) of the
Executive Order, litigation reports that accompany'civil judicial
referrals to DOJ should include a list of the documents, or the
categories of documents, that are relevant to the case and that
are in EPA's possession. In addition, attorneys should assist '
DOJ, if requested, in reviewing proposed document requests to
verify that the documents sought from the opposing parties are
not available.from .EPA or another convenient source.
VI. Section 1fe)t Expert witnesses
Section 'l(e) requires that litigation counsel refrain from
presenting expert testimony from experts who base their
conclusions on explanatory theories that are not widely accepted.
"Widely accepted" theories are defined as those theories that are
"propounded by at least a substantial minority of the experts in
the relevant field." Section l(e) further requires that
litigation counsel present testimony "only from those experts
whose knowledge, background, research, or other expertise lies in
the particular field about which they are testifying." Section
l(e) also provides for the mutual disclosure of information
regarding experts that the parties expect to call as expert
witnesses at trial. Finally, Section l(e) bans the use of
contingency fees for expert witnesses.
v
- 8 - • '
-------
DOJ's Guidance clarifies that expert testimony on newly
emerging issues is permissible. It is only the theory relied
upon by the expert that must be widely accepted, rather than the
conclusion reached by the expert. Accordingly, the Guidance
explains: "litigation counsel may offer expert testimony that
uses a widely accepted explanatory theory to support a conclusion
in a novel area, based on the qualifications of the expert to
testify on that issue, the extent of peer acceptance or
recognition of the expert's past work in the field, particularly
of any work that is related to the issue on which the testimony '
is to be offered, and any other available indicia of the
reliability of the proffered testimony.*1
The litigation reports accompanying all case referrals 'to
DOJ that involve expert, testimony on behalf of the government, or
for which EPA recommends an expert for the pending litigation,
should include the following information to the extent that it is
available at the time of referral: -
. 1) a description of the general and specific
qualifications of any expert who is expected to
testify;
2) if an expert has been retained, the relation of the
expert's particular field of expertise to the issues on
which his or her testimony will be offered;
. • '
3) if an expert has been retained, a statement noting the
degree of acceptance of the theories on which the
expert is expected to rely among experts in the
relevant field (i.e. whether the expert's theories are
"widely .accepted");
4) if an expert has been retained, a statement clarifying
' whether the expert's expected testimony will involve
any new or controversial theories, or unsettled issues
of science, engineering, or other disciplines,
including but not limited to unsettled issues regarding
risk assessment, innovative technology, or economic
analysis;
- 5) if an expert has been retained, citations to relevant
literature and studies, or peer review analysis,
supporting or opposing the theories of the anticipated
expert testimony.
VII. Section lfgl(41;- Improved Use of Litigation Resources
Section l(g)(4) requires litigation counsel to make
reasonable efforts to expedite civil litigation in the cases to
which they are assigned including, inter alia; l) making
reasonable efforts to negotiate with other parties about, and
' ' ' . -9--. ...
-------
stipulate to, facts that are not in dispute; and 2) moving for
summary judgment in every case where the movant would be likely
to prevail, or where the motion is likely to narrow the issues to
be tried.
DOJ's Guidance provides for referring agencies to identify
facts not in dispute and inform litigation counsel of the lack of
dispute and the basis of concluding that there is no factual
dispute, as soon as it is feasible to do so.7
Accordingly, in preparing litigation reports, attorneys
should make sure to include the information required by DOJ's
Guidance. To the extent possible, the following information
should be included in all litigation reports:
1) a list of all relevant and material facts that the
attorneys believe are unlikely to be disputed and for
which fact stipulations would be appropriate;
2) a list of any issues on which the attorneys believe the
United States could win summary judgment.
In the event that an attorney receives additional information
regarding facts not in dispute, the attorney should notify
litigation counsel as soon as possiblei
VIII. Purpose and Use of This Guidance • .
This Guidance and any internal procedures adopted for its
implementation are intended soley as guidance for employees of
•the United States Environmental Protection Agency. They do not
constitute rulemaking by the Agency and may not be relied upon to
create a right or benefit, substantive or procedural, enforceable
at law or in equity, by any person. The Agency may take action
at variance with this Guidance or its internal implementing
procedures.
7 The Agency's Model Litigation Report, Section 12c,
already requires that attorneys indicate if a case has potential
for summary judgment and, if so, to describe why, and how the
case can.be prepared for filing.
- 10 -
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Attachment l
MODEL NOTICE LETTER
PRIVILEGED AND CONFIDENTIAL ~ FOR SETTLEMENT PURPOSES ONLY
Ms. Mazy Smith
General Counsel
XYZ Corporation
1200 Broadway
New York, New York
Re: XYZ Chemical Facility, Brooklyn, N.Y.
Dear Ms. Smith:
You are hereby notified that the Environmental Protection
Agency (EPA) has identified your company has violated/is in
violation of the Clean Water Act. Accordingly, it is our intent
to refer this matter to the Department of Justice for appropriate
enforcement action in the applicable U.S. federal district court.
Specifically, the EPA believes that XYZ Company has violated the
Clean Water Act and you should immediately refrain from
unpermitted discharges from the XYZ Chemical facility in
Brooklyn, N.Y. into New York Harbor. [Give specifics, including
dates of offenses. Note, supplemental environmental projects
should not be included at this stage].
We would like to extend to you the opportunity to settle
this matter before litigation, to save both your, company and the
federal, government the burden and expense of litigation. Any
settlement, of course, must include the company's agreement to
cease its unpermitted discharges and comply with the injunctive
relief we are seeking, specifically [describe, if appropriate!.
In addition, we will be seeking an appropriate amount of civil•
penalties for the alleged violations. In that regard, you should
note that EPA believes XYZ company has committed 37 violations of
the federal permit, for which the statutory penalty is $25,000
per day. [Stating the statutory maximum does not require advance
coordination with the Department of Justice of the Office of
Enforcement - however, any specific dollar amount requires
advance approval of both offices].
Any settlement must be in the form of a consent decree
entered in federal district court, to be filed simultaneously
with the government's complaint in this action. [Optional
alternative, where appropriate: In order for us to determine an
appropriate resolution of this matter, we will need additional
information from XYZ Company. Accordingly, your settlement
response should express a willingness to provide the additional
information, specifically ]. ' , ,
-------
If you are willing to make the required commitments to
settle this case before litigation, please advise the undersigned
immediately. Your response must be in writing and include a
specific settlement offer that is responsive to the government's
settlement requirements outlined above. [Optional: be prepared
to complete settlement negotiations within 2 weeks from the date
you receive this letter]. Any settlement agreement we enter into
will be contingent upon the approval of the Assistant
Administrator for Enforcement, EPA, and the final settlement
authority of the Assistant Attorney General, Environment and
Natural Resources Division, Department of Justice.
If we do not receive what we characterize to be a good faith
settlement offer from you by , we will proceed to
immediately refer this matter to the Department of Justice for
their action. Thank you very much for your prompt attention to
this important matter.
Sincerely,
Joseph White
Assistant Regional Counsel
cc: Mary Matthews, EPA, Office of Enforcement
Gerald Hobson, EES, Department of Justice
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Federal Register / Vol.58. No. 14. / Monday. January 25,1993 / Notices
6015
Notice Pursuant to the" National- -*'-":^
Cooperative Research Act of 1984— .'/:
Gas-Fueled Railway Research Program
Notice is hereby given that on ..'
ennary 4,1993, pursuant to section "6(a)
of the National Cooperative Research '..''
Act of 1984.15 U.S.C. 4301 etteq. ("the
Act"). Southwest Research Institute
("SwRI") has filed a written notification
simultaneously with the Attorney .
'General and the Federal Trade..:;'. .
Commission disclosing (1) the identities
of the parties and (2) the nature and
objectives of the venture. The -'"-'-
notifications were filed for the purpose
..of invoking the Act's provisions limiting
'the recovery of antitrust plain tifis to
actual damages under specified •• • .•• '
• circumstances. Pursuant to Section 6(b)
of the Act the identities-of the parties
are Morrison Knudsen Corporation. .
Boise. ID; Southern California Gas .
Company, Los Angeles, CA; Columbia
Gas of Ohio. Ino. Columbus. OH: •
Norfolk Southern Corporation, Roanoke.
VA: California Department of \
Transportation. Division of Rail. ~
Sacramento. CA: CSX Transportation.'.
Jacksonville. FL: and Atchison.Topeka
and Santa Pe Railway Company. .
Topeka. KS. The general area of planned
activities is the identification of
technical requirements and .
quantifications of economic and •
ivironmental incentives for using . •
jtural gas instead of diesel as a railroad
fuel, addressing refueling, emissions
benefits, costs, market size, route
characteristics, safety and regulatory *
issues. The major areas of research are •
(1) the identification of the " •
infrastructure and supporting ,
technologies needed for the widespread
use of natural gas as a railway fuel in
.the United States: (2) the identification
and quantification of the most cost
effective refueling strategies; (3) the
development of a selection criteria for
choosing CNG and LNG fuel storage •
systems as the medium for specific nil
applications; and (4) the quantification
of the effect of using natural gas as a
railroad fuel on capita] costs, operating
costs.' and maintenance requirements.
Membership in the venture remains
open, and the parties intend to file
additional written notification
disclosing all changes in membership to
the venture. ' ' :" '
Coostaace K. Robinson.' f
Deputy Director o/Opewtions. Antitrust
Division. . • ' .
(TO Doc. 93-1650 Filed 1-22-93: 8:45 ami
BUMC CODE «41KV* ' . . . ' .
Notice Pursuant to the National :^>v" -
Cooperative Research Act of 1984 ::<"
"Ultra Low Emission Engine Program"
Notice is hereby given that on
December 14.1992, pursuant to section
-6(a) of the National Cooperative .y : • '
Research Act of 1984.1.5 U.S.C 4301 et
seq. ("the Act"), Southwest Research
Institute (MSwRr) filed e written . .
notification simultaneously with the •
Attorney General and (he Federal Trade •
Commission disclosing a change in its
membership. The notification was filed
for the purpose of extending the Act's ".
provisions limiting the recovery of •. ••. /
antitrust plaintiffs to actual damages : ••
'under specified circumstances. ••, .•!„ . '
Specifically. Siemens Corporation.- -••'-:.
Auburn Hills, MT (November 11.1992)
has become a party to the group .-•, . .-:
research project... .• •> i .- • . . •
-No other changes have been made in .
either the membership or planned •'.-.'.
activity of the group research project _•
Membership in this group research .
project remains open, and the members •
intend to file additional written .• •
notification disclosing all changes in •
membership. ...
On November 13,1991 'SwRI filed its
original notification pursuant to section.
6(a) of the Act The Department of
Justice published a notice in the Federal
Register pursuant to section 6(b) of the
Act on December 9,1991.56 FR 64276.'
The last substantive change notification
was filed with the Department on .• . .
October 16.1992. A notice was-. . .
published in the Federal Register
pursuant to section 6(b) of the Act on*
November 19.1992.57 FR 54610. The
last correction notification-was filed . '.
with the Department on August 13, \
1992. A notice was filed in the Federal
Register pursuant to section 6(b) of the
Act on September 10.1992,57 FR
41549. . .' . '. "'.
)o*ephH.W!dmar. . . .
Director of Operations: Antitivst Division.
fFR Doc. 93-1569 Filed 1-22-43; 8:45 am|
SUING COPE 44W4MI ' • . '. .
1 concern the conduct of tivil litigation'^ *
• with the United States Government." ••"''
including the methods by which • •••- • • •'•'.
attorneys for the government conduct
discovery, seek sanctions, present *•
• .witnesses at trial, and attempt to settle • •.
cases. The Order authorizes the '• ••-••'"-
Attorney General to issue guidelines '*-
carrying out the Order's provisions on '
"civil and administrative litigation. • •
EFFECTIVE DATE: This action is effective "•
• on January 25.1993. • • • ; • — ;f" ' . •'•"
KM FURTHER mFomunoN CONTACT: ' ' .*
. Jeffrey Axebad. Director. Torts Branch. V
Civfl Division. Department of Justice, "•
601 "D"- Street N\V.. Washington. DC '•'
20004-2904 (mailing address: Benjamin '
• Franklin Station, PJO. Box 888. : :•''•:'
' Washington. DC 20044). (202) Sois.'^"
' • • '
Office of the Attorney General.'. .
[Ordtr No. 1658-93] • '
Memorandum of Guidance eh .
Implementation of the Litigation * .
Reforms of Executive Order No. 12778
AGENCY: Department of Justice.
ACTOM; Notice. . " . . .
SUMMARY: This notice promulgates a •
memorandum providing guidance to
Federal agencies regarding the
implementation of those provisions of
Executive Order No. 12778 (Order) that
SUPPtEMENTABY WFORMATJOK: Executive "'
. Order No. 12778 ($6 FR 55195. October. •
25. 1991). which President Bush signed .
. on October 23. 1991. is intended to . .
"facilitate the just and efficient '". . ;'. ;
resolution of civil claims involving the
United States Government" 56 FR "" '
55195. The Order, infer alia, mandates . '*.
. reforms in the methods by which '•- •.'•
attorneys for the government conduct ••• >
discovery, seek sanctions, present . • .v :
witnesses at trial, and attempt to settle. .
cases. These reforms epply to litigation .'
begun on or after January 21, 1992.- v-- .
The Order requires agencies to : •-'""
implement civil justice reforms v. ' ; •• •
applicable to each agency's civil •' '•" : '
litigation. It provides, in sections 4(a), '.
4(b) and 7(d). that the Attorney General
has both the duty to coordinate efforts ;
by Federal agencies to implement the •'*
litigation process reforms and the •• ;:•.' •
authority to issue further guidelines ••."'•*
implementing the Order, and to provide •
guidance as to the scope of the Order..-;... .
Preliminary guidelines were issued as .
interim direction for applying the Order.
A Memorandum of Preliminary ; :_:"
Guidance on Implementation of the . "
Litigation Reforms of Executive Order * <
No. 12778 (Memorandum of Preliminary
Guidance) was signed on January 24. ' •
'1992 and has been published in the > ~
Federal Register. 57 FR 3640 (January .
30. 1992). Agencies were requested to •
provide comments concerning their •
experience in carrying out the Order : '
. and their recommendations for revising
the preliminary guidance. Numerous ' •
helpful comments have been received *
from agencies. United States Attorneys . )
and other persons and organizations.
The present Meifiorandum has. been . ' '.•' .
prepared after consideration of ' • : •; *: :
comments and in (he light of experience ;
to date under the Order. This • . '•'•"••
Memorandum incorporates much of the •
•prior Memorandum, of Preliminary . ' •'
-------
6016
Federal Register / VoL SB. No. 14 / Monday. January 25. 1993 / Notices
Guidance. In addition, the pttsent .; ......
on matten included in the •'•. ,-•'
Memorandum ef Preliminary Guidance
tod additional guidance and direction.
In particular, additional commentaiy . •
has been included in the discussion of
lections Id). l(b). l(c). l(d)(l). l(e) end
3 of the Order, end in the text pertaining
to exclusions from the Order. Thus, the
piesentMemorandum supersedes the
or Memonndum of Preliminary
idance end should be utilized in lieu
prii
Gui
since the January 21,1992 effective date
of the Order, ft has not been possible to*
assess fully the Impact of reforms the
Order has initiated. Therefore, further
Department of Justice Memorandum of
Guidance en Implementation of the
litigation Reforms of Executive Order
No. 12778 -.. ••
• # "
IfufOOOCuOO *'
Executive Order No. 12778, which
President Bush signed on October 23.
1991. is intended to -facilitate the Just
•end efficient resolution of civil claims
involving the United States "'
Government" 56 FR 5519S, October 25.
1991. The Order, inter alia, mandates •
reforms in the methods by which
ettomeys for the government conduct
° discovery; seek sanctions, present
witnesses at trial, and attempt to settle
cases. These reforms apply to litigation
begun on or after January 21,1992.
The Order authorizes the Attorney
General to issue guidelines carrying out
the Order's provisions on civil and •
administrative litigation. • > •
. The present Memonndum provides
guidance for applying the Order's •
provisions concerning the conduct of •
civil litigation Involving the United
States Government. • • ••
Pn-fUng Notice of a Complaint
[Section l(a)l : . •
The objective of section 1 (a) of the
Order is to ensure that a reasonable
effort is made to notify prospective
disputants of the government's intent to
' sue, and to provide disputants with an
opportunity to settle the dispute
without litigation. "Disputants" means.
persons from wbom relief is to be
sought in a contemplated civil action.
guidance may be developed in the light
of experience. Comments oa ...
Implementation of the Order continue to
be weicoxuetL • *• *, "•
By virtue of the authority vested In
me by law. Including Executive Order
No. 12778.1 hereby issue the following
Memo
Section l(a) requires either the agency
or litigation counsel to notify each :.. :
disputant of tbt fntiti iiT"*n*'f * • •
contemplated action unless an
exception to the notice requirement (set
forth In section 7(b) o? the Order)
' applies. The notifying person shall offer
to attempt to resolve the dispute .
without litigation. However, it is not
appropriate to compromise litigation by
providing pre-filing notice If the notice
would defeat the purpose of the
!»«> *•-_ * * . -
' juigauon.
".. Under section l(a), a reasonable effort
•to notify disputants and to attempt to
achieve a settlement may be provided '•' •;
either by the referring egency In • " *'
administrative orconqliation processes
or
many debt collection cases end tax cases
are the subject of extensive agency
efforts to notify the debtor and resolve
the dispute priof to litigation. If the.
referring agency has provided notice, ft
should supply the documentation of the
notice to litigation counsel. Such efforts
by the egency may well satisfy the
requirements of section l(a). In those
cases, litigation counsel need not repeat
the notice although litigation counsel
should co'nsI3er whether additional
notice may be productive, for example •
If a substantial period has elapsed since
the prior notice.
, The section requires a •'reasonable*"
effort to provide notification end to
attempt to achieve a settlement Both
the timing and the content of a
reasonable effort depend upon the
particular circumstances. However,
unless an exception set forth in section
7 of the Order (or otherwise provided
for by the Attorney General) is "
applicable, complete failure to make en
effort can not be deemed "reasonable." .
If pre-complaint settlement efforts by
government counsel require information
In the possession of prospective
defendants, litigating counsel or client
egency counsel may request such
Information .from such defendants as a
condition of settlement efforts. If
prospective defendants refuse, or fail, to
provide such information upon-request
within a reasonable time, government
counsel shall have no further obligation .
to attempt to settle the case prior to
filing. '
The Department of Justice retains
authority to approve or disapprove any
settlements proposed by the client
egency or litigation counsel, consistent
with existing law. guidelines, end
delegations. The Order confers no
litigating or settlement authority on
egenq'es beyond any existing authority
under law or explicit agreement with
the Department
Settlement Conferences • • • • • • ...-"
(Sectionl(b)l/':- " *- :; - ' •".
Section l(b) of the Order requires
litigation counsel to evaluate the
possibilities of settlement as soon as .'
adequate information Is available to..'
'permit an accurate evaluation of die
government's litigation position.
Thereafter, litigation counsel has a .
continuous obligation to evaluate
settlement possibilities. Litigation
counsel Is to offer to participate In •
settlement conference or. when It Is
reasonable to do so, move the court far
such a conference.
.Under section Kb), settlement
possibilities shall be evaluated by '
litigation counsel at the outset of the
litigation. Litigation rountfl shell '
thereafter, end throughout the course of
the litigation, use reasonable efforts to
fettle the litigation, Including the use of
settlement conferences by offering or
moving to do so. However ..the most
eppropriate timing of a settlement
conference should be determined by
litigation counsel consistent with the
goal of promoting just and efficient
resolution of civil claims by avoiding
unnecessary delay end cost To that end.
In keeping with section l(g) of the Order
("Improved Use of Litigation
• Resources"), early filing of motions that
potentially will resolve the litigation Is '
encouraged. In those cases, litigation*
counsel should initiate settlement
conference efforts after resolution of
dispositive motions, thereby avoiding
the cost and delay associated with an
unnecessary settlement conference.-'
Prior to any such conference, .
litigation counsel should consult with
the affected agency and with litigation
counsel's supervisor. At the conference,
litigation counsel should clearly state
the terms upon which litigation counsel
is prepared to recommend that the .
government conclude the litigation, but
' should not be expected to obtain
authority to bind! the government finally
at settlement conferences. Final •
settlement authority is the subject of .
. applicable regulations and may be'
exercised only by the officials
designated in those regulations. The
'Order does not change those regulations
The Order does not constrain the
• government's full discretion to
'determine which government counsel '
represents the government et settlement
conferences. Normally, e trial attorney
assigned to the casewill attend on
behalf of the United* States! .
Section l(b) does'not permit
settlement of litigation on terms that are
not in the interest of the government;
while "reasonable efforts" to settle are
-------
Federal Register / VoL 56. No. 14 / Monday. January 25,1993 / Notices
6017
iequind.no unreasonable «nn«^»??n i
offer should be extended. The section
iblished agency procedures for
, velopment of litigation positions.
Alternative Methods of Resolving the
Dispute fa Lftfgntfon. '• ". •'
ISectionlfcM .' -
Section I(c1 of the Order a
lunges '
•prompt and proper settlement of
disputes. The section states: -Whenever
feasible, claims should be resolved
through informal du
negotiations, and settlements nther -
than through utilization of any formal or
structured Alternative Dispute
Resolution (ADR) process or court
proceeding.'" *. ;• '- .' ••' '••••."•'
The Order does not pe'rmit litigation
counsel to agree that ADR will result in
a bindios dflfffpnlnatlon g£ to the
government, without exercise of an
agency's discration.Further. the Order's
authorization of the use of ADR does not
authorize litigation counsel to agree to
resolve a dispute in any manner or on
any terms not in the interest of the •
United States.' . . •
Each agency should seek to use the .
skills of litigation counsel, including
skills gained through training, to bring
about a reasonable resolution of . • •
disputes. Attorneys should bring the
«ame high level of expertise to. ADR -
| "oceedings that they bring to formal
jdicial proceedings. Disputes will be
resolved reasonably if an ADR
technique is used when the technique
holds out a likelihood of success.
Litigation counsel should consult with
the affected agency as to the desirability
of using ADR if resort to ADR offers a
reasonable prospect of success,
When evaluating whether proceeding
with ADR is likely to lead to a prompt.
fair, and efficient resolution of the
action and thus be in the~best interest
of the government, government counsel
should consider the amount and
allocation of the cost of employing ADR.
Normally, the costs associated with
ADR, such as the neutral's fee and
related expenses, will be payable as an
ordinary cost of litigation. Litigation
counsel-can voluntarily agree to share
the payment of ADR costs, even when
the court mandates'ADR. Litigation
counsel should assert sovereign
immunity when costs are involuntarily
imposed on the United States.
Disclosure Of Core Information
[Section .
Section l(d)(l) of the Order require*
litigation counsel, to the extent - •
practicable, to make the offer to •
anticipate at as early stage of the
litigation in a mutual exchange of "con
information*' (as defined in section •• -
l(d)(l) of the Order). Reasonable efforts
shall be made to obtain the agreement
of other parties to such an exchange.
When making the offer, litigation •/
counsel should emphasize that the •,"
government k willing to be bound to
disclose core information as defined in
the section if. and only if. other parties
agree to disclose the same core- '
information and the court adopts die
agreement as a stipulated order.
A mutually agreed-upon exchange of
core information should occur
'reasonably early' in the b'tigation, so as'
to serve the Order's purpose of- - "-:
expediting and streamlining discovery.
•However, when the government is ••„
plaintiff, disclosure of core information
need not be requested prior to receipt of
•opposing parties'answers to the
complaint Litigation counsel should .
not permit the core information •-• •
disclosure oner requirement to delay the
initiation of necessary discovery on
behalf of the government when the
parties to whom the offer 4s directed
have not accepted it within a reasonable.
period of time. .
Offers to exchange core information •
are not-mandated if a dispositive motion
is pending or if the exceptions to the
ADR and core disclosure provisions set
forth in section 7(c) of the Older - ,
(involving asset forfeiture proceedings
and debt collection cases involving less
than $100.000) apply. Nothing in
section l(dKl) requites disclosure of
information that litigation counsel does
not consider reasonably relevant to the
claims for relief set forth in the
complaint. •
In cases involving multiple opposing
parties, the government may agree to -
exchange disclosures of core • ' .
information with one or more opposing
parties. The government need not delay
disclosure pending agreement by ell of
the parties unless individual exchange
of core information would unfairly •
undermine the government's case.
Except when local practice warrants
another means of memorializing the
agreement, an agreement to provide core
information ordinarily should be in the
form of a consent order to ensur* •
enforcement by the court. The consent
order should also provide for use of UM
core information in the same manner as
material discovered pursuant to Rules
26 through 36 of the Federal Rules of
Civil Procedure.
All referrals from agencies requesting
litigation counsel to file suit should
include the core information described
in section l(d)(l) of the Order. The
identification of the location of
documents most relevant to the
should be specific enough to enable
litigation counsel to locate and. if
necessary, retrieve the documents, tad
•should specify the name, business
address, and telephone number of the
custodians of the documents. The
•identification of individuals having
information relevant to the claims and
defenses should include, •where
possible, current or last-known
telephone numbers at which such
persons can be reached. '
In determining the extent to which
compliance with the requirements of .
section l(dHl) of the Order is •
-practicable" in a given ease, litigation
'counsel shall consider. Inter olio, the
.utility of early issue-narrowing motions •
.and devices, and scope and complexity
of the disclosure that wfll be required..
the time available to comply with the
provisions of .the section, the extent to •
which disclosure of core information * •.
.will expedite or limit the scope of
subsequent discovery, and the cost to
the government of compliance. '
In cases where the government takes •
the position that the scope of judicial
review of one or more issues involved
in the litigation is limited to an agency's
administrative record, identifying and
affording access to the administrative '
record shall satisfy the requirements of
section l(d)(l) with respect to such
issues. • '
Litigation counsel is entitled to rely in
good faith on the representations of
agency counsel as to the existence, •'
extent, and location of core information.
Nothing in section l(d)(l) prevents
government counsel from seeking other
discovery pursuant to the Federal Rules
of Civil Procedure simultaneously with
providing, or seeking, disclosure of core
information pursuant to the section. :
Review of Proposed Document Requests
(Section l(d)(2)]
Under section l(d)(2) of the Order,
government counsel shall pursue
document discovery only after
complying with review procedures'
«*»£••«•«• w «r«*W!MW »••••» MBW WCWSirWW
document discovery is reasonable under
the circumstances of the litigation.
When an agency's attorneys act as
litigation counsel, that .agency must .
establish a coordinated procedure, .
including review by a senior lawyer.
before service or filing of any request for
dqcument discovery. The senior lawyer
is to determine whether the proposed
discovery meets the ifubstantive criteria
of section l(d)(2). Senior lawyers must
be designated within' each agency to •
perform this review function. While no
particular title, level, or grade of senior
lawyer is mandated, the persons '•
\.
-------
designated should have substantial
experience 'with regard to document
discovery and should have supervisory
authority. This designation should be -
nude forthwith. If the designated senior
lawyer is personally preparing the
document discovery, further oversight is
Botnecessary. ••• " « -- - - • •
The designated senior lawyer
reviewing document discovery
proposals should determine whether the
requests an cumulative or duplicative.
unreasonable, oppressive, or unduly
burdensome or expensive, end in doing'
so «h»ii consider the requirements of the
litigation, the amount in controversy, •
• the importance of the issues at stake in
the litigation, end whether the .
documents can be obtained in a manner
that is more convenient Jess
burdensome, or less expensive than .
pursuit of the documentary ^discovery as
• — - • -» » i_ •*.
t of whether ~
aents can be obtained in a more
convenient, less burdensome, or less
expensive manner shall include .
consideration of the convenience, ' •
burden, and expense to both the ;.
government and the opposing parties.
In conducting this review of • . •.
document requests, the senior lawyer is
entitled to rely in good faith upon
factual representations of agency
counsel and the trial attorney. The
review system should not be permitted
to deter the pursuit of reasonable
document discovery in accord with the
procedures established in the Order.
Discovery Motions _"•'•"•
ISection l(d){3)J . .' '
Section l(d)(3) of the Order provides
that litigation counsel shall not ask the •
court to resolve a discavery dispute.
including imposition of'sanctions as
well as the underlying discovery
dispute, unless litigation counsel first
attempts to resolve the dispute with •
opposing counsel or pro se parties. If
promotion efforts at resolution are
unsuccessful or impractical, a
'description of those efforts shall be set
forth in the government's motion
papers. . :'• .
Litigation counsel, however, should
not compromise a discovery dispute
.unless the terms of the compromise are
reasonable.
Expert Witnesses • . •'
(Section i(e)l • .
The function of section l(e) of the
Order is to ensure that litigation counsel
proffer only reliable expert testimony in
judicial proceedings. This practice. •
already widely used by the government,
will enhance the credibility of the
government's position-in litigation and
improve the prospects for e reasonable
outcome of disputes warranting .--
utilization of expert witnesses. *
Litigation counsel shall use experts
who have knowledge, background. •
research, or other expertise in the
particular field of the tubjectof their . •
testimony, and who case conclusions on
if., those that are propounded by at.
least a substantial minority of experts' in
the relevant field.
In cases requiring expert testimony on
newly emerging issues, litigation *
counsel shall ensure that the proffered •.
expert and bis or her testimony are . •
reliable end meet the requirements of
Rule 702 of the Federal Rules of . .
Evidence. In evaluating the reliability of
an expert's conclusions in new areas
where there are no established majority
or minority views. U is important for the
trial attorney to keep in mind that.
under section l(e). only the theory, not
the conclusion based on the theory..
need be "widely accepted." Litigation .
counsel mav offer expert testimony that
uses a widely accepted explanatory
theory to support a conclusion in a ' ,
novel area, based oh the qualifications
of the expert to testify on that issue, the
extent ofpeer acceptance or recognition
of the expert's past work in the field. •
particularly of any work that is related
to the issue on which the testimony is
to be offered, and any other available •
indicia of the reliability of the proffered
testimony. However, if an expert is .
unable to support the conclusion with '
any "widely accepted" theories, the
expert's testimony shall not be offered.
Litigation counsel shall offer to
engage in mutual disclosure of expert
witness information pertaining to
experts a party expects to call at-trial.
"Expert witness information" within the
meaning of section l(e) of the Order
should ordinarily include the
information specified in Rule 26(4)(AXO
of the Federal Rules of Gvil Procedure,
the expert's resume or curriculum vitae,
a list of the'expert's relevant • - .
publications, data, test results, or other
information on which the expert is
expected to rely in the case at issue, the
fee arrangements between the party and'
the expert and any written reports or
other materials prepared by the expert
that the party expects to offer into
evidence. ,.-.-.'
An agreement to provide expert.
witness information should be
memorialized in a consent order, except
when local practice warrants another
means of memorializing the agreement.
with the came general provisions .-•
concerning enforceability and use at
trial as are provided in consent orders
for disclosures of core information. The
. requirement to offer mutual disclosure -
of expert witness information can be
satisfied by en agreement to take
depositions of experts that the parties
plan to call to testify.
. Litigation counsel shell not offer to
pay en expert witness based on the-. .-.
success of the litigation. Section l(e)(4).
Similarly, litigation counsel should •'"
ordinarily object to testimony on the -
part of.an expert whose compensation is
linked to a successful outcome in the
litigation end should bring out on cross*.
examination of the expert such •
1 compensation arrangements or •
agreements.
Sanctions Motions.
(Section*i(Q) ' ' ;/ ,
_ Litigation counsel shell take steps to
seek sanctions against opposing counsel
end parties where appropriate, subject •
to the procedures "set forth in section 1(1)
of the Order regarding agency review of
proposed sanction filings. Before filing
• motion for sanctions, litigation
counsel should normally attempt to
' resolve disputes with opposing counsel.
Sanctions motions should not be used
es a vehicle to intimidate or coerce .
government counsel or counsel adverse'
to the government when the dispute can
be resolved on a reasonable basis.
Section 1(0(2) of the Order mandates
that each agency which has attorneys'' .
acting as litigation counsel designate e •
"sanctions officer" to review proposed
sanctions motions and motions for •
sanctions that ere filed against litigation
counsel, the United States, its agencies.
or its officers. The section also requires
that the sanctions officer or designee
"shall be a senior supervising attorney
within the agency, end shaft be licensed
to practice law before a State court.
courts of the District of Columbia, or
courts of any territory or
Commonwealth of the United States."
. The sanctions officer or his or her '
designee should be a senior lawyer with
substantial litigation experience and
supervisory authority. By way of
Illustration, rather than limitation, e
Senior Executive Service level attorney
should meet these criteria.
. The persons acting as sanctions
officers within each agency should be .
designated specifically by title or name
Action shall be taken forthwith to
designate sanctions officers within each
agency. Cabinet or subcabinet officers,
such as Assistant Attorneys General or
Assistant Secretaries, officials of
equivalent rank, and! United States
Attorneys are authorized pursuant to
•this Memorandum to designate
sanctions officers meeting the criteria of •
this Memorandum, »
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Federal RegbterV VpL "88. No. 14 / Monday'. January 25.1993 rNotleet
6019
Japrond Use of Litigation Resources'
iigation UMiiiif*! an to use efficient
A management techniques and make
reasonable efforts to expedite dvll - •.
litigation' as set forth in section i(g) of
the Order. : . ":'•••
Inappropriate cases. litigation
counsel should move Cor summaiy
judgment to resolve litigatloo or naaow
• the issues to be tried. This rule Is not -
uCB S&OUld Ptf
prematurely In a manner which wffl
permit opposing counsel to defeat
summary judgment • . ,' '. .
Litigation counsel should seek to
stipulate to facts that an not IB dispute
end move far early trial dates where
practicable. Referring agendes should
" i ff4* fiqf fa «it«y>t|fa frtA
litigation council of the Jack of dispute
and the basis for concluding that then
is no factual dispute, as soon as it is .
feasible to do so. Litigation counsel
should seek agreement to Jact.'.
stipulations as early as practicable. .
• taking into account the progress of
discovery and after exercising sound
Judgment to determine the most
appropriate and efficient timing for such
stipulations. • . •
At reasonable Intervals, litigation
counsel should review and revise
" •nissions to the court end should
Ise the court and all counsel of any
.rowing of issues, resulting from
discovery or otherwise. • ' '
These requirements are not Intended
'to suggest that litigation counsel should .
concede facts or issues as to which there
is reasonable dispute, uncertainty, or
inability to conooocata. •
Fees And Expenses^ •' ' " .
ISectionl(h)J .
Section 1(b) of the Order provides
that litigation counsel shall offer to
enter into a two-way fee shilling
agreement with opposing parties in
cases-involving disputes over certain
federal contracts or in any civil •
litigation initiated by the United States.
Under such an agreement, tfJH* losing •
party would pay the prevailing party'*
lees and costs, subject to reasonable
terms and conditions. This section is to
be implemented only "tt]o the extent
permissible by law." The section also
requires the Attorney General to review
the legal authority for entering into such
agreements. Because no legislation ',
currently provides specific authority for
it*** agreements, litigation counsel
shall not offer to enter into a two-way'
jge shifting agreement until legislation
•• ~ ?cted or other authority is provided
a Attorney General' • .
Fnnoplet to Frontutc
Administrativi Arfyad/coooiut
(Sections] -.'•..
' Section 3 of the Order encourage*'
agencies to implement the \-'..".-
in. «inifn«fw4n{friny of the Adniuu
Conference of the United State*, entitled
-Case Management es a Tool for •
Improving Agency Adjudicatioo,*! to the
extent it is reasonable and practicable to
do so (and to the extent it coe* not
conflict with say provision of the
Order). The agency proceedings within
-tne ambit of section 3 are adjudications»
before a presiding officer, such as CD
administrative law judge. • :.'. " •. .
The Order does not require the • < '•
application of section 1 to vuich agency
proceedings. However,' it DBS become .
apparent that application of the relevant
provisions of section 1 would have a
salutary effect and would be In concert
with the reforms required by the Order.'
Agendes are therefore encouraged to
extend the application of section 1 to
agency counsel in administrative
adjudications where appropriate, for
example where en evidentiary bearing is
required by law. and where, in agency
counsel',! besfjudgment. such f^^nfifKi
is reasonable and practicable.
Exceptions to the Executive Order- •'•
The Order does not apply to criminal
matters or proceedings in foreign courts,
and shall not he construed to require or
authorize litigation counsel or any
agency to act contrary to applicable law.
Sections 7(aJ and 8. .' .' •
Attorneys for the Federal government •
are obligated to follow the requirements
of the Order unless compliance would
be contrary to. law. In the event of an
overlap between the requirements of the.
Order and any local rules or court '•
orders, attorneys for the Federal •
government are obligated to comply
with both the provisions of the Oroer .
and the provisions of applicable local .
rules or court orders. . .. '
In section 5(a). the Order defines
"agency" to include each establishment
within the definition of "agency" in 28
U.S.C 451; establishments in the • .'
legislative or judicial branches an
excluded. Thus, litigation counsel.
including private attorneys representing .
the government, and the agency an
subject to the provisions of the Order
even where the agency is considered
"independent" for other purposes. The
•President clearly has the authority to
supervise and guide the exercise of con
executive functions sucb_as litigation by '
government agencies. ~ •'••*..'
The Order does not compel or
authorize disclosure of privileged
information or any other information - •
the disclosTire of which is prohibited by7
law. Section St.; : '•".• .. •'..". :'.. .'.:
Dated January IS, 1993. ' ••
WUIUmr.Berr, ., • •• .
Attorney CtamL' .-.. . • ' "'
IPR Doe. 09-1654 FiMl-a-«3;tr(S ami;
DEPARTMENT OF LABOR
Employment and Training
Administration '
Revised Determination on :
Reconsideration: Armor Bevitor Co,
Lout*vine,KY -•" '.--•.••••••
^ :'= ' * •. :'. • •
On December 23. 1992. the'-.
Department issued an Affirmative '• •:•*•••'
for Reconsideration for workers and -• .
former workers of Armor Elevator
Company in Louisville. Kentucky. This
notice was published in the Federal •
Register on December 30, 1092 (57 PR
62388). ' ...- -. " • .: '
Local t369 of the International •' •
Brotherhood of Electrical Worken •'
daimsthM company is importing - '•
elevator cxmtroU and has closed ma .
Louisville plant ' . •' "•• •
Findings on n^>n<*i'^j"nti
the union's allegation of company
imports of elevator controls. New .' -
findings on reconsideration show that ...
on November 15, 1992 the company
received its first shipment of elevator
controls from Finland. Additional '.. ' •••"
.shipments from Finland have also
arrived in the US. ft is the company's :
plan to continue importing elevator .• • - • .
controls from its parent company in .
Finland..- - -.' '• • .-.- -; 1
Other findings on nconsideration
show that all production of elevator •
'controls ceased at the Louisville plant ia
November 1892 when all production
workezs wen laid o£L .- >-. • " •
Conclusion • •.;.-•
After careful review of the additional .
facts obtained on reconsideration. It is
concluded that increased imports of
articles like or directly competitive with '
elevator controls produced at the "..
Louisville. Kentucky plant of Armor
Elevator Company contributed. • * .'!•
importantly to the decline in sales or. .
production and to the4otal or partial.
separation of workerslpt the Armor
Elevator Company. In Accordance with
the provisions of the Trade Act pfl974.
Imade the following revised •
determination: '. " -.
a
All workers of Armor Elevator Company,'
Louisville. Kentuck>- who became totally or
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IV. A. 13
"Parallel Proceedings Policy", June 22, 1994
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
• ' - ' OFFCEOF
ENFORCE»«NT
MEMORANDUM
SUBJECT: Parallel Proceedings Policy
FROM: Steven A. Herman
Assistant Admini
TO: All Assistant Administrators
All Regional Administrators
All Regional.Counsels
General Counsel
This is the Environmental Protection Agency's revised policy
on initiating and maintaining parallel enforcement proceedings.1
Most statutes administered'by EPA include both criminal and
civil enforcement authorities, as well as information gathering
and inspection provisions. The United States has multiple duties
and goals in carrying out the mandates of federal environmental
laws, which often can be achieved most effectively through use of
several investigative and enforcement options. .Thus, it is in
the public interest that EPA retain maximum flexibility in the
use of its options, consistent with all legal requirements.
'The following policies are hereby superseded:
Memo, Revised EPA Guidance for Parallel Proceedings, from
Edward E. Reich, Acting Assistant Administrator, June 21, 1989;
Guidelines on Investigative Procedures for Parallel
Proceedings (attachment to 6/21/89 Memo), prepared by Paul R.
Thomson, Jr., Deputy Assistant Administrator for Criminal
Enforcement; .
Memo, Procedures .for Requesting and Obtaining Approval of
Parallel Proceedings, from Edward E. Reich, Acting Assistant
Administrator for Enforcement, June 15, 1989; and
Memo, Supplement to Parallel Proceedings Guidance and
Procedures for Requesting and Obtaining Approval of Parallel
Proceedings, from James M. Strode, Assistant Administrator for
Enforcement, July 18, 1990. -
This policy applies in conjunction with other Agency
guidances, where applicable, such as those on case screening,
participation in grand jury investigations, and referrals.
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As used in this policy, the tern "proceedings" includes
enforcement actions (both investigation and litigation stages) as
well as use of information gathering and entry authorities.
"Parallel" means simultaneous or successive civil, administrative
and criminal proceedings, against the same or related parties,
dealing with the same or related course of conduct.
—' —Principles _
1. It sometimes is necessary, appropriate, and a reasonable use
of resources to bring a civil (administrative or judicial)
enforcement action at the same time as an existing or potential
criminal investigation or prosecution concerning the same or a
related matter, mien, in the course of considering appropriate
enforcement options, EPA determines that injunctive relief is
necessary to obtain compliance with the law or to impose remedial
measures, the pendency of a criminal proceeding is not
necessarily a sufficient reason to fail to seek appropriate
relief.2 '. . '
2. The government legitimately may seek civil penalties which
are punitive (i^fi^, effect retribution or deterrence). On the
other hand, punitive civil penalties may have implications under
the Double Jeopardy Clause if they are assessed prior, or
subsequent, to a criminal prosecution of the same .person for the
same violations. Although case law has established that civil
penalties which are significant in amount can be assessed without
implicating Double Jeopardy concerns, it is preferable to avoid
the assessment of federal- civil penalties against persons who are
likely to be subject to subsequent federal criminal prosecution
for the same violations. .
3, When an environmental criminal matter is investigated by a ~
grand jury, and EPA personnel obtain access to grand jury
information, EPA personnel must -take care not to violate the
secrecy obligation imposed by law, or to use grand jury
information for improper purposes. Although the issue of grand
jury secrecy can arise in any criminal case, extra care should be
taken in the parallel proceedings context.
*In some cases, it may be appropriate to delay initiation of
a civil enforcement action, and/or to seek a remedial order as a
condition of probation, or as a condition of the plea agreement,
in.the criminal action. These decisions must be made on a case
by case basis, taking into account the complications which
inevitably arise in parallel proceedings (such as defense
attempts to use civil discovery to gain information about a
criminal investigation), as well as other case-specific
considerations (such as the need to prevent persons from learning
that they are targets of criminal investigation) and weighing
them against the need for the civil action. - • '
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4. EPA's regulatory inspections :(administrative searches) must
be objectively reasonable, and properly limited within the scope
of the authorizing 'statute and warrant. As in every situation,
the government has a duty to act in good faith, and must ensure
that its use of administrative entry authorities is properly
within the mandates of the Fourth Amendment.
5. EPA's information-gathering authorities must be used in
accordance with the authorizing statutory provisions. There is
no general legal bar to using administrative mechanisms for
purposes of investigating suspected criminal matters, unless .
otherwise specified in the authorizing statute. However/ .the
government must not intentionally mislead a person as to the
possibility of use in the criminal enforcement context of
information provided in response.to such requests, in such a way
as to violate the Fifth Amendment Due Process Clause or the Self-
Ihcrimination Privilege.
Procedures
1. The Regional Counsel-and the Special Agent in Charge of the
Criminal Investigation Division must concur in the initiation (or
continuance) of a civil enforcement proceeding (administrative or
judicial), when a criminal proceeding is pending or contemplated
as to the same or a related matter.3 During the pendency of any
such civil action, the Regional Counsel and the SAC should
consult on a continuing basis, in order to avoid undue
duplication of effort and interference by one action with the
other.4 As with other aspects of the case screening process,
the regions (and HQ offices, where applicable) have flexibility
in.designing specific procedures to implement these requirements,
and issues may be brought to the attention of the Assistant
Administrator where agreement cannot be reached. v ..
'If the civil enforcement action contemplated is a judicial
(rather than an administrative) one, Agency referral policy
continues to require that the request for referral of a parallel
proceeding to the Department of Justice be routed through EPA-HQ,
for Assistant Administrator approval. In other words, the
"direct referral" policy does not apply to parallel proceedings.
Note also that DOJ policy affects the Agency's ability to pursue
a civil judicial action that is related to a pending criminal
investigation. .
'When an EPA Headquarters office has the lead in an
enforcement matter, both the Enforcement Counsel who has the
civil case, and the Director of the Office of Criminal
Enforcement (or delegate), must concur in the civil action.
These persons should consult on a continuing basis.
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2. When a parallel civil action is brought, a claim for civil
penalties may be filed, as necessary/ to avoid claim-splitting or
statute-of-limitation problems. Normally, however, a civil
penalty claim should be stayed (not assessed or collected) as to
a person who is a target of criminal investigation, until the
criminal proceeding is concluded-as to that person.
3. In the parallel proceedings context, open communication
should-be maintained-between EPA personnel assigned to the civil-.
enforcement or information-gathering matter and those assigned to
the criminal case, in a manner consistent with the legitimate
confidentiality and grand jury secrecy needs of the criminal
enforcement program.9 However, information relating to matters
occurring before a grand jury should not be revealed without
prior consultation with the attorney for the government (usually
a Department of Justice attorney). .•
f . '
4. Prior to any use of EPA's statutory information-gathering or
entry authorities to gather evidence of suspected criminal
activity, the Regional Counsel (or the OCE Assistant Director for
Legal Affairs, for HQ cases) should be consulted, to ensure that
constitutional requirements are-met.
i
Reservation of Rights .
This policy provides internal Environmental Protection
Agency guidance, it is not intended to, and does not, create any
rights or privileges, substantive or procedural, which are
enforceable by any party. No limitations are hereby placed on
otherwise lawful prerogatives of the Environmental Protection
Agency. .
cc: All Office of Enforcement and Compliance Assurance Personnel
"Note that it is good professional practice for enforcement
personnel to carefully document the sources of information
received and the persons with whom information is shared, whether
there is a parallel proceeding of not.
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IV. A. 14
"Guidance on Use of Section 504, The Emergency Powers Provision
of the Clean Water Act", July 30, 1993.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
JUL 3 C 1993
MEMORANDUM
SUBJECT: Guidance on Use of Section 504, the Emergency
Powers Provision of the Clean Water Act
FROM: Frederick F. Stiehl
Enforcement Counsel f
Richard G. Kpzlowski
Director, Enforcement Division
OWEC
TO: Regional Counsels
Regions I-X
Water Division Directors
Regions I-X .
Attached1to this memorandum is the Agency's final
guidance on use of Section 504 of the clean Water Act. This
emergency provision provides an important supplementary legal
tool for addressing public health and welfare threats involving
waters of the United States. This guidance should promote
greater use of Section 504 by providing detailed information on
criteria for emergency use of the section. While we encourage
appropriate use of Section 504', we urge the Regions to review
this memorandum carefully because the case law and legislative
history for the section is limited.
Section 504 clearly authorizes EPA to bring suit to
take necessary action "[nj.otwithstanding any other provision of
the Clean Water Act." As such, it plainly authorizes abatement
action against both permitted and non-permitted discharges.
These could include Section 504 actions to require clean-up where
exceedance of water quality standards results in beach closings.
We would expect, however, that dischargers may raise Section
402(k) permit-as-a-shield defenses in certain Section 504
actions. This underscores the necessity'of. selecting cases with
the strongest fact patterns when the Agency is seeking to use
this emergency authority against those in compliance with their .
permit terms. •
A draft of this guidance was sent to the Regions for
comment on August 11, 1992. W_e received comments from a number
of Regions, as well as from the Office of General Counsel and the
Printed on Recycled Papa
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Department of Justice. Every effort has been made to include the
comments received whenever possible.
This guidance has been prepared by Maria Brin, Avi
Garbow (both of the Office of Enforcement), and Ann Prezyna (of
the Office of Regional Counsel in Region X>. Questions
concerning the guidance may be directed to them at the telephone
numbers'listed on the last page of the guidance document.
Attachment . . •
cc: Scott Fulton John Cruden.
Robert Van Heuvelen Joel Gross
Michael Cook ORC Water Branch Chiefs (I-X)
Susan Lepow Regional Water Branch Chiefs (I-X)
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\
u
Q
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF ENFORCEMENT
GUIDANCE ON THE USE OF SECTION 504 OF THE CLEAN WATER ACT
TABLE OF CONTENTS
SUMMARY 1
I. STATUTORY BACKGROUND ....... 2
II. CRITERIA FOR USE OF SECTION 504 ...'... . 5
A. Evidence 5
1. Types of Evidence 5
2. Section 504 v. Section 309 . . 5
3. Proof With Certainty Not Required ........ 6
B. Elements of A Prima Facie Case 7
1. A Pollution Source or Combination of Sources . . 7
a. Definition of Pollution Source .....:. 7
b. Actual Discharge Not Required . 9
2. Causing or Contributing to the Discharge of
Pollutants. 9
3. Is Presenting an Imminent and Substantial
Endangerment . . 10
a. Continuous Discharge Not Required. . . . . 10
b. Actual Harm or Immediate Endangerment Not
- Required ... • • . • • • . 11
c. .Quantifiable Endangerment Not Required . . 12
d. Evidence Must Support Current Threat . . .13
4. Health or .Welfare of Persons . .14
5. Permit as a Shield 15
III. RELIEF AVAILABLE UNDER SECTION 504 . .......... 16
IV. CIRCUMSTANCES APPROPRIATE FOR THE USE OF SECTION 504 . . 18
A. Contaminated Sediments .............. 18
B. Narrative Water Quality Standards ... . . . . . . 20
C. Pretreatment . . . . . . .21
D. Oil and Hazardous Substance Spills 22
E. Stormwater Discharges by Municipalities Under 100,000.
Population / 22
F. Nonpoint Source Pollution 23
G. Toxics 26
H. CSps .27
CONCLUSION ..... . .28
Printed on Recycled Paper
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1 • •
SUMMARY
./
Section 504 is the Emergency Powers provision of the Clean
Water Act ("CWA" or "Act"). This provision provides the
Environmental Protection Agency ("EPA" or •?Agency") with an
important supplementary tool for addressing public health and
welfare threats involving waters of the United States. This
guidance is intended to encourage more widespread use of EPA's
Section 504 authority, where appropriate, by describing
• i . .
situations where this authority may appropriately be applied and
by providing information on how to request issuance of an
emergency order. The Agency may use Section 504 to address a
number of important enforcement issues/ including problems
presented by beach closings, fish kills, contaminated sediments
and nonpoint sources. Section 504 may be used as a backup in the
implementation of state narrative water quality criteria, and as
a means to counter the permit-as-a-shield defense. .
This guidance includes sections discussing (1) the statutory
background of Section 504, (2) criteria for use of Section 504,
(3) relief available under Section 504, and (4) circumstances
appropriate for use of Section 504. There are many potential
environmental benefits from increased use of Section'504, and
this guidance is intended to facilitate its use in appropriate
circumstances.
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I. STATUTORY BACKGROUND
Codified at 33 U.S.C. § 1364, Section 504 provides:
Notwithstanding any other provisions of. this chapter,
the Administrator upon receipt of evidence that a
pollution source or combination of sources is
presenting ah imminent and substantial endangerment to
the health of persons or to the welfare of persons
where such endangerment is to the livelihood of such
persons, such as inability to market shellfish, may
bring suit on behalf of the United States in the
appropriate district court to immediately restrain any
person causing or contributing to the alleged pollution
to stop the discharge of pollutants causing or
contributing to such pollution or to take such other
action as may be necessary.
Section 504 .was added to the Federal Water Pollution Control
Act by the 1972 amendments to that Act, known as the Clean Water
Act. Pub. L. No. 92-500, § 2, 86 Stat. 888 (effective, 10/18/72) .
There is very little legislative history or case law on Section .
504, which was patterned after Section 303 of the Clean Air Act
("CAA"), 42 U.S.C.,§ 7603.1
1.The Conference Report states: .
Section 504 authorizes the Administrator to bring suit
on behalf of the United States if he determines that a
pollution source presents an imminent and substantial
danger to health. The section is similar to section
303 of the Clean Air Act.
Senate Comm. on Public Works, 93d Cong., 1st Sess., A Legislative
History of the Water Pollution Control Act Amendments of 1972, at
328 (Comm. Print 1973).
In addition to Section 303 of the CAA, the emergency powers
provisions of other environmental statutes include Section 106(a)
of the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA"), 42 U.S.C. § 9606(a); Section 7003 of
the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C.
§ 6973;' and Section 1431 of the Safe Drinking Water Act ("SDWA") ,
42 U.S.C. § 300i.
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• ' • ' 3- • " • ' •
Since its enactment, only 15 actions have been brought
citing Section 504 as grounds -for relief.2 In each case, Section
504 merely was appended to complaints, using provisions of other
environmental statutes as the primary enforcement authority.
Given the absence of direct legislative or 'judicial guidance on*
Section 504 itself, and the presence of substantial guidance and
case law on the comparable emergency powers provisions of other
environmental statutes, these other provisions may be useful in
determining when and how to apply Section 504. However, as
discussed below, see e.g.. pp. 14-15, there are differences
between the language of Section 504 and the emergency powers
provisions of the other statutes that should be noted;
The legislative history of Section 7003 of RCRA discusses
the history of the several environmental endangerment provisions.
•s
This discussion is the most useful of all the above-mentioned
guidances in interpreting the applicability of Section 504.3
Like other imminent and substantial endangerment
2In June, 1993, Region IV filed a Clean Water Act Section
504 action against Metro-Dade's (FL) Water and Sewer Authority
alleging that the threat of failre of its corroding and
antiquated pipeline carrying 150 million gallons of raw sewage
across Biscayne Bay constituted an imminent and substantial
endangerment to the health and welfare of local residents. The
complaint also alleged that the numerous spills from other parts
of the system pose an imminent and substantial endangerment, as
well as constituting Section 309 violations.
3 Where comparable or identical terms are used in two
different statutes, it is appropriate to give them the same
interpretation. See note 14, below.
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provisions in environmental statutes (e.g. section 504
of the Clean Water Act, section 303 of the Clean Air
Act, and section 1431 of the Safe Drinking Water Act),
section 71003 is essentially a codification of common
law public nuisance remedies. The Congress made this
intent clear as early as 1948 when, in section 2(d) of
the Water Pollution Control Act (the forerunner of
present-day imminent hazard provisions), it expressly
declared that.'the pollution .of interstate
waters...which endangers the health or welfare of*
persons...is hereby declared to be a public nuisance
and subject to abatement as herein provided1 and
authorized the appropriate Federal official to request
the Attorney General to bring suit on behalf of the -
United States 'to secure abatement of the pollution.1.
. . Section 7003, therefore, incorporates the legal
theories used for centuries to assess liability for
creating a public nuisance (including intentional-tort,
negligence, and strict liability) and to determine
appropriate remedies in common law history attached to
terms such as 'imminent' and 'substantial1, as well as
more.recent legislative history.4
Section 504 emergency powers complement the civil and
administrative enforcement mechanisms found .in Sections 309, 311,
and in other provisions of the Clean Water Act. The authority to
issue compliance orders and assess penalties administratively is
explicitly provided for elsewhere in the CWA, but not in Section
504. The aforementioned emergency powers provisions in other
environmental statutes, conversely, explicitly contain authority
to issue administrative orders, and may be distinguished on that
basis.5
4 Senate Comm. on Environment and Public Works, 102d Cong.,
1st Sess., A Legislative History of the Solid Waste Disposal Act,
as Amended, at 939 (Comm. Print 1991). .
5See e.g. §106(a), -CERCLA, in which the President may
require the Attorney General to seek such relief as may be
necessary, or he may "take other action under this section
including, but not limited to, issuing such orders as may be
necessary to protect public health and welfare and the
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5 .
N • .
II. CRITERIA FOR USE OF SECTION 504
A. Evidence
1. Types of Evidence
All emergency powers provisions are triggered by receipt of
information (in the case of the SDWA) or evidence (all other
statutes) of an "imminent and substantial endangerment." For EPA
to exercise the enforcement authority granted in Section 504,
there must be evidence that a pollution source or sources is
presenting an imminent and substantial endangerment to the health
or welfare of persons. The evidence may be documentary,
testimonial, or physical. A Clean Water Act Section 308
information request may be used to gather information not readily
available through other means. See 33 U.S.C. § 1318(a)(4).
Discharge monitoring reports and monthly operations reports may
be used as evidence. Nonpoint source management plans, as well
as. nonpbint source assessment reports and Section 305(b) reports .
may also be used to identify sources of pollution.
2. Section 504 v. Section 309
The enforcement authority under Section 504 is meant to
supplement enforcement powers granted under Section 309. Section
309 of the CWA authorizes a civil action for penalties and
injunctive relief upon a finding that a permit limit, categorical
standard, regulation, or other statutory provision has been
violated. Without proof of a violation of a statutory provision
or other noncompliance, liability will not be found under Section
environment." 42 U.S.C. §9606(a) (emphasis added)
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6
309.
In contrast to Section 309, a Section 504 action is
appropriate if EPA receives evidence showing an imminent and
substantial endangerment to a person's health or welfare
regardless of compliance with a permit or regulation promulgated
under the Act. Both permitted and unpermitted dischargers fall
/
within the scope of Section 504. .A Section 504 action may also
be used in conjunction with a Section 309 enforcement action if
an imminent endangerment exists while a Section 309 action is
pending. .
3. Proof With Certainty Not Required
Proof with certainty is not required before taking action
under Section 504.6 Rather, finding an endangerment involves an
assessment of the risk of harm that may be based on medical and
scientific conclusions lying on "the frontiers of scientific
knowledge."7 -
[A risk may be assessed] from suspected,.but not
completely substantiated, relationships between facts,
from trends among facts,, from theoretical projections,
from imperfect data, or from probative preliminary data
not yet certifiable as 'fact.'8
6 United States v. Vertac Chemical Corporation. 489 F.
Supp. 870, 885 (E.D.Ark. 1980) (citing Reserve Mining Co. v. EPA.
514 F.2d 492, 529 (8th Cir. 1975)).
7 'Id., at 875; (citing Industrial Union Department. AFL-CIO
v. Hodgson. 162 U.S.App.D.C. 331, 499 F.2d 467, 474 (1974)).
8 Id. at 885 (citing Ethyl Corporation v. EPA. 541 F.2d 1,
11 (D.C» Cir. 1976)). In so finding, the court extended the
reasoning of the Reserve Mining case, which dealt with the lesser
risk of harm encompassed by the endangerment standard of the pre-
1972 Federal Water Pollution Control Act, to the more stringent
"imminent and substantial11 endangerment standard required by the
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7 . ' '
Where proof of actual harm with certainty is impossible, a low
probability of-harm from exposure to a pollutant may justify
•relief under Section 504 so long as the harm itself would be
serious.9 Moreover, the evidence does not necessarily have to
prove causation of the pollution, but a standard of contribution
is sufficient to support the use of a Section 504 action.
B. Elements of A Prima Facie Case
Broken down into its critical elements, the evidence must
show that:
(a) a pollution source or combination of sources
(b) causing or contributing to the discharge of pollutants
(c)-is presenting an imminent and substantial endangerment
(d) to the health or welfare of persons.10
Each of these elements is examined below.
1. A Pollution Source or Combination of Sources
a. Definition of Pollution Source
The statutory predicate to action under Section 504 is the
receipt of evidence that a "pollution source or combination of
sources" is presenting an imminent and substantial endangerment
to the health or welfare of persons. "Pollution" is defined
broadly under. Section 502(19) of the Act as "man-made or man-
induced alteration of the chemical, physical, biological, and
radiological integrity of water." 33 U.S.C; § 1362(19). While
1972 Amendments. . ,
9 Id.
10 See United States v. Conservation Chemical Company. 523
F,Supp.'125, 126 (W.D.Mo. 1981).
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8
"pollution source" is not defined in the statute, it seems
reasonable to read* this term as synonymous with point and
nonpoint sources of pollution."
Section 504 authorizes a district court to
restrain any person causing or contributing to the alleged
pollution to stop the discharge of pollutants causing or
contributing to such pollution, or to take such other action
as may be necessary.
Taken in conjunction with the broad reach of "a pollution source
or combination of sources," this mandate suggests that Section
504 may be used to address pollution from nonpoint sources as
well as from point sources.12 Nonpoint source management
programs submitted under Section 319 of the Clean Water Act, as
well as NPDES permits, and monitoring and reporting information,
may be used to identify categories, subcategories, or particular
point or nonpoint sources or combinations of sources causing or
contributing to the alleged pollution. The self-monitoring and
3
reporting requirements in Section 308 of the CWA provide an
11 Section 201(c), the only other provision of the CWA using
the term "pollution source," clearly refers to point and non-
point sources:
To the extent practicable, waste treatment management shall
be on an areawide basis and provide control or treatment of
all point and non-point sources of pollution, including in
place or accumulated pollution sources.
12 Unfortunately, there is no case law or legislative history
on the meaning.of "pollution source." Note that Section 504
authorizes suit "to stop the discharge of pollutants." Section
502 defines the term "discharge of a pollutant" to include only
point source discharges. See Part II B(l)(b). Therefore, a
Section 504 action against a non-point source should rely upon
the authorization to "take such other action as may be
necessary."
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•• • -9.
«
evidentiary basis for determining what pollution sources these
may be.u
/
b. Actual Discharge Not Required
"Discharge of a pollutant," is defined in Section 502(12) of
the Act as the addition of a pollutant to navigable waters from
any point source. 33 U.S.C. § 1362(12). Section 504 authorizes
' f
restraining point source dischargers, as well as nonpoint
sources, causing or contributing to the pollution. See
definition of "pollution source" at Part II B(l)(a). Section
504 is triggered when the Administrator receives evidence that a
pollution source or combination of sources is presenting an
imminent and substantial endangerment to the health or welfare of
persons. Action under Section 504 should be taken when a source
-of a pollutant is presenting a threat to the health or welfare of
persons, whether or not the pollutant has actually been
discharged or released. See definition of "imminent" at Part II
B(3) (b) below. ' - '..'.•'.
2. Causing or Contributing to the Discharge of
Pollutants
The statutory language makes plain that evidence that a
pollution source is causing or merely "contributing" to the
pollution is sufficient to support the use of a Section 504
•/
action. The legislative history of RCRA Section 7003 emphasizes
13 Section 308 applies "[w]henever required to carry out the
objective of this chapter, including but not limited to. . .(4)
carrying out,[section]. . .'.[504 of this Act]." .
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10
the broad reach of this term:14
Moreover, because Section 7003 focuses on the abatement
of conditions threatening health and the environment
and not a particular human activity, it has always
reached those persons who have contributed in the past
or are presently contributing to the endangerment,
including, but not limited to generators, regardless of -
fault or negligence.15
•i • ' • •'.-''..
3. Is Presenting an Imminent and Substantial
- Endancrennent
a. Continuous Discharge Not Required
Section 504 applies to all releases or potential releases of
pollutants. The statutory language expressly states that the
Agency may take action when EPA receives evidence that a
pollution source or sources "is presenting an Imminent and
substantial endangerment." When faced with language nearly
identical to this in Section 7003 of RCRA before its amendment in
1984, a district court held that no "continuing acts" limitation
should be read into that remedial legislation.16 The court
reasoned that the statute on its face does not discriminate
between cases of a present harm caused by past disposal practices
14 Interpretations of language in the emergency power
provision of one environmental statute may be used to interpret
comparable language in another environmental statute. See, for
example. United States v. Reillv Tar & Chemical Corp.. 546
F.Supp. 1100, 1109-1110 (D. Minn. 1982); Ethvl Corp v. EPA. 541
F.2d 1, 17 (D.C. Cir. 1976) fen bane). cert, denied. 426 U.S. 941
(1976)
13 H. Rep. No. 1133, 98th Cohg.v, 2d Sess. 119 (1984). See
also, United States v. Northeastern Pharmaceutical & Chemical
Co.. Inc.. 810 F.2d 727, 740 (1986).
16 United States v. Solvents Recovery Services. 496 F.Supp.
1127, U39-1141 (D.Conn. 1980).
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and cases of a present harm caused by ongoing disposal
practices.17 The same reasoning and conclusion would hold true
for Section 504. Thus, Section 504 would apply to inactive
facilities if a continuing hazard exists.
Required
Evidence supporting the use of Section 504 must show a
pollution source or sources is presenting an "imminent and
substantial endangerment" to the health or welfare of persons.
The legislative history of this language indicates the Agency may
take preVentative action: ,
The bill would grant new authority to the Administrator to
take remedial action in case of a water pollution episode.
. . . .When the prediction can reasonably be made that such
elevated levels [of pollution] could be reached even for a
short period of time—that is that they are imminent— an
emergency plan should be implemented to reduce or terminate
the discharge of pollutants and prevent the occurrence of
17 Id. This conclusion is confirmed by the legislative
history of the 1984 RCRA amendments. In amending the language of
Section 7003, Congress indicated that:
the section was intended and is intended to abate
conditions resulting from past activities. Hence, the
lower court decisions in United States v. Wade. 546
F.Supp. 785 (E.D. Pa. 1982) and United States v. Waste
Industries. No. 80-4-Civ-7 (E.D. N.C. Jan 3., 1983),
.which restricted the application of Section 7003 [to ^
ongoing activities], are inconsistent with the
authority of the section as initially enacted and with
these clarifying amendments.
(Emphasis supplied.) Senate Comm. on Environment and Public
Works, 102d Cong., 1st Sess., A Legislative History of the Waste
Disposal Act, As Amended, at 1524-1525 (Comm. Print. 1991).
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.' . 12 ; •
v • substantial endangerment.u
An endangerment under Section 504 may be an immediate or a
long-term problem. An endangerment is "imminent" and actionable
when it is shown that it presents a threat to human health or
welfare/ even if it may not be fully manifest for many years—as
may be the case with cancer and other effects.19 The Court in
Reilly Tar clearly rejected the contention that the analogous
RCRA Section 7003 was limited to an immediate emergency. The
phrase "imminent and substantial endangerment" underscores the
preventive nature of the provision. Evidence of actual harm is
not required. Thus, Section 504 may be used to address a
threatened harm before actual harm is evident.
c. Quantifiable Endanqennent Not Required
An imminent harm or endangerment must only pose a reasonable
cause for concern for the public health or welfare in order to
constitute an "imminent and substantial endangerment" and warrant
the invocation of Section 504 authority.20 Discussing the
i . '
meaning of the word "substantial" as found in the "imminent and
substantial endangerment" phrase in Section 106 of CERCLA, the
18 Senate Comm. on Public Works, 93d Cong., 1st Sess., A
Legislative History of the Water Pollution Control Act Amendments
of 1972, at 1496-1497 (Comm. Print 1973).
19 See United States v. Reillv Tar S Chemical Corp.. 546
F.Supp 1100, 1110 (D.Minn. 1982) .
U.S. v, Vertac Chemical Corp.. 489 F. Supp. at 885
(Court held that if EPA could show that the release of dioxin by
the defendant presented a "reasonable medical concern over public
health," then an imminent and substantial endangerment to health
would exist under §504 of the Clean Water Act and §7003 of RCRA)
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13
court in U.S. v. Conservation Chemical Co.. 619 F.Supp. 162, 194
(D.C. Mo. ,1985) illustrates the appropriate determinative factors
to be accorded that term: .
[T]he word "substantial" does not require quantification of
the endangerment (e.g., proof that a certain number of '
persons will be exposed, that "excess deaths0 will occur, or
that a water supply will, be contaminated to a specific
degree). Instead, the decisional precedent demonstrates
that an endangerment is substantial if there is reasonable
cause for concern that someone or something may be exposed
to a risk of harm by a release or a threatened release of a
hazardous substance if remedial action is not taken, keeping
in mind that protection of the public health, welfare and
the environment is of primary importance. A number of
factors (e.g., the quantities of hazardous substances
involved, the nature and degree of their hazards, or.the
potential for human or environmental exposure) may be
considered in determining whether there is reasonable cause
for concern, but in any given case, one or two factors may
be so predominant as to be determinative of the issue.
The substantiality requirement does not limit the Agency's
authority to invoke Section 504 to extreme and extraordinary
pollution episodes. While purely speculative, or scientifically .
and medically insignificant, harms should not be addressed
through this emergency authority, Section 504 may be used to
correct concentration levels of pollutants in water or sediments
which represent a reasonable cause for concern for the health or
welfare of those exposed. •
d. Evidence Must Support Current Threat
The evidence must support a contemporaneous cause for
concern for the health and. welfare of persons, or a current
threat to health or welfare. Section 504 authorizes action when
there is evidence chat a pollution source or combination of
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14
sources is. present:ing an imminent and substantial endangerment.21
Taken in. conjunction with the preventative and prospective
i , '
meaning of "imminent and substantial," the evidence must show
i . , . i • - •. •
that there currently exists a reasonable cause for concern for
the health or welfare of persons. While the actual harm may not
have occurred yet, the present threat of such harm must be
substantiated by the evidence.
4. Health or Welfare of Persons
The emergency provision of each environmental statute varies
as to what interests are protected. The CWA protects the public
health and welfare. The CAA and CERCLA permit action when the
endangerment is to the public health, welfare or to the
environment. RCRA requires a determination, that the endangerment
is to the health of persons or the environment. Use of the
emergency powers of the SDWA may occur when the health of persons
may be endangered or when necessary to protect an underground
source of drinking water.
Section 504 requires evidence of an endangerment:
to the health of persons or to the welfare of persons
where such endangerment is to the livelihood of such •
persons, such as inability to market shellfish.
At the very least, Section 504 may be used to address long
"Both Section 504 and Section 303 of the Clean Air Act are
based upon evidence that a pollution source or combination of
sources is presenting an imminent and substantial endangerment.
This should be distinguished from the thresholds found in Section
106(a) of CERCLA, Section 7003 of RCRA, and Section,1431 of SDWA,
which are based upon a showing of evidence or information that
the pollution sources may present an imminent and substantial
endangerment. (Emphasis added). .
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15
term threats to health. The discharge of a pollutant constitutes
an imminent and substantial endangerment to the health of persons
when there is a reasonable medical concern over the public health
based on an acceptable, albeit yet unproven, theory that the
* ' ' •
pollutant may be, for example, teratogenic, mutagehic, fetotoxic,
or carcinogenic.22
.The statutory language permitting Agency action when an
endangerment is presented to the "welfare" of persons allows the
Agency to address a wide variety of situations.affecting a
person's livelihood. Under CERCLA, "public welfare" may
encompass "health and safety, recreational, aesthetic,
environmental and economic interests.n23 Depending on the
contaminated water body, these same interests may impact a
/ •
person's livelihood and fall under the umbrella of Section 504 as
well. For example, harm to the tourist industry or sport
fishermen caused by polluted waters or sediments may impact
people's livelihoods and therefore be subject to action under
Section 504. See Part IV below. ,'
5. Permit as a Shield
For purposes of enforcement actions under Sections 309 and
505 of the CWA, Section 402(k) provides a limited defense to
alleged violations of Sections 301, 302, 307 and 403 of the Act. *
Dischargers of pollutants from point sources that are in
22 Vertac Chemical Corp'. 489 F.Supp. at 884-886.
23 U.S. v. Conservation Chemical Co.. 619 F.Supp. 162, 192
(D.C. Mo. 1985).
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16
compliance with an NPDES permit may attempt to argue that Section
402(k) of the Act shields them from liability under Section 504
as well.
On'its face, however, Section 402(k) does not foreclose suit
for injunctive relief under Section 504. Moreover, the clear
statutory language of. Section 504 states that Section 504 applies
"notwithstanding any other provisions of [the CWA].11 .Thus, a
Section 504 action may be used to defeat the permit as a shield
defense.
III. RELIEF AVAILABLE UNDER SECTION 504 . .
Section 504 is the only "imminent hazard" authority which
requires pre-response judicial proceedings. As relief may only
be provided by a district court, a judicial referral is required
to initiate a Section 504 action. Although the litigation
process may delay emergency action, the tool is nevertheless
quite powerful to address hazards that cannot otherwise be
addressed. A Temporary Restraining Order or Preliminary
Injunction may be appropriate depending upon the nature and
- ,fc- . .
extent of the pollution emergency.
Upon receipt of evidence of an imminent and substantial
endangerment, the Agency may bring suit to restrain "anv person"
causing or contributing to the pollution to stop the discharge of.
pollutants. Thus, Section 504 Authorizes a court .to enjoin a
large universe of potential defendants, not just an NPDES permit
holder, owner or operator of a pollution source.
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17
• ...
Section 504 also authorizes such "other action as may be
necessary." Other action may include, but is not limited to,
requiring affirmative treatment or controls to be implemented to
mitigate the effects of the pollution, or to prevent -the onset of
the hazard. The relief sought should effectively abate or
mitigate a pollution endangerment that has already occurred, or
that is continuing to occur, or prevent an endangerment that has
not yet materialized.*
Section 504 provides a greater variety of remedies than is
generally available under other enforcement provisions of the
CWA. The relief available under Section 504 is limited only by
the creativity of a federal district court exercising its general
equitable powers.
Faced with a threat to surface-water used for drinking.
i
purposes, for example, a district court acting under Section 504
might order the polluter to notify the service area for the
public water supply that a threat to health existed from
continued reliance on the contaminated surface water, or require
i
s
the polluter to provide an alternative drinking water supply,
such as bottled water. This relief could be sought in concert
24 Factors considered by one court in devising.appropriate
relief include:
1. The nature of the anticipated harm.
2. The burden of an injunction on the company and its
employees. •
3. The financial ability of the defendant to use other
means to dispose of the pollutant.
4. A margin of safety for the public.
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18
with relief under Section 1431 of the Safe Drinking Water Act.
Additionally, the court could order the polluter to pay for a
doctor's examination of affected persons to determine the extent
of the threat to public health. Provision of educational
programs which reduce the threat is another option. A court
might require similar actions by a polluter contaminating surface
water where recreational contact poses a threat to health, as by
ordering the polluter to post warning signs in the area
surrounding the contaminated water body. Because of the broad
range of potential relief available, Section 504 also would be
particularly useful to handle contaminated shellfish problems or
situations of harm to the tourist industry and fishermen caused
by pollution of surface waters or sediments.
IV. CIRCUMSTANCES APPROPRIATE FOR THE USE OF SECTION 504
The following are circumstances where EPA may use Section
504. This list is hot inclusive. The Agency may use Section 504
in other situations so long as the general guidelines set forth
1 . ' .1 •
in Part A above are followed.
A. Contaminated Sediments
Contaminated sediments can pose a threat to the public
health and welfare by contaminating human food sources and by
contributing to the decline of commercially harvested species,
such as shellfish. Because the contamination may result from
discharges in compliance with a National Pollutant Discharge
Elimination System ("NPDES") permit, the contamination may evade
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19
regulation under either Section 309 of the CWA of CERCLA, which
otherwise are commonly used mechanisms for addressing such
situations. Section 309 may be unavailable because Section .
402(k) of the CWA provides a limited defense to violations of
sections 301 of the Act for sources of pollution in compliance
with an NPDES permit (this is the so-called "permit as a shield"
defense, see Part.II.B.5 above). CERCLA is unavailable because
of the federally permitted release exception in Section 107(j) of
CERCLA, 42 U.S.C. § 9607(j). Section 9601(10) of CERCLA, 42
U.S.C. § 9601(10), defines the term "federally permitted release"
to include "discharges in compliance with a permit under section
*i
1342 of Title 33."
Contaminated sediments constitute a pollution source within
the meaning of Section 504. Section 504 authority, as we have
seen, is not limited to discharges, either past or present, but
covers any sources of pollution that are presenting an .
endangerment to the health or welfare of persons. Additionally,
suit can be brought against any person- causing or contributing to
the pollution.
At least two forms of injunctive relief are available under
Section 504 in contaminated sediment situations. The Act
provides for district court action to."restrain any person
causing or contributing to the alleged pollution to stop the
discharge of .pollutants causing or contributing to such
pollution." This language authorizes an injunction-to restrain
point.scurca dischargers causing or contributing to contaminated
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20
sediments that present an imminent and substantial endangerment.
In addition, Section 504 authorizes EPA to bring suit to
compel any person causing or contributing to the alleged
pollution to "take such other action as may be necessary." This
language may authorize a district court to require a discharger
or nonpoint. source of pollutants to remove or clean up
contaminated sediments. However, use of Section 504 authority to
require clean-up of contaminated sediments or to obtain recovery
of clean-up costs is untested. Point source dischargers in
compliance with an NPDES permit might attempt to argue that
Section 402(k) of the CWA shields them from liability. This so-
called "permit as a shield" defense is discussed in Part II.B.5
above.
The Assessment and Remediation of Contaminated Sediments
Program is conducting sediment surveys of the Great Lakes. Other
sediment studies, such as the nationwide U.S. Geological Survey, .
have been or are being done in other areas of the country.
' . ' ^
Results of these studies may be used to target sites posing
dangers that would be appropriate for action under Section 504.
B. Narrative Water Quality Standards
Section 504 may be used to back-up the use of non-numeric
water quality standards. These so-called "narrative" standards
may be difficult to enforce .under other provisions of the Clean
Water Act. Narrative standards, such as the proscription against
the discharge of toxic pollutants in toxic amounts, and the
requirement to refrain from exceeding water quality criteria, can
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21
be implemented using Section 504 in certain circumstances. Where
a discharger is in compliance with its permit, yet water quality
criteria are not being met, Section 504 may be a useful
supplemental tool to abate those discharges.
« • - o
When a water quality standard is being exceeded, and the
exceedance results in beach closings, contaminated shellfish
beds, or otherwise endangers the public health or welfare,
Section 504 can be used as an enforcement tool. If a court
refuses to enforce the narrative effluent limit under Section 309
of the CWA, Section 504 provides the court with sufficient
authority to require beach cleanup, cessation of the discharge,
or other appropriate relief. .
C. Pretreatroent
In-certain circumstances, Section 504 may be of benefit in
enforcement actions against Industrial Users of POTWs. If
Industrial Users are not covered by categorical limits, for
example, use of Section 504 might be beneficial when the
pollution created by the IU is creating an imminent and
substantial endangerment to the public health or welfare.
Additionally, in situations in which the Industrial User is
creating such an endangerment to the public health or welfare,
/
but is not causing "pass through," because the POTW does not have
limits for the pollutants the IU is contributing to its effluent,
use of Section 504 may be a. helpful enforcement tool. Section
504 may also be used in conjunction with a Section 309 penalty
action 'in situations when the IU is covered by, yet in violation
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22
of, a categorical pretreatment standard or the general
prohibition against discharges that cause pass through, and there
exists an .imminent and substantial endangerment to the health or
welfare of persons.
D. Oil and Hazardous Substance Spills .
Section 504 offers some advantages over other enforcement
mechanisms when dealing with spills of oil or hazardous
substances. Oil and hazardous substance spills.are addressed
under Section 311 of the Clean Water Act, as amended by the Oil
Pollution Act of 1990; Unlike Section 311, however, action under
Section 504 is not based upon reportable quantities. See Section
3ll(b)(4). An action brought under Section 504 may be
supplemental to a Section 311(c) or (e) order given to abate the
endangerment arising from an oil or hazardous substance spill.
Similarly, hazardous substance spills are also addressed under
Section 106 of CERCLA. Unlike CERCLA, however, Section 504 has
no requirements for listing as a hazardous substance. .
• ' • • 11 . . •.
Furthermore, Section 106 administrative actions carry with them
the possibility of claims against the Agency by defendants for
refunds of monies spent to clean up sites in certain
circumstances. There is no such threat when judicial action is
taken under Section 504... '
E. Stormwater Discharges bv Municipalities Under 100.000
Population'
ii
Municipalities serving populations less than 100,000 with a
separate storm sewer system are not currently required, under
Section 402(p) of the Clean Water Act, to comply with permit
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23
requirements for stormwater. Some of these cities may have
quantities of pollutants in their stormwater which pose an
endangerment to the public health or welfare. Section 504 may be
used to curtail known, or anticipated, toxic, and other such
discharges of pollutants, where those discharges are causing or
contributing to an endangerment of the public health or welfare.
Section 504 could be used to require installation of appropriate
treatment technologies to prevent such discharges from
reoccurring.
Section 308 information requests can be used to determine
the toxicity of stormwater discharges in areas that are known to
be failing to meet water quality standards, such as specifically
identified areas of the Great Lakes. Cases in which stormwater
discharges are contributing to the contamination or depletion of
fish or shellfish populations, or causing or contributing to the
failure of bodies of water to meet water quality standards, are
situations appropriate for use of Section 504.
F. Nonpoint Source Pollution
Nonpoint source pollution currently causes some of the most
severe remaining water pollution problems in the United States.
If nonpoint sources cause or contribute to the endangerment of
the public health and welfare, they are subject to action under
Section 504. For example, agricultural runoff in several forms
can cause or contribute to bacterial contamination, nitrate and
pesticide contamination, and eutrophication of essential bodies
of water such as the Chesapeake Bay. These discharges are
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24
subject to action under Section 504 when they pose an imminent
endangerment to the public health or welfare. Two forms of
agricultural runoff, in particular, can often present an
endangerment to the public health and welfare. Sub-surface flow
of soluble chemicals from agricultural run-off, as well as sheet
flow from agricultural fields and small feedlots adjacent to
waters of the U.S., may cause bacterial and other dangerous
contamination in surface waters. When bacterial contamination
from these pollution sources is present, either because a
hydraulic connection between the groundwater and the surface
water has allowed the bacteria to contaminate the surface water
via subsurface flow, or when the contamination results from
direct runoff, the situation often warrants the use of Section
504. For example, bacterial contamination from these sources is
especially dangerous to the public health and welfare in coastal
i '
waters and estuaries« where the contamination causes beach •
closures, as well as the tainting and .closure of shellfish beds.
Nutrient and pesticide runoff from sub-surface flow of
soluble chemicals in groundwater that bears a hydraulic
connection to surface water, as well as from sheet runoff, may
also endanger both human health, and livestock populations.
Contamination of waters of the United States, as well as private
drinking water wells, with toxic levels of both nitrates and
pesticides, has been attributed to nonpoint source, agricultural
runoff. Nitrates can be especially toxic to infants, although
they may also endanger the livelihood of farmers, by destroying
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25
livestock populations who drink from the contaminated water
sources. Pesticides from agricultural applications have been
found in private drinking water wells as a result of agricultural
runoff, as confirmed by a recent study of drinking water in Ohio
conducted by Heidelberg College. The extent of pesticide
contamination of drinking water wells has also been documented by
the Agency in the November 13, 1990 report of the results of
Phase 1 of the National Pesticide Survey of Drinking Water Wells.
This report indicates that at least 10%, or 10,000 community
>
drinking water wells, and at least 4.2%, or 446,000 .domestic
water wells, have detectable levels of at least one pesticide.
In summary, whenever drinking water or livestock populations are
endangered by surface water contamination with pesticides,
agricultural chemicals, or nitrates,.use of Section 504 may be
appropriate.
Agricultural return flows, which are exempted from Section
402 requirements, also can often pose an imminent and substantial
endangerment to the public health or welfare. In addition to
contributing to both the bacterial contamination, and the
nutrient and pesticide contamination mentioned above,
agricultural return flows discharge elevated levels of Total
Suspended Solids. These discharges contribute to the destruction
of salmonid fisheries that are essential to the public welfare.
Studies by the State of Idaho have shown that clean sediment from
both logging and agricultural operations can cause, the
destruction of salmonid fisheries and spawning habitat for
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26
valuable salmonid populations. In the case where salmonid or
other fisheries are endangered by agricultural return flows or
clean sediment discharges, use of Section 504 may be warranted.
-G. Toxics . .
Numerical effluent limits for toxics, including persistent
, • i . . • *
toxics, or toxics that bioaccumulate in aquatic vegetation and
wildlife, are not currently included in all permits of publicly
owned treatment works where they may be necessary. Water quality
standards based on numerical criteria relating to toxics have
been developed by most States, and EPA recently promulgated
numeric criteria for toxic pollutants for those States that had
not developed their own numerical criteria.
Section 504 may be used to terminate or control toxic
discharges that pose imminent endangerments to the public health
or welfare by requiring treatment technology to be installed to
lower or eliminate the amount of toxics discharged. Given that a
long term program to set numerical effluent limits for these
toxics is underway, Section 504 is a useful tool in appropriate
circumstances to address those toxic discharges which constitute
an imminent and substantial endangerment until permits include
numerical limits, or in. cases where such an endangerment exists
despite such limits'having been set in a permit.
(-*
Toxic Release Inventory data could be used to target further
investigation into releases which present an imminent
endangerment to the public health or welfare. Facilities
discharging effluent containing toxic amounts of any toxic
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27
chemical listed on the Clean Water Act Section 307 list could
present situations where Section 504 would apply. In the Great
Lakes, facilities discharging toxic amounts, of any toxic listed
in the toxics appendix to the Great Lakes Water Quality'Agreement
could be subject to action under Section 504, if the discharge
could be shown to be causing tsr contributing to an endangerment
of the public health or welfare.
H. Combined Sewer Overflows .
Combined Sewer Systems (CSSs) are systems designed to carry
sanitary, industrial, and commercial wastewaters and storm water
runoff through a single-pipe system to a treatment facility
before discharge to a receiving water body. During dry weather
conditions, CSSs generally accomplish this objective/ During wet
weather, the combined flows may exceed the capacity of the
collection-system or the treatment facility. In this situation,
these Combined Sewer Overflows (CSOs) are discharged directly
into the receiving water without any treatment. CSOs are point
source discharges subject to NPDES regulations and must meet
CWA's technology-based and water quality-based requirements.
Use of Section 504 can be a powerful tool to require
compliance on the part of violators whose discharges are posing
an endangerment to the public health or welfare.- Cases ,in which
beach closings may occur as a result of CSO discharges would be
an appropriate situation in which to consider use of Section 504.
Additionally, cases in which cso discharges are contributing to
the contamination or depletion of fish or shellfish populations,
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28
or the eutrophication of a body of water, as in the Chesapeake
Bay, would be appropriate cases in which to make use of Section
504. . ••• .•''.'• ' • . • '
CONCLUSION
Section 504 of the Clean Water Act is a potent enforcement
tool for the Agency to address water pollution presenting an
imminent and substantial endangerment to the health or welfare of
persons. An action may be brought to prevent a threatened
endangerment from materializing or to mitigate harm that has
already occurred. Section 504 also may be used to respond to
hazards that cannot be adequately addressed by other provisions
of the CWA, or to abate an endangerment pending the
implementation of permits in non-permitted situations, or the
resolution of other enforcement actions. When appropriate, the
Agency encourages its use by the Regions to the fullest practical
extent.
For more information on this guidance, please contact Avi
Garbow (Tel. 202-260-1579) or Maria Brin (Tel. 202-260-8183),
both of the Office of Enforcement, Water Division, or Ann
Prezyna, Water Branch Chief, Region X (Tel. 206-553-1023).
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IV. B.
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IV. CIVIL LITIGATION
B. ENFORCEMENT CASE MANAGEMENT PROCEDURES
-------
IV.B.l.
"MEMORANDUM OF UNDERSTANDING BETWEEN THE DEPARTMENT OF JUSTICE AND THE
ENVIRONMENTAL PROTECTION AGENCY", dated June 15, 1977. See GM-3. (Amended
by IV.B.29)
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IV.B.2.
"Memorandum of Understanding Between the U.S. Coast Guard and
the Environmental Protection Agency", dated August 14, 1979
(see this index, Section VI.C.5.).
-------
IV.B.3-
"Allocation of Litigation Responsibilities Between Regional and
Headquarters Components of Office of General Counsel", dated December 14,
1979.
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-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
December 14, 1979
MEMORANDUM CEN"AU c°UNS£t
SUBJECT: Allocation of Litigation Responsibilities
Between Regional and Headquarters Components-:
of Office of General Counsel "RECEIVED.
DEC .1.91979
FROM: David 0. Bickari
Deputy General Counsel
TO: Regional Counsels
Associate General Counsels REGION 1
Deputy Associate General Counsels OFFICE OF flUGJCft'Al COI'N'Sl
Allocation of litigating responsibility"raises
difficult issues of management ana professional pride,
both within the Office of General Counsel^/ and between
our office and the Justice Department. Our experience
during the past two years of operating under our
Memorandum of Understanding with Justice convinced me
that those issues are resolved better by discussions
among peers who have a good deal of respect for each
others abilities than by scriptural citation. Before
I set out what I believe is the appropriate approach-to
this issue, I want to emphasise a number: of .factors :thaf
I have considered,
1. I expect all attorneys. In" -/tHis-voffice .to be
technically equipped to wri teTfi'Ieable" brief's-in^. the
Federal Courts. By "fileable", 'ivmean^-b^ie'f's::that meet
my standards of professional cbmpXtence.y;v'"andr''thos;e-,:;of.
the Assistant Attorney General^ Tru 'headquarters/' the
Associates .and their Deputies "are" responsible,.for7 assuring
that .the standard is met; in" Che regions the Regional
Counsels have that responsibility.
2. Regional Counsel staffs should, be.involved in
any litigation arising out'of decisions made in their
regionsi
JV The- Office of General -Counsel includes the -Regiona
~" " ' "
Counsels and their staff
.-
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3. Legal positions taken in the Courts must be
consistent from region to region, and must be consistent
with the Agency's overall legal position. The Associate
General Counsels must be aware of, and must have an ade-
quate opportunity to consider, what arguments we will be
presenting to the Courts.
4. Determinations about the proper presentation
and staffing of litigation matters are to be made after
consultation between the relevant Regional Counsel and
the relevant Associate (or a designee who has authority
to speak for the Associate). I will resolve any unresolvable
disputes', but I expect these to be kept to a minimum.
'With these:factors in mind, I believe the following
procedures and principles should govern the allocation of
litigation responsibility between our regional and head-
quarters components.
1. When EPA receives a complaint or petition for
review in an action arising out of a regional action, -the
office served {:L.e., regional or headquarters office) will
within 24 hours transmit the pleadings to the other office
and the Justice Department.
2. The Regional Counsel will telephone the Associate
General Counsel in the affected Division (or vice versa)
and will discuss who will be assigned to the case and the
general allocation of responsibilities for its presentation.
3. As a general rule, regional personnel should
ordinarily take the lead on issues concerning the propriety
of the manner in which discretion was exercised in a parti-
cular instance. Headquarters attorneys should ordinarily
take the lead on legal and policy issues that have a broad
impact on the nationwide administration of EPA's programs.
I expect that in the many cases where both elements are
present, attorneys from both offices will be writing
different sections of the brief.
4. The "general rule" will undoubtedly^have'inany
exceptions. I expect these to be developed on a case-by- -
case basis between the Associate General Counsel and'the."'.'
Regional Counsel>in a common-sense manner. .-'In particular/.''
-------
I expect the Associates to be open-minded about asserting
territorial rights on an issue merely because it is arguably
"national". I will not look favorably upon appeals by"
Associates that a matter be handled out of headquarters,
if the Associates can't demonstrate that a headquarters
attorney, by familiarity with similar cases or by superior
access to headquarters program people, will add signifi-
cantly to the thoroughness with which our position"will be
presented to the Court. '
5. Headquarters attorneys are not forbidden to
contact regional program people directly. There are many
occasions where this may be the most efficient means of
gathering information. However, headquarters attorneys
should recognize that regional counsel attorneys will
frequently have a better feel for who the most knowledgeable
or authoritative person is in the region. If the headquarters
attorney has any doubt about who the best regional source of
information is, he should call the Regional Counsel. In
any event, when both headquarters and regional attorneys ' '
are assigned to a case, the regional attorney should know
who has been contacted.
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IV.B.4.
"Contacts with Defendants and Potential Defendants in Enforcement
Litigation", dated October 7, 1981. See GM-6.*
-------
IV.B.5,
"Quantico Guidelines for Enforcement Litigation", dated
April 8, 1982. See GM-8.*
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IV.B.6.
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Subject
Section Directives Concerning 60-Day
Report and Processing New Referrals
To
Prom
All EES/EDS Attorneys
Duie
June 22, 1982
t eb n £fV.Ai I' .'•'' Ju^m s e y
h i ~ c r' E c v i'rb r. r. e n
Ch ip^r'Euxri/r'or.r.en tal Enforc e::en
Section
My recent review of . selected hazardous waste enforcement
cases, the 60-day ''report and attorney time records for the last 6-
month period has been completed. My review has yielded much useful
information and given me a better understanding of how attorneys arc
spending their tine. It has also caused me serious concern about the
number of cases which appear not to be proceeding in an organized
fashion to any foreseeable conclusion. For example, 1 vas shocked
to learn that in a hazardous waste case which was filed r.ore than 2
years ago and in which a partial settlement was obtained several
months ago, that no amended complaint has been filed against non-
settling parties nor has any discovery been conducted in the existing
case. In another case, despite being' aware of the existence and
identity of generators for more than a year, no amended complaint
has been prepared nor has any meaningful discovery been conducted
against defendants or potential defendants.
I have also become increasingly concerned that cases
referred to the Department by EPA have in some instances languished
for no identifiable reason. It is incumbent on each attorney to
manage his/her case docket so that cases are analyzed promptly and
litigation is moved forward aggressively to an expeditious conclusion,
Accordingly, I am instituting the following procedures which are to
be followed in all enforcement cases. .
Handling Cases on
the 60-Day Report:
My review of the 60-day report and a random check of the
accuracy of the entries leads me to the conclusion that the disparity
which exists between our version and EPA's version of which cases
are being held at EPA's request, for litigation strategy reasons
or pending the receipt of additional information from EPA will not
withstand close scrutiny. In a recent meeting, Mrs. Dinkins
directed me to insure that all cases on the 60-day report should
be filed or declined as soon as
displeasure with our delay in
ossible. She expressed her
and prosecuting EPA's cases
filing
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- 2 -
and instructed me to determine whether members of our staff have
i-ailed to prepare the necessary pleadings or put forth the nezes
effort to conduct EPA's enforcement litigation in a .timely fashiod
In short, it appears that despite ray requests some
staff attorneys have failed to manage their dockets or prosecute
existing cases in a timely manner. Accordingly,'the following
general direct order is effective immediately for cases listed
by category on the 60-day report as unfiled:
1. Cases under review in Division and in United States
Attorneys' Orfices - These cases are to be reterreo
to Uniteo States Attorneys within 30 days of this
•memorandum ana expeditiously filed in district court.
Thereafter, they are to be vigorously prosecuted.
Staff attorneys ,are responsible for notifying the
Chie^/of the Environmental Enforcement Section in
writing of the date of filing; the identity of the
government attorney primarily responsible for handling
the case; the relief the government seeks; the amount
of section attorney time which will be required for
the next one year.
2. Cases held at request or agreement of EPA for scttle-
-• m-snt "'discussions or reasons or iitigatiye strategy -
.These, cases are to be rererrea to United States
Attorneys within 30 days and expeditiously filed
in district court and the same information provided
as required in item ,1 above or a memorandum shall
be provided to the Chief of the Environmental
Enforcement Section within 30 days from the date
of this memoTandum indicating (a) the litigative
/strategy reasons that the case has not been filed;
(b) the identity of the EPA attorney who requested/
agrees with non-filing; (c) the date such request/
agreement was made; (d) written approval from EPA
that this course continue, including the stated
reason therefor; (e) the progress which is being
made which in your view justifies continuing to
withhold the case from filing.
,3. Cases ,',in .-which additional factual or legal information
has been requested of EPA -Within 2 weeks from the
date of this memorandum", a written memorandum shall
be provided to the Chief of the Environmental Enforce-
ment Section which shall contain (a) the information
and a discussion of its necessity for the case; (b)
the dates on which it has been requested; (c) copies
of all written correspondence which has been sent/
received during the past year requesting and/or
refusing to provide the information; (d) the identity
of the EPA attorney.
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- 3 -
Handling New Referrals:
.EPA ..has set referral of- new cases as .one of its highest
priorities. Since March 30, 1982, EPA has.referred 20 new cases for
filing and expects to send an additional 100 cases for filing before
the end of this fiscal year. Department attorneys should give prior:
to expeditious handling of new referrals. The following procedures
are effective immediately:
1. Upon receipt of the inform?.ticnal copy of B. referral
package, a DOJ attorney will be assigned to the case
and EPA will be informed of the attorney's identity.
2. The DOJ attorney should contact the EPA regional attorney
. assigned to the case within 7 days to determine the
status of the case and any important factual or legal
issues in the case.
3. Within 30 calendar days after DOJ receives the formal
referral letter from EPA, the DOJ attorney is responsible
for analyzing the case, preparing appropriate pleadings
(complaint; discovery; etc.) and recommending to the
Assistant Attorney General that the case be filed or
declined- A staff recommendation that the case be
declined or that additional information requested must
be approved by the Chief, Environmental Enforcement
Section. All requests for additional information should
be made orally and confirmed in writing to the Regional
EPA attorneys and technical personnel with carbon copie?
of such correspondence provided to the appropriate EPA
headquarters attorney and technical personnel.
4. . Recommendations which will require more than 30 days to
prepare should be brought to the attention of the
appropriate Assistant Section Chief immediately. EPA
should be informed in writing of the reason for the delay
and given a date by which a recommendation will be made.
5. Wherever possible, compl.aints should be accompanied by
appropriate discovery documents. The propriety of seek-
ing a preliminary injunction should be considered in
each case.
Filed Cases;
Cases which have been or will be filed are to be vigorously
prosecuted. The goal in our cases is an expeditious settlement which
is favorable to the United States consistent with EPA's policies and
applicable law or a trial where resolution by settlement is not
possible. Attorneys should remember that the United States is a
plaintiff in these cases and should oush cases forward to trial.
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- A -
.Attorneys should assume that v;hen a case is referred to the Depart-
ment by" EPA, attempts at settlement have essentially failed and EPA
intends that -the case be filed promptly 'and actively litigated.
This does not mean we will refuse to negotiate with defendants.
It ^eans that we will always prepare our cases for trial even
while negotiations are proceeding.
One cannot proceed as a plaintiff without a case
plan and strategy. Attorneys are responsible for the develop-
ment of a case plan and strategy and for assignment of ongoing
responsibilities to litigation tear:: members to assure that the
litigation stra.tegy is followed. Attorneys are responsible for
identifying and -requesting all necessary assistance fro:?, EPA,
If that assistance is not forthcoming, attorneys are responsible
for bringing this to the attention of the Chief or Assistant
Chief for expeditions resolution with EPA. Similarly, attorneys
are responsible fqr familiarizing themselves with relevant statutor;
and regulatory 'prov-is ions , understanding -the technical issues
which are presented, identifying policy or legal questions which
arise in litigation and seeking early advice on the appropriate
litigative/policy position from EPA and the section management.
Section attorneys must undertake and follow through
on case preparation. There is no acceptable reason for failing
to conduct necessary discovery or perform other phases of case
preparation. Any request by EPA or a United States Attorney
to stay trial preparation, for any reason must be made in writing
and be personally approved by the Chief of the Environmental
Enforcement Section. Attorneys are responsible for identifying
and requesting needed litigation support.
Attorneys are responsible for making maximum use of
the Department's training and litigation support resources. The
Chief and Assistant Chiefs are available for consultation and
advice on all phases of case preparation and strategy. The
Section possesses substantial form files, technical information
and an expert witness file. The Department provides extensive
training through the Attorney General's Advocacy Institute for
trial preparation and techniques. EPA and other federal agencies
have vast quantities of technical material which may be easily
obtained and utilized in our cases. Attorneys should familiarize
themselves with sources of information and utilize them.
In "the future, Carol, Lloyd -an'd 'I will undertake
regular, periodic review of our docket to evaluate the progress
of our litigation. ''This periodic review .is not, however, a
substitute for seeking our consultation on case specific or
generic issues which arise in your cases.
It is my intention that this memorandum serve as a
reminder tc each section attorney that our primarv obligation
is the expeditious, satisfactory handling of EPA' s enforcement
» ?
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- 5 -
l.itigation. In raosc of our cases, section attorneys are doing
good work. In others, substantial improvement is necessary to
meet acceptable standards. I ask each of you to e:-;a:nine the
amount and quality of your effort expended on your cases and
to place increased eraphasis on noving our cases fo'rvard for
resolution by trial or settlement. Any questions about this
rae^orandurj should be addressed to me.
I ar, providing EPA management with a copy of this
neaorandura and the :aost recent 60-dav reoort.
cc: Mrs. Carol E. Dinkins
Mr. Anthony C. Liotta
Ms. Ma rv L. Walker
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IV.B.7.
-------
r: .-i.'.'wi.ivi^N i/'..L r;-;r"'"ECTlO.NJ AGHN'CY
WASHir-'STON. DC 20-1C-.
or Kicr or
LCGAL ANn
MEMORANDUM
SUBJECT: Requests to Department of Justice to
Withhold Action in Referred Cases
'
FROM: Michael A. Brown vjJ.UN ~>— Ll \\..
Acting Enforcement Counsel/
Deputy General Counsel
TO: . Regional Counsels
Associate Enforcement Counsels
Robert Perry and I recently attended a meeting with
officials of the Department of Justice to discuss the status
of cases which had been referred to DOJ from the Agency.
During that discussion, we were advised that in many cases,
action is being withheld by DOJ at the request of Regional
attorneys who are involved in the cases.
When a case has been referred to DOJ, it should have
been investigated, prepared and developed so that suit can
be filed and the case tried without inordinate delay. The
Department of Justice should be requested to withhold action
on a case only for good and sufficient reason.
I will be working closely with DOJ en a regular basis
to assure that we refer quality cases, and that they are
filed and prosecuted expecitiously. In order to avoid
misunderstandings among DCJ, Headquarters and the Regional
Offices as to the causes for particular cases not moving
forward, henceforth, any requests to DOJ to withhold or
delay action in referred cases must be concurred with in
writing by the Enforcement Counsel.
If you have any questions regarding this, please let
me know.
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IV.B.8.
••Case Referrals for Civil Litigation", dated Septe^er 7,
See GM-13.*
1982.
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IV.B.9.
-------
Procedure for Withholding Filing
of Referred Cases
To
All Attorneys
Environmental Enforcement:
and
En v i r oilmen t a 1 Defer, s e
Sections
September
1S82
Stephen V-DI.'Uarns oy
Chief, l',nviroriental Enforce:::!
Section ' ' ' .
In a recent meeting with rtob Perry, Mike Brown , Mary
Walker, Mrs. Dinkins and myself the subject of cases which have
been referred by EPA but not filed by the Department was discussed,
We have been instructed by Bob Perry, i.:lio Associate Administrator •
for Legal and Enforcement Counsel that; ins true tions from Kc<-;ioni:l •
attorneys to the Department to abstain from filing refraining fror.
or taking other action on referred cases nay not br followed absent
concurrenr-c in writing by He:idc;'.:.-.rtery KPA. !-5r. Perry has sent thu
attached mcrnoranduin on this subject to all Regional
Accordingly, in e;ich referred case in v.'hicii you h.ave bet.ii
requested by the KPA Regional a'cj.oriu-y !:o withhold i!ilin<', of tlu>
cornpliiinr or withhold other case activity; plcar-e conf.acr. the
Regional attorney, inform him/her of Mr. Perry 's instruction
and request that the Rep,i.onal attorney initiate ar.J obtain written
confirmation of any ins tr.vicr ions not to file a referred case both"
fron the Region and frora Headquarters. Attorneys should, of coiirse,
be reasonable and provide a reasonable time for those instructions
to be. transmitted. However, hereafter, Department attorneys may
not withhold filing of referred EPA cases without cypress instructie:
to do so from Headquarters EPA.
cc: Carol E. Dinkinc
Mary Walker-
Robert Perry
Michael Brown
Michael Alushin
.Edward Kurent
Louise Jacobs
Attachment
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IV.B.10.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, DC 20460
270CT1982
ornec OF
LEGAL AND ENFORCEMENT COUNS
MEMORANDUM
SUBJECT: Clearance of BrvLefs and Slinificant Pleadings
FROM: Michael A.
Deputy General Counsel (A-130)
TO: All.Attorneys
Office of General Counsel
Attached is a form that OGC will use for clearance of
briefs and significant pleadings. It is designed to provide
the background information which Mr. Perry and I need in order
to review the pleadings. This memorandum sets out instructions
for its use.
.1. What pleadings require review by the, General Counsel
or"Deputy General Counsel?
.All significant pleadings must be submitted for review by
me or the General Counsel. .These include all dispositive
pleadings, such as appellate briefs, motions to dismiss,
motions for summary judgment-, and the like. Other significant
.pleadings include appellate reply briefs and reply memoranda
in district courts. In cases involving potential court-ordered
.deadlines for EPA action, answers, motions for amendment or
extension of deadline orders, and any accompanying affidavits,
should be forwarded for review.
Examples of matters ordinarily not requiring review include
motions for extensions of time, motions to supplement (or opposi-
tions to motions to supplement) the administrative record, notices
of appearance, and other pleadings not directly related to the
merits.
2. When should pleadings be submitted?
Whenever possible, pleadings must be submitted seven days
before they are due to be filed. Sometimes, because of litigation
deadlines or when a draft is prepared at the Department of
Justice, less time is available. In that case, submit the pleading
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. - 2 -
a'S "soon as possible. Do not delay submitting a pleading until i
is letter-perfect. If a reasonably complete draft is available
at the seven-day deadline, submit it, but note under "Comments"
any changes which will be made. Reviewers can deal with hand-
written inserts, cut-and-paste drafts, and the like, if necessary
to assure early review.
3. How are pleadings submitted?
Fill out the attached form, have the Associate General
Counsel initial it, and give the form and draft pleading to the
Senior Litigator. The Associate's initials signify that he has
read the draft and has approved it for filing,- or that the draft
will be acceptable for filing after the changes noted on the form
under "Comments,": or on-the draft its-elf, 'are made. Please initial
any comments.
Under "Draft Prepared by," be sure to note whether the draft
was entirely prepared by the EPA attorney or at the Department of
Justice, or, if drafting was shared, what portions were drafted
by the EPA attorney.
When the form is returned following review, it should be"
retained permanently in the litigation file.
Attachment
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IV.B.ll.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. DC Z0460
DEC 2 198
OFFICE OF
LEGAL AND ENFORCEMENT COUNSEL
MEMORANDUM
SUBJECT: Civil Litigation RefefrraTA Packages
FROM : Louise D. Jacobs /
. Associate Enforcement Counsel
for Water
TO : All Water Enforcement Attorneys
At the staff meeting on November 23, Mike Brown
requested that we add a new paragraph to.each cover memo
accompanying proposed civil referrals. The new paragraph
should state when we received the litigation report in
our division, and, if our review has exceeded 30 days,
explain the reason for the extended review.
Please include such a paragraph in the cover memo for
any new referral-packages you may prepare.
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IV.B.12.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. DC 20460
2 DEC 1982
OFFICE OF
LEGAL AND ENFORCEMENT COUNSI
MEMORANDUM
SUBJECT:. Headquarters Review of Pleadings
FROM: Robert M. Perry
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-21-
The Administrator has affirmed that I urge OLEC staff at
Headquarters and in the Regions to caution their "client" program
offices and others within ,the Agency about the sensitivity of
contacts with persons or firms that are involved in cases
referred to DOJ for filing. There are many matters unrelated
to a specific enforcement action—e.g., processing of grants,
development of rules—in which a party may be interested and
which may be discussed without counsel present. Care should be
taken, however, to determine the purpose(s) for which meetings
are sought by defendants and potential defendants so that appro-
priate arrangements can be made. ,If matters related to a pending
case are raised by such persons during the course of a meeting
arranged for other purposes, any discussion of the case should
be interrupted and continued only after consultation with an
Agency attorney assigned to the case.
XIII. Enforcing Consent Decrees and Final Orders
Following the entry of a consent decree or final order,
compliance assessment is the responsibility of the Regional
Administrator, in the same way that the Regional Administrator
assesses compliance with statutory or regulatory requirements.
In the event that a source violates a consent decree or order,
a motion for contempt or modification of the decree may be appro-
priate. The decision to file for contempt or to negotiate a"
modification will normally be the Regional Administrator's,
based upon the advice of the Regional Counsel and subject to
national guidance issued by the responsible Assistant Administrator
or OLEC. Since the violation would concern a filed case and a
consent decree modification would involve a court order, DOJ and
the U.S. Attorney's Office should be given the opportunity to
take part in any of those discussions. Negotiations with affected
parties should be conducted in the manner described previously
in this document (with an opportunity for Assistant Administrator
participation). All modifications to consent decrees must be
approved in the same manner as the original consent decrees.
XIV. Appeals
general Counsel attorneys serve as the Agency's principal
defense lawyers and are responsible for any matter before Courts of
Appeals, including appeals of decisions relating to enforcement
actions. In such cases, the lead General Counsel attorney will
continue to be determined in accordance with a memorandum of
December 14, 1979 on the subject from the Deputy General Counsel.
The lead Agency attorney on the appeal will be responsible- for
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-22- •- • ' .
working closely with the lead Agency attorney appointed to the
'original enforcement case, as well as the appropriate Regional, and
Headquarters program office personnel. The lead Agency attorney
originally appointed to an administrative enforcement action
which is subsequently appealed'normally will serve as•co-counsel
with the General Counsel attorney in the Court of Appeals.
'With regard to hearings before an administrative law judge
or appeals of administrative actions to the Administrator, the
Regional Counsel will normally provide legal representation for the
Agency on matters arising in the Regions, including perrr.it conditions
and administrative civil penalty decisions. However, in accordance
with the OLEC memorandum of Hay 7;' 1982, on regional reorganization,
when issues of overriding national significance exist, or when
Headouarters initiates the administrative action, the lead may be
assigned to a Headquarters attorney, upon the agreement of the
Regional Counsel and the appropriate supervisor in the Enforcement
Counsel's office.
XV. Communications/Press Relations
Throughout the enforcement process, the Regional Administrator
is responsible for ensuring that the appropriate information
flows openly and smoothly to all parties with a .legitimate interest
in the final outcome. Once a matter is referred to DOJ, however,
all Agency personnel should exercise care in releasing any iivfor-
•matiori or statement, including press releases, in connection with
the matter without previously consulting DOJ. The lead Agency
attorney is responsible for the smooth and complete flow of
information to supporting attorneys within the Agency and in DOJ.
The Regional Administrator and the Regional program managers
are responsible for communicating with States, except if a State
is a party to a filed judicial action. In that case, the U.S.
Attorney and DOJ should participate in or be consulted about any
such communications.
Likewise, the Regional Administrator will normally be
responsible for handling any press inquiries or releases concerning
an enforcement action. The Regional Counsel is available to provide
legal advice on the handling of those matters. Upon occasion,
such inquiries or press releases may be handled best by the Enforce-
ment Counsel or the appropriate Assistant Administrator, but only
when all parties and the press office agree that this procedure is
the best course of action. For filed actions, DOJ or the U.S.
Attorney's office should be consulted before interacting with the
press. '•.'••'
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-2-
Operating Procedures" memorandum therefore also stressed the
need for OGC attorneys to work closely with OEC and Regional
attorneys in developing an enforcement action on appeal.
Today's memorandum provides greater detail on the respective
roles for each of these OLEC offices.
Regional Counsels generally have -the lead on advising
program clients on contemplated enforcement actions, in de-
veloping an enforcement case for litigation, and for serving
as in-house Agency legal representative in settlement dis-
cussions or litigation activities associated with that case.
As a result, Regional Counsels are usually the OLEC officials
most familiar with the facts and proceedings associated with
a given action on appeal, as well as at the action's initial
-stages.
Associate Enforcement Counsels are responsible for
ensuring that enforcement actions follow and promote Agency
policy on a nationwide basis. Appeals of enforcement actions,
even actions on which a Regional Counsel had initial lead
responsibility, often involve fundamental enforcement program
questions of national significance. Thus, OEC Associates
have an important role to play in enforcement appeals.
Finally, the fundamental questions often at stake in
enforcement appeals, whether or not initiated by EPA, typically
relate to appropriate interpretations of EPA's legal authority.
The OGC Associates possess the best expertise for addressing
these issues of legal interpretation and for ensuring that the
EPA position is consistent with and supportive of the positions
EPA has assumed in other legal proceedings.
In light of these respective areas of responsibility and
expertise, I believe it is important that each of these OLEC
officials make appropriate contributions to EPA's activities
in an appeal of an enforcement action. This means that all
three OLEC officials should confer once EPA learns that a
defendant has filed an appeal, or once EPA begins considering
whether to pursue an appeal, to determine their respective
roles and responsibilities on matters related to that appeal.
Each of the OLEC officials must be involved from the start
of the appeal process (including the decision on whether to
file an appeal) to ensure that each can provide a meaningful
contribution and to ensure that any issues are raised and
resolved as early as possible. . • :
For example, the OGC.Associate as a general rule must
participate in any Agency decision to file an appeal, since
that decision and associated filings.generally • involve the •
development of legal theories which may affect other areas
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-3-
of EPA's programs. Similarly, the OGC Associate normally must
participate in the development of any briefs to ensure that
they appropriately articulate EPA's legal position without
undermining the legal positions EPA may have adopted in
other matters. In any case, the OGC Senior Litigator should
have the opportunity to review any significant pleadings.*
OEC Associates and Regional Counsels also as a rule must
participate in the area relating to their respective respon-
sibilities and expertise. Thus, OEC Associates normally must
participate in aspects of the appeal which significantly
affect national enforcement policy or establish important
precedents. Regional Counsels normally must participate on
issues concerning the propriety of EPA's actions in the
context of the particular case at issue.
Appropriate exceptions to these rules undoubtedly will
arise on a case-by-case basis as the Regional Counsel, OEC
Associate, and OGC Associate take a-common sense approach- to
distributing responsibilities for appeal-related' activities.
In many instances, for example, different officials will be
responsible for preparing different sections of the brief.
I will be available to resolve any matters on which a
consensus cannot be reached.
In any action on appeal, there must be a clear under-
standing among participants as to who holds lead responsibil-
ity. Consistent with the "General Operating Procedures"
memorandum, the OGC Associate will have lead responsibility
for the action as a-whole unless the participants make other
arrangements. If appropriate, the participants may agree to
shift the lead on an action once it reaches a certain stage.
Let me conclude by emphasizing that each of the respon-
sible OLEC officials must ensure that he or she is promoting
coordinated OLEC participation on an enforcement appeal by
keeping other appropriate OLEC officials involved and by
making appropriate contributions to the group effort involved
in that appeal. These measures are important to enable OLEC
to provide the best legal counsel possible as the Agency
pursues or defends appeals of enforcement actions.
*Even before an enforcement case reaches the .appeal -stage-.
the appropriate OGC Associate should have at least.an
opportunity to review and comment on any dispositive
pleadings which the Federal government plans to.file- in ...
which the government -lays out. complete -legal theories which
are likely to form t-he basis of a judcmen't. ;
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IV.B.13.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, DC 20-160
OPFICE OF
LEGAL AND ENFORCEMENT COUf.'SE
MEMORANDUM
SUBJECT: Responsibilities for Handling Judicial Appeals
Arising under_EPA's Civil Enforcement Prooram
FROM: Robert M. PerrW"Associate Administrator
and General Counsel
TO: Associate Enforcement Counsels
Associate General Counsels
Regional Counsels
OLEC Office Directors
This memorandum describes the distribution of responsi-
bilities within OLEC for handling appeals which arise from
EPA civil enforcement actions and in which a reviewing court
bases its decision on the record of an earlier proceeding
(judicial or administrative). The basic concept underlying
this guidance is that enforcement appeals require the coor-
dinated participation of the appropriate Regional Counsel,
Associate Enforcement Counsel, and Associate General Counsel
in order for EPA to receive- proper legal advice and represen
t a t i o n .
This' guidance specifically is intended to clarify
discussion of this matter in my July 6, 1982, memorandum .on
"General Operating Procedures for EPA's Civil Enforcement
Program". In that document, I stated,
"General Counsel attorneys serve as the
Agency's principal defense lawyers and are
responsible for any matter before Courts of
Appeals, including appeals of decisions
relating to enforcement actions".
Of course, appeals of enforcement actions clearly involve
matters relevant.to the responsibilities of the relevant
Associate Enforcement Counsel and the Regional Counsel,
as well as the Associate General Counsel. The "General
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IV.B.14.
-------
Subject
Deferral in
the Request
Filing
of EPA
Cases at
Attorneys
Date
January 31, 1983
To
From
All Environmental Enforcement
•Section Attorneys
Stephens «,.,
Environrieri
Sectierr
f ,
T/YKap'sey , Chief
Enforcement
In some recent ..instances EPA headquarters has complained
that section attorneys were accedeing to requests from regional
attorneys that cases not be processed or referred or filed.
Attorneys are reminded that any request to defer the referral or
filing of a case must come from headquarters and must be in
writing. (See my memo of June 22, 1982.) If you receive a request
from a regional staff attorney to defer a referral -or filing of
a case please communicate that request to the EPA staff attorney
and to your Assistant Chief, however, you may not defer process
of the case until such time that EPA has communicated that deferral
in writing at the headquarter level.
cc: Michael Brown
Associate Enforcement Counsels
Regional Counsels
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IV.B.15.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, DC 20460
MAR 281983
OFFICE OF
LECAU AND ENFORCEMENT COUNSEL.
MEMORANDUM
SUBJECT: Case Management Procedures, for Civil Water Referrals
FROM: Louise D. Jacobs
Associate Enforceifre'nt Counse 1
-for Water I/
TO: Regional Counsels, Region .1 - X
As we approach the midpoint of Fiscal Year 83, I am sending
you our March 5, 1983, status report for active water referrals
and active cases. This report charts our current total active
case load of 118 cases* under the Clean Water Act and the Safe
Drinking Water Act. The chart is prepared on a Regional basis
to allow you to check your records against ours, and to compare
your enforcement status with that of other Regions.
I also want to take this opportunity to reemphasize the
importance of Michael Brown's memorandum on case referrals dated
September 7, 1982 (copy attached). In addition, I wish to discuss
several matters specifically affecting water referrals.
1. Early Notice of Planned Referrals
Page 2 of the September 7 memorandum stresses the importance
of informing Headquarters "of new cases which are under develp-
ment as soon as sufficient information is acquired about the
cases to enable a determination to be made that they have ;
potential for referral." Early notice to this Division allows
for better coordination between Regional and Headquarters staff
attorneys. It also helps to project this -Division'-s upcoming
workload and to plan accordingly. Proper planning should ... .
facilitate the processing of referrals when they are received..
* Cases fn which a consent decree, has', been .filed are
•hot inc-luded. .
-------
I am asking-my staff to emphasize the importance of notice
of planned referrals in contacts with their Regional counterparts.
I will also attempt ito visit as many Regions as possible during
the r-emainder of this fiscal year in order better to understand
how this Division can work with each Region to develop high
quality referrals and expedite processing. Staff attorneys will
be available as needed to participate in individual cases. I
urge that my attorneys be given the opportunity to work with you
and the Regional program office on case development, especially
where non-routine questions arise.
2. Program Office Coordination
This Division is working closely with its Headquarters
program counterparts in processing referrals. We obtain concurrence
from the Office of Water (OW) for all Clean Water Act and Safe
Drinking Water Act referrals and .consent decrees before forwarding
them to the .Associate Administrator, OLEC for final Agency
concurrence.
We have found OW1s technical review a valuable part of the
referral process and encourage you to make full use of the Region'.s
program office also in developing the referral package. I
specifically urge that your office consult on referrals with the
Regional water program office (1) to confirm existing .permit
requirements, if any, (2) to describe technically the precise
nature of the violations and some specific methods for solving
them, (3) to develop "first-cut" .information about the ability
of a municipality to pay for the Agency's proposed solution and
(4) to provide information about other-significant technical
problems or issues.
3. Settlement Negotiations with the Defendant
Frankly, I have felt that too much time has been expended in
prefiling negotiations with potential defendants. The matter
breaks down into two areas (1) when to negotiate and (2) how long
to negotiate. • . " . . . .
A. When to Negotiate . . - - •/ •
Prior to referral, it. is entirely .up to you whether-,a -
Region should conduct negotiations with a potential defendant in
an effort to seek compliance or. compliance .through warning Letters
or administrative orders. However/.once-you .decide that court.. "•
action is needed, this Division and .DOJ should-be ,.'to some degree,'.
involved in all subsequent: actions -on • the 'erase , including .any ' ' •
•"efforts to negotiate a '-consent' decree.- .. Involvement by this:, •:'" ". '
Division- and by DOJ is essential to. "faci litatp "approval of'a-ny-
'consent decree, and to avoid .embarrassement--.which, may resu.it>'. ' }
-from rejection of decrees negotiated / by the Region alone.' The-'
-------
involvement will probably not require Headquarters attendance at
negotiation sessions. However, an attorney in this Division
should be familiar with the general negotiation strategy and
should review draft negotiation documents prior to transmittal
to counsel for the potential defendant.
Once a referral has been made by the Region to
Headquarters, negotiations should continue only with the concur-
rence (and usually with the participation) of this Division and
DOJ. Negotiations after referral should not delay the filing of
a complaint. Negotiations may continue of course after filing.
They should (1) be extremely focussed, and (2) be coordinated
with my Division and with DOJ.
B. How Long to Negotiate
Prior to referral of a case by the Region to Headquarters,
the Region may negotiate for as long as seems appropriate to the
Region. However, this Division may wish to consult with the Region
if pre-referral negotiations are unnecessarily prolonged or if
there is a serious environmental problem which requires
immediate action.
Once a case has been formally referred by the Region to
Headquarters, negotiations may continue, but i-t should be clearly
understood (1) that the case is on a track to litigation and (2)
that the filing of the complaint should not- be delayed while
negotiations continue. Obviously a consent decree can be filed
subsequent to the filing of a complaint. If real progress is
being made in the negotiations, the Court still will later be
able to accept the consent decree. This is consistent with the
Enforcement Counsel's memorandum of September 3, 1982, which
requires prompt filing of cases. I have attached this memorandum
and Stephen Ramsey's related memorandum of September 8, 1982,
for your reference. •
4. Transmittal of Case Litigation Report
The Regions have followed varying policies concerning
transmittal of the case litigation report to Headquarters. We
recommend that you send the-original and one copy of the litigation
report and attachments to the..Associate Administrator,. OLEC-,. and
another copy to me. Immediately upon receipt, we coordinate . "•
with the water program of f ice -so. that it. may . also .begin its-''-. •••"-•'.
•review of the referral.;. After :OW .concurrence/:.on the referr.al • " '.-
-.package and the Associate -Administrator.1 s cbncurr.enceV OW' returns ('
Its copy, of the litigation report - to", us .for transmi tt.al to' 'DOJ . '.-'•'.
-Some Regions .are already following this proced.ure," and it is'.'. =•..'.
.working well. ' . '.. , ."-..-"-'-'".:, ;" ..;'-.-."','-''. -.":- : -:- '••"'.."..- .-
-------
I hope that this memorandum will expedite the referral
process for water cases and answer some of the questions raised
in recent months,. I will .continue to welcome your comments and
suggestions.
Attachments
cc: Courtney M
Michael A.
Stephen D.
Frederic A
Bruce R.
Victor J
Price
Brown
Ramsey
Eidsness
Barrett
Kimm
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IV.B.16.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, DC 20460
JUL 2 0 jc:
OFFICE OF
LEGAL AND ENFORCEMENT COUNSEL
MEMORANDUM
SUBJECT: Program Concurrence an Civil Referrals
• I i
FROM: Louise D. Jacobs (^Y~ (^^
Associate Enforcmerrt Counsel
for Water
TO: Robert W. Zeller, Director
Office of Water Enforcement
I appreciated the opportunity to meet with you on July 11,
concerning OWEP concurrences on civil case referrals to the Depart-
ment of Justice. As we agreed, it is essential that cases submitted
by the Regions be promptly referred to DOJ or rejected by Head-
quarters if inadequate. A recent delay in th-is process has sug-
gested the desirability of putting an understanding in writing.
Accordingly, this memorandum confirms that the time for OWEP
case concurrence is five days after submission to OWE? of the
final referral package as prepared by my Division. We would hope'to
have your concurrence in less than that time, especially since OWE?
has the Region's referral package one to two weeks in advance of
the forwarding of it to you by my Division. In the absence of . .
concurrence or comment at the close of five days, I will assume
that OWEP has no comment on the referral. I will send the referral
forward at that time for final approval by the Special Counsel for
Enforcement.
I look forward to continuing to work with your office on the
case referral process.
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IV.B.17.
-------
UNITED »TES ENVIRONMENTAL PROTECTION .GENCY
j;r 20 IS33
MEMORANDUM
SUBJECT: Program Review of Civil Water Cases
FROM: Bruce R. Barrett , Director
Office of Water Enforcement and Permits
TO: Louise D. Jacobs
Associate Enforcement Counsel for Water
During the past several months my office has been reviewing
and concurring in the referral of civil Clean water Act (CWA) and
Safe Drinking Water Act (SDWA) cases to the Department of Justice
(DOJ), modifications to consent decrees arising from such
referrals, proposed settlements and the withdrawal of cases which
no. longer merit prosecution.
In light of completion of the OW/OLfiC Flow Chart describing
Compliance/Enforcement procedures for the NPDES program and the
Acting Administrator's recent decisions regarding delegation of
enforcement authority, I wish to formalize the concurrence process
between our two Offices regarding the pre-referral review of
cases, consent decrees, settlement proposals and case withdrawals
by OW.
Based on the Office of Waters' responsibility as national
program manager for the Agency's water activities, pro-referral
review of cases performed by my Office will focus on the following
subject areas:
1. Does the case involve complex technical issues that
would require resources and/or technical expertise
beyond that available in the Region?
2. Does the case involve national policy issues important
to the office of Water?
3. Will the case set a precedent which may impact on
national programs managed by the Office of Water?
4. Does the case conform to existing Office of Water
policies and guidance with respect to the initiation
or
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-2-
Reviews which conform each of the four areas to be reviewed
will be concurred on by the Director of the Enforcement Division.
The Enforcement Division Director will also concur on those cases
involving issues in one or more of the four specified areas of
interest if the Enforcement Division Director is able to resolve
the key issues after consultation with Enforcement Counsel and the
initiating Region. If the Division Director is unable to resolve
the problem(s), such cases will bo escalated to the office
Director and to the Assistant Administrator, if necessary, for
resolution of key issues and for concurrence or non-concurrence.
I have assigned overall responsibility for program review of
pre-referral packages to Robert W. Zeller, Ph.D., Director,
Enforcement Division. Reviews involving violations of sections
301 and 402 (NPDES) of the CWA will be assigned to David Lyons and
his staff. Reviews involving sections 311 and 404 of the CWA,
the SWA, and the Marino Protection Research and Sanctuaries Act
(ttPRSA) will be assigned to Don Olson and his staff. The person
assigned to review each case will complete a review check sheet
(copy atached) Which will document for the file the reviewer's
rationale for recommending coneurrence/non-concurrence with the
request for referral.
I have instituted two procedural changes in my Office which •
will help to ensure timely responses to your requests for
concurrence. First, I have requested that the Water Division
Directors send copies of all referral requests to my Office.
several Regions are currently following this procedure. With this
procedure in place, program reviews will proceed simultaneously
with legal reviews, and in most instances, be completed prior to
the drafting of the referral memorandum to DOJ. This procedure
has the advantage that ow can provide technical input into the
referral memo if requested by your staff, second, I have
instituted an internal tracking system which will allow my staff
to pin-point exactly where any case is in the review and
concurrence process. Copies of the pre-referral packages and OLEC
requests for concurrence will be logged in and out through the
Division Secretary, Judy Howall. I have established a time limit
of five workdays for review of pre-referral packages and two days
for response to OLEC concurrence requests.
I believe that these procedures will enable us to work
closely with your Office in the timely review and referral to
DOJ of requests by the Regions for the initiation of civil
actions.
Attachments
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Attachment A
Procedures for Program Review of
judicial Referral Request
Office of Water Enforcement & Permits
Enforceuent Division
1. Copies of pre-referral packages and concurrence documents will
be logged in and date-stamped when received by the Division
Secretary.
2. The logged documents will be delivered to Don Olson for
distribution to the appropriate reviewer. NPDES related
reviews will be conducted by the Compliance Branch, and
Technical Evaluation and Support Section staff. ^3on-NPDES,
SDWA and MPRSA reviews will be conducted by the Drinking Water
and Special Enforcement Branch staff.
3. progran reviews will be completed using the review form and
returned to Don Olson within five workdays unless additional
information not contained in the package is required to
complete the review.
4. If the' reviewer uncovers any tactual/policy issues that would
cause OW£P to non-concur in the Region's request for referral
to DOJ', the reviewer should document his/her reason for
recommending non-concurrence on the review form or in a
separate memorandum and immediately raise the matter to the
Division Director's attention thru Don Olson.
5. Completed review sheets and pre-referral packages will be
checked by Don Olson and held until the concurrence documents
are received.
6. Don Olson will review the concurrence documents for
consistency with the pre-referral package and any comments
from the reviewer, initial the official file copy and forward
the referral package to the Division Director for program
Office concurrence.
7. Any issues that can not be resolved by the Division Director
should be immediately brought to the attention of OLEC - Water
so that they are aware of OV.'EP's concerns and recognize that
there may be a delay in the concurrence process.
Hotoi This entire review process should take no longer than seven
workdays unless additional information is required or the
matter contains issues that can not be resolved at the
Division level.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
:*M«O
OCT I 7 £9 ornc« or
**' * • •"'• ••rMtCBMCwretft
MEMORANDUM
SUBJECT: Direct Referral
FROM: Richard H. Mays
Senior Enforcemet Counsel
TO: Associate Enforcement Counsels
Attached is a letter of agreement between the Deputy
Administrator, on behalf of ETA, and the Acting Assistant*
Attorney General for Land and Natural Resources, on behalf
of the Department of Justice, regarding the referral of
certain types of cases from the Regional Offices directly
to the Department of Justice for a period of one year on
an experimental basis.
You vill note that this agreement does not go into
effect until December 1, 1983, and that Courtney Price
vill distribute a memorandum within EPA explaining this
agreement and how it vill be implemented vithin the Agency.
Courtney would like to have the assistance of each of you
and your staffs in developing the guidance memorandum which
vill implement this agreement. Please review the agreement
in your respective offices and submit any suggestions you
may have for. its implementation.
This office needs to closely monitor both the efficiency
and the effectiveness of this method of handling referrals.
Therefore, it is an important responsibility to assure that
this guidance memorandum receives careful and thoughtful
consideration. Please have your respective comments submitted
to me by Wednesday, October 26, 1983 to enable us to prepare
and distribute a guidance memorandum to the Regions veil in
advance of December 1^ 1983.
Attachment
-------
^"V^rv; j. UNITED STATES ENVIRON'N'.EN i AL FS'O i ECTiON' AGENCY ,
s. •••^•urf--^- WASHINGTON'. D.C 2."UCr . .
.^
—,_ c-:
Honorable F. Henry niibicht, II ' c '/'" ~ ' .'"
Acting Assistant Attorney General ' ' • - ."'••" ^.- • —
Land and Natural Resources Division ' ' ^_ ' •:
U.S. Department of Justice .- "_'; ' : "'';' ' .- -~..
Washington, D.C. 20530 ' ' - /_" ";
Dear Hank: .. . . -. • .-V-. . • :. /.;: ~ ~-Z =
•'•••'- . cur ~- r ~
As a result of our meeting on Thursday, September 8, 198&-* ~<
and the subsequent discussions of respective staffs, we are in
agreement that, subject to the conditions set forth below, the
classes of cases listed herein will be referred "directly from
EPA's Regional Offices to the Land and Natural Resources Division
of the Department of Justice in Washington, D.C.
The terms, conditions and procedures to be followed in
implementing this agreement are:
1. The Assistant Administrator for Enforcement and Compliance
Monitoring will waive for a period of one year the recuirer.er.t
of the Assistant Administrator's prior concurrence for referral
to the Department of Justice for the following classes of
judicial enforcement cases:
(a) Cases under Section 1414(b) of the Safe Drinking Water
Act which involve violations of the National Interim
Primary Drinking Water Regulations, such as reporting or.
monitoring violations, or maximum contaminant violations;
(b) The following cases under .the Clean Water Act:
(i) cases involving discharges without a permit
by industrial dischargers;
(ii) all cases against minor industrial dischargers;
(iii) cases involving failure to monitor or report by
industrial dischargers;
-------
(iv) referrals to collect stipulated penalties from
industrials under consent decrees;
(v) referrals to collect administrative spill
under Section 311(j) of the CWA;
(c) All cases under the Clean Air Act except the following:
(i) cases involving the steel industry;
v'ii) cases involving non-ferrous smelters;
(iii) cases involving National Emissions Standards for
Hazardous Air Pollutants;
(iv) cases involving the postTl982 enforcement policy.
2. Cases described in Section 1,' above, shall be-referred
directly from the Regional Administrator to the Land and
Natural Resources Division of DOJ in the following manner:
(a) The referral package shall be forwarded to the Assistant
Attorney General for Land and Natural Resources, U.S.
Department of Justice (DOJ), with copies of the package
being simultaneously forwarded to the U.S. Attorney
' (USA) for the appropriate judicial district in which
the proposed case is to be filed (marked "advance copy-
no action required at this time"), and the Assistant.
Administrator for Enforcement and Compliance Monitoring
(OECM) at EPA Headquarters. OECM shall have the followi-g
functions with regard -to said referral package:
(i) DECK-shall have no responsibility for review of
such referral packages, and the referral shall be
effective as of the date of receipt of the package
by DOJ; however, OECM shall comment to the Region
upon any apparent shortcomings or defects which
it may observe in the package. DOJ may, of course,
continue to consult with OECH on such referrals.
Otherwise, OECM shall be responsible only for
routine oversight of the progress and management
of the case consistent with applicable present
and future guidance. OECM-shall , however, retain
fin'al authority to approve, settlements orv.'beh.alf .
p£ EPA for these cases, as in other cases. ';. -.- .
(ii) The referral package shall be in the format and
contain information provided by guidance memoranda
as may be promulgated from time to time by OECM in
consultation with DOJ and Regional representatives.
-------
-3-
(iii) DOJ shall, within 30 days from receipt of the
referral package, determine (1) whether the Lands
Division of DOJ will have lead responsibility for
the- case; or (2) whether the USA will have lead
responsibility for the case.
While it is agreed that to the extent feasible,
cases in which the USA will have the lead will be
•transmitted to the USA for filing and handling
within this 30-day period, if. DOJ determines that
• • the case requires additional legal or factual
. ;..•' development at DOJ prior to referring the natter
to the USA, the case nay be returned to the
Regional Office, or may be retained-at the Lands
Division of DOJ for further development, including
.-1 requesting additional information from the Regional
Office. In any event, DOJ will notify the Regional
Office, OECK and the USA of its determination of
the lead role within the above-mentioned 30-o=y
period. . .
(iv) Regardless of whether DOJ or the USA is determined
to have lead responsibility for management, of
the case, the procedures and time limitations set
forth in the MOU and 28 CFR SO.65 et se'c. , shall
remain in effect and shall run concurrently with
the management determinations made pursuant to
this agreement.
3. (a) All other cases not specifically described in paragraph
1, above, which the Regional Offices propose for judicial
enforcement shall first be forwarded to OECM and the
appropriate Headquarters program office for review.
A copy of the referral package shall be forwarded simul-
taneously by the Regional Office to the Lands Division of
DOJ and to the USA for the appropriate judicial district,
the USA's copy being marked "advance copy-no act ion .'required
at this time." .
(b) OECM shall review the referral package within twenty-one
(21) calendar days of the date of receipt of said package
from the Regional Administrator and shall, within said
time period,, make a determination of whether the case
should be (a) formally referred to DOJ, (b) returned to
the Regional Administrator for any additional development
which may be required; or (c) whether the Regional
Administrator should be requested to provide any additional
material or information which may be required to satisfy
the necessary and essential legal and factual requirements
for that type of case.
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(c) Any request for information, or return of the case
to the Region shall be transmitted by appropriate letter
or memorandum signed by the AA for OECM (or her desicnee
within the aforementioned twenty-one day period. She-Id
OECM concur in the proposed referral of the case to DCj|
the actual referral shall be by letter fro- the AA for
OECM (or her designee) signed within fourteen days cf
the termination of the aforementioned twenty-one cay
review period. Copies of the letters referred to
shall be sent to the Assistan
Lands Division of DO J .
torney General for tr.c-
(d) Upon receipt of the referral package by DC
tne
procedures and tine deadlines set forth in paracrach
' . No. 8 of the HOU shall apply. .-_-..
In order to allow sufficient tine prior to implementation cf
this agreement to make the U.S. Attorneys, the Regional Offices
and our staffs aware of these provisions, i.t is agreed that this
agreement shall become effective December 1, 19S3. Courtney Price
will distribute a memorandum within EPA explaining this agreement
and how it will be implemented within the Agency. {i'ou will receive
a copy.) ""
I believe that this agreement will eliminate the necess
formally amending the Memorandum of Understanding between our
respective agencies, and will provide necessary experience to
ascertain whether these procedures will result in significant
savings of time and -resources. In that regard, I have asked
Courtney to establish criteria for measuring the efficacy cf this1
agreement during the one year trial period, and I ask that vo-
cooperate with her in providing such reasonable and necessary
information as she may request of you in making that determir.atior.
At the end of the trial period—or at any time in the interval—
we may propose such adjustments in the procedures set forth herein
as may 'be appropriate based on experience of all parties.
It is further understood that it is the mutual desire of the
Agency and DOJ that' cases be referred to the USA for filing as
expeditiously as possible. ' . "";'-;•
I appreciate your cooperation in arriving at this agreement.
If this meets with your .approval, please sign the enclosed copy
in the space indicated below and return the copy to me for. our
files.
Sincerely yours,
Alvin L. Aim
Deputy Administrate:
«pprovers:
?• Henry Hsbicht, II
Actin Assistant Attorney General
r\
Lane
and Natural Resources Division
-------
IV.B.18.
"DIRECT REFERRAL MEMORANDUM", dated September 29, 1983.(Amended by IV.B.29)
-------
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
•
BCT ITfil
MEMORANDUM
SUBJECT: Direct Referral
FROM: Richard B. May
Senior Enforcement Counsel
TO: Associate Enforcement Counsels
Attached is a letter of agreement between the Deputy
Administrator, on behalf of EPA, and the Acting Assistant'
Attorney General for Land and Hatural Resources, on behalf
or the "Department of Justice, regarding the referral of
certain types of cases from the Regional Offices directly
to the Departaent of Justice for a period o'f one year on
an experimental basis.
You vill note that this agreement does not go into
effect until December 1, 1983, and that Courtney Price
vill distribute a memorandum within EPA explaining this
agreement and how it. vill be implemented vithin the Agency.
Courtney would like to have the assistance of each of you
.and your staffs in developing the guidance memorandum which
vill implement this agreement. Please review the agreement
in your respective offices and submit any suggestions you
may have for its implementation. " _
•
This office needs to closely monitor both the efficiency
and the effectiveness of this .method of handling referrals.
Therefore, it is an important responsibility to assure that
this guidance memorandum receives careful and thoughtful
consideration. Please have your respective comments submitted
to me by Wednesday, October 26, 1983 to enable us to prepare
and distribute a guidance memorandum to the Regions veil in
advance of December 1« 1983. •
Attachment
-------
-------
, H^' '
N'lTEu1 STATES EKVIRCM»'.EI>.'T-.L. FftOTECTlC?*' ASE.'.CY f
.WASHINGTON1. O.C 2XCr - ^" "
' -' — c: .
Honorable ?. Kenry ncoicht, II • ' . c • .7 Z /
Acting Assistant Attorney General • 7'••" t... -
Land and Natural Resources Division ' . . L ' "
U.S-. Department of Justice .- '.'. ' - ~ .- .-
Washington, D.C. 20530 • .
Dear Kank: . "-.. . : -;: ~ -.^
:••• . '• • ;•'•'.•. "':--' ' • ' . ' ="" - J":t
As a result of our raeeting on Thursday, Septenoer 8,"'l9cl^ '"-?
and the subsequent discussions of respective staffs, we are in
agreement that, subject to the conditions set forth belov, the
classes of cases listed herein will be referred "directly frerr.
EPA's Regional Offices to the Land and Natural Resources Division
of the Department of Justice in Washington, D.C.
The terms, conditions and procedures to be followed in
implementing this agreement are:
1. The Assistant Administrator for Enforcement and Compliance
Monitoring will waive for a period of one year the rec^ire-er.t
of the Assistant Administrator's prior concurrence for referra-1
to the Department of Justice for the following classes of
judicial enforcement cases:
(a) Cases under Section 1414(b) of the Safe Drinking Water
Act which involve violations of the National interim
Primary Drinking Water Regulations, such as reporting or
monitoring violations, or maximum contaminant violations;
(b) The following cases under .the Clean Water Act:
(i) cases Involving.discharges without a permit
by industrial dischargers;
(ii) all cases against minor industrial dischargers;
(iii) cases involving failure to monitor'or report by
industrial dischargers;
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(iv) referrals to collect stipulated penalties from
industrials under consent decrees;
(v} referrals to collect administrative spill penaltr'
under Section 311 (j) of the CWA;
* •
(c) All eases under the Clean Air Act except the following:
(i) cases involving the steel industry;
iii) cases involving non-ferrous smelters;
•
(iiij cases involving National Emissions Standards .fsr
Hazardous Air Pollutants;
(iv) ' cases involving the post-^1932 enforcement policy.
.-•'*''
2. Cases described in Section 1, above, shall be referred
directly fro?, the Regional Administrator to the Land and
Natural Resources Division of DOJ in the following manner:
(a) The referral package shall be forwarded to the Assistant
Attorney General for Land and Natural Resources, U.S.
Department of Justice (DOJ), with copies of the package
being simultaneously forwarded to the U.S. Attorney
(USA) for the appropriate judicial district in which
the proposed case is to be filed (narked "advance copy-..
no action required at this time"), and the Assistant
Administrator for Enforcement and Compliance Monitorins
(DECK) at EPA Headquarters. OECM shall have the following
functions with regard to said referral package:
(i) DECK- shall have no responsibility for review of
such referral packages, and the referral shall be
effective as of the date of receipt of the package
by DOJ; however, OECH shall comment to the Region
upon any apparent shortcomings or defects which
it may observe in the package. DOJ nay, of course,
continue to consult with OECH on sue*) referrals.
Otherwise, OECH shall be responsible only for
routine bversieht of the progress and management
of the case consistent with applicable present
and future guidance. OECH shall, however, retain
final "authority to approve settlements on* behalf
for these cases, as in other cases. •. •> .
(ii) The referral package shall be in the format and
contain information provided by guidance memoranda
as a>ay be promulgated from time to time by OECH in
consultation with DOJ and Regional representatives.
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-3-
(iii) DOJ shall, within 30 days from receipt of the
referral package, determine (1) whether the Lar.rs
Division of D2J will have lead responsibility for
the- case; or (2) whether the USA will have lea:
responsibility for the case.
While it is agreed that to the extent feasible,
cases in which the USA will have the lead will is
transmitted to the USA for filing and handling
within this 30-day period, if DCJ determines rr.at
the case reguires additional legal or factual
development at DOJ prior to referring the mattc-r
to the USA, the case may be returnee to the
Regional Office, or say"be retained-at the Lanes
Division of DOJ for farther development, including
requesting additional information from the Regisna
Office. In any event, DOJ will notify the P.eeiena.
Office, O2C.M and the USA of its determine tier, "of
the lead role within the above-mentioned 30-day
period.
#
(iv) Regardless of whether DOJ or the USA.is determined
to have lead responsibility for management of
the case, the procedures and time limitations set
forth in the «OU and 28 C~R 50.65 et sec., shall
remain in effect and shall run concurrently with
the management determinations made pursuant tc
this agreement.
3. (a) All other cases not specifically described in paragraph
1, above, which the Regional Offices propose for judicial
enforcement shall first be forwarded to 0£CM and the
appropriate Headquarters program office for review.
' A copy of the referral package shall be forwarded simul-
taneously by the Regional Office to the Lands Division of
DOJ and to the USA for the appropriate judicial district,
the USA's copy being marked "advance copy-no action .-require
•at this time.' .
(b) OECM shall review the referral package within twenty-one
(21) calendar days of the date of receipt of said package
from the Regional Administrator and shall, within said
tine period, make a determination of whether the case
should be (a) formally referred to DOJ, (b) returned to
the Regional Administrator for any additional development
which may be required; or (c) whether the Regional
Administrator should be requested to provide any additional
material or information which may be required to satisfy
the necessary and essential legal and factual requirements
for that type of case.
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-4-
(c) Any request for information. or return of the case
to the Region shall be transmitted by. appropriate -l
or memorandum signed by the AA for OECM (or her desil
within the aforementioned twenty-one day period
OEC.M concur in the proposed referral of" the case to zc:
.the actual referral shall be by letter frc.T. the AA fcr
snail be sent to the Assistant Attorney General fcr t.-.o
Lands Division of DOJ.
(d) Upon receipt of the referral package- iy 52:, the
procedures and time deadlines set fsrtr. ir. pirirrarr.
No. 8 of the MOU shall apply. • .
In order to allow sufficient tine prior to implementstic- cf
this agreement to make the U.S. Attorneys, the Regional Cfficss
and our staffs aware of these provisions, it is agreed that this
agreement shall .be cc-rse effective December lf 19S3.. Courtney Pries
will distribute a memorandum within £?A explaining this agrser.er.t
and how it will be^inplerrented within the Agency." (You will rec-s:
a copy. ) ""
I believe that this agreement will eliminate the necessity c:
formally amending the Memorandum of Understanding between our
respective agencies, and will provide necessary experience to
ascertain whether these procedures will result in significant
savings of time and resources, in that regard, I have asked
Courtney to establish criteria for measuring the efficacy cf tr.is.
agreement curing the one year trial period, and I as): thnt yru
cooperate with her in providing such reasonable and necessary
information as she may request of ycij in making that deterr.if.2ticr
At the end of the trial period—or" at any time "in the interval—
we nay propose such adjustments in the procedures set forth hereir
as may be appropriate based on experience of all parties.
It is further understood that it-is thc'Rutual desire of the
Agency and DOJ that cases be referred to the USA for filinc as
expeditiously as possible. ' . ~ : {
I appreciate your cooperation in arriving at this acreemsnt.
If this meets with your approval, please sign the enclosed copy
in the space indicated below and return the copv to me for our
files. " ; "
Sincerely yours,
s^xTisisL.
Alvin L. Air.
T\& v**«^«* i. ** ** * T\ * C^
ix6|?w wv /^%«*«** n • d «»
-------
IV.B.19.
"Implementation of Direct Referrals for Civil Cases", dated
November 28, 1983. See GM-18.*
-------
IV.B.20.
"Guidance on Evidence Audit on Case Files", dated December 30,
1983. See GM-20.*
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IV.B.21
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s UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
f WASHINGTON. D.C. 2CM60
to 8
MEMORANDUM
SUBJECT: Headquarters Reviewand Tracking .Oyf Civil Referrals
FROM: Courtney M. Price
Assistant Administrator
Office of Enforcement and Compliance Monitoring
TO: Regional Administrators
Regions I-x
Regional Counsels
Regions I-X
Associate Enforcement Counsels
The Office of Enforcement and Compliance Monitoring is
committed to working cooperatively with Regional Offices to
track civil enforcement litigation and to generally improve
management of EPA's enforcement litigation. The following
procedures provide for expedited handling of case referrals
which continue to be reviewed by Headquarters and for over-
sight of "direct" case referrals. They also clarify roles
in the management of various classes of judicial actions.
This guidance supplements and, where inconsistent, supersedes
previous guidance on review and tracking of civil referrals.
I. CLASSIFICATION OF REFERRALS
Four distinct classes of cases have evolved in the Agency's
civil judicial enforcement program. Those classes of cases and
roles in handling each class may be described as follows:
Class I: Nationally managed cases involving highly
significant and precedential issues of major
importance in the particular program, or
involving 'activities in more than one Region.
The lead legal and/or technical responsibilities
in such cases usually .rest in Headquarters, with
assistance from the Regional office(s).
c-1
c>
'&
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-2-
Class II: Cases involving issues of significance which
may be unique or precedential, or which a<
important to establish or further Agency
enforcement goals. The lead legal and
technical responsibilities in such cases
usually rest in the Regional offices, with
substantial assistance and oversight from
Headquarters.
Class III: Cases which are significant and important to
Agency enforcement goals, but which are not
likely to raise issues which are unique or
precedential. The lead legal and technical
responsibilities in such cases rest in the
Regional offices. Headquarters involvement
will be limited to general oversight to ensure
that Agency policies are followed and that
cases are being prosecuted in an expeditious
manner. Routine communications should take
place directly between Regional attorney
staff and the Department of Justice or U.S.
Attorneys.
Class IV: Cases which may be referred directly from the
Regions to Department of justice (DOJ)
Headquarters pursuant to the September 2'9 ,
1983 letter agreement between Alvin L. Alji
for EPA and F. Henry Habicht, II for DOJ
(copy attached). Direct referrals are
presently authorized for the more routine
cases in the Air and Water programs.
Headquarters attorney involvement in those
cases will be limited to summary review and
oversight as described herein. Routine
communications should take place between
Regional Attorney Staff and DOJ or U.S.
Attorneys.
The classes of cases which fall within the Class IV are
set forth with specificity in the letter agreement between
Alvin Aim
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-3-
regarding the classification of the case or decision on lead
responsibilities. The Associate will also notify the Regional
Counsel of the issue. If agreement cannot be achieved, I will
determine the appropriate classification and lead responsi-
bilities after consultation with all relevant parties within
the Agency.
After the initial classification of a case, facts may
develop or issues arise which will justify a reclassification.
Either the Associate Enforcement Counsel or the Regional
Administrator (or the designated Regional enforcement contact
person) may suggest reclassification of a case or modifi-
cation of lead responsibilities. The decision on reclassifi-
cation will be made as described above for original classifi-
cation .
II. EVALUATION OF DIRECT REFERRALS
• On December 1, 1983 we started a one year trial period for
direct referral of certain types of enforcement litigation to
the Department of Justice. The types of civil enforcement
cases-for which I have waived the requirement of concurrence
are listed in a September 29, 1983 letter from Alvin L. Aim to
F. Henry Habicht, II (copy attached). Procedures for imple-
menting the direct referral process were detailed in a '
November 28, 1983, memorandum I addressed to Regional
Administrators, Regional Counsels and Headquarters staff (copy
attached). As a point of clarification, it is my intent that
contempt actions may also be handled as direct referrals if the
original case would meet the current criteria for direct referral
Headquarters will review and evaluate the information copy
required to be furnished to EPA Headquarters when each direct
referral is sent to the Department of Justice. Associate
Enforcement Counsels for the programs where direct referrals
are utilized will prepare checklists which, at a minimum,
provide for review of the following criteria:
A. Appropriateness of direct referral
The case should be clearly within one of the categories
enumerated in the September 29, 1983, letter from Alvin Aim to
F. Henry Habicht, II for which direct referral may be used.
Contempt actions in cases which fit the direct referral cate-
gories may also be handled through direct referral procedures.
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B. Format of the cover memorandum
The referral package should include the Case Data and
Facility Dat»a forms and a cover memorandum which identifies
and discusses at least the following subjects: nature of the
case, cause of action, proposed remedy, issues of national
or precedential significance, description of consultation
for case development (including names of Headquarters and
DOJ attorneys contacted), identification of Regional contact
persons, and basis for treating case as a direct referral.
C. Substantive adequacy of direct referrals
Each direct referral package should contain the following
elements: - -
1. An adequate cause of action;
2. Description of evidence sufficient to prove the
violations (copies of documentary evidence should
be attached, if possible, and the person(s) with
custody of all evidence should be identified);
3. Evaluation of potential defendants and a discussion
of why the named defendants were selected;
4o Discussion of State involvement in efforts to
resolve the violations;
/
5. Evaluation of potential defenses and how they can
be refuted;
6. Evaluation of issues of precedential significance
in the case, including a discussion about how the
positions proposed by the Regional Office are
consistent with law and national policy;
7. Description of the environmental harm to be remedied
or other reasons which justify prosecution of the
case at the time of referral;
8. Description of the remedy to be sought or the
specific discovery required to establish a remedy
in the case;
9. Discussion of-penalties to be sought (a) if the
case proceeds to trial and (b) as an initial
settlement position; and
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- J-
10. Description of attempts made to settle the case,
problems encountered in settlement discussions,
and the date of the last contact with the source
owner or other potential defendant.
Within 30 calendar days after receiving the information
copy of a direct referral the Associate Enforcement Counsel
will send a copy of the completed checklist to the Regional
Office, maintaining a file copy to serve as a basis for
periodic evaluation.
If a case which is not within the category for direct
referral is erroneously sent through the direct referral pro-
cess, the Associate Enforcement Counsel will prepare a
response ranging from a simple notice to the Region indicat-
ing why the direct referral was erroneous to a withdrawal
from the Department of Justice. if a case which should have
been directly referred to the Department of justice is
erroneously sent to Headquarters for concurrence, the
Associate will, after consultation with the Region, forward
it to the Department of Justice as a direct referral. A copy
of the memorandum forwarding the case to the Department of
Justice will be sent to the Region.
III. TRACKING ALL REFERRALS IN THE COMPUTER DOCKET
All civil cases must be entered and tracked in the
Enforcement Docket System. Guidance on responsibilities for
docket procedures is contained in memoranda dated April 21,
1983, November 23, 1983, and November 28, 1983 (copies
attached). The following docket guidance supplements and,
where inconsistent, supersedes those memoranda.
Each Regional attorney has primary responsibility for
updating all of his or her active cases as part of the monthly
update procedures. Headquarters attorneys will also continue
to provide information to the system. Case Status Update
reports will be sent on or about the first of each month to
the Regional Docket Control or Regional Coordinator for
distribution to the responsible Regional attorneys. By the
10th of each month, the Regional attorney must see that an
update is submitted to the Regional data analyst (if the
Region has one) or is mailed to Headquarters Docket Control,
Bruce Rothrock (LE-130A).
As with all referrals, an information copy of direct
referrals must be sent to Headquarters, directed to my atten-
tion, and must include completed Case Data and Facility Data
Forms (copies of those forms are attached). The Correspondence
Control Unit (CCU) will route the package to the appropriate
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-6-
OECM division, and will give the Case Data Form, the Facility
Data Form, and a copy of the cover letter rofccrral memorandum
to Headquarters Docket Control Cor entry of the case into
the Docket System. Regions' with Regional Docket Control shcl
give copies ;of the Case and Facility Data Forms and the
referral memorandum directly to regional data analyst for entry
into the system. Failure to attach those forms may result in
the cases not being entered in the Docket System, and the
Region not receiving credit for the case at the tine of
referral.
Copies of direct referral packages are to be sent simul-
taneously to the Department of Justice and EPA Headquarters.
The "Date to EPA Headquarters" and the "Date Referred to
DOJ" shown in the Case Docket System will be the date- on the
cover.letter from the Regional Administrator. The System is
being "mod if led so that direct referrals will be identified
an.d c-an be separately -retrieved from the System. A new
event for "Date Received EPA HQ" will also be added. This
event will be used as an approximate date when the Land
and Natural Resources Division, Department of Justice,
receives the referral package and, consequently, when the
thirty day clock begins to run for determining whether
Headquarters DOJ or the U.S. Attorney will have the lead
litigation responsibilities as provided in the September 29,
.1983 letter agreement between Alvin Aim and Henry Habicht, II.
IV. REFERRALS REQUIRING CONCURRENCE
The review criteria for direct referrals contained in
this memorandum also apply to cases which require Headquarters
concurrence. Rather than incorporating the results of review
in a file checklist, however, the results will be incorporated
in the memorandum that Associates prepare for me recommending
whether to refer the case to the Department of Justice or
return the case to the Region. A copy of the memorandum will
be sent to the Region. If the case represents a type that
should be considered for direct referral in the future, the
memorandum addressed to me should so indicate.
All settlements require Headquarters concurrence. ,Thus,
referrals which include a consent decree to be filed with
the complaint require Headquarters concurrence. Such referrals
should contain the following elements:
,1. A clear statement of a cause of action;
2. Identification and discussion of any issues of
national significance;
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-7-
3. Analysis justifying proposed penalties in terms of
applicable penalty policies; and
4. An enforceable consent decree which (a) resolves
the violation, (b) is in accordance with require-
ments of applicable statutes, regulations and
policies and (c) includes an appropriate termi-
nation date or specifies some other process for
concluding the court's jurisdiction. See "Guidance
for Drafting Judicial Consent Decrees" (GM-17)
issued October 19, 1983 for a complete description
of consent decree requirements.
V. MANAGING THE CIVIL ENFORCEMENT DOCKET
Involvement by the Associate Enforcement Counsels in all
cases, including those that do and do not require Headquarters
concurrence, will provide a basis for developing national
expertise and will identify areas where national guidance is
needed. In addition it will prepare us to respond quickly
when settlement proposals are submitted for approval. We
must ensure that litigation is expeditiously prosecuted, that
national policies are implemented and that statutory require-
ments are scrupulously observed. Whenever Headquarters
identifies a problem, the Associate Enforcement Counsel
should communicate with the Regional Counsel and Department
of Justice. Where quick resolution cannot be informally
achieved, the Associate should communicate in writing on the
subject to the Regional Office and Department of Justice and
place a copy of the memo in the Headquarters case file. I
rely on the judgment of each Associate as to when a matter is
of sufficient importance that it should be called to my
attention.
The Associate Enforcement Counsels will monitor the
activities of the Regions and the Department of Justice to
make sure that all cases are vigorously prosecuted after
referral. Extensive informal discussions and efforts at
voluntary resolution normally occur prior to referral. We
should move forward resolutely v/hen litigation is required.
Settlement discussions may, of c rse, proceed on a parallel
track, but they generally should .,ot result in suspension of
litigation activities. My Novemoer 28, 1983 memorandum
describing procedures for implementation of direct referrals
specifically requires that I concur in any delay after a
case has been referred to the Department of Justice. Whether
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-8-
or not the case was directly referred, the Associates should
identify and call to my attention any instance where the
government has caused or agreed to delay in the filing or
prosecution of any case without my consent.
The Associate Enforcement Counsels will use the
computerized enforcement docket and other available information
to monitor the overall litigation effort. In addition, they
and their staffs will make periodic visits to Regional offices
to fulfill this office's oversight role. Unless action is
required to ensure that an Agency policy or a legal require-
ment is followed, or that a case is prosecuted expeditiously,
this office will not interject itself into individual Class
III or Class IV cases. Headquarters attorneys may, at.the
request of a Regional office to the Associate Enforcement
Counsel, provide assistance, consistent with resource
availability and other priorities.
My November 28, 1983 memorandum on direct referrals
indicates that Regional offices should obtain Headquarters
approval for settlement proposals before they are forwarded
to the defendant. This procedure should apply to to all
cases whether or not they were directly reffered. Each
Associate Enforcement Counsel is authorized to approve
settlements at this stage, using his or her judgment whether
to confer with me on critical issues before agreeing to a
proposal. The Associate will make sure the settlement meets
the criteria set forth above for consent decrees, complies
with all applicable policies and laws, and is consistent
with national program objectives. I must approve all final
settlements before they are filed in court.
Attachments
cc: Office Directors, OECM
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IV.B.22.
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I 52Z2-
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C 20460
March .19, 1984
MEMORANDUM
THE ADMINISTRATOR
SUBJECT: Delegation of Authorities to the Deputy Administrator
TO:
Assistant Administrators
General Counsel
Inspector General
Associate Administrators
Regional Administrators
Staff Office Directors
In the interest of streamlining our management of the
Agency, I have today delegated to the Deputy Administrator the
authority to take certain actions relating to internal agency
management and organization or routine regulatory matters.
This delegation will be added to the EPA Delegations Manual
which is currently under revision.
This action is designed to relieve me of the burden of
acting on the volume of internal management decisions and other
relatively routine or pro forma signature items. As experience
suggests additional areas in which signature by the Deputy
Administrator may improve our management performance, I will
expand the scope of the current delegation. Beginning
immediately, decision documents addressing the following
matters should be prepared for Mr. Aim's signature:
— Agency reorganizations;
— Agency directives and internal delegations of
authority;
— Advisory Board letters and charter actions
— Approval of Advance Treatment projects; and
»
— Concurrence in modifications of State Plans under
the Coal Mine Safety and Reclamation Act as
petitioned by the Department of the Interior.
William D, Ruckelshaus
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
MAR I 3 1984
OFFICE OF
ADMINISTRATION
AND RESOURCES
MEMORANDUM MANAGEMENT
SUBJECT: General Delegation of Authority — ACTION MEMORANDUM
FROM: Howard M. Messnep-^/
Assistant Adminstrator
TO: The Administrator
THRU: AX
The Deputy Administrator
ISSUE
To allow the Deputy Administrator to exerciser at any time,
certain delegable authorities of the Administrator.
BACKGROUND
Reorganization Plan No. 3 of 1970 states that, "The Deputy
Administrator shall perform such functions as the Administrator
shall assign or delegate, and shall act as Administrator during
the absence or disability of the Administrator or in the event of ,
a vacancy in the office of the Administrator."
As a part of our analysis of the Agency's current delegations
of authorities, my staff has identified a number of opportunities
to streamline Agency action by delegating signature authority
to the Deputy Administrator. Generally speaking, these matters
involve routine administrative decisions, minor regulatory actions,
and matters of internal management and organization. Examples of
such actions include:
0 Advisory Board letters and charter actions;
0 Agency reorganizations;
0 Agency directives and internal delegations;
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-2-
* Approval of Advanced Treatment projects; and
0 Concurrences in modifications of State Plans under the
Coal Mine Safety and Reclamation Act as petitioned by
the Department of the Interior.
The efficiencies associated with delegating signature authority
to the Deputy'Administrator-could be obtained by two means. On
one hand, you could delegate authority to act in these specific
areas set forth in a narrowly-prescribed delegation. On the other
hand, the delegation could be broadly drafted to authorize the
Deputy Administrator to perform any act not statutorily required
to be performed by the Administrator.
While our analysis favors the use of as broad a delegation as
possiblef the General Counsel has made the point that delegation
language which is too general could cause confusion and possibly
conflict with other delegations as published. Within the context
of the attached delegation, you and the Deputy would determine
those actions you wish the Deputy to take without prior consulta-
tion with you, and we would publish those in the delegation. As
experience suggests additional areas in which you wish the Deputy
to act, he could be delegated such actions by amending this single
delegation.
The attached delegation authorizes the Deputy to exercise
certain authorities not reserved to the Administrator by statute.
It would give the Deputy full authority to act on your behalf at
any time. This is designed to relieve you of the burden of signing
or otherwise approving a volume of internal management actions or
relatively routine, pro forma signature items. This delegation
will become the initial delegation in the EPA Delegations Manual
which is currently undergoing a major revision.
RECOMMENDATIONS
I recommend you indicate your approval of Delegation 4-1 by
signing below.
,»
Attachment
Approve
Date:
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1200
DELEGATIONS
GENERAL, ADMINISTRATIVE AND MISCELLANEOUS
1-1. GENERAL DELEGATION
1. AUTHORITY. To exercise certain delegable authorities of the Administrator
including, tut not limited to the following:
a. signature of Advisory Board letters and charter actions;
b. approval of internal Agency reorganizations;
c. approval of Agency directives and internal delegations of authority;
d. decisions on Advanced Treatnent (AT) projects; and
e. concurrences in modifications of State Plans under the Coal Mine
Safety and Iteclamation Act as petitioned by the Department of Interior.
2. TO WHOM DELEGATED. The Deputy AJministrator.
3. REDELEGATION. This.authority may be redelegated with the concurrence of
the Administrator.
4. ADDITIONAL REFERENCES. This delegation does not supersede any other
delegation in this Manual. Delegation of other specific authorities will be
documented in revisions of this delegation.
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IV.B.23.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
MAR 2 0 1984
THE ADMINISTRATOR
MEMORANDUM
SUBJECT: Races to the Courthouse
FROM: The Administrator
TO: Assistant Administrators
Office Directors
Chief Judicial Officer
When EPA takes regulatory action, it is frequently sued.
Many of the statutes governing our Agency provide for such
suits to be filed only in one court, generally the United
States Court of Appeals for the District of Columbia Circuit.
However, a number of the statutes under which we operate
allow the Agency to be sued in any United States Court of
Appeals. This has led some litigants to sue in the court of
appeals they believe will be most likely to rule in their
favor, a practice known as forum shopping.
A federal statute, 28 U.S.C. 2112(a), requires all
lawsuits filed against a federal agency in courts of appeals
to be transferred to the court of appeals in which the first
suit was filed. That court may then transfer all the suits
to another court of appeals, .but may, in its discretion,
decide all the cases itself. This statute has led some forum
shoppers to seek to be the first to file a lawsuit in the
court of their choice. This practice is known as racing
to the courthouse. Racers have adopted such measures as
stationing staff members for months in government offices
waiting for an action to be announced, maintaining open long
distance telephone lines to distant courthouses, and estab-
lishing lengthy human signalling chains to let lawyers know
when to file petitions for review.
EPA actions under the Clean Water Act are currently
subject to rules (40 CFR Part 100) that eliminate the most
abusive aspects of races to the courthouse by setting the
date of agency action for judicial review purposes at two
weeks after the date of publication in the Federal Register.
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However, races to the courthouse are possible under
other EPA-administered statutes. Races were recently run to
file lawsuits against two EPA regulatory actions under the
Uranium Mill Tailings Radiation Control Act and the Federal
Insecticide, Fungicide, and Rodenticide Act. The races
resulted in interference with EPA work and in unnecessary
litigation. Soon I expect to propose rules that will elimi-
nate some of the abusive practices associated with such
races. The rules, if adopted, will set the time and date of
a number of EPA actions, for purposes of judicial review, two
weeks or more after the action is signed or, for rules and
similar actions, published in the Federal Register. In the
meantime, I am asking each of you to take the following steps
to prevent races on regulatory actions that are taken before
these rules are adopted.
Rulemaking and Related Actions. In all final rules
and related actions listed in Attachment A, include the
following statement in the "DATES" section of the preamble
to the final rule:
These regulations shall be promulgated for
purposes of judicial review at 1:00 p.m.
eastern time on [two weeks after the date
of publication in the Federal Register].
The bracketed material will be deleted by the Office of the
Federal Register and the actual date substituted. The
effective date should be changed to reflect this delay in
promulgation. Most rules should be made effective 60 days
after promulgation. In these cases, the following language
should also appear in the "DATES" section:
These regulations shall become effective on
[74 days after the date of publication in the
Federal Register].
Inclusion of an action in Attachment A does not constitute
an Agency opinion that it is rulemaking for purposes of the
Administrative Procedure Act.
Adjudication. All final orders in adjudications listed
in Attachment B should include the following language:
For purposes of judicial review, the date of
issuance or entry of this order shall be
fourteen days after the date it is signed.
Exceptions. The General Counsel, or the Judicial Officer,
may shorten the deferral period or waive these requirements
when special circumstances, such as the need to comply with a
statutory or court-ordered deadline, so require.
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Attachment A
Rulemaking and Related Actions
Clean Water Act
Apply the requirements of 40 C.F.R. Part 100.
Resource Conservation and Recovery Act
Authorization and interim authorization of state
Hazardous Waste Management programs.
Toxic Substances Control Act
All final rules.
Safe Drinking Water Act
All final direct federal implementation underground
injection control programs.
Approval or disapproval of state-submitted
underground injection control programs.
Final agency action on petitions for designation
of aquifers under Section 1424(e).
Uranium Mill Tailings Radiation Control Act
All final rules.
Atomic Energy Act
All final rules.
Federal Food, Drug, and Cosmetic Act
All final rules.
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Attachment B
Adjudications
Clean Water Act
Decisions on appeal to the Administrator under 40 C.F.R.
§§124.91 or 124.125.
Resource Conservation and Recovery Act
Final decisions on EPA-issued or denied permits for
hazardous waste management facilities.
Federal Insecticide, Fungicide, and Rodenticide Act
Final orders following a public hearing in pesticide
cancellation or suspension proceedings.
Safe Drinking Water Act
Decisions on applications for variances or exemptions
under Sections 1415 or 1416
Federal Food, Drug, and Cosmetic Act
Final decisions on pesticides tolerances that are
reviewable under 21 U.S.C. 346a(i) or 348(g).
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IV.B.?4.
"Guidance for Enforcing Federal District Court Orders", dated May 8, 1984,
This document is reproduced at Section IV D.I., this compendium.
-------
-------
IV.B.25,
"Guidance on Counting and Crediting Civil Judicial Referrals",
dated June 15, 1984. See GM-29.*
-------
IV.B.26,
"Revised Regional Referral Package Cover Letter and Data Sheet",
dated May 30, 1985. See GM-40.*
-------
IV.B.27
"FORM OF SETTLEMENT OF CIVIL JUDICIAL CASES", dated July 24,
1985. See GM-42.*
-------
IV.B.28.
"Direct Referrals Clean Water Act - 'No Penult' Cases", dated September 11,
1985.
-------
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF ENFORCEMENT
AND COMPLIANCE
MONITORING
MEMORANDUM
SUBJECT: Direct Referrals Clean Water Act \ "No Permit" Cases
FROM: Courtney M. Pricef fL*^-x^_/ >O -
Assistant Administrator for Enforcement
and Compliance Monitoring (LE-133)
TO: Henry L. Longest, II
Acting Assistant Administrator for Water (WH-556)
Regional Administrators
Regional Counsels
Tom Gallagher, Director
National Enforcement Investigation Center
Assistant Attorney General, F. Henry Habicht has recently
requested that all Clean Water Act "no permit" cases be care-
fully evaluated for possible criminal prosecution. As Henry
Habicht explains, the permit requirement has been in effect for
14 years; thus, it is highly unlikely that dischargers would
be unaware of the statute, and likely that any discharge without
a permit might be the result of a willful act. Furthermore,
the permit requirement is central to EPA's Water program.
I therefore am recommending that you implement the
following procedures to address his concerns.
1. The Regional Water Division Director in consultation
with the Regional Criminal Attorney and the
Special/Resident-Agent-in-charge, should carefully
scrutinize all "no permit" Clean Water Act cases for
potential criminal action prior to their referral for
civil action.
2. If they decide to bring a criminal enforcement
action, the case will be developed and referred
as provided in the General Operating Procedures
for Criminal Enforcement.
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-2-
3. If/ however, it is decided not to proceed with a
criminal prosecution, then that particular "no
permit" case will be directly referred for civil
action to the Department of Justice in accordance
with existing procedures.
These procedures will take effect on October 1, 1985.
If there are any questions, please contact Randall Lutz,
Director, Office of .Criminal Enforcement. He may be reached
at FTS 557-7410; E-Mail Box EPA 2372.
Attachment
~.
^•.
cc: Glenn Unterberger
Terrell Hunt
Randall M. Lutz
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IV.B.29
"Direct Referrals", dated August 28, 1986.
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I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
V7"*%f WASHINGTON. D.C. 20460
'«< men *°
Office of
ENfOftCEMF.NT AND
COMPLIANCE MONITORING
Honorable F. Henry Habicht, II
Assistant Attorney General
Land and Natural Resources Division
U.S. Department of Justice
Washington, D.C. 20530
Re; Direct Referrals
Dear Hank:
During the past year OECM has been holding discussions
with the Headquarters program offices and with the 10 Regional
Counsels on how to improve and expand the direct referral
program, wherein certain cases are referred directly from the
Regional Administrator to your office. Because the program
is working well, the consensus of the Associate Enforcement
Counsels, the program compliance division directors and the
Regional Counsels is to expand the classes of cases subject
to direct referral. We have also consulted with members of
your staff and understand that they acquiesce in this concept
insofar as the classes of cases set forth herein are concerned.
This letter, when signed by you, will serve as an amendment
to our September 29, 1983, agreement which set forth the condi-
tions of the initial direct referral pilot project. It will
also amend the June 15, 1977, Memorandum of Understanding
between our respective Agencies.
The following 8 classes of cases will be added to the
direct referral program:
1. All collection actions in which the relief
requested is solely for unpaid administratively or
judicially assessed penalties under any statute,
except for actions to assess penalties under CERCLA
and cases where there is little prior experience in
civil judicial enforcement (i.e., the Ocean Dumping
Act, underground injection control regulation under
RCRA/SDWA, Clean Air Act NESHAPs other than vinyl
chloride and asbestos).
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-2-
2. All actions in which the only relief sought is con-
tempt for violation of any consent decree or other
enforceable order, and/or to enforce the terns of any
consent decree or other enforceable order.£/ The pre-
ceding types of actions against governmental entities
shall continue to be referred to OECM.
3. Clean Air Act cases involving asbestos and vinyl
chloride National Emissions Standards for Hazardous
Air Pollutants.
4. All Clean Air Act post-1982 date cases except those
involving steel producers, smelters, and lead
sources. £/
5. All Clean Water Act cases involving NPDES permit
violations by industrial dischargers, except those
involving violations relating to or determined by
biological methods or techniques measuring effluent
toxicity.
6. All judicial actions alleging interim status vio-
lations under RCRA S3008(a) except cases involving
loss of interim status or closure. This authority
will take effect in each Region upon the successful
referral by the Region of two cases in order to
demonstrate the requisite experience. This author-
ity does not include corrective action cases under
S3008(h).
7. All RCRA judicial actions seeking penalties only,
except for underground injection control regulation
cases.
8. All actions to enforce final federal orders issued
under RCRA S3008(a). This authority will take ettect
in each Region upon the successful referral by the
Region of two cases in order to demonstrate the
requisite experience.
We will add these expansion cases to the 5 classes of cases
currently included in the direct referral program listed below:
I/ All modifications of consent decrees which result from any
action (direct referral) in this paragraph shall continue to
require OECN approval and program office approval, where appro-
priate, prior to submission to DOJ for entry by the court.
2/ OECM approval will also be required when major changes are
made to SIPs due to a future change in the related NAAQS.
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-3-
1. Cases under Section 1414(b) of the Safe Drinking Water
Act which involve violations of the National Interim
Primary Drinking Water Regulations, such as reporting
or monitoring violations or maximum contaminant
violations. (Note: This category does not include any
causes of action under section 1414(b) established by
the SDWA Amendments of 1986.)
2. The following cases under the Clean Water Act:
a. cases involving discharges without a permit by
industrial dischargers;
b. all cases against minor industrial dischargers;
c. cases involving failure to monitor or report by
industrial dischargers;
d. referrals to collect stipulated penalties from
industrials under consent decrees;
e. referrals to collect administrative spill
penalties under Section 311(j) of the CWA.
3. All stationary source cases under the Clean Air Act
except the following:
a. cases involving the steel industry;
b. cases involving nonferrous smelters;
c. cases involving NESHAPs;
d. post - 1982 date cases.
4. All TSCA & FIFRA collection actions for unpaid
administratively assessed penalties.
5. All mobile source tampering and fuels cases (except
governmental entity cases) arising under the Clean
Air Act, Sections 203 and 211 respectively.
OECM will continue to play a substantive role in these
cases, especially in view of the increased size of the Agency's
case load and the need to ensure that our cases reflect the
Agency's priorities. OECM and DOJ will simultaneously review
these referrals.
Within 35 days of receipt of a copy of the direct referral
package, the appropriate AEC will comment on the merits of the
referral to DOJ and to the originating regional office. He may
ask the Assistant Administrator of OECM to recommend to DOJ
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-4-
that the case be further developed before filing or returned to
the regional office. OECM will also continue to oversee the
progress and development of these direct referral cases and will
continue to approve all judicial settlements on behalf of EPA.
All other agreed-upon conditions and procedures regarding direct
referrals and case management will remain in effect.
In order to allow sufficient time prior to implementation
of the expansion and to make the U.S. Attorneys, the. regional
offices and our staffs aware of its provisions, it is agreed
that this agreement shall become effective for cases referred
trom a Region on or after September 2, 1986. I will distribute
a memorandum to the Regions, the Headquarters program offices
and within OECN explaining the expansion and how it will be
implemented.
I appreciate your cooperation in arriving at this amendment
to our agreement. If this direct referral case expansion meets
with your approval, please sign in the space provided below and
return a copy of the letter to me for our files.
Sincerely,
Thomas L. Adams, Jr.
Assistant Administrator
I \
Approved:
HenryjHabicht, II
Assistant Attorney General
Land and Natural Resources Division
U.S. Department of Justice
cc: Richard H. Nays
Senior Enforcement Counsel
-------
IV.B.30,
"Expanded Civil Judicial Referral Procedures"* dated
August 28, 1986. See also GM-50.*
-------
C0 MATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
, ALJG 2 8 I38&
ornr.i of
ENfORrEMF.NT AND
COMPLIANT MOMTOHING
MEMORANDUM
SUBJECT: Expanded Civil Judicial Referral Procedures
FROM: Thomas L. Adams, Jr. ^^^^p^i^-v-c \v.
Assistant Administrator for Enforcement
and Compliance Monitoring
TO: Regional Administrators
Program Office Enforcement Division Directors
Purpose
The purpose of this memorandum is to provide guidance
on several issues regarding the procedures by which the Agency
refers civil judicial referrals to the Department of Justice
(DOJ). They are as follows: 1) expansion of the current
direct referral program, 2) pre-referral negotiations, 3) hold
action requests to DOJ for referred cases, and 4) filing proofs
of claim in bankruptcy by regional attorneys.
Expansion of Direct Referral Program
Last summer the Direct Referral Program^/ was expanded to
include, in the second year of operation, all TSCA and FIFRA
!_/ As used here the term "direct referral" denotes case
referrals sent directly from the Regional Administrators to
the Assistant Attorney General for Land and Natural Resources
cf the Department of Justice, with simultaneous review by OECM
and DOJ. The current DOJ address for direct referrals is:
U.S. Department of Justice, Environmental Enforcement Section,
Box 7415, Ben Franklin Station, Washington, D.C. 20044, or, if
express delivery is used, U.S. Department of Justice, Land
and Natural Resources Division, Environmental Enforcement
Section, Room 1521, 9th. St. and Pennsylvania Ave, N.W.,
Washington, D.C. 20530.
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-2-
collection actions and all non-governmental mobile source tam-
oering and fuels cases. That expansion has been successful in
helping to expedite the judicial referral process. Effective
for cases referred on or after September 2, 1986, OECM with
DOJ encouragement is further expanding the categories of direct
referrals by adding the following 8 classes of cases (see
attached copy of my letter of August 28, 1986, to F. Henry
Habicht, Assistant Attorney General for Land and Natural
Resources) :
1. All collection actions in which the relief
requested is solely for unpaid administratively or
judicially assessed penalties under any statute,
except for actions to assess penalties under CERCLA
and cases where there is little prior experience in
civil judicial enforcement (i.e., the Ocean Dumping
Act, underground injection control regulation under
RCRA/SDWA, Clean Air Act NESHAPs other than vinyl
chloride and asbestos).
2. All actions in which the only relief sought is
contempt for violation of any consent decree or
other enforceable order, and/or to enforce the
terms of any consent decree or other enforceable
order.£/ The preceding types of actions against
governmental entities shall continue to be
referred to OECM.
3. Clean Air Act cases involving asbestos and vinyl
chloride National Emissions Standards for
Hazardous Air Pollutants.
4. All Clean Air Act post-1982 date cases except
those involving steel producers, smelters and
lead sources.£/
5. All Clean Water Act cases involving NPDES permit
violations by industrial dischargers, except those
involving violations relating to or determined by
biological methods or techniques measuring effluent
toxicity.
6. All judicial actions alleging interim status vio-
lations under RCRA §3008(a) except cases involving
2/All modifications of consent decrees which result from any
action (direct referral) in this paragraph shall continue to
require OECM approval and program office approval, where
appropriate, prior to submission to DOJ for entry by the court.
_3/ OECM approval will also be required when major changes are
made to SIPs due to a future change in the related NAAQS.
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loss of interim status or closure. This authority
will take effect in each Region upon the successful
referral by the Region of two cases in order to
demonstrate the requisite experience. This author-
ity does not include corrective action cases under
3008(h).
7. All RCRA judicial actions seeking penalties only,
except for underground injection control regulation
cases.
8. All actions to enforce final federal orders issued
under RCRA §3008(a). This authority will take effect
in each Region upon the successful referral by the
Region of two cases in order to demonstrate the
requisite experience.
We will add these expansion cases to the 5 classes of cases
currently included in the direct referral program listed below:
1. Cases under Section 1414(b) of the Safe Drinking-Water
Act which involve violations of the National Interim
Primary Drinking Water Regulations/ such as reporting
or monitoring violations or maximum contaminant
violations. (Note: This category does not include
any causes of action under Section 1414(b) established
by the SDWA Amendments of 1986.)
2. The following cases under the Clean Water Act:
a. cases involving discharges without a permit by
industrial dischargers;
b. all cases against minor industrial dischargers;
c. cases involving failur-e Lo nonitor or report by
industrial dischargers;
d. referrals to collect stipulated penalties from
industrials under consent decrees;
e. referrals to collect administrative spill
penalties under Section 311(j) of the CWA.
3. All stationary source cases under the Clean Air Act
except the following:
a. cases involving the steel industry;
;
b. cases involving non-ferrous smelters;
c. cases involving NESHAPs;
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-4-
d. post - 1982 date cases.
4. All TSCA & FIFRA collection actions for unpaid
administratively assessed penalties.^/
5. All mobile source tampering and fuels cases (except
governmental entity cases) arising under the Clean
Air Act, sections 203 and 211 respectively.
Attached for your convenience in Appendix A is a list of all
cases now covered under the direct referral program.
OECM will continue to play a substantive role in these
cases, especially in view of the incce*s«1 size of the Agency's
case load and the need to ensure that our cases reflect the
Agency's priorities. The Regions should continue to send
copies of the case referral reports directly to OECM, and
where appropriate, to the program office for review. OECM and
DOJ will concurrently review these referrals. Within 35 days
of receipt of a copy of the direct referral package, the appro-
priate AEC will comment on the merits of the referral to DOJ
and to the originating regional office; He may ask the
.Assistant Administrator of OECM to recommend to DOJ that the
case be further developed before filing or returned to the
regional office. OECM will also continue to oversee the
progress and development of these direct referral cases. It
should be noted that in all direct referral cases, as with
all other enforcement cases, the Regions still must coordinate
settlement terms with Headquarters and submit consent decrees
to OECM for review and approval. (See memorandum of November 28,
1983, entitled, "Implementation of Direct Referrals for Civil
Cases Beginning December 1, 1983" at page 5 (GM-18).) All other
existing policies and procedures regarding direct referrals and
case management will remain in effect.
Pre-referral Negotiations
OECM has concluded that Headquarters should not establish
mandatory requirements for pre-referral negotiations. Never-
theless, use by the Regions of pre-referral negotiations, when
^nd where appropriate, is to be encouraged by the Regional
Counsels. Also note that the Regions should continue to follow
current applicable guidance set forth in Frederick F. Stiehl's
July 30, 1985, memorandum entitled "Preparation of Hazardous
V.'aste Referrals" wherein pre-referral negotiations for hazard-
ous waste cases are discussed. In addition, refer to the
4/" This class is now included in actions for unpaid administra-
tively or judicially assessed penalties arising under any
statute. See expansion category number 1 above.
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-5-
memorandura entitled "Enforcement Settlement Negotiations,"
GM-39, dated May 22, 1985, which requires AEC review of draft
consent decrees before they are sent to the defendant. Draft
consent decrees must be reviewed by an Assistant Chief or
senior lawyer in the DOJ Environmental Enforcement Section
before they are sent to the defendant.
"Hold Action" Requests
With a more decentralized management of the Agency's
enforcement program, greater responsibility is placed on
the regional offices to develop and manage cases, particularly
in the pre-referral stage. The Regions are called upon to
sufficiently investigate, prepare and develop civil cases so
that DOJ can file them without delay. When EPA refers a case,
the referral results in the expenditure of time and resources
by OECM and DOJ. A request from the Region to hold action on
the filing of a case that results from inadequate case prepara-
tion or from the desire to conduct negotiations that could.
have been conducted prior to referral severely undercuts our
enforcement-efforts and results in inefficient use of valuable
time and resources in the Regions, in OECM and at DOJ.
Therefore, it is OECM policy that hold action requests
should be used only for strategic or tactical reasons, such as
where the defendant has made a significant settlement offer
after referral, or where settlement prior to filing will bo
advantageous to the government. A hold action request should
be in the form of a memorandum from the Regional Counsel to
the Assistant Administrator for OECM requesting and explaining
its use and the length of delay requested. The Assistant
Administrator, OECM, will determine whether the request is
justified, and if so, will ask DOJ to delay the filing of the
suit for a specified period ot time.
OECM will grant hold action requests only where there is
a clear benefit to the Agency resulting from the delay. In
those cases where there is no reasonable justification for
the requested delay, OECM will ask DOJ to proceed with filing
or consider recommending that the case be withdrawn from DOJ
and possibly will disallow credit for the referral.
Filing Proofs of Claim in Bankruptcy
EPA's judicial bankruptcy docket has grown enormously in
the last two years. OECM and DOJ are very concerned about the
handling of these cases and future bankruptcy matters. The
1-sv in this vital area is not well developed; little favorable
precedent exists on the issues of concern to us. Moreover, we
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-6-
must be very careful to avoid risking large resource expendi-
tures in bankruptcy cases where there may be little realistic
chance of obtaining material recoveries, even if we prevail on
legal issues. These concerns make it imperative that bankruptc
cases be especially well prepared and that management review
time be adequate at both OECM and DOJ prior to filing. See,
e.g., OECM (Draft) Revised Hazardous Waste Bankruptcy Guidance,
Kay 23, 1986, at 1-4. In the past, numerous cases have been
referred with very little or no lead time for review and with-
out litigation reports. Although we appreciate the difficulties
of obtaining notice that bankruptcy proceedings have been
initiated by a regulated entity, it is still important that
EPA claims be forwarded for OECM review and referral to DOJ
at the earliest possible time. These claims will be referred
by the Assistant Administrator, OECM and approved in writing
by the Assistant Attorney General, Land and Natural Resources,
prior to filing.
If you have any questions regarding these procedures,
please contact Jonathan Libber who can be reached at
FTS 475-8777.
Attachments
cc: Administrator
Deputy Administrator
Assistant Administrators
Senior Enforcement Counsel
General Counsel
Associate Enforcement Counsels
Regional Counsels
Regional Enforcement Contacts
Regional Program Division Directors
F. Henry Habicht II, Assistant Attorney General
for Land and Natural Resources, Department of Justice
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IV.B.30.
"Expanded Civil Judicial Referral Procedures", dated August 28, 1986. See
also GM-50.
-------
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IV.B.31.
"EPA Policy on the Inclusion of Environmental Auditing Provisions in
Enforcement Settlements", dated November 14, 1986; See GM-53. Supplements
GM-17.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
NOV ! 4 1986
M'.'MI "KlVd
MEMORANDUM
SUBJECT: Final EPA Policy on the Inclusion of Environmental
Auditing Provisions in Enforcement Settlements
FROM: Thomas L. Adams, Jr.
Assistant Administrator for Enforcement , \
and Compliance Monitoring ^
TO: Addressees
On July 17, 1986, this Office circulated a draft EPA
Policy on the Inclusion of Environmental Auditing Provisions
in Enforcement Settlements. I am pleased to report that Agency
comments were almost uniformly supportive of the draft as
written. Attached please find a final version of the policy,
including summaries of the known auditing settlements that
Agency personnel have achieved to date and several model audit
provisions that Agency negotiators may use as a starting point
in fashioning settlements that address the circumstances of
each case.
I believe that the inclusion of environmental auditing
provisions in selected settlements offers EPA the ability
to accomplish more effectively its primary mission, namely,
to secure environmental compliance. Accordingly, I would
like to renew last July's call for EPA's Offices of Regional
Counsel and program enforcement offices to consider including
audit provisions in settlements where the underlying cases
meet the criteria of the attached policy statement.
Inquiries concerning this policy should be directed to
Neil Stoloff, Legal Enforcement Policy Branch, FTS 475-8777,
E-Mail box 2261, LE-130A • Thank you for your consideration of
this important matter.
Attachments
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-2-
Addressees:
Assistant Administrators
Associate Administrator for Regional Operations
General Counsel
Associate Enforcement Counsels
Director, Office of Criminal Enforcement and Special Litigation
Director, Office of Compliance Analysis and Program Operations
Headquarters Compliance Program Division Directors
Director, NEIC
Regional Administrators, Regions I-X
Regional Counsels, Regions I-X
Regional Compliance Program Division Directors, Regions I-X
Principal Regional Enforcement Contacts, Regions I-X
Enforcement Policy Workgroup
cc: Administrator
Deputy Administrator
John Ulfelder
David Buente, Department of Justice (DOJ)
Nancy Firestone, DOJ
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THE POLICIES AND PROCEDURES ESTABLISHED IN THIS DOCUMENT ARE
INTENDED SOLELY AS GUIDANCE FOR GOVERNMENT PERSONNEL. THEY ARE
NOT INTENDED, AND CANNOT BE RELIED UPON, TO CREATE ANY RIGHTS,
SUBSTANTIVE OR PROCEDURAL, ENFORCEABLE BY ANY PARTY IN LITIGATION
WITH THE UNITED STATES. THE AGENCY RESERVES THE RIGHT TO ACT .
AT VARIANCE WITH THESE POLICIES AND PROCEDURES AND TO CHANGE
THEM AT ANY TIME WITHOUT PUBLIC NOTICE.
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EPA POLICY ON THE INCLUSION OF ENVIRONMENTAL AUDITING
PROVISIONS IN ENFORCEMENT SETTLEMENTS
I. Purpose
The purpose of this document is to provide Agency enforce-
ment personnel with general criteria for and guidance on selecting
judicial and administrative enforcement cases in which EPA will
seek to include environmental auditing provisions among the
terms of any settlement. This document supplements the "Guidance
for Drafting Judicial Consent Decrees."!/
II. Background
On July 9, 1986, EPA announced its environmental auditing
policy statement (Attachment A) which encourages the regulated
community's use of environmental auditing to help achieve and
maintain compliance with environmental laws and regulations.2/
That policy states that "EPA may propose environmental auditTng
provisions in consent decrees and in other settlement negotiations
where auditing could provide a remedy for identified problems
and reduce the likelihood of similar problems recurring in the
future."3/
In recent years, Agency negotiators have achieved numerous
settlements that require regulated entities to audit their
operations. (Attachment B is a representative sample of the
auditing settlements that the Agency has achieved to date.)
These innovative settlements have been highly successful in
enabling the Agency to accomplish more effectively its primary
mission, namely, to secure environmental compliance. Indeed,
auditing provisions in enforcement settlements have provided
several important benefits to the Agency by enhancing its
ability to:
0 Address compliance at an entire facility or at all
facilities owned or operated by a party, rather than
just the violations discovered during inspections;
and identify and correct violations that may have gone
undetected (and uncorrected) otherwise.
0 Focus the attention of a regulated party's top-level
management on environmental compliance; produce corporate
policies and procedures that enable a party to achieve
and maintain compliance; and help a party to manage
pollution control affirmatively over time instead of
reacting to crises.
0 Provide a quality assurance check by verifying that
existing environmental management practices are in
place, functioning and adequate.
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-2-
III. Statement of Policy
It is the policy of EPA to settle its judicial and admin-
istrative enforcement cases only where violators can assure the
Agency that their noncompliance will be (or has been) corrected.4/
In some cases, such assurances may, in part, take the form of ~
a party's commitment to conduct an environmental audit of its
operations. While this would not replace the need for correction
of the specific noncompliance that prompted an enforcement
action, EPA nonetheless considers auditing an appropriate part
of a settlement where heightened management attention could
lower the potential for noncompliance to recur. For that
reason, and as stated in the Agency's published policy,
"[environmental auditing provisions are most likely to be
proposed in settlement negotiations when:
0 A pattern of violations can be attributed, at least in
part, to the absence or poor functioning of an environ-
mental management system; or
0 The type or nature of violations indicates a likelihood
that similar noncompliance problems may exist or occur
elsewhere in the facility or at other facilities operated
by the regulated entity."5/
This policy is particularly applicable in cases involving
the owner or operator of extensive or multiple facilities,
where inadequate environmental management practices are likely
to extend throughout those facilities.^/ Nevertheless, even
small, single-facility operations may face the types of compliance
problems that make an audit requirement an appropriate part of
a settlement.
The environmental statutes provide EPA broad authority to
compel regulated entities to collect and analyze compliance-
related information.?/ Given this statutory authority, and
the equitable grounds for imposing a requirement to audit
under the circumstances outlined in this policy statement,
such a requirement may be imposed as a condition of settlement
or, in the absence of a party's willingness to audit voluntarily,
sought from a court or administrative tribunal.
EPA encourages state and local regulatory agencies that
have independent jurisdiction over regulated entities to consider
applying this policy to their own enforcement activities, in
order to advance the consistent and effective use of environ-
mental auditing._8/
a. Scope of the Audit Requirement
In those cases where it may be appropriate to propose an
environmental audit as part of the remedy, negotiators must
decide which type(s) of audit to propose in negotiations. This
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-3-
determination will turn on the nature and extent of the environ-
mental management problem, which could range from a specific
management gap at a single facility 9/ to systematic, widespread,
multi-facility, multi-media environmental violations. K)/ In
most cases, either (or both) of the following two types of
environmental audits should be considered:
1. Compliance Audit; An independent assessment of the
current status of a party's compliance with applicable statutory
and regulatory requirements. This approach always entails a
requirement that effective measures be taken to remedy uncovered
compliance problems and is most effective when coupled with a
requirement that the root causes of noncompliance also be
remedied.ll/
2. Management Audit; An independent evaluation of a
party's environmental compliance policies, practices, and
controls. Such evaluation may encompass the need for:
(1> a formal corporate environmental compliance policy, and
procedures for implementation of that policy; (2) educational .
and training programs for employees; (3) equipment purchase,
operation and maintenance programs; (4) environmental compliance
officer programs (or other organizational structures relevant
to compliance); (5) budgeting and planning systems for environ-
mental compliance; (6) monitoring, recordkeeping and reporting
systems; (7) in-plant and community emergency plans; (8) internal
communications and control systems; and (9) hazard identifica-
tion and risk assessment.12/
Whether to seek a compliance audit, a management audit, or
both will depend upon the unique circumstances of each case. A
compliance audit usually will be appropriate where the violations
uncovered by Agency inspections raise the likelihood that
environmental noncompliance exists elsewhere within a party's
operations. A management audit should be sought where it
appears that a major contributing factor to noncompliance is
inadequate (or nonexistent) managerial attention to environmental
policies, procedures or staffing.!^/ Both types of audits
should be sought where both current noncompliance and shortcomings
in a party's environmental management practices need to be
addressed.14/
In cases where EPA negotiators determine that an acceptable
settlement should include an audit provision, the attached
model provisions 15/ may be used as a starting point in fashion-
ing a settlement tailored to the specific circumstances of each
case. The model provisions are based on settlements addressing
a broad range of circumstances that give rise to audits.
3. Elements of Effective Audit Programs. Most environ-
mental audits conducted pursuant to enforcement settlements
should, at a minimum, meet the standards provided in "Elements
of Effective Environmental Auditing Programs," the Appendix to
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the Agency's published policy on auditing. Those elements
include:
0 Explicit top management support for environmental auditing
and commitment to follow-up on audit findings.
0 An environmental audit team separate from and independent
of the persons and activities to be audited.
0 Adequate team staffing and auditor training.
0 Explicit audit program objectives, scope, resources
and frequency.
0 A process which collects, analyzes, interprets and docu-
ments information sufficient to achieve audit objectives.
0 A process which includes specific procedures to promptly
prepare candid, clear and appropriate written reports
on audit findings, corrective actions, and schedules
for implementation.
0 A process which includes quality assurance procedures
to ensure the accuracy and thoroughness of environmental
audits.16/
Agency negotiators may consult EPA's program and enforcement
offices and the National Enforcement Investigations Center,
which can provide technical advice to negotiators in fashioning
auditing provisions that meet the needs of both the party and
the regulatory program(s) to which it is subject. Additional
information on environmental auditing practices can be found in
various published materials.17/
A settlement's audit requirements may end after the party
meets the agreed-upon schedule for implementing them. Neverthe-
less, the Agency expects that most audit programs established
through settlements will continue beyond the life of the settle-
ment. After the settlement expires, the success of those
programs may be monitored indirectly through the routine inspec-
tion process.
b. Agency Oversight of the Audit Process
In most cases, resource and policy constraints will pre-
clude a high'level of Agency participation in the audit process.
Several successful audit settlements indicate that the benefits
of auditing may be realized simply by obtaining a party's
commitment to audit its operations for environmental compliance
or management problems (or both), remedy any problems uncovered,
and certify to the Agency that it has done so.ljB/ Other recent
Agency settlements, also successful, have entailed full disclosure
of the auditor's report of findings regarding noncompliance,
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and even access to the company records which the auditors
examined.1J3/ Audit settlements that require either self-
certification or full disclosure of audit results may require
a party to submit to the Agency an environmental management
or compliance plan (or both) that addresses identified problems,
to be implemented on an enforceable schedule.20/
These approaches require the Agency neither to devote
significant resources to oversight of the audit process nor to
depart from its traditional means of enforcing the terms of
consent decrees and agreements. Although it may—and will—
evaluate audit proposals in terms of the elements described
in §111.a.3. above, in all but the most extreme cases 21/
the Agency will not specify the details of a party's internal
management systems. Rather, an independent audit represents
one step a violator can take toward assuring the Agency that
compliance will be achieved and maintained.22/
Considerations such as the seriousness of the compliance
problems to be addressed by an audit provision, a party's
overall compliance history, and resource availability will
dictate the extent to which the Agency monitors the audit
process in particular cases. Thus, it will usually be approp-
riate to withhold approval of an audit plan for a party with
an extensive history of noncompliance unless the plan requires:
0 Use of an independent third-party auditor not affiliated
with the audited entity;
0 Adherence to detailed audit protocols; and
0 More extensive Agency role in identifying corrective
action.23/
c. Agency Requests for Audit-Related Documents
The various environmental statutes provide EPA with broad
authority to gain access to documents and information necessary
to determine whether a regulated party is complying with the
requirements of a settlement.24*J Notwithstanding such statutory
authority, Agency negotiators should expressly reserve EPA's
right to review audit-related documents.25/
d. Stipulated Penalties for Audit-Discovered Violations
Settlements which require a party to report to EPA audit-
discovered violations may include stipulations regarding the
amount of penalties for violations that are susceptible to
prediction and are promptly remedied, with the parties reserving
their respective rights and liabilities for other violations.26/
This policy does not authorize reductions of penalty amounts
below those that would otherwise be dictated by applicable
penalty policies, which take into account the circumstances
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surrounding violations in guiding the calculation of appropriate
penalty amounts. It is therefore important that stipulated
penalties only apply to those classes of violations whose
surrounding circumstances may be reasonably anticipated. The
application of stipulated penalties to violations discovered
during an audit is consistent with Agency policy.27/
e. Effect of Auditing on Agency Inspection and Enforcement
1. Inspections
The Agency's published policy on auditing states that
"EPA will not promise to forgo inspections, reduce enforcement
responses, or offer other such incentives in exchange for
implementation of environmental auditing or other sound environ-
mental practice. Indeed, a credible enforcement program provides
a strong incentive for regulated entities to audit."28/
Consistent with stated Agency policy, the inclusion of
audit provisions in settlements will not affect Agency inspec- .
tion and enforcement prerogatives. On the contrary, a party's
incentive to accept auditing requirements as part of a settlement
stems from the Agency's policy to inspect and enforce rigorously
against known violators who fail to assure the Agency that
they are taking steps to remedy their noncompliance. Auditing
settlements should explicitly provide that Agency (and State)
inspection and enforcement prerogatives, and a party's liability
for violations other than those cited in the underlying enforce-
ment action (or subject to stipulated penalties), are unaffected
by the settlement.29/
2. Civil Penalty Adjustments
Several audit settlements achieved to date have mitigated
penalties to reflect a party's agreement to audit. In view of
EPA's position that auditing fosters environmental compliance,
EPA negotiators may treat a commitment to audit as a demonstra-
tion of the violator's honest and genuine efforts to remedy
noncompliance. This may be taken into account when calculating
the dollar amount of a civil penalty.3Q_/ In no case will a
party's agreement to audit result in a penalty amount lower
than the economic benefit of noncompliance.
For judicial settlements where penalties are proposed to
be mitigated in view of audit provisions, negotiators should
coordinate with the Department of Justice (DOJ) to ensure
consistency with applicable DOJ settlement policies.
3. Confidentiality
EPA does not view as confidential per sg audit-related
documents submitted to the Agency pursuant to enforcement
settlements. Such documents may, however, contain confidential
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business information (CBI). Auditing provisions should indicate
that EPA will treat such information in the same manner that
all other CBI is treated. 3JY Where appropriate, negotiators
may consider defining in advance which categories of audit
information will qualify for CBI treatment. 2!_2/ Such determina-
tions shall be concurred in by the Office of General Counsel,
in accordance with 40 CFR Part 2.
The Freedom of Information Act (FOIA) may provide additional
bases for protecting privileged information from disclosure. 33/
However, determinations under FOIA are within the sole discretion
of the Agency and therefore are not an appropriate subject of
negotiation.
IV. Coordination of Multi-Facility Auditing Settlements
When negotiating with a party over facilities located in
more than one EPA region, Agency personnel should consult with
affected regions and states to ensure that pending or planned
enforcement actions in other regions will not be affected by -
the terms of an audit settlement. This may be done directly
(e.g. , pursuant to existing State/EPA Enforcement Agreements)
or with the assistance of OECM's Legal Enforcement Policy
Branch (LEPB), which will serve as a clearinghouse for infor-
mation on auditing in an enforcement context (contact: Neil
Stoloff, LEPB, FTS 475-8777, LE-130A, E-Mail Box EPA 2261).
In most cases, however, auditing settlements that embrace
facilities in more than one region will affect neither the
Agency's inspection and enforcement prerogatives nor a party's
liability for violations other than those which gave rise to
the underlying enforcement action. 2I4_/ Accordingly, inter-office
consultation in most cases will be necessary only for informa-
tional purposes. Some multi-facility settlements will fall
within the scope of the guidance document, "Implementing
Nationally Managed or Coordinated Enforcement Actions. "35/
Such settlements should be conducted in accordance with that
document and the memorandum, "Implementing the State/Federal
Partnership in Enforcement: State/Federal Enforcement 'Agree-
ments. '"
Attachments
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FOOTNOTES
1. EPA General Enforcement Policy No. GM-17, October 19, 1983.
2. 51 Fed. Reg. 25004 (1986).
3. 51 Fed. Reg. 25007 (1986).
4. See "Working Principles Underlying EPA's National Compliance/
Enforcement Programs," at 7 (EPA General Enforcement Policy
No. GM 24, November 22, 1983).
5. 51 Fed. Reg. 25007 (1986).
6. See, e.g., Owens-Corning Fiberglas Corp., Attachment B,
p. 1; and Attachments D-F.
7. See, e.g., the Clean Air Act (CAA) §§113 and 114, the Clean
Water Act (CWA) §§308 and 309, and the Resource Conservation
and Recovery Act (RCRA) §§3007 and 3008.
8. See 51 Fed. Reg. 25008 (1986).
9. See, e.g., BASF Systems Corp., Attachment B, p. 3.
10. See Attachment F.
11. See Attachment C.
12. See Attachment D.
13. See Chemical Waste Management, Inc., Vickery, Ohio and
Kettleman Hills, California facilities, Attachment B, pp. 1
and 2 respectively; and Attachment D.
14. See Attachments E and F.
15. Attachments C-G.
16. See 51 Fed. Reg. 25009 (1986).
17. See, e.g., "Current Practices in Environmental Auditing,"
EPA Report No. EPA-230-09-83-006, February 1984? "Annotated
Bibliography on Environmental Auditing," September 1935,
both available from EPA's Office of Policy, Planning and
Evaluation, Regulatory Reform Staff, PM-223, FTS 382-2685.
18. See, e.g., Crompton and Knowles Corp., Attachment B, p. 1;
and Attachments C-E).
19. See, e.g., Chemical Waste Management, Inc., Vickery, Ohio
and Kettleman Hills, California facilities, Attachment B,
pp. 1 and 2 respectively; and Attachment E.
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20. See, e.g., United States v. Georgia Pacific Corp., Attachment
B, p. 2; Attachment D, §"B.3; and Attachment F, §§6(1) and 9.
21. See/ e.g., Attachment G.
22. See, e.g., Potlatch Corp., Attachment B, p. 1; and Attach-
ment C.
23. See Attachment F.
24. See, e.g., CAA §114, CWA §308, RCRA §3007, CERCLA §103,
the Toxic Substances Control Act §8, and the Federal Insec-
ticide, Fungicide and Rodenticide Act §8.
25. See, e.g., Attachment F, §IV, "Access to Documents."
26. See Attachment F, §§22, 23, 24, 34, and Appendix 2.
27. See "Guidance for Drafting Judicial Consent Decrees," at 22
(EPA General Enforcement Policy No. GM-17, October 19, 198.3).
28. 51 Fed. Reg. 25007 (1986).
29. See Attachment C, §A.3; Attachment D, §B; Attachment E,
§C.3; and Attachment F, §34.
30. See 51 Fed. Reg. 25007 (1986); EPA's Framework for Statute-
Specific Approaches to Penalty Assessments, General Enforce-
ment Policy No. GM-22, at p. 19; and applicable medium-
specific penalty policies, e.g., TSCA Settlement with
Conditions, November 15, 1983.
31. See "Guidance for Drafting Judicial Consent Decrees," at 28
(EPA General Enforcement Policy No. GM-17, October 19, 1983).
32. See Attachment F, §§5(2), 14, and 15.
33. See, e.g., 5 U.S.C. §552(b)(4), which encompasses voluntarily
submitted information the disclosure of which would impair
a Government interest such as EPA's interests in the settle-
ment of cases and in ensuring compliance with statutes
under its authority.
34. See Attachment F, §25.b.
35. General Enforcement Policy No. GM-35, January 4, 1985.
36. General Enforcement Policy No. GM-41, June 26, 1984.
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SUMMARY OF ATTACHMENTS
ATTACHMENT A; Environmental Auditing Policy Statement,
51 Fed. Reg. 25004, July 9, 1986.
ATTACHMENT B; Representative Sample of Environmental Auditing
Settlements Achieved to Date, revised 10/9/86.
Attachment C; Model Environmental compliance audit provision,
with requirement for certification of compliance.
Attachment D; Model Environmental management audit provision,
with requirement for submission of plan for improvement of
environmental management practices, to be completed on an
enforceable schedule.
Attachment E: Model Environmental compliance and management
audit provision, with all audit results submitted to EPA, all
Agency enforcement prerogatives reserved.
Attachment Ft Model Environmental compliance and management
audit provision, with extensive Agency oversight, audit results
disclosed, stipulated penalties applied to most prospective
violations, and all Agency enforcement prerogatives reserved
for other violations. [Most appropriate for party with an
extensive history of noncompliance.]
Attachment G; Model Emergency environmental management reorgan-
ization provision. [Appropriate for cases where a party's
environmental management practices are wholly inadequate and
action is necessary without waiting for the results of an
audit.]
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IV.B.32.
"Interim Guidance on Joining States as Plaintiffs," dated December 24,
1986, as corrected February 4, 1987.
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1 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
FEB 4 1987
OFFICE Of
ENFORCEMENT AND
COMPLIANCE MONITORING
MEMORANDUM
SUBJECT: Correction to the December 24, 1986 Interim
Guidance on Joining States as Plaintiffs
FROM: Glenn L. Unterberger
Associate Enforcement Counsel
for Water
TO: Regional Counsels, Regions I - X
Attached is the corrected Interim Guidance on Joining
States as Plaintiffs.
The second line in the first paragraph under the heading
Intervention by the State as Plaintiff under Rule 24(a)(2) and
24(b)(2) of the Federal Rules of Civil Procedures, page 3, was
inadvertantly dropped from the December 24, 1986, copy of the
guidance. I believe that this line, which reads "in the
litigation, EPA will support a State's motion to intervene",
is important to the understanding of EPA's position on State
intervention. I am, therefore, reissuing a corrected copy of
the Guidance.
Attachment
cc: Jim Elder
Bill Jordan
David Buente
OECM/Water Attorneys
Cheryl Wasserman
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CORRECTED COPY
I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, O.C. 20460
DEC 2 4 1986
OFFICE Of
ENFORCEMENT AND
COMPLIANCE MONITORING
MEMORANDUM
SUBJECT: Interim Guidance on Joining States as Plaintiffs
FROM: Glenn L. Unterberger
Associate Enforcement Counsel
for Water
TO: Regional Counsels, Regions I • - X
Summary
This memorandum 'provides interim guidance on the conditions
under which States may participate as plaintiffs in Federal
lawsuits against municipalities for civil violations of the
Clean Water Act. EPA generally encourages State participation
as plaintiff in Federal Clean Water Act municipal enforcement
actions.
Background
Section 309(e) of the Clean Water Act requires the
Federal government to join the State as a party in all civil
actions brought against a municipality for violations of the
Clean Water Act or the municipality's NPDES permit. The
State is a necessary party in such litigation because Section
309{e) further provides that the "... State shall be liable
for payment of any judgment, or any expenses incurred as a
result of complying with any judgment, entered against the
municipality in such action to the extent that the laws of
that State prevent the municipality from raising revenues
needed to comply with such judgment."
In the past, the usual procedure has been to name the
State as a party defendant in a Federal suit against a
municipality under the Clean Water Act.* In many instances,
Courts have uniformly held that joining the States as a
party under Section 309(e) is mandatory, regardless of whether
the Federal government has alleged that a specific State law
(Continued)
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- 2 -
however, States have expressed a desire to participate in the
Federal action as a party plaintiff and have requested guidance
on procedures for doing so. The easiest way for the Federal
government to achieve this result is to file a complaint naminrj
the State as a defendant, then support the State's motion for
realignment as a plaintiff.
In a number of instances, however, a State will be particu-
larly interested in not being named as defendant at the beginning
of a municipal enforcement lawsuit. As will be explained
below, the Federal government will actively support a State's
participation as a plaintiff from the outset in municipal
enforcement litigation under the Clean Water Act, and can agree
not to name the State as a defendant in the complaint, as long
as the following general conditions are met: (1) The Federal
and State governments should jointly reach the decision to
support State participation as a plaintiff early in the referral
process and well before filing suit. If no such decision is
made, a State must be named as a defendant under Section 309(e).
(2) When the State intends to intervene as a plaintiff, the
State should agree in writing, to file an appropriate pleading
to intervene within 30 days after the United States files the
lawsuit, and agree not to assert as a defense, the United
States' failure to assert a claim against it under Section
309(e).
Because problems as to State liability still may arise,
the Federal government should assert a crossclaim against the
State co-plaintiff to preserve the State's liability under
Section 309(e) for payment of any judgment or expenses of
complying with any judgment which State law prevents the munici-
pality from paying.
prevents a municipality from raising revenues to comply
with a judgment. See: United States v. City of Geneva,
No. 85 C 3917 (N.D. 111., June 27, 1986) at 14 and; United
States v. City of Guymon, Oklahoma and the State of Oklahoma,
No. 84 C 2368 (W.D. Okla., March-18, 1985) (order denying
the State's motion to dismiss).
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- 3 -
Procedural Options for State Alignment As a Plaintiff
The State has two procedural options for becoming a
plaintiff. Those options are (1) intervention under Rule 24 of
the Federal Rules of Civil Procedure and (2) realignment under
Rule 21 of the Federal Rules.2
Intervention by the State as Plaintiff under Rule 24(a)(2)
and 24(b)(2) of the Federal Rules of Civil Procedure
In those situations where a State will participate actively
in the litigation, EPA will support a State's motion to intervene
as of right under Rule 24(a)(2), or permissive intervention
under Rule 24(b)(2). In addition, EPA will support a State's
right to share in civil penalties, where the State has actively
and publicly litigated the case and the State's claim to penalties
is founded on State law. See: EPA Guidance On The Division Of
Penalties With State And Local Government (October 30, 1985).
In order to meet the test for intervention of right, a
State must be able to satisfy the following Rule 24(a)(2)
reguirements: (1) it must have an interest relating to the
property or transaction; (2) it must be so situated that the
disposition of the action may, as a practical matter, impair or
impede its ability to protect that interest; and (3) its
interest may be inadeguately represented by existing parties.
In most cases, a State which files a timely motion should be
able to make the necessary demonstrations.
Appropriate demonstrations (particularly in light of the
State's status as a necessary party under Section 309(e)) might
be (1) that the State, especially one delegated to administer
the NPDES program, has an interest in having its laws and
regulations upheld; (2) that a Federal court's disposition of
the matter may, as a pratical matter, impair or impede the
State's ability to protect this interest; and (3) that the
Federal Government's representation of the State's interest may
It has also been suggested that EPA and the State initiate
the suit jointly as co-plaintiffs, citing both Federal and
State law in the complaint. This guidance is not intended
to preclude joint filings. However, due to the extensive
coordination needed to arrange a joint filing, it is not
recommended as the mechanism of first choice where timely
filing of enforcement actions is desired.
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— 4 -
be inadequate since these interests are not identical. Inade-
quacy of representation by the Federal Government is the most
difficult part of the test for the State to meet. If the State
can assert related State law claims, it has a better chance of
prevailing. At least one district court has held, however,
that in order to have subject matter jurisdiction over a State
claim, it must derive from a common nucleus of fact or a single
transaction or occurrence. See U.S. v. Dow Chemical Company,
Cb No. 85-294-A (M.D. La., February 25, 1936) where the district
court denied the State's right to assert a State Clean Air Act
claim which was based on violations of the State's clean air
laws which occurred after the violations alleged in the Federal
Complaint.
In order to meet the test for permissive intervention
under Rule 24(b)(2), a State must be able to satisfy the
following two Rule 24(b)(2) requirements: (1) its motion for
intervention must be timely; and (2) its claims and the main
action must have a question of law or fact in common.
In our view, a State would normally be able to meet the
test for permissive intervention with regard to its claims
under the test of common question of law or fact, keeping in
mind the discussion of U.S. v. Dow Chemical Company, supra. It
is, however, entirely within the discretion of the Court to
grant such intervention, as well as to rule whether the tests
for intervention of right are met.
A recent case construing Section 309(e) and how it impacts
Rule 24 is United States v. City of York, 24 E.R.C. 1637 (M.D.
Pa., 1986). In the York opinion (copy attached) Pennsylvania's
motion to intervene under Rule 24 as a party plaintiff was
granted. The Court found that Section 309(e) required the
State to participate as a party, but that such participation
could be either as a plaintiff or defendant. In ruling that
the State could intervene as a plaintiff, the Court declined to
follow United States v. City of Hopewell, 508 F.Supp. 526 (E.D.
Va. 1980), which had held that a State could only be a defendant
under Section 309(e). The Court in York (1) found no legisla-
tive history to support the Hopewell decision and (2) noted
that the requirement of State participation as a "party" under
Section 309(e) could be met by the State as either plaintiff or
defendant.
In granting the State's motion to intervene under Rule 24,
the Court in York in effect found that Section 309(e) created
(1) an obligation of the State to be a party and (2) a corres-
ponding right of the State to intervene under Rule 24 so that
it might fulfill its Section 309(e) obligation. Ultimately,
the Court determined that in this case the State's interests
were more closely aligned with the plaintiff. The Court did
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- 5 -
not explain whether it was granting intervention by right under
Rule 24(a)(2) or permissive intervention under Rule 24(b)(2).
Realignment of Parties Under Rule 21 of the Federal Rules of
Civil Procedure
As a practical matter, the State (once named as a party
defendant) may also attain plaintiff status by filing a motion
"of its own initiative, at any stage of the action ... on
such terms as are just," to be realigned as a plaintiff under
Rule 21 of the Federal Rules of Civil Procedure. In U.S. v.
City of Joliet, CA. No. 86 C 2512 (N.D. 111., June 5, 1986),
the Court granted Illinois' motion to realign in a Clean
Water Act pretreatment case. In granting the motion, the Court
ruled that (1) realignment does not preclude later submission
of evidence of the State's liability; (2) Section 309(e) does
not require a State to be joined as a defendant; and (3) realign-
ment is proper where the defendant is a nominal defendant, and
the party's true interests lie with those of the plaintiff.
See also Securities and Exchange Commission v« Quing N. Wong,
et al., 42 F.R.D. 599 (D.P.R. 1967).
Recommendation
Regional Counsels should work with States subject to
Section 309(e) claims to use whichever of the above methods
appears appropriate when the Agency determines that a State
merits status as a plaintiff in a civil lawsuit against a
publicly-owned treatment works under the Clean Water Act.
If you have any guestions regarding this interim guidance,
please contact Elyse DiBiagio-Wood of my staff at 475-8187.
Attachment
cc: Jim Elder
Bill Jordan
David Buente
OECM/Water Attorneys
Cheryl Wasserman
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IV.B.33,
"Expansion of Direct Referral Cases to the Department of Justice", dated
January 14, 1988. See GM-69.
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IV.B.34.
"Delegation of Concurrence and Signature Authority1*, dated January 14,
1988. See GM-70.
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IV.B.35,
"Enforcement Docket Maintenance", dated April 8, 1988..
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*
I ^ip? I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. O.C. 20460
a(MK
APR ft KM IMOHCIMfMTMO
"• " O KX3O coMPUAnrtMOMTOo
MEMORANDUM
^
SUBJECT: Enforcement Docket Maintenance
FROM: Edward E. Reid
Acting Deputy Assistant Administrator
for Civil Enforcement
TO: Regional Counsels, Regions I - X
Associate Enforcement Counsels
As was discussed in Tom Adams' memo of February 8, entitled
"Responsibilities for Assuring Effective Civil Judicial
Enforcement" primary responsibility for the timeliness, accuracy
and completeness of information contained in the Enforcement
Docket lies with the Offices of Regional Counsel. Specifically:
•*
(1) Regions are responsible for accurate updates, at
least monthly;
(2) Headquarters is responsible for accurate monthly
update of Headquarters - initiated data fields
(e.g., "checklist completed");
(3) Headquarters will not amend regional data entry;
(4) Headquarters will continue to monitor overall data
quality, on a monthly basis for the balance of
FY'88, and thereafter on a quarterly basis;
discrepancies will be brought to the attention of the
Regional Counsel;
(5) Docket -maintenance will be considered as part of the
annual performance assessment discussion with
Regional Counsels.
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-2-
*
To insure that all parties understand their responsi-
bilities, ve have developed detailed procedures, which are
attached. I request that you distribute copies to all attorneys
in your office.
If you or your staff have any comments or questions, please
let me know, or contact Sally Mansbach or Bruce Rothrock at
8-382-3125.
My thanks for your cooperation.
•
Attachments
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GUIDELINES AND PROCEDURES FOR THE ENTRY AND
UPDATE OP. CTVTL JUDICIAL CASES IN THE
ENFORCEMENT POCKET SYSTEM
I. INTRODUCTION
"Responsibilities for Assuring Effective Civil Judicial
Enforcement" is the subject of a Tom Adams memorandum, FEB 08,
1988, which gives the Regions increased authority and
responsibility in the judicial enforcement process. One of these
responsibilities pertains to the maintenance of the Enforcement
Docket System.
The Regions also will take the lead in the
criticalfunction of maintaining the Agency's
Enforcement DocketSystem. Except in national lead case
or where this responsibility is undertaken by a
Headquarters attorney and this is so noted in the case
management plan, Offices of Regional Counsel will be
solely responsible for ensuring that accurate and up-
to-date information on each caseis maintained in the
System. OECM attorneys will no .longer make separate
docket entries as a matter of course; instead we will
rely on the Regionally-entered casestatus information.
OECM will retain an oversight responsibility to
ensure, to the extent possible, thataccurate
information, consistent across the Regions,is available
from the Docket System....
This document describes the procedures and responsibilities
for entering cases in the DOCKET and for the regular, monthly
review and update of the Case Status Report. As stated in Mr.
Adams' memorandum, this responsibility is almost entirely that of
the Regional Attorney, who in most instances is designated the
Lead EPA Attorney.
II. DEFINITION•OF A CASE
A. DOCKET Design and Assigning a Case Number.
The Enforcement Docket has been designed primarily as a
system for tracking civil judicial enforcement cases.. A case is
a matter which is developed and referred with the intent that it
will be filed in court as a separate- and independent entity, will
receive its own court docket number and not be joined with any
other case. With th .s in mind, an enforcement matter which
involves multiple facilities, multiple statutory violations, or
multiple defendants is entered as one case if it is intended and
believed at the time of case development and case referral that
it should be handled as one action, filed in court as one case,
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and negotiated or litigated as one case. The Docket system has
been designed to handle and report on multiple law/section
violations, multiple facilities and multiple defendants, all
linked to the parent case.
B. Amendments to Ongoing Cases.
It may be necessary once a case has been initiated to
prepare and refer a, related matter with the intent of amending
the original case. An example might be an additional statute
violation or other defendants. These matters should not be
entered as separate cases but as amendments. There is a separate
record in the Docket System that allows for entry and tracking of
amendments.
C. Use of DOCKET for SPMS, Accountability, and with the
Workload Model.
The numbers used in the SPMS and Accountability process are
based on cases, the fundamental ingredients of the Docket System.
These are the numbers that we also report to Congress and the
public. The numbers used in the workload model are based on
cases and their component parts, such as amendments, number of
facilities, etc. The Docket structure allows for tracking all
these separate activities for workload model counts, even though
they are included under a single case name and number.
III. TNTTYAL CASE ENTRY •
^•••^•^•^•••^^••^•MMaM^bH^M^H^nAA^b # * . (
A case should be entered in the system ( Opened ) as soon as
possible after the Regional program office refers the matter to
the Regional Counsel for civil litigation, and an attorney is
assigned and begins case development. The Regional Attorney is
responsible for completing the following and giving them to the
Regional data analyst.for assignment of a case number and initial
data entry:
1. Case Data Form ( APPENDIX A ). Complete all items as
required.
2. Facility Data Form ( APPENDIX B ). Complete a separate
form for each violating facility.
3. Case Summary ( APPENDIX C ). Develop a case summary that
contains the following information: -
- Case Name: The name of the case as specified in the
litigation report.
- Facility Name: The name of the facility and
location where the violation(s) -occurred.
-------
- Nature of ease and violations(s) upon which the case
is based. Include the.laws and sections violated.
- Proposed relief and remedy, including injunctive
and proposed penalty to be sought at settlement.
Enter penalty fields on the Case Data Form.
- Significant national or precedential legal or
factual issues.
- Previous enforcement actions (date, type).
- Recent contacts with defendant(s) (nature, outcome).
- Other significant aspects.
These paragraphs will be entered in the DOCKET as narrative under
the heading "Case Summary." See APPENDIX C for an example.
The Regional Attorney is responsible for entering a new case
as soon as possible after case development is begun. While the -
case is under development and prior to being referred (Initiated)
the case is in an overall status of "Opened." The earlier the
case is entered as an "Opened" case the sooner it will appear on
the DOCKET for use in case management. This procedure reduces
the end-of-quarter data entry crisis to record cases initiated (a
large proportion of which appear at the very end of the quarter).
If the case has been entered during case development it is
necessary to enter only the "Date Initiated" at the time the case
is referred. This eliminates the risk that a case might not be
counted because all of the appropriate information could not be
entered before accountability reports are run. Entry of "opened"
cases also facilitates management of actions which are the
subject of pre-referral negotiation.
IV. CASE STATUS REVIEW PROCEDURES
The Lead EPA Attorney has primary responsibility for the
review and update of all active cases. This is done at a minimum
monthly by reviewing the Case Status Report and making any
changes or updates directly on the report. The Lead EPA Attorney
receives update forms for all his/her cases from the Regional
data analyst once each month. The Lead EPA Attorney is
responsible for annotating the update forms. These forms are
returned by the Lead EPA Attorney to the data analyst for entry
by the last work.day of the month. The data analyst completes
corrections and updates and returns revised forms within five s
work days to the Lead EPA Attorney for the next month's review
and update.
The Lead EPA Attorney should pay particular attention to the
-------
following areas:
Case Information
Major Milestone and Miscellaneous Events
Staff, Attorney Names
Results
Penalties
Case Status Comments
An entry must be made in the attorney comment area every
month. Any issues which have been discussed or significant
events which occurred during the past month since the last update
must be included in the comments. An example of the nature and
method of entering status comments is contained in APPENDIX D.
If there has been no development or no activity in the case, "No
Change" must be entered by the Lead EPA Attorney. The lead EPA
attorney gives the annotated monthly reports to the data analysts
for data entry and data base update. If the analyst does not
receive an update for an active case by the time the review
period has ended, he/she will enter "NO UPDATE .RECEIVED."
Except in cases where the Headquarters attorney is the Lead
EPA Attorney, Headquarters attorneys will be responsible enlv for
updating KQ-specific data (e.g., received at EPA HQ, checklist
completed, for direct referrals and referred to DOT for other
than indirect referrals).
A chart display of roles and responsibilities is contained
in Appendix E. Summary "case code" tables are included in
Appendix F.
V. • QUALITY ASSURANCE
The Lead EPA Attorney is responsible for assuring the
accurate, complete, and timely entry of all cases and for the
ongoing, monthly update and verification of case data. Regional
Counsel are responsible for periodic review of the Docket for
accuracy and completeness of all data elements, including
Attorney Comments. • ' .
Repeated problems with accuracy of data entry should be
brought to the attention of the Regional Counsel. The Regional
Counsel should notify Sally Mansbach or Bruce Rothrock if
problems merit further attention. '
OECM Headquarters will review the overall Docket for
accuracy and completeness, on a monthly basis for the balance of
FY 1988 and quarterly thereafter. Obvious errors or omissions
will be brought to the attention of the Regional Counsel, for
appropriate Regional action. Headquarters data entry will be
restricted to those data elements which are Headquarters
responsibility. No amendment of Regional data will be made by
-------
Headquarters staff. •
Comments-or questions regarding Docket update and
maintenance procedures should be addressed to Sally Mansbach or
Bruce Rothrock.
-------
-------
ENFORCEMENT CASE DATA FORM
APPENDIX A
:ASE NO.: - - E _
(Assigned by Docket Control
Date Entered:
• CASE NAME:
• TYPE CASE:
(See Back for Adm.)
• HQ DIVISION:
CIV - Civil
CIT - Citizen Suit
BNK - Bankruptcy
AIR - Air
KAZ - Hazardous Waste
PES - Pesticides and Toxics
* (Please use the section
of the law VIOLATED,
NOT the section that
authorizes the action)
MOB - Mobile
WAT - Water
* TECHNICAL CONTACT:
* REGIONAL ATTORNEY:
* DEFENDANTS:
PHONE: FTS -
•
PHONE: FTS -
«
NAMED IN
2.
3.'
4.'
* STATE:
VIOLATION TYPE:
DATE OPENED:
* DATE INITIATED:
(Civil)
DATE ISSUED:
(Adj. Adm.)
DATE CONCLUDED:
DATE VIOLATION
DETERMINED:
PROPOSED PENALTY:
POLLUTANT:
* REFERRAL INDICATOR _
Direct Referral Lead: DOJ
DATE DOCUMENTS
RECEIVED BY ORC:
RH: Region to HQ
RD: Region to DOJ
(Direct Referral)
USA
Required fields - must be filled out for case entry
/(C -'
-------
Appendix B
FACILITY DATA FORM
PLEASE USE THE ADDRESS OF THE SITE OF VIOLATION (NOT THE COMPANY MAILING
DDRESS).
A SEPARATE FORM MUST BE COMPLETED FOR EACH FACILITY CITED IN THE CASE.
CASE NO.:
-E
(Assigned by DOCKET analyst)
EPA ID #:
| (Assigned by FINDS analyst) |
FACILITY NAME:
STREET ADDRESS:
CITY:
TYPE OWNERSHIP:
* STATE
ZIP:
P: Private industry or individual
F: Federal Government
S: State
C: County
M: Municipal
D: District
1C CODE(s): _____
(one required)
OPTIONAL
ARENT COMPANY:
PDES PERMIT NO.
•JPERFUND SITE:
\TITUDE: '
DNGITUDE:
(Y or N)
- « ..
^ J
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APPENDIX C
CASE SUMMARY CONTENT AND FORMAT
The following is an example of a Case Summary. The summary
is written by the Regional Attorney and provided to the Regional
Data Analyst along with the Case Data Fora and Facility Data Form
at the time the case is initially entered. The summary includes:
Case Name, Facility Name, Nature of case and violation(s) upon
which the case is based, Proposed relief and remedy, Significant
national or precedential legal or factual issues, Previous
enforcement actions, Recent contacts with defendants, Other
significant aspects.
- EXAMPLE -
CASE SUMMARY:
THIS IS A PROPOSED ACTION AGAINST THE ACME DISPOSAL CORP
(ADC) ET AL., UNDER SECTION 107 OR CERCLA TO RECOVER PAST COSTS
AND TO ESTABLISH LIABILITY AS TO FUTURE COSTS TO BE INCURRED
UNDER SECTION 104.
THIS CASE INVOLVED THE ADC SITE, LOCATED IN MODELTOWN, MA.
THE SITE WAS LISTED ON THE NPL ON 04/01/84. THE SITE IS A 100-
ACRE LANDFILL WHICH HAS BEEN OWNED BY ADC SINCE 03/05/75.
NUMEROUS INDUSTRIAL WASTES HAVE BEEN DISPOSED OF AT THIS FACILITY
SINCE 1942.
EPA CONDUCTED ON-SITE GROUNDWATER SAMPLING ON 05/01/85.
ANALYSIS REVEALED THE PRESENCE OF HAZARDOUS SUBSTANCES INCLUDING
METHYL ISOBUTYL, KETONE, AND TOLUENE. A NCTICE LETTER WAS SENT
TO THE SITE OWNER/OPERATOR AND TO THE TEN KNOWN GENERATORS ON
05/20/87. NO RESPONSES WERE RECEIVED.
THE 1ST IMMEDIATE REMOVAL WAS COMMENCED ON 06/01/85 AND WAS
COMPLETED ON 06/25/85. ONE HUNDRED DRUMS AND 500 CU YDS OF SOIL
WERE REMOVED AND DISPOSED OF AT A RCRA-APPROVED FACILITY. THE
2ND IMMEDIATE REMOVAL ACTION WAS STARTED ON 08/01/85. FIFTY
DRUMS AND 100 CU YDS OF SOIL WERE REMOVED AND DISPOSED OF AT A
RCRA-APPROVED FACILITY. TOTAL FEDERAL GOVT COSTS AS OF 11/01/87
ARE $1,524,000.
A DEMAND LETTER FOR PAST COSTS WAS SENT TO ADC ON 12/01/87.
THE STATUTE OF LIMITATIONS MAY RUN ON 06/25/88. GENERAL NOTICE
LETTERS WERE SENT TO 143 PRP GENERATORS ON 09/01/87.
-------
APPENDIX D
.CASE STATUS COMMENTS
The following are examples of attorney case status comments,
provided as part of the monthly review of active cases. Comments
are written by the attorney directly on the Case Status Report
directly below or in the margin beside the previous months entry.
- EXAMPLE -'
HEADQUARTERS CASE STATUS:
REGIONAL CASE STATUS:
01-30-88: COMPLAINT FILED IN DIST. CT (EDMA) ON 01/15/88
AGAINST ADC, CITY OF MODEL/TOWN, GENERAL DISPOSAL CORP,, ET AL.
02-28-88: ADC FILED ANSWER ON 02/15/88; GENERAL DENIALS. ADC
FILED MOTION TO DISMISS ON 02/15/88.
03-30-88: ADC MOTION TO DISMISS DENIED ON 03/20/88. STATUS
CONF SCHEDULED TO BE HELD ON 04/18/88.
04-29-88: STATUS CONF HELD ON 04/18/88. GENERAL DISPOSAL 'CORP
REQUESTED TREATMENT AS DE MINIMIS GENERATOR. LITIGATION TEAM
PLANS TO MEET .ON 05/20/88. GOVT PLANNING TO FILE MOTION FOR SJ.
(1) It is important to add precise elites to update comments
both to be specific and to avoid confusion between the date of
the docket entry and the date of the event.
'(2) It is important to follow up on stated planned events
in subsequent monthly updates with comments as to whether or not
the planned event took place and, if so, when.
(3) Case status comments should reflect the general content
of settlement proposals and draft and final consent decrees,
including final construction deadlines, final compliance
deadlines, penalties, duration of the decree, and whether or not
stipulated penalties are included.
(4) If there are no updates during a month, enter "NO
CHANGE". •
-------
CIVIL JUDICIAL FNFORC? DOCKET
DATA ENTRY MAINTENANCE VERIFICATION
RESPONSIBILITIES AND PROCEDURES
APPQ
03/1i/RR
ACTIVITY
WHO
WHAT
When
HOW
Open a Case
Regional Attorney
assigned to Case
development or
Lead EPA Atty
Completes: Case Data Form,
Facility Data Form for each
violating Fac., Case Summary.
Case is a matter which is
filed, settled or litigated
separately from any other
Case.
Optional; When case is
opened or any time up
to but no later than
when case la referred
to HQ or directly to
DO!
Attorney completes forms and
Case Summary. All items
marked with '*' sust he .
completed. Gives to Regional
data analyst.
Initial Case
Entry
Regional Data
Analyst
Assign Case Nimber: Enter
data from Case Data and
Facility Data Forms, Case
Summary
At time Regional
Attorney Complete
Forms.
On-line from Case Data and
Facility Data Forms, Case
Summary
Case Review
and Case Update
of all Active
Cases
a. Lead EPA Atty
Mai. Milestones/Misc. Events,
Dates, Staff, Status Comments
and Signficant Case events
Monthly, Completed and
given to Regional
Analyst by 1st work
day of each month
Review & edit as appropriate
Case Update Report (using
clear notations in bright '
colored ink)
b HQ Attorney
HQ data fields (e.g. checkist
Monthly
complete, HQ Comments if appropriate)
Case Update Report, as above,
delivered by HQ data analyst
Data Entry,
Data Rase
Update
a. Reg. Analyst
Case Update Report as
reviewed and annotated by
Lead Attorney
b. HQ Analyst
As appropriate
Case/Data
Verification
HQ Attorney
Ma lor milestone Dates, Over-
all Status (see 3b), other
Case Level Data; Regular
Status Comment Update by
Lead Attorney
Monthly, Beginning the
1st of the month,
completed by the 5th
work day. Run new
Update Reports and
distribute by Rth work
day.
On-line, directly from Case
Update provided by Regional
Attorney. Update all active
cases even if no change made
or no update received.
Monthly for FY'88
quarterly thereafter
Scan Case Update Report
provided hy HQ Analyst. Any
obvious errors or omissions
are brought to the attention
attention of Associate and
then Regional Counsel, for
Lead EPA Atty to supply
corrections to Regional data
-------
DATA BTIW MAINTWANCK VERIFICATION
RRSPnNSIRII.ITlES AND PROCEDURES
.CT1VITY
king
lenents
Litigation
its
:luding a
» (CD/Judge-
Rntered
;ing a Case
il Gnmpll-
», Case
idrawn,
lined. Dls-
>ed or
>ined
* Returned
(egion
e Rereferred
itor Case
nmed to
ion
nding a
e
eking CD
pltance
town
Lead RPA Atty
HQ Attorney
Lead RPA Atty
Lead EPA Atty
Lead EPA Atty
Lead F.PA Atty
Lead EPA Atty
IK) Attorney
Lead RPA Atty
ad EPA Atty
WIIAT
Significant events related
to settlement negotiation
or Litigation as required
by RC
HQ Events, as appropriate
Enter data about settle-
ment/Judgement Results.
Date. Penalty
Enter Data for Closed Case -
when final compliance
achieved or case is with-
drawn, declined or dismissed
Rnter "Date Returned"
Enter "Date Re-referral"
Determine cases returned and
pending > 60 days. Deter-
mine action to he taken:
Refer or close. Update Docket
Assess need to discuss cases.
with Region
Add amendments to existing
case when matter Is part
of on-going case and will
not he filed as a separate
maccer tor litigation
Monitor Compliance with
terms of CD or Court Order
WlfFN
Monthly
Monthly
Monthly
Monthly
Monthly '
Monthly
Monthly
Quarterly
When natter Is referred
i
isrterly
HGW 1
Part of monthly review of
Case Update Report.
monthly case review.
Part of monthly review of
Case Update Report . or as
events occur.
Part of monthly review of
Case Update Report, or as
events occur.
Part of Monthly Update, or
as returns occur by proper
notification of data analyst •
Part of Monthly Update
Analyst produces report
of all cases returned to
Region and pending >60 days
for Lead EPA Attorney review
HQ analyst prepares quarterly
report on cases rtd to Region
X>0 days
Monthly Case Update, or on
amendment data foim, to
Regional Analyst , when
amendment occurs
Contact with. Regional
Profiram Office and reu*
-------
VIOLATION TABLE
Appendix F.
VIOLATION
TYPE
AOVIOL
CLO
FIFRA
FIN
GFR
GRANT
GWM
IMP
IND
INFO
LOT
HPRSA
NESHAP
NOPRMT
NORPTG
NSPS
NSR
PNN
PRETMT
PRMTVL
PSD
PWSM/R
PWSMCL
PWSNP
PWSSA
REC
REP
SIP
SPILL
UIC
UICCAC
OICMFL
DICMIN
UICMON
(JICNPA
UICOIN
UICPRS
UICUNI
UICUNO
OICVPA
VHAP
404PMT
Air Pollutants
DESCRIPTION
Administrative Order Violation
Closure and Pose-Closure Plan
FIFRA
Financial Responsibility
General Facilities Requirements
P.L. 92-500 Facility
Groundvater Monitoring
Imports ' •
Industrial Source
CAA/114 (INFO)
Land Disposal & Treatment
MPRSA
National Emission Stds. for Has.
Discharge v/o Permit
No Reporting or Monitoring
Nev Source Performance Standards
New Source Review
Pre-manufacturing Notice
Pretreatment
Permit Violation
Prevention of Significant Deterioration
PWS Monitoring/Reporting
PUS Maximum Containment Level
PUS Notification to Publi:
PWS Sampling & Analyzing
Required Records Maintenance
Reporting Violations
State Implementation Plan
311/CWA
UIC/SDHA
DIG Casing & Cementing
DIC Fluid Movement in Underground Source
Drinking Water
UIC Mechanical Integrity
Monitoring
No Approved Plugging & Abandonment Plan
Injection Between Outermost Casing
Injection Beyond Authorized Pressure
Unauthorized Injection
Unauthorized Operation of a Class IV Well
Compliance w/Plugging & Abandonment Plan
Hazardous Air Pollutants
of
UIC
UIC
UIC
UIC
UIC
UIC
UIC
Volatile
404/CWA
-------
POLLUTANT TABLE
Appendix F
POLLUTANT
TYPE
MM^M '
ARSN
ASB
BENZ
BERY
CO
COE
CON
LEAD
MERC
NOX
OP
PCB
PM
RADON
RDNC
S02
VNCL
DESCRIPTION
Arsenic
Asbestos
Benzene
Berylium
Carbon Monoxide
Coke Oven Emissions
Containers (Druas, Tanks)
Lead
Mercury
Nitrogen Oxides
Opacity
Polychlorinated Biphenyls
Particulace Matter
Radon
Radionuc lides
Sulfur Dioxide
Vinyl Chloride
** If you would like to see any more pollutants added to
the table, please contact Bruce Rothrock at
FTS-382-2614 .
-------
RESULT TABLE
Appendix F
RESULT
LEVEL
1- Before
Referral Co
OOJ
RESULT
CODE
RESULT
REASON
WR • Withdrawn by
Region
OE - Declined by HQ
2- After WE
Referral to DJ
DOJ/US Atty, DA
Before filing
of Complaint
or CD
Withdrawn by HQ
Declined by DOJ
Declined by US
attorney *
3- After filing LN -
of Complaint
or CD CH -
Litigated w/no
Penalty
CD v/no Penalty
CP - CD v/Penalty *RO
LP - Litigated v/Penalty *CO
*BO
.Penalty .under
Penalty under
Penalty under
& CERCLA
RCRA
CERCLA
both RCRA
*CR - CD/Cost Recovery *OC -
*LR - Litigated/Cost *OT -
Recovery
*CB • CD v/Penalty & Cost *RC -
Recovery
*LB • Litigated v/Penalty *CC -
and Cost Recovery
. *CT -
*RT -
*BC -
*BT -
Cost Recovery under CERCLA
Cost Recovery y/treble
damages under CERCLA
Penalty under RCRA & Cost
Recovery under CERCLA
Penalty and Cost Recovery
under CERCLA
Penalty under CERCLA, Cost
Recovery v/treble damages
under CERCLA
Penalty under RCRA, Cost
Recovery v/treble damages
under CERCLA
Penalty under both RCRA &
CERCLA, .Cost Recovery under
CERCLA
Penalty under both RCRA &
CERCLA, Cost Recovery v/
treble damages under CERCLA
DC - Dismissed by Court
VD - Voluntarily Dismissed
CO - Combined
* Result code and Result reason apply only to RCRA/CERCLA cases
-------
Appendix F
REFERRAL INDICATOR TABLE
REFERRAL
INDICATOR DESCRIPTION
RH Region to Headquarters
RD Region to DOJ
RU Region to US Attorney
BD Headquarters to DOJ
-------
IV.B.36,
"Process for Conducting Prc-Referral Settlement Negotiations on Civil
Judicial Enforcement Cases", dated April 13,1988. See GM-73.
-------
-------
IV.B.37.
"Criteria for Active OECM Attorney Involvement in Cases", dated May 22,
1988.
-------
-------
I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
* - WASHINGTON. D.C. 20460 . ....
«„
2 !988
^^
MEMORANDUM
SUBJECT: Criteria for Active OECM Attorney Involvement
in Cases
FROM: Thomas L. Adams, Jr.
Assistant Administrator
TO: Regional Administrators
Deputy Regional Administrators
Regional Counsels
The following criteria have been developed for evaluating *
what cases warrant active OECM attorney involvement. Taken
together with the 'guidance on the pre-referral negotiation
process and on the use of case management plans, the following
guidelines will significantly contribute r.o our efforts to
enhance the enforcement process.
Cases that meet one or more of the c-iteria listed below
are appropriate for active involvement by OECM attorneys. The
extent and nature of an OECM attorney's involvement in any
given case will depend on a number of factors, including
availability of legal resources in the Region, the expertise
and workload of the OECM attorney involved, and the reason
involvement is considered appropriate. OECM management, in
consultation with the Regional Office, will take all of these
factors into account in .determining the level of active
involvement, if any, by the OECM attorney.
Cases which warrant active involvement by the OECM
attorney include those .cases:
1. that are nationally-managed or nationally-coordinated;
2. raising issues whose resolution may set a legal or
policy precedent of national significance;
3. which have unusually significant environmental impacts
or in which there is a particularly high level of congressional
interest;
-------
* 2 ~
• •
- 4. jointly selected with the Regional Office which are
well-suited to serve as training vehicles for newer attorneys
or as a refresher for other attorneys in need of exposure to
particular elements of the negotiation or litigation process
related to their responsibilities;
5. where OECM's involvement would facilitate or support
a special enforcement initiative;
6. requiring the specialized expertise jf an OECM
attorney that is not currently possessed within the Region;
7. for which the Region or DOJ has requested OECM
attorney involvement (e.g., where the Region cannot adequately
staff the case or where OECM's presence is desired for tactical
reasons) and it is OECM's judgment that its involvement is
warranted; and
. 8. where OECM's participation would directly further its
evaluation of the effectiveness of a particular national'policy
and the need for modification or supplementation of that
policy.
Assuming that active involvement by the OECM attorney is
deemed warranted, the process for initial determination of the
degree of involvement will be based upon whether the case is
undergoing pre-referral negotiations. For rases that are the
subject of pre-referral negotiations, the initial 21-day review
process will be the vehicle for making the determination. For
.cases that are not the subject of pre-referral negotiations,
the .review within OECM of the case management plan will be the
vehicle for determining the degree of involvement. The role of
the OECM attorney may subsequently be modified as the case
evolves, through consultation with the Region and DOJ, to
increase or decrease the level of involvement in light, of
changing circumstances.
Please feel free to contact Ed Reich (FTS-382-4137) if you
have any questions regarding the implementation of these
guidelines. .
cc: Associate Enforcement Counsels
OECM Attorneys
Program O.ffice Enforcement Directors
. Roger J. Marzulla, Assistant Attorney General,
Land and Natural Resources Division,
U.S. Department of Justice
David T. Buente, Chief, Environmental Enforcement Section,.
Land and Natural Resources Division,
U.S. Department of Justice •
-------
IV.B.38.
"Withdrawal of Referrals and Issuance of.'Hold' Letters", dated February
24, 1989.
-------
-------
ASHIM.TOV D.( . :
7
2 4 1989 •-" • * • •' '
'
XEMORANDCM
SUBJECT: withdrawal of Referrals and Issuance .of "Hold" letters
FROM: Edward E. Reich
Acting Assistant Administrator
TO: Regional Administrators
Deputy Regional Administrators
.Regional Counsels
There has been some recent confusion about the process for
withdrawing directly referred cases from the Department 'of
Justice (DOJ) and the issuance of "hold" letters for cases
pending at DOJ. For clarification, please note the January 14,
1988, memorandum from Tom Adams entitled ' xpansion of Direct .
Referral of Cases to the Department of Ju.-ice." In accordance
with that memorandum:
(a) In the unusual circumstance necessitating a withdrawal
of a directly referred case, the Regions are required to consult
with OECM prior to requesting a withdrawal. If a withdrawal is
determined to be appropriate, the Region should then send a
written request for withdrawal of the referral to DOJ with a copy
to the Assistant Administrator for OECM and the appropriate
program office; and «,
(b) In accordance with the December 24, 1987 Adams to
Marzulla letter attached to the January 14 memorandum, all "hold1*
letters must continue to be requested in accordance with the
procedures contained in the memorandum entitled "Expanded Civil
Judicial Referral Procedures11 dated August 28, 1986. Those
procedures outline at page 5 the narrow basis on which "hold"
actions will be considered and require the Regional Counsel to
submit a memorandum to the Assistant Administrator for OECM to
request a delay in filing. DOJ will not recognize -a "hold"
request not coming from the AA for OECM in accordance with these
procedures.
-------
PlOftM l«t »•
- - -2 - - "
know if you hav. any questions about this
cc: Awociat. Enforcyfnt couns.l.
David Bu«it., DOJ
-------
IV.B.39,
I "Agency Judicial Consent Decree Tracking and Follow-up Directive," dated
January 11, 1990. Attached to IV.D.4. this compendium.
-------
-------
IV. C
-------
IV. CIVIL LITIGATION
C. PENALTIES AND TERMS OF SETTLEMENT
-------
IV.C.I,
"Civil Penalty Policy", dated July 8, 1980 (for reference only).
993
-------
-------
k \ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
4 vAi/^7 WASHINGTON. D C. 20460
H. .-I*
OFF1CE OF ENFORCEMENT
CIVIL PENALTY POLICY
JULY 8, 1980
For application of Section 309(d) of the Clean Water
Act and Section 113(b) of the Clean Air Act to
Certain Water Act Violators and Air Act
Stationary Source Violators
-------
-------
TABLE OF CONTENTS
CIVIL PENALTY POLICY - CLEAN WATER ACT VIOLATORS AND
STATIONARY SOURCE VIOLATORS OP THE CLEAN AIR ACT
I. Preamble ....... 1
II. Statutory Basis for Civil Penalty 3
III. • Types of Violations to Which Policy
Applies 3
IV. Use of the Penalty Policy in Enforcement
Actions 5
V. Determining the Amount of the Statutory
Maximum Penalty and of the Minimum Civil
Penalty . . . . . 7
VI. Determining the Minimum Penalty Acceptable
for Settlement ' 9
VII. Explanation of Factors Considered in
Determining Minimum Amount of Civil
Penalty ..... . 10
A. Harm or Risk of Harm to Health or
the Environment 10
3. Economic Benefit of Delayed
Compliance 11
C. Violator's Recalcitrance, Defiance,
or Indifference to the. Requirements
of the Law 12
D. Extraordinary Costs of Enforcement
Action ......... 12
E. Mitigation for Noncompliance Caused
bv the Government Itself • . . '13
-------
F. Mitigation for Impossibility ...... 13
G. Other Bases for Mitigation 14
E. Specified Clean Air Act Factors .... 14
VIII. Approved Environmentally Beneficial
Expenditures in Lieu of Payment of
Penalty Sum to State or Federal Treasury
(i.e., "Credits Against Penalty") ..... 15
A. Use of Credit to 'Satisfy or
Offset Penalty . 15
B. Criteria for Acceptable Credits .... 16
C. Constraints on Federal Enforcement
' Officials with Respect to Payment
of Penalties and Use of Credits in
Lieu of Penalties 18
D. Discretionary Nature of Credit . . . . .18
E. Consideration of After-Tax Effects
of Credit Expenditures 18
IX. Penalty Postponement or Forgiveness Based
Upon Inability to Pay 19
X. Time Period for Application of Civil
Penalty Policy .20
XI. Application of Civil Penalty Policy to
Different Types of Sources - Private,
Public, Regulated Utilities, etc 22
A. Privately-Owned or Operated Sources
. (other than Regulated Utilities) ... 22
. B. Publicly-Owned Utilities and Investor-
Owned, Regulated Utilities ...... 22
C. State and Municipal Facilities (Other
than Utilities) . . 23
D. Federal Facilities (Other than'
': • Utilities .23
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XII. Federal-State Cooperation in Implementing
this Policy 24
XIII. . Effective Date of this Civil Penalty
Policy . . 24
XIV. Previous Civil Penalty Policy Superseded 25
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I. Preamble
The objective of this civil penalty policy is to assist
in accomplishing the goals of environmental laws by deterring
violations and encouraging voluntary compliance.
The -elements of the policy reflect years of experience
by federal, state and local enforcement officials, adapted
to present conditions and needs. The policy has had the
benefit of much,informed comment in meetings of federal, state,
and local officials in every region, in written comments, and
in a working group of federal and state enforcement officials.
The policy is based upon the main themes of the Clean Air
and Water Acts, in which Congress required all citizens, private
firms and public bodies to join in a common effort to restore
and maintain the quality of the nation's air and waters, and
to do so consistently in all parts of the country, in accordance
with statutorily mandated time schedules. The theme of national
consistency has been reinforced by the Clean Air Act Amendments
of 1977, which directed the Administrator of the Environmental
Protection Agency to promulgate.regulations designed to assure
fairness and uniformity in implementing and enforcing the Act
by the EPA Regional Offices and the states (Clean Air Act,
Section 301).
• The national response to the Air and Water Acts is
encouraging. The overwhelming majority of citizens, private
firms and public bodies have met the deadlines and complied
with what was required of them. A minority have not. This
penalty policy will keep, faith with those who joined the
common effort. It will help maintain the voluntary compliance
on which achievement of our environmental goals depends.
The Clean Air and Water Acts authorize civil penalties
up to stated maximums. This policy enunciates general-principles
for determining appropriate penalties that the government will
seek in individual cases. It is based primarily on four
considerations—the harm done to public health or the
environment; the economic benefit gained by the violator;
the degree of recalcitrance of the violator; and any unusual
or extraordinary enforcement costs thrust upon the public.
The policy recognizes appropriate mitigating circumstances
or factors. Each of these penalty considerations and each of
the mitigating factors is well founded in law and is consistent
with statutory requirements..
100!"
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While fulfilling its primary objective to deter violations
and encourage compliance, this policy has very.significant
additional justifications and benefits as well:
A. The policy is fair:
1. in an ethical sense, because it
will assure that violators of the
law do not economically benefit
from their violation,
2. in an economic sense, because it will
assure that violators do not gain an
economic advantage over others who
incurred costs to obey the law, and
3. in a geographic sense, for it will
assure that no area of the country can
offer lenient enforcement as an advantage
to its industries or a lure to the industries
of other areas.
B. The policy seeks to improve the operation of the
market sector of our economy by more fully
imposing onto polluting firms costs otherwise
thrust upon the public. By internalizing more
of the social costs of producing goods or
services, it makes prices of goods or services
better reflect the resources used in their
production, and allows the market system to
better allocate resources.
C. The policy seeks to compensate the public for
harm done to public health or the environment,
or for unusual or extraordinary enforcement expenses.
D. The policy seeks to make efficient use of govern-
ment resources by removing economic incentives to
violate environmental laws, thus maintaining .high
voluntary compliance rates. Because there are
hundreds of thousands of pollution sources, even
a small decline in compliance rates brings major
new requirements for enforcement resources.
Because this policy is to be used by many federal, state
and local enforcement officials throughout the country, it has
been drafted.in general form. It is a policy for determining
what civil penalties the government will seek when civil
actions are taken, not a policy to determine which enforcement
actions should be taken. Enforcement strategy or priorities
are;determined elsewhere, not by this policy.
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„ -«-««
national
Associate;
- cacjut assertir
j.ssue merely because it is argx
.ooJc favorably upon appeals by
be handled out of headquarters/
eraonstrate that a hea'8'— —
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IV.C.2,
"GUIDANCE FOR DRAFTING JUDICIAL CONSENT DECREES", dated
October 19, 1983. See GM-17.*
-------
IV.C.3,
"New Civil Penalty Policy", dated February 16, 1984. See GM-21.
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I ,
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POLICY ON CIVIL PENALTIES
EPA GENERAL ENFORCEMENT POLICY IGM - 21
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY „ .. .
?ZZ i C IN-
EFFECTIVE DATE:
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^tsn,,,^
} UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
/ WASHINGTON. O.C. 20460
«'•" » C -i--»
MEMORANDUM
SUBJECT: New Civil Penalty Policy
FROM: Courtney M. Price
Assistant Administrator tot Enforcement
and Compliance Monitoring
TO: Associate Administrators
Assistant Administrators
General Counsel
Inspector General
Regional Administrators
Staff Office Directors
Attached is the Agency's new civil penalty policy. This
new penalty policy will establish a consistent Agency-wide
approach to the assessment of civil penalties while allowing
substantial flexibility for individual cases within certain
guidelines. It is designed to promote the goals of deterrence,
fair and equitable treatment of the regulated community and
swift resolution of environmental problems. No attempt is
made to address issues specific to each statute the Agency
administers. Instead, this will be left to guidance developed
by each program.
The policy consists of two documents: Policy on Civil
Penalties and A Framework for Statute-Specific Approaches to
Penalty Assessments. The first document focuses on the
general philosophy behind the penalty policy. The Framework
provides guidance to each program on how to develop medium-
specific penalty policies.
The new penalty policy vill not be truly effective until
the medium-specific penalty policies are completed. Thus it
is important that work begin on the medium-specific policies
as «oon as possible. I am therefore requesting that each
program office meet with their counterparts in OECM and develop
workplans for the development of those policies. Please submit
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those workplans to me by March 31, 1984. The Deputy Adminis-
trator has requested that we add the workplans to the Action
Tracking System as we receive them. If you have any questions
regarding this memorandum or the new civil penalty policy,
please contact Jonathan Libber of the Office of Legal and
Enforcement Policy. Be may be reached at 426-7503.
Attachment
cc: Enforcement Policy Workgroup Members
Associate Enforcement Counsels
OECM Office Directors
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-1-
Introduction
This document, Policy on Civil Penalties, establishes a
•ingle set of goals for penalty assessment in EPA administrative
and judicial enforcement actions. These goals - deterrence,
fair and equitable treatment of the regulated community, and
swift resolution of environmental problems - are presented here
in general terms. An outlinesof the general process for the
assessment of penalties is contained in Attachment A.
A companion document, A Framework for Statute-Specific
Approaches to Penalty Assessments, will also be issued today.
This document provides guidance to the user of the policy on
how to write penalty assessment guidance specific to the user's
particular program. The first part of the Framework provides
general guidance on developing program-specific guidance; the
second part contains a detailed appendix which explains the basis
for that guidance. Thus, the user need only refer to the appendix
when he wants an explanation of the guidance in the firvst part of
the Framework.
In order to achieve the above Agency policy goals, all
administratively imposed penalties and settlements of civil
penalty actions should, where possible, be consistent with the
guidance contained in the Framework document. Deviations from
the Framework's methodology, where merited, are authorized as
long as the reasons for the deviations are documented. Documen-
tation for deviations from the Framework in program-specific
guidance should be located in that guidance. Documentation for
deviations from the program-specific guidance in calculating
individual penalties should be contained in both the case files
and in any memoranda that accompany the settlements.
The Agency will make every effort to urge administrative
law judges to impose penalties consistent with this policy and
any medium-specific implementing guidance. For cases that go
to court, the Agency will request the statutory maximum penalty
in the filed complaint. And, as proceedings warrant, EPA will
continue to pursue a penalty no less .than that supported by the .
applicable program policy. Of course, all penalties must be consis-
tent with applicable statutory provisions, based upon the number
and duration of the violations at issue.
Applicability
This policy statement does not attempt to address the
specific mechanisms for achieving the goals set out for penalty
assessment. Nor does it prescribe a negotiation strategy to
achieve the penalty target figures. Similarly, it does not
,r£dress differences between statutes or between priorities cf
different programs. Accordingly, it cannot be used, by itself,
as a basis for determining an appropriate penalty in a specific
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-2-
aetion. Each EPA program office, in a joint effort with the
Offict of Enforcement and Compliance Monitoring, will revise
existing policies , or write new policies as needed. These
policies will guide the assessment of penalties under each
statute in a manner consistent with this document and, to the
extent reasonable v the accompanying Framework*
Until new program-specific policies are issued* the
current penalty policies will remain in effect. Once new
program-specific policies are issued, the Agency should
calculate penalties as follows:
For cases that are substantially settled,
the old policy.
• For cases that will require further sub-
stantial negotfation, apply the new policy
if that will not be too disruptive.
Because of the unique issues associated with civil penal-
ties in certain types of cases, this policy does not apply to
the following areas:
• CERCLA SI 07. This is an area in which
Congress has directed a particular kind
of response explicitly oriented toward
recovering the cost of Government cleanup
activity and natural resource damage.
• Clean Water Act S311(f) and (q). This also
is cost recovery in nature. As in CERCLA
$107 actions, the penalty assessment
approach is inappropriate.
• Clean Air Act S120. Congress has set out in
considerable detail the level of recovery
under this section. It has been implemented
with regulations which, as required by law,
prescribe a non-exclusive remedy which
focuses on recovery of the economic benefit
of noncomplift ce. It should be noted, how-
ever, that t -« general penalty policy builds
upon, and is consistent with the approach
Congress took in that section*
Much of the rationale supporting this policy generally
applies to non-profit institutions, including government entities,
In applying this policy to such entities, EPA must exercise judg-
ment case-by-case in deciding, for example, how to apply the
economic benefit and ability to pay sanctions, if at all. Furtfc
guidance ot« the ib&»e cf sccliir.; per.?:M»« e^pi^st non-orofit
entities will be forthcoming.
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-3-
Deterrence
The first goal of penalty assessment is to deter people from
violating the lav. Specifically* the penalty should persuade the
violator to take precautions against falling into noncompliance
again (specific deterrence) and dissuade others from violating the
law (general deterrence). Successful deterrence is important
because it provides the best protection for the environment.. In
addition, it reduces the resources necessary to administer the
lavs by addressing noncompliance before it occurs.
Zf a penalty is to achieve deterrence, both the violator and
the general public must be convinced that the penalty places the
violator in a vorse position than those vho have complied in a
timely fashion. Neither the violator nor the general public
is likely to believe this if the violator is able to retain an
overall advantage from noncompliance. Moreover, allowing a
violator to benefit from noncompliance punishes those who have
complied by placing them at a competitive disadvantage, this
creates a disincentive for compliance. For these reasons, it
is Agency policy that penalties generally should, at a minimum.
remove any significant economic benefits resulting from failure
to comply with the law. This amount will be referred to as the
"benefit component" of the penalty.
Where the penalty fails to remove the significant economic
benefit, as defined by the program-specific guidance, the case .
development team must explain in the case file why it fails to do
so. The case development team must then include this explanation
in the memorandum accompanying each settlement for the signature
of the Assistant Administrator of Enforcement and Compliance
Monitoring, or the appropriate Regional official.
The removal of the economic benefit of noncompliance only
places the violator in the same position as he would have been if
compliance had been achieved on time. Both deterrence and funda-
mental fairness require that the penalty include an additional
amount to ensure that the violator is economically worse off than
if it had obeyed the law. This additional amount should reflect
the seriousness of the violation. Zn doing so, the penalty will
be perceived as fair. In addition the penalty's size will tend
to deter other potential violators.
Zn some classes of cases, the normal gravity calculation may
be insufficient to effect general deterrence. This could happen
if, for example, there was extensive noncompliance with certain
regulatory programs in specific areas of the United States. This
would demonstrate that the normal penalty assessments had not been
achieving general deterrence. Zn such cases, the case development
team should consider increasing the gravity component sufficient to
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-4-
achieve general deterrence. These extra assessments should
balance the other goals of this policy, particularly equitable
treatment of the regulated community.
This approach is consistent with the civil penalty
provisions in the environmental laws* Almost all of them
require consideration of the s<. iousness'of the violation.
This additional amount which reflects the seriousness of the.
violation is referred to as the 'gravity component*. The
combination of the benefit and gravity components yields the
•preliminary deterrence figure.*
As explained later in this policy* the case development
team will adjust this figure as appropriate. Nevertheless, EPA
typically should seek to recover, at a minimum, a penalty which
includes the benefit component plus some non-trivial gravity
component. This is important because otherwise regulated
parties would have a general economic incentive to delay
compliance until the Agency commenced an enforcement action.
Once the Agency brought the action, the violator could then
settle for a penalty less than their economic benefit of
noncompliance. This incentive would directly undermine the
goal of deterrence.
Fair ana Equitable Treatment of the Re.ulated Community
The second goal of penalty assessment is the fair and
equitable treatment of the regulated community. Pair and
equitable treatment requires that the Agency's penalties must
display both consistency and flexibility. The consistent
application of a penalty policy is important because otherwise
the resulting penalties might be seen as being arbitrarily
assessed. Thus violators would be more inclined to litigate
over those penalties. This would consume Agency resources and
make swift resolution of environmental problems less likely.
But any system for calculating penal ies must have enough
flexibility to make adjustments to reflect legitimate differences
between similar violations. Otherwise the policy migv-t be
viewed as unfair. Again, the result would be to undermine
the goals of the Agency to achieve swift and equitable resolu-
tions of environmental problems.
Methods for quantifying the benefit and gravity components
are explained in the Framework guidance. These methods signifi-
cantly further the goal of equitable treatment of violators.
To begin with, the benefit component promotes equity by re-
moving the unfair economic advantage which a violator may have
gained over complying parties. Furthermore, because the benefit,
end gravity rcs?*pr««>rt>js «ro ce-*r?t*d systematically' thev '
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-5-
will exhibit relative consistency from case to case. Because
the methodologies account for a wide range of relevant factors,
the penalties generated will be responsive to legitimate
differences between eases.
However* not all the possibly relevant differences between
cases are accounted for in generating the preliminary deterrence
•mount. Accordingly, all preliminary deterrence amounts should
be increased or mitigated for the following factors to account
for differences between cases:
• Degree of willfulness and/or negligence
• History of noncompliance.
• Ability to pay.
• Degree of cooperation/noncooperation.
• Other unique factors specific to the
,, violator or the case.
Mitigation based on these factors is appropriate to the extent
the violator clearly demonstrates that it is entitled to miti-
gation.
The preliminary deterrence amount adjusted prior to the
start of settlement negotiations yields the "initial penalty
target figure". In administrative actions, this figure
generally is the penalty assessed in the complaint. Zn judicial
actions, EPA will use this figure as the first settlement goal.
This settlement goal is an internal target and should not be
revealed to the violator unless the case development team feels
that it is appropriate. The initial penalty target may be
further adjusted as negotiations proceed and additional
information becomes available or as the original information is
reassessed.
Swift Resolution of Environmental Problems
The third goal of penalty assessment is swift resolution
of environmental problems. The Agency's primary mission is to
protect the environment. As long as an environmental violation
continues, precious natural resources, and possibly public
health, are at risk. For this reason, swift correction of
identified environmental problems must be an important goal of
any enforcement action. In addition, swift compliance conserves
Agency personnel and resources.
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• • -6-
The Agency will pursue two basic approaches to promoting
quick settlements which include swift resolution of environmental
problems without undermining deterrence. Those two approaches
are as follows;
1. Provide incentives to settle and institute prompt •
remedial actionl. '
MM^^^BM^^^MM^O^^MM^^^M . ' /
EPA policy will be to provide specific incentives to settle,
including the following:
• The Agency will consider reducing the
gravity component of the penalty for
settlements in which the violator already
has instituted expeditious remedies to
the identified violations prior to the
commencement of litigation.^/ This would
be.considered in the adjustment factor
called degree of coeperation/noncoopsra-
tion discussed above.
• The Agency will consider accepting additional
environmental cleanup, and mitigating the
penalty figures accordingly. But normally,
the Agency will only accept this arrangement
if agreed to in pre-litigation settlement.
Other incentives can be used, as long as they do not result in
allowing the violator to retain a significant economic benefit.
2. Provide disincentives to delay*.-i compliance.
The preliminary deterrence amount is based in part upon
the expected duration of the violation. If that projected period
of time is extended during the course of settlement negotiations
due to the defendant's actions, the ease development team should
adjust that figure upward. The case development team should
consider making this fact known to the violator early in the negoti-
ation process. This will provide a strong disincentive to delay
compliance.
I/ For the purposes of this document, litigation is deemed to
begins
• for administrative actions - when the -
: respondent files a response to an adminis-
trative complaint or when the time to
file expires or
• for judicial actions - when an Assistant
United States Attorney files a com-
plaint in court. .
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-V
intent of Pcliev and Information Requests for Penalty Calculations
The policies and procedures set out in this document and in
»»- r™*»£«rk fQr Statute-s^elf ie Appr^eh^ to Penalty Assessment
are intended solely tor the guidance ot government personnel.
They mil nil intended and caXnot be relied upon to create any
ri2*»T substantive or procedural, .nforceable by any party in
litigation with the United States. The Agency reserves the right
to act at variance with these policies and procedures and to change
then at any time without public notice. In addition, any Penalty
calSulatioXs under this policy made in anticipation of litigation
ire exempt from disclosure under the Freedom of Information Act.
Nevertheless as a matter of public interest, the Agency auiy
elect to release this information in some cases.
Courtney K. Price
Assistant Administrator for
Enforcement and Compliance Monitoring
Attachment
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ATTACHMENT A
Outline or Civil penalty Assessment
I. Calculate Preliminary Deterrence Amount
A. Economic benefit component and
B. Gravity component
(This yields the preliminary deterrence amount.)
II. Apply Adlustment Factors
A. Degree of eooperation/noncooperation (indicated through
pre-settlement action.)
8. Degree of willfulness and/or negligence.
C. History of noncompliance'.
. • ;
• D. Ability to pay (optional at this stage.)
E. Other unique factors (including strength of case,
competing public policy concerns.)
(This yields the initial penalty target figure.)
•\
III. Adjustments to Initial Penalty Target Figure After
Negotiations Have Begun
A. Ability to pay (to the "extent not considered in
calculating initial penalty target.)
B. Reassess adjustments.used in calculating .initial
penalty target. (Agency may want to reexamine
evidence used as a basis for the penalty in the
light of new information.)
C. Reassess preliminary deterrence amount to reflect
continued periods of noncompliance not reflected
in the original calculation.
D. Alternative payments agreed upon prior to the
commencement of litigation.
(This yields the adjusted penalty target figure.)
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IV.C.4,
"A .Framework for Statute Specific Approaches to Penalty Assessment", dated
February 16, 1984. See GM-22.
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A FRAMEWORK FOR STATUTE-SPECIFIC APPROACHES
TO PENALTY ASSESSMENTS;
IMPLEMENTING EPA'S POLICY ON CIVIL PENALTIES
EPA GENERAL ENFORCEMENT POLICY fGM - 22
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY
FEE I 6 1984
EFFECTIVE DATE:
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Contents . Paoe
Introduction
Writing a Program-Specific Policy 2
I. Developing a Penalty Figure 2
II. Calculating a Preliminary Deterrence Amount 2
III. Adjusting the Preliminary Deterrence Amount 3
to Derive the Initial Penalty Target Figure
IV. Adjusting the Initial Penalty Target Figure 4
During Negotiations
Use of the Policy in Litigation
Use of the Policy as a Feedback Device
Appendix
Introduction 6
The Preliminary Deterrence Amount 6
I. The Benefit Component 6
A. Benefit from delayed costs ?
B. Benefit from avoided costs 9
C. Benefit from competitive advantage 10
D. Settling a case for an amount less than 11
• the economic benefit component
II. -The Gravity Component 13
A. Quantifying the gravity of a violation 13
B. Gravity factors 14
Initial and Adjusted Penalty Target Figure 16
I. Flexibility-Adjustment Factors 17
A. Degree of willfulness and/or negligence 17
B. Degree of cooperation/noncooperation 19
C. History of noncompliance 21
D. Ability to **"*
£. Other unique factors 24
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ii
Appendix (Con't)
XI* Alternative Payments 24
III. Promoting Consistency 27
\
Use of Penalty Figure in Settlement Negotiations 28
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introouction
This document, A Framework for Statute-Specific Approaches
to Penalty Assessment, provides guidance to the user of the
Policy on Civil Penalties on how to develop a medium-specific
penalty policy. Such policies will apply to administratively
imposed penalties and settlements of both administrative and
judicial penalty actions.
In the Policy on Civil Penalties, the Environmental
Protection Agency establishes a single set of goals for penalty
assessment. Those goals - deterrence* fair and equitable
treatment of the regulated community, and swift resolution of
environmental problems - will be substantially impaired unless
they are pursued in a consistent fashion. Even different
terminology could cause confusion that would detract from the
achievement of these goals. At the same time, too much'rigidity
.will stifle negotiation and make settlement impossible.
The purpose of this document is to promote the goals of
the Policy on Civil Penalties by providing a framework for
medium-specific penalty policies. The Framework is detailed
enough to allow individual programs to develop policies that
will consistently further the Agency's goals and. be.easy to
administer. Zn addition, it is general enough to allow each
program to tailor, the policy to the relevant statutory provi-
sions and the particular priorities of each program.
While this document contains detailed guidance* it is not
cast in absolute terms. Nevertheless, the policy does not
encourage deviation from this guidance in either the development
of medium-specific policies or in developing actual penalty
figures. Where there are deviations in developing medium-
specific policies, the reasons for those changes must be
recorded in the actual policy. Where there are deviations from
medium-specific policies in calculating a penalty figure, the
case development team must detail the reasons for those changes
in the case file. Zn addition, the rationale behind the deviations
nust be incorporated in the memorandum accompanying the settlement
package to Headquarters or the appropriate Regional official.
This document is divided into two sections. The first one
gives brief. instructions to the user on how to write a medium-
specific policy. The second section is an appendix that gives
detailed guidance on implementing each section,of the instruc-
tions and explains how the instructions are intended to further
the goals of the policy.
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Writing a Program Specific Policy
Summarized below are those elements that should be present
in a program-specific penalty policy. For a detailed discus-
sion of each of these ideas* the corresponding j :ions of the
appendix should be consulted.
I. Developing a Penalty Figure .
The development of a penalty figure is a two step process.
First the ease development team must calculate a preliminary
deterrence figure. This figure is composed of the economic
benefit component (where applicable) and the gravity component.
The second step is to adjust the preliminary deterrence figure
through a number of factors. The resulting penalty figure is
the initial penalty target figure. Zn'judicial actions, the
initial penalty target figure is the penalty amount which the
government normally sets as a goal at the outset of settlement
negotiations. It is essentially an internal settlement goal and
should not be revealed to the violator unless the case developing
team feels it is appropriate. In administrative actions, this
figure generally is the penalty assessed in the complaint.
While in judicial actions, the government's complaint will reques
the maximum penalty authorized by law.
This initial penalty target figure may be further ad-justed
in the course of negotiations. Each policy should ensure that
the penalty assessed or requested is within any applicable
statutory constraints, based upon the number and duration of
violations at issue.
II. Calculating a Preliminary Deterrence Amount
Each program-specific policy nu. t contain a section on
calculating the preliminary deterrence figure. That section
should contain materials on each of the following areas:
• Benefit Component. This section should
. explain: •
a. the relevent measure of economic benefit
for various types of violations,
b. the information needed*
c. where to get assistance in computing
this figure and
d." how to use available computer systems
: to compare a case with imilar previous
violations.
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• Gravity Component. This section should first
.rank different types of violations according
to the seriousness of the act. In creating
that ranking, the following factors should be
considered:
a. actual or possible harm/
b. importance to the regulatory
scheme and
c. availability of data from other
sources.
Zn evaluating actual or possible harm, your scheme should
consider the following facts:
amount of pollutant,
toxicity of pollutant,
sensitivity of the environment,
length of time of a violation and
size of the violator.
The policy then should assign appropriate dollar amounts
or ranges of amounts to the different ranked violations to
constitute the "gravity component". This amount, added to the
amount reflecting economic benefit, constitutes the preliminary
deterrence figure. .
•
III. Adjusting the Preliminary Deterrence Amount to Derive the
Initial Penalty Target Figure (Preneootiation Adjustment)
Each program-specific penalty policy should give detailed
guidance on applying the appropriate adjustments to the pre-
liminary deterrence figure. This is to ensure that penalties also
further Agency goals besides deterrence (i.e. equity and swift
correction of environmental problems). Those guidelines should
be consistent with the approach described in the appendix. The
factors may be separated according to whether they can be con-
sidered before or after negotiation has begun or both.
Adjustments (increases or decreases, as appropriate) that
can be made to the preliminary deterrence penalty to develop an
initial penaly target to use at the outset of negotiation include:
* Degree of willfulness and/or negligence
• Cooperation/noncooperation through pre-
settlement action.
• History of noncompliance.
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•4-
• Ability to pay.
• Other unique factors (including strength of
case, competing public policy considerations).
The policy nay permit consideration of the violator's ability
to pay as an adjustment factor before negotiations begin. It
may also postpone consideration of that factor until after negoti-
ations have begun. This would allow the violator to produce
evidence substantiating its inability to pay.
The policy should prescribe appropriate amounts, or ranges
of amounts, by which the preliminary deterrence penalty should
be adjusted. Adjustments will depend on the extent to which
certain factors are pertinent. In order to preserve the penalty's
deterrent effect, the policy should also ensure that, except for
the specific exceptions described in this document, the adjusted
penalty will: 1) always remove any significant economic benefit
of noncompliance and 2) contain some non-trivial amount.as a
gravity component.
/
IV. Adjusting the Initial Penalty Target During Negotiations
Each program-specific policy should call for periodic reas
sessment of these adjustments during the course of negotiations.
This would occur as additional relevant Information becomes avail-
able and the old evidence is re-evaluated in the light of new
evidence. Once negotiations have begun, the policy also should
permit adjustment of the penalty target to reflect "alternative
payments* the violator agrees to make in settlement of the case.
Adjustments for alternative payments and pre-settlement corrective
action are generally permissible only before litigation has
begun.
Again, the policy should be structured to ensure that any
settlement made after negotiations have begun reflects the
economic benefit of noncompliance up to the date of compliance
plus some non-trivial gravity component. This means that if
lengthy settlement negotiations cause the violation to continue
longer than initially anticipated, the penalty target figure
should be increased. The increase would be based upon the extent
that the violations continue to, produce ongoing* environmental
risk and increasing economic benefit.
\
Use of the Policy In Litigation
\
Each program-specific policy should contain a section on
.the use, of the policy in litigation. Requests for penalties
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should account for all the factors identified in the relevant
statute and still allow for compromises in settlement without
exceeding the parameters outlined in this document. (For each
program, all the statutory factors are contained in the Frame-
work either explicitly or as part of broader factors.) For admin-
istrative proceedingsf the policy should explain how to formulate
a penalty figure* consistent with the policy. The case develop-
ment team will put this figure in the administrative complaint.
Zn judicial .actions, the EPA will use the initial penalty
target figure as its first settlement goal. This settlement
goal is an internal target and should not .be revealed to the
violator unless the case development team feels it is appro-
priate. In judicial litigation* the government should request
the maximum penalty authorised by law in its complaint. The
policy should also explain how it and any applicable precedents
should be used in responding to any explicit requests from a
court for a minimum assesment which the Agency would deem
appropriate.
•
Use of the Policy as a Feedback Device "*
Each program-specific policy should first explain in detail
what information needs to be put into the case file and into the
relevant computer tracking system. Furthermore, each policy
should cover how to use that system.to examine penalty assessments
in other cases. This would thereby assist the Agency in making
judgments about the size of adjustments to the penalty for the
case at hand. Each policy should also explain how to present
penalty calculations in litigation reports.
Courtney H. Price
Assistant Administrator for
Enforcement and Compliance Monitoring
Attachment
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APPEKDIX
Introduction
This appendix contains three sections. The first two sections
set out guidelines for achieving the goals of the Policy on Civil
Penalties. The first section focuses on achieving deterrence by
assuring that the penalty first removes any economic benefit from
noncompliance. Then it adds an amount to the penalty which reflects
the seriousness of the violation. The second section provides
adjustment factors so that both a fair and equitable penalty will
result and that there will be a swift resolution of the environmenta
problem. The third section of the framework presents some practical
advice on the use of the penalty figures generated by the policy.
The Preliminary Deterrence Amount
The Policy on Civil Penalties establishes deterrence as an
important goal of penalty assessment. More specifically, it speci-
fies that any penalty should, at a minimum, remove any significant
benefits resulting from noncompliance. In addition, it should
include an amount beyond removal of economic benefit to reflect
the seriousness of the violation. That portion of the penalty
which removes the economic benefi af noncomplia.-.ce is referred
as the "benefit component;" that p-rt of the penalty which refi
the seriousness of the violation is referred to as the "gravity
component." When.combined, these two components yield the "prelim-
inary deterrence amount•"
This section of the document provides guidelines for calcu-
lating the benefit component and the gravity component. It will
also present and discuss a simplified version of the economic
benefit calculation for use in developing quick penalty deter-
minations. This sertion will also discuss the limited circum-
stances which justify settling for less than the benefit component.
The uses of the preliminary deterrence amount will be explained
in subsequent portions of this document.
I; The Benefit Component
In order to ensure that penalties remove any significant '
economic benefit of noncompliance, it is necessary to have
reliable methods to calculate that benefit. The existence of
reliable methods also strengthens the Agency's position in both
litigation and negotiation. This section sets out guidelines for
computing the benefit component. It first addresses costs which
are delayed by noncompliance. Then it addresses cos-ts which are
avoided completely by noncompliance. It also identifies issuer
\;>*s.-
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to be considered when computing the benefit component for those
violations where the benefit of noncompliance results from factors
other than cost savings. This section concludes with a discussion
of the proper use of the benefit component in developing penalty
figures and in settlement negotiations.
A* Benefit from delayed costs
In many instances, the economic advantage to be derived from
noncompliance is the ability to delay making the expenditures
necessary to achieve compliance. For example, a facility which
fails to construct required settling ponds will eventually have to
spend the money needed to build those ponds in order to achieve
compliance. But, by deferring these one-time nonrecurring costs
until EPA or a State takes an enforcement action, that facility
has achieved an economic benefit. Among the types of violations
which result in savings from deferred cost are the following:
• Failure to install equipment needed to meet
, discharge or emission control standards.
• Failure to effect process changes needed
to eliminate pollutants from products or
waste streams.
• Testing violations, where the testing still
must be done to demonstrate achieved com-
pliance.
• Improper disposal, where proper disposal is
still required to achieve compliance.
• Improper storage where- proper storage is still
required to achieve compliance.
• Failure to obtain necessary permits for dis-
charge, where such permits would probably be
granted. (While the avoided cost for many
programs would be negligible, there are pro-
grams where the the permit process can be
expensive).
The Agency has a substantial amount of experience under
the air and water programs in calculating the economic benefit
that results from delaying costs necessary to achieve compliance.
This experience indicates that it is possible to estimate the
benefit of delayed compliance through the use of a simple formula.
Specifically, the economic benefit of delayed compliance may be
estimated at: 5% per year of the delayed one-time capital cost
for the period from the date the violation began until the date
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compliance was or is expected to be achieved. This will be
referred to as the "rule of thumb for delayed compliance" method.
Each program may adopt its own "rule of thumb*1 if appropriate.
The applicable medium-specific guidance should state what that
method is.
The rule of thumb method can usually be used in making
decisions on whether to develop a case or in setting a penalty
target for settlement negotiations. In using this rule of thumb
method in settlement negotiations, the Agency may want to make
the violator fully aware t;..:t it is using an estimate and not
a more precise penalty determination procedure. The decision
whether to reveal this information is up to the negotiators.
The "rule of thumb" method only provides a first-cut estimate
of the benefit of delayed compliance. For this reason, its use
is probably inappropriate in situations where a detailed analysis
of the economic effect of noncompliance is needed to support or
defend the Agency's position. Accordingly, this "rule of thunc"
method generally should not be used in any of the following cir-
cumstances:
• A hearing is likely on the amount of the
penalty.
• The defendant wishes to negotiate over the
amount of the economic benefit on the basis
of factors unique to the financial condition
of the' company.
• The case development team has reason to
believe it will*produce a substantially
inaccurate estimate; for example, where the
defendant is in a highly unusual financial
position, or where noncompliance has or will
continue for an unusually long period.
There usually are avoided costs associated with this type
of situation. Therefore, the "rule of thumb for avoided costs"
should also be applied. (See pages 9-10). For most cases, both
figures are needed to yield the major portion of the economic
benefit component.
When the. rule of thumb method is not applicable, the economic
benefit of delayed compliance should be computed using the Meth.
odoloqy for Computing the Economic'Benefit of Noneemplianee.
This document, which is under development, provides a method
for computing the economic benefit of noncompliance based on a
detailed economic analysis. The method will largely be a refin«c
version of the method used in the previous Civil Penalty Polic
•ispu*2 July 6. 19£0, for the Clean Water Act and Title I of th*
Clean Air Act. Zt will also be consistent witn tne
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implementing Section 120 of the Clean Air Act. A computer
program will be available to the Regions to perform the analysis,
together with instructions for its use. Until the Methodology
is issued, the economic model contained in the July 8, i960,
Civil Penalty Policy should be used. Zt should be noted that
the Agency recently modified this guidance to reflect changes in
the tax law.
B. Benefit from avoided costs
Many kinds of violations enable a violator to permanently
avoid certain costs associated with compliance.
• Cost savings for operation and maintenance of
equipment that the violator failed to install.
• Failure to properly operate and maintain
existing control equipment.
• Failure to employ sufficient number of
adequately trained staff.
• Failure to establish or follow precautionary
methods required by regulations or permits.
• Improper storage, where commercial storage is
reasonably'available.
• Improper disposal, where redisposal or cleanup
is not possible.
• Process, operational, or maintenance savings
from removing pollution equipment.
• Failure to conduct necessary testing.
As with the benefit from delayed costs, the benefit com-
ponent for avoided costs may be estimated by another 'rule of
thumb* method. Since these costs will never be incurred, the
estimate is the expenses avoided until the date compliance is
achieved less any tax savings. The use of this "rule of thumb*
method is subject to the same limitations as those discussed in
the preceding section. .
Where the "rule of thumb for avoided costs* method cannot
be used, the benefit from avoided costs must be computed using
the Methodology for Computing the Economic Benefit of Noncom-
pliancTI.Aoaxn* until the Methololpqy is issued, the metr.od
contained in the July 8, 1980, Civil Penalty Policy should be
used as modified to reflect recent changes in the tax law.
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C. Benefit fron competitive advantage
i
For most violations* removing the savings vhich accrue
from nonconpliance will usually be sufficient to remove the
competitive advantage the violator clearly has gained from
noncompliance. But there are some situations in which noncom-
pliance allows the violator to provide goods or services which
are not available elsewhere or are more attractive to the
consumer. Examples of such violations include:
• Selling banned products.
• Selling products for banned uses.
• Selling products without required labelling
or warnings.
• Removing or altering pollution cc-trol
equipment for a fee, (e.g., tampering with
automobile emission controls.)
• Selling products without required regula-
tory clearance, (e.g., pesticide registra-
tion or premanufacture notice under TSCA.)
To adequately re.nove the economic incentive for such viola-
tions, it is helpful to estimbre the net profits made from the
improper transactions (i.e. those transactions which would not
have occurred if the party had complied). The case development
team is responsible for ide-tifying violations in which this
element of economic benefit clearly is present and significant.
This calculation may be substantially different depending on the
type of violation. Consequently the program-specific policies
should contain guidance on identifying these types of violations
and estimating these profits. In formulating that guidance, the
following principles should be followed:
• The amount of the profit should be based on
the best information available concerning
the number of transactions resulting from
noncompliance.
• Where available, information about the
average profit per transaction may be used.
'In some cases, this may be available from
the rulemaking record of the provision
violated.
• The benefit derived should be adjusted to
reflect the present value of net profits
derived in the past.
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lt is recognized that the methods developed for estimating
the profit from those transactions will sometimes rely substan-
tially on expertise rather than verifiable data. Nevertheless,
the programs should make all reasonable efforts to ensure that
the estimates developed are defensible. The programs are encour-
aged to .work with the Office of Policy, Planning and Evaluation
to ensure that the methods developed are consistent with the
forthcoming Methodology for Computing the Economic Benefit of
Koneompliance and with methods developed .by other programs. "The
programs should also ensure that sufficient contract funds are
available to obtain expert advice in this area as needed to
support penalty development, negotiation and trial of these kinds
of cases.
D. Settling cases for an amount less than the economic
benefit\
As noted above, settling for an amount which does not remove
the economic benefit of poncorapliance can encourage people to
wait until EPA or the State begins an enforcement action before
complying. For this reason, it is general Agency policy not to
settle for less than this amount. There are three general areas
where settling for less than economic benefit may be appropriate.
But in any individual case where the Agency decides to settle for
less than enconomic benefit, the case development team must detail
those reasons in the case file and in any memoranda accompanying-
the-settlement. . .
1. Benefit component involves insignificant amount
It is clear that assessing the benefit component and
negotiating over it will often represent a substantial commitment
of resources. Such a commitment of resources may not be warranted
in cases where the magnitude of the benefit component is not likely
to be significant, (e.g. not likely to have a substantial impact on
the violator's competitive positions). For this reason, the case
development team has the discretion not to seek the benefit com-
ponent where it appears that the amount of that component is
likely to be less than $10,000. (A program may determine that
other cut-off points are more reasonable based on the likelihood
that retaining the benefit could encourage noncomplying behavior.)
In exercising that discretion* the case development team should
consider the following factors:
• Impact on violator; The likelihood that
.assessing the benefit component as part
of•the penalty will have a noticeable
effect on the violator1* competitive
position or overall profits. If no such
effect appears likely, the benefit com-
ponent should probably not be pursued.
• The size of the gravity component; If the
gravity compone;4;. i» xiii^ivily s-ill. :*
may not provide a sufficient deterrent, by
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itself, to achieve the goals of this policy.
• The certainty of the size of the benefit
component;. It the economic benefit is quite
veil definedr it is not likely to require
as much effort to seek to include it in the
penalty assessment. Such circumstances also
increase the likelihood that the economic
benefit was a substantial motivation for the
noncompliance. This would make the inclusion
of the benefit component more necessary to
achieve specific deterrence.
It may be appropriate not to seek the benefit component in
an entire class of violation. In that situation* the rationale
behind that approach should be clearly stated in the appropriate
medium-specific policy. For example, the most appropriate way
to handle a small non-recurring operation and maintenance vio-
lation may be a small penalty. Obviously it makes little sense
to assess in detail the economic benefit for each individual
violation because the benefit is likely to be so small. The
medium-specific policy would state this as the rationale.
2. Compelling public concerns
The Agency recognizes that there may be some instances wher*
there are compelling public concerns that would not be served by
taking a case to trial. In such instances* it may become necessa.
to consider settling a ease for less than the benefit component.
This may be done only if it is absolutely necessary to preserve
the countervailing public interests. Such settlements might be
appropriate where the following circumstances occur:
• There is a very substantial risk of creating
precedent which will have a significant
adverse effect upon the Agency's ability
to enforce the law or clean up pollution
if the case is taken to trial.
• Settlement will avoid or terminate an
imminent risk to human health or ' .-
environment. This is an adequate
justification only if injunctive relief
is unavailable for some reason, and if
settlement on remedial responsibilities
could not be reached independent of any
settlement of civil penalty liability.
V Remc.al of the economic benefit would
result in plant closings, bankruptcy, or
other extreme financial burden, and there
is an important public interest ir allow-
ing the firm to continue in busin s.
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Alternativc payment plans should be fully
explored before resorting to this option.
.Otherwise* the Agency will give the per-
ception that shirking one's environmental
responsibilities is a way to keep a failing
enterprise afloat. This exemption does not
apply to situations where the plant was
likely to close anyway, or where there is a
likelihood of continued harmful noncompliance.
3. Litigation practicalities'
The Agency realizes that in certain cases, it is highly unlikely
the EPA will be able to recover the economic benefit in litigation.
This may be due to applicable precedent, competing public interest
considerations, or the specific facts, equities, or evidentiary
issues pertaining to a particular case. In such a situation it is
unrealistic to expect EPA to obtain a penalty in litigation which
would remove the economic benefit. The case development team then
may pursue a lower penalty amount.
II. The Gravity Component
As noted above, the Policy on Civil Penalties specifies that
a penalty,.to achieve deterrence, should not only remove any eco-
nomic benefit of noncompliance, but also include, an amount reflecting
the seriousness of the violation. This latter amount is referred
to as the 'gravity component.* The purpose of this section of the
document is to establish an approach to quantifying the gravity
component. This approach can encompass the differences between
programs and still provide the basis for a. sound consistent treat-
ment of this issue.
A. Quantifying the gravity of a violation
Assigning a dollar figure to represent the gravity of a vio-
lation is an essentially subjective process. Nevertheless, the
relative seriousness of different violations can be fairly
accurately determined in most cases. This can be accomplished
by reference to the goals of the specific regulatory scheme and
the facts of each particular violation. Thus, linking the dollar
amount of the gravity component to these objective factors is a
useful way of insuring that violations of approximately equal
seriousness are treated the same way.
Such a linkage promotes consistency. This consistency
strengthens the Agency's position both in negotiation and before
a trier of fact. This approach consequently also encourages
swift resolution of environmental problems.
Each program must develop a system'for quantifying the
gravity ot vioiationt wl •„;.<; laws, ar.z rejuiatiers it *?-:~i?*
ers
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This development must occur within the context of the penalty
amounts authorized by law for that program. That system must
be based, whenever possible, on objective indicators of the
seriousness of the violation. Examples of such indicators are
given below. The seriousness of the violation should be based
primarily ont 1) ;he risk of harm inherent in the violation at
the time it was committed and 2) the actual harm that resulted
from the violation. In some cases, the seriousness of the
risk of harm will exceed that of the actual harm Thus, each
system should provide enough flexibility to allow EPA to consider
both factors in assessing penalties.
Each system must also be designed to minimize the possi-
bility that two persons applying ths system to the same set of
facts would come up with substantially different numbers. Thus,
to the extent the system depends on categorizing events, those
categories must be clearly defined. That way there is little
possibility for argument over the category in which a violation
belongs. In addition, the cat*^orization of the events relevant
to the penalty decision shoulc .e noted in the penalty develop-
ment portion of the case file.
B. Gravity Factors
* ! , ' . . «
In quantifying the gravity of a violation, a program-spec!
policy should rank different types of violations according to t.
seriousness of the act. The following is a sue sted approach to
ranking the seriousness of violations. In this approach to rank-
ing, the following factors should be considered:
• Actual or possible harm; This factor
focuses on whether (and to what extent)
the activity of the defendant actually
resulted or was likely to result in an
unpermitted discharge or exposure.
• Importance to the regulatory scheme: This
factor focuses on the Importance of the
requirement to achieving the goal of the
statute or regulation. For example, if
labelling is the only method used to pre-
vent dangerous exposure to a chemical,
then failure to label should result in a
relatively high penalty. By contrast, a
warning sign that was visibly posted but
was smaller than the required size would
not normally be considered as serious.
* Availability of data from ether sources:
The violation of any recordkeeping or
reporting requirement is a very serious
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matter. But if the involved requirement
is the only source of information* the
violation, is far more serious* By contrast,
if the Agency has another readily available
and cheap source for the necessary infor-
mation , a smaller penalty may be appro-
priate. (E.g. a customer of the violator
purchased all the violator's illegally
produced substance. Even though the
violator does not have the required
records* the customer does.)
• Site of violators In some cases, the
gravity component should be increased
where it is clear that the resultant
penalty will otherwise have little
impact on the violator in light of the
risk of harm posed by the violation.
This factor is only relevant to the
extent it is not taken into account by
other factors. ,
The assessment of the first gravity factor listed above,
risk or harm arising from a violation, is a complex matter. For
purposes of ranking violations according to seriousness, it is
possible to distinguish violations within a category on the basis
of certain considerations, including the following:
' *
• Amount of pollutants Adjustments for the
concentration of the pollutant may be
appropriate, depending on the regulatory
scheme and the characteristics of the
pollutant. Such adjustments need not be
linear, especially if the pollutant can
be harmful at low concentrations.
• Texicity of the pollutant? Violations
involving highly toxic pollutants are more
serious and should result in relatively
larger penalties.
• Sensitivity of the environments This
factor focuses on the location where the
violation was committed. For example,
. improper discharge into waters near a
drinking water intake or a recreational
beach is usually more serious than dis-
charge into waters not near any such use.
• The length of time a violation continuest
In most circumstances, the longer a
violation continues uncorrected, the
rCitcr is tJ*.? risV .e»f hanr.
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Although each program-specific policy should address each
of the factors listed above, or determine why it is not relevant*
the factors listed above are not meant to be exhaustive. The
programs should make every effort to identify all factors rele-
vant to assessing the seriousness of any violation. .The programs
should then systematically prescribe a dollar amount to yield a
gravity component for the penalty. The program-specific policies
may prescribe a dollar range for a certain category of violation
rather than-a precise dollar, amount within that range based on
the specific facts of an individual case.
The process by which the gravity component was computed must
be memorialized in the case file. Combining the benefit component
with the gravity component yields the preliminary deterrence amount.
In some classes of cases, the normal gravity calculation may
be insufficient to effect general deterrence. This could happen
if there was extensive noncompliance with certain regulatory
programs'in specific areas of the United States. This would
demonstrate that the .normal penalty assessments had not been
achieving general deterrence. The medium specific policies should
address this issue. One possible *oproach would be to direct the
case development team to consider .ncreasing the gravity component
within a certain range to achieve general deterrence. These extra
assessments should be consistent with the other goals of this
policy.
Initial and Adjusted Penalty Target Figure
The second goal of the Policy on Civil Penalties is the
equitable treatment of the regulated community. One important
mechanism for promoting equitable treatment is to include the
benefit component discussed above in a civil penalty assessment.
This approach would prevent violators from benefitting economi-
cally from their noncompliance relative to parties which have
complied with environmental requirements.
In addition, in order to promote equity, the system for
penalty assessment must have enough flexibility to account for
the unique facts of each case. Yet it still must produce enough
consistent results to treat similarly-situated violators similarly.
This is accomplished by identifying many of the legitimate differ-
ences between cases and providing guidelines for how to adjust
the preliminary deterrence amount when those facts occur. The
application of these adjustments to the preliminary deterrence
amount prior to the commencement of negotiation yields the initial
penalty target .figure. During the course of negotiation, the case
development team may further adjust this figure to yield the
adjusted penalty target figure.
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Nevertheless, it should be noted that equitable treatment is
a two-edged sword. While it means that a particular violator will
receive no higher penalty than a similarly situated violator, it
also means that the penalty will be no lower.
t. Flexibility-Adjustment Factors
The purpose of this section of the document is to establish
additional adjustment factors to promote flexibility and to iden-
tify management techniques that will promote consistency. This
section sets out guidelines for adjusting penalties to account for
some factors that frequently distinguish different cases. Those
factors are: degree of willfulness and/or negligence, degree of
cooperation/noncooperation, history of noncompliance, ability to
pay, and other unique factors. Unless otherwise specified, these
adjustment factors will apply only to the gravity component and
not to the economic benefit component* Violators bear the burden
of justifying mitigation adjustments they propose based on these
factors.
Within each factor there are three suggested ranges of
adjustment. The actual ranges for each medium-specific policy
will be determined by those developing the policy. The actual
ranges may differ from these suggested ranges based upon program
specific needs. The first, typically a 0-20% adjustment of the
gravity component, is within the absolute discretion of the case
development team. V The second, typically a 21-30% adjustment,
is only appropriate* in unusual circumstances. The third range,
typically beyond 30% adjustment, is only appropriate in extra-
ordinary circumstances. Adjustments in the latter two ranges,
unusual and extraordinary circumstances, will be subject to scrutiny
in any performance audit. The case development team may wish to
reevaluate.these adjustment factors as the negotiations progress.
This allows the team to reconsider evidence used as a basis for
the penalty in light of new information*
Where the Region develops the penalty figure, the appli-
cation of adjustment factors will be part of the planned Regional
audits. Headquarters will be responsible for proper application
of these factors in nationally-managed cases. A detailed dis-
cussion of these factors follows.
A. Degree of Willfulness and/or Negligence
Although most of the statutes which EPA administers are
strict liability statutes, this does not render the violator's
I/ Absolute discretion means that the case development team
may make penalty development decisions independent of EPA
Headquarters. Nevertheless it is understood that in all
judicial matters, the Department of Justice can still review
t,i*c:»e i«v.*r=.ir.aticr.c if tr.cy sr tfes«r». Of eource the authority
to exercise the Agency's concurrence in final settlements is
covered by the applicable delegations.
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•
willfulness and/or negligence irrelevant. Knowing or willful
violations can give rise to criminal liability, and the lack
of any culpability may, depending upon the particular program,
indicate that no penalty action is appropriate. Between these
two extremes, the willfulness and/or negligence of the violator
should be reflected in the amount of the penalty.
Zn assessing the degree of willfulness and/or negligence,
all of the following points should be considered in most cases:
* - /
• Bow much control the violator had over the
•vents constituting the violation.
• The forseeability of the events consti-
tuting the violation.
• Whether the violator took reasonable
• i precautions against the events con-
stituting the violation.
• Whether the violator knew or should have
known of the hazards associated with the
conduct. ,
• The level of sophistication within the
industry in dealing with compliance issues
and/or the accessibility of appropriate
cor.rol technology (if this information is
reacily available). This should be balanced
against the technology forcing nature of the
statute, where applicable.
• Whether the violator in fact knew of the
legal requirement which was violated.
It should be noted that this last point, lack of knowledge
of the legal requirement, should never be used as a basis to
reduce the penalty. To do so would encourage ignorance of
the law. Rather, knowledge of the law should serve only to
enhance the penalty.
The amount of control which the violator had over'how
quickly the violation was remedied is also relevent in certain
circumstances. Specifically, if correction of the environmental
problem was delayed by factors which the violator can clearly
show were not reasonably foreseeable and out of its control, the
penalty may be reduced.
The suggested approach for this factor is for the case
development team to have absolute discretion to adjust the
per.ilty up cr *««.— *y ?0* of the gravity component. Adjustmen
in the £ 21-30% range should only be made in unusual circus.* ;.&.;..
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Adjustments for this factor beyond ± 30% should be made only in
extraordinary circumstances. Adjustments in the unusual or
extraordinary circumstance range will be subject to scrutiny in
any audit of .performance.
B. Degree of Cooperation/Koncooperatibn
The degree of cooperation or noncooperation of the violator
in remedying the violation is an appropriate factor to consider in
adjusting the penalty. Such adjustments are mandated by both the
goals of equitable treatment and swift resolution of environmental
problems. There are three areas where this factor is relevant.
1. prompt reporting of noncompliance
Cooperation can be manifested by the violator promptly
reporting its noncompliance. Assuming such self-reporting is not
required by law, such behavior should result in the mitigation of
any penalty.
The suggested ranges of adjustment are as follows. The case
"development team has absolute discretion on any adjustments up to
+ 10% of the gravity component for cooperation/noncooperation.
Adjustments can be made up to +, 20% of the gravity component, but
only in unusual circumstances." In extraordinary circumstances,
such as self reporting of a TSCA premanufacture notice violation,
the ease development team may adjust the penalty beyond the ^ 20%
factor. Adjustments in the unusual or extraordinary circumstances
ranges will be subject to scrutiny in any performance, audit.
2. Prompt correction of environmental problems
The Agency should provide incentives for the violator to
commit to correcting the problem promptly. This correction must
take place before litigation is begun, except in extraordinary
circumstances.2/ But since these incentives must be consistent
with deterrence, they must be used judiciously.
2/ For the purposes of this document, litigation is deemed to
begin:
• for administrative actions - when the
respondent files a response to an adminis-
trative complaint or when the time to
file expires or
• for judicial actions - when an Assistant
United States Attorney files a com-
plaint in court.
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The circumstances under which the penalty is reduced depenc
on the type of violation involved and the source's response to
the problem. A straightforward reduction in the amount of the
gravity component of the penalty is most appropriate in those
cases where eithers 1) the environmental problem is actually cor-
rected prior to initiating litigation* or 2) ideally, immediately
upon discovery of the violation. Under this approach, the reduction
typically should be a substantial portion of the unadjusted gravity
component.
In general, the earlier the violator instituted corrective
•action after discovery of the violation and the more complete
the corrective action instituted, the larger the penalty
reduction EPA will consider. At the discretion of the case
development team, the unadjusted gravity component may be
reduced up to 50%. This would depend on how long the environ-
mental problem continued before correction and the amount of any
environmental damage. Adjustments greater than 50% are permitted,
but will be the subject of close scrutiny in auditing performance.
Zt should be noted that in some instances, the violator
will take all necessary steps toward correcting the problem but
may refuse to reach any agreement on penalties. Similarly, a
violator may take some steps to ameliorate the problem, but
choose to litigate over what constitutes compliance. In such
cases, the -gravity component of the penalty may be reduced up
to 25% at the discretion of the case development team. This
smaller adjustment still recognizes the efforts made to correct
the environmental problem, but the benefit to the source is not
as great as if a complete settlement is reached. Adjustments
greater than 25% are permitted, but will be tne subject of close
scrutiny in auditing performance.
In all instances, the facts and rationale justifying the
penalty reduction must be recorded in the case file and in-
cluded in any memoranda accompanying settlement.
3. Delaying compliance
Swift resolution of environmental problems will be encour-
aged if the violator clearly sees that it will be financially
disadvantageous for the violator to litigate without remedying
noricompliance. The settlement terms described in the preceding
section are only available to parties who take steps to correct a
problem prior to initiation of litigation. To some extent, this
is an incentive to comply as soon as possible. Nevertheless, once
litigation has commenced, it should be clear that the defendant
litigates at its own risk.
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In addition, the methods for computing the benefit component
and the gravity component are both structured so that the penalty
target increases the longer the violation remains uncorrected.
The larger penalty for longer noncompliance is systematically
linked to the benefits accruing to the violator and to the con-
tinuing risk to human health and the environment. This occurs
even after litigation has commenced. This linkage will put the
Agency in a strong position to convince the. trier of fact to
impose such larger penalties. For these reasons, the Policy
on Civil Penalties,provides substantial disincentives to litigat-
ing without complying.
C. History of noncompliance
Where a party has violated a similar environmental require-
ment before, this is usually clear evidence that the party was
not deterred by the Agency's previous enforcement response.
Unless the previous violation was caused by factors entirely out
of the control of the violator, this is an indication that the
penalty should be adjusted upwards.
In deciding how large these adjustments should be, the case
development team should consider the following points:
• How similar the previous violation was.
• Row recent the previous violation was.
• The number of previous violations.
• Violator's response to previous violation(s)
in regard to correction of the previous
problem.
Detailed criteria for what constitutes a "similar violation"
should be contained in each program-specific policy. Neverthe-
less a violation should generally be considered "similar" if the
Agency's previous enforcement response should have alerted the
party to a particular type of compliance problem. Some facts
that indicate a "similar violation" was committed are as follows:
• The same permit was violated.
. • The same substance was involved.
• The same process points were the source
of the violation.
• The same statutory or regulatory provision
was violated.
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-22-
• A similar act or omission (e.g. the failure
4 to properly store chemicals) was the basis
* of ttu violation.
For purposes of this section, a "prior violation* includes
my act or omission for which a formal enforcement response has
>ccurred (e.g. notice of violation, warning letter, complaint,
:onsent decree, consent agreement* or final order)* It also
Includes any act or omission for which the violator has pre-
riously been given written notification, however informal, that
the Agency believes a violation exists.
Zn the case of large corporations with many divisions or
wholly-owned subsidiaries, it is sometimes difficult to deter-
nine whether a previous instance of noncompliance should trigger
the adjustments described Jn this section. New ownership often
raises similar problems. ..i making this determination, the case
development team should ascertain who in the organization had
control and oversight responsibility for the conduct resulting
in the violation. . Zn some situations the same persons or the
same organizational unit had or reasonably should have had
control or oversight responsibility for violative conduct. Zn
those eases, the violation will be considered part of-'the com-
pliance history of that regulated party.
. Zn general, the case development team should begin with
the assumption that if the same corporation was involved, the
adjustments for history of noncompliance should apply. Zn
addition, the case development, team should be wary of a party
changing operators or shifting responsibility for compliance to
different groups as a way of avoiding increased penalties. The
Agency may find a.consistent pattern of noncompliance by many
divisions or subsidiaries of a corporation even though the
facilities are at different geographic locations. This often
reflects, at best, a corporate-wide indifference to environmental
protection. Consequently, the adjustment for history of noncom-
pliance should probably apply unless the violat-r can demonstrate
that the other violating corporate facilities are independent.
The following are the Framework * s suggested adjustment
ranges. Zf the pattern is one of "dissimilar* violations,
relatively few in number, the case deve.opment team has absolute
discretion to raise the penalty amount by 35%. For a relatively
large number of dissimilar violations, the gravity component
be increased up to 70%. Zf the pattern is one of "similar"
violations, the case development team has absolute discretion ..
raise the penalty amount up to 35% for the first repeat violation,
and up to 70% for further repeated similar violations. The ease
development team may make higher adjustments ir extraordinary
circumstances, but such adjustments will be su:ject to scrut.
in any performance audit.
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2
D. Ability to pay
The Agency will generally not request penalties that are
clearly beyond the means of the violator. Therefore EPA should
consider the ability to pay a penalty in arriving at a specific
final penalty assessment. At the sane tine, it is inportant
that the regulated connunity not see the violation of environ-
mental requirements as a way of aiding a financially troubled
business. EPA reserves the option, in appropriate circumstances,
of seeking a penalty that night put a company out of business.
For example, it is unlikely that EPA would reduce a penalty
where a facility refuses to correct a serious violation. The same
could be said for a violator with a long history of previous vio-
lations. That long history would demonstrate that less severe
measures are ineffective.
The financial ability adjustment will normally require a
significant amount of financial information specific to the
violator. If this information is available prior to commence-
ment of negotiations, it should be assessed as part of the
initial penalty target figure. If it is not available, the
case development team should assess this factor after commence-
ment of negotiation with the source.
The burden to demonstrate inability to pay, as with the
burden of demonstrating the presence of any mitigating circum-
stances, rests on the defendant. If the violator fails to
provide sufficient information, then the case development team
should disregard this factor in adjusting the penalty. The
National Enforcement Investigations Center (NEIC) has developed
the capability to assist the Regions in determining a firm's
ability to pay. .Further information on this system will be made
available shortly under separate cover.
When it is determined that a violator cannot afford the
penalty prescribed by this policy, the following options should
be considered:
• Consider a delayed payment schedule; Such a
schedule might even be contingent upon an
increase in sales or some other indicator of
improved business. This approach is a real
burden on the Agency and should only be
considered on rare occasions.
• Consider non-monetary alternatives, such as
public service activities; For example, in
the mobile source program, fleet operators
who tampered with pollution control devices
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-24-
on their vehicles agreed to display anti-
tampering ads en their vehicles. Similar
solutions nay be possible in other industries.
Consider straight penalty reductions as a last
recourse: If this approach is necessary, the
reasons for the case development team's
conclusion as to the size of the necessary
reduction should be made a part of the formal
enforcement file and the memorandum accompany-
ing the settlement.
• Consider joinder of the violator's individual
owners: .- This is appropriate if joinder is
legally possible and justified under the
circumstances.
Regardless of the Agency* s determination of an appropriate
penalty amount to pursue based on ability to pay considerations,
the violator is still expected to comply with the law.
E. Other unique factors
Individual programs may be able to predict other factors
that can be expected to affect the appropriate penalty amount.
Those factors should be identified and guidelines for their H&A
set out in the program-specific policies. Nevertheless, eac*
policy should allow for adjustment for unanticipated fat .ors
which might affect the penalty in each case.
It is suggested that there be absolute discretion to adjust
penalties up or down by 10% of the gravity component for such
reasons. Adjustments beyond the absolute discretion range will
be subject to scrutiny during audits. In addition, they will
primarily be allowed for compelling public policy concerns- or the
strengths and equities of the case. The rationale for the reduet
must be expressed in writing in the case file and in any memorand
accompanying the settlement. See the discussion on pages 12 and
13 for further specifics on adjustments appropriate on the basis
of either compelling public policy concerns or the strengths and
equities of the case.
II. Alternative Payments
In the past, the Agency has accepted various environmentally
beneficial expenditures in settlement of a case and chosen not to
3/ If a firm tails to pay the agreed-to penalty in an adminis-
Trative or judicial final order, then the Agency must * -How
the Federal Claims Collection Act procedures for obtai ig t
penalty ar.our.t.
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-25-
pursue more severe penalties. In general, the regulated community
has been very receptive to this practice. In many cases,
violators have found "alternative payments* to be more attrac-
tive than a traditional penalty. Many useful projects have been
accomplished with such funds. But in some instances, EPA has
accepted for credit certain expenditures whose actual environ-
mental benefit has been somewhat speculative.
The Agency believes that these alternative payment projects
should be reserved as an incentive to settlement before litigation
For this reason, such arrangements will be allowed only in preliti
gation agreements except in extraordinary circumstances.
In addition, the acceptance of alternative payments for
environmentally beneficial expenditures is subject to certain
conditions. The Agency has designed these conditions to prevent
the abuse of this procedure. Most of the conditions below appliec
in the past, but some are new. All of these conditions must* be
met before alternative payments may be accepted:^/
• No credits can be given for activities
that currently are or will be required
under current law or are likely to be re-
quired under existing statutory authority
in the forseeable future (e.g., through
upcoming rulemaking).
• The majority of the project's environmental
benefit should accrue to the general public
rather than to the source or any particular
governmental unit.
• The project cannot be something which the
violator could reasonably be expected to do
as part of sound business practices.
4/ in.extraordinary circumstances, the Agency may choose not to
pursue higher penalties for "alternative" work done prior to
commencement of negotiations. For example, a firm may recall a
product found to be in violation despite the,fact that such
recall is not required. In order for EPA to forgo seeking
higher penalties, the violator must prove that it has met the
other conditions herein stated. If the violator fails to prove
this in a -satisfactory manner, the case development team has the
discretion to completely disallow the credit project. As with
all alternative projects, the case development team has the dis-
cretion to still pursue some penalties in settlement.
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-26-
• EPA must not lower the amount it decides
to accept in penalties by more than the
after-tax amount the violator spends on
the project.^/
In all cases where alternative payments are allowed, the
case file should contain documentation showing that each of
the conditions listed above have been met in that particular
case, in addition when considering penalty credits, Agency
negotiators should take into account the following points:
• The project should not require a large
amount of EPA oversight for its comple-
tion. In general the less oversight
the proposed credit project would
require from EPA to ensure proper
completion, the more receptive EPA
can be toward accepting the project
in settlement.
\
• The project should receive stronger
consideration if it will result in the
abatement of existing pollution,
ameliorate the pollution problem that
is the basis of the government's claim
and involve an activity that could be
ordered by a judge as equitable relief.
• The project should receive stronger
consideration if undertaken at the
facility where the violation took place.
• The company should agree that'any publicity
it disseminates regarding its funding of
the project must include a statement that
such funding is in settlement of a lawsuit
brought by EPA or the State.
5/ This limitation does not apply '-O public awareness activitit
"such as those employed for fuel sv Itching and tampering yiolati
under the Clean Air Act. The purpose of the limitation is to
preserve the deterrent value of the settlement. But these vio:
tions are often the result of public misconceptions about the
economic value of these violations. Consequently, the public
awareness activities can be effective in preventing others fror
violating the law. Thus, the high general deterrent value of
public awareness activities in these circumstances obviates th<
need for the one-to-one requirement on penalty credits.
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-27-
Each alternative payment plan must entail an identified
project to be completely performed by the defendant. Under the
plan, EPA must not hold any funds which are to be spent at EPA's
discretion unless the relevant statute specifically provides
that authority. The final order, decree or judgment should
state what financial penalty the violator is actually paying and
describe as precisely as possible the credit project the violator
is expected to perform.
III. Promoting Consistency
Treating similar situations in a similar fashion is central
to the credibility of EPA's enforcement effort and to the success
of achieving the goal of equitable treatment. This document has
established several mechanisms to promote such consistency. Yet
it still leaves enough flexibility for settlement and for tailor-
ing the penalty to particular circumstances. Perhaps the most
important mechanisms for achieving consistency are the systematic
methods for calculating the benefit component and gravity compo-
nent of the penalty. Together, they add up to the preliminary
deterrence amount. The document also sets out guidance on unifo:
approaches for applying adjustment factors to arrive at an initi,
penalty target prior to beginning settlement negotiations or an
adjusted penalty target after negotiations have begun.
Nevertheless, if the Agency is to promote consistency, it
is essential that each case file contain a complete description
of how each penalty was developed. This description should cove:
how the preliminary deterrence amount was calculated and any
adjustments made to the preliminary deterrence amount. It shoui<
also describe the facts and reasons which support such adjustmen
Only through such complete documentation can enforcement attorne;
program staff and their managers- learn from each others' experie:
and promote the fairness required by the Policy on Civil Penalti*
To facilitate the use of this information, Office of Legal
and Enforcement Policy will pursue integration of penalty infor-
mation from judicial enforcement actions into a computer system.
Both Headquarters and all Regional offices will have access to
the system through terminals. This Would make it possible for
the Regions to compare the handling of their cases with those of
other Regions. It could potentially allow the Regions, as well
as Headquarters, to learn from each others' experience and to
identify problem areas where policy change or further guidance
is needed.
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-28-
Dse of Penalty Figure in Settlement Discussions
The Policy «nd Framework do not seek to constrain negotiation-
Their goal is to set settlement target figures for the internal
use of Agency negotiators. Consequently, the penalty figures
under negotiation do not necessarily have to be as low as the
internal target figures. Nevertheless, the final settlement
figures should go no lower than the internal target figures unless
eithers 1) the medium-specific penalty policy so provides or
2) the reasons for the deviation are properly documented.
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IV.C.5.
"GUIDANCE FOR CALCULATING ECONOMIC BENEFIT OF NON-COMPLIANCE FOR A CIVIL
PENALTY ASSESSMENT", dated November 5, 1984. See GM-33.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C 20460
5834
omct or CXFMCIMENT
AKOCOMrtlAKCZ
MUN1IOUNO
MEMORANDUM
SUBJECT:
FROM:
TOs
Guidance for Calculating the Economic Benefit of
Noncompliance for a. Civil Penalty Assessment
Courtney M. Price
Assistant Administrator
and Compliance Monitoring
Regional Administrators
Associate Enforcement Counsels
OECM Office Directors
I. PURPOSE
This guidance amplifies the material in the Appendix of
GK-22, "Framework for Statute-Specific Approaches to Penalty
Assessment." The Appendix presents a description of how to
calculate the economic benefit of noncompliance as part of
developing a civil penalty. A new computer model, BEN, is a
refinement of the methodology for calculating the economic
benefit of noncompliance.•
By refining the methods by which we calculate the economic
benefit of noncompliance, we will:
1. Respond to the problems that enforcement end program
offices identified concerning methods for calculating the
economic benefit component of a civil penalty;
2. Ensure among the media programs appropriate consistency
in calculating the economic benefit component of a civil penalty;
3. Ensure that the economic benefit of noncompliance con-
tinues to be a fairly valued, reasonable component of a civil
penalty; and
4. Ensure that the assumptions and data used in BEN to
calculate the economic benefit component ccn be defended at
either an administrative hearing or a judicial proceeding.
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-2-
XI. SCOPE
This guidance describes BEN, the new computer model, in
terms of how this model resolves the identified problems related
to the use of CZVPEN. EPA personnel can use BEN to calculate .he
economic benefit a violator gains from delaying capital expendi-
tures for pollution control equipment or from avoiding the costs
of operating and maintaining pollution control equipment. '
Exhibit I summarizes BEN.
EPA personnel'cannot use B£N to calculate the economic
benefit component of a civil penalty if a violator's action
does not involve a delayed or avoided expenditure. Under
these circumstances, program offices may elect to develop
statute-specific formulas as provided in GM-22 for calculating
the economic benefit component of a civil penalty. These
formulas would be used to develop civil penalties in response
to actions such as certain TSCA marking/disposal violations or
RCRA reporting violations. The rule of thumb in the general
penalty policy would not be appropriate fcr these types of
violations.
OPPE is considering the feasibility of developing a second
computer model or rule of thumb formula that could be applied
uniformly to violations that do not involve delayed or avoided
expenditures.
III. NEW CIVIL PENALTY POLICY APPROACH
•
Regional personnel may use the rule of thumb described in
GM-22 to develop a preliminary estimate of the economic benefit
component of a civil penalty. The rule of thumb is for the
convenience of EPA and is not intended to give a violator a lower
economic benefit component in a civil penalty. Regional personnel
should consider whether an estimate of economic benefit derived
with the rule of thumb would be lower than an es.imate calculated
with BEN. For example, the longer the period of noncompliance,
the sore the rule of thumb underestimates the economic benefit
of noncompliance.
If EPA proposes and a violator accepts the rule of thumb
calculation. Regional personnel can develop the civil penalty
without further analysis of economic benefits. If a violator
disputes the economic benefit figure calculated under the rule
of thumb, a more sophisticated method to develop the economic
benefit component of the penalty is required.
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-3-
Zn general, if the estimate under the rule of thumb is
less than $10,000, the economic benefit component is not needed
to develop a civil penalty;1 the other factors in GM-22 still
apply. Zf the rule of thumb estimate is more than $10,000,
Regional personnel should use BEN to develop an estimate of
the economic benefit component.
IV. USING BEN TO CALCULATE ECONOMIC BENEFIT OF NONCOMPLIANCE
EPA personnel should use the revised computer model BEN
whenever:
1. the rule of thumb indicates that the
economic benefit of noncompliance is
greater than $10,000; or
2. the violator rejects the rule of thumb
calculation.
BEN uses 13 data variables. At the option of the user,
BEN substitutes standard values for 8 of the 13 entries, and
the user only provides data for 5 variables. (See Exhibit X.)
BEN also has the capability for EPA personnel to enter
for those 8 variables the actual financial data of a violator.
In appropriate cases, EPA should notify a violator of the
opportunity to submit actual financial data to use in BEN
instead of the 8 standard values. Zf a violator agrees to
supply financial data, the violator must supply data for all
the standard values.
V. ADVANTAGES OF BEN OVER OTHER CALCULATION METHODS
The computer model BEN has advantages over previously
used methods for calculating the economic benefit component
of a civil penalty. BEN does not require financial research
by EPA personnel. The five required variables are information
about capital costs, annual operation and maintenance costs,
and the dates for the period of noncompliance. Further, BEN
has the flexibility to allow a violator who cooperates with
EPA to provide actual financial data that may affect the penalty
calculation.
I/ Although the general penalty policy cut off point is $10,000,
.'each program office may establish a cut off point for the
^program's medium-specific policy.
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-4-
An economic benefit component calculated with BEN can be
offended in an administrative or judicial proceeding on the
grounds that the standard values used in BED are derived from
standard financial procedures and the violator had an opportu-
nity to provide financial data to help develop the civil penalty*
The use of BEN or statute-specific formulas when appro-
priate gives the Regional Offices flexibility in determining
the economic benefit of noncompliance. Regional personnel
have a consistent method for developing a civil penalty under
several statutes for multiple violations that involve delayed
capital costs and avoided operation and maintenance costs.
BEN is easy for a layman to use. The documentation is
built into the program so that a Regional user always has
updated documentation and can use the program with minimal
training. States are more likely to follow EPA's lead in
pursuing the economic benefit of noncompliance through civil
penalty assessments because the method available from EPA to
serve as a model does not require extensive financial research.
cc: Regional Enforcement Contacts
Program Compliance Office Directors
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Exhibit I .
BEN
A. Accessed via terminal to EPA's IBM computer in Durham, N.C.
B. Can be run in either of two modes:
1. Standard mode:
a) Requires 5 inputs:
i. Initial Capital Investment
ii. Annual Operating and Maintenance Expense
iii. First Month of Noncompliance
iv. Compliance Date
v. Penalty Payment Date
b) Relies on realistic standard values for
remaining variables:
i. A set of standard values for private
companies
ii. A set of standard values for munici-
pally-owned or not-for-profit companies
c) Would be used for final calculation of economic
benefit unless the violating firm objected and
supplied all its own financial data
2. Specific mode:
a) Requires 13 inputs .
b) Would be used if violating firm supplied data or
if EPA staff researched data
/
C. Is easy to use
• /
1. Optional on-line documentation will guide-inexperienced
users through each step of the model
2. Written documentation will be available by December
1984
D. Is based on modern financial principles
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IV.C.6.
"Penalty Calculations Compliance Schedule for Pretreatment Enforcement
Initiative", dated February 19, 1985. (See Also IV.C.10)
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. O.C. 20460
FEE 19 iss5
MEMORANDUM
SUBJECT: Penalty Calculation and Compliance Schedules for
Pretreatment Enforcement Initiative
FROM: J. William Jordan, Acting Director
Enforcement Division (EN-338)
Glenn L. Unterberger
Associate Enforcement Counsel
for Water (LE-134W)
TO: Water Management Division Directors
Regions I, III, V, and VI
Regional Counsels, Regions I, III, V and VI
During the week of February 4, staff from the Office
of Water Enforcement and Permits, the Office of Enforcement and
Compliance Monitoring, and the Department of Justice met
with you to discuss the potential referral candidates and the
scope of the referral packages for the Pretreatment Enforcement
Initiative. We are pleased with the results of those meetings
and expect to receive your referral packages shortly, and in all
cases by February 28. We have committed to expedite our norsial
review process.
Two aspects of the referral package may need to be clarified.
During the visits we distributed a draft penalty policy. The
final version is attached for your use in calculating the penalty.
As we noted in our visits and conference calls, we would advocate
a penalty of at least 520,000.00 in these cases. Since this is
an interim penalty policy, please feel free to call us if you
have any questions as to its use for your cases. We also dis-
cussed the compliance schedule that should be sought in settlement.
We would expect the POTW to submit a- complete and approvable
pretreatment program in six months or less. In addition, we
recommend that you plan to negotiate milestones and stipulated
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- 2 -
penalties for failure by the POTWs to prepare an.annual
report and for failure to implement the program (examples are
attached). •
If you have Questions, please contact Ed Bender/ OWEP,
(475-8331) or Kim'pearson, OECM (475-8185).
Attachment
cc: Ross Connealy, DOJ
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Attachment A
Penalty for Failure to Submit a Complete and Approvable
Pretreattnent Program
The basis for assessing a penalty in the Pretreattnent Enforcement Initiative
is to be determined by two factors. The first factor is the economic saving that
a POTW received by failing to develop all or cart of an adeouate pretreaonent
program and. the avoided costs of not implementing the program. The second factor
is the penalty for the gravity of the failure to develop and inclement a oretreatrent
program. This preliminary penalty figure can then be increased or decreased bv
considering appropriate adjustment factors. The basis for calculating the oenaltv
for pretreafcnent violations is summarized by the ecuation below, if specific POTV*
costs are available for the economic or gravity component they should be used.
Settlement amount=(Economic component)+{Gravity component)* (Adjustments)
I II III
NOTE: A minimum upfront penalty of 520,000 is advocated for all
referrals.
I. Economic benefit component9(savings from delaying costs for program develoonent)*
(avoided costs of program iirolerrentation)
A. Savings from delaying program developments (Program Development cost) (interest
rate) (percent of program not yet developed)
1. Total cost to develop a .couplete program (including grants)
a. Snail POTW ( 1-5 MGD, IU flow 10% or less) $5,000 to 525,000
Depends on the sampling needed for the IUsr and
whether developed in house or by consultant.
b. Medium POTW (5-15 MGD, IU flow 10-20%, 50 lUs) $25,000 to 75,000
same considerations as a. Needs local limits.
c. Large POTW (over 15 MGD, 50 or more lUs, needs $50,000 to $300,000
local limits, multijurisdictional)
2. Oast to develop each program element
Typical Percent of Total Cost*
Program Element ( Small Medium Laree
1. Industrial-Waste Survey 30 25 20
2. Legal Authority 8 5 7 .
3. Technical/Local limits 11 6 6
4. Compliance Monitoring Plan 857
5. Administrative. Procedures 7 8 10
6. Resources 36 51 51
3. Interest rate assumed to be .12 annually for one year on borrowed
capital.
4. Example calculation: POTW-10 MGD, 15% in Flow, 30 life
Incomplete program elements 2, 3, and 5 (19% of total)
Program cost=S50,000; interest rate*.12;
Economic benefit component'(550,000)(.12)(.19)=S1140.00
*JR3 Associates. 1982. "Funding Manual for Local Pretreattnent Programs" EPA Contract
No. 68-01-5052. Tables 2.7 (manpower and GC/MS costs dropped) and Table 3.7.
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-2-
B. Avoided Implementation costs=(annual salaries .and operating costs)
(number of years delayed) (percent of program not implemented)
1. Total Annual implementation cost-range S-10,000 to S250,OOC
- Salaries based on work years shown under resources bv the POTW
- Can be drawn directly from the PCTW program submission estimates.
- Monitoring costs depends on number of lUs, inspections, and analyses.
2. Number years delayed-assume implementation by reouired July, 19R3 unless
other deadline is justified based on the permit.
3. Cost to implement each program activity
- In some cases, a POTW may have irolevented some pretreacrent practices
even though their program is not approved by the approval authorif/.
Activity TVpical Percent of Implementation Cost*
1. Sampling and Industrial Review
2. Laboratory Analysis
3. Technical Assistance
4. Legal Assistance
5. Program Administration
4. Example calculation .
Annual cost to unplement=S60,000; activities not implemented
3 and 4; assume same POTW as A-4. Delayed 18 months.
Avoided costs*(360,000)(.35)(1.5)=$31,500.00
II. Gravity Component
This component considers damage done to the POTW and its collection system, or
potential harm to the environment that may have been allowed to continue as a result
of the POTW not having an approved and implemented pretreacnent ^program. Therefore,
this aspect of the penalty should include any known costs which the POTW is incurrinc
for O&M, sludge disposal, and collection system renovation which will be eliminated
by implementing the pretreatment program. In addition, the penalty policy for the
multi-case initiative includes the factor of "importance to the regulatory system."
Penalties in these cases should reflect the importance that the Aaencv attaches to th
prompt submission of approvable pretreatment programs. This factor would justify a
minimum gravity component of 55,000 or 10% of the economic benefit, if it is higher,
where actual environmental harm, significant risk of harm, or damage to the POTW is
not shown. The factors that should be considered in this calculation are included in
the equation below:
Gravity Component=(S5000)-»-( (lenath) (TO impact))+(Loss of plant useful 1 ife)*(Increase
costs for O&M and sludge disposal)+((Lenoth of violation)(Mature of
IU wastewaters))
A. Length of Violation-this value is used to weight toxic and water duality
impacts, which are expressed as cost factors. The length of violation in
months should be divided by 3.
B. Loss of useful life of the treatment plant that could be avoided by imp
pretreatanent. Any cost savina should be entered directly.
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C. Excess costs for O&M and Sludge Disposal which could be avoided by ifnplemerv,
pretreatment. Include these costs directly.
D. Nature of the IU wastewaters that will be controlled.
1. Toxics
2. Corrosives-low/hiah ttt
3. Explosives-oraanic solvents, histotv of 'in-olant orobler^s, seotic haulers
Multiply the percent IU flow tines SlOOn if no data are available. T^ese
data may include the costs of TU treatment, workmans condensation, or
other damages fron toxics.
E. Water Duality impacts, e.g., . • .
1. fish kills -economic value + replacement and maintenance costs
2. loss of habitat-cost/acre or cost/strean nile
3. drinking water contamination r cost of treatment
\
F. Example calculations
Length of violation=18 months/3 = 6 units
Loss of useful life- 1 year lost of design life, 20 years =.05
cost=.05(cost of damaged comtx)nent=S-10000)=S500
IU waste controlled^.2(1000);
Gravity ccnponent= S5000+S500+(6(S-200)=$6700
III. Adjustments ,
, If the POTW has demonstrated good faith, the PCFTN may be penalized to recover
a minimum of economic benefit plus 10% or 55,000, whichever is higher. The oenaltv
should also consider other factors which are favorable to the POTW. "niese may
include delays by EP£, ambiguous information given to the POTW by CPA, and other
factors as may be appropriate, such as including inability to pay*
Example Calculations
No equities for the POT/'. Region oroviced written guidance and issued an AO .
which POTW violated.
Adjustments
Recalcitrance (e.g., failure to comoly with ' S-10000
a previous administrative order)
Total Penalty for Example POTW
Component , Amount
Economic • ' $-32640
Gravity S- 6700
Adjustments - SIOCKM
Total S49340
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Attachment B
Pretreatment
Compliance Schedule Elements
Milestones , Deadline
1. Submit complete program ' ' Six months (maximum) after settler«ent
2. Submit program implementation Six months after approval
status report
3. Advise approval authority of 30 days after change occurs
program change
4. Respond to noncompl iance of Based on time frame for an appropriate
industrial users through , enforcement resoonse
enforcement activities
5. Inspect all major industrial users Within six months after settlement
Examples of Stipulated Penalties for Compliance Milestones for a Small POTW
1. Failure to submit complete program S200 day day 1-15
S400 day after day 15
2. Failure to submit annual .report $200 day
3. Failure to notify approval .authority S200 day
of program changes
4.- Failure to address lUs noncompl iance S-150/informal action
through enforcement activities* S200-S750/formal action
5. Failure to inspect major industrial S-100/Insoection
users
^
* The control authority should, as oart of its approved program, have procedures and
time frames to respond to instances ci IT! noncompliance. The control authority mus
contact the IU for all instances of noncomoliance (e.g., failure to reoort, failure
to monitor, or violations of effluent limits and compliance schedules). The POTW
should start with telephone calls for the initial minor violations and proceed to
initiate formal written enforcement activities (i.e., NOVs, administrative orders,
penalties, and lawsuits) for continued noncompliance. The POTW must maintain a log
of IU violations and enforcement responses. When the IU noncompl iance occurs and
the control authority fails to initiate appropriate and timely enforcement action,
the control authority has failed to enforce its pretreatment prcqram and is subject
to penalties. Additional guidance on appropriate and timely enforcement responses
will be provided later in the guidance to Control Authorities.
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IV.C.7.
"Enforcement of Settlement Negotiations", dated May 22, 1985.
See GM-39.*
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IV.C.8,
"Headquarters Approval of Proposed Civil Penalties", dated May 31, 1985.
1095'
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uoo
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
MAY 3 I 1985
OFFICE OF ENFORCEMENT
AND COMPLIANCE
MONITORING
MEMORANDUM
SUBJECT: Headquarters Approval of Proposed Civil
Penalty Settlements in Water Cases
FROM: Glenn L.
Associate Enforcement Counsel
for Water
TO: James Moore
Regional Counsel, Region X
This memorandum addresses what I understand to be the
belief of certain Regional staff that, if preliminary settlement
penalty figures in water cases are cleared with this office,
any final settlement submitted with a higher figure may be
disapproved by Headquarters as too high.
Let rae clarify Headquarters policy in this area: OECM's
explicit approval of a Regional preliminary settlement figure,
whether in a Headquarters referral to the Department of Justice,
a separate OECM letter to DOJ following a direct referral, or
during negotiations with a water defendant, will not under any
circumstances preclude the Region from negotiating or accepting
a larger penalty settlement. What OECM approves is a minimum
settlement amount, not a maximum or an exact amount. This
office, for example, readily approved a $10,000 per day of
violation settlement in the 1983 Mobil Oil case, and we would
be happy to approve other settlements with similarly successful
outcomes.
In order to facilitate clear and timely feedback from ray
office on proposed minimum settlement amounts, I strongly
encourage Regional staff to include those proposed amounts in
all litigation reports and to discuss informal settlement
proposals with my staff prior to raising them with defendants,
as called for by Agency policy. Under these circumstances,
the Regional attorney can negotiate with a defendant confident
that all elements of the Agency will stand behind his or her
penalty proposals, so long as (1) they are at or greater than
the figure previously approved by OECM and (2) no new, material
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-2-
information surfaces that requires a reconsideration of the
Agency's minimum'civil penalty settlement figure. The Regional
attorney should routinely keep this office well informed on the
progress of negotiations or litigation.
If new information indicates that a Headquarters-approved
penalty settlement figure should be adjusted, the Region should
inform this office to receive advance approval of a new figure
before negotiations with the defendant continue.
I hope that this explanation will answer any questions
Region X may have had on this subject. If you have any
questions, please call me at 475-8180 or David Drelich of my
staff.
cc: Richard H. Mays, OECM
"Robert Burd, Water Division Director, Region X
Jim Dragna, DOJ
John Hohn, Region X
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IV.C.9.
"Division of Penalties with State and Local Governments*, dated October 30,
1985.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
, / WASHINGTON, D.C. 20460
'
OCT30
OFFICE OF ENFORCEMENT
AND COMPLIANCE
MONITORING
MEMORANDUM
SUBJECT: Division of Penalties with State and Local Governments
FROM: Courtney M. Price
Assistant Administrator for Enforcement
and Compliance Monitoring
TO: Regional Administrators
Associate Enforcement Counsels
Program Enforcement Division Directors
Regional Counsels
This memorandum provides guidance to Agency enforcement
attorneys on the division of civil penalties with state and
local governments, when appropriate. In his "Policy Framework
for State/EPA Enforcement Agreements" of'June 26, 1984, Deputy
Administrator Al Aim stated that the EPA should arrange for
penalties to accrue to states where permitted by law. This
statement generated a number of inquiries from states and from
the Regions. Both the states and the Regions were particularly
interested in what factors EPA would consider in dividing
penalties with state and local governments. In addition, the
issue was raised in two recent cases, U.S. v Jones & Laughlin
(N.D. Ohio) and U.S. v Georgia Pacific Corporation (M.D. La.).
In each case, a state or local governmental entity requested a
significant portion of the involved penalty. Consequently, OECM
and DOJ jointly concluded that this policy was needed.
EPA generally encourages state and local participation in
federal environmental enforcement actions. State and local
entities may share in civil penalties that result from their
participation, to the extent that penalty division is permitted
by federal, state and local law, and is appropriate under the
circumstances of the individual case. Penalty division advances
federal enforcement goals by:
1) encouraging states to develop and maintain active
enforcement programs, and
2) enhancing federal/state cooperation in environmental
enforcement.
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_ 2—
However, penalty division should be approached cautiously because
of certain inherent concerns, including:
1) increased complexity in negotiations among the
various parties, and the accompanying potential
for federal/state disagreement over penalty
division; and
2) compliance with the Miscellaneous Receipts Act, 31
U.S.C. §3302, which requires that funds properly
payable to the United States must be paid to the U.S.
Treasury. Thus any agreement on the division of
penalties must be completed prior to issuance of and
incorporated into a consent decree.
As in any other court-ordered assessment of penalties under
the statutes administered by EPA, advance coordination and
approval of penalty divisions with the Department of Justice is
required. Similarly, the Department of Justice will not agree
to any penalty divisions without my advance concurrence or that
of my designee. In accordance with current Agency policy,
advance copies of all consent decrees, including those involv-
ing penalty divisions, should be forwarded to the appropriate
Associate Enforcement Counsel for review prior to commencement
of negotiations.
The following factors should be considered in deciding if
penalty division is appropriate:
1) The state or local government must have an indepen-
dent claim under federal or state law that supports
its entitlement to civil penalties. If the entire
basis of the litigation is the federal enforcement
action, then the entire penalty would be due to the
federal government.
2) The state or local government must have the authority
to seek civil penalties. If a state or local govern-
ment is authorized to seek only limited civil
penalties, it is ineligible to share in penalties
beyond its statutory limit.
3) The state or local government must have partici-
pated actively in prosecuting the case. For example,
the state or local government must have filed com-
plaints and pleadings, asserted claims for penalties
and been actively involved in both litigating the
case and any negotiations that took place pursuant
to the enforcement action.
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-3-
4) For contempt actions, the state or local government
must have participated in the underlying action
giving rise to the contempt action, been a signatory
to the underlying consent decree, participated
in the contempt action by filing pleadings asserting
claims for penalties, and been actively involved
in both litigating the case and any negotiations
connected with that proceeding.}/
The penalties should be divided in a proposed consent
decree based on the level of participation and the penalty
assessment authority of the state or locality. Penalty division
may be accomplished more readily if specific tasks are assigned
to particular entities during the course of the litigation.
But in all events, the division should reflect -a fair apportion-
ment based on the technical and legal contributions of the
participants, within the limits of each participant's statutory
entitlement to penalties. Penalty division should not take
place until the end of settlement negotiation. The subject
of penalty division is a matter for discussion among the
governmental plaintiffs. It is inappropriate for the defendant
to participate in such discussions.
cc: F. Henry Habicht II, Assistant Attorney General
Land and Natural Resources Division
I/ If the consent decree contains stipulated penalties and
specifies how they are to be divided, the government will
abide by those terms.
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rv.c.io.
"CLEAN WATER ACT CIVIL PENALTY POLICY", dated February 11, 1986. Also see
Addendum at III.B.9.
\f-~P)
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\\\0
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
OFFICE OF ENFORCEMENT
MON'ITORINC
MEMORANDUM
SUBJECT: New Clean Water Act Civil Penalty Policy
FROM: Lawrence J. Jensen \£u.xQ.f'it J .
Assistant Administrator for Water
Courtney M. Price
Assistant Administrator for Enforcement
and Compliance Monitoring
TO: General Counsel
Regional Administrators
Regional Counsels
Regional Water Management Division Directors .
Attached is the Agency's new Clean Water Act civil penalty
policy to be used by EPA in calculating the penalty that the
Federal government will seek in settlement of judicial actions
brought under Section 309 of the CWA. This policy supersedes
the CWA Civil Penalty Policy issued on July 8, 1980 and repre-
sents the Office of Water's guidance in response to EPA's
Policy on Civil Penalties (GM-21) and A Framework for Statute-
Specific Approaches to Penalty Assessments (GM-22) issued on
February 16, 1984. This policy is effective as of the date of
this memorandum and shall be applied to future enforcement
actions and to pending enforcement actions in which the
government has not transmitted to the defendant a proposed
settlement penalty.
The attached document consists of the following three
parts: (1) the CWA Penalty Policy; (2) the policy "methodology",
which is a one-page description of each of the steps to be
taken in a penalty calculation, along with one page of footnotes;
and (3) the "worksheet", a proposed model sheet to be used to
record the different numerical components of the final penalty.
This penalty policy is designed to promote a more consistent,
Agency-wide approach to the assessment of civil penalties while
allowing substantial flexibility for individual cases within
certain guidelines. We believe that this penalty policy, when
effectively applied, will promote the goals of increasing
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- 2 -
recovery of economic benefit of non-compliance, providing
substantial deterrence to noncompliance, providing a more fair
and equitable treatment of the regulated community, and achieving
a more swift resolution of environmental problems and of
enforcement actions. In order to support the goals of this
policy and EPA's enforcement efforts generally, application of
this policy may result in EPA seeking higher civil penalties
than it has in the past.
This CWA penalty policy tracks the basic concepts and
procedures embodied in the general penalty policy and Framework.
For example, the CWA policy directs the Regions to calculate
the economic benefit of noncompliance, calculate the "gravity"
(or seriousness) component, and then calculate adjustments to
consider ability to pay, ,litigation .factors, and other factors.
This policy includes the following minor deviations from
the general penalty policy and the Framework which we believe,
based upon our past experience with Clean Water Act enforcement,
are reasonable:
(1) The first adjustment factor is "History of Recalci-
trance." We believe that this factor should only result in an
increase in the proposed penalty amount;
(2)' The remaining two adjustment factors ("Ability to
Pay" and "Litigation Considerations") should only be used to
reduce the proposed penalty;
(3) A proposed section on "mitigation projects" has
been included, although the Department of Justice and the
Agency may make some additional refinements on this issue in
the near future; and
(4) The economic benefit component will not be deleted
merely because the component involves an "insignificant amount."
Substantial thanks are due to the Clean Water Act Penalty
Policy Work Group for an excellent job in developing an initial
draft, collecting comments, carefully considering all comments,
and reconciling and balancing often disparate viewpoints
regarding penalty assessment. Thanks also"to staff in the
Regional Offices and in a number of Headquarters offices and
the Department of Justice for considerable assistance in
providing review and comment on drafts.
During the upcoming months, we will carefully analyze
and evaluate the application and effectiveness of this penalty
policy. After, that, we will issue appropriate refinements to
the policy.
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In the near future, we will publish the policy in the
Federal Register. In addition, we will soon distribute some
example calculations and hold training workshops to
provide further guidance on the application of this policy.
If you have any questions or comments on this policy,
please contact Anne Lassiter, at 475-8307, or Jack Winder,
382-2879.
at
Attachment
cc: Clean Water Act Penalty Policy Work Group
Associate Enforcement Counsel for Water
OECM Office Directors
OW Office Directors
Department of Justice, Environmental Enforcement
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I 1
CLEAN WATER ACT
PENALTY POLICY FOR CIVIL SETTLEMENT NEGOTIATIONS
UNITED STATES .
ENVIRONMENTAL PROTECTION AGENCY
FEB 1 I
EFFECTIVE DATE:
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Clean Water Act
Penalty Policy for Civil Settlement Negotiations
I. Introduction
Under Section 309 of the Clean Water Act (CWA), the
Administrator is authorized to bring civil actions to enforce
certain requirements of the Act and related regulations. In
such actions, the Administrator may seek a civil penalty not to
exceed $10,000 "per day of such violation." The Agency will
vigorously pursue penalty assessments in judicial actions to
ensure deterrence and to recover appropriate penalties.
In order to guide settlement negotiations on the penalty
issue in actions under Section 309 of the CWA and Section 113
of the Clean Air Act for failure to meet statutory deadlines,
the Agency issued a Civil Penalty Policy on July 8, 1980.
During the ne,xt few years, the Agency identified the following
four goals for improving its civil penalty assessment practices:
(1) penalties should, at a minimum, recover the economic benefit
of noncompliance; (2) penalties should.be larg.e .enough to deter
noncomp.liance; (3): penalties should be more consistent throughout
the country in an effort to provide fair and equitable treatment
to the regulated community; and (4) there should be a logical
basis for the calculation of civil penalties for all types of
violations, industrial and municipal, to promote a more swift
resolution of environmental problems and of enforcement actions.
In an effort to address these and related penalty issues,
on February 16, 1984, the EPA Off ice^of Enforcement and Com-
pliance Monitoring (OECM) issued the'following two civil penalty
guidance documents: The Policy on Civil Penalties (# GM-21),
and the companion document entitled A Framework for Statute-
Specific Approaches to Penalty Assessments, (# GM-22), as
general guidance for settlements for violations of all statutes
which EPA enforces. Although the 1984 penalty policy documents
do provide basic conceptual guidance for penalty calculations,
they were designed to be implemented further through medium-
specific penalty guidance. The "Policy" document states in
part, as follows:
Each EPA program office, in a joint effort with
[OECM], will revise existing policies, or write new
policies as needed. These policies will guide the
assessment of penalties under each statute in a manner
consistent with this document and, to the extent
reasonable, the accompanying Framework. [Policy,
at 1, 2]
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- 2 -
II. Purpose
Thifc penalty policy and attached methodology is the water-
specific-penalty guidance for certain CWA violations. This
policy follows the major principles set out in the general
penalty policy documents and also reflects considerations
unique to CWA enforcement.
As the Framework directs, this CWA Penalty Policy provides
"a system for quantifying the gravity of violations of the laws
and regulations . . . ." Moreover, this policy provides a logical
structure and a number of different ways (number of violations,
duration, etc.) to quantify the severity of a defendant's
noncompliance with the CWA. The policy also provides a number
of ranges of weighting factors in order to allow the Regions
flexibility in exercising their experienced judgment.
The calculated penalty figure should represent a reasonable
and defensible penalty which the Agency believes it can and
should obtain in a settlement in compromise of its claim for the
statutory maximum penalty. This figure, and a discussion of
the basis of calculation, must be included in all litigation
reports. After referral, as more information becomes available,
the penalty calculation should be modified to reflect relevant,
new information. In those cases which proceed to trial, the
government should seek a penalty higher than that for which
the government was willing to settle, reflecting considerations
such as continuing noncompliance and the extra burden placed
on the government by protracted litigation.
III. Applicability
This penalty policy applies to Federal CWA civil judicial
enforcement actions commenced after the effective date of this
policy and to pending judicial enforcement cases in which the
government has not transmitted to the defendant an approved oral
or written proposed penalty. The' policy applies to civil
penalties sought under CWA Section 309 for violations including
the following: violations of NPDES permits by industrial and
municipal facilities; discharges without an NPDES permit;
violations of general and categorical pretreatment requirements
and local limits; monitoring and reporting violations; viola-
tions of Section 405 sludge uise or disposal requirements; etc.
The policy also applies to violations of Section 308 information
requests and to violations of Section 309 administrative orders.
This policy shall not be applied to CWA civil enforcement
actions brought exclusively under §311 ("hazardous substance
spills") or for violations related to requirements in §404
(disposal of "dredged or fill"r material). The CWA and imple-
menting regulations provide unique enforcement procedures and
penalty provisions for §311 artd §404 violations which are
currently being followed' in pursuing these types of cases.
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I I:
- 3 -
IV. Penalty Calculation Methodology
Th«*initial calculation shall be an estimate of the
statutory maximum penalty in order, for comparison purposes,
to determine the potential maximum penalty liability of the
defendant. The penalty which the government seeks in settle-
ment may not exceed this statutory maximum amount.
,The Regional office shall then calculate a civil penalty
figure for settlement purposes based upon the following
formula: "Civil Penalty = (Economic Benefit Component) + (Gravity
Component) +/- (Adjustments)."
The civil penalty.settlement calculation involves the
following four consecutive steps: (1) calculate the "Economic
Benefit" of noncompliance; (2) calculate the monthly and total
"Gravity Components"; (3) calculate the "Adjustment Factors";
and (4) calculate the total penalty.
(1) Economic Benefit. Consistent with the Agency-wide
"Policy and Framework", every reasonable effort shall be made
to calculate and recover the economic benefit of noncompliance.
Note that the economic benefit should be calculated from the
start of noncompliance up to the point when the facility was or
will be in compliance. In a limited number of cases, based
upon a defendant's inability to pay or "litigation practicalities",
application of the "adjustment factors" may justify recovery of
less than the calculated economic benefit. The economic benefit
component shall be calculated by using the EPA computer program
— "BEN." This program produces an estimate of the economic
benefit of delayed compliance, which is calculated to be the
sum of the net present value of: delayed capital investment,
one-time, non-depreciable expenditures, and avoided operating
and maintenance expenses. (See "BEN Users Manual,".OPPE/OECM,
January 1985.)
(2) Gravity Component. The gravity calculation methodology
is based upon a logical scheme and criteria which relate the
gravity of the violations to the Clean Water Act and its regula-
tory scheme. Every reasonable effort should be made to calculate
and recover a "gravity component" in addition to the economic
benefit component. As the penalty Policy states:
The removal of the economic benefit of
noncompliance only places the violator in
the same position as he would have been
if compliance had been achieved on time.
Both deterrence and fundamental fairness
require that the penalty include an
additional amount to ensure that the
violator is economically worse off than
if [he] had obeyed the law. [Policy, at 3]
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- 4 -
The following four gravity weighting factors should be
considered for each month during which there was one or more
violations and assigned values according to the attached "CWA
Penalty Policy Calculation Methodology":
"A" — "Significance of Violation." This factor is to
reflect the degree of the exceedance of the most significant
effluent limitation violation each month, and is weighted more
heavily for exceedances of toxic effluent limitations. The
attached outline contains a table indicating the range of
"significance of violation" factor values for exceedances of
effluent limitations (% over permit effluent limitation).
Note that all exceedances, and all other violations of permit
conditions in a given month, should be accounted for under
gravity weighting factor "C" - "Number of Violations."
"B" — "Health and Environmental Harm." A value between
1 and a value that results in the statutory maximum penalty may
be applied to each month in which one or more violations present
actual or potential harm to human health or to the environment.
"C" — "Number of Violations." This factor allows
consideration of the total number of violations each month,
including all violations of permit effluent limitations,
monitoring and reporting requirements, and standard and special
conditions. It is important to account for each violation in
assessing the significance of a defendant's violations, and
this factor allows for flexibility in assessing penalties for
multiple violations. Violation of a monthly average effluent
limitation should be counted as 30 violations, a weekly average
effluent limitation violation should be counted as 7 violations,
violations of different parameters at the same outfall are to
be counted separately, and violations at different outfalls are
to be counted separately. The attached outline contains a
range of weighting factor values between 0 and 5 to account for
the total number of violations. In addition, this "number of
violations" factor may be weighted more heavily to account for
serious or significant violations other than the most signifi-
cant effluent limit violation which was accounted for under
factor "A." . .
"
D" — "Duration of Noncompliance." This factor allows
consideration of continuing, long-term violations of an effluent
limitation or other permit condition, and for extended periods
of discharge without a permit. The attached outline contains
a range of values between 0 and 5 for the "Duration of Noncom-
pliance" factor which should be applied to each month of
continuing violation of the same requirement. Generally, "long-
term" violations are those which continue for three or more
consecutive months.
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- 5 -
The gravity component should be calculated from the date
on which the violations at issue began up to the date when the
violations ceased or the date of anticipated filing of the
enforcement action. The monthly gravity component is the sum
of the gravity weighting factors, plus one, multiplied by
$1,000. The total gravity component is the sum of all monthly
gravity components.
(3) Adjustment Factors. After the economic benefit
component is added to the sum of all the " monthly gravity
components," this total may be modified by the application of
"adjustment factors." The consideration of "history of recalci-
trance" may only result in an increased penalty. In addition,
in some cases and when justified in writing, the following two
factors may be applied for a penalty reduction: ability to pay
and litigation considerations.
(A) History of recalcitrance (to increase penalty).
The "recalcitrance" factor will allow for higher penalties for
bad faith, unjustified delay in preventing, correcting or
mitigating violations, violations of prior administrative orders
or consent decrees, failure to provide timely and full informa-
tion, etc. This factor should also be used to account for the
relationship of the violations to the regulatory scheme, i.e»
the significance of the recalcitrance. For example, higher
values for this factor may be used to account for municipal
violations which continue beyond July 1, 1988. This factor is
to be applied one time, by multiplying a percentage (0 to 150%)
times the sum of the "total gravity component" plus the economic
benefit calculation and then adding this figure to the benefit
and gravity total. The resulting figure is the "preliminary
total," which shall not exceed the statutory maximum. The
application of the recalcitrance factor to the total figure
allows for a more logical relationship between recalcitrance
and the actual significance of the violations. The recalci-
trance factor may also be increased during negotiations if
defendant continues to be recalcitrant with the remedy or with
settlement efforts.
(B) Ability to pay (to decrease penalty). The
Regional-of f ice should evaluate the ability of the defendant to
pay the proposed civil penalty and to pay for the proposed
injunctive relief. The government should carefully analyze
this factor where it appears that the defendant can convincingly
demonstrate an inability to pay a given penalty. The defendant
has the principal burden of establishing a claim of inability
to pay. The government typically should seek to settle for as
high an amount which the government believes defendant can
afford without seriously jeopardizing defendants ability to .
continue operations and still achieve compliance, unless the
defendant's behavior has been exceptionally culpable, recalci-
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- 6 -
trant, or threatening to human health or the environment. The
government should carefully assess the accuracy of the actual
or anticipated .claim; Evaluation by an outside expert consultant
may be necessary to rebut the inability to pay claim. If
securing an outside expert is impractical or impossible, the
Region shall make its best estimate of ability to pay.
Many factors often have a significant impact on ability to
pay and may justify a reduction of a penalty. For example, the
Region may consider high user fees, high percentage of local
funds spent on a POTW, low bond rating, low per capita income,
low total of population served by the POTW, bankruptcy, etc.,
in evaluating-an "inability to pay" claim.
(C) Litigation considerations (to decrease penalty).
The government should evaluate every penalty with a view toward
the potential for protracted litigation and attempt to ascertain
the maximum civil penalty the court is likely to award if the
case proceeds to trial. The Region should take into account
the inherent strength of the case, considering for example, the
probability of proving questionable violations, the probability
of acceptance of an untested legal construction, the potential
effectiveness of the government's witnesses, and the potential
strength of the defendant's equitable defenses. (Also see
GM-22, pp. 12 - 13; discussion of "compelling public concerns".)
Examples of equitable considerations which may lead to
adjustment of the penalty amount include the following: whether
the defendant reasonably, conclusively, and detrimentally
relied on EPA's or state or local agency's representations or
actions; whether the defendant has requested modification of
its final effluent limits (related to, for example, pending
§301(h) decisions, pending industrial variance decisions, or
new wasteload allocations); whether the defendant's violations
are clearly attributable to accepting new discharges from nearby,
noncomplying jurisdictions; and whether the defendant's compliance
has been delayed in an unusual or unreasonable manner by other
Federal requirements through no fault of the defendant.
These equitable considerations will justify mitigation only
to the extent that they directly caused or contributed to the
defendant's violations. The government may reduce the amount
of the civil penalty it will accept at settlement to reflect
these considerations where the facts demonstrate a substantial
likelihood that the government will not achieve a higher penalty
at trial.
V. Mitigation Projects
In the past, in a few cases the Agency has accepted consent
decree provisions which allow the reduction of a civil penalty
assessment in recognition of the defendant's undertaking an
environmentally beneficial "mitigation project."
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The following criteria are provided to guide the use of
mitigation projects in settlements.
(1) The activity must be initiated in addition to all
regulatory compliance obligations.
The project may npt be an activity which is otherwise
required by law. the project may not be a substitute for full
compliance — it must be designed to provide an environmental
benefit beyond the benefits of full compliance.
(2) The activity is most likely to be an acceptable
basis for mitigating penalties if it closely addresses the
environmental effects of the defendant's violation.
Preferably, the project will address the risk or harm
caused by the violations at issue. In general, qualifying
activities must provide a discernible response to the percep-
tible risk or harm caused by defendant's violations which are
the focus of the government's enforcement action.
(3) The defendant's cost of undertaking the activity,
taking into account the tax benefits that accrue, must be
commensurate with the degree of mitigation.
In order to attain the deterrent objectives of the civil
penalty policy, the amount of the penalty mitigation must
reflect the actual cost to the defendant. With consideration
of tax benefits, the actual cost of the project may exceed
the value of the mitigation.
(4) The activity must demonstrate a good-faith commitment
to statutory compliance.
*
One test of good faith is the degree to which the defendant
takes the initiative to identify and commence specific, potential
mitigation projects. In addition, the project must be primarily
designed to benefit the environment rather than to benefit the
defendant.
(5) Mitigation based on the defendant's activity must not
detract significantly from the general .deterrent effect of the
settlement as a whole. , ..
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 defendant and also the entire
regulated community. Accordingly, every settlement should
include a substantial monetary penalty component.
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- 8 -
(6) Judicially-enforceable consent decrees must meet the
statuto»y and public interest criteria for consent decrees and
cannot 4W>ntain provisions which would be beyond the power of
the court to order.
A proposed consent decree should not include 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.
The Agency should exercise case-by-case judgment in deciding
whether to accept a mitigation project based upon the above
criteria and, in addition, based upon consideration of the
difficulty of monitoring the implementation of the proposed
project in light of the anticipated benefits of the project.
VI. Intent of Policy; and Information Requests for
Penalty Calculations
The policies and 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 any rights,
substantive or procedural, enforceable by any party in litigation
with the United States. The Agency reserves the right to act
at variance with these policies and procedures and to change
them at any time without public notice. When the Regions
deviate from this policy they shall include in the litigation
report a brief description of the nature of and justification
for the deviation. In addition, any penalty calculations under
this policy made in anticipation of litigation are likely "to be
exempt from disclosure under the Freedom of Information Act.
As a matter of public interest, the Agency may release this
information in some cases.
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I k
Clean Water Act Penalty Policy; Calculation Methodology
SETTLEMENT PENALTYV.2 = (ECONOMIC BENEFIT) + (GRAVITY COMPONENT)
+ (ADJUSTMENTS)
Step 1: Calculate the Statutory Maximum Penalty
Step 2: Calculate the Economic Benefit Using "BEN"3*4
Step 3: Calculate the Total Gravity Component5
- Monthly Gravity Component = ($1,000) x (1+A+B+C+D)
- Total * Sum of Monthly Gravity Components
GRAVITY CRITERIA
ADDITIVE FACTORS
A. Significance of Violation6
% Exceedence
Monthly Avg.
0-20
21 - 40
41 - 100
101 - 300
301 - >
% Exceedence
7-Day Avg.
0-30
31 - 60
61 - 150
151 - 450
451 - >
% Exceedence
Daily Max.
0-50
51 - 100
101 - 200
201. - 600
601 - >
Toxic
0
1
3
(10
- 3
- 4
- 7
- 2(T>
Conventional/
Non-Toxic
0-2
1-3
2-5
3-6
5-15
10 - Stat. Max
1 - 10
0-5
0-5
B. Health and Environmental Harm7
(i) Impact on Human Health; or
(ii) Impact on Aquatic Environment
*
C. Number of Violations^
D. Duration of Noncompliance^
Step 4: Include Adjustment Factors
A. History of Recalcitrance10 (Addition)
- Penalty may be increased by up to 150 percent based upon the past
and present recalcitrance of the defendant.
B. Ability to Pay (Subtraction)
- Penalty may be adjusted downward to represent the defendant's
ability to pay.
C. Litigation Considerations (Subtraction)11
- Penalty may be adjusted downward to reflect the maximum amount
which the court might assess if the case proceeds to trial.
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I I
. WATERS CttV'IL ^PENALTY POLICY CALCULATION METHODOLOGY: FOOTNOTES
1. In general, the Settlement Penalty amount shall be at least the
Economic Benefit of Noncompliance plus a gravity component.
2. The maximum Settlement Penalty shall not exceed the amount
provided by Section 309(d), $10,000 per day of such violation.
3. Calculate all economic benefits using BEN. There is no minimum
amount triggering the use of BEN.
4. Economic benefit is to be calculated as the estimated savings
accrued to the facility; i.e., it is to be based upon the total
amount which should have been spent by the facility. (All
capital and expense costs, direct and indirect, are to be
considered.) .
5. The Total Gravity Component equals the sum of each Monthly
Gravity Component for a month in which a violation has occurred,
6. The Significance of Violation is assigned a factor based on
the percent by which the pollutant exceeds the monthly or
7-day average or daily maximum permit limitation and whether
the pollutant is classified as toxic, non-toxic or conventional,
7. Where evidence of actual or potential harm to human health
exists, a factor from "10" to a value which results in the
statutory maximum penalty should be assessed. Where the
identified impact relates only to the aquatic environment, a
factor from "1" to "10" should be used.
8. The Region has the flexibility to assign a high penalty factor
where an excessive number of violations occur in any month
(effluent limit, reporting, schedule, unauthorized discharge,
bypass, etc.).
9. The Duration of Noncompliance factor allows the Region to
increase the monthly gravity component for continuing, long-
term violations of the same parameter(s) or requirement(s).
Generally, a "long-term" violation is one which continues for
three or more consecutive months.
10. A factor ranging from "0" (good compliance record, cooperation
in remedying the violation) to 150 percent of the total of the
Economic Benefit and Gravity Component may be added based upon
the history of recalcitrance exhibited by the violator.
11. In addition, the penalty should-be reduced by any amount which
defendant paid as a penalty to a State or local agency on the
same violations.
-------
CWA Penalty Summary Worksheet
(1) No. of Violations
x 510,000 * stat. max. - $
(2) Economic Benefit ("BEN")
(period covered/
months) =
(3) Total of Monthly Gravity
Components $
(4) Benefit + Gravity TOTAL
(5) Recalcitrance Factor %
(0-150%).x Total (Line 4) = $
(6) Preliminary TOTAL (Line 4 + Line 5) $
ADJUSTMENTS
(7) Litigation Considerations
(Amount of reduction) $
(8) Ability to Pay
(Amount of reduction)
(9) SETTLEMENT PENALTY TOTAL
Name and Location
of Facility
Date of Calculation
-------
IV.C.ll.
"Letter of the Administrator to James Borberg, President of the Association
of Metropolitan Sewerage Agencies", (concerning penalties against
municipalities), dated October 21, 1986.
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®
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON/DC 20460
OCT 211986
THE ADMINISTRATOM
Mr. James R. Borberg, President
Association of Metropolitan Sewerage Agencies
Suite 1002
1015 18th Street, N. W.
Washington, D.C. 20036
Dear Mr. Borberg:
Thank you for your letter of September 22, 1986, which
reiterates some of the issues that you and other members of
the Board of the Association of Metropolitan Sewerage Agencies
(AMSA) raised during our meeting on September 10, 1986. We
at the Environmental Protection Agency (EPA) thought the
session was a productive exchange of ideas, and we certainly
appreciate your endorsement of our proposal on stormwater and
your willingness to communicate that support to Congress. I
also welcome this opportunity to continue our dialogue.
The first issue you raise involves EPA's practice of
assessing penalties for a municipality's past and future
violations in conjunction with Federal judicial actions under
the National Municipal Policy (NMP). You are correct that the
NMP does not explicitly require us to seek penalties* However,
the NMP—-although it is a clear statement of Agency policy-
is not intended to stand alone. All Agency policy documents,
including the NMP, serve as a "master plan," and are buttressed
by other policy and guidance; collectively, they direct our
day-to-day activities to reach our goals. The NMP states our
position with respect to the relationship between the Clean
Water Act (CWA) provisions for Federal funding and for munici-
pal compliance, and provides a general framework for accom-
plishing the Agency's goal of achieving as much compliance as
possible by July 1, 1988.
Since your concern relates to what AMSA perceives as an
•inconsistency" between penalties and the NMP, I will mention
the three main foundation documents that we use in conjunction
with the Policy statement to guide the NMP enforcement effort.
First, we rely on the NMP Guidance (March 1984), which sets
out our detailed action plan, including! 1) the use of judicial
enforcement actions to establish schedules that extend beyond
the July 1, 1988, deadline in the NMP; and 2) the use of
appropriate civil penalties.
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-2-
The second document that undergirds our municipal compliance
program -is the Agency'• Uniform Civil Penalty Policy (February
1984), which superseded an earlier version (July 1980). This
Policy is a statement of the Agency's position on the use of
penalties. It sets out guidelines covering, among other
things, the application of our statutory authority to afsess
penalties under $309 of the CNA. It also affirms our obligation
to exercise that authority to ensure a consistent, common
effort to deter violations of the laws of the United States
and to promote equity and voluntary compliance among all
parts of the regulated public.
Most recently, we have issued a third policy documenti the
Clean Water Act Penalty Policy (February 1986), which provides
a detailed methodology on how to determine the appropriate
amount of each penalty. It is important to note, however,
that the CWA Penalty Policy in no way alters the Agency's
policy on whether to seek penalties from municipalities, as
originally enunciated back in 1980; both $309 of the CWA and
EPA's CWA Penalty Policy simply do not distinguish between
industrial and municipal violators. Rather, the 1986 CWA
Penalty Policy provides technical guidance on how to best carry
out the Agency's policy in an even-handed manner.
If you look at the law and at these expressions of Agency
policy and guidance, I am confident you will see that our
enforcement policies are faithful to both the CWA and the
spirit of the NMP. For nearly three years, we have made an
honest effort to work with States and with affected municipali-
ties to establish reasonable schedules for compliance in admin-
istrative orders or NPDES permits—without penalties. Where
the municipality is not willing to work with us to negotiate a
reasonably expeditious schedule or where the schedule extends
beyond July 1, 1988, we.are seeking Court-sanctioned schedules
and penalties consistent with the law and Agency policy. Thus
far, the Courts have consistently upheld our interpretations
of the law in this area, which indicates that we are complying
with the intent of Congress as it appears in the CWA.
Perhaps some numbers would be helpful to put things into
perspective. By the end of FY 1986, we had returned about
260 major facilities to compliance (generally as a result of
schedules established in administrative orders (AOs)). We
had also placed about 1000 other major facilities on enforce-
able schedules established in administrative orders (700) and
in NPDES permits (300). Nationwide, since the issuance of
the NMP, EPA has established about 40 schedules in Court
Orders, and has filed another 30 cases; some schedules are
established in State Court Orders as well.
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- 3 -
After nearly three years of work and negotiation, however,
we still have about 100 major municipalities that have not
agreed to an enforceable schedule for achieving compliance,
including some pending final $301(h) decisions. Every day that
passes reduces the likelihood that these municipalities can
meet the statutory deadline, which increases the prospects that
we will have to establish their schedules in Court Orders
including penalties for violations of the Act. Overall, how-
ever, Court Orders that assess penalties have constituted only
a small part of our total effort, and penalty amounts are a very
small percent of total construction costs (rarely in excess of
one percent and often below that figure).
The second issue you raise.on behalf of AMSA is the
relationship between the Construction Grants program and the
NMP. As we have said consistently, we see no conflict between
the Construction Grants program and the municipal compliance
effort under the NMP. Both are intended to achieve the sane
goals municipal compliance with the requirements of the CWA.
Moreover, we have provided clear guidance to the Regions and •
States that, where a municipality is ready and willing to
initiate construction before its name comes up on the priority
list for a grant award, this does not necessarily preclude that
municipality's grant eligibility for the remainder of the pro-
ject. This is intended to provide an incentive for communities
to start construction as soon as possible so they can retain
their grant eligibility and avoid Court Orders and associated
penalties.
In summary, we have worked cooperatively with affected
municipalities for the nearly three years since issuance of
the NMP, and we will continue to do so. However, EPA has an
obligation to Congress and to the public to carry out and
enforce the law that protects the nation's waters, and we fully
intend to do so through all the mechanisms the Act provides.
Moving to your final issue of EPA's response to the Third
Circuit Court's decision on removal credits, I want to let you
Xnow that an appeal to the Supreme Court is still under con-
iideration. Just recently, at EPA's request, the Department
of Justice asked the Supreme Court for an extension of time
to allow us to further consider the merits of an appeal. I
know this is an important issue to AMSA members and to other
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- 4 -
municipalities that administer local pretreatraent programs,
and X assure you that the Agency will continue to work with
your removal credits subcommittee so that AMSA's views will
be incorporated into our decision-making.
Again* I valued our recent discussions and appreciate
hearing the views of your organization.
/-^Sincere!
Lee M. Thomas
-------
IV.C.12.
"Guidance on Calculating after Tax Net Present Value of Alternative
Payments", dated October 28, 1986. See also GM-51.
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-------
I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
' WASHINGTON. D.C. 20460
OCT 2 8 1986
OFFICE OF
ENFORCEMENT AND
COMPLIANCE MONITORING
MEMORANDUM
SUBJECT: Guidance on Calculating After Tax Net Present Value
of Alternative Payments
V
>~-*-*v^
FROM: Thomas L. Adams, Jr.
Assistant Administrator for
Enforcement and Compliance Monitoring
•
TO: Assistant Administrators
Regional Administrators
PURPOSE
This guidance provides a methodology for calculating the
after tax net present value of an environmentally beneficial
project proposed by a violator to mitigate a portion of a civil
penalty. We developed this guidance in reponse to requests from
both the Regions and Headquarters on how to evaluate a project's
real cost to a violator. The Associate Enforcement Counsels,
Regional Enforcement Contacts, Regional Counsels, and the Chief
of the Environmental Enforcement Section at Department of Justice
have reviewed this guidance. In addition, the Tax Litigation
Division of the Internal Revenue Service and the Corporate
Finance Division of the Securities and Exchange Commission
reviewed pertinent language in this document. We hope it will
be useful. The policy on alternative payments is set forth in
the February 16, 1984, uniform civil penalty policy.
BACKGROUND
The 1984 civil penalty policy provides flexibility for EPA
to accept, under specified conditions, a violator's investment in
environmentally beneficial projects to mitigate part of a civil
penalty. The policy allows the use of these alternative payments
as an incentive for settlement. The policy does not contemplate
a dollar-for-dollar reduction in the civil penalty equal to the
cost of an acceptable alternative payment project. Furthermore,
EPA will not accept more than the after tax net present value
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-2-
of an alternative payment project. The Agency also can choose
to accept less than that amount. £/
EPA must carefully balance the benefits of fostering settle-
ments by approving alternative payment projects against the benefits
of achieving the broadest deterrent impact from enforcement actions.
Allowing these projects to mitigate part of a penalty may reduce
the deterrent effect of an action on the regulated community.
A civil penalty is not tax deductible under 26 U.S.C.
§162(f); therefore, the full amount of the penalty is a
liability to a violator.£/ Conversely, if a violator invests
in an alternative payment project, that investment may be tax
deductible. EPA must use the after tax value of a proposed
investment when determining whether and by how much to mitigate
a civil penalty.^
•
In addition to considering the tax e.ffects of an alterna-
tive payment project, EPA must evaluate the cost of the project
in terms of its present value. An alternative payment project
usually requires expenditures over time.^/ Therefore, the Agency
also must reduce the after-tax value of the cash flows invested
in an alternative payment project to its net present value at
I/ Proposed alternative payment projects may not be used to
mitigate the entire amount of a civil penalty. The Agency
plans to issue further policy clarifying the use of alter-
native payments in settlement negotiations.
_2/ A written agreement specifiying the tax implications of the
civil penalty is essential. The agreement should be a legally
binding contract. The agreement should state that the civil
penalty is punitive and deterrent in purpose and is a non-
deductible expense.
3/ In addition to tax benefits, a firm also can generate
positive, image-enhancing publicity from the project developed
for the alternative payment; however, the penalty policy requires
that any publicity a violator generates about the project must
include a statement that the project is undertaken in settlement
of an enforcement action by EPA or an authorized state.
£/ A dollar today is worth more than a dollar a year from now
for two reasons: 1) if a dollar today is held in a no-interest
checking account, inflation erodes the value of that dollar over
the year; and 2) if a dollar today is invested at a rate higher
than the rate of inflation, that dollar increases in value by
the amount of earnings in excess of the inflation rate.
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-3-
The BEN computer model can calculate the atter tax net
present value of a violator's proposed alternative payment.
Appendix A of tne BEN User's Manual provides the procedure tor
calculating after tax net present value of capital investment,
operation and maintenance costs, and one-time costs.
USING BEN TO CALCULATE THE AFTER TAX NET PRESENT VALUE OF
ALTERNATIVE PAYMENTS
To use BEN to calculate after tax net present value of an
alternate payment project, respond to the BEN questions as
follows:
1. Enter the case name (variable 1);
2. For variables 2 through 4, enter the incremental
, costs for the alternative payment project of:
a. Pollution control equipment;
b. Operation and maintenance;
c. One-time expenditure;
3. Substitute the date of settlement of the enforcement
action tor the first month of non-compliance
(variable 5);
4. Enter the compliance date or completion date of the
alternative investment for variables 6 and 7;
5. Select standard values for variables 8 through 13;£/
6. Select output option 2.
5/ Decreasing the tax'rate used in BEN increases the amount of a
civil penalty and also increases the atter-tax cost ot an
alternative investment. Therefore, a violator has an incentive
to provide a lower marginal tax rate tor an alternative payment
project than the one used to calculate the civil penalty.
Both the civil penalty calculation and the alternative payment
calculation must use the same tax rate. The annual inflation
rate and the discount rate should be the same as the rates used
in the civil penalty calculation.
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-4-
Calculation C in output option 2 expresses the after tax
net present value ot the alternative payment on tne date of
settlement, which is the date substituted for the first month
ot noncompliance (variable 5). This tigure is the maximum
amount by which EPA may mitigate a civil penalty. Attachment
A is an example ot a proposed alternative payment project with
the BEN output showing the after tax net present value of the
investment.
If you have any questions about calculating the after tax
net present value ot a proposed alternative payment, call Susan
Gary Watkins of my staff (FTS 475-8786).
Attachment
•
cc: Regional Counsels
Associate Enforcement Counsels
Compliance Office Directors
-------
ATTACHMENT A
ALTERNATIVE PAYMENT EXAMPLE
Suppose a violator offers to invest over the next 20 months
$500,000 in pollution control equipment. The equipment will
provide environmental benefits beyond those that result from
meeting legal requirements for compliance. The after tax net
present value in 1986 dollars of a $500,000 investment over a
period of 20 months is $299,562. Therefore, the value of the
alternative payment in this example is $299,562, although the
violator must commit to investing $500,000. Exhibit 1 shows
how the BEN model displays the data.
If EPA approves the alternative payment project in the
example, the Agency may propose an adjusted penalty target figure
that is as much as $299,562 less than the initial penalty target
figure.V Other adjustment factors also may reduce the initial
penalty target figure.
The effects of inflation and return on a dollar are smaller
over shorter periods of time. Consequently, the difference
between the after tax net present value of an alternative payment
and the total amount of the alternative payment decreases as the
time between the date of settlement and the date of the final
alternative payment decreases. If the violator in the example
could invest $500,000 in pollution control equipment in less
than 2 months after settlement, the net present value of the
investment would be $76,742 greater (See Exhibit 2).
For using the BEN model to calculate the after tax net
present value of the proposed alternative payment for this
example the data required are:
1. Case Name: Alternative Payment Example
2. Capital investment: 500000 1986 dollars
3. One-time nondepreciable expenditure: 0
4. Annual O&M expense: 7000 1985 dollars
5. Month of settlement: 4, 1986
6. Compliance date: 12, 1987
7. Penalty payment date: 12, 1987
I/ The Agency is never obligated to mitigate a civil penalty by
the full amount of the after tax net present value of an alter-
native payment project. For example, EPA might mitigate a civil
penalty by only half of the after-tax net present value of the
project.
-------
EXHIBIT 1
OUTPUT OPTION 2
ALTERNATIVE PAYHENT EXAMPLE
APRIL 16, £1986
PRESENT VALUE COST OF PURCHASING THE INITIAL
pni i IITTON rriMTRru FOIITPMFNT DN TIMF
OPERATING IT THROUGHOUT ITS USEFUL LIFE
B. PRESENT VALUE COST OF ON-TIME PURCHASE AND
riPFRQTTPM HF TNTTTflL POLLUTION CONTROL
rf
c.
EQUIPMENT PLUS ALL FUTURE REPLACEMENTS
PRESENT VALUE COST OF DELAYED PURCHASE AND
OPERATION OF POLLUTION CONTROL EQUIPMENT
PLUS ALL FUTURE REPLACEMENTS
ECONOMIC DENEFIT OF A 20 MUNIH L*iL»
AS OF INITIAL DATE OF NONCOMPLIANCE
(EQUALS B MINUS C)
299562
5B62G
VI IP"
•LiFIT OF A 20 MONTH DELAY
A2 Of TIC • t.:4ALTY PAYMENT DATE, 20 MONTHS
AFTER THE INITIAL DATE OF NONCOMPLIANCE
77252
THE ECONOMIC SAVINGS CALCULATION ABOVE
USED TUP POL I OWING VARIABLES 8
USER SPECIFIED VALUES-
1.
2.
3.
4.
5.
6.
7.
CASE NAME* ALTERNATIVE PAYHENT
INITIAL CAPITAL INVESTMENT «
EXAMPLE
S
ONE-TIME NONDEPRECIABLE EXPENDITURE -
ANNUAL OScM EXPENSE* *
FIRST MONTH OF NONCOMPLIANCE-
COMPLIANCE DATE* :
PENALTY PAYMENT DATE* IL:
' •" ' ' ' I
i
50OOOO
*
70OO
4,
12.
12,
19B6 DOLLARS
0
1986 DOLLARS
1986
1987
1987
STANDARD VALUES..
8.
9.
1O.
11.
12.
13.
USEFUL hi FE OF POLLUTION CONTROL EQUIPMENT - -v
INVESTMENT TAX CREDIT , RATE. - . - -:
MARGINAL INCOME TAX RATE-* . , .
ANNUAL INFLATION RATE* i. . ;• "„•::. ' . :
DISCOUNT RATE » , "' ..,.,,.-_,....
AMOUNT OF LOM INTEREST FINANCING * *
15 YEARS
10.00 '/.
SO. 00 V.
6.00 '/.
18.00 •/.
0
S-> i
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EXHIBIT 2
OUTPUT OPTION 2
ALTERNATIVE PAYMENT EXAMPLE
- *>*tt-24t 1986
y f t»fi :*-j .. v
A. PRESENT VALUE COST OF PURCHASiNBrtHE~INITIAL
POLLUTION CONTROL eBUlPI'IBMT OKI TINE flUIP
OPERATING IT THROUGHOUT ITS USEFUL LIFE
303688
B. PRESENT VALUE COST OF ON-TIME PURCHASE AND
OPERATION OF INITIAL'POLLUTION CONTROL
C.
EQUIPMENT PLUS ALL FUTURE REPLACEMENTS
••••^^•^••••••••iMMM^MMHM
PRESENT VALUE COST OF DELAYED PURCHASE AND
OPERATION OP POLLUTION CONTROL EQUIPMENT
379682
PLUS ALL FUTURE REPLACEMENTS
376304
D. ECONOMIC BENEFIT OF A 1 MONTH DELAY
AS OF INITIAL DATE OF NONCOMPLIANCE
(EQUALS B MINUS C>
3373
-fc THE ECONOMIC DENCflT OF A i MONTH DELAY
AS OF THE PENALTY PAYMENT DATE, 1 MONTHS
AFTER TMC INITIAL DATC Or NONCOHPHAMOC
3425
->->->->->
THE ECONOMIC SAVINGS CALCULATION ABOVE
USCP THE fOLLOMINB VARIABLES;
<-<-<-<-<-<-
USER SPECIFIED VALUES
1. CASE NAME- ALTERNATIVE PAYMENT EXAMPLE
^•"•^™"~^^"™"™™y~^™1
3. ONE-TIME NONDEPRECIABLE EXPENDITURE -
4. ANNUAL Q»f1 CXPCNOC- : •
5. FIRST MONTH OF NONCOMPLIANCE-
6. COMPLIANCE DATE- ^— :
7. PENALTY PAYMENT DATE-
leeeee 190& DQLLftRQ
t 0
7000 1906 DOLLARS
11, 1987
12, 1907
12, 1987
STANDARD VALUES
•r'- -
o. uocruL Lire or POLLUTION CONTROL EQUIPMENT
9. INVESTMENT TAX CREDIT RATE - - -
*GOMC TAX RATE • : -
IB YCARG
10.00 7.
11. ANNUAL INFLATION RATE-
12. DIOCOUNT RATE : £
13. AMOUNT OF LOW INTEREST.FINANCING'*•• :
6.00 7.
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IV.C.13.
"Guidance on determining Violator's Ability to Pay a Civil Penalty", dated
December 16, 1986. See GM-56.
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\\-
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IV.C.14.
"Addendum to the Clean Water Act Civil Penalty Policy for Administrative
Penalties", distributed August, 1987. (This document is reproduced at
III.B.9., this compendium).
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-------
IV.C.15.
"November 4, 1987 Congressional Testimony on Proposed Amendments to the
Clean Water Act", dated November 24, 1987. Includes OOJ and EPA Testimony
on "Environmental Improvement Projects",.
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j UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
/ WASHINGTON. O.C. 20460
NOV 24 ;gg?
-is •.
e;a. -MI-'.
MEMORANDUM
SUBJECT: November 4, 1537, Congressional Testimony c
Proposed Amendments to the Clean Water Act
FROM: Thomas L. Adams, Jr.
Assistant Administrator for Enforcement
and Compliance Monitoring
Regional•Enforcement Contacts
Regional Counsels
Associate Enforcement Counsels -
Director, Office of Compliance Analysis
and Program Operations
Director, Office of Criminal Enforcement
Attached are copies of Agency and Department of Jus-i^e
testimony on environmental improvement projects as used ir.
water enforcement case settlements. The testimony was giver.'
at a November 4 hearing before the House Subcommittee on
Fisheries, Wildlife Conservation, and the Environment.
Jonathan Z. Cannon, Deputy Assistant Administrator fcr
Enforcement and Compliance Monitoring - Civil, testified for
the Agency. Raymond B. Ludwiszewski., Associate Deputy
Attorney General, testified for DOJ. Other parties who
testified were the Mayor of New Bedford, MA; a representative
from the California Environmental Trust; Patrick Parenteau,
Commissioner of the Vermont Department of Natural Resources
and foraer Regional Counsel for Region I; and Donald Stever,
law professor and former DOJ environmental enforcement.
official.
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- 2 -
Also attached'is a copy of proposed bill K.R. 3411 which
addresses environmental improvement projects. I hope you
find this material helpful.
Attachments
cc: Susan Lepow, OGC
Jim Elder, OWEP .
Dave Davis, OWP
Tudor Davies, OMZP
Tai-Ming Chang, OCAPO
CEC-1-Water' Attorneys
-------
STATEMENT OF
JONATHAN Z. CANNON
DEPUTY .ASSISTANT ADMINISTRATOR FOR CIVIL ENFORCEMENT
OFFICE OP ENFORCEMENT AND COMPLIANCE MONITORING
I'.S. ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE
SUBCOMMITTEE ON FISHERIES, WILDLIFE CONSERVATION AND THE ENVIRON"- N"
- OF THE
COMMITTEE ON MERCHANT MARINE AND FISHERIES
'J.S. 30lfSE OP REPRESENTATIVES
WASHINGTON, D.C.
November 4, 19Z7
Good afternoon, Mr. Chairman and Members of the Subcomal ctee .
It Is a pleasure to appear before you co discuss . aspects of the
Agency's water enforcement program and H.R. 3411, now before
the Subcommittee. I am Jonathan Z. Cannon, Deputy Assistant
Adainistrator for Civil Enforcement in the Office of 'Enforcement
and -Compliance Monitoring (OECM) at the Environmental Protection
Agency. Seated beside me is Glenn L. Unterberger, Associate
Enforcement Counsel for Water. Among other things, my office
is responsible for approving settlements on behalf of EPA for
civil enforcement cases to ensure they support national enforce-
ment goals and policy before transmitting them to the Department
of Justice (DOJ) for final approval and lodging in court. My
office work* closely with the Department of Justice and EPA's
Regiona.1* off ic«s Co encourage prompt case filings by DOJ and co
ensure proper resolution of cases.
'More specifically, ay responsibilities under the Clean
Water Act include national aanage-aent of ^PA's legal enforcement
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program implementing Section 309(d) and Section 309(g). Those
sections authorize che Agency co briag judicial or administrative
enforcement actions seeking civil penalties against owners and
operators of facilities, both municipal and industrial, that
violate the Clean Water Act. My office also provides legal
*T.£orcement counsel to EPA program officials charged with
administering the Marine Protection, Research and Sanctuaries
Act (M.PRSA), including Section 105(a) of chat Act, which autho-
rizes the Agency to assess civil penalties administratively
for violations of that statute. I vill focus on the Clean
Water Act today, but the same general principles also apply to
:he MPRSA.
SPA's Present Policies on "Environmental Improvement Projects"
As background for considering H.R. 3411, I want to review
the Agency's current policies fo.r approving environmental
aitigation projects as part.of settlement-agreements io judicial
or administrative enforcement actions. Many of the Agency's
enforcement actions are settled without litigation or full
adainlstrative penalty proceedings. The Agency developed tvo
civil penalty settlement policies to assist in treating the
regulated community fairly and consistently during settlement
'^* • • -
-egotiations and to ensure that settlements achieve a proper
deterrent iapact on- potential violators. The Uniform Civil
Penalty Policy (issued February 16, 1984) applies to all of
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che eaviroa»«neal statutes the Agency enforces. This policy
provides « framework for developing policy and guidance for
settlement negociacions. The Clean Water Ac: Penalty Policy
(issued February 11, 1986) applies specifically to settlements
of Clean Water Ace enforceaenc actions. The tvo policies were
developed in consultation with che department of Justice, yhlch
strongly supports them.
Both policies contain provisions for considering "environ-
mental improvement projects" as part of a settlement agreement.
The Uniform Civil Penalty Policy calls these projects "alternative
payment projects," vhi'le the Water Penalty Policy calls these
projects "mitigation projects." Both policies contain specific
criteria that the Agency applies to a defendant or respondent's
proposed environmental project to determine whether to accept
the project as part of the settlement agreement. I will focus
on the criteria in the Clean Water Act Penalty Policy that we
use to evaluate proposed mitigation projects during settlement
negotiations. There are six criteria. Comparable criteria
apply to settlements of EPA's administrative penalty actions
under the MPRSA pursuant to our Uniform Civil Penalty Policy.
First, Mitigation projects aust not significantly reduce
the de.rVrrent effect of a settlement. Therefore, the Agency
policy establishes an expectation of a substantial up front
cash penalty.to the U.S. Treasury as part of any settlement,
which might also include a mitigation project. I cannot
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emphasize ceo strongly that any ait.igation project Is only one
eleaent of • settlement chat should Include a requirement for a
cash penalty payaenc by a violator.
Second, the project aust provide an envlronmental benefl:
In addition to the benefits of full compliance with the law.
•or exaaple, a proposal to upgrade a wastewater treataent plant
would not be acceptable as a mitigation project if the upgrade
were required to aeet permit liaitations.
Third, the project should correct or reverse the environ-
aental hara caused by the violation. For example, a proposed
project to install equipment that would result in a discharge
of pollutants significantly below the permit requirements and
thus reduce the pollutant ' load in the receiving waters might
be allowed if the effect of the*project also included a net
iaproveaent in the quality of the receiving waters which were
affected by the violations.
Fourth, the Agency's evaluation of the effec: che cost
of a aitigation project will have on an acceptable penalty
settlement amount must cake into account the tax consequences
of the project that can reduce the deterrent effect of the
enforcement action.* For exaaple, an investaent in pollution
control^'equipment provides tax deductions for denreciat ion .and
operation and maintenance (O&M) costs. On occasion, violators
seek tax deductions for payments to environaental trust funds.
, Part of the deterrent effect of a civil penalty is, that It Is
rrot : ax deductible.
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other public relations benefits. Polluters have also displayed a
natural eagerness to avail themselves of the potentially
significant- tax deductions possibly associated with credit
projects. When violators take deductions for these "projects",
they essentially force the United States' taxpayer to subsidize
their .unlawful pollution. Finally, an unrestrained statutory
endorsement of environmental projects as substitutes for
penalties r.ay encourage the courts sua sporte to order
undesirable credit projects, even where the -expert technical
agency, the Environmental Protection Agency, has rejected such
projects as an appropriate component, of a settlement agreement.
For these reasons, the extensive use of-credit projects
may have the damaging effect of undercutting the civil
enforcement program, rather than supporting it. In light of
these adverse effects, any mitigation of statutory penalties
through credit projects must be carefully structured to preserve
and enhance the operation of an effective judicial enforcement
program and support the four basic goals discussed above.
The February 11, 1986, Clean Water Act civil penalty
j t
policy, issued by the Environmental Protection Agency (EPA) after
extensive review and coordination with the Department of Justice,
carefully delineates criteria to be used in considering
"environmental improvement projects* as part of a settlement
agreement. This policy is working. To date, according to
information provided by the EPA, approximately 15% of our
judicially-approved CWA settlements with publicly-owned treatment
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works contain some kind of environmental improvement project.
Any settlement which includes a mitigation project must have a
substantial upfront monetary payment to the United States
Treasury. The following discussion highlights the other criteria
used by the EPA and the Department in determining whether to
accept a credit project as part of a settlement agreement:
1. Mitigation of the penalty amount based on the
defendant's activity must not detract significantly from the
deterrent effect of the settlement as a whole. The Department of
Justice is especially concerned that the expanded use of credit
projects will undermine the deterrent impact of our environmental
enforcement efforts. To avoid this, these projects should be the
exception, rather than the rule. Moreover, any settlement
including a credit project must also contain a substantial cash
penalty component payable to the United States Treasury.
2. The credit project should closely address the
environmental effects-of the defendant's violations. The goal of
all enforcement efforts is to prevent, remedy, and punish
environmental pollution. Credit projects, to serve the ultimate
enforcement objectives, should address the environmental risk or
harm resulting from the defendant's violations.
3. The polluter's cost of undertaking the activity,
taking into account any tax benefits that may accrue, must be
commensurate, with the degree of mitigation. Defendants often
exploit tax benefits, corporate filing benefits and other
advantages from credit projects. To maintain the proper
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incentives, the violator's real costs, rather than the value of
the project, must be considered.
4. The activity must demonstrate a good-faith
commitment to statutory compliance. A defendant's commitment to
future compliance is extremely relevant to a civil penalty
calculation. It is appropriate to consider the type of
mitigation project, the initiative of the defendant in
identifying and commencing the project, and the environmental
.benefit provided by the project as demonstrating the defendant's
commitment.
5. The activity must be initiated in addition to all
regulatory compliance obligations. That is, the credit project
aust provide a benefit to the environment beyond those provided
by full compliance with the lav, and cannot be substituted for
full compliance.
6. Under the CWA, the Department cannot accept, and
the court cannot approve, provisions in a consent decree that are
beyond the power of the court to order.
These criteria provide for a fair and equitable
assessment of an environment improvement project in the context
of the settlement decision.
II. COMMMfffl ON H.R. 3411
First and foremost, the amendment is not necessary.
While civil and criminal penalties and injunctive relief are the
only presently authori2ed remedies under the CWA, the United .
States Attorney General, in settling claims for penalties, has
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the inherent authority to consider a polluter's willingness and
commitment to undertake activities that mitigate the harm caused
by his violations. This authority is derived from the broad
discretion vested in the Attorney General to settle and
compromise litigation involving the United States. •!/ Since this
authority is already being used in appropriate situations, the
amendment may have the undesirable effect of fostering a much
greater number of credit project proposals, many of which would
prove to be unacceptable. Consideration of these proposals may
delay settlement or prosecution of the government's case. In our
cases, delay only helps the polluter at the expense of the
•
environment. Moreover, the regulated community understands and
abides by the existing civil penalty policy -- the "ground
rules." This amendment will upset the existing status quo and
provide incentives for violators to avoid civil penalties and
engage in protracted negotiation and litigation until the new
ground rules are again established.
\
At this point, let me clarify my earlier statement on
the Attorney General's legal authority to use mitigation under
the Clean Water Act. As indicated earlier, the CWA and MPRSA do
no^ deafly authorize the use of credit projects as substitution
for civil penalties. However, the government has broad
discretion to mitiqqte civil penalties and permits this
•!•/ The Attorney General's settlement authority is both inherent
in the creation of his office, eg.. Confiscation Cases. 74 U.S.
at 457-459, and derived from the client agencies' authority to
settle cases. United States v. Newport News Shipbuilding. 571
F.2d 1283, 1287 (4th Cir.), cert, denied. 439 U.S. 875 (1978).
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mitigation on the basis of a defendant's environmentally
beneficial, activities. Such authority must be exercised
consistent with the terns of the Miscellaneous Fees Act, 31
U.S.C. § 3302, which provides, that money received for the
government must be deposited in the United States Treasury. We
have interpreted this section to mean that the government is
constrained in its ability to accept direct substitutes for civil
penalties, but the Miscellaneous Fees Act does not entirely
eliminate the authority of the government to mitigate the civil
penalty based on an environmentally beneficial credit project.
Thus, the United States currently has the legal authority to
accept "credit projects" in certain circumstances as mitigation
of civil penalties.
Direct substitution of a-project for civil penalties,
as well as unlimited credit projects, raise difficult enforcement
issues. First, the amendment is unclear with respect to the
Department's role in the approval of these credit projects under
the amended section 309(d). As currently drafted, it has no role
for the Attorney General. Yet, the Administrator or the
Secretary alone cannot accept credit projects in settlement of
federal enforcement actions without the involvement of the
Attorney General, since ultimately the Attorney General must
approve alj. consent decrees under the CWA to which the United
States is a party. Therefore, the amendment should reflect the
Attorney General's involvement.
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Second, section 4(b) is most troubling as it raises the
specter of judicially-imposed environmental improvement projects
in situations where the EPA and the Department believe such
projects are inappropriate. The courts and the defendants
shouldn't-be in business of selecting environmental improvement
projects. That should be left to the Congress and the IPA.
If Congress does not want these monetary recoveries to go into
the United States Treasury, then it is incumbent upon Congress to
establish a procedure that gives the Administrator some guidance
in determining how and where the monies should be spent. A
system that puts the polluter in the driver's seat unwisely
rewards the outlaw for his illegal activity.
In conclusion, achieving compliance with environr.er.tsi
requirements in the first instance is the goal of our enforcement
program. Any amendment that provides incentives to the regulated
community to avoid compliance should be rejected. We all share
the same goals — quick, effective, and complete compliance with
the nation's environmental laws — the 'only question is the best
means to reach them.
The Department of Justice looks forward to working
closely with Members of this Subcommittee and the Environmental
Protection Agency in this important area. I would be pleased to
answer any questions you might have.
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STATEMENT OF
RAYMOND B. LUDWISZEWSKI
ASSOCIATE DEPUTY ATTORNEY GENERAL
U.S. DEPARTMENT OF JUSTICE
BEFORE THE
SUBCOMMITTEE ON FISHERIES, WILDLIFE CONSERVATION,
AND THE ENVIRONMENT
OF THE
COMMITTEE ON MERCHANT MARINE AND FISHERIES
U.S. HOUSE OF REPRESENTATIVES
NOVEMBER 4, 1987
Mr. Chairman and Members of the Subcommittee:
On behalf of the Department of Justice, I am pleased to
have this opportunity to present our views on issues related to
H.R. 3411 and "environmental improvement projects" under the
Clean Water Act (CWA) and the Marine Protection, Research and
Sanctuaries Act (MPRSA) . I am Raymond B. Ludwiszewski, Associate
Deputy Attorney General, from the Department of Justice. For a
period of two years, I was Special Counsel to the Assistant
Attorney General, in the Land and Natural Resources Division. As
Special Counsel, I was involved in all aspects of our civil
environmental enforcement procraa, including enforcement under
the CWA and the MPRSA. I am committed to helping the Congress
work through these important issues and achieving our mutually
desired goals of a forceful environmental protection program. I
wish to stress at the very outset that the Justice Department,
and the Lands Division in particular, is strongly committed to
achieving the most effective environmental enforcement program
possible. My testimony today will focus on the current federal
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enforcement program under the CWA and the MPRSA, and the effects
this amendment would have on those efforts.
i
In the last six years ve have successfully prosecuted
more people and corporations for criminal violations of the
v
environmental laws than ever before, obtaining, over 262 guilty
pleas and convictions since 1981. The prosecutions have resulted
in over $6,million in fines and over 175 years in jail sentences.
Since 1981, we have also filed more than 1400 civil environmental
enforcement suits — more than ever before.
Specifically, with respect to the Clean Water Act, we
have initiated over 225 cases and concluded more that 197 since
FY 1985. Also, since FY 1985, we have recovered approximately
$15 million in civil penalties paid to the United States Treasu:.
under the Clean Water Act.
These civil penalties play a critical role in the
Government's strong enforcement program. They are the foundation
and the cement of the private compliance structure. It is often
the fear of these penalties (which can be as high as $25,000 per
day per violation) that discourages potential violators fron
polluting the environment. The imposition of civil penalties
against the polluters of our nation's waterways, combined with
the perseverance and aggressiveness that the EPA, the States, and
the Department of Justice bring to bear on these problems, makes
for a roost effective and efficient enforcement program.
I. CIVIL PENALTY POLICY
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Enforcement actions initiated under the Clean Water Act
use the Clean Water Act Civil Penalty Policy as the basic
framework to calculate penalties which the United States would
seek to recover in settlement in these actions. This policy,
most recently amended in February 1986, reflects the four basic
' X
goals of an effective civil penalty enforcement program: (l)
penalties should disgorge the economic benefits that the violator
obtained through non-compliance; (2) penalties should act to-
deter non-compliance, not just for the individual violator
subject to the penalty, but for the regulated cccaunity as a
whole; (3) penalties should be applied throughout the nation
consistently to provide fair and equitable treatment to all in
/
the regulated community; and (4) penalties should promote swift
resolution of environmental problems and enforcement actions by
being rationally based and easily discemable to the regulated
community.
At this point, I think it would be helpful to clear up
any confusion over the scope of the United States' existing
authority to accept 'credit projects* in settlement of
enforcement cases. The CWA and the MPRSA do not clearly
authorize the use of credit projects as substitution for civil
penalties. Nor do I believe that any such endorsement is
necessary. The Acts do, however, allow the government to
exercise its historically-recognized discretion to mitigate civil
penalties where appropriate .and permit this .mitigation to be
based on a defendant's environmentally beneficial activities.
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Thus, the United States already has the legal authority to accept
'environmental improvement projects* in certain circumstances as
i , ' '
mj.tiaation of civil penalties.
Where exercising our discretion to mitigate penalties
because of environmentally beneficial activities by the
defendant, the Department and EPA proceed with caution and
attempt to keep the overarching interests of our enforcement
programs in mind. In our view, the unfettered use of these
projects would present serious potential dangers to the overall
efficacy of the Department's civil enforcement program. First,
such a practice circumvents the Congressional appropriations
^
process. Second, with 'credit projects', the polluter is often
•
in the position of ultimately determining the need for, the
appropriateness of, and the proper funding level for the specific
project. This approach yields the anomalous result of having the
violator determine the type of punishment it will suffer for
breaking the law. Third, the use of credit projects, especially
without clear standards, makes it more difficult to treat
similarly-situated defendants in a consistent fashion. They lack
the easy comparability of penalty assessments. Accordingly,
settlement and resolution of the litigation may be prolonged and
become more difficult. Fourth, the linchpin of the enforcement
.•
program — voluntary compliance resulting from the deterrent
effects of federal enforcement — may be seriously undermined by
allowing the violator falsely to cast the image of a 'responsible
environmental actor* or 'model citizen*,.and by affording hir
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Pifch, a proposed project aust show che defendant's gsci
faich commitment co statutory coapliance and must be designed
priaarily Co benefic che environment rather Chan che defendant.
For example, adding additional creatnenc capacity co a waste-
water treataent plane beyond what is required Co achieve perai:
compliance may provide more production capacity for che defsr.dar.:
without generating additional water quality benefits for the
Local community as a whole.
Sixth, our policy is chac che Agency cannoc accepc
provisions in judicial Consent Decrees or administrative Consent
Agreements chac are beyond che equitable power of a court to
order.
EPA uses che criteria in che 1986 Water Penalty Policy
for evaluating proposed oicigacion projects when negociacing
settlemencs in enforcement acclons brought under che authority
of the Clean Water Ace relaclng co che Nacional Pollutant
Discharge Eliainacion System (JfPDES) program. Where che United
States has, on occasion, accepced mitigation projects in recent
years, m»s t have been associated with settlements of caf o rceae r.:
actions against auaicipalicies for Clean Water Act violations
at publicly ovned wascewacer creataent works (POTWs). We have
accepcVd fewer mitigation projects in sectleaents vich industrial
dischargers. • •
EPA issued 'che National Municipal Policy in January 198-i
calling for expeditious compliance by POTWs with C,lean Water
>. i . c.-.
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Act pollution control requirements. From chat time through
June of chi« y«ar, the United States has filed 73 actions
agaiasc POTWs. We have concluded 46 of chose actions during
that ciae period. Seven of ehoae concluded cases (about 15
percent) included aitigation projects. Examples of these
projects include a $190,000 stream restoration and a $625,000
i
invescaent in pollution control equipment to reduce degradation
of lake Erie.
There are a number of enforcement policy reason* why EPA
applies the criteria in our penalty policies in determining the
acceptability of a mitigation project in settlement of an
enforcement case. The most Important reason is to maximize the
iapacc of the enforcement case in deterring future violations
by che defendant or other members of the regulated community.
Consistent with the goals of the statutes the Agency administers,
EPA's enforcement program not only seeks to abate existing
violations but also takes steps to prevent future violations.
To che extent that undertaking ah environmental improvement
•
project has some bearing on a defendant's good faith, and thus
serves as some justification for accepting a lower cash penalty,
settlement •till should leave the defendant worse off economi-
>
cally .than if it had complied in che first instance. Thus, we
are not receptive to proposals in which a defendant seeks to perfor:
projects which the' defendant would be required co do by law or
would otherwise choose to do on its own, or co perform projects
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wnose benefica accrue co che defendant rather Chan the puoilc
at large. Further, we are not receptive co proposals, however
beneficial che project, that allow a defendant to avoid civil
penalties entirely, nor do we believe that it is appropriate
for a defendant co receive aicigaced penalties a'nd co benefit
froa the favorable publicity or organizational goodwill that
Che defendant sight gain froa performing che alcigaclon projects
if proposes, particularly wnen ic was defendant's probable iac.<
(
of responsibility on environmental aacters which engendered the
enforcement action in che first place.
There are other policy reasons for being careful about chef
kinds of aitigacion projects which the government should accept
in an enforcement case, specifically:
1. Some proposed mitigation projects raise serious
queseions about whether che projecc actually will
produce any direcc or indirect environaenacally
beneficial result;
2. Accepting a proposed credic project creates a
resource burden on EPA to monitor and enforce
performance of che project; and
3. Cercain proposed projects aay raise fairness or
propriety quescions (e.g., agreeing co payments co
one designated cruse fund or organisation as
opposed to another).
Eveo wich ctrese reservations, I believe that che Agency
has developed a policy Co ensure chat any environmental
iaproveaent projects proposed during seccleaenc negotiations
are given fair consideration and evaluated in terms of how the
projects will further che i.icent of che. Clean Wacer Ace.
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Observationa on H.R. 3411
la thm context of our present policies on environmental
improvement projects, I have reviewed H.R. 3411. it appears
that we are already fulfilling the objectives of H.R. 3411
under the existing Agency penalty policies that I earlier
described by giving consideration to proposed mitigation projects
in appropriate situations. I understand the intent of H.R. 34i:
is to provide legal support for the use of environaental improve-
sent projects as part of civil enforcement settlements. We are
already using our policies In the judicial context. Mitigation
•projects also are included as part of settlements of judicial
actions for illegal dredge and fill activities, aed are available
ir. settlement of EPA's penalty claims under MPRSA flOS(a),
which authorizes the Administrator to mitigate penalties "for
good cause shown." the relationship of H.R. 3411 to administra-
tive penalty litigation under S309(g) of the Clean Water Act
would require further study if the bill were enacted, particu-
larly in light of Congress' intent that administrative penalty
proceedings serve as an expeditious vehicle for civil penalty
assessment.
It appears co'us that H.R. 3411 would not require any signi-
: icant^'change to our existing reasoned approach to evaluating
environaental -Improvement projects. Therefore-, we believe
H.R. 3411 is not necessary. Should the Subcommittee proceed
with this legislation, we have a faw further observations
you aay wtsh to consider. ' •
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1. You aay wish to clarify whether H.R. 3»ll gives
a courc che authority unilaterally to order a
defendant to perfora an envi roaoental laproveaenc
project, or siaply to ratify the agreement between
the parties to the action. Our experience suggests
chat these projects are aost likely to succeed if
defendants, rather' than SPA or a court, are
clearly aade responsible both for devising and
implementing an acceptable project.
2. You aay vish to provide explicit authority for
the government to enforce compliance with the
terms of an environmental iaproveaeat project
to ensure that che intended results of the
initial enforcement action actually are achieved.
3. You aay wish to ensure that SPA retains the
authority to determine in its discretion vhat
environmental iaproveaent projects are /acceptable
so as to avoid litigation over that issue In
individual cases. Our concern is the effect on *t
the efficiency of our national enforcement program •
if defendants could propose mitigation projects
directly to a court without approval by the
plaintiffs.
We would be happy to provide aore specific language on r^ese
points if it would help the Subcoaaittee in its deliberations.
In closing, I want to assure the Subcoaaittee that the
Agency supports the use of appropriate environmental iapraveaent
projects which are consistent with our overall enforcement goals
as part of selected case settlements. At the same tiae, we
believe it appropriate to continue to rely on the up front cash
penalty to the U.S. Treasury as the principal deterrent la
environmental cases, including those settled and those tried.
Again, thank you for this opportunity to testify. I
would be happy to respond ta any questions the Subcommittee
aay have.
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IV.C.16.
"GUIDANCE ON PENALTY CALCULATIONS FOR POTW FAILURE TO IMPLEMENT APPROVED
LOCAL PRETREATMENT PROGRAMS", dated December 22, 1988. Displayed at
VLB.30.
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IV.C.17,
"Guidance on the Distinction Among Pleading/ Negotiating and litigating
civil Penalties for Enforcement Cases under the Clean Hater Act", dated
January 19,1989.
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1
3 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. O.C. 20460
JAN | 9
CM'O*rFW»Mr AND
MEMORANDUM
SUBJECT:
FROM:
Guidance on the Distinctions Among Pleading,
Negotiating, and Litigating Civil Penalties
for Enforceaent Cases Under the Clean Water Act
-'""
^
TO:
Edward E.
Deputy Assistant~"BOm"inistrator'for
Civil Enforcement, OECM ^
" * '•/ <& '
F* 'James R. Elder, Director //--^
Office of Water Enforcement
and Permits, ow
David G. Davis, Dir _
Office of Wetlands Protection, OW
Deputy Regional Administrators
Regional Counsels
water Management Division Directors
Environmental Services Division Directors,
Regions ZZZ and VI
Assistant Regional Administrator for Policy
and Management, Region VZZ
Attached you will find a major guidance on the subject of
how to develop CWA civil penalty demands under many different
circumstances. We have found a certain amount of confusion in
this area, with the creation of new administrative remedies and
subsequent use of the CWA penalty settlement policy in
inappropriate situations.
Upon circulation of a draft of this guidance to NPDES
contacts, a few commenters noted that they believed the CWA
penalty policy should be applied in setting penalty amounts in
administrative complaints, and that the CWA penalty policy should
also be explained to and considered by administrative judges in
their assessment of penalties. We understand this approach,
which the Agency does follow in other enforcement programs, but
have decided to follow the majority sentiment that we place
ourselves in a stronger negotiating position by pleading for
penalties without direct reference to our bottom-line settlement
calculations and retaining the option of litigating for civil .
penalties well in excess of settlement policy amounts. (We have
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found that administrative judges more often lover a penalty
policy amount requested in an administrative complaint than
maintain it, even though in these other programs judges are to
take such policie.s into account when assessing civil penalties
under 40 C.F.R. 122.27[b].)
We also received a number of comments noting some ambiguity
in the draft's discussion of how high a penalty to plead for in
an administrative complaint. The final guidance clarifies that
we cannot plead for a penalty greater than we could justify to an
administrative judge under the relevant statutory assessment
factors, but that in many/ if not most cases, this amount will be
the same as the statutory maximum "cap."
Because the points discussed in this guidance apply in
principle equally to the §404 program, we have widened the scope
of the guidance to encompass wetlands judicial and administrative
enforcement cases.
Attachments
cc: Regional Counsel Hater Branch Chiefs
Regional Water Management Division
Compliance Branch Chiefs
Regional Wetlands Coordinators
OECM-Water Attorneys
Susan Lepow, OGC
David Buente, DOJ
Margaret Strand, DOJ
Administrative Law Judges
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CLEAN WATER ACT
LITIGATING CTVTL PENALTIES FOR ENFORCEMENT CASES
UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
Effective Date: .
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Clean Water Aet;
Diatinetiona Among Pleading. Naaatiatina and
g Civil Penalties for Enforcement
This policy provides guidance on some of the distinctions
for determining appropriate penalty amounts to pursue at throe
different stages of a Clean Water Act enforcement action --
- pleading for penalties in a judicial or administrative complaint,
settling penalty claims in a judicial or administrative .action,
and litigating for penalties in a legal proceeding before a judge
or hearing officer where a case does not settle.
Specifically, this guidance emphasizes the following points:
1. EPA's Clean Water Act civil penalty policy governs only
the bottom-line dollar amount which EPA will accept in settlement
of civil penalty claims in a judicial or administrative NPOES
enforcement case.
2. The CWA civil penalty policy is not intended to be used
to calculate either the amount which EPA requests a judge or a •
hearing officer to assess in 'a judicial or administrative
complaint, or the amount which EPA argues a judge or hearing
officer should assess in a litigated proceeding where a case does
not settle. Those amounts will be significantly higher than the
CWA penalty policy . indicates for settlement purposes.
3. In litigating a claim for CWA civil penalties either
judicially or administratively, counsel representing EPA
typically should argue for assessment of a penalty amount which
is well above the internal bottom-line settlement amount derived
through application of the CWA penalty policy.
4. Counsel should support its arguments for the "litigation
amount" based upon reasoned application of the statutory penalty
assessment criteria and citation of precedent, not through
arithmetic calculations derived according to the CWA penalty
settlement policy.
5. In judicial complaints, as has been the practice to
date, the United States typically will continue to request civil
penalties of "up to $10,000 per day of such violation for
violations occurring before February 4, 1987, and up to $25,000
per day per violation for violations occurring thereafter."
6. In an administrative penalty complaint initiating a
Class I or Class II proceeding, IPA enforcement officials should
request assessment of a penalty amount which is:
a) Within statutory ceilings;
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b) Justifiable based on the statutory penalty
assessment criteria of CWA §309(g) (3); and,
c) Set at a level which .will facilitate negotiation of
an appropriate settlement amount and recovery of an
appropriate amount through litigation if the case does
not settle (since we cannot litigate for a higher
figure than we request in the administrative-
complaint).
Application of these principles should, among other things/
help EPA obtain adequate CWA civil penalty judgments if judicial
or administrative cases do not settle. At the same time, they
will help preserve EPA's leverage to obtain satisfactory civil
penalties through settlement of these enforcement actions.
Effect of Guidance
To the extent there may be any conflict with existing Agency
CWA policy, this guidance supersedes any such policy regarding
the pleading, negotiating, or litigating of Clean Hater Act civil
penalties in NPOES and 1404 judicial and administrative
enforcement cases. This guidance does not apply to cases brought
under §311 of the Clean Water Act. This guidance does not apply
to CWA administrative or judicial enforcement cases in which a
complaint or equivalent document has been served, but shall apply
to eyery case initiated after the date of this guidance.
Pleading Civil Penalties '
An administrative complaint1 typically only opens and
describes the Agency's case, just as a complaint in federal
1 These are sometimes titled per the August 28, 1987,
guidance as "Administrative Complaint, Findings of Violation,
Notice of Proposed Assessment of a Civil Penalty, and Notice of
Opportunity to Receive a Hearing Thereon.1* Zn order to avoid
confusion over the role of the complaint in an administrative
penalty action, Regional enforcement officers have the discretion
to modify the caption of the §309(g) pleading to read
"Administrative Complaint."
Although the longer caption accurately recites the statutory
functions the Agency implements in an enforcement action, that
title may contribute to the existing confusion over the
particular role we play as Agency prosecutors initiating a case.
A change in caption will more accurately describe to the general
public our action, which is often described in press releases as
the actual imposition of a fine.
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District Court opens a judicial enforcement case. To the extent
possible, we intend to treat administrative and judicial
enforcement complaints the same, both procedurally
and substantively.
It is Agency and Department of Justice practice in civil
judicial cases to paraphrase the Clean Water Act in pleading for
penalties. At the present time, our Prayers for Relief typically
include the request for "$10,000 per day of such violation before
February 4, 1987, and $25,000 per day per violation thereafter."
This formulation.has worked well and will continue as our usual
•judicial policy. At the outset of a case, the government often
does not have complete information on the number or extent of
violations, but as a litigant, it preserves its rights by
pleading for the statutory maximum penalty by using this
phrasing.
Similarly, EPA's interests as a plaintiff in an
administrative penalty complaint are best served by pleading for
an administrative penalty which is high enough to facilitate
negotiation of a settlement which is based on the CHA penalty
policy for settlements or an approved §404 settlement amount.
Moreover, the penalty amount pled in the administrative complaint
also must be high enough to permit the Agency to obtain an
appropriate penalty under statutory assessment criteria if the
case must be litigated.
In many cases, it will be necessary to name the statutory
maximum amount (i.e., $25,000 for Class I cases and $125,000 for
Class II cases) in the administrative complaint to preserve EPA's
ability to negotiate and litigate for as high a penalty as is
possible under the facts of the case. Nevertheless, EPA Regions
have discretion to plead for a lesser amount by weighing other
case-by-case considerations such as what amount is likely to
produce an adequate settlement, as well as a duty to consider
what amount, taking into account the statutory penalty factors,
is supported by the facts.
To ensure that CWA administrative complaints comply with the
statute and present Class II rules of practice by explaining the
basis for the penalty sought, Agency water enforcement staff are
to follow the August 27, 1987, guidance by pleading:
2 For reasons peculiar to the present administrative
penalty process, EPA staff should not use this formula in
administrative complaints, but instead request a specific dollar
amount (as more precisely described below). In case of a
default, using a specific dollar amount in the complaint will
result in a more enforceable penalty assessment..
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The proposed penalty amount was determined
by EPA after talcing into account tha nature,
circumstances, axtant and gravity of tha violation
or violations, and Respondent's prior compliance
history, dagraa of culpability for tha citad
violations, any aconomic banafit accruing to
Respondant by virtua of tha violations, and
Raspondant's ability to pay tha proposad penalty,
all factors identified at Saction 309(g)(3) of
tha Act, 33 U.S.C. |1319(g)(3).
This statamant should satisfy tha raquiramant of 40 C.F.R.
§22.14(a)(5) that "Each complaint for tha assassmant of a civil
panalty shall include . . . [a] statamant explaining tha
reasoning behind the proposed penalty." The Agency staff which
drafts the administrative complaint in fact should consider the
statutory penalty factors. This consideration satisfies the
requirements of 1309(g)(3) of the Act, in case the respondent
defaults and the requested Class ZZ penalty becomes an
assessment. Zn this context, EPA will best preserve its
negotiation and litigation position by pleading for a civil
penalty based on the statutory penalty factors and resolving all
discretion in favor of the highest defensible penalty amounts.
The facts supporting the reasoning — but not itemized arithmetic
calculations— underlying the requested penalty (e.g., facts
showing extent and history of violations, environmental impact,
economic benefit, or good faith) should be incorporated in the
case file which becomes part of the administrative record. These
materials will form the basis for EPA penalty arguments before an
Agency judge if the matter is litigated4 and will form part of
the necessary administrative record to support the assessment of
the proposed civil penalty if the respondent defaults and the
proposed penalty becomes final through operation of law.
Zn the event that an administrative judge in a Class ZZ
proceeding requires under 40 C.F.R. 522.14(a)(5) more information
from EPA than the recitation of the statutory penalty factors,
Agency enforcement personnel should provide those elements of the
3 Under the present default procedures for Class ZZ
penalties fsee 40 C.F.R. §22.17), the administrative complaint
can become an. assessable order without the intercession of an
administrative law judge. ,
4 The materials are not directly applicable, however, to
.settlement negotiations, which are governed by the methodology of
.the CWA penalty policy. See discussion below.
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case file which support the penalty pleading based upon the
statutory factors in (309(g)(3).
This analysis to support EPA's administrative penalty
pleading based on the statutory penalty assessment factors should
not be derived by applying the Clean Water Act penalty policy,
which EPA uses specifically for determining appropriate penalty
settlement amounts for NPDES cases. Unlike other Agency
enforcement programs, such as FIFRA or TSCA, which operate under
penalty policies that control Agency administrative'pleading
practices, the NPDES program's penalty policy does not encompass
how to plead administrative penalty complaints. The Agency's
settlement position, although based on concepts similar to the
Agency's or a district court's assessment criteria, almost always
will differ from (and presumably will be less than) the figure or
formulation requested in a complaint. These two calculations we
make in an administrative case serve entirely different purposes,
and should not be confused.
Negotiating Civil Penalty Settlements
The February 11, 1986, Clean Water Act penalty policy, as
amended for administrative penalty cases in the August 18, 1987
guidance, governs Agency negotiators in settling both
administrative and judicial NPDES enforcement cases. The
principles of. the policy and its use are well known, and we will
not repeat them here. We believe this policy has succeeded both
in raising Agency penalty settlements consistent with the policy
and goals of deterrence and providing incentives for quick
correction of violations, and in achieving a greater national
consistency. Agency negotiators should continue using this.
policy in all NPDES settlements. Similarly, Agency negotiators
should continue to use approved bottom-line, settlement amounts in
wetlands cases. .
If the request comes at the outset of the administrative .
enforcement action, before the parties have exchanged information
or even before the respondent has answered the complaint, Agency
prosecutor* often will not possess complete information on some
relevant issues. Such an incomplete information base is usual
and normally sufficient for pleading and charging purposes, but
may be of limited use to an administrative judge making decisions
during contested litigation. Under these circumstances,
enforcement staff should consider whether it is advantageous -o
EPA to urge the judge to delay the inquiry until a later stage in
the litigation when all available information can be considered.
See discussion below on Litigating Penalties.
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Civil Penalties
When EPA or DOJ attorneys provide written or oral arguments
to a federal District Court judge or an administrative judge on
the issue ot an appropriate civil penalty, they are not governed
by the calculation methodology of the 1986 Clean Water Act
penalty policy or the 1987 addendum. The 1986 policy itself
notes:
In those eases which proceed to trial, the
government should seek a penalty higher than
that for which the government was willing to
settle, reflecting considerations such as
continuing noncompliance and the extra burden
placed upon the government by protracted
litigation.
CWA Penalty Policy at p.2. It is inherent to the concept of
settlement negotiations that respondents will risk a higher civil
penalty in the event settlement talks fall through, without this
leverage, defendants or respondents will not have strong
incentive to settle on terms acceptable to the government under
the penalty policy. Agency negotiators then would either have to
agree to civil penalties lower than those presently being
attained, or spend a lot more time litigating cases that are
currently being settled. Zn order to promote settlements, it is
necessary to restrict the scope of the penalty policy and its.
specific calculation methodology to settlements alone.
Government litigators are to argue for the highest civil
penalty appropriate under the law, considering the applicable
statutory factors, our ability to prove the allegations in the
6 These are, for judicial actions,
"the seriousness of the violation or violations, the
economic benefit (if any) resulting from the violation,
any history of such violations, any good faith efforts
to comply with,the applicable requirements, the
economic impact of the penalty on the violator, and
such other matters as justice may require."
CWA S 309(d). The virtually identical statutory factors in
administrative enforcement proceedings are
**the nature, circumstances, extent and gravity of the
violation, or violations, and, with respect to the
.violator, ability to pay, any prior history of such
violations, the degree of culpability, economic benefit
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- 7 -
complaint, and whatever financial burdens may be placed upon the
government by continuing litigation.
Government litigators must provide legal arguments and may
introduce testimony or other evidence supporting facts related to
the application of statutory penalty criteria to a violator's
conduct to advance EPA's claims for civil penalties. We should
draw on favorable civil penalty precedents, such as
Bay Foundation v. Gwaltney of Smithficld. 611 F. Supp. 1542
(E.O.Va. 1985), aff., 791 F.2d 304 (4th Cir. 1986), rev. on other
grounds and remanded, 108 S.Ct. 376 (1987) (for the total amount
assessed) , Sierra; C^ub. v. Sinking Induatriea. Inc. 617 F.Supp.
1120 (D.Md. 1985), aff., 847 F.2d 1109 (4th Cir. 1988) or United
States v. Cumberland Farms of Connecticut. Inc. . 647 F. Supp.
1166 (O.Mass. 1986), aff., 826 F.2d 1151 (1st Cir. 1987) (§404
case in which defendant was assessed a civil penalty of $150,000
and required to pay an additional $390,000 if restoration of
wetlands not carried out) . See alsp. Attachments A and B. We
strongly advise you to adopt the approach used in the attached
Regional materials — recommend a total penalty amount, after
discussion of the appropriate . statutory factors, but do not
provide specific amounts (other than for economic .benefit, where
applicable) for each factor. Attachments A and B. The penalty
we recommend should be one supportable by the evidence and
available legal arguments, but also one that resolves any penalty
discretion or factual ambiguity in terms most favorable to the
United States or the Environmental Protection Agency. The amount
that we recommend to a judge should in all instance* be more than
we were proposing in settlement negotiations. Zn administrative
penalty cases in which there is a significant record of
violations, it is likely that the facts of a case will often
justify EPA seeking the maximum penalty authorized by the Act —
either $25,000 or $125,000 — assuming also that EPA requested
that maximum assessment in its administrative complaint. An
important distinction to note here is that in pursuing a clean
Water Act civil penalty in litigation, the government should
support its claim through application of the statutory penalty
factors rather than the Agency's civil penalty policy
or savings (if any) resulting from the violation, and
such other matters as justice may require.1*
CWA §309(g)(3).
••
7 At this point in an enforcement case, such financial
costs will typically be minimal.
8 Th« judges in our enforcement cases need this information
to support their decisions imposing civil penalties under the
Water Quality Act amendments.
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methodology. Indeed, government litigators shall not arou*
bafora « ^tidoe or neutral daeisionnaker for a civil nanaltv baaad
upon the specific methodology set out in the CWX p«naltv poliey.
nor should .th«y offar evidence, including expert testimony, as to
how specific CWA penalty, policy gravity component calculations
apply to a given case.
The analysis of the economic benefit accruing to the
violator remains the same (after accounting for a potentially
longer period of noncompliance if settlement is not reached), and
is to be considered according to the terms of |309(d)*and (g) of
the Act, so the BEN program may and should be used in litigating
penalties. The existence and extent of economic benefit is a
factual matter which may be objectively measured in dollar terms.
Therefore, to support the United States' figure on economic
benefit government litigators may introduce a witness expert in
the application of financial analysis as used in the BEN program.
The penalty policy's settlement gravity analysis, however,
must be abandoned in favor of a more stringent, statutorily-
grounded approach if penalties in a case are litigated.
Specifically, the government should then offer into evidence
facts that are related to the gravity-oriented statutory
criteria, such as the magnitude and duration of the violations,
the actions available to the defendant to have avoided or
mitigated the violations, or any environmental damage. The
government should argue as an advocate that the presence of these
facts warrant assessment of a civil penalty.of a given amount.
9 Although the application of BEN to the facts of violation
will remain the same in settlement or litigation, government
prosecutors may well take a more stringent position in litigation
than settlement regarding, for example, days in violation. This
tactical shift may influence the economic benefit analysis by
changing material inputs into the computer program. We do not
address here special issues that may arise over how to apply the
BEN program to a given set of facts.
The BEN program generally does not apply to wetlands cases
under 1404 of the Act.
10 This, amount should correspond to the penalty requested
in the administrative or judicial complaint, adjusted to reflect
any new information received since the filing of the case
(keeping in mind that the government cannot argue for penalties
higher than 'initially requested), and should always be
.significantly greater than the bottom-line penalty derived from
.application of the CWA penalty policy.
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The results of our gravity analysis of the clean Water Act
penalty policy, although applicable in NPOES settlement
discussion*, are irrelevant to our litigation approach and should
never be introduced into evidence by the United States or
advanced as representing Agency litigation penalty policy. This
is the case because the penalty policy quantifies gravity
calculations in a way which takes into account government
resources and priorities relevant to deciding whether to litigate
or settle a case. -
If the defendant in a judicial case attempts to depose EPA
personnel on the gravity calculations for settlement purposes
under the CWA penalty policy, either in the case at hand or other
cases, this should be vigorously opposed by government counsel
under Rule 26 (b) as not "being reasonably calculated to lead to
the discovery of admissible evidence.11 If the defendant in a
judicial case attempts to introduce the CWA Penalty Policy into
evidence, this snould be opposed as irrelevant. In
administrative litigation in which formal rules of evidence may
not apply, EPA prosecutors should resist the respondent's
introduction of the policy as irrelevant and potentially
misleading.
.40 C.F.R. f22.27(b)'s mandate that administrative law judges
"consider any penalty guidelines issued under the Act" when
assessing a penalty does not apply in Clean.Water Act cases,
because there are no applicable guidelines. The February 1986
NFDES settlement policy, as amended, does not and cannot govern
or even apply to the decision which an adjudicator must make to
resolve an.administrative or judicial claim for civil penalties.
If it did, the policy most likely would be designed to quantify
penalties differently so as to produce acceptable amounts to
achieve through litigation, rather than settlement. Furthermore,
if the settlement policy governed adjudications respondents cculd
have too little incentive to settle with Agency negotiators and
administrative judges would face much lengthier dockets. EPA
litigators should make this point to any administrative judge who
misconstrues the scope of the NPDES penalty policy.
Attachments
11 Tactically, exceptions may apply here. But in no case
should government prosecutors represent to the Court that the CWA
penalty policy binds the Court, the hearing officer, or the
United States in litigating civil penalties.
12 The Agency has not issued §404 program penalty
guidelines applicable to administrative judges.
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IV.C.18.
# "Use of stipulated Penalties in EPA Settlement Agreements", dated January
11, 1990.
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MTED STATES ENV'*OYMENTAL PROTECTION U.EM
* ASHINfiTOV D.C. :
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•2-
Several coramenters also disagreed with the language in
section IV discouraging caps. This language has been revised to
reflect these comments. Only caps on the amount of penalties are
now discouraged. Caps on the number of days for which stipulated
penalties can accrue combined with a reservation of all
enforcement responses available to the government for violation
of the consent agreement eliminate the problems associated with
caps on penalty amounts and are now mentioned as an option to
consider. ,
One commenter asked that the guidance address the practice
of forgiving stipulated penalties for violation of interim
milestones where the final deadline for compliance is met. It is
now addressed in section VI of the guidance and allowed in
situations where minimal environmental degradation results from
missing the interim milestones and the accrued penalties are kept
in escrow until compliance is achieved.
Two commenters objected to the language in the first
paragraph regarding the applicabilty of the guidance to
administrative cases. This language has not been changed because
in fact the agency does not have legal authority to assess
stipulated penalties in all administrative cases. The legal
determination of whether the government has authority to assess
stipulated penalties in a given administrative case is a
threshold issue to be determined by ORC, OECM, and DOJ based on
their legal expertise concerning the particular statute involved.
Finally, one commenter suggested that the language in
section VI restricting compromise of stipulated penalties to
"rare, unforeseen circumstances" was too strong. The intent of
this section and the guidance in general is that stipulated
penalties should be set at levels and attached to provisions that
the government is ready to vigorously enforce dollar for dollar
except in "rare, unforeseen circumstances." Stipulated penalties
should never be set at levels higher than we intend to.enforce or
attached to provisions we are not prepared to enforce. This
practice sends the regulated community the wrong message, namely
that accrued stipulated penalties are only a starting point or
opening offer and are subject to negotiation.
If you have any questions concerning this guidance, please
contact Elise Hoerath of the Air Enforcement Division of OECM,
FTS 382-4577.
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Attachnent
Addressees:
Regional Administrators
Regions I-X
Deputy Regional Administrators
Regions I-X
Regional Counsels
Regions I-X
Associate Enforcement Counsels
Headquarters Enforcement Office Directors
Mary T. Smith, Acting Director
Field Operations and Support Division
Office of Mobile Sources
E. Donald Elliott
General Counsel
David Buente, Chief
Environmental Enforcement Section
U.S. Department of Justice
Workgroup Members
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S3ZZ
L MTED STATES ENVIRONMENTAL PROTECTION \GENO
D.C. :i
JAN 2 4 ,'990
MEMORANDUM
SUBJECT: Use of Stipulated Penalties in EPA Settlement
Agreements
FROM: . James M. Strock—/
Assistant Administrator
TO: Addressees
This memorandum provides guidance on the use of
stipulated penalties in settlement of enforcement actions.
For each issue discussed, a preferred approach is stated
along with its rationale. These preferred approaches should
be followed absent unusual circumstances dictating, an alter-
native approach. The guidance applies to judicial settle-
ments except that it does not supersede the September 21,
1987 Guidance on the Use of Stipulated Penalties in Hazardous
Waste Consent Decrees. It also applies to administrative
cases where EPA has. legal authority to assess stipulated
penalties.
Stipulated penalties are penalties agreed to by the
parties to a settlement agreement for violation of the agree-
ment's provisions. These penalties are then made a part of
the agreement, and are enforceable if it is violated. In EPA
settlement agreements, the primary goal of a stipulated
penalty is to act as an effective deterrent to violating the
settlement agreement.
I. Tvpaa of Requirements to Which Stinulated Penalties
Any clMrly definable event in a settlement agreement
may be appropriate for stipulated penalties in a given case.
Such events include testing and reporting requirements,
interim and final milestones in compliance schedules, and
final demonstration of compliance. The government litigation
team assigned to a case should carefully consider which
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consent agreement provisions are appropriate for stipulated
penalties and be prepared to vigorously enforce them.' Stipu-
lated penalties can even be attached to consent agreement
provisions requiring payment of up-front penalties so long as
the stipulated penalties are higher than the interest,
computed at the statutory interest rate, on the underlying
amount. Every consent agreement requirement to which stipu-
lated penalties are attached should be drafted to ensure that
the standards for determining compliance are clear and objec-
tive, and that any information required to be submitted to
EPA is clear and unequivocal.
i
in general, stipulated penalties are particularly impor-
tant for requirements of the consent agreement which do not
represent regulatory or statutory violations for which the
agency could potentially get statutory maximum penalties.
Such provisions may include a requirement to install specific
control equipment where the regulations and statute involved
require only compliance with a discharge or emissions stan-
dard , or environmental auditing or management requirements
designed to ensure future compliance. Without stipulated
penalty provisions, penalties for violation of such provi-
sions in judicial cases are only available at the judge's
discretion in a contempt action under the court's inherent
authority to enforce its own order.
Attaching stipulated penalties to violations of consent
agreement provisions which are also violations of a statute
or regulation with a specified statutory maximum penalty has
advantages and disadvantages which Agency attorneys should
consider, carefully in the context of a particular case. The
advantage is ease of enforcement. The Agency can pursue
violations without having to bring a new enforcement action
or, in the judicial context, a contempt action. The disad-
vantage is where stipulated penalties for such violations are
set at less than the statutory maximum, parties may argue
that the government has bargained away some of its
enforcement discretion.
It a particularly egregious statutory or.regulatory
violation occurs for which the government feels the applic-
able stipulated penalties are not adequate, sources may claim
the government in equitably estopped from pursuing other
enforcement responses. Sources may argue in the context of a
contempt action or new enforcement action that the govern-
ment has already conceded in the consent agreement that a
fair penalty for. this type of violation is the stipulated
penalty, and therefore, the court should not require any
.CO
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additional penalty. Sources nay nake this argument even if
the government has reserved all rights to pursue various
enforcement responses* for consent agreement violations.1
II. Level- of Stipulated Penaltiep
Because the statutes EPA is charged with enforcing vary
so widely, penalty schedules for all media or types of viola-
tions are not practical. There are, however, several impor-
tant criteria which should always be considered in.setting
stipulated penalty amounts. Each program office, in concert
with the appropriate OECM Associate Enforcement Counsel, may
want to consider providing further, more specific guidance on
appropriate levels or ranges for stipulated penalties based
on the criteria below.
One key element which applies to setting the levels of
all stipulated penalties for violation of a consent agreement
provision is that the defendant is by definition a repeat
offender when the provision is violated. For this reason,
such stipulated penalties should be higher on a per day basis
than the initial civil penalties imposed. See Guidelines for
Enforcing Federal District Court Orders in Environmental
Cases (GM-27).
The economic benefit accruing to a source due to a
violation should be recovered in order for the stipulated
penalty to be an effective deterrent. For some types of
violations, such as notice provisions, the economic benefit
of noncompliance may be minimal, though significant stipu-
lated penalties may be appropriate based on other criteria as
discussed below. For these types of violations, no formal
BEN analysis is necessary. For violation of provisions which
involve quantifiable delayed or avoided costs, such as
installation of control equipment as part of a compliance
schedule, the minimum stipulated penalty should be the
economic benefit of noncompliance. However, the recidivism
factor will nearly always justify a penalty well above this
minimum, which often serves as the point of departure for a
minimum initial penalty.
The source's ability to pay can be another important
criterion to consider. How much of a deterrent a stipulated
penalty is will depend on how financially significant it is
to the source. The same stipulated penalty may be ,
1 In considering whether to attach penalties to violations
uncovered by an environmental audit, the November 14, 1986 Final
EPA Policy on the Inclusion of Environmental Auditing Provisions
in Enforcement Settlements (GM-52) should be consulted.
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financially crippling to one source, while eerely a routine
business expense for, another. However, the burden is always
on the defendant to raise such issues during negotiations and
to justify lower stipulated penalties than the government has
proposed. Financial ability to pay a penalty can be
determined using the ABEL computer program for corporate
violators and the MABEL computer program for municipal
violators.
It should be emphasized that this factor should not be
considered a reason for lowering the level of stipulated
penalties below the level equal to the economic benefit. It
would mainly affect the degree to which this base minimum
amount is increased to account for the recidivist nature of
the violation. The key concern is that stipulated penalties
should be set at levels which are significant enough to deter
violations rather than resulting in a "pay-to-pollute"
scheme.
* /
Another criterion which should be considered in setting
stipulated penalty amounts is the gravity of the violation,
i.e.. how critical is the requirement to the overall
regulatory scheme and how environmentally significant is the
violation. The environmental significance factor should
include consideration of potential and actual harm to human
health and the environment. In general, consent agreement
provisions which are central to a particular regulatory
scheme should have higher stipulated penalties than
provisions that are considered less significant. It is up to
each enforcement program to make judgments about the relative
importance of respective requirements. As previously noted,
some consent agreement requirements such as notice provisions
may have little or no associated economic benefit, but may
nevertheless be critical to the regulatory program in
question and would warrant high stipulated penalties.
Another consideration related to the gravity component
is the source's history of compliance. If the source has a
record of previous violations, a higher stipulated penalty
. may be neeoMery because earlier enforcement responses were
ineffective in deterring subsequent violations.
Another option to consider whenever setting stipulated
penalty levels is an escalating schedule, in which the
stipulated penalty increases with the length of the
violation. For example, violations of up to two weeks might
have stipulated penalties of $1000 per day while violations
of two to four weeks might have stipulated penalties of $2000
per day, and so on.
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III. Method of Collection
Settlement agreements should state the method by which
stipulated penalties will be collected. Two options are for
the settlement agreement to provide that the penalty is
automatically due upon the occurrence or non-occurrence of a
specified event, or it may make the penalty payable only on
demand by the government.
Automatic payment is the preferred approach. It saves
resources which would otherwise be devoted to making demands
for payment and may put the government in a more advantageous
position should the source declare bankruptcy. If payment is
made on demand, the consent agreement should make it clear
that the legal liability of the source for the stipulated
penalty attaches immediately upon violation, and it is only
payment of the penalty to the Agency which is not due until
demand is made.
Settlement agreements should always state where and how
the penalty should be paid and how the check should be draft-
ed. Sfifi EPA Manual on Monitoring and Enforcing Administra-
tive and Judicial Orders for additional guidance. In
addition, settlement agreements should not agree to pre-
enforcement review of accrued stipulated penalties.
IV. Timing of Enforcement Responses
Prompt action to collect stipulated penalties due under
any consent agreement is crucial. If stipulated penalties
are due on demand, it is very important such demands be
timely. The government encounters significant difficulty
collecting stipulated penalties if it sits on its rights.
Delay allows penalties to increase to levels parties may
argue are inequitable. Sources may also raise equitable
defenses such as laches or estoppel, arguing that the govern-
ment cannot fail to exercise its rights for extended periods
of time allowing stipulated penalties to continue to accrue
and then aov« to collect unreasonably high penalties. The
government, of course, can and should always rebut such
claims by arguing it is simply enforcing the decree or agree-
ment as agrwd to by defendant, and is not subject to such
equitable defenses. However, this unnecessary complication
should be avoided.
A cap on the amount of stipulated penalties which can
accrue is generally not a preferred solution to this problem.
The stipulated penalty would lose its deterrent value once
the cap is reached. Also, the main goal of any enforcement
action must be compliance with the lav so that public health
.and welfare is protected. If consent agreement provisions
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•6-
are allowed to be Delated long enough for a cap. to be reach-
ed, serious environmental consequences may have occurred.
Providing that stipulated penalties only apply for a
specific, reasonably short period of tine in conjunction with
reserving to the government all available enforcement respon-
ses for violation of the consent agreement, however, solves
many of the problems mentioned above. By its own terms,
stipulated penalties will not accrue to levels defendants can
argue are inequitable. The government will be in a- strong
position when it pursues other enforcement options, such as
contempt actions or a new enforcement action to get
additional penalties, because it can argue that the penalties
in the original consent agreement were not enough to deter
the defendant from further violations and the possibility of
additional penalties was clearly contemplated.
V. Reservation of Rights
All consent agreements must contain a provision which
reserves to the government the right to pursue any legally
available enforcement response for violation of any consent
agreement provision. These enforcement responses would
include civil contempt proceedings and injunctive relief, and
criminal contempt proceedings for particularly egregious
violations. However, for provisions mandated by statute or
regulation and which have stipulated penalties attached, a
reservation to pursue statutory penalties is suggested but
not required. For model language, see the October 19, 1983
Guidance for Drafting Judicial Consent Decrees (GM-17).
VI. Collection of Stipulated Penalties
The government should be prepared to collect the full
amount of stipulated penalties due under a consent agreement.
No agreement should ever anticipate compromise by specifying
instances where it will be allowed, aside from a standard
force majeure clause. In rare, unforeseeable circumstances,
however, tbe equities of a case may indicate that the govern-
ment may ooBpromise the amount it agrees to collect. For
penalties payable on demand, the government may also exercise
prosecutorial discretion by declining to proffer a demand for
stipulated penalties for minor violations of a consent agree-
ment.
It may also be appropriate to provide that stipulated
penalties for violation of interim milestones in a compliance
schedule will be'forgiven if the final deadline for achieving
compliance is met. This is clearly inappropriate where there
is significant environmental harm ct sed by the defendant
missing the interim deadlines. If such a provision is used,
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-7-
the defendant should generally be required to place accrued
penalties in an escrow account until compliance by the final
deadline is achieved;
In judicial cases, the Attorney General and his
delegatees in the Department of Justice (DOT) have plenary
prosecutorial discretion to compromise stipulated penalties.
This authority stems from 25 U.S.C. § 516, which reserves to
DOJ authority to conduct the litigation of the United States,
including cases in which an agency of the United States is a
party, and the cases and regulations broadly interpreting
this authority.
In administrative cases handled solely by EPA,
stipulated penalties should be collected pursuant to the
enforcement authority granted to EPA under the statute gover-
ning the case. .This authority to collect and compromise
stipulated penalties varies from statute to statute.
Separate from the process for collecting stipulated
penalties, EPA must keep track of money owed the federal
government (accounts receivable) resulting out of the acti-
vities of the Agency, including administrative penalty
assessments. A stipulated penalty becomes an account receiv-
able when the appropriate Agency official determines that a
violation of a consent agreement provision with an attached
penalty has occurred. Under Agency financial regulations and
policies for monitoring accounts receivable, stipulated
penalties due and owing must be reported within three days to
the Regional Financial Management Office (FMO). The FMO is
responsible for entering the stipulated penalty as an
accounts receivable into the Agency's Integrated Financial
Management System (IFMS). The "appropriate agency official"
who determines the existence of a stipulated penalty account
receivable is responsible for keeping the FMO updated on the
status of enforcement penalty collection efforts. A more
detailed account of these procedures is included in the
Manual on Monitoring and Enforcing Administrative and Judi-
cial Orders.
Address
Regional Administrators
Regions I-X
Deputy Regional Administrators
Regions I-X •
Regional Counsels
Regions I-X
-7.- --
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-8-
E. Donald Elliott
General Counsel
Headquarters Compliance Program Divisions Directors
Mary T. Smith, Acting Director
Field operations and Support Division
Office of Mobile Sources
David Buente, chief
Environmental Enforcement Section
U.S. Department of Justice
Associate Enforcement Counsels
Workgroup Members
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IV.C.19.
# "Multi-Media Settlements of Enforcement Claims", dated February 6, 1990.
-------
-------
t" St*ff
I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
f WASHINGTON. D.C. 20460
6-1990
MEMORANDUM
ofnee of
EMFORCEMI-.NT AMD
Multi-Media Settlements^ef Enforcement Claims
SUBJECT:
FROM: . James M. StrocK, /
Assistant Administrator
TO: Regional Administrators, Regions I - X
Regional Counsel, Regions I - X
Associate Enforcement counsel
Program Compliance Office Directors
A. PURPOSE
The purpose of this memorandum is to provide guidance which
explains 1) EPA policy strongly disfavoring judicial and
administrative settlements of enforcement cases which include
releases of potential enforcement claims under statutes which are
not named in the complaint and do not serve as the basis for the
Agency bringing the enforcement action, and 2) how approval for
any multi-media settlements of enforcement claims should be
obtained in civil judicial enforcement cases in the Region and at
Headquarters.
B. DISCUSSION
As a general rule, a settlement of a hazardous waste
enforcement action, for example, may include a covenant not to
sue providing the settling party with protection from subsequent.
civil enforcement action under some or all provisions of CERCLA
and/or RCRA. A Similarly, a Clean Water Act enforcement
settlement may expressly settle EPA claims under some or all
provisions of the Clean Water Act. A settlement which extends to
potential EPA enforcement claims under any statute(s) outside of
the program medium under which the case was brought, e.g.. a CWA
release in a CERCLA case, or a release in a CERCLA case under all
' 1 The united States generally gives covenants riot to sue,
not releases, in.the CERCLA context. This guidance, however,
uses the terms "covenant not to sue" and "release"
interchangeably. Use of the word "release" is not intended to
signify any differing effect of the settlement but is merely used
for ease of exposition.
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statutes administered by EPA, should not be given except under
exceptional circumstances, because it is standard EPA policy that
releases, when granted, should be no broader than the causes of
action asserted in the complaint. 2
Although defendants often seek releases broader than the
specific medium at issue in the case, multi-media releases for
single-medium enforcement cases are strongly discouraged and will
be granted only in exceptional cases. A proposal to enter into
such a settlement will undergo close scrutiny at both the
Regional and Headquarters level. When deciding whether to'.'
entertain a request for a multi-media release, the Region should
consider the following factors:
1) The extent to which EPA is in a position to know whether
it has a cause of action warranting further relief against the
settling party under each of the statutes included in the
release. If, after investigation, it is determined that no cause
of action exists, then it is somewhat more likely that the
release might be considered;
2) Whether the settlement provides adequate consideration
for the broader release. If the relief to be obtained under the
settlement includes appropriate injunctive relief and/or
penalties for any actual or potential violation/cause of action
under the other media statutes, then it is somewhat more likely
that the release might be considered; and
3) Whether the settling party is in bankruptcy. If the
relief obtained through the settlement is all the Agency can
obtain from the settling party, and the settling party win be
ceasing operations, then it is somewhat more likely that the
multi-media release might be considered if the settlement is
otherwise favorable to the Government. This rationale is far
more persuasive in the Chapter 7 or Chapter 11 liquidation
context than in the Chapter 11 reorganization context.
In addition, the only possible statutory releases or
covenants not to sue that EPA will grant are for statutes
administered by EPA. . Multi-media settlements should not grant
releases phrased in broad terms such as "all statutes
2 If multi-media causes of action have been asserted
in the United States* complaint, then settlement of and
releases under all statutes involved in the action would not be
unusual, provided that appropriate relief is obtained under each
statute. Such settlements would, however, require the
concurrence of all Regional and Headquarters media offices
involved, as described in Part C below.
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3
administered by EPA." Rather, all such releases should
specifically name the EPA statutes included in the release.
Further, releases should not include broad statements reaching
beyond EPA- administered statutes such as "all claims or causes
of action of the United States." A settlement should also not
release any common law claims EPA may have, because it is not
clear what, if any, Federal common law exists in the
environmental area, and thus a release of this kind is of
undefined scope. Similarly, State law claims should not be
released by the Federal government, since it is unclear what, if
any, Federal causes of action derive from State' law. Moreover,
as a matter of practice and policy, we should not purport to bind
States When they are not directly involved in our enforcement
cases. 3 As always, releases may be granted only for civil
liability, not for criminal liability. 4
C.'
All settlements involving multi-media resolution of
enforcement claims require the approval of the appropriate EPA
official(s) consistent with Agency delegations of authority. For
civil judicial enforcement cases specifically, all multi-media
settlements, including all CERCLA settlements resolving claims
under other EPA- administered statutes, require the approval or
concurrence of the AA-OECM. 5 In any case in which the Region
wishes to propose to the AA-OECM that EPA enter into such a
settlement, certain procedures must be followed.
•* Ordinarily, State claims are independent of Federal
enforcement authorities and are not compromised by settlement
under the Federal authorities.
4 Releases should also be drafted in accordance with the
policy and practice of each medium involved, in most enforcement
.actions, this means that the release is based upon information
known to EPA at the time of the settlement and does not extend to
undefined future violations or site conditions.
5 For administrative enforcement cases which include multi-
media releases, the Regions similarly should obtain the
concurrence of all EPA officials (at Headquarters or in the
Region, as the case may be) consistent with the relevant EPA
delegations covering., administrative settlements under each
statute included within the release. (If all authorities
included within the release are delegated to the Regions, then no
Headquarters concurrence is needed.) Of course, some
administrative settlements with multi-media releases will also
require approval by the Department of Justice when a DOJ role is
established by statute.
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First, cross-media consultation among all affected Regional
program offices and Office of Regional Counsel branches must be
undertaken. This consultation should involve joint investigation
as to whether there are any actual or potential causes of action
under any statute under which a release is contemplated. An
appropriate investigation, for example, is likely to include a
check of all relevant files, a determination of whether a field
inspection is warranted, and, if so, an inspection, and an
inquiry to State program and legal counterparts to ensure that
EPA is not unknowingly settling or waiving any potential claims
it may have based upon relevant and available information. In
the event that an appropriate cross-media investigation cannot be
undertaken, a release for any uninvestigated medium cannot be
given.
Second, when the settlement is referred to Headquarters for
approval or concurrence, the Regional Administrator's cover
memorandum to the AA-OECM should highlight the existence of the
multi-media settlement or release. It should also include a
statement by the Regional Administrator (or any other Regional
official delegated responsibility to approve the settlement on
behalf of the Region) that the Region has evaluated all possible
claims under all EPA-administered statutes included within the
release and, after diligent inquiry, has determined that, to the
best of its knowledge, no claims exist, or, if any claims do
exist, that it is in the best interest of the Agency to settle
the claims in the manner included in the proposed settlement. If
claims do exist, the RA's memorandum should explain why the
settlement is in the best interests of the Agency.
\
Lastly, the OECM Division for the program area that has the
lead in the settlement must take certain steps to ensure that
the other affected OECM Divisions and their program counterparts
at Headquarters do not object to the multi-media release. The
lead Associate Enforcement Counsel should provide a copy of the.
settlement, the RA's cover memorandum, and any other relevant
supporting material from the Region (e.g.. in the case of a
CERCLA settlement, the Ten Point Settlement Analysis) to all
other OECM Associates who are responsible for any statutes
included in the release with a request for written concurrence
within 21 days. Each Associate should in turn consult with, and,
if part of standard procedure, obtain the concurrence of, his/her
Headquarters program counterpart on the settlement. The lead
Associate and his/her staff should coordinate all OECM comments
or requests for additional information from the Region to help
avoid presenting the Region with conflicting comments or
requests. .
After all necessary concurrences have been received, the
lead Associate Enforcement counsel will transmit the settlement
to the AA-OECM for final action, with a copy of all Headquarters
concurrences attached to the package. Although OECM will strive
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to meet its standard 35-day turnaround time for civil judicial
settlement referrals, because multiple Headquarters offices are
involved, the Regions should expect that multi-media release
settlements may take greater time to be reviewed and approved by
Headquarters than single-medium settlements. To assist OECM in
obtaining concurrences as expeditiously as possible, the Region
should actively consult with the lead OECM Division during
negotiations so that OECM will have advance notice of the cross-
media release issue and will be able to consult with other OECM
Divisions before the settlement is referred to the AA-OECM.
D. DISCLAIMER
This memorandum and any internal office procedures adopted
for its implementation is intended solely as guidance for
employees of the U.S. Environmental Protection Agency. It does
not constitute a rulemaking and may not be relied upon to create
a right or a benefit, substantive or procedural, enforceable at
law or in equity, by any person. The Agency may take action at
variance with this memorandum or its internal implementing
procedures. .
If your staff has any questions on this matter, please ask
them to contact Sandra Connors of OECM-Waste at 382-3110.
cc: Richard B. Stewart, Assistant Attorney General, Land and
Natural Resources Division, U.S. Department of Justice
David T. Buente, Chief, Environmental Enforcement Section,
Land and Natural Resources Division, U.S. Department of
Justice
-------
' ' —r
-------
IV.C.20,
# "Documenting Penalty Calculations and Justifications in EPA Enforcement
Actions", dated August 9, 1990.
-------
-------
-. _wi/^ '! UNITED STATES ENVIRONMENTAL PPCTECTIQN
\j*m+f WASHINGTON, D.C.
*'• »:•*-'.
9 r^3
MEMORANDUM
SUBJECT: Documenting Penalty Calculations and Justifications in
EPA Enforcement
f
FROM: James M. SfrQcJs/
Assistant Administrator
TO: Addressees
This memorandum institutes a uniform system for documenting
penalty calculations and explaining how they are consistent with
the applicable penalty policy in all EPA enforcement actions. It
expands on the September 14, 1987 Guidance on Processing of
Consent Decrees (GM-64) and requirements in several media
specific penalty policies. The system will allow regional and OE
management to assure that EPA settlement agreements comply with
applicable penalty policies, and will provide documentation for
our actions for purposes of oversight review. The memorandum
sets out the information regarding the penalty which must be
discussed at each stage of litigation. The exact format of the
discussion is left to the discretion of each program. All
discussions of the agency's settlement position regarding
penalties are, of course, strictly enforcement confidential
workproduct, should be clearly labeled as such and should not be
released. \
Effective immediately, every settlement package transmitted
from the Regional Administrator or Regional Counsel to
Headquarters for concurrence must include a written "Penalty
Justification." This should include an explanation of how the
penalty, including the economic benefit and gravity component,
was calculated. The Region should then discuss in detail the
justification for any mitigation of either component. In
particular, reference should be made to the factor or language in
the penalty policy that is relied upon to justify the mitigation,
and a discussion must be included detailing why mitigation is
warranted in the particular case. For administrative cases, a
Penalty Justification should be prepared for circulation within
the Off ice of Regional Counsel with a final consent agreement or
order. It may not be circulated to the agency official who signs
the final order as the presiding agency official, usually the
Regional Administrator, because it could constitute *» part*
communication which would have to be shared with defendants under
40 C.P.Ri Part 22.
MOM en ftcydrt Pvtr
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- 2 -
when the factor relied upon to justify mitigation is
litigation risk, the Region should state the probable outcome of
litigation along with legal and factual analysis which supports
its conclusion. For judicial cases, this should be done in
consultation with the Department'of Justice. Specific discussion
of the evidentiary problems, adverse legal precedent, or other
litigation problems in the case should be included. If the
required discussion of the penalty is contained in the litigation
report or subsequent correspondence between the ORC and OE, the
settlement package from the Region may reference this discussion
along with an attachment of the previous documentation.
A similar discussion of Penalty Justification should also be
included in every settlement package transmitted from the
Associate Enforcement Counsels for the signature of the Assistant
Administrator. The Headquarters staff may, however, reference
the discussion in the regional memorandum when it is sufficient.
Seriously deficient Penalty Justifications will be returned to
the Region to allow a proper analysis to be prepared before the
Assistant Administrator for Enforcement reviews a consent decree
for signature.
In addition, each Office of Regional Counsel case file and
all OE files in cases in which OE is involved should contain at
all times during the course of an enforcement action
documentation of the current bottom line agreed upon by the
litigation teaa. For civil administrative cases, this will begin
with the filing of the administrative complaint. For civil
judicial cases, this will begin with the litigation report, which
should include the penalty proposed by the Region initially. The
litigation report should clearly indicate how the gravity and
economic benefit components were calculated under the applicable
penalty policy and discuss in detail any mitigation that is
proposed. Significant uncertainties which could result in
further mitigation should also be identified.
The OE attorney assigned to the case will then determine if
OE concurs with the.penalty proposed by the Region in reviewing
the referral. OE concurrence will bs documented in writing,
placed in the OE cas« file and provided to the Region. If OE
doss not concur with the penalty proposed by ths Region in the
referral, the assigned OE attorney will prepare a memorandum to
the Region stating with specificity ths basis(es) of ths
nonconcurrsncs.
Ones ths enforcsaant action is initiated or prs-filing
negotiations begin, ths litigation team should document any
agreed upon changes to ths bottom line penalty baaed upon new
information or circumstances which arise during ths course of ths
enforcement action. This documentation must, at a ainimum.
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- 3 -
include a memorandum to the file recording how both the gravity
and economic benefit components were calculated, the basis in the
applicable penalty policy and in the specific facts of the case
for any mitigation, and the changed circumstances or new
inforr.aticn which justify modification of the bottom line. This
will be especially beneficial in cases where there are changes in
the litigation team over time. It will enable new attorneys
assigned to the case to know what the current bottom line penalty
is and how that has been determined over the course of the case.
These requirements will serve several functions. It will
ensure that management has adequate information to judge
consistency with the applicable penalty policies in specific
cases and in the various enforcement programs overall. It also
will ensure that every regional case file and all OE files in
cases in which OE is involved have written documentation of how
the penalty obtained was calculated and justified in terms of the
penalty policy. This is essential for reviews or audits of our
settlements.
Addressees:
Regional Administrators
Regions I-X
Deputy Regional Administrators
Regions I-X
Regional Counsels
Regions I-X
E. Donald Elliott
General Counsel
Headquarters Compliance Program Division Directors
Associate Enforcement Counsels
Richard B. Stewart
Assistant Attorney General
Environment and Natural Resources Division
U.S. Department of Justice
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L V TED STATES ENVIRONMENTAL PROTECTION AGENC V
\T"^-' WASHINGTON. D.C. 204*0
MEMORANDUM
SUBJECT: Documenting Penalty Calculations and Justifications in
EPA Settlement Agreements
FROM: James M.
Assistant Administrator
Office of Enforcement
TO: Addressees
Attached is final guidance on documenting penalty
calculations and justifications in all EPA enforcement actions.
We have made several revisions to the draft memorandum in
response to Regional comments.
Two Regions pointed out that the requirement to include the
discussion of the penalty in settlement packages which go to the
Regional Administrator in administrative cases violates the
prohibition against a* parte communication in 40 C.F.R. Part 22
where the Regional Administrator is acting as the presiding
agency official. The memorandum has been changed to reflect
this. The penalty documentation requested is still required in
administrative cases. However, it should be circulated only
within the Office of Regional Counsel and the program office
where the Program Office Director is not the presiding agency
official. This discussion should not be circulated to the
Regional official who acts as the presiding official.
Some coamenters expressed concern as to the level of detail
and length of explanation required. What is contemplated by the
memorandum is a document which calculates the unmitigated penalty
and discuss** the factors relied upon for any mitigation. Thisi
should generally take only a page or two. It is not acceptable
to simply say, for example, that the gravity component was
mitigated by 30% due to defendant's inability to pay without some
explanation of what the Region did to ascertain the defendant's
financial status,.consistent with the ABEL program and agency
guidance.
One Region expressed concern that, with, regard to mitigating
penalties with reference to municipalities, there is no agancy
guidance on this issue and, therefore, no policy they can
reference to justify mitigation. We are not addressing this
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- 2 -
issue in this memorandum, but OE will consider future guidance on
this topic. Several commenters expressed concern that the
required penalty documentation be marked and treated as
enforcement confidential work product. A caution to this effect
has been added.
Several commenters were also concerned that the memorandum
will cause a significant paperwork burden with its requirement
that every time a bottom line penalty changes, a new
justification needs to be drafted. What is required by the
memorandum is only that changes since the last penalty
justification be discussed. Points which are already adequately
discussed in previous documentation need not be repeated.
Previous documentation which fully discusses an aspect of the
penalty can simply be referenced. One commenter suggested that
penalty documentation' only be required at the end of the
litigation in the settlement package. This is not acceptable
because it invites post hoe rationalizations.
Finally, one commenter suggested that a similar requirement
be applied to injunctive relief. This is not a subject which
will be addressed in this memorandum, but OE will consider it for
future guidance.
If you have any questions concerning this memorandum, please
contact Elise Hoerath of the Air Enforcement Division of OE at
FTS 382-2843.
Addressees:
Regional Administrators
Regions I-X
Deputy Regional Administrators
Regions I-X
Regional Counsels
Regions I-X
Associate Enforcement Counsels
E. Donald Elliott
General Counsel
Headquarters Compliance Program Division Directors
-------
Richard B. Stewart
Assistant Attorney General
Environment and Natural Resources Division
U.S. Department of Justice
-------
-------
IV.C.21.
"Multi-Media Settlements of Enforcement Claims", February 6,
1990.
-------
IV.C.22.
"Interim Policy on the Inclusion of Pollution Prevention and
Recycling Provisions in Enforcement Settlements", February 25,
1991.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C 20460
FEE 25 199!
ENFCSCeMEV
MEMORANDUM
SUBJECT: Interim Policy on the Inclusion of Pollution Prevention
and Recycling Provisions in Enforcement Settlements
FROM: James M.
Assistant
TO: Regional Administrators
Assistant Administrators
General Counsel
This memorandum transmits the final interim policy on the
use of pollution prevention and recycling conditions in Agency
consent orders and decrees (see Attachment). It reflects your
extensive comments on the draft version distributed on
September 25, 1990, as well as the subsequent work of the "
Pollution Prevention/Settlement Policy Workgroup. .
This interim policy is part of the Agency's overall strategy
to make pollution prevention a major component of all Agency
programs. It encourages the use of pollution prevention and
recycling conditions in enforcement settlements, either as
injunctive relief or as "supplemental environmental projects"
incidental to the correction of the violation itself. When a
pollution prevention condition is considered as a supplemental
project, this interim policy should be used in conjunction with
the recently-issued Policy on the Use of Supplemental Enforcement
Projects in EPA Settlements (February 12, 1991).
This interim policy is effective immediately and should be
used whenever a pollution prevention condition is being
considered as part of a consent order or decree. Each national
media compliance program may decide whether to develop its own
more specific pollution prevention settlement guidance or
continue to use this general guidance. The Agency plans to
develop final guidance in FY 1993, after gaining further
experience in negotiating,, pollution prevention settlement
conditions.
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-2- ' .
I am confident that this interim policy will help the Agency
secure the additional protection of human health and the
environment which pollution prevention offers. Any questions you
or your staff may have regarding its implementation should be
addressed to Peter Rosenberg, the Workgroup Chairperson (Office
of Enforcement, 382-7550). .
Attachment
cc: Deputy Administrator
Associate Deputy Administrator
Deputy Regional Administrators
Regional Counsels
Regional Program Division Directors
Program Compliance Directors
Associate Enforcement Counsels
OE Office Directors
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INTERIM EPA POLICY ON THE INCLUSION OF POLLUTION PREVENTION
AND RECYCLING PROVISIONS IN ENFORCEMENT SETTLEMENTS
, I. Purpose
ir >-.
This document provides Agency enforcement personnel with a
generic interim policy and guidelines for including pollution .
prevention and recycling provisions in administrative or
judicial settlement agreements. It encourages pollution
prevention and recycling both as a means of returning to
compliance and as supplemental environmental projects by offering
several incentives while preserving effective deterrence and
accountability for compliance and environmental results.
II. Background .
The Agency defines pollution prevention as the use of
procedures, practices, or processes that reduce or eliminate-the
generation of pollutants and wastes at the source. Pollution
prevention encompasses both the concepts of volume reduction and
toxicity reduction. /I Within the manufacturing sector, examples
of pollution prevention include such activities as input
substitution or modification, product reformulation, process
modification, improved housekeeping, and on-site closed-loop
recycling. The Agency's "hierarchy" of environmental protection
practices consists of pollution prevention, followed by
traditional recycling, treatment and control, respectively. /2
< • • ' ' • •
The Office of Enforcement's Pollution Prevention Action
plan (June 30, 1989), states that a strong enforcement program
can promote pollution prevention goals by enhancing the desire of
the regulated community to reduce its potential liabilities and
resulting costs of resolving noncompliance. An emphasis on
preventing pollution at the source can help reduce or eliminate
i/ Sec the forthcoming Pollution Prevention Policy Guidance.
especially pps. 3-6, for a full discussion of the considerations
underlying the Agency's definition of pollution prevention. Both
the Guidance and the Pollution Prevention Act of 1990
(P.L. 101 - 508) exclude "end of pipe" recycling from the formal
definition of pollution prevention.
2/ Although non-closed loop (i.e., "end-of-pipe") recycling
occupies the second tier of the "hierarchy" behind pollution
prevention, it will, because of its environmental benefit, be
included within the scope of this interim policy. All elements
of this policy will apply to such recycling to the same extent as
use and production substitution activities which constitute the
formal definition of pollution prevention.
-------
root causes of some violations and thereby increase the prospects
for continuous compliance in the future. /3
In addition to this "indirect" incentive for pursuing
pollution prevention, the Action Plan recognized that pollution
prevention could be directly achieved by initiating .
enforcement actions against individual noncompliers. The Agency
is constrained from requiring (i.e., imposing unilaterally)
pollution prevention activities in the absence of statutory,
regulatory, or permit language. Until the Agency commences an
enforcement action, respondents are generally free to choose '
they will comply with Federal environmental requirements.
However, once a civil or administrative action has been
initiated, the specific means of returning to compliance are
subject to mutual agreement between the Agency and the
respondent. 4/ The settlement process can be used to identify
and implement pollution prevention activities consistent with the
Agency's overall enforcement approach.
The office of Enforcement chaired a workgroup, which
included representation by the Prograr. Compliance Offices and
Regions III, IV, and vnr, to develop an interim policy on the
use of pollution prevention conditions in enforcement
settlements. In addition, OE and the Programs will receive
funding from the Office of Pollution Prevention for technical
support to develop and evaluate pollution prevention proposals in
settlements in FY 1991-2 and to evaluate their utility for
promoting long-term compliance and for permanently reducing the
level of pollutants or toxic discharges into the environment.
III. Statement of Interim Policy
It shall be a policy of the Environmental Protection Agency
to favor pollution prevention and recycling as a means of
achieving and maintaining statutory and regulatory, compliance and
of correcting outstanding violations when negotiating enforcement
settlements. While the use of pollution prevention conditions is
not mandatory (for either a program/Region to propose or for a
defendant/respondent to accept), Agency negotiators are strongly
encoraged to try to incorporate pollution prevention conditions
in binylB and mulLi'-ffltmia settlements when feasible. The policy
is appllfiaDle to BOCA civil and criminal enforcement settlements
involving private entities, Federal facilities or municipalities.
.- . i
3/ Office of Enforcement Pollution Prevention Action Plan, page 2
4/ Note that some pollution prevention-related activities, e.g.,
environmental auditing, can be sought as injunctive relief in
appropriate circumstances. See, Final EPA Policy en the
Inclusion of Environmental Auditing Provisions in' Enforcement
Settlements (GM-52)
-------
Among the types of situations which favor the use of
pollution prevention conditions in- enforcement settlements are:
a. recurring patterns of violations which are unlikely to be
corrected by additional "add on" controls or improved
operations and maintenance, and elimination or substitution •
offers the best prospects for the permanent return to
compliance;
b. proposed solutions which do not create environmental problems
in other media (i.e., have no negative cross-media impacts);'
c. effluent emissions or discharges for which technically
and economically feasible pollution prevention options
have been identified; '
d. violations which involve one or more pollutants listed on the
target list of 17 chemicals the Agency will emphasize as
part of the implementation of its Pollution Prevention
Strategy (see appendix A for list of chemicals).
Pollution prevention.settlement conditions can either be
specific activities which correct the violation or activities
which will be undertaken fn addition to those necessary to
correct the violation.
The interim policy should be implemented in concert with the
.Agency's new Pollution Prevention Guidance and Pollution
Prevention Strategy, as well as Office of Enforcement policy
documents, including the EPA Policy on the Inclusion of
Environmental Auditing Provisions in Enforcement Settlements (GM-
52); A Framework for Statute-Specific Approaches to Penalty
Assessments: Implementing EPA's Policy on Civil Penalties (GM-
22,), and the newly issued Supplemental Envirbnnental Projects
Policy (February 12, 1991), which amends the "alternative
payments" section of GM-22; the office of Enforcement's Pollution
Prevention Action Plan (6/30/89); and the Manual on Monitoring
:and Enforcing Administrative and Judicial Orders (2/14/90). /5
A. Pollution Prevention as a Means of Correcting the Violation
By definition, a use/source reduction or recycling activity
which corrects the original violation will be media and facility
specific. When conducting settlement negotiations, the Agency
shall consider whether it is appropriate (e.g., technically and
economically feasible) to correct the violation(s) through
implementation of source reduction or recycling activities.
5/ These documents are available through the Office of
Enforcement General Enforcement General Policy Compendium
and/or the Enforcement Docket Retrieval System (EDRS).
-------
Examples include compliance with permit requirements by switching
from a high to a lower toxic solvent which reduces excessive
emissions or discharges or by recycling effluent. /6
Pollution prevention conditions may be proposed by either
the Agency or the respondent. Inclusion of any condition rests.
upon the outcome of mutual negotiations between the two sides.
B. Pollution Prevention Conditions "Incidental" to the
Correction of the Violation
During negotiations to resolve the violation, the Agency
also may consider as settlement conditions supplemental pollution
prevention projects in addition to the specific actions or
injunctive relief needed to correct the violation. Potential
examples include phasing out a pollutant within a specific period
of time or a commitment by a facility to change production
technology at more than one facility.
Pollution prevention settlenunt conditions which do no.
by themselves correct the violation Will usually be negotiated
as "supplemental environmental projects" and, as such, are
subject to the criteria described in the recently-issued policy
on the use of supplemental projects which amends part of the
Aoenevwide Framework for Civil Penalties (GM-22) /7. The
decision to consider, accept, or reject such projects rests
exclusively with the Agency.
IV. Specific Elements of the In-:e:rim Pollution Prevention Policy
A. Timelines for Implementing Pollution Prevention Conditions
EPA's enforcement policy calls for the "^expeditious"
return of the violator to compliance. /8 As *a general rule,
* • .
. 6/ A firm could theoretically return to compliance by reducing
'the scope of operations, i.e., by producing less and, therefore,
reducing its discharge or emissions. Although this may return
a facility to compliance, it is hot "pollution prevention" within
the Agency's definition nor the scope of this interim policy.
7/ The term "supplemental environmental proncet" replaces the
term "alternative payments" used in GM-22. The Agency has
recently issued a new policy on the use of these projects,
Guidelines for Evaluating Supplemental Environmental Projects.
which replaces the section on "alternative payments" on pps. 23-
27 of GM-22. It provides detailed guidance on the "scope" of
eligible supplemental projects, including ones which are related
to pollution prevention. Also see Section IV B2f below.
8/ Civil Penalty Policy Framework (GM-22), page. 13
-------
there shall be no significant ("significant" to be defined by
each program) extension of the "normal" time period for returning
to compliance. Under no circumstances will a respondent be
granted additional time to correct the violation in exchange for
his conduct of a supplemental environmental project. (see IV B 2,
below). For example, a facility which exceeds its effluent.limit
would have to return to compliance within the "normal" time
period the NPDES program estimates for facilities of that size
and type. This time period would noi be extended if, as part of
the overall settlement, the respondent also agreed to establish a
sludge recycling system.
If a pollution prevention activity is presented as the means
of correcting the violation, however, the Agency settlement team
has some additional flexibility in negotiating an implementation
schedule, given that pollution prevention alternatives sometimes
add an element of complexity to a facility-specific compliance
strategy, especially if it involves new or innovative technology
The j.ength of time which is deemed to be "expeditious" is
ultimately a "best judgment" decision on the part of the EPA
negotiators. It should be based upon their assessment of the
ecological and public health-related risks and benefits involved -
in providing the additional time to return to compliance.
While Federal negotiators should consider the following
factors in deciding whether to use innovative pollution
prevention technology as injunctive relief at anv time, they
become even more relevant when deciding whether to extend the
"normal" timeline for resolving a violation. I.f a decision is
made to extend the timeline, the Federal negotiators should also
establish interim milestones and controls to assure the adequate
protection of public health and the environment while the
pollution prevention relief is being implemented, (cf. Section C,
below):
1. Seriousness of the Violation
Both the aggregate amount and toxicity of excess emissions
or discharges affect the decision whether to extend the
compliance timeline. Some .violations (e.g., those which meet
"imminent and substantial" endangerment definitions) must be
corrected as quiclcly as possible, even when that involves
foregoing a pollution prevention approach in favor of traditional
treatment technology. Even when the violation has a much less
potentially adverse impact, Federal negotiators should
consider whether the risk allows a longer timeframe .
2. Aggregate Gain in "Extra" Pollution Prevention
Schedules should be extended only where there is an
important net permanent reduction in the overall amount or
-------
toxicity of the pollution as a result of a pollution prevention
project which requires a longer timeline to implement than would
"end-bf-pipe" controls. (Note: This consideration is appropriate
only when a longer compliance timeline is at issue since, "all
other things being equal," the Agency would prefer a pollution
prevention approach to traditional treatment and/or disposal.)
3. Reliability/Availability of the Technology
The pollution prevention technology being used to implement
the injunctive relief should (ideally) have been successfully
applied or tested at other facilities. While not intended to
discourage the use of innovative prevention or reduction
technologies, the more "experimental" or "untried" the
technology, the more rigorous Federal negotiators should be about
extending the "normal" compliance.timeline. The technology
should also avoid the cross-transfer of pollutants.
4. Applicability of the Technology
The Federal negotiators should be more willing to extend the
compliance timeline if the pollution prevention technology is
applicable to other facilities, so that, if successful, the
lessons learned can be disseminated industry-wide.
5. Compliance-related Considerations
The pollution prevention approach offers the best prospects
for a permanent return to compliance.
B. Penalty Assessments -
1. General Considerations • , .
* *
Under EPA's general framework for assessing civil penalties
(GM-22) and its program-specific applications, most formal
enforcement actions are concluded with a penalty. The two
elements of the penalty calculation are the gravity of the
violation and the economic benefit of noncomplianee. The former
can be adjusted upward or downward depending several factors.
The latter sets the penalty "floor." /9
The willingness of a respondent to correct the violation
via a pollution prevention project can be one 'of the * assessment
factors used to.adjust the "gravity" component of the penalty.
The defendant/respondent's willingness to comply with permit
requirements through pollution prevention activities can be
seen as a "uni^a
-------
considerations) which may warrant an adjustment of the gravity-
based penalty factor consistent with program-specific penalty
policies.
.Calculation of the economic benefit of noncompliance may
have particular consequences for the inclusion of pollution
prevention conditions in settlements. For example, two of the
variables used by the BEN Model to calculate the penalty are
the time expected to elapse from the date of the violation until
the date of compliance (i.e., the estimated future date at which
the facility would be expected to return to full compliance)
and the expected cosf of returning to compliance, /ll. This
calculation could create a disincentive for a respondent to
correct the violation with pollution prevention technology
(i.e., the longer the facility is expected to be out of
compliance and the higher the cost of returning to compliance,
the larger the economic benefit of noncompliance and, ultimately,
the larger the penalty).
In order to eliminate this possible disincentive, the
penalty amount should be calculated using the costs and
timeframes associated with both the pollution prevention approach
and the conventional way of correcting the violation. The final
penalty will be the smaller of the two calculations, so long as
the Federal negotiators have decided to allow the "longer"
timeframe for returning to compliance. However, the settlement
agreement should also provide for stipulated penalties in the
event the violation is net corrected or exceeds its compliance
schedule.
Several other criteria currently contained in GM-22 will
continue to apply to pollution prevention projects. For example,
a minimum cash penaltv_shall always be collected (sub-jest to
"progtam-specitic guidance), regardless of the value of the
project, and it generally should not be less than the economic
benefit of noneompliance.
2. Supplemental Environmental Projects
When settling an enforcement action, the Agency also may
seek additional relief in the form of activities which remediate
the adverse health or environmental consequences of the original
violation. The size of the final assessed penalty may reflect
the commitment of the defendant/respondent to undertake these
"supplemental environmental projects".
As noted previously, the Agency's recently issued Policy on
the Use of Supplemental Environmental Projects, which amends and
supersedes GM-22's discussion on "alternative payments," .
identifies pollution prevention projects as one of five general
11/-GM-22, pps. 6-10 ~
-------
categories of projects, eligible for consideration. /12. In
order to be part of the consent order or decree, a proposed
supplemental pollution prevention project must meet all. of the
criteria discussed in the policy, including those which relate -to
the "scope" of the projects, the amount of penalty reduction, and
oversight requirements. .
One important criterion involves the "nexus" between the
violation and the supplemental project. Nexus," which, is defined
as "an appropriate... relationship between the nature of the
violation and the environmental benefits to be derived from the
type of supplemental environmental project," helps assure that
the supplemental project furthers the Agency's statutory mandate
to clean up the environment and deter violations of the law. /13
The policy also states that while studies are generally not
eligible mitigation projects, this prohibition will be modified
slightly only for pollution prevention studies. 14/ The policy
specifically exempt pollution prevention projects from the "sound
business practices", limitation which are in effect for the four
other categories of supplemental environmental projects. /15
Federal negotiators -who are considering the adoption of
supplemental pollution prevention projects should refer
specifically to the Policy on the Use of Supplemental
Environmental Prelects to make sure that the proposed pollution
prevention project meets all applicable criteria.
C . Tracking And Assessing Compliance With the- Terms ef the
Settlement
The Agency places a premium on compliance with the terms of
its settlements and .several documents exist which outline .
procedures for enforcing final orders and decrees, which may
range from modification of the order to stipulated penalties and
12 / The five categories cover pollution prevention, pollution
reduction, environmental restoration, environmental auditing,, and
public awareness.
13/ Policy, p. 1. The extended discussion of "nexus" and example
of supplemental projects which meet the "nexus" requirement are
on pps. 5-8.
Eaiicy,, p. 9
15/ Policy, pps. 8-9
-------
notions to enforce the order and contempt of Court. /16
A more difficult situation arises when the respondent —
despite his best "good faith efforts" — fails to successfully
implement a pollution prevention activity which is required to
correct the violation (e.g., is the injunctive relief).
Ultimately, the respondent must be responsible for full
compliance. If the pollution prevention approach does not work.
he will be required to return to compliance through traditional
means.
In order to make sure that the violation is corrected (as-
well as minimize any additional liabilities which may accrue to
the defendant/respondent) the consent order or decree will state
that any pollution prevention project which is used to
achieve compliance with a legal standard must have a "fall-bade*
schedule requiring the use of an proven technology agreed to by
all parties to the settlement and which will be implemented.- if
necessary, by a time certain. The settlement agreement also
should establish a systematic series of short term milestones so
that preliminary "warning signs" can be triggered promptly and
issues raised. If the Agency decides that the "innovative"
pollution prevention approach will not succeed, the "traditional"
remedy must be implemented according to the set schedule. Under
these circumstances, as long as the "fall-bade"
remedy is implemented on schedule, the defendant/respondent will
only have to pay an additional penalty equal to the economic
benefit of the further delay in compliance, offset by the actual
expenditures incurred as a result of the unsuccessful effort to
comply through pollution prevention. If the actual expenditures
on pollution prevention equal or exceed the incremental economic
benefit of noncompliance using conventional controls, there would
be no additional penalty.
D. Delegations and Level of Concurrence
Settlement conditions which involve more than one program
or Region (e.g., a multi-media or multi-facility case) usually
require additional oversight, and the estimated amount of time
and resources required for effective oversight is one criteria
which the Agency will use to determine whether to include the
project in the settlement agreement. The respondent should
shoulder as much of the direct costs as feasible, (e.g., pay for
16/ The respondent's failure to carry out a pollution prevention
activity which is a supplemental project shall be dealt with
through procedures outlined in GM-22 and the Supplemental
Environmental Projects Policy (e.g., reimposition of the full
civil penalty and/or the assessment of stipulated penalties
contained in the settlement once the Government determines that
the conditions have not been fulfilled).
-------
10
ah independent auditor to monitor the status of the project and
submit periodic reports, including a final one which evaluates
the success or failure-of the project).
Each Region should develop its own coordination procedures
for negotiating and overseeing a multi-media pollution prevention
condition which affects only that Region (i.e., applies only to
the specific facility or other facilities within the Region).
The extent of coordination/concurrence required for a
pollution prevention settlement which involves more than*one ... -
Region will vary according to the nature and complexity of the
proposal. The negotiation team should at a minimum notify and
coordinate with other affected Regions about pollution prevention
conditions which would have an impact on facilities in those
Regions (e.g. an agreement for the respondent to conduct
environmental audits; or an agreement for solvent substitution at
other facilities not in violation).
However, the negotiation team would have tc receive
.the concurrence of all affected Regions if the proposed pollution
prevention condition involved significant oversight resources or
activities (e.g., if it required major construction or process
changes). For this type of situation, the settlement team must
notify all affected Regions that it is considering the inclusion
of such conditions as part of a proposed settlement prior to the
completion of the negotiations. These Regions will then have the
opportunity to comment on the substance and recommend changes to
the aCOpe of.the proposal. Each entity will have to concur with
the pollution prevention condition and agree to provide the
necessary oversight in order for it to be included in the
settlement agreement. The Programs and Regions must also agree
on their respective tracking and oversight responsibilities
before lodging the consent order or decree.
The Headquarters compliance programs and the Office of
Enforcement will be available to help Regions coordinate this
concurrence process, and to help the parties reach a consensus on
oversight roles and responsibilities, where necessary.
Concurrence by the Headquarters program office and the Office of
Enforcement will be mandatory only where it is already required
by existing delegations or for supplemental projects as described
in the Supplemental Environmental Projects policy.
V. organizational Issues
A. Copies of Settlements
The Regions should send copies of settlements with pollution
prevention conditions to the respective national compliance
officer (consent order) or Associate Enforcement Counsel (consent
decree) for insertion to the Enforcement Docket Retrieval System
-------
11
(EDRS). In addition, the Region should enter a brief descriptive
summary of the settlement (1-2 pages) into the Pollution
Prevention Information clearinghouse (PPIC, 1-800-424-9346) .
enforcement settlement file which is being established. This will
enable all the Programs and Regions to have "real time"
information about pollution prevention settlements which have
been executed, and will enable the Office of Enforcement and the
programs to conduct an overall assessment of the impact of
pollution prevention conditions in Agency settlements as part of
the process of developing a final settlement policy in FY 1993.
B. Media—Specifie Policies
The media programs and Regions have begun to implement their
own pollution prevention strategies. Since they are still
gaining experience in identifying and applying* source reduction
technologies to enforcement situations, and developing the
technology and resources to track and evaluate these conditions,
this interim policy adopts a phased approach that encourages,
but does not require, them to cry to incorporate pollution
prevention conditions on a case-by-case basis where they enhance
the prospects for long-term compliance and pollution reduction.
Each national program manager may decide whether to develop
its own specific pollution prevention guidance (consistent with
this interim guidance) or continue to use the general interim
guidance. Program-specific guidance should discuss when to
include pollution prevention conditions in settlements, and
describe -he categories of violations for which pollution
prevention "fixes" are most encouraged and the specific types of
source reduction or recycling activities considered appropriate
for that program. The National Program Manager may also adopt
additional reporting or concurrence requirements beyond those
described in this interim policy. The Programs can develop
specific policies on their own schedule, utilizing this general
interim policy until they do so.
-------
INDUSTRIAL TOXICS PROJECT
17 TARGET CHEMICALS
1988 TRI Reporting Year
(in Pounds)
Chemical Name
BENZENE
CADMIUM ft COMPOUNDS
CARBON TETRACHUMUDE
4~*fcJ> f%M&f\t£4%MHM
CHLOROFORM
CHROMIUM ft COMPOUNDS
CVAIMDE ft COMPOUNDS
DJCJILQROMETHANE
LEAD ft COMPOUNDS"" ^
MERCURY ft COMPOUNDS
METHYL ETHYL KETONE
METHYL BOBUTYL KETONE
NICKEL ft COMPOUNDS
TETRACHUmOCTHYLENE
TOLUENE )
1.1.1-TRICHLOROETHANE
TRfCttkOROETHYLENE
XVLENES
19*9
g
11.630.000
4.188 C-1-2
747.000*
A
523.600
291.000 Cl1'*
41 7.600 *l3
504.100*
2.218.000 C>l>*
iflza "''•*•*
•
482.000
205.300
ioo.ooocl>a
497.700*
6.300.000*
723.700*
200.000
6.572.000 **
1989
(toosefts)
b
956.800
5.512 "'
in. ooo d
b
27.000
912.700
26.800 ' .
25.000 b
e 12
374.800
760 •' '
b
20.0CO
20.000 .
320.000
1 19.000 b
888.800 b
22.000 b
13,000 b
225.000
NuMbtf
453
166
64
166
1.882
355
1.525
1.277
43
2.284
933
1.253
660
3.606
3.518
868
3.187
Release
lo Ak
28.1I/.9S5
119.412
3.683.121
22.974.156
1. 181.482
1.981.210
126.796.287
2.587.790
25.629
127.675.717
30.523.697
539.864
32.277.372
273.752.712
170.420.900
49.071.464
155.888.584
to Water
46.589
4.382
15.667
1.089.285
389.475
193.456
347.336
237.014
1.406
76.593
762.108
209.887
33.284
254.175
94.310
13.550
299.375
Oeep-WeN
Infection
636.314
2.409
98.054
36.002
101.180
7~.460.999
664.750
2.755
27
213.962
121.650
152.925
72.250
1.43l.»ltt
1.000
390
122.977
Release
to Land
221.192
541.530
14.759
68.483
28.125.080
106.299
156.647
27.494.165
13.779
155.049
31.912
3.644.070
105.644
882.691
187.396
20.940
834.174
Transfer
toPOTW
1.102.265
20.115
5.014
1.226.573
2.107.561
1.147.962
2.584.199
207.732
2.136
932.S6/
1.508.530
881.506
566.138
3.544.407
293.219
78.758
4.213.768
Other
Transfer
2.9/2.877
1.360.967
1. 166.781
I.46/.9I4
24.960.834
2.915.637
22.885.336
28.IZ7.73!
275.224
30.002.775
10.760.598
14.000.659
4.428.398
64.762.046
19.480.645
6.231.064
40.215.061
Annual Total
Releese *
33.097.192
2.048.81*5
5.003.396
26.662.413
56.865.612
13.805.563
153.434.555
58.707.187
318.201
159.056.663
43.A08.6dS
19.428.91 1
37.503.066
344.627.947
190.477.4/0
55.416.166
201.5/3.9/9
•o
ri
a. Syntntc Organ* Cnemcab. USfTC. 1969. PuMcafcm #2219.
b. MmmsMie Chemical Product Synops«. Manns»*o Ohctwcai Producls Cwp
c Mmeral CommxMy Summanes. U S Bufcaii ol M*ies. ' .mdfy. I98U
0 ChunMcalKamoincsHandboali.SIUIntcmaUonal
I HiixluctKm horn pnmaty A secondary lutoHng. no irarang data
iii! tr^xs! OaUs Oovs not mckHlu inulal cuiii|HMiiHls
2. Meb contort, oxccpl lo» gross weight Q| Chrorraum
3 Hydc'jgeii Cyatwio only.
4. Sodium Cyanide only. IOB/ data.
5. Indudus socontlary MM win/ ruteusvd (rout Ocpi «ill nciiiy
6 Only ortno and paju HySttiu rv|HNlu«l
/. Only pura Xyhmu ivpcMlMl
-------
IV.C.23.
"Issuance of Revised Interim Clean Water Act Settlement Penalty
Policy", February 28, 1995.
-------
s ->—- I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF
FEB 2 8 1995 ENFORCEMENT AND
w WJJ COMPLIANCE ASSURANCE
1
MEMORANDUM
SUBJECT: Issuance of Revised loterim Clean Water Act Settlement Penalty Policy
FROM: Steven A. Hef
Assistant Administrator
TO: Regional Administrators •
Attached is the Agency's new Interim Clean Water Act Settlement Penalty Policy to
be used by EPA in calculating the penalty that the Federal government will generally seek in
settlement of judicial and administrative enforcement actions brought pursuant to section 309
of the Act. This Policy establishes a framework which EPA expects to use in exercising its
enforcement discretion in determining appropriate settlement penalties.
/
This Policy provides the flexibility necessary to secure appropriate relief in settlement
of cases against municipalities, and supersedes six interpretive guidances issued since the
Clean Water Act Penalty Policy was issued in February, 1986. This Policy also furthers
four important environmental goals. First, penalties should deter noncompliance, and help
protect the environment and public health by deterring future violations by the same violator
and by other members of the regulated community. Second, penalties should help ensure a
level playing field by ensuring that violators do not obtain an economic advantage over their
competitors. Third, penalties should be generally consistent across the country in order to
provide fair treatment to the regulated community wherever they may operate. Fourth,
settlement penalties should be based on a logical calculation methodology to promote swift
and fair resolution of enforcement actions and the underlying violations.
This interim revised version of the Policy provides numerous improvements to the
1986 Policy, while still retaining the underlying principles and methodology in the prior
Policy. There are four key changes. First, this revision establishes an alternative approach
to use in appropriate cases to determine penalties against municipalities. This approach,
called the national municipal litigation consideration, is based, in part, on past settlements
and on an evaluation of four key factors: the size of the facility (service population), duration
of violation, environmental impact, and economic benefit. Our Regional offices have the
discretion to select from a range of values for each of these factors and may then reduce the
penalty further, if appropriate, by up to 40 percent, for supplemental environmental projects.
Second,'the methodology for evaluating the gravity or seriousness of the violation has been
wot SeyCwwU •* c«
80* nqnM
-------
-2-
revised 10 eliminate redundancy, improve national consistency, and better cover non-effluent
limit violations (such as bypasses). Third, we have established two new gravity adjustment
factors, to provide incentives for quick settlements and to mitigate penalty amounts for small
facilities. Fourth, we have consolidated the existing Policy and six subsequent guidances
interpreting it into one document.
x •
This Poiicy is effective March 1, 1995, and supersedes the Clean Water Act Civil
Penalty Policy issued on February 11, 1986. This Policy applies to all CWA civil judicial
and administrative actions filed after March 1, 1995 and to all pending cases in which the
government has not yet transmitted to the defendant or respondent an oral or written
proposed settlement penalty amount. This Policy also may be applied (instead of the 1986
version) in pending cases in which penalty negotiations have commenced if application of this
Policy would not be disruptive to the negotiations.
We are issuing this Policy in an interim version because we expect to revise it based
on public comments and our experience in using it. We are issuing it as an interim policy,
rather than as a draft, because we believe this revision is superior in many ways to the
existing 1986 version of the Policy. This interim approach also will put this Policy revision
on a consistent timeline with our generic penalty policy analysis. Based on the results of the
generic penalty policy analysis, we can then modify the interim version accordingly. We are
specificaljy interested in how well the national municipal litigation consideration and gravity
adjustment factors function, and whether we should include an explicit penalty adjustment
factor for environmental auditing of voluntary self-disclosures of violations.1 We expect to
publish this interim version of the Policy in the Federal Register within the next 30 days.
Thank you for your comments on the three prior internal drafts of this Policy. If you
have any questions or comments on this Policy you may contact David Hindin, Acting
Branch Chief, Multimedia Enforcement Branch, at 202 564-6004, or Ken Keith in the Water
Enforcement Division at 202 564-4031.
Attachment
cc: (w/attachment)
Regional Counsels
Regional Water Division Directors
Regional Water Enforcement Branch Chiefs
ORC Water Branch Chiefs
Department of Justice, EES Chief and Deputy Chiefs
1 The 1986 Policy and this interim revision both automatically produce smaller penalty amounts
for violators who conduct environmental audits and promptly remedy violations. This is because
violators who promptly remedy violations will have shorter histories of violations, which reduces both
the economic benefit and gravity penalty amounts.
-------
INTERIM CLEAN WATER ACT SETTLEMENT PENALTY POLICY
March 1, 1995
TABLE OF CONTENTS
I.
INTRODUCTION
II. PURPOSE . ............ ......................... ......; 2
III. APPLICABILITY ........ ____ ..... ..... ...:,.;. ......... . . 3
IV. PENALTY CALCULATION METHODOLOGY ..'..' ......... ....... 4
A. Economic Benefit . . . ..... ......... . ....... . ......... . . 4
B. Gravity Component ............. ......... . ...... ....... 6
C. Gravity Adjustment Factors ........ . . . '. ........... ..... 12
D. Litigation Considerations ...... ..... ....... ........ ...... 13
E. Ability to Pay . . . ............... , . ................... 21
V. SUPPLEMENTAL ENVIRONMENTAL PROJECTS (SEPs) ...... ....... 22
VI. OTHER TYPES OF PENALTIES ..... .......... , . ....... ..... 22
VII. DOCUMENTATION, APPROVALS, AND CONFIDENTIALITY ____ . ____ 23
ATTACHMENT 1 - Examples of How to Calculate1 Statutory Maximum Penalty
ATTACHMENT 2 - Settlement Penalty Calculation Worksheet
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Interim CWA Settlement Penalty Policy - March 1. 1995 Page 2
I. INTRODUCTION
Section 309 of the Clean Water Act (CWA), (33 U.S.C. §1319) authorizes the
Administrator of the U.S. Environmental Protection Agency ("EPA" or "Agency") to bring
civil judicial and administrative actions against those who violate certain enumerated
requirements of the CWA. In such actions the Administrator may seek civil penalties.
EPA brings enforcement actions to require alleged violators to promptly correct the
violations and remedy any harm caused by the violations. As pan of an enforcement action.
EPA also seeks substantial monetary penalties which promote environmental compliance and
help protect public health by deterring future violations by the same violator and deterring
violations by other members of the regulated community. Penalties help ensure a national
level playing field by ensuring that violators do not obtain an unfair economic advantage over
competitors who have done whatever was necessary to comply on time. Penalties also
encourage companies to adopt pollution prevention and recycling techniques, so that they
minimize their pollutant discharges and reduce their potential liabilities.
This Policy implements the Agency's February 1984 general Policy on Civil Penalties
(#GM-21) and the companion document, A Framework for Statute Specific Approaches to
Penalty Assessments (#GM-22), both issued on February 16, 1984. This Policy revises and
hereby supersedes the Clean Water Act Penalty Policy for Civil Settlement Negotiations
issued on February 11, 1986.'
This document sets forth the policy of the EPA for establishing appropriate penalties
in settlement of civil judicial and administrative actions. Subject to the circumstances of a
particular case, this policy provides the lowest penalty figure which the Federal Government
should accept in a settlement. This Policy is drafted so that violators whose actions, or
inactions, resulted in a significant economic benefit and/or harmed or threatened public
health or the environment will pay the highest penalties. Obviously, where settlement is not
possible, the Government reserves the right to seek penalties up to the statutory maximum.
II. PURPOSE
The purpose of this Policy is to further four important environmental goals. First,
penalties should be large enough to deter noncompliance. Second, penalties should help
1 The guidances issued to interpret and supplement the 1986 Penalty Policy are also superseded. These
documents are the: Addendum to the Clean Water Act Civil Penalty Policy for Administrative Penalties, issued
August 28, 1987; Guidance on Penalty Calculations for POTW Failure to Implement an Approved Pretreatmem
Program, issued December 22, 1988; Bottomline Penalties for Cases Involving More than Five Years of Non-
Compliance, issued May 11, 1992; Gravity Penalty Pilot Policy for Clean Water Act Cases, issued November 12,
1992; and Final Interim Guidance on Use of Litigation Consideration Reductions in the Clean Water Act Penalty
Policy, issued October 10, 1993 (which incorporated the November 1992 Gravity Penalty Pilot Policy).
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Interim CWA Settlement Penalty Policy - March 1. 1995 Page 3
ensure a level playing field by ensuring that violators do not obtain an economic advantage
over their competitors. These two goals generally require that penalties recover the
economic benefit of noncompliance, plus an appropriate gravity amount. Third, CWA
penalties should be generally consistent across the country. This is desirable as it not only
prevents the creation of "pollution havens" in different parts of the nation, but also provides
fair and equitable treatment to the regulated community wherever they may operate. Fourth,
settlement penalties should be based on a logical calculation methodology to promote swift
resolution of enforcement actions and the underlying violations. . . ' .
HI. APPLICABILITY
This Policy applies to all CWA civil judicial and administrative actions filed after the
effective date of this Policy, and to all such pending cases in which the government has not
yet transmitted to the defendant or respondent an oral or written proposed settlement penalty
amount. This Policy also may be applied (instead of the 1986 version) in pending cases in
which penalty negotiations have commenced if application of this Policy would not be
disruptive to the negotiations. This Policy applies to civil judicial and administrative
penalties sought under CWA §309, including: violations of NPDES permit limits and
conditions; discharges without an NPDES permit; violations of pretreatment standards and
requirements (including local limits and pretreatment programs); violations of §405 sludge
use or disposal requirements; violations of §308 information requests; and violations of
§309(a) c npliance orders. This Policy does.not apply to actions brought exclusively under
CWA §311 (oil and hazardous substance spills) nor for violations of requirements in §404
("wetlands" cases involving disposal of dredged or fill material). Separate penalty policies
apply to these two types of cases.
This Policy sets forth how the Agency generally expects to exercise its enforcement
discretion in deciding on an appropriate enforcement response and determining an appropriate
settlement penalty. In some cases, the calculation methodology set forth here may not be
appropriate, in whole or part; in such cases, with the advance approval of the Assistant
Administrator, an alternative or modified approach may be used.
This Policy only establishes how the Agency expects to calculate the minimum
penalty for which it would be willing to settle a case. The development of the penalty
amount to plead in an administrative or judicial complaint is developed independent of this
Policy, except that the Agency may not seek a settlement penalty in excess of the statutory'
maximum penalty for the violations alleged in the complaint. This Policy is not intended for
use by EPA, violators, courts, or administrative judges in determining penalties at a hearing
or trial. (Also see §VI below).
A settlement penalty calculation is generally required before the Agency files an
administrative complaint or refers a civil action to the Department of Justice. The penalty
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calculation should be revised as relevant new information is discovered during the course of
the litigation. The penalty calculation should be reviewed periodically (e.g.,on the
anniversary of when the complaint was filed) to determine if any revisions to the calculation
are necessary.
IV. PENALTY CALCULATION METHODOLOGY
s ' '
Before proceeding to calculate the settlement penalty, Agency staff should estimate
the statutory, maximum penalty in order to determine the potential maximum penalty liability
of the discharger.2 The penalty which the government seeks in settlement may not exceed
this statutory maximum amount. Examples of how to calculate the statutory maximum are
set forth in Attachment 1. In general, the statutory maximum penalty for violations of an
effluent limit for a period longer than one day includes a separate penalty for each day in the
time period (assuming there was a discharge on each day). '
The settlement penalty is calculated based on this formula:
Penalty = Economic Benefit + Gravity +/- Gravity Adjustment Factors -
Litigation Considerations - Ability to Pay - Supplemental Environmental Projects.
Each component of the penalty calculation is discussed below. A worksheet summarizing
the penalty calculation is included as Attachment 2.
A. Economic Benefit
Consistent with EPA's February 1984 Policy on Civil Penalties, every effort should
be made to calculate and recover the economic benefit of noncompliance. The objective of
die economic benefit calculation is to place violators in the same .financial position as they
would have been if they had complied on time. Persons that violate the CWA are likely to
have obtained an economic benefit as a result of delayed or completely avoided pollution
control expenditures during the period of noncompliance. Commonly delayed and avoided
CWA pollution control expenditures, include, but are not limited to:
a Monitoring and Reporting (including costs of the sampling and proper laboratory
analysis);
o Capital equipment improvements or repairs, including engineering design,
purchase, installation, and replacement;
2 This calculation of the statutory maximum penalty, done as pan of the settlement penalty calculation, is a
legal evaluation, subject to the attorney-work product privilege. This calculation is not intended tor use in court.
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Interim CWA Settlement Penalty Policy - March L 1995 • Paee 5
o Operation and maintenance expenses (e.g. labor, power, chemicals) and other
annual expenses; and
o One-time acquisitions (such as land purchase).
The standard method in settlement efforts for calculating the economic benefit from
delayed and avoided pollution control expenditures is through the use of the Agency's BEN
model. Refer to the "BEN User's Manual" (Office of Enforcement, December 1993, or any
subsequent revision) for specific information on the operation and proper use of BEN. There .
is no minimum amount triggering the use of the BEN model. In estimating economic benefit.
using the BEN model, the benefit should be calculated from the first date of noncompljance.
but EPA generally does not go back «o» more than five years prior to the date when the
complaint should be filed.3
The BEN model will produce a valid estimate of the economic benefit from delayed
and avoided compliance costs only if it is properly used.4 Before using the BEN model you
need a defensible theory of on-time compliance: that is, the pollution control system or
measures the violator should have installed and operated earlier to have prevented the CWA
violations at issue in the case.5 As a general rule, the best evidence of what the violator
should have done to prevent the violations, is what it eventually does (or will do) to achieve
compliance.*
•
In some cases, the BEN model may not be an appropriate methodology for estimating
economic benefit or will not capture the full scope of the economic benefit. For example, if
the violator is a privately-owned regulated utility, the standard BEN model may not be
appropriate. In this situation, the Agency should consider a wrongful profits analysis and
seek to recover the profits and other competitive market benefits the violator obtained as a
result of operating during the period of violation.7 In another type of case, if the violator
3 The five year guideline for when the BEN and gravity calculations starts is a policy decision. Legally, there
is nothing that prevents EPA from calculating economic benefit or gravity from the first date of violation, even if
that is more than five years before the complaint is filed, as long as the statutory ma«innnn penalty (calculated
pursuant to the five year statute of limitations) exceeds the settlement penalty amount
4 The BEN model does not calculate the "competitive advantage' benefits a firm may have obtained as a result
of operating in violation of the law. Such benefits include profits and increases in market share from selling goods
and services during the period of violation. . '
5 The BEN model is comparing the compliance costs the violator would have paid if it bad complied on-time.
versus the usually smaller compliance costs it actually pays by complying late.
6 See BEN User's Manual, December 1993. page 6-2.
7 Regions should consult Headquarters for how to conduct this analysis; a financial consultant is likely to be
needed.
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decides that its "method of compliance" is to cease operations at the facility, conducting a
BEN analysis may be complica'M.8 In a few urusuil cases, economic benefit may be
negative: this means, e.g., operating the old inefficient treatment system was more
expensive than purchasing and operating a new, more efficient treatment system. When
economic benefit is negative, the settlement calculation enters zero ac the economic benefit.
B. Gravity Component
The gravity calculation methodology is based upon a logical scheme and criteria that
quantifies the gravity of the violation based upon the CWA and its regulatory programs.
Every reasonable effort must be made to calculate and recover a gravity component in
addition to the economic benefit component. As EPA's February 1984 Policy on Civil
Penalties, states on page 4: .
The removal of the economic benefit of noncompliance only places the violator
in the same position as he would have been if compliance had been achieved
on time. Both deterrence and fundamental fairness require that the penalty
include an additional amount to ensure that the violator is economically worse
off than if [he] had obeyed the law.
The gravity component of the penalty is calculated for each month in which there was
a violation. The ural gravity component for the penalty calculation equals the sum of each
monthly gravity component. The monthly gravity formula is:
Monthly gravity component = (1 + A + B + C + D) x $1,000.
The four gravity factors - A, B, C, and D - are considered for each month in which there
were one or more violations. Values are assigned to each of the four factors as described in
me text and tables below. In performing the gravity calculation, the monthly gravity
component is calculated from the first date of noncompliance up to when the violations
ceased or the date the complaint is expected to be filed, but EPA has the option to start the
gravity calculation no more than five years prior to the date when the complaint should be
filed. (See footnote #4.) In cases with continuing violations, the gravity calculation should
be revised periodically to include additional months of violations that have occurred since the
previous calculation.
* In cases where a-facility determines that it can only comply by ceasing operations, an appropriate BEN
analysis would be to input the savings obtained from the delayed closure costs and the avoided costs of not treating
the wastewaiter during the period of noncompliance. See Appendix B in BEN User's Manual. If it is not possible
to estimate these avoided treatment costs, then a wrongful profit analysis is necessary.
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a
"A* - Significance of Violation (Monthly Range 0 to 201. This factor is based on the
degree of exceedance of the most significant effluent limit violation in each month. Values
for this factor are selected from within designated ranges; violations of toxic monthly effluent
limits are weighted most heavily. Values are selected using the table below based on the
effluent value which yields the highest factor A value. Regions select a particular value for .
factor A within the designated range. For purposes of this table conventional and
nonconventional pollutants include biochemical oxygen demand, chemical oxygen demand,
total oxygen demand, dissolved oxygen, total organic carbon, total suspended solids; total
dissolved solids, inorganic phosphorous compounds, inorganic nitrogen compounds, oil and
grease, calcium, chloride, fluoride, magnesium, sodium, potassium, sulfur, sulfate, total
alkalinity, total hardness, aluminum, cobalt, iron, vanadium and temperature. Factor A
values for fecal coliform and pH, which are calculated using logarithmic scales, are
calculated using the special scales at the bonom of the table. All-other pollutants are
classified as toxic pollutants. '
If there were no effluent limit violations in a particular month, but there were other
violations, then factor A is assigned a value of zero in that month's gravity calculation. In
pretreatment cases in which the industrial user was not required to provide monthly
compliance reports, and provided less frequent effluent data (e.g., in a 40 CFR §403.12(e)
periodic compliance report), any effluent violations reported in the report are assumed to
represent identical violations in each month of the reporting period for purposes of
calculating gravity if there is substantial evidence supporting this assumption. Examples of
such evidence are: (1) no pretreatment equipment was in operation during the period and (2)
the production and treatment operations remained consistent during the per! ,d. This means
the monthly gravity calculation, with a factor A value, should be repeated for all of the
months covered by the report.9 If there was no evidence indicating continuing violations
throughout the period covered by the periodic compliance report, then a value for Factor A
•should be assigned only for the month in which the sampling occurred. If the industrial user
did not notify the control authority and repeat the sampling after finding the effluent violation
as required by 40 CFR §403.12(g)(2), then an appropriate value for gravity Factor D should
be assigned for this notification or monitoring violation(s).
9 The pretreatment regulations, 40 CFR §403.12(g)(3), require die periodic compliance reports to contain data
which "is representative of conditions occurring during die reporting period." For example, if an industrial user
reports in its December (semi-annual) periodic compliance report that it violated the daily maii^im cadmium limit
by 150% in September, and this was die most significant effluent violation, using the Gravity Factor A Table.
factor A will be assigned a value between 3 and 7 for each of me six months covered by the report (July -
December) if. e.g.. EPA had evidence that die facility lacked treatment equipment during that period and wastewater
generating operations were consistent during die period.
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Paee 8
GRAVITY FACTOR A- SIGNIFICANCE OF THE VIOLATION
Select a value for factor A based on the effluent limit violated in the month
which produces the highest range of values for factor A.
Percent by which effluent limit was exceeded:
Monthly
Average
1-20
21 - 40
41 - 100
101 - 300
301 - >
7-day Average
1 -30
31-60
61 - 150
151 -450
451 - >
Percent Exceedance of Fecal
Colrform Limit:
0-100 .
101 - 500
501 - 5,000
5,001 - >
Daily Maximum
1-50
51-100
10V -200
201 - 600
601 - >
Factor A Value Ranges
Toxic
Pollutants
1 -3
14*
3-7
5-15
10-20
Standard Units above or below pH
limit:
o-:so
.51 - 2.0
2.01 - 3.0
3.01 - 4.0
4.01 - >
Conventional &
Nonconventional
Pollutants
^0-2
1-3
2-5
3-6
5-15
Factor A Value
Ranges:
0-5
2-8
4- 10
6-12
8-15
"B" - Health and Environmental Harm (Monthly Range 0 to 50 ). A value for this
factor is selected for each month in which one or more violations present actual or potential
harm to human health or to the environment. Values are selected using the table below
based on the type of actual or potential harm that yields the highest factor value.
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Interim CWA Settlement Penalty Policy - March L 1995 ' Pagf 9
GRAVITY FACTOR B - HEALTH AND ENVIRONMENTAL HARM
Type of Actual or Potential Harm
Impact on Human Health (e.g., interference with drinking water
supplies, hgrm or increased risks to subsistence fishing)
Factor B Value Ranges
10-50
Impact on Aquatic Environment (or the POTW) .
Water quality-based effluent standard(s) or whole effluent
toxicity limit violated
Fish kill, beach closing; restrictions on use of water body;
or pass through or interference at the POTW caused by
the IU discharge.
Other impact on aquatic environment
1-10
4-50
2-25
"C" — Number of Effluent Limit Violations (Monthly Range 0 to 5). This factor is
based on the total number of effluent limit violations each month. (Violations of interim
limitations in administrative orders are not counted here, but included .as pan of
recalcitrance.) In order to properly quantify the gravity of the violations, all effluent limit
violations are considered and evaluated. Violations of different parameters at the same
outfall are counted separately and violations of the same parameter at different outfalls are
counted separately. The guidelines in Attachment 1 for calculating the statutory maximum
penalty are generally not applicable for selecting the value for gravity factor C (e.g.,
violation of a weekly limit need not be calculated as 7 separate violations). A minimum
factor C value of 1 is generally appropriate whenever there are violations of two or more
different pollutants. Values for this factor may be selected by comparing the number of
effluent limits exceeded with the number of effluent limits in the permit: e.g., if all of the
limits in the permit were violated in a month, a value of 5 would be appropriate; if 50
percent of the limits in the permit were violated, a factor of 2 or 3 would be appropriate.
"D" — Significance of Non-effluent Limit Violations. This factor has a value
ranging from 0 (zero) to 70 and is based on the severity and number of the six different
types of non-effluent limitation requirements violated each month. There are six types of
non-effluent violations: 1) monitoring and reporting; 2) pretreatmem program
implementation; 3) sludge handling; 4) unauthorized discharges; 5) permit milestone
schedules; and 7) other types of non-effluent violations. The value for factor D for each
month in which there is a non-effluent limit violation is selected pursuant to the table on the
next page. The factor D value for a given month is the sum of the highest value for each
type of non-effluent limit violation.
With regards to monitoring and reporting violations, the failure to submit a report in a
timely manner should generally not be treated as a continuing violation past the month in
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Interim CWA Settlement Penalty Policy - March 1. 199p Paee 10
which the report is due. For example, if an industrial user fails to submit a baseline
monitoring report as required by 40 CFR 403.12(b), this should be counted as a violation
only in the month when the report was due. Given the importance of such a report, if the
violator fails to submit the report at all a factor D value of 5 or more may be appropriate for
this violation.10 "
With regards to pretreatment program implementation violations, "key program
activities" include: identifying all industrial users; issuing appropriate control mechanisms to
all significant industrial users (SIUs); inspecting SIUs; enforcing industrial user self-
monitoring; enforcing pretreatment standards (including local limits); submitting pretreatment
reports to the approval authority; and failing to comply with other significant pretreatment
program obligations. The 1989 Guidance for Reporting and Evaluating POTW
Noncompliance with Pretreatment Requirements or subsequent revisions may be helpful in
evaluating the seriousness of pretreatment program implementation violations.
As an example of calculating factor D for a given month, assume a discharger did not
sample for 4 of die 8 parameters in its permit,' the discharge monitoring report was submitted
20 days late, and there were several days of discharge of a process wastestream through an
unauthorized outfall without any treatment. Using the factor D table, for Type 1, a value of
4 may be selected based on the failure to conduct sampling for half of the parameters; the
delay in submitting sampling data is not considered since the other Type 1 violation produces
a higher value. For the unauthorized discharge of the process wastestream, a value of 6 may
be selected for Type 4. Since there are no Type 2, 3, 5, and 6 violations, a value of 0 is
entered for each of these Types. Thus, the total vaiue for factor D for this month is 10.
10 The failure to provide the regulatory agency with required sampling data on the discharge is a very serious
violation as this eliminates the government's ability to perform necessary oversight and allows the discharger to
avoid the. possible application of gravity factor A.
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Interim CWA Settlement Penalty Policy - March 1^1995
Pane 11
GRAVITY FACTOR D - NON-EFFLUENT LIMIT VIOLATIONS
THE FACTOR D VALUE FOR A GIVEN MONTH IS THE SUM OF THE HIGHEST VALUE
FOR EACH TYPE OF NON-EFFLUE.NT LIMIT VIOLATION.
Type and Extent of Violation
Factor D Value
Ranges
* ' 4
1 . Effluent Monitoring and Reoortins Violations:
Failure to conduct or submit adequate pollutant sampling data for 1 or
more pollutant parameters (but not all parameters)
Failure to conduct or submit any required pollutant sampling data in a
given month but with a reasonable belief that the facility was in compliance
with applicable limits.
Failure to conduct or submit any required pollutant sampling data in a
given month without a reasonable basis to believe that facility was
otherwise in compliance with applicable limits.
Failure to conduct or submit whole effluent toxicity sampling data
Delay in submitting sampling data -
Failure to submit a pretreatmem baseline report, 90-day compliance report,
or period" compliance report (40 CFR 403.12(b), (d), or (e,) or failure to
sample again after finding a violation (40 CFR 403.l2(g)(2)).
Any other monitoring or reporting violation
2. Pretreatment Program Implementation Violations:
All key program activities implemented, with some minor violations.
One or two key program activities not implemented
Many key program activities not implemented
Few if any program activities implemented
3. Failure to properly control, treat, or dispose of sludge
4. ' Unauthorized discharge: e.g., discharge through an
unpermitted outfall, discharge of a wastestream not identified in the permit,
sewer overflows, or spill (other than oil or §311 hazardous substance)
5. Violation of permit milestone schedule
6. Any other type of noneffluent limit violation
Ito6
2 to 6
6 to 10
4 to 10
0 to 5
2 to 8
0 to 10
Oto4
2 to 6
4 to 8
6 to 10
1 to 10
Ito20
1 to 10
1 to 10
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Pan 12
£L Gravity Adjustment Factors
In certain circumstances as explained below, the total monthly gravity amount may be
adjusted by three factors: flow reduction factor (to reduce gravity); history of recalcitrance
(to increase gravity); and the quick settlement reduction factor (to reduce gravity). The
resulting figure - benefit + (gravity +/- gravity adjustments) — is the preliminary penalty
amount. .
Flow Reduction Factor for Small Facilities. The total monthly gravity amount may
be reduced based on the flow of the facility. This factor is applicable to direct and indirect
discharges, both municipal and non-municipals. Flow reduction percentages are selected
using the table below. In order to ensure that these reductions are directed at small facilities
(that are not otherwise pan of large corooration), this gravity reduction does not apply to
non-municipals if the facility or parent corporation employs more than 100 individuals.
FLOW REDUCTION FACTOR
AVERAGE DAILY WASTEWATER
DISCHARGE FLOW (in gallons per day)
Less than 5,000
Between 5,000 and 9,999
Between . :,000 and 19,999
Between 20,000 and 29,999
Between 30,000 and 49,999
Between 50,000 and 99,999
100,000 and above
PERCENTAGE REDUCTION FACTOR
OF TOTAL GRAVITY
50
40
30
20
10
5
0 (i.e., no reduction)
History of Recalcitrance Adjustment Factor. The "recalcitrance" factor is used to
increase the penalty based on a violator's bad faith, or unjustified delay in preventing^
mitigating, or remedying the violation. Recalcitrance is also present if a violator failed to
comply with an EPA issued administrative compliance order or a §308 information request,
or with a prior state or local enforcement order. This factor is applied by multiplying the
total gravity component by a percentage between 0 and 150. In administrative penalty
actions, violations of administrative compliance orders are not included in the recalcitrance
calculation (because EPA lacks the authority to seek penalties in the administrative forum for
violations of administrative compliance orders).
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A minimum recalcitrance factor of 10 percent is generally appropriate for each
instance in which a violator fails to substantially comply in a timely manner with an
administrative compliance order ("AO"), a §308 information request, or a state enforcement
order. Thus, if a particular discharger violated 3 AOs, a minimum recalcitrance factor of 30
percent is generally appropriate. If a violator completely fails to comply with an AO or
§308 request, a recalcitrance factor of 20 percent may be appropriate for that failure, while if
there were only minor violations of the Ad or request, a recalcitrance factor of 5 percent
may be appropriate for that violation.
Quick Settlement Adjustment Factor. In order to provide an extra incentive for,
violators to negotiate quickly and reasonably, and in recognition of a violator's
cooperativeness, EPA may reduce the gravity amount by 10 percent if EPA expects the
violator to settle quickly. For purposes of this reduction factor, in Class I administrative
enforcement actions, a quick settlement is when the violator signs an administrative consent
order resolving the violations within four months of the date the complaint was issued or
within four months of when the government first sent the violator a written offer to settle the
case, whichever date is earlier. In Class II administrative enforcement actions and judicial
cases, the controlling time period is 6 and 12 months, respectively. If the violator is not able
to sign the consent order within this time period, this adjustment does not apply.
Environmental Auditing Adjustment Factor. This interim revision of the Penalty
Policy contains no explicit gravity adjustment factor for violators that conduct, or fail to
conduct, environrantal audits, disclose the results to the government, promptly correct the
violations and remedy any harm. This interim revision of the Policy (and the original 1986
version), however, automatically produces smaller penalty amounts for violators who
promptly remedy violations. This is because violators who promptly remedy violations will
.have shorter histories of violations and this automatically reduces both the economic benefit
and gravity.amounts. After the Agency completes its review of its environmental auditing
policy, this Policy may be reissued with an explicit adjustment factor for this factor. In the
interim, Regions, may with the advance approval of Headquarters, appropriately adjust the
gravity amount based on the presence, or absence, of an environmental auditing program.
D. Litigation Considerations (to decrease preliminary penalty amount)
1. Overview. The government should evaluate every penalty with a view toward
litigation and attempt to ascertain the maximum civil penalty the court or administrative
judge is likely to award if the case proceeds to trial or hearing. Many enforcement cases
may have mitigating factors, weaknesses or equitable problems that could be expected to
persuade a court to assess a penalty less than the statutory maximum amount. The simple
existence of weaknesses in a case, however, should not automatically result in a litigation
consideration reduction of the preliminary bottom-line settlement penalty amount (economic
benefit + gravity +. gravity adjustment factors). The government may reduce the amount
of the civil penalty it will accept at settlement to reflect weaknesses in its case where the
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interim CWA Settlement Penalty Policy - March 1. 1995 Paee 14
facts demonstrate a substantial likelihood that the government will not achieve a higher
penalty at trial. .
2. Legal Evaluation. The mere existence, of weaknesses or limitations in a case
should not result in a reduction of the preliminary bottom-line settlement penalty amount,
unless the Agency determines that the preliminary settlement amount is more than EPA is
likely to obtain at trial.11 In evaluating potential litigation consideration reductions, EPA
legal staff should: (a) Determine the statutory maximum penalty; (b) Evaluate what penalty
the court might assess at trial given the particular strengths and weaknesses of the case; and;
(c) Compare this amount to the preliminary settlement amount (benefit + gravity +
recaicitrance).
While Agency legal staff cannot predict the exact penalty amount a court might assess
at trial, case law indicates that a court should use the statutory maximum as its preliminary
penalty figure, and then reduce that amount, as appropriate, using only the penalty
assessment factors in §309(d) of the Act. Fitting the facts of EPA's enforcement case to the
method adopted by the courts in recent CWA penalty decisions provides the Agency with the
clearest method to estimate penalty litigation outcomes.12
3. Application. Adjustments for litigation considerations are taken on a factual basis
specific to the case. Before a complaint is filed, the application of certain litigation
considerations is almost always premature, since the Agency generally does not have enough
information to fully "valuate litigation risk regarding the assigned judge's previous ruling on
similar matters, the court's informed opinion, or witness performance. Other litigation
considerations, including evidentiary matters, witness availability, and equitable defenses
often may not be reliably demonstrated until after case filing. Reductions for these litigation
considerations are more likely to be appropriate after the Agency obtains an informed view.
through discovery and settlement activities, of the strengths and weaknesses in its case and
how the specific court views penalties in the case. Pre-filing settlement negotiations are
often helpful in identifying and evaluating litigation considerations, especially regarding
potential equitable defenses, and thus reductions based on such litigation considerations may
be appropriately taken before the complaint is filed. As a general rule, the greater the
. '? In many situations, weaknesses or limitations in a case are already accounted for in toe preliminary penalty
calculation. For example, the gravity calculation will be less in those circumstances in which the period of violation
was brief, the exceedances of the limitations were small, the pollutants were not toxic, or mere is no evidence of
environmental harm. The economic benefit calculation also will be smaller when the violator has already returned
to compliance since the period of violation will be shorter.
12 The prevailing CWA case law on the assessment of penalties indicates mat, in assessing a penalty, a court
begins at the statutory ma^mum amount and reduces the penalty based on the specific factors set out in section
309(d) of the CWA. See Atlantic States Legal Foundation v. Tvson Foods. 897 F.2d 1128 (11th Cir. 1990). In
contrast, settlement penalties calculated pursuant to this Policy build the Agency's bottom line negotiating position
upward from zero, generally ending up with a figure orders of magnitude less than the statutory maxiirnim penalty.
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Interim CWA Settlement Penalty Policy - March 1,1995 Page 15
disparity between the maximum statutory penalty and the preliminary penalty amount, the
less litigation considerations should affect the Agency's settlement position.
4. Possible Litigation Considerations. While there is no universal list of litigation
considerations, the following factors may be appropriate in evaluating whether the
preliminary settlement penalty exceeds the penalty the Agency would likely obtain at trial:
a. Known problems with the reliability or admissibility of the government's evidence
proving liability or supporting a civil penalty; . .
b. The credibility, reliability, and availability of witnesses;13
c. The informed, expressed opinion of the judge assigned to the case (or person
appointed by the judge to mediate the dispute), after evaluating the merits of the
case.14
d. The record of the judge in any other environmental enforcement case presenting
similar issues. (In contrast, the reputation of the judge, or the judge's general
demeanor, without a specific penalty or legal statement on a similar case, is rarely
sufficient as a litigation consideration.) .
e. Statements made by federal, State or local regulators that may allow the
respondent or defendant to credibly argue that it believed it was complying with the
federal law under which EPA is seeking penalties.
f. The payment by the defendant of civil penalties for the same violations in a
case brought by another plaintiff.15
11 The credibility and reliability of witnesses relates to their demeanor, reputation, truthfulness, and
ixnpeachability. For instance, if a government witness has made statements significantly contradictory to the position
he is to support at trial, his credibility may be impeached by me respondent or defendant. The availability of a
witness will affect the settlement bottom-line if me witness cannot be produced at trial; it does not relate to the
inconvenience or expense of producing the witness at trial.
14 This factor, except as provided below with respect to the record of die judge or odier trier of feet, may not
be applied in anticipation, or at die stage of initial referral, and should not be distorted by taking at face value what
a judge anr"»p*ing to encourage a settlement might say.
15 If die defendant has previously paid civil penalties for die sag violations to another plaintiff, this factor may
be used to reduce the amount of the settlement penalty by no more dun me amount previously paid 'for die same
violations. (If the previous plaintiff was a State qualified to preempt federal enforcement under EPA's interpretation
of Section 309(g)(6), EPA's complaint should not include counts already addressed by a penalty. See "Supplemental
Guidance on Section 309(gK6) (A) of me Clean Water Act," memorandum from Frederick F. Stiehl, Enforcement
Counsel for Water, to Regional Counsels, March 5,1993, and "Guidance on State Action Preempting Civil Penalty
Enforcement Actions Under me Federal Clean Water Act, OE/OW. August 28, 1987.)
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Interim CWA Settlement Penalty Policy — March 1. 1995 Page 16
g. The development of new, relevant case law.
h. A blend of troublesome facts and weak legal arguments such that the Agency faces
a significant risk of obtaining a nationally significant negative precedent at trial.
5. Not Litigation Considerations. In contrast to the above list of possible litigation
considerations, the following items are hot litigation considerations:
a. A generalized goal to avoid litigation or to avoid potential precedential
areas of the law.16
•\
b. A duplicative use of elements included or assumed elsewhere in the Penalty
Policy, such as inability to pay, "good faith"17, "lack of recalcitrance", or a '
lack of demonstrated environmental harm18.
c. Off-the-record statements by the court, before it has had a chance to
evaluate the specific merits of the case are, by themselves, not a reason to
reduce the preliminary settlement penalty amount. (Compare with 4.c above.)
" A generalized desire to minimire litigation costs is not a litigation consideration.
17 The efforts of the violator to achieve compliance or minimize the violations after EPA, a State or
pretreannent control authority has initiated an enforcement action (i.e., an administrative or judicial enforcement
action) do not constitute "good faith" efforts. If such efforts are undertaken before the regulatory agency initiates
an enforcement.response, the settlement penalty calculation already includes such efforts through a potentially
smaller economic benefit amount, a shorter or less serious gravity component, or a lack of any recalcitrance. The
Penalty Policy »«"«"*< all members of die regulated community will make good faith efforts bom to achieve
compliance and remedy violations when they occur, consequently the settlement penalty calculation begins at zero
and builds upward, with no reductions for good faith. In contrast, the absence of good faith efforts .provides the
basis for increasing die penalty through use of the recalcitrance factor.
11 The gravity calculation will reflect the lack of environmental harm. Courts have considered the extent of
environmental harm associated with violations in determining me "seriousness of violations" pursuant to die factors
in §309(d), and have used the absence of any demonstrated or discrete identified environmental harm to impose less
than die statutory maximum penalty. Proof of environmental harm, however, is neither necessary for liability nor
for the assessment of penalties.
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Interim CWA Settlement Penalty Policy — March J. 1995 fate 17
d. The fact that the receiving water is already polluted or that the water can
assimilate additional pollution is not a litigation consideration.19
e. By itself, the failure of a regulatory agency to initiate a timely enforcement action
is not a litigation consideration.20
6. Approval of Litigation Considerations. The Agency recognizes that the
quantitative evaluation of litigation considerations often reflects subjective legal opinions.
Therefore, EPA Regions may reduce the preliminary penalty amount for litigation
considerations for up to one-third of the net gravity amount (i.e., gravity as modified by the
gravity adjustment factors) without Headquarters approval (where such approval would
otherwise be required). Of course, such a reduction must be fully explained and maintained
in the case file. This reduction is not applicable in municipal cases in which the tables in
D.7 below are used.
7. Municipal Cases. In those cases against a municipality or other public entity
(such as a sewer authority) in which the entity has failed to comply with the Clean Water Act
but nevertheless did make good faith efforts to comply, the Agency may mitigate the
preliminary penalty amount based en this national municipal litigation consideration. The
preliminary penalty amount (economic benefit -I- gravity +. gravity adjustments) may be
mitigated to no less than the cash penalty determined by operation of the two tables set forth
below. In addition, the cash penalty amount established by the tables may be reduced based
on compelling ability to pay considerations and by up to 40 percent for appropriate
supplemental environmental projects. Reducing the cash penalty below the amount
established by the national municipal litigation consideration (other than for ability to pay
considerations or for 40 percent based on a SEP) requires compelling evidence of other
considerations and the prior approval of Headquarters (even if Headquarters' approval of the
settlement would otherwise not be required).
The national municipal litigation consideration is a discretionary factor and the
Agency is under no obligation to use it in all municipal cases.21 It should only be used if
there is some evidence that the municipality made a good faith effort to comply. The
national municipal litigation consideration is based on the economic benefit, environmental
19 See, e.g.. Natural Resources Defense C?V"9^ v- Texaco ^fil'IR 8lri MKlRi 800 F. Supp. 1, 24 (D. Del.
1992).
» See PIRG v. Powell Dutftvn. 913 F. 2d 64, 80-81 (3rd Cir. 1990).
21 The national municipal litigation consideration is primarily intended to apply in cases in which there has been
a failure to timely construct treatment facilities or other capital projects; it may not be appropriate in prerreaonent
failure tb implement cases. • .
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Interim CWA Settlement Penalty Policy - March 1, 1995 Fate 18
impact, duration and size of the facility, and is derived, in part, on the settlement penalties
EPA has obtained from judicial municipal cases settled between October 1988 and December
1993. There are three steps to calculate a penalty using the national municipal litigation
consideration tables.
1. Using Table A determine the economic benefit environmental impact factor
amount. This dollar amount is found by selecting an appropriate value from the range
in the appropriate cell in Table A. The economic benefit is the benefit previously
calculated pursuant to section IV.A. above. Impact of the violations is based on the
actual or potential (risk) of harm caused, in whole or part, by the violations.
2. Using Table B determine the population months of violations factor amount. This
dollar amount is found by selecting an appropriate value from the range in the
appropriate cell in Table B. The service population is the total population served by
the violating POTW(s) during the period. The months of violation are the total
number of months calculated pursuant to section IV.B above. (If the 'service
population exceeds 3 million, the Table B value is found by combining values from
multiple rows. For example, if the service population was 4.5 million, the factor B
penalty contribution would be the sum of a value selected from the appropriate cell in
the 1,000,001 to 2,000,000 population row plus a value selected from the appropriate
cell in the 2,000,001 to 3,000,000 population row.)
3. Sum the selected factor values from Tables A and B. Note that th"° factor values in
Tables A and B are in thousands of dollars.
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CWA S,/*/,m,n/ Penalty Policy - March 1. 1995
Page 19
NATIONAL MUNICIPAL LITIGATION CONSIDERATION - TABLE A
ECONOMIC BENEFIT ENVIRONMENTAL IMPACT FACTOR IN THOUSANDS OF DOLLARS
IMPACT OF
VIOLATIONS ON
HUMAN HEALTH OR
THE ENVIRONMENT
No actual or potential
harm.
Minor actual or potential
harm (e.g., water quality-
based effluent or whole
effluent toxicity limit
violated).
Moderate actual or
potential harm (e.g., fish
kill, beach closing.
restrictions on use of water
body, raw sewage
discharges).
Severe actual or potential
harm (e.g., repeated beach
closings, interference with
drinking water supplies).
ECONOMIC BENEFIT RANGES IN THOUSANDS OF DOLLARS
.001 to
50
6 to 9
9 to II
13 to 14
-
17 to-32
50 to
100
II to 15
16 to 19
22 to 25
30 to 55
100 to
250
17 to 23
25 to 29
33 to 38
46 to 84
250 to
1,000
32 to 43
47 to 55
63 to 71
- •
87 to
158
1,000 to
2,000
49 to 67
73 to 86
98 to
no
135 to
245
2,000 to
5,000
75 to 103
112 to
131
150 to
168
206 to
374
5,000 to
10,000
1 10 to
151
164 to
192
219 to
246
301 to
548
10,000
to
25,000
167 to
230
251 to
293
335 to
376
460 to
837
greater
than
25,000,000
283 to
389
424 to
495
•
566 to
636
778 to
1,414
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Interim CWA Settlement Penalty Policy •• March I. 1995
Pate 20
NATIONAL MUNICIPAL LITIGATION CONSIDERATION - TABLE B
POPULATION MONTHS OF VIOLATION FACTOR IN THOUSANDS OF DOLLARS
SERVICE
POPULATION
100 to 5,000
5,001 to 25,000
25.001 to 50,000
50,001 to
100,000
100,001 to
250,000
250,001 to
500.000
500.001 to
1,000.000
1.000.001 to
2,000,000
2.000.001 to
3.000.000
1 to 6
Oto
0.6
0.6 to
3
3 to 6
6 to 12
12 to
30
30 to
60
60 to
120
120 to
240
240 to
360
7to 12
Olo
1.8
I.Sto
9
9 to 18
18to
36
36 to
90
90 to
180
ISOto
360
36010
720
720 to
1,080
I3to
18
O.I to
3
3 to IS
I5to
30
30to
60
60 to
ISO
ISO to
300
300 to
600
60010
1.200
1,200
to
1,800
19 to
24
O.I to
4.2
4.2to
21
21 to
42
42 to
84
84 to
210
210 to
420
420 to
840
84010
1,680
1.680
to .
2.520
MO
25 to
30
O.I in
5.4
5.4 to
27
27 to
54
S4lo
108 .
108 to
270
27010
540
540to
1.080
1.080
to
2.160
2.160
to
3.240
NTHS Of
31 to
36
O.I to
6.6
6.6.to
33
33to
66
66 to
132
132 to
330
330 to
660
660to
1,320
1.320
to
2,640
2.640
to
3,960
' VIOLA!
37 to
42
0.2 to
7.8
7.8 to
39
39to
78
78 to
156
156 to
390
390 to
780
780to
1.560
1,560
to
3,120
3,120
to
4.680
ION
43to
48
0.2 to
9
9 to 45
45to
90
90lo
180
ISOto
450
4SOto
900
900to
1.800
1,800
to
3.600
3.600
to
5i400
49 to
54
0.2 to
10.2
10.2 to
51
SI to
102
I02to
204
204 to
510
510 to
1.020
1.020
to
2,040
2,040
to
4.080
4.080
to
6.120
55 to
60
0.2to
11.4
11.4 to
57
57 to
114
114 to
228
228to
570
570 to
1,140
1,140
to
2.280
2,280
to
4,560
4,560
to
6,840
61 to
66
0.3 to
12.6
12:6 to
63
63 to
126
126 to
252
252 to
630
630 to
1.260
1.260
to
2.520
2,520
to
5.040
5,040
to
7.560
66>
0.3 to
14
14 to 70
70 to
140
I40to
280
280 to
700
700to
1,400
l,400to
2,800
2,800 to
5,600
5.600 to
8.400
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Interim CWA Settlement Penalty Policy - March 1. 1995 Paee 21
E. Ability to Pay (to decrease preliminary penalty amount)
The Agency typically does not request settlement penalties, which combined with the
cost of the necessary injunctive relief, that are clearly beyond the financial capability of the
violator. This means EPA should not seek a penalty that would seriously jeopardize the
violator's ability to continue operations and achieve compliance, unless die violator's
behavior has been exceptionally culpable, recalcitrant, threatening to human health or the
environment, or the violator refuses to comply. . ' .
The adjustment for ability-to-pay may be used to reduce the settlement penalty to the
highest amount that the violator can reasonably pay and still comply with the CWA. The
violator has the primary burden of establishing the claim of inability to pay. The violator
must submit the necessary information demonstrating actual inability to pay as opposed to
unwillingness to pay. Further, the claim of inability to pay a penalty should not be confused
with a violator's aversion to make certain adjustment in its operations in order to pay the
penalty.22
If the violator is unwilling to cooperate in demonstrating its inability to pay the
penalty, this adjustment should not be considered in the penalty calculation, because, without
the cooperation of the violator, the Agency will generally not have adequate information to
determine accurately the financial position of the violator. In some cases, the Agency may
need to consult a financial expert to properly evaluate a violator's claim of inability to pay.
If the violator demonstrates an inability to pay the entire negotiated penalty in one
lump sum (usually within 30 days of consent decree entry), a payment schedule should be
considered. The penalty could be paid in scheduled installments with appropriate interest
accruing on the delayed payments. The period allowed for such installment payments should
generally not extend beyond three years.
If a payment schedule will not resolve the violator's ability-to-pay issue, as a last
recourse, the Agency can reduce the amount it seeks in settlement to a more appropriate
amount in situations in which inability-to-pay can be clearly documented and reasonably
quantified.
In the case of municipalities, one quick way to evaluate whether there might be ah
ability to pay issue is to examine the most recent bond rating (within the past 5 years). If the
bond rating is below BBB (Standard & Poor's rating scale) or below Baa (Moody's rating
scale), the community may be in poor financial condition and a detailed financial evaluation
- For example, a business may have to use funds mat were previously designated to develop a new product
line to pay a penalty and thus the new product line would be delayed. Similarly, a penalty could be paid using
company funds that otherwise would have gone to pay its executives bonuses.
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Interim CW A Settlement Penalty Policy - March 1. 1995 Pafe 22
by an appropriate expert may be necessary to determine whether the financial condition
affects the ability to pay a penauy. '
V. SUPPLEMENTAL ENVIRONMENTAL PROJECTS (SEPs)
Supplemental Environmental Projects (SEPs) are defined by EPA as environmentally
beneficial projects which a violator undertakes, but is not otherwise legally required to
perform, in exchange for favorable penalty consideration in settlement of an enforcement
action. In order for a violator to receive a settlement penalty reduction in exchange for
performing such a project, the project must conform with the EPA's SEP Policy, or be
approved in advance by the Assistant Administrator23. A SEP may be allowed in a
municipal case, even if the cash penalty is less than economic benefit, provided the cash
penalty is no less than 60 percent of the amount provided in section IV.D.7. Use of SEPs in
a particular case is entirely within the discretion of EPA, and the Department of Justice in
judicial cases.
VI. OTHER TYPES OF PENALTIES
This Policy only establishes how the Agency expects to calculate the minimum
penalty for which it would be willing to settle a case. The development of the penalty
amount to plead in an administrative or judicial complaint is developed independent of this
Policy. This Policy is not intended and should not be used as the basis for a penalty
demand in a complaint, an administrative hearing or, a civil judicial trial. The Agency will
not use this Penalty Policy in arguing for a penalty at trial or in an administrative penalty .
hearing.24 In those cases which proceed to trial or an administrative hearing, the Agency
should seek a penalty higher man that for which it is willing to settle.
If the "bottom-line" settlement penalty calculated pursuant to this Policy exceeds the
maximum penalty that can be obtained in an administrative penalty action pursuant to §309(g)
of the CWA, the Agency should instead proceed judicially.25 In rare circumstances, the
D See "EPA Policy on the Use of Supplemental Environmental Projects in Enforcement Settlements".
transmitted on February 12, 1991 by the Assistant Administrator for Enforcement, or subsequent revisions.
24 If mat were to occur, then me defendant would have no incentive to settle with EPA. Sec Guidance on the
Distinctions Among Pleading. Negotiating, and Litigating Civil Penalties far Enforcement Cases Under the Clean
Water Act, OECM/OW, January 19, 1989. .
v For further guidance on choosing between administrative and judicial enforcement options, see "Guidance
on Choosing Among Clean Water Act Administrative, Civil and Criminal Enforcement Actions", which
Attachment 2 to the August 28,1987 "Guidance Documents and Delegations for Implementation of Administrative
Penalty Authorities Contained in 1987 Clean Water Act Amendments'.
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Interim CWA Settlement Penalty Policy - March 1. 1995 .Pate 23
statutory maximum penalty may be less than the "bottom-line" settlement penalty in civil
judicial cases; in such circumstances, the statutory maximum penalty should serve as the new
"bottom-line" penalty.
YD. DOCUMENTATION, APPROVALS, AND CONFTOENTIALITY
1 . , • •
Each component of the settlement penalty calculation (including all adjustments and
subsequent recalculations) must be clearly documented with supporting materials and written
explanations in the case file. In all cases in which a settlement penalty may not comply with
the provisions of this Policy, or in a case in which application of this Policy appears
inappropriate, the penalty must be approved in advance by the EPA Assistant Administrator
for Enforcement and Compliance Assurance.
Documentation and explanations of a particular settlement penalty calculation •
constitute confidential information that is exempt from disclosure under the Freedom of
Information Act, is outside the scope of discovery, and is protected by various privileges,
including the attorney-client privilege and the attorney work-product privilege. While
individual settlement penalty calculations are confidential documents, this Policy is a public
document and may be released to anyone upon request. Further, as part of settlement .
negotiations between the parties, the Agency may choose to release pans of the case-specific
settlement calculations. The release of such information may only be used for settlement
negotiations in the case at hand and, of couise, may not be admitted into e\.Jence in a trial
or hearing. See Rule 408 of Federal Rules of Evidence.
This Policy is.purefyfor the use of U.S. EPA enforcement personnel in settling cases.
EPA reserves the right to change this Policy at any time, without prior notice, or to act at
variance to this Policy. This Policy does not create any rights, implied or otherwise, in
any third parties.
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ATTACHMENT 1 TO INTERIM CWA SETTLEMENT PENALTY POLICY
EXAMPLES OF HOW TO CALCULATE STATUTORY MAXIMUM PENALTY
Violation scenario
Maximum
statutory penalty*
Authority
Violation of daily maximum limit for
pollutant A. on the 5th of January.
$25,000
Plain reading of CWA, § 309(d): "$25,000
per day for each violation"
Violation of daily maximum limit for
pollutant A, on the 5th, 10th, and
15th of January.
$75,000
Plain reading-of CWA, § 309(d): "$25,000
per day for each violation"
Violation of daily maximum limits for
each of pollutants A and B, on the 5th
of January.
$50,000
Tyson Foods and Powell Duffryn. as well
as plain reading of CWA, § 309(d):
"$25,000 per day for each violation"
Violation in January of weekly
average for pollutant A.
$25,000 per day,
multiplied by 7
days $175,000.
Tvson Foods. 897 F.2d at 1139. Also see,
Gwaltnev. 897 F. 2d at 314.
Violation in January of monthly
average limit for pollutant A.
$25,000 per day,
multiplied by 31
days hi January =
$775,000
Tvson Foods. 897 F.2d at 1139. Also see,
Gwajfijev. 897 F. 2dat314.
Violation in January of monthly
average limit for pollutant A, in which
there is evidence that tht e were no
discharges on 4 days (e.g. plant shut
down on Sundays).
'$25,000 pe: day,
multiplied by 27
days hi January -
$675,000
Natural Resources Defense Council v.
Texaco. 2 F.3d 493, 507-508 (3rd Cir.
1993).
Violation in January of monthly
average limits for both pollutants A
and B.
$50,000 per day,
multiplied by 31
days hi January,
= $1,550,000
Tyson Foods. 897 F.2d at 1140. footnote
22
Violation in January of monthly
average limit for pollutant A, and of
daily maximum limit for pollutant B
on January 5th and 15th.
$775,000 for
pollutant A, +
$50,000 ($25,000
per day x 2) for
pollutant B, =
$825,000
Tvson Foods' 897 F.2d at 1140, under
"The interaction of daily and monthly
violations"
Violation in January of monthly
average limit for pollutant A, and of
daily maximum limit for pollutant A
on Jan. 5th and 15th.
25,000 per day,
multiplied by 31
days in January, =
$775,000.
Tvson Foods. 897 F.2d at 1140, under
"The interaction of daily and monthly
violations"
Failure to properly monitor" for
pollutant A on 4 required days in
January.
$100,000.
Statutory language, CWA §309.
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Attachment 1 to Interim CWA Settlement Penalty Policy
Violation scenario
Maximum
statutory penalty*
Authority
Failure to properly monitor for
pollutants A, B, and C on January 15.
$75,000.
Statutory language, CWA §309.
Failure to monitor for a monthly
pollutant parameter.
$25.000 for each
day in which the
discharger was
required to monitor
for that pollutant.
Statutory language, CWA §309.
Failure to submit adequate.discharge
monitoring report on time ( each
failure to monitor for a particular
pollutant is subject to a separate
penalty calculation).
$25,000.
Statutory language, CWA §309.
Failure to timely submit a report or
other document (each failure to timely
complete an activity covered by the
report is subject to a separate penalty
calculation).
$25,000
Settlement policy discretion.
NOTES:
* For administrative penalty cases the penalty per day for each violation is $10,000 and may
not exceed the total penalty amount allowed in a Class I or Class II administrative
proceeding.
**
For purposes of calculating penalties, the act of monitoring for a particular pollutant
includes the sequence of events starting with the collection of the wastewater sample through
completion of the analytical testing of the sample. The obligation to report the results of the
monitoring is a separate act subject to a separate penalty calculation.
The guidelines set forth here reflect EPA's policy on how to calculate the statutory maximum
penalty with regards to ensuring that all settlement penalties sought pursuant to the Penalty
Policy do not exceed such statutory maximum. At trial or in a hearing, EPA reserves the
right to calculate (he statutory maximum pursuant to more aggressive assumptions.
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ATTACHMENT 2 TO INTERIM CWA SETTLEMENT PENALTY POLICY
Case Name
Date
Prepared by
.and
[attorney name].
SETTLEMENT PENALTY CALCULATION WORKSHEET
STEP
l:
2.
3.
4.
.5.
Calculate Statutory Maximum Penalty (period of violations
from through )
Economic Benefit (attach BEN printouts, with explanations
for calculations)
Total of Monthly Gravity Amounts
Economic Benefit + Gravity (lines 2 + 3)
AMOUNT
-
Gravity Adjustments .
a. Flow Reduction Factor ' (0 to 50%) X line 3
b. Recalcitrance Factor (0 to 150'* } X line 3
c. Quick Settlement Reduction (0 or 10%) X line 3
d. Total gravity adjustments (negative amount if net gravity
reduction) (lines 5.b. - 5,c - 5. a )
6. Preliminary Penalty Amount (lines 4 + 5.d)
7.
8.
9.
10.
Litigation Consideration Reduction (if any)
Ability to pay reduction (if any)
Reduction for Supplemental Environmental Projects (if any)
Bottom-line Cash Settlement Penalty (Line 6 less lines 7, 8
and 9. Or, if applicable, amount calculated by national
municipal litigation consideration in §IV.D.6, less no more
than 40% of that amount for appropriate SEPs.)
-------
IV.C.24.
"Issuance of Interim Revised Supplemental Environmental Projects
Policy", May 8, 1995.
-------
.
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, O.C. 20460
MAY-3B95
••'-..-• OFFICE OF
ENFORCEMENTAND
MEMORANDUM , COMPLIANCE ASSURANCE
SUBJECT: issuance'of Interim, Reviled Supplemental Environmental Projects Policy
FROM: Steven A. Hi
Assistant Administrator
TO: Regional Administrators '
Attached is EPA's Interim Revised Supplemental Environmental Projects (SEP)
Policy. SEPs are environmentally beneficial projects which a violator agrees to undertake in
settle mem of an enforcement action, but which the violator is not otherwise legally required
JP perform. This.interim revised Policy provides the Agency with additional flexibility to
craft .settlements which may secure significant environmental or public health protection.
The Agency encourages die use of SEPs. While penalties play an important role in
environmental protection by deterring violations and creating a level playing field, SEPs can
play an additional role in securing significant environmental or public health protection and
improvements. SEPs may be particularly appropriate to further the objectives in the statutes
EPA administers and to achieve other policy goals, including promoting pollution prevention
and environmental justice. .
.f> • •, ^^
This revision provides numerous improvements to the current SEP Policy. The
revised Policy clearly defines a SEP. It establishes guidelines to ensure that SEPs are within
EPA's legal authority. It defines seven categories of projects which may qualify as SEPs. It
provides step-by-step procedures for calculating die cost of a SEP and the percentage of that
cost, based on an evaluation of five factors, which may be applied as a mitigating factor in
establishing an appropriate settlement penalty. . .
This, Policy is effective May 8,1995 and supersedes the February 12, 1991 "Policy
on the Use of Supplemental Environmental Projects in EPA Settlements.' The Policy is to
be used in all enforcement actions filed after the effective date and to all pending cases in
which the government has not reached agreement in principle with the alleged violator on the
specific terms of a SEP.
-------
-2-
We are issuing this Policy in an interim version because we may wish to revise it
based on public comments and bur experience in using it. We are issuing it as an interim
policy, rather than as a draft, because we believe it is superior to the 1991 Policy and thus
should go into effect as soon as possible. We expect to publish this interim version of the
Policy in the Federal Register within the next 30 davs.
Thank you for your comments on two previous internal drafts of this Policy. We
appreciate the support and efforts of the Department of Justice, our Office of General
Counsel, and the SEP workgroup in revising this Policy.
We expect to conduct training sessions on the new Policy in each Region during .the
next few months. In addition, we expect to issue guidance on the proper drafting of
settlement agreements containing SEPs shortly. If you have any questions on the Policy, you
may contact David A. Hihdin. Acting Branch Chief, Multimedia Enforcement Division, in
the Office of Regulatory Enforcement at 202-564-6004. Questions also may be directed to
Peter Moore, at 202-564-6014, or Gerard Kraus at 202-564-6047 in the Multimedia
Enforcement Division.
Attachment ;
cc: (w/attachment)
Assistant Administrators ^
OECA Office Directors
ORE Division Directors
- Regional Counsels
Regional Enforcement Coordinators, .• •
Pfgional Program Division Directors
Department of Justice. AAG, ENRD
Department of Justice, EES Chief and Deputy Chiefs
Department of Justice, EDS Chief and Deputy Chief
SEP Workgroup Members
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INTERIM REVISED
EPA SUPPLEMENTAL ENVIRONMENTAL PROJECTS POLICY
EFFECTIVE MAY 8, 1995
A. INTRODUCTION
1. Background .
In settlements of environmental enforcement cases, the U.S. Environmental Protection
Agency (EPA) will require the alleged violators to achieve and maintain compliance with
Federal environmental laws and regulations and to pay a civil penalty. To further EPA's
goals to protect and enhance public health and the environment, in certain.instances
environmentally beneficial projects, or Supplemental Environmental Projects (SEPs), may be
included .in the settlement, this Policy sets forth the types of projects that are permissible as
SEPs, the penalty mitigation appropriate for a particular SEP, and the terms and conditions
under which they may become part of a settlement The primary purpose of mis Policy is to
...ooufii^ and obtain eirvironmentstand public health protection . nd improvem* mat may
not otherwise nave occurredwithout the settlement incentives provided by this Policy:
In settling enforcement actions/EPA requires alleged violators to promptly cease the
violations and, to the extent feasible, remediate any harm caused by the violations. EPA also
*eeks substantial monetary penalties in order to deter noncompliance. Without ;: -dties,
companies would have an incentive to delay compliance until they are caught and ordered to
comply. Penalties promote environmental compliance and help protect public health by
deterring future violations by the same violator and deterring violations by other members of
the regulated community. Penalties help, ensure a national level playing field by ensuring
that violators do not obtain an unfair economic advantage over their competitors who made
*Kc necessary expenditures .to comply on time. Penalties also encourage companies to adopt
pollution prevention and recycling techniques, so that they minimize their pollutant
discharges and reduce their potential liabilities. ,.--..••
Statutes administered by EPA generally contain penalty assessment criteria mat a . '
court or administrative law judge must consider in determining an appropriate penalty at trial
or a hearing. In the settlement context, EPA generally follows these criteria in exercising its
discretion to establish an appropriate settlement penalty. In establishing an appropriate
penalty, EPA considers such factors as the economic benefit a«nria»«^ with the violations,
the gravity or seriousness of the violations, and prior history of violations. Evidence of a
violator's commitment and ability to perform a SEP is also a relevant factor for EPA to
consider in establishing an appropriate settlement penalty. All else being equal, the filial
settlement penalty will be lower for a violator who agrees to perform an acceptable SEP
compared to the violator who does not agree to perform a ShP.
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Revised SEP Policy *** May 1995 *** Page2
The Agency encourages the use of SEPs. While penalties play.an imp^imt^le.in
father the Objectives in the statutes EPA administers and to achieve other policy goals,
including promoting pollution prevention and environmental justice.
2. Pollution Prevention ?nH Environmental Justice .
The Pollution Prevention Act of 1990 (42 U.S.C. § 13101 et seq 1 Nomnbei £
1990) identifies an environmental management hierarchy in which pollutton should 1 te
prevented or reduced whenever feasible; pollution that cannot be P^^f^L
recycled in an environmentally safe manner whenever feasible; ^*™**<^*
prevented or recycled should be treated in an environmentally ^«£j£d3J as a last
feasible; and disposal or other release into the environment should be employed piJy as a last
resort ..." (42 U.S.C. §13103). In short, preventing pollution before it is created is
preferable to trying to manage, treat or dispose of it after ^ it is created.
Selection and evaluation of proposed SEPs should be conducted in acx»rdan« with
this hierarchy of environmental management, i.e., SEPs involving pollution prevention
technique' m preferred ove~ qther types of reduction or control strategies, and this «" °*
refected in the degree of comideration accorded to ydefeiKL-itArespondent before c
of the final monetary penalty.
Further, there is an acknowledged concern, expressed in Executive O^wW^S on
environmental justice, that certain segments of the nation's population are d^rPPo™°™f ly
burdened by pollutant exposure. Emphasizing SEPs in comr.^,ities where envutramental
justice issues are present helps ensure that persons who spend significant portions of ttieir
time in areas, or depend on food and water sources located near, whence violanonsoccur
would be protected. Because environmental justice is not a specific technique or process out
an overarching goal, it is not listed as a category of SEP; but EPA encourages SEPs in
communities where environmental justice may be an issue.
3. Using this Policy
In evaluating a proposed project to determine if it qualifies as a SEP and jhen
determining how much penalty mitigation is appropriate, Agency enforcement and
compliance personnel" should use the following five-step process:
(1) Ensure that the project meets the basic definition of a SEP. ^s?ct^"B^r_
(2) Ensure that all legal guidelines, including nexus, are satisfied. (Section C)
Depending on circumstances and cost, SEPs also may have a deterrent impact.
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Revised SEP Policy *** May 1995 *** Page3
(3) Ensure that die project fits within one (or more) of the designated categories of SEPs.
(Section D)
(4) Calculate the net-present after-tax cost of the project and then determine die
appropriate amount of penalty mitigation. (Section E)
(5) Ensure that the project satisfies all of the implementation and other criteria. .
(Sections F, G, H and I)
4. Applicability . . .
This Policy revises and hereby supersedes die-February 12, 1991 Policy on the Use of
Supplemental Environmental Projects in EPA Settlements. This Policy applies to settlements
of all civil judicial and administrative actions filed after the effective date of this Policy, and
to all pending cases \urwhich die government has not reached agreement in principle with die
alleged violator on the specific terms of a SEP.
This Policy applies to all civil judicial and administrative enforcement actions taken
under die authority of the environmental statutes and regulations that EPA administers. It
also may be used by EPA and die Department of Justice in reviewing proposed SEPs in
settlement of citizen suits. This Policy also applies to federal agencies that are liable for die
payment of civil penalties. This Policy does not apply to settlements of claims for stipulated
penalties for violations of conseni decrees or other settlement agreement requirements.2
._....-. ;_ ••••'. .••'.--. .. •.-'-••• ;.. .- ;••;!_'• - •. •• -•'•;
: . This is a settlement Policy and thus is not intended for use by EPA, defendants,
respondents, courts or administrative law judges at a hearing or in a trial.; I'urther, whetiier
die Agency decides to accept a proposed SEP as part of a settlement is purely within EPA's
discretion. Even though a project appears to satisfy all of the provisions of this Policy, EPA
may decide, for one. or more reasons, that a SEP is not appropriate (e.g., the cost of
reviewing a SEP proposal is excessive, die oversight costs of die SEP may be too high, or
die defendant/respondent may not have die. ability or reliability to complete the proposed
SEP). •'.:' •. . - '.'.''". " ' ' -.'••'•'•-'
This Policy establishes a framework for EPA to use in exercising its enforcement
discretion in determining appropriate settlements. In some cases, application of tiiis Policy
may not be appropriate, in whole or part. In such cases, the litigation team may, witii the
advance approval of Headquarters, use an alternative or modified approach.
B. DEFINITION AND KEY CHARACTERISTICS OF A SEP
. Supplemental environmental projects are defined as environmentally Jtenefidal
projects which a defendant/respondent agrees to undertake in settlement of an •enforcement
2 The Agency is evaluating whedier SEPs should be used, and if so, how, in evaluating claims
for stipulated penalties.
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Revised SEP Policy *** May 1995 *** Page 4
action, but which the defendant/respondent is not otherwise legally required to perform
The three bolded key parts of this definition are elaborated below.
"Environmentally beneficial" means a SEP must improve, protect, or reduce risks to
public health, or the environment at large. While in some cases a SEP may provide the
alleged violator with certain benefits, mere must be no doubt mat the-project primarily
benefits the public health or the environment. ;
"In settlement of an enforcement action" means: 1) EPA has die opportunity to help
shape the scope of the project before it is implemented; and 2) the project is not commenced
until after the Agency has identified a violation (e.g., issued a notice of violation,
administrative order, or complaint).3 • .
'Not otherwise legally required to perform means" the SEP is not required by any
federal, state or local law or regulation. Further, SEPs cannot include actions .which the
defendant/respondent may be required .to perform: as injunctive relief in the instant case; as
part of a settlement or onder in another legal action; or by state or local requirements. SEPs
may include activities which die defendant/respondent will become legally obligated to
undertake two or more years in the future. Such "accelerated compliance* projects are not
allowable, however, if the regulation or statute provides a benefit (e.g., a higher emission
limit) to the defendant/respondent for early compliance.
* ilso, the performance of-a-SLK reduces neither the stringency nor time1 js&.
requirements of-Federal environmental statutes and regulations.^Qfcourse, •performance oi ^
SEP does not alter the defendant/respondent's obligation to remedy a violation expeditiously
and return to compliance. ; ; , '•._".::••- ]•••-. •••..>'••. ;
C. LEGAL GUIDELINES
/ • " .
EPA has broad discretion to settle cases, including the discretion to include SEPs as
an appropriate part of the settlement. The legal evaluation of whether a proposed SEP is
within EPA's authority and consistent with all statutory ind Constitutional requirements may
be a complex task. Accordingly, this Policy uses five legal guidelines to ensure that our
' Since the primary purpose of this Policy is to obtain environmental or public health benefits
that may not have occurred "but for" die settlement, projects which have been started before the
Agency has identified a violation are not eligible as SEPs. Projects which have been committed to or
started before the identification of a violation may mitigate the penalty in other ways. Depending on
the specifics, if a company had initiated environmentally beneficial projects before the enforc
process commenced, the initial penalty calculation could be lower due to die absence of cecatehranj
no history of other violations, good faith efforts, less severity of the violations, or a shorter duratioi
of the violations.
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Revised SEP Policy *** May 1995 *** Page 5
SEPs are within the Agency's and a federal court's authority, and do not run afoul of any
Constitutional or statutory requirements.4
1. All projects must have adequate nexus. Nexus is the relationship between the
violation and the proposed project. This relationship exists only if the project
remediates or reduces the probable overall environmental or public health impacts or,
risks to which the violation at issue contributes, or if the project is designed to reduce.
the likelihood that similar violations will occur in the future. SEPs are likely to have
an adequate nexus if the primary impact of the project is at the site where the alleged •
violation occurred or at a different site in the same ecosystem or within the immediate
geographic1 area. Such SEPs may have sufficient nexus even if the SEP addresses a
different pollutant in a different medium. In limited cases, nexus may exist even
though a project will involve activities outside of the United States.6
2. A project must advance at least one of the declared objectives of the
environmental statutes tiiat are the basis of the enforcement action; Further, a project
cannot be inconsistent with any provision of the underlying statutes. ' .
'. 3. EPA or any other federal agency may not play any role .in managing or controlling
funds mat may be set aside or escrowed for performance of a SEP. Nor may EPA
retainer uthority to mana£» or administer :he SEP. EPA may, of course, provide
oversight to ensure that a project is implemented pursuant to me provisions of the
. .settlement and have legal recourse if the SEP is not adequately ;performed.
4. The type and scope of each project are determined in die signed settlement
.agreement. This means the "what, where and when* of a project are determined by
.:. the settlement agreement. Settlements in which the defendant/respondent agrees to
spend a certain sum of money on a projects) to be determined later (after EPA or the
Department of Justice signs the settlement agreement) are generally not allowed.
5. A project may not be something mat EPA itself is required by its statutes to do.
And a project may not provide EPA with additional resources to perform an activity
for which Congress has specifically appropriated fuinis. In addition, a SEP should
not appear to be an expansion of an existing EPA program. For example, if EPA has
developed a brochure to help a segment of the regulated community comply with
environmental requirements, a SEP may not directly, or indirectly, provide additional
resources to revise, any or distribute the brochure.
4 These legal guidelines are based on federal law as ft applies to EPA; States may have more or
flexibility in the use of SEPs depending on their laws.
3 The immediate geographic area will generally be the area within a SO mite radius ofthe she on
which the violations occurred.
' All projects which would-include activities outside the U.S. must be approved in advance by
Headquarters and/or the Department of Justice. See section I.
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Revised SEP Policy * * * Maj 19Sv * * * Page 6
D. CATEGORIES OF SUPPLEMENTAL ENVIRONMENTAL PROJECTS
EPA has identified seven categories of projects which may qualify as SEPs. In on
for a proposed project to be accepted as a SEP, it must satisfy the requirements of at leasi
one category plus all the other requirements established in this Policy.
1. Public Health ,
A public health project provides diagnostic, preventative and/or remedial components
of human health care which is related to the actual or .potential damage to human health
caused by the violation. This may include epidemiological data collection and analysis,
medical examinations of potentially affected persons, collection and analysis of blood/fluid/
tissue samples, medical treatment and rehabilitation therapy.
Public health SEPs are acceptable only where the primary benefit of the project is the
population mat was harmed or put at risk by the violations. -,
2. Pollution Prevention .
A pollution prevention project is one which reduces the generation of pollution
through "source reduction;" i.e., any practice which reduces the amount of any hazardous
substance, pollutant or contaminant entering any waste stream or otherwise being released
into the environment, prior to recycling, treatment or disposal. (After the pollutant or waste
sseau has been jeneratedTpdllution prevention is ho longc• t ossible and th* aste iaast be
handled by appropriate recycling, treatment, containment, or disposal memods.)
Source reduction may include equipment or technology modifications, process or
procedure modifications, reformulation or redesign of products/ substkution 4>f raw materials,
and improvements in housekeeping, maintenance, training, inventory jcpntrc!, ?r Other
operation and maintenance procedures. Pollution prevention also includes any project which
protects natural resources through conservation or increased efficiency in the use of energy,
water or other materials. "In-process recycling," wherein waste materials produced during a
manufacturing process are returned directly to production as raw materials, on site, is
considered a pollution prevention project. • • •
In all cases, for a project to meet the definition of pollution prevention, there must be
an overall decrease in the amount and/or toxicity of pollution released to the environment,
not merely a transfer, of pollution among media. This decrease may be achieved directly or
through increased efficiency (conservation) in the use of energy, water or other materials.
This is consistent with the Pollution Prevention Act of 1990 and the Administrator's .
"Pollution Prevention Policy Statement: New Directions for Environmental Protection,"
dated June 15, 1993.
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Revised SEP Policy *** May 1995 *** Page?
3... Pollution Reduction
If the pollutant or waste stream already has been generated or released, a pollution
reduction approach - which employs recycling, treatment, containment or disposal
techniques - may be appropriate. A pollution reduction project is one which results in a
decrease in the amount and/or toxicity of any hazardous substance, pollutant or contaminant
entering any waste stream or otherwise being released into the environment by an operating
business^or facility by a means which does not qualify as "pollution prevention." This may
include the installation of more effective end-of-process control or treatment technology.
This also includes "out-of-process recycling," wherein industrial waste collected after the .
manufacturing process and/or consumer waste materials are used as raw materials for
production off-site, reducing the need for treatment, disposal, or consumption of energy or
natural resources. •
4. Environmental Restoration and Protection
An environmental restoration and protection project is one which'goes beyond
repairing the damage caused by die violation to enhance the condition of the ecosystem or
immediate geographic area adversely affected.? These projects, may be used to restore or
protect natural environments (such as ecosystems) and man-made environments, such as
facilities and buildings. Also included is any project which protects the ecosystem from
actual p> potential damage resulting from ue violation or improves the overall condition of
the ecosystem. Examples of such projects include: reductions in discharges of pollutants
which are not the subject of the violation to an affected air basin or watershed; restoration of
a wetland along die same avian flyway in which the facility is located; or purchase and
management of a watershed area by the defendant/respondent to protect a drinking water
supply wnere the violation; e.g., a reporting violation, did not directly damage the watershed
but potentially could lead to damage due to unreported discharges. This category also
includes projects which provide for the protection of endangered species (e.g., developing
conservation programs or protecting habitat critical to the well-being of a species endangered
by the violation). /
With regards to man-made environments, such projects may involve the remediation
of facilities and buildings, provided such activities are not otherwise legally required: This
includes the removal/mitigation of contaminated materials, such as soils, asbestos and leaded
paint, which are a continuing source of releases and/or, threat to individuals.
5. Assessments and Audits * •
Assessments and audits, if they are not otherwise available as injunctive relief, are
potential SEPs under this category. There are four types of projects in this category:
a. pollution prevention assessments; b. site assessments; c. environmental management
system audits; and d. compliance audits.
7 If EPA lacks authority to require repair, then repair itself may constitute a'SEP.
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Revised SEP Policy *** May 1995 »*.* Page 8
a. Pollution prevention assessments v* "•'Stematic, internal reviews of specific
processes and operations designed to identify aim yiovide information about opportunities
reduce the use,, production, and generation of toxic and hazardous materials and other
wastes. To be eligible for SEPs, such assessments must be conducted using a recognized
pollution prevention assessment or waste minimization procedure to reduce the likelihood of
future violations.
b. Site assessments are investigations of the condition of the environment at a site or
of the environment impacted by a site, and/or investigations of threats to human health or the
environment relating to a site. These include but are not limited to: .investigations'of levels
and/or sources of contamination in any environmental media at a site; investigations of
discharges or emissions of pollutants at a site, whether from active operations or through
passive transport mechanisms; ecological surveys relating to a site; natural resource damage
assessments; and risk assessments. To be eligible for SEPs, such assessments must be
conducted in accordance with recognized protocols, if available, applicable to the type of
assessment to be undertaken.
c. An environmental mqnagyngnt system audit is an independent evaluation of a
party's environmental policies, practices and controls. Such evaluation may encompass the
need for: (1) a formal corporate environmental compliance policy, and procedures for
implementation of that policy; (2) educational and training programs for employees; (3)
equipment purchase, operation and maintenance programs; (4) environmental compliance
officer progr
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Revised SEP Policy *** May 1995 ,*'**. Page 9
Implementation is not required because drafting implementation requirements before the
results of the study are known is difficult. Further, for pollution prevention assessments and
environmental management systems audits, many of the implementation recommendations
from these studies may constitute activities that are in the defendant/respondent's own
economic interest. '' - . .
These assessments and audits are acceptable where the primary impact of the project
is at the same facility, at another facility owned by the violator, or at a different facility in
me same ecosystem or within the immediate geographic area (e.g., a publicly owned .
wasiewater treatment works and its users). These assessments and .audits are only acceptable
as SEPs when the defendant/respondent agrees to provide EPA with a copy. .
6. Environmental CffPPMfl1!??- Promotion . " .
An environmental compliance promotion project provides training or technical -support
:. to other members of die regulated community tc: 1) identify, achieve and maintain
compliance with applicable statutory and regulatory requirements; 2) avoid committing a
violation with respect to such statutory and regulatory requirements; or 3) go beyond
compliance by reducing the generation, release or disposal of pollutants beyond legal
" requirements. For these types of projects, the defendant/respondent may lack die experience,
ta^'^e or ability to implement me project itself, and, if so, *e defendant/respondent
should jbe required to contract with an appropriate expert to develop and implement the
'.,; compliance promotion project. Acceptable projects may include, for example.^producing or
sponsoring a seminar directly related to correcting widespread, at prevalent violations within
the defendant/ respondent's economic sector. •: :.
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Revised SEP Policy *** May 1955 «*« Page 10
Planning Committees (LEPCs) and Local Fire Departments (LFDs). This enables states a*
local communities to plan for and respond effectively to chemical accidents .and inform
potentially affected citizens of the risks posed by chemicals present in their communities,
thereby enabling them to protect the environment or ecosystems which could be damaged by
an accident. Failure to comply with EPCRA impairs the ability of states and local
communities to meet their obligations and places emergency response personnel, the public
and the environment at risk from a chemical release.
\ Emergency planning and preparedness SEPs are acceptable where the primary impact
of the project is within the same emergency planning district or state affected by the
violations. Further, this type of SEP is allowable only wnen the SEP involve •
assistance and there are violations of EPCRA of reporting violations under CERCLA § 103
alleged in the complaint. . .
Except for projects which meet the specific requirements of one of the categories
enumerated in § D. above, the following are examples of the types of projects that are not
allowable as SEPs: •
a. General educational or public environmental awareness projects, e.g.,
sponsoring public sehunars, wSIucting'tqurs of environmental controls at a fivili
promoting recycling in a community; '••'*:•:
- b. Contribution to environmental research at a college otiinwersity;
c. Conducting a project, which, though beneficial 'to a ^community, is unrelated to
environmental protection, e.g. , making a contribution to charity, or donating
. playground equipment; .
d. Studies or assessments without a commitment to implement the results (except
as provided for in § D.S above);
f
e. Projects which are being funded by low-interest federal loans, federal
contracts, or federal grants.
1 •
E. CALCULATION OF THJtlfclNAL PENALTY
As a general rule, the costs to be incurred by a violator to performing a SEP may be
considered in determining an appropriate settlement amount Calculating the final penalty in
a settlement which includes a SEP is a three-step process. First, the Agency s penalty
policies are used as applicable to calculate all of the other parts of the settlement penaite
(including economic benefit and gravity components). Second, calculate the net-preserii
after-tax cost of the SEP. Third, evaluate the benefits of the SEP, base^l on specific fecw >,
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Revised SEP Policy *** May 1995 *** Page 11
to determine what percentage of the net-present after-tax cost will be considered in
determining an appropriate final settlement penalty.
1. Penalty
Penalties are an important part of any settlement A substantial penalty is generally
necessary for legal and policy reasons. Without penalties there would be no deterrence as .
regulated entities would have little incentive to comply. Penalties are necessary as a matter
of fairness to those companies that make die necessary expenditures to comply on time:
violators should not be allowed to obtain an economic advantage over their competitors Who
complied. Except in extraordinary circumstances, if a settlement includes a SEP, die penalty
should recover, at a minimum,the economic benefit of noncompliance plus 10 percent of the
gravity component, or 25 percent of the gravity component only, whichever is greater.
• \ * •*•".•
'«•••'. *-•• • . . •' ' '• •
In cases involving government agencies or entities, such as municipalities, or non-
profit organizations, • whe-c the circumstances warrant, EPA may determine, based, on the
nature of die SEPs .being proposed,.that an appropriate settlement could contain a cash
penalty less than the- economic benefit of non-compliance. The precise amount of the cash
penalty will be determined by the applicable penalty policy, - "- • . ;
- 2. Calculation of the Cost of die SE1J •
^ _-— •-- — - ^ —-• ^ . . .^ . ^ ."'•,-.
'• To ensure that a proposed SEP is consistent with this Policy, tie net present after-tax
cost of the SEP, hereinafter called die "SEP Cost," is calculated. Jn order to facilitate
evaluation of the SEP Cost of a proposed SEP, the Agency has develop tacc^uter model
called PROJECT. To use PROJECT, the Agency needs reliable ts&niaLsof the costs and
savings associated with a defendant/respondent's performance of a SEP. Often the .costs will
not be estimates but known amounts based on a defendant/respondent's agreement to expend
a fixed or'otherwise known dollar amount on a project .
There are three types of costs that may be associated with performance of a SEP
(which are entered into the PROJECT model): capital costs (e.g., equipment, buildings);
one-time nondepreciable costs (e.g., removing contaminated materials, purchasing land,
developing a compliance promotion seminar); and annual operation costs or savings (e.g.,
labor, chemicals, water, power, raw materials).10
. In order to run me PROJECT model properly (i.e., to produce a.reasonable estimate
of die net present after-tax cost of die project), the number of years mat annual operation
costs or savings will be expended in performing the SEP must be specified. At a minimum,
the defendant/respondent must be required to implement the project for the same number of
10 PROJECT does not evaluate the potential for^ marlbet benefits which niay accrue whli the
performance of a SEP (e.g., increased sales of a product improved corporate public image, or
unproved employee morale). Nor>does h consider costs imposed on die government such as the cost
to the Agency for oversight of die SEP, or the burden of a lengthy negotiation with a defendant/ .
respondent who does not propose a SEP until late in the settlement process.
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Revised SEP Policy *** May 1995 **'*.• Page 12
years used in the PROJECT model calculation if Certain cosis or savings appear
speculative, they should not be entered into the PROJECT model. The PROJECT model IT
the primary method to determine the SEP cost for purposes of negotiating settlements."
EPA does not offer tax advice on whether a company may deduct SEP expenditures
from its income taxes. If a defendant/respondent states that it will not deduct the cost of a
SEP from its taxes and it is willing to commit to this in the settlement document, and provide
the Agency with certification upon completion of the SEP that it has not deducted the SEP
expenditures, the PROJECT mod;l calculation should be adjusted to calculate the SEP Cost
without reductions Tor taxes. This is a simple adjustment to the PROJECT model: just enter
a zero for variable 7, the marginal tax rate. If a business is not willing to make this
commitment, the marginal tax rate in variable 7 should not be set to zero; rather the default
settings (or a more precise estimate of the business* marginal tax rates) should be used in
variable7. v
If the PROJECT model reveals that a project has a negative cost, this means mat it
represents a positive cash flow to the defendant/respondent and as'a profitable .project thus,
generally, is not acceptable as a SEP. If a project generates a profit, a defendant/respondent
should, and probably will, based on its own economic interests, implement the project
.•While EPA encourages companies to undertake environmentally beneficial projects.mat are
economically profitable, EPA does not believe violators should receive a bonus in the form
of Anally litigation to undertake such projects as part of an enforcement action. EPA does
not offer subsidies to complying companies'to undertake profitable environmentally benei
projects and it would thus be inequitable,and perverse to provide such subsidies only to
violators. In addition, the primary goal of SEPs is, to secure a favorable environmental or.
'public health outcome which would not have occurred but for the «nfordemeht case .
settlement To allow SEP penalty mitigation for profitable projects would thwart mis
goal." ' '•••''/•'.
3. Penalty Mitigation
» ' "
After the SEP Cost has been calculated,. EPA should determine what percentage of
that cost may be applied as mitigation against the preliminary total calculated gravity
component before calculation of the final penalty.' The SEP should be examined as to
whether and how effectively it achieves each of the following five factors listed below.
11 See PROJECT User's Manual, January 1995. If the PROJECT model appears inappropriate to
a particular fact situation, EPA Headquarters should be consulted to identify an alternative approach.
For example, the December 1993 version of PROJECT does not readily calculate the cq$t of an
accelerated compliance SEP. The cost of such a SEP is the additional cost associated with doing the
project early (alhead of the regulatory requirement) and it needs to be calculated in a slightly different
12 The penalty mitigation guidelines in subsection E.3 provide that the amount of mitigatioii
should not exceed the net cost of the project. To provide penalty mitigation for profitable projects
would be providing a credit in excess of net costs.
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Revised SEP Policy *** May 1955 *** Page 13
Benefits to the Public or Environment at' j,-?rge. While all SEPs benefit public health
or the environment, SEPs which perform .well on this factor will result in significant
and quantifiable reduction in discharges of pollutants to the environment and the
reduction in risk to the general public. SEPs also will perform well on this factor to
the extent they result in significant and, to the extent possible, measurable progress in
protecting and restoring ecosystems (including wetlands and endangered species
habitats). -'
Innovariveness. SEPs which perform well on this factor'will further the development
and implementation of innovative processes, technologies, or methods which more
effectively: reduce the generation, release or disposal of pollutants; conserve natural
resources; restore and protect ecosystems; protect endangered species; or promote
'compliance. This includes "technology forcing" techniques which may establish new
regulatory "benchmarks,* : :
Environmental Justice: SEPs which perform well oh this factor will mitigate damage
" or reduce risk to minority or low income populations which may have been
• disproportionately exposed to pollution or are 'at environmental risk.
•'Multimedia Impacts. SEPs which perform well on mis factor will reduce emissions to
man one rnediur"
v Pollution Prevention. SEPs which perform well on this factor will develop and
^-implemeritpollntion prevention techniques and practices. -..;.>'• '-''•],-,":?*%•':£?*'• •.-''"'\
brmance of the SEP under eadi of these tactors, the higher the
mitigation percentage may be set. As a general guideline,-the final mitigation percentage
should not exceed 80 percent of the SEP Cost For small businesses, government agencies
, or entities, and non-profit organizations, this percentage may be set as high as 100 percent.
For any defendant/respondent, if one of the five factors is pollution prevention/the
: percentage may be set as high as 100 percent. A lower mitigation percentage may be
•Appropriate if the government must allocate significant resources to monitoring and reviewing
the implementation of a project. .
In administrative enforcement actions hi which mere is a statutory limit on •
administrative penalties, the cash penalty obtained plus the amount of penalty mitigation
credit due to the SEPs shall not exceed the statutory administrative penalty limit.
F. , PERFORMANCE BY A THIRD PARTY
••'.*•, - • r ( . - .
; SEPs are generally performed either by the defendant/respondent itself (using its own
employees) and/or by contractors or consultants.13 In die past in a few cases, a SEP has
'« • s •
u Of course, non-profit organizations, such as universities and public interest groups, may
function as contractors or consultants. • . .
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Revised SEP Policy *** May 1995 *** Page 14
' ' ' '
been performed by someone else, commonly called a third party. Because of legal concerns'
and the difficulty of ensuring that a third party implements the project as required (since by
definition a third party has no legal or contractual obligation .to implement the project as
specified in the settlement document), performance of a SEP by a third party, is not allowed.
G. OVERSIGHT AND DRAFTING ENFORCEABLE SEPS
*• _ _ ' _ .... — ._ ' -_ _ . .__ '. — • .
* ' « ' *.•• •.". #
The settlement agreement should accurately and completely describe die SEP. (fee
related legal guideline 4 in § C above.) It should describe the specific actions to be ;
performed by the defendant/respondent and provide for a reliable and objective means to
verify that the defendant/respondent has timely completed the project. This may require the
defendant/respondent to submit periodic reports to EPA. If an outside auditor is necessary to
conduct this oversight, the defendant/respondent should be made responsible for the cost of
any such activities. The defendant/respondent remains responsible for the quality and
timeliness of any actions performed or any reports prepared or submitted by the auditor. A
final report certified by an appropriate corporate official, acceptable to EPA and evidencing
completion of me SEP, should be required.
To the extent feasible, defendant/respondents should be required to quantify the
benefits associated with the project and provide EPA with a report setting forth how the
benefits were measured. or estimated. The defepidant/flEsou.Tdeiit shouHfl agree "**** whenevi
it publicizes a SEP or the results of the SEP. it will smte in a prominent foannCT that
roect is bein iMerken as part of the settlement of an enforcemen
, ; ;, ; The drafting of a SEP will vary depending on whetherthe SEP is being performed as
part oi*n administrative or judicial enforcement action. StPs with long implementation
schedules (e.g., 18 months or longer), SEPs which require EPA review and comment on
interim milestone activities, and other complex SEPs may not be appropriate in those
administrative enforcement actions where EPA lacks injunctive relief authority or is subject
to a penalty ceiling. Specific guidance on the proper drafting of SEPs will be provided in a
separate guidance document. , .
H. FAILURE OF A SEP AND STIPULATED
If a SEP is not completed satisfactorily, the defendant/respondent should be required,
pursuant to the terms of the settlement document, to pay stipulated penalties for its failure.
Stipulated penalty liability should be established for each of the scenarios set forth below as
appropriate to the individual case. ... . :. v* '
• " • . „ •• ' ."'•'.'•.''...•••-.-. -*"&'•'''
•'.''• . • ... ->".-• ...
1. Except as .provided in paragraph 2 immediately below, if die SEP is not
completed satisfactorily, a substantial stipulated penalty should be required. .
Generally, a substantial stipulated penalty is. between 50 and 100 percent of die
amount by which the settlement penalty was mitigated on account of die SEP.
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Revised SEP Policy »** May 1995 **» Page 15
2. If the SEP is not completed satisfactorily, but the defendant/respondent:
a) made good faith and timely efforts to complete the project; and b) certifies,
with supporting documentation, that at least 90 percent of the amount of
money which was required to be spent was expended on the SEP, no stipulated
penalty is necessary. '
3. If the SEP is satisfactorily completed, but die defendant/respondent spent less
than 9a percent of the amount of money required to be spent for the project, a small
stipulated penalty should be required. Generally, a small stipulated penalty is
between 10 and 25 percent of the amount by which the settlement penalty was
mitigated on account of the SEP. :.. _ ;
4. If the"SEP is satisfactorily completed, and the defendant/respondent spent at
least 90 percent of the amount of money required to be spent for the project, no
V'•stq>ulated penalty is necessary. . •;; •"'?:;:• iv--:.-;;v';V;'~.
^•V^^J^'^K.^r' ':^>'v '•• V'.'•''••-•' : •,':•./" v^-.;';'.. ' ^vr^^;^'^. '<:••: ' : "
The detenninations of whether the SEP has been satisfactorily completed •••*• '"••-^'•r'.'i^^. ':'•'.-"".'
'•:•,.. a. Regions in which a SEP is proposed for implementation shall be given the
opportunity to review and comment on the proposed SEP.
b. In all cases in which a SEP may hot fully comply with the provisions of this
.«.-;. . Policy, the SEP must be approved by the EPA Assistant Administrator for
Enforcement and Compliance Assurance. . •
: c. In all cases in which a SEP wculd involve activities outside the United States,
the SEP must be approved in advance by the Assistant'Administrator and, for
judicial cases only, the Assistant Attorney <3eneral for die Environment and
Natural Resources Division of the Department of Justice^";?''
In judicial cases, the Department of Justice must approve die SEP.
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Revised SEP Policy » ** May 1»>5 *** Page 16
d. In all cases in which a SEP includes an environmental compliance promotj
project, the SEP must be approwu oy the Office of Regulatory Enforcement ...
OECA. With time, this approval requirement may be delegated to Regional
officials. . .
2. Documentation and
In each case in which a SEP is included as part of a settlement, an explanation of the
SEP with supporting materials (including the PROJECT model printout, where applicable)' "
must be included as pan of the case file. The explanation of die SEP should demonstrate
that the five criteria set forth in Section A.3 above are met by the project and include a
description of the expected benefits associated with the SEP. The explanation must include a
description by the enforcement attorney -of hbw'nexus and the other legal guidelines are
satisfied. '. • . ' .• " '"•'•-.•'• • '' • ' •'; '•'•'.: •• •' . ' ''
Documentation and explanations of a particular SEP fliay constitute confidential
settlement information that is exempt from disclosure under the Freedom of Information Act,
is outside the scope of discovery, and is protected by various privileges, including the
attorney-client privilege and the attorney work-product privilege. While individual Agency
evaluations of proposed SEPs are confidential documents, this Policy is a public document
and may be released to anyone upon request . :
This Policy is primarily for the use of U.S. EPA enforcement perspnneTin 'settling
cases. -EPA reserves the right to change thuPo^atanytim^^
j>r to act at variance to this Policy. This Policy does hot create c.iy rights, duties, or
'obligations, implied Or otherwise, in any third parties.
-------
IV.C.25.
"Issuance of Interim Policy on Compliance Incentives for Small
Businesses", June 13. 1995.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
JUN 1 3 193b
OFFICE OF
ENFORCEMENTAND
COMPLIANCEASSURANCE
SUBJECT:
FROM:
TO:
v-Comi
Issuance of Interim^Poljcy op Compliance Incentives for Small Businesses
Steven A.
Assistant Adminis
Assistant Administrators
General Counsel
Regional Administrators
Attached is the Agency's Interim Policy on Compliance Incentives for Small
Businesses. This Policy is one of the 25 regulatory reform initiatives announced by
President Clinton on March 16, 1995, and implements, in part, the Executive Memorandum
on Regulatory Reform, 60 Fed. Reg. 20621 (April 26, 1995).
EPA expects to finalize this Policy, with appropriate revisions, after considering
public comment. This interim Policy will be published in the Federal Register for public
review shortly. Comments should be submitted to Elliott Gilberg, Office of Compliance,
Mail Code 2224-A, and to David Hindin, Office of Regulatory Enforcement, Mail Code
2248-A, by July 31, 1995. Issues in specific enforcement cases related to this Policy should
be directed to the appropriate division within the Office of Regulatory Enforcement: Steven
Viggiani, Air - Stationary Sources, 202 564-2002; Marc Hillson, Air - Mobile Sources, 202
564-2255; Kathryn Smith, Water, 202 564-3252; Barbara Reilly, Toxics and Pesticides,
202 564-4176; and Susan Garcia, RCRA, 202 564-4013.
Attachment
cc: (w/attachment)
Small Business Ombudsman
Regional Counsels
Regional Enforcement Coordinators
OECA Office Directors
ORE and OC Division Directors
Workgroup Members
AAG, ENRD, Department of Justice
Chief, EES, ENRD, Department of Justice
Reeycted/R»eyclabl»
PitnMd otti Soy/CwiM K* on ftfn tun
contain* « toast 75* neydcdCMr
-------
Interim Policy on Compliance Incentives for Small Businesses
United States Environmental Protection Agency
' . .."•'.- June 1995 v
A. INTRODUCTION
i
This document sets forth the Environmental Protection Agency's Interim Policy on
compliance incentives for small businesses. This Policy is one oHhe 25 regulatory reform
initiatives announced by President Clinton on March 16, 1995, and implements, in part, the
Executive Memorandum on Regulatory Reform, 60 FR 20621 (April 26, 1995).
The Executive Memorandum provides in pertinent part:
To the extent permitted by law, each agency shall use its discretion to modify
the penalties for small businesses in the following situations. Agencies shall
exercise their enforcement discretion to waive the imposition of all or a
portion of a penalty when the violation is corrected within a time period
appropriate to the violation in question. For those violations that may take
longer to correct than the period set by the agency, the agency shall use its
enforcement discretion to waive up to 100 percent of the financial penalties if
the amoun , waived are used to bring the entity into compliance. The
provisions [of this paragraph] shall apply only where there has been a good
faith effort to comply with applicable regulations and the violation does not
involve criminal wrongdoing or significant threat to health, safety, or the
environment.
Pursuant to this Interim Policy, EPA will exercise its discretion, under applicable
media-specific policies, to refrain from initiating an enforcement action seeking civil
penalties, or to mitigate civil penalties, whenever a small business makes a good faith effort
to comply with environmental requirements and where there is no criminal behavior and no
significant health, safety or environmental threat. In addition, as announced in the package
of regulatory reform initiatives, EPA is creating special incentives for small businesses who
take the initiative to identify and correct environmental violations by requesting compliance
assistance from the government. In such circumstances, and provided the small business
meets certain other criteria set forth below, EPA will exercise its discretion to waive the
entire penalty. .Moreover, EPA will defer to state actions that are consistent with this Policy.
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Compliance Incentives for Small Businesses * * * June 1995 Interim Policy * * * page 2
B. BACKGROUND
The Clean Air Act (CAA) Amendments of 1990 require that .states establish Small
Business Assistance Programs (SBAPs) to provide technical and environmental compliance
assistance to stationary sources. On August 12, 1994, EPA issued an enforcement response
policy which provided that an authorized or delegated state program may, consistent with
federal requirements, either: ,
(1) assess no penalties against small businesses that voluntarily seek compliance
assistance and correct violations revealed as a result of compliance assistance within a
limited period of time; or
(2) keep confidential information that identifies the names and locations of specific
small businesses with violations revealed through compliance assistance, where the
SBAP is independent of the state enforcement program.
In a further effort to assist small businesses to comply with environmental regulations,
and to achieve health, safety, and environmental benefits, the Agency is adopting a similar
policy for water, toxics, hazardous waste, and other media programs. This interim Policy ~
sets forth the Agency's implementation of the Executive Memorandum.
C. PURPOSE
/
This interim Policy is intended to promote environmental compliance among small
businesses by providing incentives for participation in compliance assistance programs, and
encouraging the prompt correction of violations. The Policy accomplishes this in two ways:
by setting forth a settlement penalty Policy that rewards such behavior, and by providing
guidance for States and local governments to offer these incentives.
EPA is committed to a strong enforcement and compliance assurance program as a
means to protect human health and the environment. We expect this Policy to encourage
greater participation in compliance assistance programs that offer services to small businesses
(referred to generically as SBAPs in this Policy). The Policy will allow greater openness
among SBAPs and specific facilities, the small business community in general, and other
federal and state officials. It will promote the sharing of information on pollution prevention
measures, cost effective means of compliance and other valuable compliance-related activities
with and among the regulated community. Application of the policy to all media programs
should encourage small businesses to look for "whole facility" approaches to environmental
compliance. Ultimately, by bringing many small businesses into compliance, this Policy will
enhance the quality of our air, water, and land.
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Compliance Incentives for Small Businesses * * * June 1995 Interim Policy * * * page 3
Measuring the success of compliance assistance programs is a critical component of
EPA's ability to assess the results of compliance and enforcement activities. EPA will work
with States to evaluate the effectiveness of this Policy and, in 1997, EPA will consider
whether this Policy should be continued, modified or discontinued.
D. APPLICABILITY
This Policy applies to facilities owned by small businesses as defined here. A small
business is a person, corporation, partnership, or other entity who employs 100 or fewer
individuals (on a company wide basis). This definition is a simplified version of the CAA
§507 definition of small business. On balance, EPA determined that a single definition
would make implementation of this Policy simple and would allow for consistent application
of the Policy in a multimedia context.
This interim policy is effective immediately. This Policy applies to all civil judicial
and administrative enforcement actions taken under the authority of the environmental
statutes and regulations that EPA administers, except for corrective action programs and the
Public Water System Supervision Program under the Safe Drinking Water Act.1 This Policy
applies to all such actions filed after the effective date of this Policy, and to all pending cases
in which the government has not reached agreement in principle with the alleged violator on
the amount of the civil penalty.
This Policy sets forth how the Agency expects to exercise its enforcement discretion
in deciding on an appropriate enforcement response and determining an appropriate civil
settlement penalty for violations by small businesses. This Policy is to be used for settlement
purposes and is not intended for use in pleading, or at hearing or trial. To the extent that
this Policy may differ from the terms of applicable enforcement response policies under
media-specific programs, this document supersedes those policies, This Policy supplements,
but does not supplant the August 12, 1994 Enforcement Response Policy for Treatment of
Information Obtained Through. Clean Air Act Section 507 Small Business Assistance
Programs.
1 This Policy does-not apply to corrective action programs (such as CERCLA, RCRA §7003, and
SDWA §1431) because these programs are primarily remedial in nature and generally do not seek
penalties. This Policy does not apply to the Public Water System Supervision Program because EPA
is developing another policy which addresses compliance by small communities.
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Compliance Incentives for Small Businesses * * * June 1995 Interim Policy * * * page 4
E. CRITERIA FOR CIVIL PENALTY MITIGATION
EPA will eliminate or mitigate its settlement penalty demands against small businesses based
on the following criteria:
1) For purposes of sections F(l) and F(2), the small business has made a good, faith effort to
comply with applicable environmental requirements as demonstrated by receiving; compliance
assistance from a non-confidential government or government supported program that offers
services to small businesses (such as a SBAP or state university), and the violations are
detected during the compliance assistance.2
Good faith does not exist if an agency specifically offered a compliance assistance program
concerning the relevant regulated activities to the business and it failed to participate, in such
program. '.'„'.
2) This is the small business's first violation of this requirement. This Policy applies to
businesses that have not previously been subject to a warning letter, notice of violation, field
citation, or other enforcement action by a government agency for a violation of that
requirement within the past five years. If a business has been subject to multiple
enforcement actions for violations of environmental requirements in the past five years, this
Policy does not apply even if this is the first violation of this particular requirement.
3) The policy does not apply if:
a) The violation has caused actual serious harm to public health, safety, or the
environment; or
. b). The violation may present an imminent and substantial endangerment to public
health or the environment; or
c) The violation presents a significant health, safety or environmental threat (e.g.,
violations involving hazardous or toxic substances may present such threats).
4) The violation does not involve criminal conduct.
2 If the compliance or technical assistance program keeps the information obtained confidential
(i.e., does not share or disclose facility specific information on compliance status with a regulatory
agency), this Policy does not apply. However, if a small business wishes to obtain a corrections
period after receiving compliance assistance from a confidential program, the business need only
disclose the violations to the appropriate regulatory agency pursuant to criterion 1 and comply with
the other provisions of this Policy.
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Compliance Incentives for Small Businesses * * * June 1995 Interim Policy * * * page 5
5) The business corrects the violation within the corrections period set forth below.
Small businesses are expected to remedy the violations within the shortest practicable
period of time. Small businesses may take up to 90 days following detection of the violation
to correct the violation, or to take substantial steps to correct the violations (e.g. apply for
necessary permits, secure financing, order equipment). For violations that cannot be
corrected within 90 days, the correction period may be extended for an additional period not
to exceed 90 days, so long as the business enters into a written agreement that sets forth the .
additional correction period and any additional steps to be undertaken by the business to
achieve compliance. The schedule may extend for an additional period of 180 days, i.e.. up
to>a period of one year from the date the violation is detected, only if necessary where the
small business corrects .the violation by implementing pollution prevention measures.
Correcting the violation includes remediating any environmental harm associated with the
violation.3 Any corrections period longer than 180 days should be incorporated into an
enforceable order. The requirements of the correction period should be made clear to the
small business prior to offering compliance assistance.
F. PENALTY MITIGATION GUIDELINES
EPA will exercise its enforcement discretion to eliminate or mitigate civil settlement
penalties as follows.
•i
1. EPA will eliminate the civil settlement penalty in any enforcement action if a
small business satisfies all of the criteria in section E.
2. If the small business meets all of the criteria, except it needs a longer
corrections period than provided by criterion 5 (i.e., more than 180 days for non-pollution
prevention remedies, or 360 days for pollution prevention remedies), EPA will waive up to
100% of the gravity component of the penalty, but may seek the full amount of any
economic benefit associated with the violations.4
3. If a small business has not met all the criteria above, but has otherwise made a
good faith effort to comply, EPA has discretion, pursuant to its applicable policies, to refrain
from filing an enforcement action seeking civil penalties or to mitigate its demand for
3 If significant efforts will be required to remediate the harm, criterion 3 is likely not to have
been satisfied.
4 In determining how much of the gravity component of the penalty is appropriate, EPA should
consider the nature of the violations, the duration of the violations, the environmental or public health
impacts of the violations, good faith efforts by the small business to promptly remedy the violation,
and the facility's overall record of compliance with environmental requirements.
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Compliance Incentives for Small Businesses * * * June 1995 Interim Policy *. • * . page 6
penalties to the maximum extent appropriate. These policies generally recognize good faith
efforts to comply and allow for mitigation of the penalty where there is a documented
inability to pay all or a portion of the penalty, thereby placing emphasis on enabling the
small business to finance compliance. .
G. OTHER FACTORS
To ensure that this Policy enhances and does not compromise public health and the
environment, the following conditions apply:
1. Violations detected through federal, state, or local enforcement inspections or reported
to an agency as required by applicable regulations or permits remain fully enforceable.
2. A business is subject to all applicable enforcement response policies (which may
include discretion whether or not to take formal enforcement action) for all violations that
had been detected through compliance assistance and were not remedied within the
corrections period. The penalty in such action may include the time period before and
during the correction period.
3. A business's good faith efforts to correct violations detected during compliance
assistance should be considered as a mitigating factor in determining an appropriate
enforcement response or penalty in a subsequent enforcement action. However, a State's or
EPA's actions in providing compliance assistance is not a legal defense in any enforcement
action. This Policy does not limit EPA or a state's discretion to use information on
violations revealed through compliance assistance as evidence in subsequent enforcement
actions. -
H. APPLICABILITY TO STATES '* .
EPA recognizes that states are partners in enforcement and compliance assurance.
Therefore, EPA will defer to state actions in delegated or approved programs that are
generally consistent with the guidelines set forth in this Policy.
This Policy does not require SBAPs to provide to EPA information that identifies the
names or locations of specific businesses that are found to be in violation through compliance
assistance. EPA recommends, however, that whenever an agency provides a correction
period to a small business, the agency notify the appropriate EPA Region or state of its
action, to assure that federal and state enforcement responses to the identified violations are
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Compliance Incentives for Small Businesses * * * June 1995 Interim Policy » * * page 7
»^^^^^^^^^^^^^ ^^=.^——— ^^—^^ ._L •—-•- -_-. - ___^..^^__^,_lJIJJ^MMM,mi^^JMJ»*l-J--»^»MiMJU^—^^^^»^^a»»M
consistent. A state program that offers confidentiality may not also offer a corrections period
for the same violations (see footnote 2).5
In developing this Policy, EPA balanced three primary considerations! First, the
Agency is seeking to provide States with ample opportunity to adopt innovative approaches to
environmental compliance. Thus, the Policy provides the parameters within which States
have flexibility to tailor SBAPs to their, needs. .
Second, EPA recognizes that participation in SBAPs by individual businesses is
typically voluntary. Assistance is provided generally upon icquest. Thus, the Agency is
seeking to assure states of the ability to provide incentives that will encourage many small
businesses to participate in SBAPs.
Third, the environmental statutes covered by this Policy generally require, as a
condition of delegation or authorization, that programs be consistent with Federal
requirements and that states have the authority to take appropriate enforcement action with
respect to violations.6 Thus, EPA has an obligation to ensure that state SBAPs are
structured so as to maintain an appropriate level of enforcement authority within delegated or
authorized state programs. The Agency believes this Policy will allow states sufficient
latitude to use an appropriate combination of delegated state enforcement authority and
compliance assistance activity to improve compliance in the small business community.
5 The CAA §507 policy establishes criteria for EPA approval of SBAPs in State Implementation
Plans to satisfy the mandate in the CAA, and addresses confidential assistance in that context.
6 For example, the Resource Conservation and Recovery Act provides that the Administrator
may authorize any State to administer and enforce the Act unless he finds, among other things, that
"such program does not provide adequate enforcement of compliance with the requirements or the
Act. 42U.S.C. §6926(b). . . •
-------
IV. D.
-------
IV. CIVIL LITIGATION
D. ENFORCING JUDGMENTS AND DECREES
-------
IV.D.I
"Guidelines for Enforcing Federal District Court Orders",
dated April 18, 1984. See GM-27.*
-------
IV.D.2.
"Procedures for Assessing Stipulated Penalties", dated January 11, 1988.
See GM-67.
-------
-------
IV.D.3,
"Guidance on Certification of Compliance with Enforcement Agreements",
dated July 25, 1988, see GM-74.
-------
-------
IV.D.4,
# "Manual on Monitoring and Enforcing Administrative and Judicial Orders1*,
dated February 6, 1990. Transmittal Memorandum, Summary Introduction, and
Table of Contents only.
-------
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, O.C. 20460
61990
MEMORANDUM
SUBJECT: Manila I on Monitoring and Enforcing
Administrative and Judicial Orders
FROM: James M. Sf
Assistant. Administrator
TO: Assistant Administrators
Regional Administrators, I-X
This memorandum transmits the EPA Manual on Monitoring and
Knforcing Administrative and Judicial Orders. The Manual
provides general guid.inc0 to EPA enforcement staff on their roles
and responsibilities in monitoring and enforcing final order
requirements.. The Manual applies to all regulatory enforcement
programs with the exception of the CERCI.A (Superfund) Program.
The term "order" includes 'judicial consent decrees and
administrative consent orders. The Manual also outlines a
process for working with the EPA Financial Management Offices
(FMOs) and the Department of Justice for monitoring and
collecting penalties.
The Manual was prepared in response to recommendations in
several Office of Inspector General (OIG) audit reports that OE,
the Program Offices and the OARM Financial Management Division
(FMD) develop clearer guidance and management systems for
ensuring that administrative and judicial order requirements are
aggressively monitored until compliance is achieved. A major
concern of the OIG was thp failure of enforcement staff to notify
the Regional Financial Management Offices (FMOs) when
administrative or judirial penalties have been assessed so that
these "accounts re*"*i v.ibies" can be entered into and tracked in
the Agency's Integr-ifvi Financial Management System (IFMS).
-------
The Manual has received two Agency-wide reviews, in May 1987
and October 1988. Both reviews surfaced gaps and deficiencies in
the Manual's attempt to designate areas of responsibility and
information sharing. The final Manual contains procedures
designed to address the deficiencies.
The OARM FMD has drafted revisions to Chapter Nine of its
Resource Management Directives to conform with the guidance
agreed to in.this Manual. These Directives will soon undergo
green border review and may require some adjustments to the FMD-
related sections of the Manual. Accordingly, the Manual will be
updated as necessary. A summary of the major provisions of the
Manual, including the latest revisions, is contained in
Attachment A.
OE is available to assist you in implementing the revised
procedures. Questions should be directed to ReneHe Rae, Chief
of the Program Development Branch, at 475-8777.
Attachments
cc: Deputy Regional Administrators
Regions I-X
Regional Counsels
Regions I-X
Regional Financial Management Offices
Associate Enforcement Counsels
Associate General counsels
Headquarters Enforcement Office Directors
Financial Management Division Director
Deputy Assistant Administrator for Criminal Enforcement
Acting Director, National Enforcement Investigations Center
Chief, Environmental Enforcement Section, DOJ'
-------
Attachjner.t *:
MANUAL ON MONITORING AND ENFORCTMC
ADMINISTRATIVE AND JUDICIAL
SUMMARY OF PROVISION AND RESPONSE TO COMMENTS
Chapter 1 - Monitoring and Reporting the Status of Orders.
Roles and Responsibilities
The Regional Program Office (RPO) is responsible for
monitoring (i.e. routinely checking) compliance with the
technical requirements in administrative and judicial orders.
The Regional Financial Management Office (FMO) is responsible for
monitoring and collecting administrative penalties as "accounts
receivables". The Department of Justice (DOJ) is responsible for
monitoring and collecting judicial penalties arid for reporting
the status of penalty collection to the EPA Headquarters
Financial Management Division (HQ-FMD).
Reporting on Penalty Payments
While the RPO is not responsible for monitoring collection
of administrative or judicial penalties, RPO is responsible for
verifying that penalties have been paid before terminating an
order or reporting a violator in full compliance. Therefore, RPO
data systems should include the amount of penalties assessed in a
final order and be able to report on a "yes/no" basis whether the
total amount of the administrative or judicial penalty has been
collected. The OE Docket also will report the amount of the
judicial penalty assessed and contain a yes/no statement on
whether the total amount assessed has been collected. The
Integrated Financial Management System (IFMS) maintained by the
Headquarters and Regional FMOs viii be the official EPA system
for reporting the numerical (dollar) amounts of enforcement
penalties collected.
EPft BtfwTCftmentr Payment Accounts Recftiy{y}?.e Control Number
In ovter to cross-walk between program office systems and
the IFMS, th« Manual recommends that all programs enter into
their program data system the assigned IFMS accounts receivable
control number for the penalty assessed in each final order.
When the Regional FMO receives a copy of a final order and
establishes the accounts receivable in IFMS, the FMO win provide
the RPO, the ORC and the Regional Hearing Clerk with the accounts
receivable control number. The goal is to have the IMFS accounts
receivable control number be the common identifier number in all
data systems that report penalty information.
-------
Several of the comments received on the Manual expressed
concern that some program office data systems do not have the
ability to report penalty payments on a "yes/no" basis or to
include the IFMS accounts receivable control number. These
additions vould require modifications to their systems. Program •
Offices should follow the Manual's guidance, wherever possible
including these penalty tracking modifications as they make other
improvements to their system. OE will work with the Program
Offices to ensure that these changes are made. As of the date of
the issuance of the Manual, the IMFS will be recognized as the
official EPA record of the total amount of dollars collected on
every penalty assessed in a final order.
Chapter 2 - Collecting Administrative Penalties.
Roles and Responsibilities
The RPO (or the ORC in some Regions) is responsible for
sending a copy of the final order assessing a penalty to the FHO.
The FMO is responsible for monitoring and collecting the penalty
as an accounts receivable for the first 120 days. The ORC is
responsible for collecting the penalty after 120 days in default
The Regional Hearing Clerk is responsible for keeping the
official administrative record for the case and including any
penalty payment information received from the RPO, ORC or FMO in
the record.
Notifying the FMO of Assessed Administrative Penalties
The 1969 OIG audits of the Regional Financial Management
Offices found that the FMOs still are not receiving from
enforcement offices all copies of final orders that assess
penalties. The Manual adds a documentation procedure for
ensuring that the responsible enforcement office sends to the FMO
a copy of th« order and the transmittal letter to the violator.
A Mtf form entitled: "EPA Enforcement Payment Accounts
Receivable Control Number Form", hereafter referred to as the
Form (SM lact page of Attachment il), will provide a record that
the responsible EPA office has sent a copy of the final order to
the FMO. The Form also will document that the FMO provided the
offices designated on the Form with the IFMS accounts receivable
control number for each assessed penalty. Under most enforcement
programs, the:RPO has been delegated the responsibility for
administrative enforcement, so the Manual presumes the RPO is the
responsible party ("originating office") for filling out the
Form, and sending the Form with a copy of the final order and
transmittal letter to violator to. the FMO. In some Regions,
ORC may have assumed the "originating office" responsibility.
copy of the completed Form that includes the IFMS accounts
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receivable control number should be included in the case file and
available for review in the context of an audit.
collecting. Enforcing and Terminating Administrate!VP Penalrv
Payments
The procedures for coordinating among the FMO, RPO and ORC
in collecting, enforcing and terminating administrative penalty
payments also have been refined. At the request of FMD, the time
frames have been added for ORC review of enforcement1 options
regarding penalties chat have not been paid within 120 days.
The process for collecting, enforcing or terminating orders is as
follows:
Once the FMO receives a copy of the final order and
establishes the accounts receivable, the FMO will monitor and
collect the receivable using standard debt collection practices.
The FMO will send the RPO, ORC and Regional Hearing Cleric a copy
of payments received. These payments win be identified by the
IFMS Accounts Receivable Control Number.
Uncollected penalties* at the end of 120 days and after
three demand letters have been issued, win be referred by the
FMO to the ORC for review and option selection. The ORC, after
consulting with the RPO, must notify the FMO, in writing within
30 days from receipt of debt from the FMO, of the collection
option the ORC will pursue. Options include referring the
penalty debt to DOJ for judicial collection, pursuing additional
FMO collection activities such as outside collection agencies, or
requesting termination of the debt. However, to uphold EPA's
enforcement authority, administrative penalty debts should be
terminated only under exceptional circumstances. The ORC's
written response to the FMO should be included in the official
case file.
Several reviewers of the draft Manual suggested that EPA and
DOJ institute a direct referral process from the ORC to the U.S.
Attorneys' Office (USAO) for administrative penalty debt
collection The current delegation of authority by the Attorney
General Mr the Land and Natural Resources Division precludes a
direct referral to the USAO of EPA enforcement cases including
administrative penalty collection cases.
Chapter 3 -Collecting Judicial Penalties.
Roles and Responsibilities
The Manual recognizes that the DOJ Land and Natural
Resources Division, Environmental Enforcement Section,
hereinafter referred to as LNRD-EES. is responsible for
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monitoring judicial penalty payments and the U.S. Attorneys-
Office is responsible for collecting payments through the DdJ
lockbox system and pursuing uncollected debts. While EPA is not
responsible for collecting judicial penalty payments, it is the"
policy of EPA Financial Management Division that all judicial
penalty payments that are the result of an EPA enforcement action
be recorded in the IFMS as "accounts receivables". As EPA
receivables, these debts must be monitored by the Regional FMO
until collected or terminated. This requires all DOJ offices and
all EPA offices involved with the penalty to have a common
identifier number—the IFMS accounts receivable control number.
Superfund cost recovery payments (debts) obtained through
judicial actions (court orders or consen-. decrees) are collected
differently than judicial penalties. All cost recovery payments
(administrative or judicial) are collected by the EPA Regional
FMOs through the EPA Regional Superfund lockbox depositories.
Even though a judicial cost recovery case has been handled by the
USAO, Agency resource management directives (RMDS 2550) governing
financial management of the Superfund Program require that EPA
FMOs monitor and collect Superfund debts.
Obtaining Copies of Final Orders and Motifylna the FMO of
Penalties Assessments and Superfond Cost Recovery Payments
A major concern raised in the review on the draft Manual is
that the ORC and the Regional FMOs dp not consistently get
copies of the final (entered) judicial orders (enforcement
penalty or Superfund cost recovery) from the USAO. Under the
guidance specified in Chapter Three, the LNRD-EES win be
responsible for ensuring that the USAO sends a copy of the
entered final order including all consent decrees to the
appropriate ORC. The ORC is responsible for following up with
the LNRD-EES or USAO if an order is not received. Unless another
office is designated in a Region, the ORC is responsible for
sending to the FMO a copy of the final order with the attached
EPA Enforcement Payment Accounts Receivable Control Number Form.
TIM IMP will fill in the IFMS accounts receivable control
number on tlM Form and send a copy of the Form to the parties
designated on the Form, including the DOJ LNRD-EES. The Form
containing the IFMS accounts receivable control number will be
retained in the case file as documentation.
Reporting the Status of Penalty Payments
DOJ LNRD-EES win enter the IFMS accounts receivable contro
number in its Lands Docket Tracking System (LOTS) and will
provide quarterly reports to the Headquarters FMD on the status
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of EPA penalty payments using the IFMS number. The Headquarters
FMD will distribute copies of these reports to the Regional FMOs.
The FMOs will update the IFMS vith the data received from LWRD-
EES. The IFMS will be the official EPA system for .reporting the
dollar amounts of judicial enforcement penalties collected.
Other EPA data systems viii. as with administrative penalty
payments, provide information on judicial penalty collection in a
"yes/no penalty paid" format only. To interface with the IFMS,
other EPA program offices can include the IFMS accounts
receivable control number in their data systems.
, Chapter 4 - Enforcing Orders.
This chapter remains unchanged and contains existing
guidance on available enforcement tools such, as motions for
specific enforcement, contempt actions, contractor listing, etc.
The Appendix contains procedures for working with DOJ Land and
Natural Resources Division on modifying judicial orders or
collecting stipulated penalties under judicial consent decrees.
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/-"•I
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MANUAL
ON
MONITORING
AND
ENFORCING
ADMINISTRATIVE
AND
JUDICIAL ORDERS
January 1990
;/
Office of Enforcement
U.S. Environmental Protection Agency
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INTRODUCTION
This Manual provides guidance to EPA enforcement staff on monitoring
and enforcing administrative and judicial orders. The procedures
described in this Manual apply to all EPA statutes that provide
authority to issue administrative and judicial orders requiring
compliance with Agency requirements with the exception of the CERCLA
(Superfund) program. The procedures set forth herein win supersede
general guidance in program case development manuals that address the
topics in this Manual. Each program, however, may have more specific
guidance on monitoring and tracking orders that supplements this
manual.
The Manual focuses on the activities of Regional Offices in monitoring
and enforcing penalties since the majority of the cases are initiated
by the Regional programs. .Some Headquarters offices, such as the
Office of Toxic Substances, have national programs where enforcement
cases are initiated, concluded and settlements monitored by
Headquarters staff. These Headquarters offices have program, legal,
administrative hearing cleric and financial management functions
comparable to the Regional structure described in this Manual.
Headquarters offices involved in monitoring and enforcing orders
should substitute their office functions for the comparable Regional
functions described and follow the guidance set forth in this Manual.
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Table of Contents
Chapter One - Monitoring and Reporting the Status of Final
Final Administrative and Judicial Orders
Drafting Enforceable Orders
Monitoring Systems
Reporting Requirements
Additional Oversight Requirements for Administrative Orders
Additional Oversight Requirements for Judicial Orders
Appendices
Chapter Tvo - Collection of Administrative Penalties
Authority for Administrative Penalty Collection
Roles and Responsibilities
Financial Management Collection Procedures
Appendices
Chanter Three - Collection of Judicial Penalties
Payment Depositories
Responsibilities
Distributing Copies of final Orders
Monitoring Penalty Payments
EPA Enforcement Reporting of the Status of Penalty Payments
Coordination of DOJ and EPA Accounts Receivable Reporting Systems
Pursuing Outstanding Penalty Debts
Compromising, Suspending or Terminating Judicial Penalty Debts
Appendices
Chanter w*ft& „ Enfar^ina final Orders
Enforcing jJbtoistrative Orders
Enforcing jpncial Orders
-- Modifications
— Stipulated Penalties
— Motions to Enforce
— Contractor Listing
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IV.D.5.
"Agency Judicial Consent Decree Tracking and Follow-up Directive", dated
January 11, 1990.
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'=3 •>'-'= 5 t . . -i S VMS ••,'-.. -- "DTSCTION AGENCY
JAN I I 99C
MEMORANDUM
SUBJECT: Agency Judicial Consent Decree Tracking and Follow-up Directive
FROM: James M. Strocirf ^L>
Assistant Administrator
TO Assistant Administrators
Regional Administrators, I-X
This memorandum transmits the Agency Judicial Consent Decree Tracking
and Follow-up Directive. The Directive specifies Agency requirements for how EPA
Regional Offices track compliance with judicial consent decree requirements and for
how Regions select and document decisions on appropriate Agency follow-up
responses to consent decree violations (for the purposes of this Directive, the use of
the term "consent decree" also includes judicially imposed court orders). Each
Region should develop and execute a plan to implement this Directive so that all
elements will be in place by April 30,1990. By no later than May 30, each Region
should submit to me a memorandum detailing the steps they have taken to
implement the Directive. In addition, we intend to review its implementation
during this year's audits of the Offices of Regional Counsel
\
The Directive was developed after an extensive review of current Agency
requiraelfjii and practices conducted, over the last nine months, in consultation
with fhtArfbrcement Management Council and the Enforcement Office Directors.
We appndtftt the efforts of the Regional and Headquarters offices, which made
significant contributions to the study and to the development of the requirements
outlined in this Directive. The resultant Directive outlines the basic requirements
that are necessary to effectively manage our consent decree tracking and follow-up
responsibilities'and should be used as a supplement to the Agency "Manual on
Monitoring and Enforcing Administrative and Judicial Orders", which OECM will
soon be publishing.
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There are a few requirements from the Directive that I would like to highlight.
The Directive emphasizes the need for adequate documentation of each violation
and the selection of the Agency s enforcement response in response to a violation.
The documentation requirement is handled through the use of a form which has
been kept basic so as to not cause a resource drain on Regional resources. The
Directive also lays out a requirement for database management but provides each
Region with maximum flexibility on selecting the appropriate method of
maintaining its database based on its caseload and computer capabilities. Finally, the
Directive requires that the Regional Program Division and the Office of Regional
Counsel jointly select the Agency response to a consent decree violation, with the
decision made at the Branch Chief or higher level in keeping with the seriousness
associated with consent decree violations.
Fulfilling the requirements of the Directive should allow us to successfully
address the increasing workload associated with the growing number of judicial
consent decrees. We will soon be discussing with the Headquarters Enforcement
Office Directors the appropriateness of applying elements of these judicial Directive
requirements to at least some classes of administrative enforcement orders.
Each Region currently reports quarterly on die status of each active consent
decree as part of the Agency's STARS system. OECM would like to move to
oversight of Regional consent decree tracking and follow-up implementation
through our existing Regional audits, rather than through the STARS system. We
will assess the Regions' success in implementing this Directive with the goal of
dropping this activity as a STARS reporting measure in FY1992. We will also be
working with the Headquarters Enforcement Office Directors to include consent
decree tracking and follow-up activity in their Regional audit programs. As we
move to drop the STARS reporting requirements, Regions must asjui* that their
consent decree tracking systems have the capacity to provide timely information or
reports on the compliance status of their consent decrees to respc^id to information
»»» TTMght ^rm^fm*ny **• «"*<<• ty Ag*"
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OECM is available to provide assistance to you in implementing this Directive.
Rick Duffy, Chief of the Compliance Evaluation Branch, or Bill Watt of his staff are
available to assist the Regions on the technical and management requirements and
can be reached at 382-3130. Regions interested in exploring the option of using the
consent decree tracking database management system developed by the National
Enforcement Investigation Center (the NTIC-CDETS) should contact Rob Laidlaw at
776-3210.
Attachment
( \
cc Headquarters Enforcement Office Directors
Deputy Regional Administrators, I-X
Regional Counsels, I-X
Associate Enforcement Counsels
Acting Director, NEIC
Regional Program Division Directors, I-X
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Judicial Consent Decree Tracking
and Follow-up Directive
January 1990
Office of Enforcement and Compliance Monitoring
US. Environmental Protection Agency
-------
mf concerning tin Dirtctiatorrtt/uaO
for vUitwmi copia em at directed to:
Chief. Compliance Evaluation Branch
Office of Compliance Analyvs and Program Operations
Office of Enforcement and Compliance Monitoring.
US. Environmental Protection Agency
401MSmetS.W.
Washington. DC 20460
1202-382-3130)
US. EPA MaU Code LE-133
OECM-EPA .
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-JUDICIAL CONSENT DECREE TRACKING AND FOLLOW-UP DIRECT?. E
PURPOSE
This directive is provided to cla; J?y and supplement existing Agency
requirements and guidance for judicial consent decree tracking and follow-up.
Agency managers responsible for consent decree tracking and follow-up activities
must implement the requirements of this directive. Managers are also responsible
for fulfilling any additional requirements for consent decree tracking and follow-up
that are issued by National Program Managers. This Directive is effective April 30,
1990. For purposes of this Directive, the term "consent decree" includes judicially
imposed court orders.
This directive prescribes judicial consent decree tracking and follow-up
re., jirements for the following areas:
I. Implementing the Agency Guidance on Certification of Compliance with
Enforcement Agreements
2. Regional consent decree tracking and follow-up database management
3. File documentation of consent decree violations
4. Decisions on Agency follow-up to violations
A. Responsibility for decision
B. General criteria for making follow-up decisions
C File documentation of follow-up decisions
5. Maintaining data on the current status of EPA consent decrees
6. Termination of consent decrees and dosing cases
BACKGROUND
Consent Decree Tracking Responsibilities:
Consent decree tracking and follow-up is conducted by each Regional Office
under the direction of the Regional Administrator. Within each Region, most
responsibilities are shared between the Office of Regional Counsel (ORO and the
Regional Divisions responsible for program compliance activity. Generally, the
responifliflltiri are divided within each Region as follows:
Regional ftogram Divisions
Regional Program Divisions are responsible for the overall management and
direction of the Regional compliance program in accordance with the policies and
procedures of the Agency and each National Program Office. In that role, they are
responsible for the following regional consent decree tracking and follow-up
activities:
1. Assuring, along with ORC that proposed consent decree agreements contain
provisions/milestones that maximize the Region's ability to determine
compliance status.
OECM-EPA January'•*
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2. Determining compliance with the consent decree requirements throe*.-. :r.*\
use of announced and unannounced inspections and the receipt and review o
delivtrables.
3. Determining whether there are violations of the consent decree and
notifying the ORC of each violation.
4. Maintaining a database of consent decree status which tracks completion or
consent milestones and denotes violations. 4Cam be a component of a
Region-wide consent decree database system.)
5. Determining (jointly with the ORC) the appropriate Agency response to each
violation.
6. In concert with the ORC, maintaining complete file documentation of
consent decree violations and the subsequent follow-up activity, including
documentation of all consent decree violations and follow-up decisions. (File
documentation must be maintained in whatever file or files the Region uses as
the official case file, whether in a separate Program file, ORC file or a common
Program-ORC file.)
7. Notifying the ORC when all the requirements of the consent decree have
been met so that the ORC can track and assist in the termination of the
decree according to the terms of the decree.
Offices of Regional Counsel:
The Office of the Regional Counsel in each Region is responsible for the
following Regional Office consent decree tracking and follow-up activities:
1. Assuring that each settlement agreement complies with the "Guidance on
Certification of Compliance with Enforcement Agreements'' (July 25, 1988
memorandum from Thomas L Adams to AAs,RAs, and RCs).
2. Obtammg a copy of the entered decree and providing it to the appropriate
regional program compliance office and to the NEIC Central Depository in a
" — awner. A copy must also be provided to the Financial Management
rCPHO) in the Region when the decree requires a penalty payment
f Ifct regional FMO. after receiving a copy of the entered decree, will enter the
EPApoiky
ftqnmn that aOJudfculpemlty amount^ irnidtdmttvl^
receivable'' and that they be tracked a* raeeivabla until collected or terminated. The
Land and Natural Reaourm Oivuion at DOf is the mpwible entity for monitoring
judicial penalty debts and notifying EPA's Financial Management Division of the
status of penalty payment*. This information is placed in the ffMS so that Regions can
determine if penalties requirnnaioof the decree have been met The program
database a* well a* the Enforcement DOCKET database should contain a
milestone/requirement for tracking penally payment!
OECM-EPA
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3. Determining (jointly with the Regional Program Divisions) the approrr.a-e
follow-up action the Region will take in response to a violation of the decree
4. Providing legal support and services to the programs, as necessary, to enforce
die consent decree.
5. In concert with the Program Division, maintaining complete file
documentation of consent decree violations and the subsequent follow-up
activity, including documentation of all consent decree violations and
follow-up decisions. (File documentation must be maintained in whatever file
or files the Region uses as the official case file, whether in a separate ORC file,
Program file, or a common Program-ORC file.) .
6. Maintaining and reporting data on the status of active consent decrees as
might be required by the Agency management and accountability systems.
7. Assisting in obtaining the termination of consent decrees which have
been successfully fulfilled, including updating the Agency DOCKET
database to reflect current status.
CONSENT DECREE TRACKING REQUIREMENTS
1. IMPLEMENTING THE AGENCY GUIDANCE ON CERTIFICATION OF
COMPLIANCE WITH ENFORCEMENT AGREEMENTS
Background:
Certification requirements were prescribed in the July 25,1988 memorandum
from Thomas L. Adams Jr. to Assistant Administrators, Regional Administrators
and Regional Counsels, "Guidance on Certification of Compliance with Enforcement
Agreements." This Guidance addresses the inclusion of compliance certification
language (in which a responsible official personally attests to the accuracy of
information contained in compliance documents made available to EPA pursuant to
the terms of a settlement agreement) and the need for including precise
Each Region must take steps to insure that all staff involved in drafting and
negotiating consent decrees are fully aware of the requirements of the July 25, 1988
guidance memorandum and this Policy. (While that guidance applies more broadly
than to consent decrees, the discussion in this Policy will refer only to consent
decrees, consistent with the scope of the rest of the document)
Staff involved in drafting consent decrees must incorporate the guidance for
documentation of compliance and for certification by a responsible official unless
OECM-EPA
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:hey affirmatively determine and document that the policy is not applicable to j •
specific case. Therefore, each consent decree should specify that ill future reports
the settling party to the Agency, which purport to document compliance
with the terms of the decree, shall be signed by a responsible official. The need for
certification and documentation requirements should be raised early in the
negotiation and drafting process.
Regional managers who review and approve drafted consent decrees must
assure that the Guidance has been adequately incorporated or determine that the
Guidance is not applicable for the specific case.
Staff and managers within the OECM Associate Enforcement Counsel Offices
must also review drafted consent decrees for inclusion and/or applicability of the
Guidance. Implementation of the certification and documentation requirements
will be a component of the ongoing oversight and periodic reviews conducted bv
OECM. '
2. REGIONAL CONSENT DECREE TRACKING DATABASE MANAGEMENT
Background:
Regional Program Divisions are responsible for tracking compliance with active
consent decrees once the decree has been entered by the Court The ORC is
: - . -nsible for obtaining a copy of the entered decree and providing it to the
Program Division and the Financial Management Office (for penalty tracking). If the
decree has been entered but a copy has not yet been made available, the program can
use the lodged decree during the interim, if it is known that the final decree was not
changed.
i
Compliance tracking is accomplished through the receipt of reports and other
deli verables from the consent decree parties and through the use of announced and
unannounced inspections. In order to determine whether a party is currently in
compliance with the consent agreement the program compliance staff must
compare the requirements of each decree with the information gathered through
inspections and deliverable*. In the case of deliverable items, the compliance staff
should dettrmine if the submission adequately meets the decree requirements.
fTno^jhtitinf management is an important element for effective and timely
tracking aad reporting of case status. This policy outlines requirements for the
consent decree databases that are used to track consent decrees for each Regional
program. Additional elements may be required by each of the National Program
Offices.
Requirements:
Each program responsible for tracking consent decree compliance status must
maintain a consent decree database (file/record). Each program database must
OECM.- EPA
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include the following information for each active decree: case name and
enforcement civil judicial docket number, statute/program, all required milestones
and their due dates, and a block for inserting the date each milestone was comcleteu
The consent decree database can be manual, on a personal computer or
included as a part of a national compliance database such as the CDS of the Air
Program. The database could also be maintained centrally, as in Region II, where the
ORC maintains a database of all regional consent decrees using the NEIC • CDET5
capability. Each Region can choose what database type system(s) to use. For
programs with only a few consent decrees to track, a manual system may be
sufficient Regional programs may opt to use the national compliance database
depending on its specific capabilities.
The consent decree database must be maintained in three ways for it to be used
effectively. Milestones for all decrees must be entered (and revisions, if applicable,
in the case of amended decrees). On a regular schedule (not less than quarterly), all
currently due (and overdue) milestones must be extracted from the system and made
available to staff and supervisors. This use as a tickler system will alert staff as to
what actions are required to be checked on. Finally, the dates for completed
milestones must be put into the database on a regular basis (suggested monthly
updates).
Maintaining this database in a central location will allow a program easy access
to the status of all its decrees, the ability to retrieve all due milestones and a complete
historical record of each decree as staff turnover and assignment changes occur. It
will also provide documentation of case history for audits or other oversight activity.
3. FILE DOCUMENTATION OF VIOLATIONS
Background:
Program Divisions are responsible for determining if a consent decree violation
has occurred. Any milestone not complied with by the due date of the consent
decree constitutes a violation, regardless of the substantive impact of the deviation
from the consent decree requirement In certain cases, Program Divisions may need
to conMltiriflli the ORC in determining whether* violation has occurred (e.g.,
where * ^to of force majeure has been made).
Regional Prognm Divisions must notify the ORC of each violation of an active
consent decree. A violation occurs when any milestone is missed (Le a report that is
one day late is a violation), although there may be instances where, as a matter of
priority, no formal enforcement action is taken. In addition, a record of the violation
must be placed in the official Regional case file (see copy of form attached).
OECM-EPA
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-i. PEcrsrovS o.v ACEVCY FOLLOIV.IJ.-P rp VIOLATIONS '
Background-
\
When a violation occurs, the Region must determine the appropriate Agencv
response. In some cases, the violation may not pose a threat to public health or the
environment or jeopardize the party's ability to meet subsequent milestones or the
final compliance date. In such instances, after a review including the criteria
discussed in subsection C below, the program office and ORC may jointly decide tha:
no follow-up action is required or that a non-formal response may be appropriate.
Other violations will be more serious and the program and ORC may decide to take a
formal enforcement action such as seeking stipulated penalties or initiating a
contempt action. For all violations it is important for the Agency to document the
decision process within the case record. For all violations, the responsibility for
determining the appropriate response action is shared by the Regional Program
Division and the Office of Regional Counsel.
Requirements:
A, Responsibility for decision:
Once a violation occurs, the Program and the ORC must jointly determine
the Agency response. Given the seriousness of consent decree violations,
concurrence must occur at no lower than the Branch Chief level in both Offices.
Disagreements should be elevated to senior management On the rare occasion
when the two offices cannot agree, the issue will be resolved at the RA or DRA ievei.
B. File documentation of follow-up decisions:
The decision concerning how the Agency will respond to a violation must be
documented in the official Regional case file. The documentation (copy of form
attached) must include the decision made and the reason for the decision. The
documentation must also include the signatures of the responsible Program Office
and ORC Branch Quell (or higher level).
C General Criteria for follow-up decisions:
i the Agency enters into a consent decree we expect the defendant to
comply. Uhlri i compliance with the decree very seriously and expect all parties to
take afl Hey* IHUJII ny for timely compliance. As a result, if they are in violation, we
will normally respond for the purpose of remedying the violation, obtaining a
penalty, or both. However, given the need to set priorities, we may not choose to
take a formal action in every instance. The Region is delegated authority to decide
what follow-up action, if any, to take. The decision not to take a formal action is a
serious judgment required to be made jointly by the Regional Program Division and
the Office of Regional Counsel at the Branch Chief or higher leveL
OECM-EPA . , fanuarv >-
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In selecting the appropriate response , the following factors /criteria :r.i»zr: •:•=
considered.
Harm Caused by Violation: What is the level of risk to
human health and to the ambient surroundings for continuing
nonoompliance?
Duration of the Violation: How long has the violation continued? Has the
violation been continuous or interrupted? Has the violation been corrected?
Good Faith /Bad Faith (Compliance history): Was the violation deliberate?
Has the party been notified that it was in violation and continued to violate?
Has the party demonstrated good or bad faith in its past efforts to comply or
respond to Agency efforts? Is there a pattern of violations which suggests
inattention to its compliance obligations, even though the individual
violations are not, in themselves, of major concern?
Deterrence Value: Will an action deter future violations?
Ability to Respond: Will the enforcement action result in compliance?
Will the facility meet its final compliance date, even though it missed an
interim date?
Economic Cain: Has the violator gained an economic advantage over its
competitors as a result of the violation?
Violations for which a decision not to take a formal action based on competing
priorities might be appropriate would generally find the party on the positive side of
the factors above (i.e. no or limited environmental harm from the violation, good
compliance record, etc.). Situations where the Agency might exercise its discretion
not to take an action might include:
• Late reporting with no environmental consequence and without a
past pattern of delay or noncompliance.
• Missed milestone, not a major requirement, with expectation they will be in
compliance with/by the next milestone
- Violation of an interim limit, magnitude of the exceedence is minor, with
compliance now achieved or anticipated shortly.
5. MAMCAMNC REGIONAL CONSENT DECREE TRACKING STATUS
Background:
Currently, each ORC is responsible for providing consent decree status reports
each quarter to OECM as part of the Agency SPMS system. In most Regions, the
information for this report is collected from each program and combined into a
Regional report
OECM • EPA Januarv
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'Requirements: , •
The ORCs will continue to be responsible for maintaining information on
regionwide status of consent decrees and providing Regional reports to OECM, as
required The specific nature of these reports may change from the current STAR
measure. Regional Program Divisions are responsible for supplying
program-specific information or reports to ORC that might be needed to fulfill
national reporting requirements in addition to meeting the requirements of their
National Program Office.
•Background
A judicial enforcement case with a consent decree is successfully completed
when all the requirements of the consent decree, including penalty payments, have
been met and the termination clause satisfied At that point, the consent decree
should be terminated in accordance with the terms of the decree. Agency databases
and status reports need to accurately reflect the current status of cases (including cases
where the requirements of the decree have been fully met, cases tor which
termination of the decree is due, and cases which have been dosed after consent
decree termination). Accurate data are needed to report the status of active decrees
and for planning, budgeting and other management purposes.
Requirements:
Program Divisions, as part of their responsibility for tracking consent decree
compliance status, must notify the ORC when all the requirements of the consent
decree have been satisfied.
The ORC is responsible for working with DO] to effect the termination of the
consent decrees, in accordance with the termination dause of the decree (timeframe,
automatic plaintiff or defendant motion). The ORC is responsible for tracking the
termination status of inactive decrees and assisting the completion of plaintiff
responsibilities, as appropriate. The ORC is responsible for maintaining the current
status of tew decrees in the Agency DOCKET system and dosing cases after
.OECM. EPA
1
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CONSENT DECREE VIOLATION AND FOLLOW-UP FORM
PART A: REPORT OF VIOLATION
Program/Statute
EPA DocKet *
Reauirement due date: ______
Requirement was completed late:
Requirement not completed:
(wnen;
Comments:
Violation documented by: Sigraurf/dan:
Print RUM:
TiBt/organzaiion:
PART B: DECISION ON RESPONSE TO VIOLATION
Q Type of enforcement action planned:
D Enforctmertaclon determined not to be appropnate for the Wtowing reason(s):
Program Division
Office of Regional Counsel
EPA-OECU Form
-------
V.
-------
V. CRIMINAL LITIGATION/ENFORCEMENT
-------
V.I
v
"Agency Guidelines for Participation in Grand Jury
Investigations", dated April 30, 1982. See GM-9.*
-------
V.2
"Criminal Enforcement Priorities for the EPA", dated October 12, 1982. See
GM-14. . .
-------
•"5;
-------
V.3.
"Analysis of Existing Law Enforcement Emergency authorities", dated March
6, 1984. ,
-------
-------
Memorandum
Subject Dale
Analysis of Existing Law Enforcement
Emergency Authorities
SST;EHF;JIF;lsp
March 6, 1984
To Distribution F'^ Stephen S. Trott
Assistant Attorney General
Criminal Division
As you are aware, the Law Enforcement and Public Safety
Working Group (LEPSWG), which I chair, was directed by the
President to compile existing emergency law enforcement author-
ities, analyze them, and propose measures which could improve
law enforcement agency preparedness to respond to severe
regional or national emergencies. The purpose of this exercise
is to provide the nation with the legal means to confront the
disruptions that would result from a wide range of severe
national security and domestic emergencies.
The Federal Emergency Management Agency (FEMA) recently
completed a compilation (attached) of emergency authorities.
As we enter upon the second and third phases — analysis and
recommendation, respectively — of our assignment, I request
your assistance. Your participation will also present an
opportunity to assure that your agency will be in a position
to act efficiently and with lawful authority in responding to
regional or national emergencies. _
I would appreciate your determination whether the compi-
lation accurately reflects your agency's existing emergency
authority. (The LEPSWG determined that only authorities which
take effect in emergency situations should be included in the
compilation.) Even if your agency has already had an opportunity
to review and comment upon an earlier draft of this compilation,
it would be appreciated if you would bring any current errors
or omissions to our attention.
I would also appreciate your suggestions regarding statutes,
Executive Orders, or other authorities that need to be enacted
to provide your agency with jurisdiction that would be necessary
or useful in meeting foreseeable emergencies. In this regard,
it is the Working Group's belief that a review should be con-
ducted by both your legal staff and by officials with operational
-------
- 2 -
responsibilities. It would be most helpful if your staff con-
sidered both hypothetical situations that might develop and
actual incidents which have already occurred. If your agency
has created after-incident reports following previous law
enforcement emergencies, such reports could be very useful in
this endeavor. We are only looking for outlined suggestions,
not meticulous legislative drafts. The attached sample would
be an ample response.
Finally, as it may be necessary for us to discuss specific
issues in greater detail with members of your legal or operational
staffs, please identify for me, by name, title, and phone number,
the persons whom we can contact for further information. At
this time it has not been determined whether such interviews
will be necessary, or how they can be most productively con-
ducted, if necessary.
Consistent with the Presidentially "mandated milestone
deadlines for completion of this project, it is requested that
you provide us with the requested information within one month
of receipt of this memorandum. The responses should be addressed
to the Emergency Mobilization Preparedness Board Support Group
(Room 2252, Main Justice Building, 10th and Pennsylvania Avenue,
NW., Washington, D.C. 20530). Mr. Ezra Friedman, Chairman of
the Emergency Law Enforcement Authorities Sub-Working Group,
may be contacted directly at 724-6971 if your staff has any
questions regarding this project.
Attachments
-------
DISTRIBUTION
General Counsel
Department of Agriculture
Washington, D.C. 20250
Inspector General
Department of Agriculture
Washington, D.C. 20250
General Counsel
U.S. Forest Service
Department of Agriculture
Washington, D.C. 20250
General Counsel
Commodity Futures Trading
Commission
Washington, D.C. 20581
General Counsel
Consumer Product Safety
Commission
Washington, D.C. 20207
General Counsel
Department of Commerce
Washington, D.C. 20230
General Counsel
Civil Aeronautics Board
Department of Commerce
Washington, D.C. 20428
General Counsel
Environmental Protection
Agency
Washington, D.C. 20460
General Counsel
Department of Energy
Washington, D.C. 20585
General Counsel
Farm Credit Administration
Washington, D.C. 20578
General Counsel
Federal Communications
Commission
Washington, D.C. 20554
General Counsel
Federal Home Loan Bank Board
Washington, D.C. 20552
General Counsel
Federal Maritime Commission
Washington, D.C. 20573
General Counsel
Federal Reserve Board
Washington, D.C. 20551
General Counsel
Federal Trade Commission
Washington, D.C. 20580
General Counsel
General Services Administration
Washington, D.C. 20405
General Counsel
Department of Health and Human
Services
Washington, D.C. 20201
General Counsel
Food and Drug Administration
Department of Health and Human
Services
5600 Fishers Lane
Rockville, Maryland 20857
General Counsel
Social Security Administration
Department of Health and Human
Services
Baltimore, Maryland 21235
Inspector General
Department of Health and Human
Services
Washington, D.C. 20201
General Counsel
Department of Housing and Urban
Development
Washington, D.C. 20410
Solicitor
Department of the Interior
Washington, D.C. 20240
General Counsel
National Park Service
Department of the Interior
Washington, D.C. 20240
-------
- 2 -
Deputy Assistant Secretary
for Indian Affairs
Bureau of Indian Affairs
Department of the Interior
Washington, D.C. 20245
Director
U.S. Fish & Wildlife Service
Department of the Interior
Washington, D.C. 20240
Director
Bureau of Land Management
Department of the Interior
Washington, D.C. 20240
General Counsel
International Trade Commission
Washington, D.C. 20436
General Counsel
Interstate Commerce Commission
Washington, D.C. 20423
General Counsel
International Boundary and
Water Commission, U.S.
and Mexico
4110 Rio Bravo
El Paso, Texas 79902
General Counsel
International Boundary
Commission, U.S. and Canada
Room 150 - 425 I. St., NW.
Washington, D.C. 20001
Director
Community Relations Service
Department of Justice
Washington, D.C. 20530
Assistant Attorney General
Antitrust Division
Department of Justice
Washington, D.C. 20530
Assistant Attorney General
Civil Division
Department of Justice
Washington, D.C. 20530
Assistant Attorney General
Civil Rights Division
Department of Justice
Washington, D.C. 20530
Assistant Attorney General
Land & Natural Resources Division
Department of Justice
Washington, D.C. 20530
Assistant Attorney General
Tax Division
Department of Justice
Washington, D.C. 20530
General Counsel
Bureau of Prisons
Department of Justice
Washington, D.C. 20530
General Counsel
U.S. Marshals Service
One Tysons Corner Center
McLean^, Virginia 22102
General Counsel
Immigration & Naturalization Service
Department of Justice
Washington, D.C. 20536
General Counsel
Federal Bureau of Investigation
Washington, D.C. 20535
General Counsel
Drug Enforcement Administration
Washington, D.C. 20537
Solicitor
Department of Labor
Washington, D.C. 20210
General Counsel
National Credit Union Admin.
Washington, D.C. 20456
General Counsel
Nuclear Regulatory Commission
Washington, D.C. 20555
Chief Postal Inspector
Postal Inspection Service
Washington, D.C. 20260
General Counsel
Small Business Administration
Washington, D.C. 20416
General Counsel
Securities & Exchange Commission
Washington, D.C. 20549
-------
- 3 -
Legal Adviser
Department of State
Washington, D.C. 20520
General Counsel
Tennessee Valley Authority
400 West Summit Hill
Knoxville, Tennessee 37902
General Counsel
Department of Transportation
Washington, D.C. 20590
General Counsel
U.S. Coast Guard
Washington, D.C. 20593
General Counsel
Federal Aviation Administration
Washington, D.C. 20591
General Counsel
Maritime Administration
Washington, D.C. 20590
General Counsel
Department of the Treasury
Washington, D.C. 20220
General Counsel
U.S. Customs Service
Washington, D.C. 20229
Chief Counsel
Bureau of Alcohol, Tobacco,
and Firearms
Washington, D.C. 20226
Chief Counsel
Internal Revenue Service
Washington, D.C. 20224
Chief Counsel
U.S. Secret Service
Washington, D.C. 20223
Chief Counsel
Veterans Administration
Washington, D.C. 20420
-------
EHER6ENCT AUTHORITIES RECORDS FOR SECTION: LAW ENFORCEMENT
-------
? use 11fl< -001
RE£0*l» TITLE;
' SUSPENSION OF ItoWl&RAUON
LE6AL CITATION:
« V&C 1182U)
AtSTKAlT:
K THL PPISIDLNT FINDS THAT TME ENTRY OF ANT ALIENS OR OF AKY CLASS OF
JKTO THE UMTEli STATtS MOULD 6k DETRIMENTAL TO THE INTERESTS OF THE
"JhHEt ST*TIS» Ht KAY feY PROCLAhA Tl ON» AND FOR SUCH PERIOD AS ME SHALL
3iCLSSARY, SUSPU.D THi £I.TRY UF ALL ALUNS OR ANY CLASS OF ALIENS AS
U NtMK«lG»(ANTi.t OR IMPOSE ON THE ENTRY OF ALIENS ANY RESTRICTIONS HE HAY t>lU
JO sE AfPkCFRJATE.
-------
KEY: 10 use 333 -001
.. TITLE:
USE OF MILITIA ANb ARMED FOKCES TO SUPPRESS INTERFERENCE «/ (FED ft ST LAWS
LEGAL CITATION:
H) USe 333
ABSTRACT:
AUTHORIZES THL PRESIDENT TO USE THE MJLITJA OR ARMED FORCES OR BOTH TO
SUPPUSS, It. A STATE, ANY INSUfcfcECTI ON, DOMESTIC VIOLENCE, UNLAWFUL ASSEMBLAGE
©K LONSPUAIY If IT (1) SC- HINDERS THE EXECUTION OF STATE OR FEDERAL LAW THAT
a*Y PART OR CLASS Or PEOPLE IS DEPRIVED OF A RIGHT, PRIVILEGE, IMMUNITY OR
JUCTJON NAKED IN TnE CONSTITUTION AND CONSTITUTED AUTHORITIES OF THAT STATE
FAIL, C* DEFUSE TO PROTECT THAT RIGHT, PRJVJLEDGE, OR IMMUNITY,
o GIVE THAT PROTECTION; OK (?) OPPOSES OR OBSTRUCTS THE EXECUTION OF THE
LAVS CF THE UNITLD STATES OK IP.f-EDES THE COURSE OF JUSTICE UNDER THOSE LAWS.
: 1C use 371 -001
luFO COLLECTED DURING MILITARY OPERATIONS fOR CIV L*« ENFORCEMENT
LEGAL CITATION:
10 USC 371
DERAL, STATE OR LOCAL CIVILIAN
ED DURING THE NORMAL COURSE
Of *IL1TA*1 OPERATION ««*• MAY BE RELEVANT TO A VIOLATION OF ANY FEDERAL OR
STATE LA. HTHIN THE JURISDICTION OF SUCH OFFICIALS.
RET: iw use 372 -001
fcEtO«D TITLE:
Kit OF MILITARY EQUIPMENT/FACILITIES FOR CIVILIAN LAW ENFORCEMENT
146AL CITATION:
1C use 372
A3STKACT:
4UTMO*I2ES THE SECRETARY OF DEFENSE TO MAKE AVAILABLE, IN ACCORDANCE WITH OTHER
APPLlCAbLE LA., TO CIVILIAN LAW ENFORCEMENT OFFICIALS ANY ARMY, NAVY, AIR
SfDRCE OR r.AKUE COfcPS EQUIPMENT, »ASE FACILITY OR RESEARCH FACILITY FOR LAw
2NF9RCEMCNT PURPOSES.
-------
*ASTtR KEY: 1w USC 373; DOD D1RECTI VE~C01
REC09D TITLE:
USE OF MLlTAKY PERSONNEL TO TRAIN AND ADVISE CIVILIAN LAW CNFORCEMT OFCLS
.EGA,. CITATION:
1C USC 37J; ftOD DIRECTIVE 5525.5
ABSTRACT:
AUTHORIZES SECRETARY OF DEFfcNiE TO ASSIGN MILITARY PERSONNEL TO TRAIN FEDERAL,
STATE AND LOCAL LAk ENFORCEMENT OFFICIALS IN THE OPERATION AND MAINTENANCE OF
EbUlPr-EuT KAD£ A.AKAeLt UNDER SECTION 372 OF TITLE 1C AND TO PROVIDE £XP£RT
ADVJSt «£LE«/Ei»T TO THE PURPOSES OF THIS CHAPTER.
MASUR KEY: 1u USC 374 -001
&ECOMD TITLE:
USE OF MILITARY PtKSOtaNEL FOR CIVILIAN LAto ENFORCEMENT OUTSIDE THE U.S.
UGAw CITATION;
1C USC 374:P>
R KEY: 10
S5C08D TITLE:
°" U$L °r rJLIT*RT hESOuR" FOR CIVILIAN LAW ENFORCEMENT
16 USC 376
*••
. *°T Bl FftOVII>E» T0 AWV CIVILIAN LA. ENFORCEMENT OFFICIAL UNDER
. ANY PfcOVISIC* lh THIS CHAPTER IF THE PROVISION OF SUCH ASSISTANCE t
ADVERSELY AFFECT THE KKITAKY PREPAREDNESS OF THE UNITED STATES.
-------
10 USC 906 (ART* 106, UCW-001
RELOKD TITLE:
SPYING
LE6*k CITATION:
10 USC 906 (ART. 106, UC«J>
ABSTHACT:
ANY PERSON WHO IN T1WE OF WAR IS FOUND LURKING AS A SPY OR ACTING AS A SPY IN
Ok ABOUT ANY PLACE, ViSSEL, OR AIRCRAFT, KITHIN THE CONTROL OR JURISDICTION OF
AKY Of THE ARHED FOtfCtS, OR IK OR ABOUT ANY SHIPYARD OR AKY MANUFACTURING OR
INDJSTRJAL PLANT ENGAbEO IN AID OF THE PROSECUTION^OF THE WAR BY THE UNITED
STATE* SHALL bC TfcltD EY A CENEkAL COURT-WAfcTIAL OR BY A MILITARY COMISSXOK
AND Of. CONVICTION SHALL Bt PUNlSHcD BY DEATH.
-------
MSTtR KEY: 12 USC 34U(B> .001
RECOKD TITLE:
EMERGENCY GOVERNMENTAL ACCESS TO FINANCIAL RECORDS
LEGAL CITATION:
12 USC JiU(B)
ASSTKACT;
£*E1PTS GOVERNMENT FRfcK PROHlbHIUN Ih 12 USC 3401 ET StO AGAINST OBTAINING
FINANCIAL RfcCORDS FlkOK A FINANCIAL INSTITUTION WITHOUT A SEARCH WARRANT OR
JUDICIAL SUFOENA IF TK£ GuVLRKMM AUTHORITY DETtR^INES THAT DELAY IN OBTAINING
ACCtSi, bCULD CREATE JKr.INENT DANGER OR PHYSICAL INJURY TO ANY PERSON, SERIOUS
PRUPF.KTV DAKAwE Dk FLItMT TO AVOIf PROSECUTION. bOVERNHENT AUTHORITY MUST ALSO
(1) SUfet'IT 10 ThL FINANCIAL INSTITUTION THE CERTIFICATE REQUIRED IN 12 USC
5«,U3Cfc>, blTHlN fJVt DAYS Of UBTAININb ACCESS TO RECORDS, (?) FILE WITH THE
APPROPRIATE COUKT A SIGNED SbGSN STATifENT OF DESIGNATED SUPERVISORY OFFICIALS
IIT11NG FORTH TH( 6ROUNDS FOR EKENGENCY ACCESS; (3> COMPILE AN ANNUAL
fABJLATlG'V OF OCCASIONS WHEN AUTHORITY EXERCISED.
-------
FASTER KIT: U USC
REC03D TITLE:
SAVING OF LIFE
LE»AL CITATION:
14 USC 68
&B *D01
ANi, PROPERTY 6T COAST GUARD
ABSTRACT:
THE COAST GUARD IS AUlhORIItD TO RE
AIRCRAFT ON AND UNDER THE HIGH SEAS
TED Sims **S JUKISD1CTION, AND TO
(1) PEKFOPMNG ANY AND ALL ACTS NE
TECT AND SAVi PROPERTY;
(2) TAikivb CHARGE OF AND PKOTECTIN
CNTK SUCH PfcOPEfcTY IS CLAjr.ED
SlSPwSkD OF IN ACCORDANCE »1TH
KAY HAVE. PERJSHEl. IN SuCH CATA
(3) FutfMSnUG CLOTHING, FOOD, LCD
PLIES AND SERVICES;
AND
IAJ DESTROYING OK TO.ING INTO POKT
NDtR AID TO DISTRESSED PERSONS, VESSELS AND
AND ON AND UNDER WATERS OVER MNICN THE UNI'
PERSONS AND PROPERTY IMPERILED BY FLOOD BY-
CESSARY TO RESCUE AND AID PERSONS AND PRO-
G ALL PROPERTY fAVED FRQM SUCH DISASTERS
PY PERSONS LEGALLY AUTHORIZED OR UNTIL
LAb, AND CARING FOR BODIES OF THOSE WHO
STROPHES;
GING, MEDICINES, AND OTHER NECESSARY SUP-
SUNKEN OR FLOATING DANGERS TO NAVIGATION.
KEY: u use tSi -001
RECOkD TITLE:
REr.OVAL OF COAST GUARD RESTRICTIONS
LEGAL CITATION:
14 USC 652
A3SUACT:
^?? tKY RESTRJCTJON "^AINED IN ANY THEN-EXISTING LAW AS APPLIED
, FOP THE DURATION OF THE »AR OR NATIONAL EMERGENCY PROCLAIMED
THE PSiSJDENT, INCLUDING EUT NOT LIFTED TO RESTRICTIONS RELATING TO THE
K IN fcHJCH PURCHASES KAY Bt Mltf. AND CONTRACTS AWARDED, FISCAL OPERATIONS.
!?SCNN£Lt SM*U 1N ™E $*B£ M*KK£R *N6 T0 ™E **« EXTENT, REMOVE SUCH
JCTICNS AS APPLIED TO THt COAST fcUARfr.
-------
KEY: 16 use 2153U) -001
,0«D TITLE:
DESTRUCTION OF WAfc MATERIAL
E&AL CITATION:
Id USC *153CA>
tR .HEN THE UNITED STAUS IS AT WAR, OR IN TIMES OF NATIONAL I*E«ENCT
AS DECLARED fit THE PRESIDENT OR CONGRESS, WITH INT£NT TO INJURE 0* OBSTjUCT
T«£ UNITED STATES OR JTS ALLY IN PREPARING FOR OR CARRYING ON THE WA* OR
DEFENSE ACTIVITIES, WILLFULLY INJURES, DESTROYS, OR CONTAMINATES ANY WAR
MATERIALS, OR ATTEMPT* TO DC SO, SHALL BE FINED NOT MORE THAN $10,000 OR
ISPRISCNED NOT MOKE ThAN 3c YtAfcS OR BOTH.
KEY: U USC 2153(B) -C01
«££0*D TITLE:
CONSPIRACY TO DESTROY WAR MATERIALS
LEfeAL CITATION:
16 USC 2153(6)
A3STKALT:
If TWO OR PORE PERSON* CONSPIRE TO DESTROY WAR MATERIALS, AS OUTLINED IN
15 &ISC 215J(A), AND ONE 0« MOHE Of SUCH PERSONS DO ANY ACT TO fPFECT TM|
Q^JECT OF ThE CONSPIRACY, EACH PAiiTl SHALL tE PUNISHED AS PROVIDED FOR IN
9 y v d I* &'7^%A/9
KEY: 1£ use 2l5i(A> -001
SECOND TITLE:
PkCDuClKG DEFECTIVE WAR MATERIALS
CITATION:
13 USC 21S£CA>
WHOEVER. -HEN THE UNITED STATES IS AT WAR, OR IN TIMES OF NATIONAL EMERGENCY AS
OULAhED BY THE PKESI6ENT OR CONGRESS, bJTH INTENT TO INJURE OR OBSTRUCT THE
U^iUt; STATES OK ITS ALLY IN PfcLPARING FOR OR CARRYING ON THE WAR OR DEFENSE
ACTIVITIES, WILLFULLY MAKES, CONSTRUCTS, OR CAUSES TO BE MADE OR CONSTRUCTED,
A*T bAR MATERIAL, tAR UTILITY OR TOOL IN A DEFECTIVE MANNER, SHALL BE FINED NOT
19RE THAN *1t,CuO OK IMPRISONED NOT KtfcE THAN 30 YEARS OR BOTH.
ft KEY: 18 use 2i*t(B>
NECO*» TITLE:
CONSPIRACY TO PRODUCE DEFECTIVE WAR MATERIALS
LEiAL CITATION:
16 USC 2154(6)
i? TWO OR MORE PERSONS CONSPIRE TC PRODUCE DEFECTIVE tAR MATERIALS, AS
9'JTLIVED IN 16 U.S.C. 21S4CA), ASt> ONE OR HOR£ OF SUCH PERSONS BO ANY ACT
¥0 EFFECT THE OBJECT OF THE CONSPIRACY, (ACM PARTY SHALL BE PUNISHED AS
FO* IN 16 U.SeC. 21 5* (A).
-------
R KEY: 18 USC 21i»S(A> -001
D TITLE:
DESTRUCTION OF NATIONAL DEFENCE MATERIALS, PREMISES OR UTILITIES
CITATION:
Ik USC 215S(A)
*HOtVLP, »ITH INTENT TO INJURE OR OhSTRUCT THE NATIONAL DEFENSE OF THE UNITED
STATEi. WILLFULLY DESTROYS OR CONTAMINATES ANY NATIONAL DEFENSE MATERIAL,
PKE11-ES OK UTILITIES SMALL BE FI hE t> NOT MO*E THAN SIC,ODD OR IMPRISONED HOT
MORE THAN 1u YEARSt OK BOTH.
KEY: 18 LSC 21*5(B> -001
AECOKD TITLE:
COHSF1RACV TO DESTROY NATIONAL DEFENSE MATERIALS, PREMISES OR UTILITIES
LEGAL CITATION: *
It USC 2US
A3SUACT:
IF TWO JC PORE PERSONS COsSFJKE TO DESTROY NATIONAL DEFENSE MATERIALS* PREMISES
95 UTILITIES. AS OUTLINED IN 16 U.S.C. 2155(A>, AND ONE OR MORE OF SUCH PERSONS
2>y ANY AC1 TC EFFiCT THt UBJECT OF THE COKSFIKACY, EACH OF THE PARTIES TO SUCH
^PIRACY SHALL bE PuKISHEL AS PROVIDED FOR IK 16 U.S.C. 2155(A>.
MAS It* KEY: 16 USC 2Ut(A)
RSC08D TITLE:
PRODUCTION
LE6AL CITATION:
1t USC 2156CA)
-001
OF DEFtCTlVE NATIONAL DEFENSE MATERIALS OR PREMISES
A3ST3ACT:
^MOIVER, ^ITH INTENT TO INJURE OR ObSTRUCT THE NATIONAL DEFENSE Of THE UNITED
S7&TES, kULFJLLY CONSTRUCTS, OR r.AKES ANY NATIONAL DEFENSE MATERIAL OR
PREMISES IN A DEFECTIVE MANNER, 0* ATTEMPTS TO DO SO, SHALL BE flNEfi WOT MORE
»15,OCw OR IMPRISONED NOT MOKE THAN 10 YEARS OR BOTH.
R4STER KEY: 16 USC 2156(b> -001
RECORD TITLE:
CONSPIRACY TO PROwUCE DEFECTIVE NATIONAL DEFENSE MATERIALS OR PREMISES
LE6AL CITATION: -
It USC 2156(6)
TkACT:
IF TWO OR
8ATEPIALS
MORE PERSONS CONSPIRE
OR PREMISES AS OUTLINED
PRODUCE DEFECTIVE
IN 10 USC 2156(A)t
NATIONAL DEFENSE
AND ONE OR MORE OF
PIR&C'NS
T& iUCh
DO AKT ACT
CONSPIRACY
TO EFFkCT THE UEJECT
SHALL BE PUNISHED AS
OF TJ4E CONSPIRACY,
PROVIDED FOR IN 1*
EACH OF THE
USC 2156(A)
SUCH
PARTIES
-------
MASTfcR KEY: 18 use 2381 -001
REC9»e TITLE:
TKEAS3N
LESAL CITATION:
Ifi USC i361
ABSTRACT:
WHOEVER, 0«ING ALLEGIANCE TO THk UNITED STATES, LEVIES WAR AGAINST TMEM OR
ADHERES TO THEIR ENt^lES, GIVING THEM AID AND COMFORT WITHIN THE UNITED STATES
OR ELSEb-URt, IS OUILTY OF TRtASOrt AND SHALL SUFFER DEATH, OR IMPRISONMENT HOT
LESS THAN 5 YEARS AND FINED NUT LESS THAN sio.ooo; AND SHALL BE INCAPABLE or
NG Af** OR GOVERNS" IS 6UKT
t flNE" K°T MORE THAK >1'CO° OR 1RPR«ONED NOT
fcO'H.
KEt: 18 USC 23£3 -001
TITLE:
REBELLION OR iNSUfcKECTION AGAINST THE UNITED STATES
LEGAL CITATION;
1e USC 2383
VER'INCITES, ASSISTS OR E.\GAGCS IN ANY REDELLION OR INSURRECTION AGAINST
THE AUTHORITY OF ThE UNITED STATES. OR GIVES AID OR COMFORT THERETO. SHALL BE
FINED NOT roFl THAN SIC,003. U* .1MPK1SONEfc NOT MORE THAN 1C YEARS, OR BOTM;
SHALL Bl INCAPABLE OF MOLDING ANY OFFICE UNDE* THE UNITED STATES.
18 USC 23C*
«!COkC TITLE:
SEDITIOUS CONSPIRACY
CITATION:
U usc 23*«
-001
3^T«ACT: . .
If IbC Ok ruRk PERSON* IU ANY STATE OR TERR1T0RT, Oii IN AMY PLACE SUBJECT TO
M*S. JUMSD1CT10N, CONSPIRE TO OVERTHROW, PuT DO-N, OR DESTROY BY FORCE THE
SI.S. GOVERNMENT, Ok It LEVY M^R AGAINST THE*, OR TO OPPOSE BY FORCE THE
SSEiUllON OF ANY LAW Of THE U.S., OR TO TARE ANY U.S. PROPERTY BY FORCE* SMALL
Si flUED NOT f.ORL THAN S2J.ODO OR IMPRISONED NOT MORE THAN TWENTY YEARS, OR
10T*.
-------
HASTEK KEY: IB USC 23b5 -001
RECORD TITLE:
ADVOCATING THE OVfcKTHRO* OF THE GOVERNMENT
CITATION:
14 use
ER KNOftlNGLt OR »ILLINGLY ADVOCATES, A6ETS, ADVISES OR TEACHES THE
PKOPRUTY Oft NECESSITY OF OVEKTHR&WlNb OR DESTROYING THE U.S. GOVERNMENT
OK THE GOVERNMENT OF AKY STATE OK TERRITORY, OR GOVERNMENT OF ANY POLITICAL
SUBDIVISION TnEkLOF, &Y FORCE OR VIOLENCE, OR BY THE ASSASSINATION OF ANT
OFFICER OF ANY SUCH GOVERNMENT SHALL fcE FINED NOT MORE THAN $20,000 OR
IMPRISONED NOT MOKE ThAN 20 YtARS, OR faOTM.
RASUR KEY: 18 USC 23e7 -001
fcECO*D TITLE:
. INTERFERENCE WITH AR«ntD FORCES
LEGAL CITATION:
U USC 23tt7
ABSTRACT:
WHOEVER, »1TH INTENT TO INTERFERE WITH, IMPAIR OR^INFLUENCE THE LOYALTY,
lOKfcLE OR HSC1PLINL OF THE MILITARY OF THE UNITED STATES ADVISES, COUNSELS
OR IN ANY TANKER CAUStS OR ATTEMPTS TO CAUSE INSUoORDlNATION , DISLOYALTY,
MUTINY OR KIFUSAL OF KUTY BY AKY MEMBER OF THE MILITARY SHALL BE FINED NOT
aiOHt THAN J10.GC.G, OR IKPRlSONEfc NOT MOPE THAN 10 TEAKS, OR BOTH.
UF. 16 USC 23£c>.
kR Kit: 18 use 23fce -001
..m>iE FINED NUT MORE *10,DCO OR IMPRISONED NOT
•lORt THAN TWENTY YEARS OR BuTn.
MHOEVER DURINu TIRE OF «AM WILLFULLY CAUSES OK ATTEMPTS TO CAUSE INSUBORDINA-
T!0<9 DISLOYALTY, MUTINY OR REFUSAL OF DUTY IK THE U.S. MILITARY OR WILLFULLY
OBSTRUCTS RECRUITMENT CR ATTEMPTS TO DO SO TO THE INJURY OF THE U.S. SHALL BE
FINED NUT MORE TH»N iio.OOC OK IMPRISONED NOT MORE THAN TWENTY TEARS OR BOTH*
CCF.U usc *;,»?).
HARtOKS OK CONCEALS A PtRSON «HO HE KNOwS OR HAS REASON TO SUSPECT HAS
OK IS AbOUT TO COMMIT AN OFFENSE UNDER THIS SECTION SHALL BE FINED
NOT PURE THAN sio,ooo OR IMPRISONED NOT MORE THAN TWENTY YEARS OR BOTH. THIS
SECTION ALSO APPLIES »ITHIN THE ADMIRALTY AND MARITIME JURISDICTION OF THE
UNITED STATLS AND ON THE HIGH SEAS.
HASTLH H*: 16 USC 23b' -001
RECORD TITLE:
•ICRUlTINb FOR SEKVICE AGAINST THE UNITED STATES
;AL IITATION:
Tb USC 2389
ABSTRACT:
WHOEVER RECRUITS SOLDIERS OR SAILORS WITHIN THE u.s. OR ANT PLACE SUBJECT
•/3 U.S. JURISDICTION, TO CNbAbE ZN ARMED HOSTILITY AGAINST THE SAME SHALL
9t flNEb NOT nOKb THAN S1.COO OK IMPRISONED NOT flORE THAN S YEARS, OR BOTH.
-------
KEY: 18 USC 2390 -001
RECORD.>T1UE :
ESLISTrtNT TO SE&VE AGAINST THE UNITED STATES
LEGAL CITATION:
U USC 2390
ABSTRACT:
•HOtVE* ENLISTS «1THI\ TM£ U.S. OK IK ANY PLACE SUBJECT
WITH INTENT TO SkRVt IN AR*ED HOSTILITY AGAINST THE U.S.
S10J CR ir.PklSOiilw NOT MOKE THAN i YEARS* OR BOTH.
TO U.S. JURISDICTION,
SHALL BE FINED
P.ASUR KEY: 18 USC 2S11 -001
RECORD TITLE:
INTERCEPTION t DISCLOSUkE OF WIRE OR ORAL
LEGAL CITATION:
Ifc USC 2511
•*
ABSTRACT:
Afc? PERSON »HO,
«a* .ILLFULLY INTERUFTS OR t*DEAVORS TO INTERCEPT ANY WIRE OR ORAL COMMUNI
CATION OK,
*a) -ILLFULLY UStS ANY ELECTRONIC, KlCnANICAL. OR OTHER DEVICE TO INTERCEPT
ANY OfcAL C&MhuNlCATION, OR
Cg) hlLLFULLV DISCLOSES, OR ESDEAVOKS TO DISCLOSE* TO ANY OTHER PERSON THE
CONTENTS OF ANY .IRE 0« ORAL COMMUNICATION OBTAINED IN VIOLATION OF
THIS SUBSECTION, OR
ti» WILLFULLY USES Oft ENDEAVORS TO USE* THE CONTENTS OF ANY HIRE OR ORAL
CO'.fUNlCATlON OBTAINED IN VIOLATION OF THIS SU0SECTION,
S;)ALL BE FINED NOT MOKE THAN HC.CDO OR IMPRISONED NOT MORE THAN FIVE YEARS,
OR *OTH.
s KEY: 18 usc 3?t? -001
B TITLE;
KART1NL SUSPENSION OF STATUTE OF LIMITATIONS
CITATION:
16 USC 3207
•AR THE RUNNING OF ANY STATUTE OF LIMITATIONS
THE UNITED STATES, OR
•ITH REAL OR PEISONAL PROPERTY OF THf UNITED
ABSTRACT;
1HH THE UNITED STATES IS AT
APPLICABLE TO AKV OFFENSE,
CD INVOLVING FRAUD AGAINST
<2) COMMTTED !*• CONNECTION
.53 COKMTTE& IK CONNECTION fclTH CONTRACT, SUBCONTRACT, CR PURCHASE ORDER
CONNECTED «1TH OK RELATED TO THE PROSECT10M OF WAR,
SHALL »E SUSPENDtD UNTIL THREE YEARS AFTER THE TtRBlhATION OF HOSTILITIES
AS PROCLAIMED AY Tttt PRESIDENT OR BY A CONCURRENT RESOLUTION OF CONGRESS.
-------
MASTER KEY: id
RECORD TITLE:
GATHERING,
At CITATION:
U USC 793
use 793
-001
TRANSMITTING Oft LOSING DEFENSE INFORMATION
A3ST«ACT:
WHOEVER ObTAINS INFORKATION RELATING TO THE NATIONAL DEFENSE,
(A) eY SECkETLY INSPECTING A DEFENSE RELATED INSTALLATION, OR
(B> BY COPYING, TAKING OR OBTAINING DOCUMENTS RELATED TO NATIONAL DEFENSE, OR
(O BY RECEIVING DOCUMENTS RELATING TO NATIONAL DEFENSE, OR
(D) bY HAVING LAWFUL POSSESSION OF A DOCUMENT RELATED TO NATIONAL DEFENSE,
AKD THEN TftAUSMlTS OR CAUSES IT TO BE COMMUNICATED, OR
(E) BY HAVING UNAUTHORIZED POSSESSION OF A DOCUMENT RELATED TO NATIONAL
DEFENSE, AND THEN TRANSMITS OR CAUSES IT TO BE COr«UNICATED, OR
(F) BY HAVING LAWFUL POSSESSION OF A DOCUMENT RELATED TO NATIONAL DEFENSE, AND
THEN THROUGH GROSS NEGLIGENCE, PERMITS IT TO BE REMOVED FROM ITS PROPER
PLACE OF CUSTODY,
tflTH INTENT OK REASON TO BELIEVE THAT THE INFORMATION IS TO BE USED TO THE
INJJRY OF THE UNITED STATES, Oft TO THE ADVANTAGE OF ANY FOREIGN NATION, SMALL
BE FINED NOT MCkE THAN 110,000 OR IMPRISONED MOR£ THAN 10 YEARS OR BOTH.
IF TWO OR MORE PERSONS CONSHftE TO VIOLATE ANY SUBPART OF 18 U.S.C. 793,
JA3STKACT (CONTINUED):
ASD ONE C« HOSE OF SUCH PERSONS DO ANY ACT TO EFFECT THE
CONSPIRACY, EACH OF THE PARTIES TO SUCH CONSPIRACY SHALL
PUNISHMENT PROVIDED IN 18 u.s.c. 793.
OBJECT OF TNE
BE SUBJECT To
THE
,TtR KEY: IB USC
'O WHOEVER, IN TIME CF MAR, «ITH 1NUNT TO COKMUN1CATE TO THE ENEMY COLLECTS,
PUBLISHES Ok COr.MuMCAUS ANY INFORMATION bITH RESPECT TO MILITARY OR NAVAL
MOVEMENTS. kUr,bE*» AND PLANS OR PUPL1C DEFENSE, WHICH MIGHT BE USEFUL TO
THE CNEMT, SMALL fcE PUNISHED feY DEATH OR 6Y IMPRISONMENT FOR ANY TCRH OF
TEAKS Ck FOR LIFE.
SO COfcSFlfiACV PENALTY FOR ABoVE C
-------
KIT: 1* use 79t -001
ECQkD TITLE:
USING AIRCRAFT TO PHOTOGRAPH DEFENSE INSTALLATIONS/EQUIPFUHT
*', SHALL BE FINED NOT MORE THAN M.D&D OK IMPRISONED NOT PORE THAN
ON£ TEAK, CK
MASHR KLT: 16 USC 795, 79? -C01
«E£*>*D TITLE:
PHOTOGRAPHING AND SKETCHING DEFENSE INSTALLATIONS/EQUIPMENT
LCSAL CITATION:
U USC 795, 797
t
A3ST«ACT:
THE PRESIDENT IS AUTHORIZED TO DEFINE CERTAIN VITAL MILITARY AND NAyAL INSTALL-
ATIONS, AS VITAL TC THE INTERESTS OF NATIONAL DEFENSE, AS REQUIRING PROTECTION
A&A;N;»T THE GCKCPAL DISSEMINATION OF INFORMATION RELATIVE THERETO. IT is
IT IS UULAktUL TO KAKfc ANY FHOTOGKAPH, SKETCH, PICTURE, DRAWING, HAP, Oft
REPRESENTATION OF SUCH INSTALLATIONS OR EQUIPMENT DEFINED AS VITAL
FIRST ObTAlrflhG THE P&RMISSION UF THE COMMANDING OFFICER OF THE ftlLl-
INSTALLATION. VIOLATORS OF THIS SECTION SHALL BE FINED NOT MORE THAN
1,DOC OR IMPRISONED NOT MOKE THAN ONE YEAR, OR BOTH.
IT IS ALSO I'NLAhFUL TO REPRODUCE, PUgLlSH, SELL OR GIVE AbAV ANY PHOTOGRAPH,
SKETCH, P1C1UKE, DRAWIt.6, ^AP, OR GRAPHICAL REPRESENTATION OF THE VITAL M1LI-
T3«r OR NAVAL II.STALLAT13N OR EQUIPMENT SO DEFINED, WITHOUT OBTAINING THE
PKOPLfi PE«<*ISSIO\, UNLESS SUCH REPRESENTATION CLEARLY INDICATES THAT IT HAS
CENSORED BY THE PROPER AUTHORITY. VIOLATORS SHALL BE FINED NOT MORE THAN
OP IKPMISONL1' NOT MCfcE ThAU ON£ YEAR, OR BOTH.
M*|tlR KEY; Ifi USC ?9c
TITLE:
»ISCLCSURE OF CLASSIFIED INFORMATION
CITATION:
U USC 79b
AB5ffiALT:
k^O£V£*. KNGkUGLY AND »ILLFtLLY C &KMUMCAT E S , FURMSHtS, TRANSMITS, Oft
OJHLfchlSE PAKES AVAILAELE TC AN UNAUTHORIZED PERSON, 0* PUBLISHES, 0* USES
IN At.V ftAN'f.ER PREJUDICIAL TO THE SAFETY OR INTEREST OF THE UNITED STATES
OS )Cfc THE fcENEFlT OF ANY FORU6N GOVERNMENT TO THE DETRIMENT OF THE UNITED
SUHS ANY CLASSIFIED INFORMATION CONCERNING THE CRYPTOGRAPHIC SYSTEMS OR
THE COMMUNICATION INTELLIGENCE ACTIVITIES OF THE UNITED STATES OR INFORMATION
KNOWINGLY ObTAINED FRO' THE COMMUNICATIONS OF ANY FOREIGN GOVERNMENT BY
COMMUNICATIONS INTELLIGENCE PROCESSES, SHALL BE SUBJECT TO A FINE OF NOT MORE
THA* &1G,UOu OR IKPklSONMENT UF NOT MORE THAN 10 YEARS, OR BOTH.
-------
ER KtY: 16 USC *feJ -001
RECORD TITLE:
6ETENTION OF ARrED VESSELS
LEbAL CITATION:
It USC V63
A3SUACT:
DURJK& A tAk IN WHICH THE UMTEt STAUS IS A NEUTRAL NATION, THt PRESIDENT,
OK AKY PERSON AUTHORIZED BY HI*, MY DETAIN ANY AR*ED VESSEL OWNED WHOLLY OR
2k PART eY CITI21NS OF THE UMUD STATESt IK ANY VESSEL, DOMESTIC OR FOREIGN,
WHICH IS foUILT OR HAS EEEN ADAPTED FOR WARLIKE PURPOSES UNTIL THE OWNER OR
' PtRiOl, IN CHARGE SATlifACTOKILY PROVES THAT THE VtSSEL WILL MOT BE USED TO
COMMIT HOS11L1TUS UPvN THE CITIZENS OK PfcOKERTY OP A FOREIGN STATE WITH WHICH
THE UMTEy STATES IS AT PEACE OR SOLD TO A BELLIGERENT NATION. VIOLATION OR
OR ATTE'PTtu VIOLATION SHALL CAkRV A FINE OF NOT MORE THAN $10,000, OR TEN
?£AkS IftPftlSON'tNT, OR bOTH.
18 use 967 -001
RECOMD TITLE:
FORDIdDINfc DEPARTURE OF VESSELS IN AID OF NEUTRALITY
LEGAL CITATION:
1e USC V67
A3ST*ACT:
A WAR IN WHICH ThE UNITED STAUS IS A NEUTRAL NATION, THE PRESIDENT,
ANY PEKSON ALTHOkUED bY HJW, MAY FOhBJD DEPARTURE OF A VESSEL WHENEVER
IS fEASONALLE CAUSE TC bELUVE THAT SUCH VESSEL IS ABOUT TO CARRY FUEL,
AK*UN1TJON, MEN, SUPPLIES OR INFORMATION TO A WARSHIP OR SUPPLY SHIP OF A
,1, EELLltEKI NT NATION IN VIOLATION OF THE LAWS, TREATIES OR OBLIGATIONS OF
THE UNITED »TATfcS. WHOEVER TAKES Ok ATTEMPTS TO TAKE A VESSEL OUT OF A PORT IN
VIOLATION OF THIS SECTION SHALL BE FINEb NOT MORE THAN 110,000 OR IMPRISONED
NOT MORE THAN TIN YEARS, OR BuTd.
-------
ASTER KEY: POSSE COM/TATUS ACT. 18 u-001
ECOKD TITLE:
' USING MILITARY EQUIPMENT/PERSONNEL fOR CIVILIAN LAW ENFORCEMENT
E&AL CITATION:
POSSE COKITATUS ACT, U UJ>C 1365
PRCKlblTlOS AbAINST THE USE OF MILITARY SERVICES
E3s?UKCLHENT UhLLSS SPiClFJCALtY AUTHORIZED BY CONGRESS.
CtPTIONS TO U USC 13c5 AT 10 USC 371*378 AND SPECIFIC
li/ TML PKtSiDLST FOR UTILIZATION CF MILITIA AND/OR ARMED
AT 10 USC 331-333.
2N CIVIL LAV
SEE STATUTORY
6RANT OF AUTHORITY
FORCES DOMESTICALLY
-------
KIT: 19 USc 26&3 -001
RECORD TITLE;
. EMERGENCY IMPLEMENTATION OF IMPORT RESTRICTIONS
LE&AL CITATION:
19 USC 2603
ABSTRACT:
AUTHORIZES TNC PRESIDENT TO IMPOSE IMPORT RESTRICTIONS OF. 19 USC 2606 UPON A
ttURMNAu&N THAT AN EMERGENCY CONDITION EXISTS WITH RESPECT TO ARCHEOLOGICAL
OR ETHNOLOGICAL MATERIAL OF AKY STATE PARTY. AN EMERGENCY CONDITION IS DEFINED
AS INVOLVING MATERIAL fcHicn is—
(1) Nt-LY DISlOVtKEl* IMPORTANT TO UUDfc RSTAN &I N& THE HISTORY OF MANKIND* AND IN
JECPAKCV OF KILLAbEt DESTRUCTION ETC;
U) ICENTIFIArLC AS CODING FROK ANY SITE RECOGNIZED TO BE OF HIGH CULTURAL
SIGNIFICANCE IF SUCH SITE IS IN DANGER FROM PILLAGE* DESTRUCTION ETC; OR
A PART OF THE REMAINS OF A PARTICULAR CULTURE* THE RECORD OF WHICH IS IN
LY FRO* PILLAGE, DESTRUCTION ETC.
-------
«UST£R *EY: 21 USC 95* 19 CFR 162.0 -C01
tECORD TITLE:
WAIVER OF CONTROLLED SUbSTANCE IMPORTATION RESTRICTIONS
1E6AL CITATION:
21 USC 952 19 CFR 162.C
ABSTRACT:
IMPORTATION INTO ThL CMTED STATES OF CONTROLLED. SUbSTANCES (SCHEDULE I OR 11)
OR MAkCOTK DRUGS (SCHEDULE III, IV OR V) IS PROHIBITED EXCEPT ftURlNG Ali
CMt*GLKCY IK WHICH DOMESTIC SUPPLIES OF ANT CONTROLLED SUBSTANCE IN SCHEDULE X
OR II (21 USC S12> OR ANY NARCOTIC DRUG IN SCHEDULE III, IV, OR V (21 USC 812)
ARE FOUND BY THE ATTOKNtY GENERAL TO BE NECESSARY TO PROVIDE FOR RED1CAL,
SCIENTIFIC OR OTHtR L&ITIRATE PURPOSES, AND ARE INADEQUATE, SUCH SUBSTANCES
at&Y BE SO IMPORTED UN&IR ^UCH REGULATIONS AS THE ATTORNEY GENERAL SHALL PRE-
SCRIBE.
IMPORTATION OF NONNARCOTU CONTROLLED SUBSTANCES IN SCHEDULE III, XV OR V IS
ALSj UNLAWFUL Ul.tESS THk SUBSTANCE IS IMPORTED FOR MEDICAL, SCIENTIFIC, OR
DTHLR LEolTlfATt USES PURSUANT TO REGULATION OF THE ATTORNEY GENERAL.
THE ATTORNEY &EMHAL *AY PERMIT IMPORTATION OF COCA LEAVES IF THE COCAINE
?M£xEIt. IS DESTROYED UKDER HIS SUPERVISION.
-------
MASTfcR KtY: 26 USC 55d, 27 CfR 19.70-001
fctcoKD TITLE :
E*E*PIIONS FRO? TAX LAWS TO HUT NATIONAL DEFENSE REQUIREMENTS
LEUAt CITATION:
26 USC 5561, 27 crR 19.70
ABSTRACT;
THE D1RECTO* OF THE BUREAU OF ALCOHOL, TOBACCO, I FIREARMS HAY TEMPORARILY
EXE1PT DISTILLED SPJRJTS PLANT PRvP*IETuRS FROM ANY PROVISION OF THE INTERNAL
KEVcNtt LA-S KE4.AT1NG Tu DISTILLED SPIRITS, ExCkPT THOSE REQUIRING PAYMENT OF
THE TAX TriEfctOM, fcHUNlVlP Ht DEErj> IT EXPEDIENT TO DO SO TO MEET NATIONAL
KSE Rt6U!kEKLNT5. THE tlriECTOR MAY PRESCRIBE AhY NECESSARY REGULATIONS.
MASTtK RET: 26 bSC 5562; 27 CFR 19.64-001
RE£9fcS> TITLE:
BlSASTEk EXEMPTJOKS FROM TAX LAW REQUIREMENTS
LEGAL CITATION:
2o USC 5562; 27 CFR 1V.t>4
A3STKACT;
THE DinCTOK OF THE RtKtAU OF ALCOHOL, TOBACCO, AND FIPEARPS MAYt WHENEVER HE
FINDS THAT IT IS NEtESSAkY OR DESIRABLE, BY REASON OF DISASTER, TEMPORARILY
• E*k4FT AI.Y DISTILLED SPIKITS PLANT PROPklETORS FROM AKY PROVISION OF TH£ INTER'
NAL RtVENUE LAWS ftkLATlNG TO DISTILLED SPIRITS, EXCEPT THOSE REQUIRING PAYMENT
OF THE TAX THEREUK, TO THE EXTENT H£ MAY DEEM NECESSARY OR DESIRABLE.
-------
MASUR KEY: 42 U3C 51S7(A> -001
RECO«D TITLE;
PtNALTKS FOR MISREPRESENTATION UNDER :&ISAST£R RELIEF ACT(BftA)
LE6AL CITATION:
42 USC 5157(A>
AiSTHACT:
ANY INDIVIDUAL *«MO
fclTrt A RE-UtST FOk
OR 1'PaiSGNEb
FRAUDULENTLY OR ULLFULLY MISSTATES ANY FACT IN CONNECTION
ASSISTANCE USDiR ThE DRA SHALL BE FINED NOT MORE THAN
FOR NOT BORt THAN ONE t£AR_-OR BOTH FOR EACH VIOLATION.
42 U$C 5U7C8) -001
ȣC04D TITLE :
VIOLATION OF DISASTER RfcLIEF ACT ORDERS I REGULATIONS
il&Au CITATION:
42 USC 51S?(d)
A«Y INDIVIDUAL »HO KNUklNGLY VIOLATES ANY ORDER OR REGULATION UNDER THIS
ACT SHALL Ei SUbJECT TO A CIVIL PENALTY OF NOT MORE THAN SS.OOC FOR EACH
«asT£R KEY: 42 use 51*?(c> -001
fcl£ORO TITLE:
MISAPPLICATIONS OF LOANS fc i CASH BENEFITS UKDER DISASTER RELIEF ACT
Li&AL CITATION:
42 USC &1*7(C>
eR KNO.IN6LT MISAPPLIES TH£ PROCEEDS OF A LOAN OR OTHER CASH BENEFIT OB-
t UNDER ANY SECTION OF ThE DKA SHALL Bt SUBJECT TO A FINE IN AN AftOUKT
TO UN£ AND ONC-HALF Tl«tS Tn£ ORIGINAL PRINCIPAL AMOUNT OF TH£ LOAN OR
fc£i<£FJT.
-------
4* U5C U11C4), UUU), ^
ELOkl* TITLE:
PiNALTIlS FOfc VIOLATIONS OF OIL SPILL NOTICE fcE()Um*ENTS
EliAL CITATION: £
ty USC U11(4), 1o1t(A)t U2?(f,); 23 CFfi 135.305, SO?
.BSTRACT:
ANY PERSON IN CMMGL Of A ViSSEL OK OFFSHORE FACILITY WHO IS SUBJECT TO U.S.
JUfclSl/ICTiON AND WHO FAILS TO 6IVE IMMEDIATE NOTICE TO THE SECRETARY OF TRANS-
P&ST*T10% OF AN OIL POLLUTION INCitLNT AS SOON AS M£ MAS KNOWLEDGE THEREOF
S»tALLv UPON CONV]CTlONt Bfc FINED NOT MORE THAN X10.0CD OR IMPRISONED FOR MOT
• "^ THA'« ONE Yl/.R, PR bOTH.
-------
4V USC U72M>(3> -001
TITLE:
AIR PIRACY
EGAL CITATION:
49 USC 1472H>C1IU)
ml Jm«m"oi THIS Simon S«LL BE imsmmt er THE m.
KIT: 49 USC 1472CP) -001
TJTLE:
INTERFERENCE klTH AIRCRAFT ACCIDENT INVESTIGATION
LEbAL CITATIuN:
49 USC 1472CP)
AISUACT:
-AS 0"
A f,M
YEAH, OK BOTH.
^OklN&Lr ANP .ITHOUT AUTHORITY REMOVES, CONCEALS, OR VXTHMOL01
CJVJL CRAFT jNVOLVEi) JN AN ACCIDENT, OR ANT PROPERTT yMKH
UCH AIRCRAFT AT THE Tl«t OF SUCH ACCIDENT, SMALL BE SUBJECT TO
ESi ThA,\ S^DO NOR H0«£ THAN $5000 OR IMPRISONED FOR NOT MORE T«AN
.HO
UF A
SUCH
NO LESi ThA,\
4y USC 1514
«
-------
Kit: 50 USC b5l, 852. 655 -001
TITLE :
iESISTRATlON OF PfcRSONS TicAINlD IK FOREIGN ESPIONAGE SYSTEMS
.EfiAL CITATION:
50 USC 651, 852, 655
iBSTkACT:
EVEkY Pt«iSOr, bHC HAS KK&biEDGL OR HAS RtCEIVEb INSTRUCTION OR ASSIGNMENT IN,
THE ESPIONAGE OK SABOUbt SERVICE OF A FOREIGN COUNTRY SHALL REGISTER WITH
THE ATTORNEY GENERAL. tolLLFUt VIOLATION &R THE kILLFUL MAKING OF FALSE
STATEMENTS SHALL RESUuT IN A FINE OF NOT MORE THAN S1Q,000 OR IMPRISONMENT
FOR NCT ».QnL THAN UVL YEARS OR BOTH. IXCEPTlONS TO THE REGISTRATION REQUIRE-
KENT ARE LUUD IN 50 USC £52.
-------
V.4.
"Guidelines on Sampling, Preservation, and Disposal of Technical Evidence
in Criminal Enforcement Matters", dated April 18, 1984.
-------
-------
1 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
APR 18 IS84
OFFICE OF
ENFORCEMENT AND
COMPLIANCE MONITORING
MEMORANDUM
SUBJECT: Guidelines on Sampling, Preservation, and
Disposal of Technical Evidence in Crijninal
Enforcement Matters^.
FROM: Courtney M. Price V^ QsLuJh~-\
Assistant Administrator for Enforcement
and Compliance Monitoring
TO: Assistant Administrators
Regional Administrators, Regions I-X
Regional Counsels, Regions I-X
Associate Enforcement Counsels
Director, NEIC
Introduction
This guidance describes procedures to be used for tech-
nical evidence related to cases which have been assigned to,
and are being managed by, the Office of Criminal Investigations
of the National Enforcement Investigations Center (NEIC) of
the Office of Enforcement and Compliance Monitoring. This
guidance, and the internal office procedures adopted in
accordance with the guidance, are not intended to, do not,
and may not be relied upon to create a right or benefit—
substantive or procedural--enforceable at law by a party in
litigation with the United States. Attempts to litigate
any portion of this guidance should be brought to the
attention of the Criminal Enforcement Division, Office of
Enforcement and Complaince Monitoring, EPA Headquarters.
I. SAMPLING GUIDELINES
Background
In any criminal prosecution, the government must prove
each element of each offense beyond a reasonable doubt. The
evidence that the government chooses to use to meet this
burden is left to the prosecutor's discretion subject to the
standard limitations of probativity and relevancy. Prosecution
under environmental statutes poses particularly interesting
-------
-2-
questions because of the need to prove the identity (and
often quantity) of pollutants, and because of the need for
experts (i.e., technicians, environmental engineers, etc.)
to establish aspects of the government's case. The facts
upon which the expert relies must impress a jury, meet defense
challenges, and establish the criteria necessary for the
expert opinion.
Only by considering issues of proof before evidence is
collected can the government be assured that violations dis-
covered can be proved when the case goes to trial. A determine
tion of what evidence should be taken, how it is to be taken
and how much should be taken must be done on a case-by-case
basis. As will be discussed below, the general principle
will be to take representative samples and to refer clean
up problems for civil and/or administrative remedies.
Issue
What level of pollutant sampling will suffice to support
a criminal case?
Guide lines
Technical support operations conducted as part of investi-
gations assigned to the Office of Criminal Investigations
will, with few exceptions, be evidence-gathering rather than
remedial or response operations, and will be limited accordingly.
Samples taken in support of a criminal investigation normally
will be limited to those considered necessary to confirm the
occurence of illegal activity, and to prove the government's
case at trial. Any overall remedial response required by the
situation will then become the responsibility of existing
administrative or civil response authorities within the
Agency.
It will be the policy of the Agency to use representative
samples as evidence for criminal cases. Occasionally, the only
evidence available for a significant environmental offense will
be a small -amount of material. In that event, the entire amount
of material which can be collected will be retained for testing
and for defense requests. Most cases assigned to the Office
of Criminal Investigations will involve large amounts of pollu-
tion or hazardous substances and, in those cases, representative
samples will be gathered.
-------
-3-
Before any decisions are made or any samples obtained,
agents, technical personnel, and, where possible, prosecuting
attorneys should collaborate to decide what evidence will be
necessary and desirable to prove each charge. When samples
are obtained without a search warrant and prior to a referral
to the Justice Department or to the U.S. Attorney's office, a
prosecutor may not be working on the case. When this is the
case, the legal, investigative and technical personnel at the
Agency will make the evidence decisions.
If the evidence is to be obtained pursuant to a search
warrant, this discussion (concerning evidence collection) must
be prior to the submission of the affidavit for the warrant.
The magistrate or judge issuing the warrant will inquire as to
the duration of the "on-site" time, the area to be searched,
and the subject(s) of the search. These questions can only be
answered if the government has formulated an investigative
plan for obtaining the evidence in advance of the request for
the warrant.
In some cases, the Office of Criminal Investigations will
be notified of environment offenses which must be documented
immediately if the evidence is to be preserved. In such situ-
ations, the necessarily quick response time precludes lengthy
collaborate discussions. However, the guidelines concerning
quality control, chain-of-custody and representative sampling
apply even in these situations.
Discussion
Evidence decisions must start with the technicians, envi-
ronmental engineers and other experts who are familiar with
the evidence necessary to form a basis a for their scientific
opinions. Attorneys and agents should then add information
concerning the tangible evidence that is most likely to
clarify the government's case for the jury and what evidence
is likely to best reflect the seriousness of the charges.
Thought should be given to defense arguments concerning whether
the samples are truly representative and whether they were
obtained, preserved and tested in an accurate, scientific
manner. Consideration must also be given to reducing the
"on-site" time and the practical difficulties of proper storage
-------
-4-
and safekeeping. Finally, under certain statutory provisions
[for example, the CERCLA reporting requirement for "reportable
quantities" found at Section 103(b)(3)], the government will
be obliged to demonstrate that a specified amount of a hazardous
substance was released. This will also affect the amount of
sampling that is conducted on-site.
The question of what is a representative sample can only
be answered in the context of the case. All the parameters of
the potential evidence should be sampled, photographed or
documented in some fashion. See, NEIC Policies and Procedures
Manual. For instance, if drums are located at a plant which
does not have a permit to store hazardous wastes, the necessary
proof will include establishing the nature of the drum contents.
The total number of drums should also be determined and docu-
mented. Unless the number is extremely large, samples can be
obtained from each drum. If this is impractical, samples
should be obtained from all apparent categories (size, content,
appearance, state of deterioration or exposure to the environ-
ment, etc.). If the soil under and around the drums appears
contaminated, then soil samples should be taken at different
points and at different depths. Keeping in mind that the
concentration of the substances as well as the gross amount of
the substance may be relevant, the technicians should be prepared
to take samples which can answer these questions. £eje_, United
States v. Gonzalez, 697 F. 2d 155 (6th Cir. 1983).
If it is anticipated that a screening procedure will be
used, either at the site or in the laboratory, it is recommended
that the prosecuter be made aware of this. A screening procedure
is a preliminary analysis used to determine whether further
analysis would be useful.
Because criminal prosecutions must be proved "beyond a
reasonable doubt", care must be taken to ensure thorough and
complete testing and sampling procedures. Recognizing the
storage limitations of the Agency, it cannot be denied that
the seriousness of the offense is emphasized when the Govern- „
ment can visually prove its case with a multitude of samples
and physical evidence. It is expected that the technical
personnel who testify in criminal cases will be able to state
that a thorough and scientific procedure was used to obtain
the evidence, that no further samples or tests would be necessary
to confirm the results, and that strict chain of custody and
quality control procedures were employed.
-------
-5-
II. DISPOSAL OF EXTRA SAMPLE EVIDENCE
Background
There will be occasions when EPA technicians and agents
take more evidence samples than are necessary to prove a case.
The storage and preservation expense as well as potential
dangerousness of the items might make it advisable to dispose
of the evidence in advance of trial. At the same time, courts
look with disfavor upon the disposal of material that may be
characterized as potential evidence in a criminal trial.
Thus/ destruction of samples and remains of samples must occur
in a manner that does not jeopardize the subsequent prosecution.
Finally, once a prosecution has been concluded, decisions
must be made concerning all remaining evidence stored on behalf
of the Office of Criminal Investigations.
Issue
When and how may the Agency dispose of surplus sampling
evidence collected on behalf of the Office of Criminal Investi-
gations?
Guidelines
Court permission must be obtained before surplus samples
obtained in the course of a criminal investigation are disposed
of by the government. Disposal procedures will vary depending
on the stage of the criminal case. Where a defendant has been
formally charged, the government can file a pre-trial motion
for disposal of evidence that will be considered in an adver-
sarial proceeding. If charges have not been filed, the same
type of motion filed ex parte may be used. This e_x_ parte
motion would be made pursuant to the All Writs Act, 28 U.S.C.
§636(b ) (1 ) (A ) . (A copy of a sample destruction motion is
attached to this guidance.)
Following termination of the criminal case (by trial,
plea, dismissal or other means), the prosecutor should be
contacted to discuse appropriate procedures for evidence
disposal.
Discussion
It should be noted at the outset that an evidence destruc-
tion motion will not always succeed. For example, it is not
certain that a court will give permission for such destruction
in the context of a criminal case involving non-contraband
materials. The majority of cases which discuss destruction of
evidence before trial involve destruction of contraband (i.e.,
drugs, counterfeit money, illegal weapons). It would be under-
standable for a court to refuse permission to dispose of
chemicals, soil, capacitors, or drums when it has not been
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conclusively established -- by plea or trial -- that these
items were illegally held or stored by the defendant(s). If
the jury acquits the defendant(s), they would have the right
to repossess the evidence seized, for whatever value it might
have .
In United States v. Ramsey, 490 F. Supp. 96 (E.D. Tenn.
1980) the court issued an opinion on the government's motion
to destroy certain chemicals. The court would not authorize
the disposal of chemicals which the government had seized
even though the government documented a reasonable concern
over the hazardous nature of the substances. The government
alleged that the chemicals were flammable and explosive and
"constitute a present danger to property and a threat of
personal injury or death to people in or near the storage
area." Id. at 97. But, the court reasoned, how could it
authorize destruction of non-contraband, unforfeited property
when there has been "no showing that the chemicals have been
used or intended to be used by anyone in any significant way
in a criminal enterprise?" Id. at 96. Presumably, that is
what the government intended to prove at trial, but until then,
the prosecutor was admonished by the court to u-se extreme care
and caution with the chemicals, but to keep them.
When a court is petitioned, either pursuant to the All
Writs Act, or by way of a pre-trial motion, for permission to
destroy evidence, the court should be informed whether the
targets of the investigation have been notified of the motion,
whether the targets have been offered split samples (see Section
III, infra) and whether the targets have been offered the
opportunity to view the evidence before destruction. Of course,
before such a motion is made, the effect of disclosing the
existence of a previously secret criminal investigation must
be analyzed. However, if the defendants have been formally
charged or otherwise made aware of the criminal investigation,
EPA will encourage the prosecutor assigned to the case to
obtain court authorization to destroy sample evidence which
goes beyond that necessary to prove the case or evidence
which the defense has declined.
In any event, any 'evidence obtained on behalf of the
Office of Criminal Investigations shall not be disposed of
until the investigation has foreclosed the possibility of
criminal charges; or until the criminal case has been concluded
by trial, plea, dismissal or otherwise and the prosecutor and,
if necessary, the court have approved disposal.
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III. SPLIT SAMPLES/DOUBLE SAMPLES
Background
Many environmental statutes require the Agency to split
samples taken in the exercise of statutory inspection rights.
When a site search is conducted pursuant to a criminal search
warrant, no such requirement exists. However, offering samples
at the time of the execution of the warrant is an expeditious
method of assuring the defense access to the samples while not
burdening the Agency with storeage problems.
Issue
Should samples be split in the context of a criminal
investigation?
Guidelines
All samples taken by EPA technical personnel on behalf
of the Office of Criminal Investigations should be taken in
large enough quantities so that if the defense requests part
of the sample at any time prior to trial, a portion of the
sample may be turned over to the defense or to a defense-
designated laboratory.
If sample collection is authorized by a court as part of a
search warrant, it is appropriate to inform the court (at the
time the warrant is obtained) of the Agency's plan to offer
split samples to authorized persons at the site of the warrant.
Prior court approval of the transfer of hazardous substances
is helpful, even if not necessary. Once the court has authorized
the collection of samples and the splitting of such samples, an
offer to turn over split samples should be made to an authorized
person at the site, even without such a request having been made
by the defense.
An alternative which may be used is to ask the defendant
to designate a laboratory to analyze the sample. Thus, instead
of giving the sample to an authorized person at the site, the
sample would be sent to a laboratory named by the defendant(s).
If the split sample is refused or no one is available to
accept it, extra amounts of the sample must be retained by the
Agency. Whether or not the extra amounts are kept in separate
containers should be a laboratory decision. There may be
subsequent requests for samples so that independant testing
can be administered on behalf of the defense in preparing for
trial. Courts will normally honor such requests.
Finally, the return on the search warrant should document
whether a sample split is accepted, refused or not offered
because no one was available to accept it.
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Discussion
Although convictions have been affirmed where the govern-
ment has lost or destroyed an evidentiary sample, the courts
have begun to sympathize with a defendant's request to indepen-
dently inspect and test. For instance, in Banks y. F.A.A.,
687 F.2d 92 (5th Cir. 1982) the courts reversed the dismissal
of two air traffic controllers who were fired after drugs
were found in their urine. The defendants claimed that their
due process rights were violated because F.A.A. allowed the
private lab which had tested the urine to destroy it after it
was analyzed. The court agreed that it was "crucial" that the
samples were not available for independent testing and dis-
counted the government's claim that cross examination of the
independent testing chemist and challenging the testing methods
were sufficient. Citing the principles of United States v.
Gordon, 580 F.2d 827 (5th Cir.), cert., denied,439 U.S. 1051
(1978), the court stated:
The laboratory tests here were the only
meaningful evidence resulting in the
discharges. The accuracy of those tests,
including the possibility that the samples
were mixed up, damaged, or even inaccurately
tested, was the likely determinant of the
entire case. Id. at 94. (emphasis in original)
In Gordon, even though the government made available
samples of the three seized chemicals to the defense, the
court found that it was error not to also have turned over
the chemical which the government chemist made from the three
seized chemicals. The reasoning of this and other similar
cases is that if the government intends to introduce secondary
evidence (i.e., photographs, testimony, test results), then
it should retain the primary evidence for defense inspection
and testing.
One more case widely cited is U.S. v. Loud Hawk, 628 F2d
1139 (9th Cir. 1979), cert, denied, 445 U.S. 917 (1980). In
this case, state law enforcement officers destroyed seized dyna-
mite after thoroughly examining it and photographing it. The
defense argued that the material was not dynamite and that they
were not notified of the state's intention to destroy it and
therefore, did not get a chance to test it. The court held
that even though the dynamite was destroyed for "public safety
considerations," it was evidence and it should have been
preserved for the defense.
The Fifth (U.S. v. Gordon, supra.), Ninth (U.S. v. Loud
Hawk, supra.), Third (Government of the^ Virgin Islands v.
Testamark, 570 F.2d 1162, 1978), Eleventh (U.S. v. Nabors, 707
F.2d 1294, 1983) and First (U.S. v. Picariello, 568 F.2d 222,
1978), Circuits are not 'Sympathetic to the argument that
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-9-
evidence which has been destroyed is not "suppressed." Under
Brady v. Maryland, 373 U.S. 83 (1963) and following the
reasoning of U.S. v. Bryant, 439 F2d 642 (D.C. Cir. 1971),
courts have found that a right to discover implies a duty to
preserve. Therefore, sufficient quantities of the evidence
should be obtained and preserved so that both the government
and the defense can perform tests.
IV. TECHNICAL SAMPLES WHICH DEGENERATE
Background
Samples taken by the government may, no matter how scienti'
fically preserved, degenerate with the passage of time. Thus,
even if there is an adequate amount of the material for defense
testing, it may no longer be suitable for testing by the time
the defense is notified or by the time a defendant is identi-
fied. This will only be an issue when the defense has not
obtained a split sample at the time the sample was taken by the
Government.
Issue
What steps should the government take when it has poss-
ession of evidence which degenerates?
Guidelines
Under no circumstances will samples, residues, or sample
containers used in cases assigned to the Office of Criminal
Investigations be destroyed, regardless of their condition,
without following disposal procedures established in Section II
above. If the chemical and/or biological properties of the
evidence seized remains stable for only a short period of time,
the Office of Criminal Investigations should be notified by
the laboratory personnel. Agency personnel and/or a prosecutor
will then notify the defense. The notification should state
that the government has a sample and that the defense has
until a certain date to inspect or obtain the sample for indepen-
dent testing. The target must be notified as soon as possible
after formal charges have been brought. Whenever the target
is notified, court approval to destroy after the stated date,
whether or not the defense responds to the notice, must be
obtained. This can be accomplished by way of the All Writs
Act or by a motion to the court which has jurisdiction over
the case.
Discussion
This is a difficult and sensitive area because of the
time considerations when evidence is likely to self-destruct.
To avoid an allegation of bad faith, it will be important
that the government give notice as soon as possible, so that
the defense has adequate time to retain their own experts
and to start their own testing.
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Notice should include a technical person's preliminary
assessment of what the sample contains, when it was obtained
and the rate of anticipated degeneration. The Agency has good
technical information upon which to make sound assessments of
how long a sample may be held and still retain its integrity
for its intended purpose. The name and phone number of the
prosecutor and agent to contact should also be included. If
the defense responds to the notice, the U.S. Attorney's office
should be contacted and the arrangements for the transfer of a
portion of the sample should be coordinated with that office.
V. Laboratory Procedures
Issue
What procedures should be used in the laboratory in handling
evidence for criminal enforcement cases?
Guidelines
All evidence obtained on behalf of the Office of Criminal
Investigations will be obtained, tested and preserved by Agency
laboratories. Unless unavoidable, no contract laboratories
will be employed. Until further guidance is issued, each Agency
laboratory will institute its own procedures to ensure the
security of the paperwork and the samples. These procedures
will supplement those already in force in this this area.
Discussion
Because of superior quality control and simplified chain
of custody, technical samples collected in criminal cases should
be analyzed whenever possible in EPA laboratories, rather than
contract laboratories. In addition, samples and paperwork
(on these samples) should not be tampered with or discussed
with persons who are not assigned to work on the case. A
premature disclosure, even inadvertent, to a company, the
media, or other individuals can jeopardize the success of the
investigation and the safety of the investigators.
Furthermore, the "tighter" the chain of custody, the easier
it will be to prove the case in court. Since it may be necessary
to bring into court each individual who handled, tested or packaged
the samples, the fewer individuals involved, the better. Because
of the complexity of the sampling and testing procedures, the
laboratories are authorized to determine their own methods for
making sure that no "unnecessary" personnel handle the evidence.
It is assumed that the quality control guidelines and methods
already in use by the laboratories will be applied with particular
care in the development of criminal cases.
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V.5,
"Guidance Concerning Compliance with the Jencks Act11, dated November 21,
1983. See GM-23. Superseded and replaced by V.8. below.
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V.6,
"Policy and Procedure on Parallel Proceedings at the EPA", dated January
23, 1984. See GM-30. Superseded.
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V.7,
Ci **" ^
"The Use of Administrative Discovery Devices in the Development of Cases
Assigned to the Office of Criminal Investigations", dated February 16,
1984. See GM-36. Superseded.
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V.8.
"Guidance Concerning Compliance with the Jencks Act" . dated March 8, 1984,
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1
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ISK
| UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
i WASHINGTON. D.C. 20460
MAR £ 1964
OFFICt OF
ENFOFICEMF.NT AND
COMPLIANCE MONITORING
MEMORANDUM
SUBJECT
FROM:
TO:
Guidance Concerning Compliance with the Jencks Act
Courtney M.
Assistant Adminis
or Enforcement
and Compliance Monitoring
Assistant Administrators
Regional Administrators
Regional Counsels
Associate Enforcement Counsels
Director, NEIC
Background
The Jencks Act (18 U.S.C. §3500) provides that in a
federal criminal prosecution, after a witness called by the
United States has testified on direct examination, the court,
on motion of the defendant, shall order the United States to
produce any "statement", as defined in the Act, in the
possession of the United States that relates to the subject
matter as to which the witness has testified. Any witness
called by the United States is subject to the Jencks Act.
Therefore, the "statements" of environmental engineers,
technicians, laboratory personnel, criminal investigators,
inspectors, and EPA lawyers may be ordered turned over to
the defense if any of these individuals testifies for the
Government. The need for a complete understanding of the
requirements of the Jencks Act, by all EPA personnel, can-
not be underestimated. The identity of government witnesses
cannot be accurately predicted in advance, and the sanctions
for losing, destroying or misplacing "Jencks Act material"
can be severe.
The Act (the text of which is set forth in Appendix A) __
has generated a considerable amount of case law. Litigation^
has mainly concerned questions as to what is a "statement" 2-
and what sanctions should be imposed should the Government B5 ^
fail to produce Jencks Act material. This memorandum will — f—
discuss these points and the procedures which must be used w m
to preserve the material. -^ *"~*
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-2-
Issue
What written materials will be considered "statements"
subject to production to the defense during the course of
criminal litigation?
Discussion
A "statement" is defined in part in 18 U.S.C. §3500(e)
as (1) a written statement made by the witness and signed or
otherwise adopted or approved by him; or (2) a stenographic,
mechanical, electrical, or other recording, or a transcription
thereof, which is a substantially verbatim recital of an oral
statement made by the witness and recorded contemporaneously
with the making of such oral statement.
*(e)(l) Statements"; Under subsection (e)(l), a written
statement can be a report written by an agent and adopted by
the witness. That is, if an agent writes up a report and
either reads it back to the witness or lets the witness read
it and then has the witness, in writing or orally, approve
what has been written, then the witness has "adopted" the
statement and it becomes the witness's statement. This
statement or report does not have to be written at the time
of the interview of the witness. If an agent talks to a wit-
ness, types up a report a few days later and shows the report
to the witness who approves it, it is an "(e)(l) statement"
of the witness. A document written by a witness, whether
signed or unsigned, is also a statement and, if turned over
to an agent, must be retained as Jencks Act material.
Criminal investigators or agents intentionally obtaining
statements from potential witnesses are not the only EPA
personnel who may create "(e)(l) statements." If an EPA
technician or inspector writes a report which a facility
manager reads and certifies as being accurate, then this
report may be considered the "statement" of the facility
manager. The manager has "adopted" the report. Also, the
notes or laboratory reports of a technician or inspector
are "(e)(l) statements" as to that technician or inspector.
If the technician or inspector testifies, then these notes
or reports must be turned over to the defense if they relate
to the subject matter of the direct testimony. It does not
matter who records the statement or for what purpose; it
remains Jencks Act material. EPA technical personnel must
keep any notes that they have made of interviews with facil-
ity personnel (or other potential witnesses) as well as notes
recording actions which may later be the subject of a criminal
prosecution.
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"(e)(2) Statements"; Statements which are "(e)(2) statements"
include not only tape recordings, but any notes which can be
considered a "substantially verbatim recital" of a witness's
oral statement. If an agent takes notes quoting, or writing
down in a substantially verbatim form/ the words of a witness
and these notes are taken either at or near the time of the
witness's oral statement, these notes become the witness's
"(e)(2) statement". The agent taking the notes is viewed in
the manner of a stenographer who accurately memorializes the
witness's words. The witness does not have to approve or
adopt the agent's notes. He does not have to even know that
notes were being taken. If the agent has captured the witness's
words on paper, then these words are the witness's statement
even if he is unaware that he is making a statement.
Agents who testify in court become witnesses whose
statements also must be turned over to the defense. Investi-
gative reports, written interpretations or impressions of a
case, and written analyses of case problems and issues may
all be "statements" of an agent. For instance, a report of
a witness interview may not be a witness's "(e)(l)" or "(e)(2)"
statement because it does not directly quote the witness or
capture the witness's words in a substantially verbatim form.
However, it may be the "(e)(l) statement" of the agent who
wrote the report. "The written report of the agent, however,
is just as much a verbatim statement of the agent who prepares
it as a written statement of an informer, incorporated in
the report, is the statement of the informer." Holmes v.
United States, 271 F.2d 655, 658 (4th Cir. 1959).
"Running resumes" of F.B.I, agents, detectives or EPA
agents are "(e)(l) statements" of the agent and may be
producible. If a Special Agent testifies, it can be antici-
pated that his/her notes, reports to SAICs, case referral
reports, and investigative reports will be producible if the
direct testimony covers areas which are discussed in these
previously written documents. United States v. Sink, 586
F.2d 1041 (5th Cir. 1978), cert, denied, 443 U.S. 912 (1979);
Holmes v. United States, supra. Although it is incumbent
upon the trial judge to separate out personal evaluations
and "discussions of legal and practical problems of a prose-
cution" from the "running resumes" (or from any document
which contains Jencks Act material), the writer who includes
extraneous material always runs the risk of a judge deciding
against excision. United States v. Pfingst, 377 F.2d 177,
195 (2d Cir.), cert, denied, 412 U.S. 941 (1973). Material
in an agent's report which is sensitive or which might affect
the security of EPA's investigative techniques is not exempt
from Jencks Act requirements. West v. United States, 274
F.2d 885 (6th Cir. 1960), cert, denied, 365 U.S. 819 (1961).
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Notes, reports, etc., in the hands of any EPA employee—
including criminal investigators, lawyers and technical
persons—are considered "in the possession of the government."
Therefore, if an EPA employee fails to disclose Jencks Act
material to the prosecutor, that failure will be held against
the Government even though it is the agent rather than the
prosecutor who has failed to preserve something. United
States v. Bryant, 439 F.2d 642 (D.C. Cir. 1971); Emmett v.
Ricketts, 397 F. Supp. 1025 (N.D. Ga. 1975); United States v.
Niederberger, 580 F.2d 63 (3d Cir. 1978); United States v.
Williams, 604 F.2d 1102 (8th Cir. 1979). As soon as a case
is opened by the Office of Criminal Investigations, the agent
assigned to the case should inventory all existing notes and
reports concerning potential government witnesses in the
possession of, or known to, all Agency personnel involved in
the case, and inform them of their obligation to retain such
material. Copies of this Agency's guidance on the Jencks Act
should also be distributed to such personnel.
Courts will require the Government to turn over any material
which fits the "statement" definition if it relates to the
subject matter of the witness's direct testimony. Any material
which either is not a statement of the witness or does not
relate to the subject matter of the witness's direct testimony
will be excised from the document. A judge may not exercise
his or her own judgment as to what material is important,
helpful or necessary for the defense. If it is a statement
that relates to the direct testimony, it must be turned
over.
Courts have broadly interpreted the phrase "relates to
the subject matter as to which the witness has testified," in
Section (b) of the Act. However, courts have more restric-
tively defined "statements" under Section (e). Acknowledging
that it is unfair to cross-examine a witness using material
which does not represent what the witness in fact said,
courts have excluded material that is really the agent's
words or impressions rather than those of the witness. In
Palermo v. United States, 360 U.S. 343 (1959), the Court
affirmed the denial of the production of a 600-word memoran-
dum in which the Government agent summarized a three and a
half hour interrogation of a witness who testified at trial.
In one of the first Supreme Court decisions discussing the
"statement" definition of the Jencks Act, the Court attempted
to clarify what courts may exclude:
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-5-
[S]ununaries of an oral statement which evidence substan-
tial selection of material, or which were prepared after
the interview without the aid of complete notes, and hence
rest on the memory of the agent, are not to be produced.
Neither, of course, are statements which contain the
agent's interpretations or impressions.
360 D.S. at 353. If a court describes an agent's notes as
"rough", "random" or "brief", it will be signaling its finding
that the notes are not "statements" as to the witness referred
to in the notes.
To determine whether notes accurately reflect a witness's
words, courts will consider the extent to which the writing
conforms to the witness's language (e.g., "I dumped it because
I thought the load was hot."); I/ the number of pages of notes
in relation to the length of the interview (e.g., one page of
notes after three hours of interviewing); 2/ the lapse of time
between the interview and its transcription; "$/ the appearance
of the substance of the witness's remarks (i.e., are they in
quotation marks? in sentence form?); V and the presence of
comments or ideas of the interviewer. _5/
The Jencks Act clearly gives the court the authority to
determine, after an in camera inspection, what is Jencks Act
material and what is not. It is not the Government's function
to excise material; rather, any notes or memoranda which
conceivably could be viewed as Jencks Act material should be
provided to the prosecutor for review by the courts.
I/ Palermo v. United States, supra.
2/ United States v. Judon, 581 F.2d 553 (5th Cir. 1978);
United States v. Durham, 587 F.2d 799 (5th Cir. 1979);
Goldberg v. United States, 425 U.S. 94 (1976); Palermo v.
United States, supra.
y Campbell v. United States, 365 U.S. 85 (1961).
V United States v. Muckenstrum, 515 F.2d 568 (5th Cir.),
cert, denied, 423 U.S. 1032 (1975); United States v.
Pennett, 496 F.2d 293 (10th Cir. 19747!United States v.
Bines, 455 F.2d 1317 (D.C. Cir. 1971).
5/ United States v. Pfingst, supra.
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Issue
When must Jencks Act material be made available to the
defense and what are the sanctions if it is not made
available?
Discussion
If a prosecutor decides to follow strictly the letter
of the law, he or she need not turn over Jencks Act material
until after the witness has testified at trial for the Govern-
ment. However, because of the delay which this creates (while
the defense reviews the material), most courts expect that a
prosecutor will agree to turn over Jencks Act material either
at the start of each day of trial or before the witness testi-
fies on direct examination. Some prosecutors even allow the
defense to examine the material before trial.
As in any area of the law, different courts interpret
the Jencks Act differently. Prosecutors who are aware of
previous rulings by a court on Jencks Act issues will conform
their practice accordingly. Therefore, what one prosecutor
considers Jencks Act material, another may not. EPA personnel
must accommodate themselves to the practice of the prosecutor
within their jurisdiction.
The Congressional purpose of the Act is to allow the
defendant to have, for impeachment purposes, "relevant and
competent statements of a governmental witness in possession
of the Government touching the events or activities as to
which the witness has testified at trial." Campbell v. United
States, supra, 365 U.S. at 92. If the defense's ability to
cross-examine is impeded by the deliberate or inadvertent
loss, by the Government, of Jencks Act material, the Court
may decide not to allow the witness to testify at all or to
strike the witness's entire testimony. Of course, the effect
of completely excluding the testimony of a Government witness
may be significant.
Although the Act does not require the automatic imposi-
tion of sanctions for failure to preserve potential Jencks
Act material, courts have warned law enforcement agencies of
their duty to promulgate procedures to ensure preservation.
[S]anctions for non-disclosure based on loss of evidence
will be invoked in the future unless the Government can
show that it has promulgated, enforced, and attempted in
good faith to follow rigorous and systematic procedures
designated to preserve all discoverable evidence gathered
in the course of a criminal investigation. The burden,
of course, is on the Government to make this
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United States v. Bryant, 439 F.2d 642 (D.C. Cir. 1971)
(footnote omitted)(emphasis in original).
In light of the sanctions that can flow from a failure
to preserve Jencks Act material, as well as Government's
inherent responsibility to preserve discoverable evidence, it
is incumbent upon EPA to develop procedures that will ensure
this end.
Issue
What procedures should be implemented throughout the
Agency to preserve Jencks Act material?
Discussion
As a general rule, after a matter is referred to EPA's
Office of Criminal Investigations, the case agent, will be
responsible for reports written to document factual develop-
ments in ongoing cases. This would include, for example,
interview write-ups, surveillance reports, documentation
of the receipt of physical evidence, etc. One clear exception
to this general rule will be Agency technical personnel who
will continue to draft reports documenting sampling data
and analysis, chain of custody information, etc.
If more than one investigator is involved in an investi-
gation, only one report should be written documenting a
specific event unless circumstances mandate otherwise.
All work notes should be retained by Agency personnel
working on the criminal investigation until the final disposi-
tion of the case. ^ This potential Jencks Act material must
be kept in secured files when not in immediate use. Any
notes taken at the time of the event, or at the time of the
interview, as well as reports composed from the notes must be
retained. Intermediate drafts need not be retained.
Investigative reports and technical reports should not
include the writer's subjective thoughts, impressions or
general opinions concerning a case. If it is thought necessary
to reduce to wrrting information that is not strictly factual,
this should be kept separately in secured files. It is more
likely that material which is arguably not producible under
the Act will be withheld from the defense if it is kept apart
from material which is clearly Jencks Act material. Rather
than disputing ifn court which portions of reports should be
excised, everything within a report should be relevant and
objective material. Extraneous material which does not
directly relatento a case should not be included in investi-
gative reports''.onnthat case.
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APPENDIX A
§3500 Demands for production of statements and reports of
witnesses.
(a) In any criminal prosecution brought by the United
States, no statement or report in the possession of the United
States which was made by a Government witness or prospective
Government witness (other than the defendant) shall be the
subject of subpoena, discovery, or inspection until said wit-
ness has testified on direct examination in the trial of the
case.
(b) After a witness called by the United States has tes-
tified on direct examination, the court shall, on motion of
the defendant, order the United States to produce any state-
ment (as hereinafter defined) of the witness in the possession
of the United States which relates to the subject matter as to
which the witness has testified. If the entire contents of
any such statement relate to the subject matter of the testi-
mony of the witness, the court shall order it to be delivered
directly to the defendant for his examination and use.
(c) If the United States claims that any statement
ordered to be produced under this section contains matter
which does not relate to the subject matter of the testimony
of the witness, the court shall order the United States to
deliver such statement for the inspection of the court in
camera. Upon such delivery the court shall excise the portions
of such statement which do not relate to the subject matter of
the testimony of the witness. With such material excised, the
court shall then direct delivery of such statement to the
defendant for his use. If, pursuant to such procedure, any
portion of such statement is withheld from the defendant and
the defendant objects to such withholding, and the trial is
continued to an adjudication of the guilt of the defendant,
the entire text of such statement shall be preserved by the
United States and, in the event the defendant appeals, shall
be made available to the appellate court for the purpose of
determining the correctness of the ruling of the trial judge.
Whenever any statement is delivered to a defendant pursuant to
this section, the court in its discretion, upon application of
said defendant, may recess proceedings in the trial for such
time as it may determine to be reasonably required for the
examination of such statement by said defendant and his
preparation for its use in the trial.
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(d) If the United States elects not-to-comply with an
order of the court under subsection (b) or .(c) hereof to
deliver to the defendant any such statement, or such portion
hereof as the court may direct, the court shall strike from
the record the testimony of the witness, and the trial shall
proceed unless the court in its discretion shall determine
that the interest interests of justice require that a mistrial
be declared.
(e) The term "statement", as used in subsections (b),
(c), and (d) of this section in relation to any witness
called by the United States, means—
(1) a written statement made by said witness and
signed or otherwise adopted or~approved by him;
(2) a stenographic, mechanical, electrical, or other
recording, or a transcription thereof, which is
a substantially verbatim recital ofcan oral
statement made by said witness and recorded
contemporaneously with the making of such oral
statement; or
(3) a statement, however taken or recorded, or a
transcription thereof, if any, -made by said
witness to a grand jury.
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V.9,
"Functions and General Operating Procedures for the Criminal Enforcement
Program", dated January 7, 1985. See GM-15.
-------
v.io,
"The Role of EPA Supervisors during Parallel Proceedings", dated March 12,
1985. See GM-T7. «SiiruM-eorU»H
1985. See GM-37. Superseded.
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v.ii.
"Environmental Criminal Conduct Coming to the Attention of Agency Officials
and Employees", dated September 21, 1987.
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ISSE?
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
V.ASKING70N. D.C. 20.160...
SEP 2 11337
MEMORANDUM
SUBJECT: Environmental Criminal Conduct Coming To The
Attention Of Agency Officials And Employees
FROM: Thomas L. Adams, Jr.
Assistant Administrator
*
TO: Assistant Administrators
Regional Administrators
Deputy Regional Administrators
Associate Enforcement Counsels
Program Enforcement Directors
Regional Counsels I-X
It is important that all acts of the regulated community
exhibiting actual or suspected environmental criminal conduct '
which come to the attention of any employee of the Agency be
referred to the Office of Criminal Investigations for review.and
possible investigation. I urge each of you to communicate this
policy regularly to all of the employees under your supervision.
It should also be included in any new employee orientation or
training that you conduct.
It is not expected or desired that your staff attempt an in
depth legal analysis of whether environmental criminal conduct
occurred. The highly trained Special Agents in the Office of
Criminal Investigations will do that with the help of attorneys
in the Office of Criminal Enforcement Counsel, the Office of
Regional Counsel and the Environmental Crimes Section of the
Department of Justice. However, in order for employees to
recognize possible environmental criminal conduct generally and
whether the case is meritorious, the factors listed below should
assist their efforts. In addition, my office will help provide
training to your staff in this essential area of.enforcement.
FACTORS TO CONSIDER IN DETERMINING WHETHER
A MATTER SHOULD BE REFERRED FOR CRIMINAL INVESTIGATION
1. Knowing .or Willful Behavior. All federal environmental
statutes require some degree of intent or voluntariness (usually
expressed in the statute as "knowingly" or "willfully") before a
criminal case can be proved. Prosecutions under the Clean Water
Act can be prosecuted also for simple negligent acts (careless-
ness) without demonstrating intent, although such situations are
'generally of lower prosecutorial priority than are knowing
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violations. Aiaost avery feaeral environmental statuta- express-
the type of r.sntal state required to be shown for an act co ba.
criainally punishable.
When statutes,.such as the environmental laws, are enacted
for the purpose of protecting public health and welfare, and
especially in subject areas where where is a strong likelihood of
protective governmental regulation, the government: generally only
has to prove that a person knew what he was doing and he did it
voluntarily, not accidentally, in order to establish the state of
mind required for a conviction. It is not necessary to show that
he actually knew what the lav required or that he acted with the
specific purpose of violating that lav. Also, the knowledge
necessary for a criminal conviction may be proven circumstan-
tially; it need not always be shown directly. For example, while
there may be no direct evidence (such as a statement by the
defendant) that he knew a particular material was a hazardous .
waste, a document found in his file describing it as such would
be good circumstantial evidence of knowledge. Thus employees
should be alert to indirect indicators of knowledge and other
elements of the offense. ,
2. Elements of the Offt ise. In addition to the required
degree of intent, each statut >ry offense consists of a number of
other elements, each one of v dch must be proved. For example,
the crime of disposal of hazardous wastes without a permit in
violation of RCPA fi 3008 (d) requires the government to prove
beyond a reasonable doubt that (1) a person (2) knowingly (3)
disposed of (4) any hazaiJous waste listed or identified by
characteristic (5) withou . a permit. Similarly, every
environmental offense mus\ be analyzed in terms of its component
elements.
Determining whether the required degree of intent and each
of the elements of the offense exists and can be proven sometimes
entails a complex legal analysis which should be left to the
investigators and their attorneys. When faced with a possible
criminal case where the intant may -be marginal, it is best to
advise employees to err on the side of caution and refer the
matter for the investigators and attorneys to analyze.
3. Impact on Government's Reerulaterv Function. Many of
EPA's regulatory systems rely heavily on complete and accurate
voluntary reporting from the regulated community. When infor-
mation or documents required to be filed are falsified, concealed
or intentionally destroyed, the integrity of the system is in
danger. The degree to which an act may have threatened or
damaged the system is another factor that can be-weighed in the
decision to prosecute, but is not a requirement.
4, Harm. The extent of harm or threat of harm to human
health or the environment is another factor that is reviewed to
'determine whether a case should be prosecuted. Prosecutors may
look at the duration of the harm or threat, the toxicity of the
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•---"• ' • 9 .
Secretary would have insufficient expertise ter evaluate thd"
environmental impact of a proposed clredce or fill operation,
Senator .Muskie, the author of S. 2770, opposed those
arendjrents. £/ lie. proposes instead that the Secretary cor t if v
the need for any peririt for discharge of cJrcdgcc! caterisl to "
the Administrator, who would retain" permit issuing auchcritv.
The Senate adoptee! Senator Kuskie's proposal. £/
The House of Representatives bill, K.B. 11C'S6, en the
other hand, cave the Secretary coirplets responsibility over
issuing permits for the discharge of dredged or fill material.
Although the House bill required the Sec-story to consult -with
the SPA on the environmental aspects of permit applications,
the Secretary had the authority to rake the final" decision cr.
persit issuance.
The Conference Ccrrittee substitute, passed by the
Congress as S 4C4 of the Federal '.,'ater Pollution Control *ct
Amendments of 1972, represented a ccrprorine between the
Senate and Souse positions. It established 'a separate pcrr.i
procedure for discharges of dredged cr fill caterisl to' be
administered by the. Secretary, acting thrcugh the Chief of
Engineers. The Administrator, however, retainer! substantial
responsibility over administration end enforcement of 5 404.
The SPA responsibilities were perhaps best sussarired by
Senator ttuskie during the Senate's considercticn of th?
Conference Report: •
.- First,- the Administrator has both
responsibility ar.d authority for failure to
obtain a Section 404 perr.it or ccrrsly with
the condition thereon. Section 3C9
' authority Is available 'because discharge of
the "pollutant" dredge spoil without a
perreit or in violation of o permit would
violate Section 301(a).
• Second, the Snvironaer.tal Protection
Agency irust determine whether, or net c site
to be used for the disposal of dredged spoil
4/ .id. ac iJg7-8ij.
5/. II- at 1393.
€/ ^d. at 816.
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is acceptable when judged against,the
criteria established for fresh And oc'ear.
waters similar to that which is required
under Section 403.
• .- • .
Third f prior to the issusr.ee of any
persit to dispose of spoil, the Actmini-
nistratcr must determine that the material
to be disposed of will not adversely effect
municipal water supplies, shellfish beds ar.cl
fishery areas (including spawning and
breeding areas), wildlife or recreations!
areas in the specified site. Should the
Administrator so determine, no permit cay
issue. 2/
Subsequent amendment of S 404 by the Clean Ketar Act cf
1977, SI Stat. 1566, altered the.relationship between the
Secretary and the Administrator in only limited fashion. ?h
amendments cave the Administrator authority.ccmperable to tr.
authority conferred on hie by the 5 4C2 KPDES prccrer to
approve and to monitor State programs for the discharge- of
dredged or fill material. 33 U.S.C. 5 1344(g}-(l). i~sw
subsection (s) gave the Secretary of the Army explicit
authority under the Act to take action to enforce • those ..
permits which he had issued. Hew subsection (n) csuticr.ec
that the amendments should not be considered to detract frs"
the Administrator's enforcement authority under S 339 of the
Act, 33 C.S.C. S 1319. !/
T/Id. at 177. This statement, which is often quoted ir.
Explanation of the relative responsibilities of the Corps -r.
EPA under S 404, is included in the. Congressional F-eccr:1. &s
surplcrent to Senator Kuskie's oral* remarks.
n/ Section 309 empowers the Administrator to. qrder .com-
pliance vith .the conditions" or limitations cf.r*rr>;ts issue:;
uhcer<~5"4d2 and S^t-ate _sermits issued under..*; 4C3TTfir.c! to see
civil end criminal penalties"with respect to"such permits.
Importantly, as the above-cucted history.of_.c.404^indicates,
the section_.also"gives the"Administrator_the_AUthc.rity._to
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Kith that background, I turn to "your rspVcl£ic questions.
First, you asked whether-the Secretary or the Administrator x
has the authority under 5 404 to resolve administrative to
disputes over interpretation.Af.J&e.Jurisdicticn&l tersi
"navigable waters." That question is an"Trj:brt«mt one, sir.ee
the authority to construe that tersi accounts to-the authority
to determine the score of the §404 pe'rrtit.. program.
The tersi "navigable waters," r.orcover, is a linchpin of
the Act in other respects. It is critical not only to the .
coverage of § 4C4, but also to the coverage of the other
pollution control mechanises established under the Act,
including the 5 402 permit program for point source
discharges, 9/ the regulation of discharges of oil and
hazardous substances in 5 311, 32 O.S.C. 5 1221, and the
regulation -of discharges of vessel s-wace in 5 212, 23 C;S.C.
5 1322. Its definition is not specific to § 4C4, but is
included among the Act's general provisions. 10/ It is,
therefore, logical to conclude that Congress intended that
<: there be only a single judgment as to whethsr—sr.d to whec
'. extent—any particular water body ccr.es within .the juris-
1 dicticnal reach of the federal coverntr.er.t'c"pollution control
; authority. Vie find no support either in the sts&ute or its
" legislative history, for a conclusion that a water body would
have one set of boundaries for purposes cf dredcec end fill
permits under S 404 and a different cet for r«r?o-cs of the
other pollution control eeasures ir. the Act. On this pcir.z I
believe there can be no serious disagreement. Tachsr,"
uncerstanding ^that_laav.is£ble.watcr3l.csn .have.only .cne
internrcta'tion under the Act, the cuestion .is whether Congress
intended'ultimately -for the Administrator or the Secretary"tc
describe "its parameters. •
The question is.explicitly resolved neither in S 40«i
itself nor in its legislative history* Ky conclusion that chs
U.S.C. £ 1311(a). The definition of the phrase "dTscharns of
pollutants" includes a discharge frons a point source into
-navigable waters." 5 502(12), 33 U.S.C. 5.1362(12).
107 "Navierable waters" is defined under the Act ar. rearing
"the waters of the United States, including the territorial
seas." £ 502(7), 32 O.S.C. 5 1362(7).
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Act leaves;.this authority in the hands of the Administrator
thus nscesssrily crews upon the structure df the Act as aA
whole. First, it is the Administrator who has tha evsrai™ .
responsibility for administering the Act's. provisions, excer:
sis.otherwise expressly provided. 5 101(d), 33 C.S.C. «
1251(d). Zt is the Administrator as w&ii x»-ho interprets ths
ters? "navigable waters" in carrying out uoilution co.itrel
responsibilities under sections of the Act apart from 5 4C4.
Additionally, while the Act charges the Secretary with t-
duty of issuing and assuring compliance with the terms cf s
404 permits, it does not expressly charge his with respon-
sibility for deciding-when a discharge of dredged or fill
rsterial into the navigable waters takes place so that the.* S
404 permit requirement is brought into play. Enfcrescent"
cuthority over penaitless discharges of creclqcd and fill •
material is charged, moreover* to the Administrator. 1I/
Finally/ any argument ir. favor cf the Secretary's
authority to interpret the reach ^f the trrs "r.avicaisle
waters" .for purposes of 5 404 is substantially uncsrcut bv tr
fact that he shares his duties under the section with the'
Adsinistrator. As outlined above, 5 404 authorises the
Administrator to develop guidelir.es vitr. res-set to select:::
ef disposal sites, *tp approve and oversee State r'ccrarc f^-
the discharge of dredged or fill material,'and tc veto cr
er.vircnr.entfil grounds ar.y perr.it the Secretary proposes t
issue. • '
I therefore conclude that the structure sr.ci ir.tsr.t cf th-:
Act tupport ?n interpretation ef 5 404 ti'.r.t gives ths
Administrator the final administrative responsibility for
construing the terst "navigable waters."
.Your second cuestion is whether the Secretary or the
Administrator has the final authority to construe 5 4C-(f) o
the.Act. 33 D.S.C. £ 1344(f).' That subsection excr.nts
n/ 33 U.S.C SS 1311, 1344(n). The Secretary decs !>evc?
enforcement authority with 'respect to perrritless discharges
into navicahle waters under the Fivers am.1 Farbors
Appropriations Act of 1699, 33 C.S.C. « 407, 413. Nevigas
water? for purposes ef that Act have a r.crc rsstrictiv*
meaning, however, than ncvicahlc waters under the Fc£*ral
Water Pollution Control Act! £•£•» Natirnjl resoorcf:? I'gfs
Council v. Callavav, 392 ?. SuF?T 605 (2.U.C. J575).
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pollutants ir/ .-Ived, and the proximity to population centers,
among otr.• -s. Proof of harm is not a prerequisite :to pro-" '"f
secution. . ut : a factor considered in e;-c2rci3ing-pro3ecut3rial
discretion. ~~ '.''."•' ---/-... -
5. Patterns or Practices. It is useful to review a
subject's historical record of noncompliance before prosecution.
The past practices of a company, whether good or bad, can weigh
heavily in sentencing, thereby effecting its deterrent value and
prosecutorial merit.
6. Deterrence. A major value of criminal prosecution in an
environmental enforcement context is its ability to deter others
from doing the same type of act for fear of being prosecuted
themselves. For the deterrence to be effective, others similarly
situated must become aware of the prosecution. In some areas/
one criminal conviction with appropriate penalties can motivate
much of the regulated industry to be in compliance. Although
this factor is considered, it is not a prerequisite for prose-
cution. -
OTHER CONSIDERATIONS
The factors discussed above are not exclusive and are not in
any particular order of importance. Many of the factors overlap.
How to weigh the various factors in any given case will depend on
the circumstances involved.
It is possible that an eve..:: involving environmental
criminal activity will not be investigated further or prosecuted.
There are innumerable reasons for this including, for example,
lack of prosecutorial merit, inadequate proof, the matter would
be better handled civilly or administratively, the state is
prosecuting the matter, the matter is not commensurate with
Agency priorities, and lack of resources. However, if the Office
of Criminal Investigations determines that criminal activity
occurred after formally opening a case investigation, only the
United States Attorney (or his representative) in the District or
the Department of Justice can decline to criminally prosecute the
case. •.-..'• -
If a potential environmental criminal matter comes to the
attention of an employee, consultation with the Office of
Criminal Investigation should be sought at the earliest
opportunity. When in doubt, it is far better to consult with the
Office of Criminal Investigations on matters that may be
questionable than to risk the possibility of overlooking or
failing to recognize serious environmental criminal conduct.
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V.12,
"Procedures for Requesting and Obtaining Approval of Parallel Proceedings",
dated June 15, 1989. Excludes attachment entitled "Guidelines on
Investigative Procedures for Parallel Proceedings".
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-7 r /l
*"•*
-------
(SB
} UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
/ WASHINGTON. O.C. 20460
JUN 15199
OM
-------
- 2 -
— a brief factual outline of each proposed civil 'or
administrative action;
— a brief description of the existing criminal
investigation or action; and,
—a specific statement explaining why simultaneous
actions are necessary and the specific aspects of
the Agency parallel proceedings policy which justify
this request.
2. The memorandum request for parallel proceedings should
be prepared by the Regional Counsel. The memo should be signed
by the Office of Regional Counsel anw by affected Regional
Program.Manager(s).
*
3. All factors affecting potential enforcement actions —
criminal, civil and administrative'— should be coordinated
within the Region before the decision to request approval for
parallel proceedings. However, once the decision is made, in
advance of sending the memorandum request, the Office of -
Regional Counsel should call the Special (Resident) Agent in
Charge in that Region and the Office of Criminal Enforcement
Counsel (OCEC) in Headquarters that the request is coming.
4. Simultaneous information copies of the request for
approval together with any supporting attachments should be sent'
to the following persons:
A. Deputy Assistant Administrator for Criminal
Enforcement;
B. Deputy Assistant Administrator for Civil
Enforcement;
C. Regional Criminal Enforcement counsel for the
requesting Region;
0. Special (or Resident) Agent in Charge in the
requesting Region;
2. Chief of the Environmental Enforcement Section
(BBS), Departs -»t of Justice; end,
P. ' Chief of the Environmental Crimes Section (ECS),
Department of Justice.
5. while awaiting approval of requests for parallel
proceedings, Regional personnel may continue good faith
inspection and monitoring activities, but Agency policy with
respect to separation of civil and criminal staff shall be
followed in anticipation of approval of the request.
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- 3 -
at HMdquart«g«
6. Upon receipt by the Assistant Administrator, the
request for parallel proceedings will first be sent to the Deputy
Assistant Administrator for Civil Enforcement (DAA Civil). The
DAA Civil will assign and delegate the preparation of the
referral package.
7. Upon receipt of their information copies, each Deputy
Assistant Administrator will assign a staff attorney to work on
the request. The staff attorney should begin preliminary issue
exploration immediately after receiving the assignment.
Preliminary issue exploration includes having discussions and
conferences with other attorneys and EPA or Regional staff. This
is necessary to prepare the matter for speedy review when the
request is actually received from the OAA Civil. Note: it is
anticipated that before there is discussion of a parallel
proceeding request with the Department of Justice by
headquarters, all affected programs trill exchange information and
views, and discuss the merits of the request to establish an .
Agency consensus before seeJcing information or comment fro*
outside source*, departments, agencies or individuals.
8. The office assigned responsibility for the request
shall process the request into a referral package within eight
(8) working days. Within the eight day limit for and during
preparation of the referral package, the office assigned
responsibility for the package preparation is expected to confer
with all affected media representatives during its preparation of
the package. The referral package shall include a memorandum
drafted to the Regional Counsel from the Assistant Administrator,
reflecting approval or disapproval of the request. The final
referral package should reflect the concurrence of each Associate
Enforcement Counsel for each medium identified as affected by the
request for parallel proceedings. The final package will then be
forwarded to each of the following offices in turn, which will
each complete its review within five (5) working days of
receiving the package:
— Deputy Assistant Administrator for Civil
Enforcement (DAA Civil)
— Office of Criminal Er ^rcement Counsel (OCEC),
who will discuss the referral with the Regional
criminal enforcement contact.
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- 4 -
— DAA Civil, who, in conjunction with the DAA-
Crininal, will coordinate final discussions
with and input from the Department of Justice
(and, as necessary, State enforcement
personnel.)
— Assistant Administrator, Office of Enforcement
and Compliance Monitoring.
Time limits will be met. Extensions of time limits will be
allowed only for good cause and required approval by the DAA
Civj,! and should not exceed five (5) working days. Routine
preparation of analyses or implementing memoranda shall not
appropriate reasons for delay or extensions of time in the rtr/iew
process.
f •
9. When the referral package and implementing memorandum
have been signed by the Assistant Administrator, the package will
be returned to the preparing office. The office assigned
responsibility for preparation of the referral must assure
distribution of copies of the referral memorandum to the persons
named in paragraph 4.
Emergency Clearances
10. When the public health or the environment is
significantly endangered, and in the judgment of the Region*
immediate, civil or administrative action is required to
stabilize or to control an emergency fact situation when there
would otherwise be need for approval of parallel proceedings, the
Region may seek emergency clearance. Prior to seeking emergency
clearance, the Region shall consult with the Special (Resident)
Agent in Charge of that Region. Emergency clearance may be
requested by telephonic contact between the Regional
Administrator or Deputy Regional Administrator and Regional
Counsel with the Assistant Administrator - Office of Enforcement
and Compliance Monitoring for limited civil or administrative
action. This Emergency Request will then be memorialized by the
Region in accordance with the procedures outlined above.
Emergency approval will be limited to an immediate need to
stabilize a fact situation or protect against Significant
environmental harm or public endangerment. and* -.- not a
substitute for- final, formal approval of parallel proceedings.
cc: Gerald H. Yamada
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U.S. E, ylRONMENTAL PROTECTION AGENCY
PROCEDURES FOR APPROVAL OP PARALLEL PROCEEDINGS
c
IDENTIFICATION OF FACT SITUATION
J
SPECIAL AGENT IN CHARGE
(U.S. ATTORNEY)
(OTHER FEDERAL AGENCY)
REGIONAL PROGRA:
PERSONNEL
MEMORANDUM REQUEST
by
OFFICE OF REGIONAL COUNSEL
REGIONAL PROGRAM MANAGER(S)
ASSISTANT ADMINISTRATOR, OECM
"
DEPUTY ASSISTANT ADMINISTRATOR, CIVIL
REFERRAL PACKAGE
by
PRINCIPAL MEDIA, AEC
ALL AFFECTED
MEDIA. AECs
DEPUTY ASSISTANT ADMINISTRATOR, CIVIL
f
DEPUTY ASSISTANT ADMINISTRATOR, CRIMINAL
T
DEPUTY ASSISTANT ADMINISTRATOR,' CIVIL
ASSISTANT ADMINISTRATOR, OECM
CAPPROVAL 3
V
OEPARTMENT OF JUSTICE
CDISAPPROVA
f
REGIONAL COUNSI
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V.13
# "Revised EPA Guidance for Parallel Proceedings", dated June 21, 1989.
This document together with V.12. above, supersedes and replaces the
documents at V.6.,V.7., and V.lO. This document is supplemented by the
document at V.14.
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-------
} UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. O.C. 20460
(HWMCIM KT AMO
COMUAMCf MOMTOMG
MEMORANDUM
SUBJECT: Revised EPA Guidance for Parallel Proceedings
PROM: Edward E. Reich _
Acting Assistant Administrator *
TO: Assistant Administrators
Associate Administrators
Headquarters Enforcement Program Office Directors
Regional Administrators, I-X
Deputy Regional Administrators, I-X
Regional Counsel, I-X
Attached for your use and distribution is the revised
guidance on parallel proceedings. Copies of the "Guidelines on
Investigative Procedures for Parallel Proceedings* should be made
available at once to all affected enforcement personnel, program
managers, and senior staff. Also included in the Guidelines is a
short form, two-page "Easy Access to Parallel Proceedings
Guidance by Five Rules of Thumb" which you may wish to post
prominently in all civil enforcement offices.
Effective immediately, thes<* Guidelines constitute Agency
policy with respect to parallel proceedings. These Guidelines,
taken together with the June 15, 1989 memorandum, "Procedures for
Requesting and Obtaining Approval of Parallel Proceedings",
(attached) supersede and replace the following five memoranda
dealing with parallel proceedings:
.."Policies and Procedures on Parallel Proceedings at the
Environmental Protection Agency," dated January 23, 1984;
—"The Use of Administrative Discovery Devices in the
Development of Cases Assigned to the Office of Criminal
Investigations," February 16, 1984;
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—"The Role of EPA.Supervisors During Parallel .Proceedings."
March 12, 1985; " ...... _
',"'.'.". "._,._. "' *
—"Implementation of Guidance on Parallel Proceedings,"
February 3, 1986; and,
—"Handling Requests for Parallel Proceedings," April 2,
1987.
This final guidance reflects all of the comments received
upon th« several prior drafts circulated over the past several
months. These Agency Guidelines also reflect the comments of the
Department of Justice and correlate with their October 13, 1987,
"Guidelines for civil and Criminal Parallel Proceedings." Your
comments were very helpful, and we appreciated your assistance in
making the guidance useful as a field reference tool.
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V.14
# "Supplement to Parallel Proceedings Guidance and Procedures for
Requesting and Obtaining Approval of Parallel Proceedings", dated July 18,
1990.
-------
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. O.C. M4«t
JUL ! 8 1990
MEMORANDUM ,
SUBJECT: Supplement to Parallel Proceedings Guidance and
Procedures for Requesting and Obtaining Approval of
Parallel Proceeding
FROM: James M.
Assistant Administr.
TO: Regional Counsels, Regions I-X
Associate Enforcement Counsels
Director, Office of Criminal Enforcement
Director, Office of Civil Enforcement
As a result of the recent reorganization of and realignments
within the Office of Enforcement, changes must be made to the
parallel proceedings policy and to procedures for requesting and
obtaining approval of parallel proceedings requests. This
memorandum supplements prior memoranda dated June 15, 1989,
"Procedures for Requesting and Obtaining Approval of Parallel
Proceedings," and June 21, 1989, "Revised EPA Guidance for
Parallel Proceedings," which transmitted "Guidelines on
investigative Procedures for Parallel Proceedings," to the degree
necessary to change certain references and terms used in those
memoranda. The procedures, policy and guidance provided by the
memoranda dated June 15 and 21, 1989, remain fully effective,
except as revised as follows: .
1. Two revised flov charts, which replace the one
previously supplied with the memorandum dated June 15, 1989, are
attached. These charts should be used instead of the earlier one
as an aid in routing the parallel proceeding request.
2. Requests for parallel proceedings will continue to be
submitted by memoranda from the Office of Regional Counsel,
directed to the Assistant Administrator, OE. Information copies
should also be sent simultaneously to the Office of .Criminal
Enforcement and to the attention of the Associate Enforcement
Counsel for the principal media affected by the parallel
proceeding request (Chart I).
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3. Upon receipt in the Office of the Assistant
Administrator, the Deputy Assistant Administrator will assign the
request to an Associate Enforcement Counsel for preparation of
the package, which will then be routed for concurrence and action
within Headquarters as provided by the existing policy and
procedures (Chart II). (A request for parallel proceedings which
involves a request for suspension or debarment or discretionary
listing and for which there is an ongoing environmental criminal
investigation will be routed to the Office or Criminal
Enforcement for preparation of. the package for internal OE
concurrence and AA approval.)
4. The following titles and terms, used in prior
memoranda, have been changed as indicated:
"Office of Enforcement and Compliance Monitoring (OECM)" to
"Office of Enforcement (OE)"
"Deputy Assistant Administrator, Civil1* to "Director,
Office of Civil Enforcement"
"Deputy Assistant Administrator, Criminal" to "Director,
. Office of Criminal Enforcement"
Attachments
cc: Gerald H. Yamada, Deputy General Counsel
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U. S. Environmental Protection Agency
Procedures for Approvai of Parallel Proceedings
Row Chart for Regional Request to Headquarters
Special Agent in Charge
(U. S. Attorney)
(Other Federal Agency)
Regional Program Personnel
\
Memorandum Request
by
Office of Regional Counsel
Regional Program Managers)
(original request)
Assistant Administrator
Office of Enforcement
(information copy)
Director
Office of Criminal Enforcement
(information copy)
Associate Enforcement Counsel
Civil Division (Affected Media)
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U. S. Environmental Protection Agency
• / '
Procedures for Approval of Parallel Proceedings
Row Chart for Headquarters
Memorandum Request
Received
Assistant Administrator
Office of Enforcement
Deputy Assistant
Administrator
(assignment to AEC)
1
Referral Package
AEC Principal Affected Media
All Affected Media
Director of Civil Enforcement
Director of Criminal Enforcement
Deputy Assistant Administrator
1
Referral package for
Suspension or
Debarment/
Discretionary listing
Office of Criminal
Enforcement
Assistant Administrator
(approval or disapproval)
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VI.
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VI. A.
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VI;.. SPECIALIZED ENFORCEMENT TOPICS
A. NATIONAL MUNICIPAL POLICY
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vi'.A.i,
"Municipal Enforcement Case Requirements", dated December 14, 1982.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. DC 20460
DEC I 4 1932
OFFICE OF
LEGAL. AND ENFORCEMENT COU
MEMORANDUM
SUBJECT: Municipal Enforcement Case Requirements
FROM : Louise D. Jacobs
Associate Enforcement Counsel for Water
«x
TO : All Attorneys
Water Enforcement Division, OLEC
Please ensure that the following information is contained
in all referrals sent to the Department of Justice for
prosecution of municipal violations:
0 Confirmation of the municipality's permit requirements;
0 Listing of precise nature of violation of the requirements;
0 Information about alternatives for solving the problem
which are likely, in the opinion of an informed indivi-
dual, to be successful. The informant should be some-
one who knows the plant and violation, is familiar
with the kind of violations occurring, is knowledgeable
about sewage treatment systems in general, and is of
the opinion that these particular violations are
possible to solve by one of several alternatives posited.
The informant should be identified in the referral.
A JRB report may ordinarily suffice to meet this
requirement;
0 "First-cut" information indicating that the cost of a
probably feasible solution is one which this municipality
will not find it totally impossible to pay. We will
discuss at a later date some sources for this "first-
cut" conclusion. One source of such information
might be the OW test (Longest office) for whether a-
given munipality can support a grant. Another source
might be the economists on staff.in Region III.
You will note that the tests listed are broad'..and general.
.This is purposeful, particularly in" the case of .the financial"./
information requests. .The purpose of collecting 'this'information
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is to provide the Department of Justice with a rough, predis-
covery screening of the case, containing enough information
to indicate to a sensible lawyer that filing is warranted, but
certainly not enough to make a conscientious lawyer comfortable
at the time he/she enters the courtroom for the first day of trial.
-.••••• It is my opinion that too often we have tried to meet
the"first-day-of-trial test in our prefiling efforts, and
that this has slowed the rate of filing beyond what might be
desirable.
If after providing the information listed above you find
that further information is being requested by the Department
of Justice-,, please call this to. my attention. It may be that
in a given case further information might be desirable.
However, I would like to keep abreast of these requests and
to discuss them with Steve Ramsey if necessary.
The elements listed above as materials sufficient for -an
average filing have been discussed by me with Steve, and generally
agreed upon.
In addition to meeting these internal requirements for a
municipal referral, each attorney should impress upon his/her
regional counterpart, to the extent possible, that we prefer
to use scarce agency resources to develop cases against larger
municipalities, or those presenting otherwise significant
problems. ...
Examples of "o.therwise significant" might include damage
to water quality or threat to public health caused by
violations by any-sized municipality, violations having
unusual precedential significance, or responses to an unusual
show of recalcitrance.
I am sending a copy of this memo to Steve so that he may
make any corrections he desires in this statement of my
understanding of our agreement.
cc: Mike Brown
Steve Ramsey • .
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"CWA Municipal Enforcement Cases", dated January 3, 1983.
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Subject
CWA Municipal Enforcenent Cases
Dale
January 3,
To
All EES Accorneys
Ramsey
As you know, EPA is in Che process of developing a
municipal water enforcement policy. Although the policy is not
yet final, we have said we will consider filing cases against a
municipality where the agency can identify what the municipality
must do to achieve compliance and that the municipality has the
financial wherewithal to implement the remedy.
Mike Brown and Louise Jacobs have agreed that EPA will
provide the following information to assist us in reviewing
these cases:
1. Violation
Information about the precise nature and duration of
the violation, including confirmation of the municipality's permit
requirements.
2. Remedy
An explanation of what the municipality must do to
achieve compliance, basically a particularised plan of action
identifying practical alternatives we can propose to the court.
3. Financial Capacity
Information which reflects that the proposed remedy
will not be impossible for the municipality to fund. EPA's
economists are putting together a test which identifies the kinds
of information relevant to this inquiry (e.g. , bond rating»
assessment of staff economists, user charges).
We also expect that the referral will identify an
individual who has been to the plant, is familiar with the
violations, and can explain how the violations can be remedied.
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- 2 -
The referral should indicate the civil penalty the agency seeks
including the penalty calculation and what .amount EPA will accept
as a bottom line.
If any of the municipal enforcement cases which you are
reviewing lack this information, please advise Carol, Lloyd, or
Chip immediately and prepare a letter to the EPA staff attorney
requesting this information. These cases are important to EPA
and I would appreciate your expediting your assessment of them.
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VI. A. 3.
NATIONAL HUNICIPAL POLICY, 49 FR 3832 (January 30, 1984)
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Monday
January 30, 1984
Part V
Environmental
Protection Agency
Publicly-Owned Treatment Works;
National Municipal Policy; Notice
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3832
Federal Register / Vol. 49. No. 20 / Monday. January 30, 198'> / Notices
ENVIRONMENTAL PROTECTION
AGENCY
[WH-FRL 2515-6]
Notice of National Municipal Policy on
Publicly-Owned Treatment Works.
AGENCY: Environmental Protection
Agency.
ACTION: Notice of National Municipal
Policy.
SUMMARY: This notice sets forth the
Environmental Protection Agency's
policy on ensuring that all publicly-
owned treatment works (POTW) comply
with the statutory requirements and
compliance dead-lines in the Clean
Water Act (CWA). The policy describes
the Agency's intention to focus its
efforts on POTWs that previously
received Federal funding assistance and
are not in compliance, on all other major
POTWs, and on minor POTWs that are
contributing significantly to an
impairment of water quality. It also
describes how the Agency expects EPA
Regions and States to carry out the
intent of the policy. The purposes of the
policy are to achieve maximum
improvement in water quality in
accordance with the goals of the CWA,
and to protect the public's investment in
wastewater treatment facilities.
The Agency has recently proposed a
regulation that redefines secondary
treatment pursuant to the 1981
amendments to section 304(d) of the
CWA, 48 FR 52258. November 16,1933.
This related action will help provide
reasonable certainty regarding POTWs
applicable effluent limits and will
facilitate implementation of this policy.
EFFECTIVE DATE: This policy will be
effective January 30.1984.
FOR FURTHER INFORMATION CONTACT
Robert W. Zcller. Ph. D.. U.S.
Environmental Protection Agency, EN-
338. 401 M Street, SW.. Washington.
D.C., 20460 (202) 475-8304.
Dated: January 23.1904.
William D. Ruckelshatis,
Administrator.
Statement of Policy
V.'hen the Clean Water Act (CWA)
was passed in 1972. Congress gave
municipalities until 1977 to comply with
its requirements. Congress authorized
the Environmental Protection Agency
(EPA) to extend the deadline to 1983 and
then again to July 1.1988. for some
municipalities. In addition. Congress
amended the Act in 1981 to modify the
basic treatment requirements. Therfore,
Congress has authorized EPA to give
some municipalities several additional
years to achieve compliance and has
also provided more reasonable
treatment requirements for certain types
of facilities.
The CWA requires all publicly-owned
treatment works (POTWs) to meet the
statutory compliance deadlines and to
achieve the water quality objectives of
the Act, whether or not they receive
Federal funds. The EPA will focus on
POTWs that previously received Federal
funding assistance and are not currently
in compliance with their applicable
effluent limits, on all other major
POTWs. and on minor POTWs that are
contributing significantly to an
impairment of water quality. EPA's goal
will be to obtain compliance by POTWs
as soon as possible, and no later than
July 1,1988. Where there are
extraordinary circumstances that
preclude compliance of such facilities by
July 1.1988. EPA will work with States
and the affected municipal authorities to
ensure that these POTWs are on
enforceable schedules for achieving
compliance as soon as possible
thereafter, and are doing all they can in
the meantime to abate pollution to the
Nation's waters.
Implementation Strategy
The Agency is committed to pursuing
a clear course of-action that fulfills the
intent of Congress and results in the
maximum improvement in water quality.
The Agency is also committed to
protecting the public's financial
investment in wastewater treatment
facilities. To meet these objectives, the
Agency expects EPA Regions and States
to adhere to the National policy stated
above and to use the following
mechanisms to carry out the intent of
this policy.
EPA Regions will cooperate with their
respective States to develop strategies
that describe how they plan to bring
noncomplying facilities into compliance.
These strategies should include a
complete inventory of all noncomplying
facilities, should identify the affected
municipalities consistent with the
National policy, and should describe a
plan to bring these POTWs into
compliance as soon as possible. Regions
and States will then use the annual
State program grant negotiation process
to reach agreement on the specific
activities they will undertake to carry
out the plan.
Based on the information in the final
strategies, the permitting authority
(Region or approved NPDES State) will
require affected municipal authorities to
develop one of the following as
necessary:
Composite Correction Plan: An
affected municipality that has a
constructed POTW that is not in
compliance with its NPDES permit
effluent limits will be required to
develop a Composite Correction Plan
(CCP). The CCP should describe the
cause(s) of noncompliance. should
outline the corrective actions necessary
to achieve compliance, and should
provide a schedule for completing the
required work and for achieving
compliance.
Municipal Compliance Plan: An
affected municipality that needs to
construct a wastewater treatment
facility in order to achieve compliance
will be required to develop a Municipal
Compliance Plan (MCP). The MCP
should describe the necessary treatment
technology and estimated cost, should
outline the proposed sources and
methods of financing the proposed
facility (both construction and O&M).
and should provide a schedule for
achieving compliance as soon as
possible.
The permitting authority will use the
information in these plans and will work'
with the affected municipality to
develop e reasonable schedule for
achieving compliance. In any case
where the affected municipal authority
is unable to achieve compliance
promptly, the permitting authority will,
in addition to setting a schedule for
achieving full compliance, ensure that
the POTW undertakes appropriate
interim steps that lead to full
compliance as soon as possible. Where
there are extraordinary circumstances
that make it impossible for an affected
municipal authority to meet a July 1.
1908 compliance date, the permitting
authority will work with the affected
municipality to establish e fixed date
schedule to achieve compliance in the
shortest, reasonable period of time
thereafter, including interim abatement
measures as appropriate. The general
goal is to establish enforceable
compliance schedules for all affected
municipalities by the end of FY 1985.
Once schedules for affected
municipalities are in place, the
permitting authority will monitor
progress towards compliance and will
take follow-up action as appropriate.
Nothing in this policy is intended to
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Federal Register / Vol. 49. No. 20 / Monday. January 30. 19U4 / Notices 3833
impede or delay any ongoing or future
enforcement actions.
Overview
EPA Headquarters will overview the
implementation of this policy to ensure
that actions taken by Regions and States
are consistent with National policy and
that the Agency as a whole is making
progress towards meeting the statutory
deadlines and achieving the water
quality objectives of the Act.
Dated: January 23.1984.
William D. Ruckelshaus,
Administrator.
|FR Due M-24U Filed 1-T-S4: MS am|
BILLING CODE BMO-tfr*!
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VI.A.4.
"Municipal Enforcement: The Financial Ability Question", dated February 17,
1984.
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.
} UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
/ WASHINGTON, D.C. 20460
FEE ITB64
COM**) "AN" r MUNI fO*"\" .
MEMORANDUM
SUBJECT: Municipal Enforcement: the; Financial Ability Question
" I .• /
FROM: Louise D. Jacobs (i^~'~**J^*--
Associate Enforcement Counsel
for Water
TO: Addressees: Headquarters Water Program, Department of
Justice, and OECM (Water)
I was delighted with progress made in our meeting Thursday
morning on this subject. Efforts made to discuss this subject
among departments and among disciplines were worth the effort in
my opinion, and we should do it more often.
Following are some of the more important conclusions
reached, as I understood them.
0 The Office of Water will make clear to the Regions that
priorities in 'municipal cases lie first in correcting the
substantial noncompliance among funded facilities.
0 OECM will participate with the Office of Water in
developing and sending to the Regions a statement of
other qualifications which should be viewed as having
high priority for litigation. (Regions should be cautioned
not to view the development of this formula as a reason
for delay in developing other cases which they presently
consider important.)
0 For cases referred against POTWs built with Federal
funds, no financial impossibility defense should be
anticipated, and no special financial information will
be requested from the Regions.
0 For cases dealing with POTW noncompliance where compliance
can be achieved through proper o & M, no special financial
information will be requested from the Regions.
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0 When a Region refers a case against a POTW which was not
federally funded, and in regard to which construction
is needed, the amount of financial information requested
from the Region will depend on the stage the case has
reached and other relevant circumstances. While we
have not had sufficient experience with municipal enforce-
ment to define this with precision, we can make the
following agreement, based to some extent on past partial
agreements:
1. To justify filing a complaint, information listed in
the attached exchange of memos (Ramsey and Jacobs)
will be requested from the Region, to make a prima
facie showing that construction expenditure proposed
is not an impossibility for the municipal defendant.
2. If the case proceeds into early stages of discovery
and shows signs of being contested, information con-
tained in the attached "Longest" questionnaire will
be requested from the Regions. (It should be noted
that this is information to be supplied in other
contexts for other purposes and may in some cases
already be on file in the Regions.) This information
is intended to result in a balance sheet which shows
municipal assets and liabilities and therefore
the relative financial health of the municipality.
3. If discovery is extended, and there is indication
of a seriously contested case which may well lead
to full trial, an expert will be hired by the
Agency to provide direction on any further financial
information needed from the Region or from else-
where. Funds are available in the FY84 OW budget
for this purpose. OW and OECM can assist in
locating and hiring experts.
0 OW will provide OECM with information on ways in which
financial data gathered for grants purposes has been
applied in making grants decisions, to assist the Agency
in maintaining a consistent position.
0 OECM will gather examples of some successful municipal
cases for OW to use in encouraging the Regions to
prioritize cases properly and refer them promptly.
These agreements, in my opinion, give us a good starting
point for moving agressively into the implementation of enforce-
ment aspects of the Administrator's municipal policy. As we
encounter new problems, or as the Regions make us aware of
new questions, I will hope to reconvene the participants for
similarly constructive solutions.
-------
Again, thanks for your cooperation,
Attendees:
Rebecca Hanmer, OW
Betsy LaRoe, OW
Robert Zeller, OW
Don Olson, OW
Stephen Ramsey, DOJ
Lloyd Guerci, DOJ
John Lyon, OECM
Jack Winder, OECM
Elyse DiBiagio-Wood, OECM
Attachment
cc: Courtney Price
Richard Mays
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VI.A.5,
"Financial Capability Guidebook", dated March 1984. (Table of Contents
only)
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United States Office of Water March 1984
Environmental Protection Programs Operations IWH-547'
A9encv Washington DC 20460
»EPA Financial Capability
Guidebook
TABLE OF CONTENTS
Chapter Page
L Introduction
o Purpose of the Guidebook 1
o Guidebook Audience 2
o Approach Used in this Guidebook 4
o Application and Evaluation Procedures 4
o Guidebook Organization 7
II. Overview of Approach and Notes on the Preparation
of a Financial Capability Analysis
o An Overview of the Approach 9
o - Worksheet //I: Roles and Responsibilities
of Local Governments 9
- Worksheet //2: Facilities Cost Estimate 9
- Worksheet //3: Financing the Facilities 11
- Worksheet //4: Determining the Annual Costs
per Household 11
- Worksheet //5: Assessing the Community's
Debt History 11
- Worksheet #6: Evaluating the Community's
Financial Condition 12
o Notes on the Preparation of a Financial
Capability Analysis 12
- Obtaining the Data 13
- Estimating Needed Data 13
- Knowing Which Number to Use When
There's a Choice 13
- Recognizing the Effect of Different
Accounting Methods 13
- Incorporating Trend Analysis into the
Financial Capability Assessment 14
- Taking Account of Inflation and Economic
Change 14
- Considering Overlapping Debt 14
- Funding Financial Capability Analysis 15
III. Financial Capability Analysis Worksheets and
Instructions
o Evaluating Results of the Analysis 17
- Worksheet //I: Roles and Responsibilities
of Local Governments 23
- Worksheet #2: Facilities Cost Estimate 27
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- Worksheet //3: Financing the Facilities "35
- Worksheet //4: Determining the Annual Costs 47
- Worksheet #5: Assessing the Community's
Debt History 53
- Worksheet //6: Evaluating the Community's
Financial Condition 59
Appendices
A. Selected References A-3
B. Glossary of Financial Terms B-3
C. The Calculation of Capital Recovery Factors C-3
D. Sensitivity Analysis D-3
LIST OF EXHIBITS
Page
Exhibit I Integration of Financial Capability Analysis
into the Construction Grants Process 3
Exhibit II Relationship of Guidebook to Financial
Capability Policy Facilities 5
Exhibit III Flow of Information from Source
Documents to Worksheets 10
f
Exhibit IV Overlapping Debt in Community "A" 16
Exhibit V Wastewater Facilities Financial
Information Sheet 19
Exhibit VI Basis for Identification of Regional
Costs 24
Exhibit VII Supplemental Information Sheet 52
VI
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VI. A. 6.
"Eligibility for Variances under Section 301(i)(l) of the CWA"; dated April
11, 1984.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
APR
orncc or
GENERAL. COUNSCL
MEMORANDUM
Eligibility for Variances under Section
301(i)(l) of the Clean Water Act
SUBJECT
FROM: Colburn T. Cherney;
Associate General Cou/is'e'l
Water Division (LEx!32V;)
TO: Rebecca Hanger
Director •
Office of Water Enforcement and
Permits (EN- 335)
Bruce Barrett requested my legal opinion on a set of
five issues relating to the eligibility of publicly owned
treatment works (POTWs) for compliance extensions under
Section 301(i)(l) of the Clean Water Ace (Cr.vA) . This
memorandum responds to that request.
.QUESTION 1
(1) Can EPA (or an approved NPDES State) issue a Section
301(i)(l) compliance extension to a municipal permittee that
will not be receiving Federal funds to construct its treatment
facility? • • ' •
ANSWER
Yes, if the permittee is otherwise eligible. In order
Co be eligible a POTW would have to establish that it applied
by June 26, 1978 and meets a variety of substantive criteria
discussed below.
Discussion
Under Section 301(b)(l)(B) and (C) of the CUA, enacted
in 1972, all POTWs were required to comply with secondary
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-2-
treatment, as well as a variety or other requirements, _!/ by
July 1, 1977. To assist POTWs to meet the 1977 compliance
deadline, Congress also enacted in 1972 Title II of the CWA.
which provided Federal grant assistance for POTW construction.
Congress did noc, however, condition the applicability of
the compliance deadline upon the timely receipt of Federal
funds. See State Water Control Board v. Train, 559 F.2d
921 (4th Cir. 1977) .
Many POTWs failed to meet the 1977 deadline, in" part
because of delays in Federal funding. Therefore, in the
1977 Amendments to the CWA, Congress enacted a new Section
301(i)(l) granting EPA the authority to extend the compliance
deadline for particular POTWs in appropriate circujns tances. 2/
Section 301(i)(l) as originally enacted read as follows:
Where construction is required in
order for a planned or existing publicly
owned treatment works to achieve limitations
under subsection (b)(l)(3) or (b)(l)(C) of
this section, but (A) construction cannot be
completed withrri the time required in such
subsection, or (B) the United States has
failed to make financial assistance under this
Act available in time to achieve such limitations
by the time specified in such subsection, the
owner or operator of such treatment works may
request the Administrator (or if appropriate the
State) to issue a permit pursuant to section 402
of this Act or to modify a permit issued pursuant
to that section to extend such time for compliance.
Any such request shall be filed with the Administrator
(or if appropriate the State) within ISO days
after the date of enactment of this subsection.
The Administrator (or if appropriate the State)
o
\_l These consist of "any more stringent limitation, including
those necessary to meet water quality standards, treatment
standards, or schedule of compliance, established pursuant
to any State law or regulations (under authority preserved
by section 510), or any other Federal law or regulation, or
required to implement any applicable water quality standard
established pursuant to this Act." Section 301(b)(1)(C).
2/ Congress also granted EPA authority to extend compliance
deadlines for direct dischargers that had planned to
discharge into POTWs that were not yet fully constructed and
were granted Section 301(i)(D extensions. See Section 301(i)(2)
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-3-
raay granc such request and issue or modify such a
permit, which shall contain a schedule of compliance
for Che publicly owned treatment works based on
the earliest date by which such financial assistance
will be available from the United States ana
construction can be completed, but in no event
later than July 1, 1983, and shall contain such
other terns and conditions, including those necessary
to carry out subsection (b) through (g) of section
201 of this Act, section 307 of this Act, and such
interim effluent limitations applicable to fhat -•
treatment works as the Administrator determines
are necessary to carry out the provisions of this
Act.
On December 29, 19S1, Congress again amended the Clear,
Water Act by enacting the "Municipal Wastewater Treatment
Construction Grant Amendments of 1931," P.L. 97-117 ("1931
Amendments"). The 1981 amendments reduced Federal funding
of POTWs, both in aggregate terms and in the maximum
percentage of construction^- coses that rr.ay be borne by EPA.
The 19S1 Amendments also extended the compliance deadline
for recipients of Section 301(i) extensions to July 1,
1938. The remainder of the section was unchanged. Thus,
the criteria that previously applied to obtaining and granting
extensions have remained in effect. Congress did, however,
restrict the availability of extensions beyond July 1, lb?S3:
- The amendment shall not be interpreted or
applied to extend the date for compliance
with section 301(b)(l)(B) or (C) of the
Federal Water Pollution Control Act
beyond schedules for compliance in effect
as of the date, of enactment of this Act,
except in cases where reductions in the
amount of financial assistance under
this Act or changed conditions affecting
the rate of construction beyond the
control of the owner or operator will make
it impossible to complete construction
by July 1, 1983.
1981 Amendments, Section 21(a).
The criteria set forth in Section 301(i)(l) and in
Section 21(a) of the 1931 Amendments arc designed to assess
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-4-
whecher a POTW has justifiably failed to achieve compliance
with Che relevant compliance deadline. 3_/ These include Che
POTW's abilicy co physically construct by the deadline; the
impact of Federal failure to provide funding in a timely
manner upon the POTW's schedule; and changed conditions that
have affected the rate of constructon beyond the POT'v's
control. None of these statutory criteria makes a POTWs
eligibility for an extension contingent upon the likelihood
that the POTW will receive Federal funds in the future.
Likewise, nothing in the legislative history prevents ..
EPA from granting a Section 301(i) extension to an otherwise
eligible POTW that will not receive Federal funds. The
relevant legislative history consists of the following brief
discussion in the Senate Report:
The 1972 Act originally required municipal plants
to comply with effluent limitations based on secondary
treatment by 1977. This deadline proved to be difficult,
and in many cases impossible to meet, largely because of
insufficient Federal,-funding. The 1977 amencments,
therefore, permitted'extension of the deadline to
municipalities acting in good faith which were unable
to meet this requirement. Such extensions were to be
in no case later than July 1, 1983.
With the projected shortfall in Federal expenditures,
and the reduced Federal share for the construction grant
program, it is once more apparent that r.any communities
--will be unable to meet the 1933 deadline. The legislation
thus extends the deadline to 1988 for communities which
cannot meet earlier Deadlines because Feoeral funds
are not available. The Committee emphasizes that the
same gooa faicn requirements now in existing law are
also extended to facilities seeking the new extension.
*****
The Committee is aware that a number of communities
are under court orders to comply with certain pollution
control deadlines. These communities will not be
helped by the further program limitations and reduced
funding imposed by this legislation. This provision
_3/ The relevant compliance deadline at present is either no
later than July 1, 1977, or, for POTWs Chat were granted
Section 301(i)(l) extensions, no later than July 1, 19S3.
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O- .
expresses the sense of the Congress that courts in
supervision of court orders for such non-complying
municipalities take cognisance of the amendments
contained in this legislation in their consideration
of modifications to such deadlines.
Senate Report No. 97-204, 97th Cong., 1st Sess. (1981), at 17
(emphasis added).
Under no circumstances, however, may a POTU' delay
compliance beyond July 1, 1988. Section 301(i) provides that
any extension "shall contain a schedule of compliance for the
publicly owned treatment works based on the earliest date by
which such financial assistance will be available from the
United States and construction can be completed, but in no
event later than July 1. 1988" (emphasis added) ana must
contain interim limitations or other necessary requirements.
Thus, even if the POTW does not anticipate receiving any Federal
funcs, it is required to construct and achieve compliance. ^/
The quoted language does indicate, however, that the scheduTed
availability of Federal funding is a relevant factor in
establishing a schedule' ••orv compliance for POTWs that are
granted extensions under Section 301(i).
Can a Section 301(i)(l) compliance extension beyond
July 1, 1983 be issued to a permittee that applied for an
extension by June 26, 1973, if EPA (or an approved IIPDES
State) never acted on the request? --
ANSWER
Yes.
DISCUSSION
The 1977 Amendments to the CWA provide that EPA may
grant an extension to any eligible POTW that applied in'a
timely manner. . There is no deadline by which EPA is
required to grani: or deny the extension. The 1981 Amendments
and legislative history did not alter this conclusion.
4/ Moreover, we note that the 1931 amendments cut back on the
Federal grants program without providing a waiver for
unfunded POTWs. Therefore, POTWs do not have a reasonable
basis to expect that Congress will provide further relief fron
compliance deadlines in the future.
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-o-
QUESTION 3
Is a permittee than requested a Section 301(i)(l)
compliance extension upon which KPA (or the approved State)
did'not act in violation of the Act or i^PDES regulations?
ANSWER
Yes, if the permittee has not achieved compliance with
the requirements of Section 301(b)(l)(3) and (C) by the deadline
set forth in its permit.
DISCUSSION
Initially, all POTWs should have been issued permits
requiring compliance with Section 301(b)(l)(3) and (C) not
later than July 1, 1977. This permit deadline remains in
effect unless the permit is modified by EPA (or the approved
State) under Section 301(i)(l). If EPA (or the approved
State) has not modified the permit to extend the deadline
and the permittee., has not achieved compliance by the deadline,
then the permittee;is in violation of its permit. _5/
QUESTION 4
Can EPA bring an enforcement action against a POTW
where EPA has not vet acted upon the FOTW's timelv Section
301(i)(l) request?'
ANSWER
Yes.
DISCUSSION
EPA may bring an enforcement action under Section 309 of
the Act against any permittee that is violating its permit.
If a POTW has not complied with the compliance deadline in
its permit, it is subject to an enforcement action.
The statute does not provide any defense against
enforcement based upon the pendency of a request for an
extension, variance, or other permit modification. While
the
^/ The Senate Report described the reported bill as extending
the 1983 deadline. However, like the enacted amendment,
the bill itself did not extend the deadline. Rather, it
authorized EPA to do so on a case-by-case basis, thereby
assuring, as noted in the Senate Report, that only
actors receive such extensions.
good-faith
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issue has yet to arise in any Clean Water Act case, it has
been held 'that enforcement actions uay proceed, and compliance
orders may be issued, under the Clean Air Act against violators
of State Implementation Plans (SIPs), despite the pendency
of variance requests. Train v. Natural Resources Defense
Council. 421 U.S. 60,92 (1975); Ohio Environmental Council
v. U.S. District Court, 565 F.2d 393, 397 (6tn Cir. 1977);
Gectv Oil Co. v. RucKelshaus, 467 F.2d 349 (3rd Cir. 1972).
None of the Clean Air Act cases cited above involved
delays as lengthy as EPA's six-year delay in deciding many
301('i) extension requests. However, the principle that: valid
existing requirements are enforceable remains true in any
case. If a POTV; believes chat the Agency is unduly delaying
its Section 301(i) decision to the POT'.v' s detriment, the
POTV can challenge the Agency delay, as discussed below.
Such delay is not, however, a defense against enforcement of
the existing requirement.
This does not raean that a court would ignore a pending
variance request.. If EPA were to bring an enforcement accicn
against a POTW without having acted upon the POT:.v" s 301(i)
request, the POTW may seek (by asserting a counterclaim or
initiating a separate lawsuit) to compel EPA to act upon the
request. Under the Administrative Procedure Act (APA), 5
U.S.C. §706(1), a reviewing court £/ nay "compel agency
action unlawfully withheld or unreasonably delayed."
Furthermore, the APA generally requires agencies to conclude
matters "[w]ith due regard for the convenience and necessity
of the parties or their representatives and within a reasonable
tine." 5 U.S.C. §555(b).
A claim to-compel agency action night also be asserted
under Section 505(a)(2) of the CWA, which provides for an
action in district-court against the Administrator "where
there is alleged a failure of the Administrator to perform
any act or duty under this Act which is not discretionary
with tne Administrator." A court might accept a POT'.v" s
argument that the duty to act upon a 301(i) request within a
reasonable time is not discretionary. See, e.g., Rite-Research
Imnroves the Environment v. Costle, 650 F. 2 d 1312, 1322
(5th.Cir. 1931). See also FTC v. Anderson 631 F.2d 741
(D.C. Cir. 1979); "Naoer v. FCC, 520 F.2d 132 (D.C. Cir. 1975).
£/ "Reviewing court" is undefined. However, Section 702 of
the APA provides that unless prior, adequate and exclusive
opportunity _or judicial review is provided by law, agency
action is subject to j^.«-iCiai review in civil or criminal
proceedings for judicial
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-fl-
it' che POTW asserts a claim, a court may well stay the
enforcement proceeding pending an agency decision on the
Section 301(i) request. In an extreme case where agency
delay has prejudiced the POTW's ability to defend itself
(e.g'. , if POTW employees with pertinent knowledge have left
its employ and are unavailable), the court mignc even dismiss
the lawsuit. See, e.g., EEOC v. Liberty Loan Coro. , 584
F.2d 853 (8th Cir. 197-j) ana cases cicea therein at 355.
Finally, even if the court allows the case to proceed to
judgment in'EPA's favor, either before or after a final agency
action on the 301(i) request, the court maintains a great.
deal of equitable discretion to fashion appropriate remedies
for violations of Clean Water Act requirements. Weinberger
v. Romero-Barcelo. 456 U.S. 305 (1932). Moreover, a court
would li:
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because the two processes are functionally distinct. A
Section 301(i)(l) extension is s.et forth in a permit, which
thereby establishes a new compliance deadline for the POTW.
An administrative order is an enforcement action. Compliance
with the order does not relieve che POTW from its legal
obligation to comply with the permit deadline. See
Environmental Coalition v. EPA , 19 E.R.C. 1169, 1171 (D.C. ^
Cir. 19S3) . The oraer merely assures the POT'.; that EPA will .
exercise its discretion not to enforce against the permit
violation if the POTW complies with a specified set of
requirements. _ _
The distinction between Section 301(i) extensions and
administrative orders may be important from the POTW" s point
of view. If the POTW is issued a permit containing a Section
301(i) extension and complies with that permit, the POTW has
a good defense to citizens' suits. If the POT'v does not
receive such an extension, it will be subject to citizens'
suits alleging a permit, violation; compliance with an
administrative order is no defense to such a lawsuit. See
Montgomery Environmental Coalition v. EPA supra, at n. 6.
Therefore, if EPA' would attempt to use administrative orders
on a broad scale "in lieu 'of" 301(i) extensions, it would be
(FOOTNOTE 7 CONTINUED)
sections 301, 302, 306, 307, 308, 313, or ^05 of this Act, or
is in violation of any permit condition or limitation
•implementing any of such sections in a permit issued under
section 402 of this Act . . ., he shall issue an order
requiring such person to comply with such section or requirement
or he shall bring a civil action in accordance with subsection
(b) of this section.
Section 309(-a) (5) (A) provides.-
Any order issued under this subsection shall be by personal
service, shall state with reasonable specificity the nature
of the violation, and shall specify a time for compliance not
to exceed thirty days in the case of a violation of an interim
compliance schedule or operation and maintenance requirement
and not to exceed a time the Administrator determines to be
reasonable in the case or a violation of a final deadline,
taking into account the seriousness of the violation and any
good faith efforts to comply with applicable requirements.
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placing chose POTWs at
to afford them relief.
-10-
risk despite Congress1
8/ •
clear intent
Nonetheless, the use of administrative orders under
Section 309(a)(5) is a permissible means of issuing enforceable
compliance schedules to POTUs that are not complying with their
permits. While an administrative order does not shield a POTV/
from citizens suits, it does provide governmental assurances
of non-enforcement if the order is complied with. Furthermore,
if a citizen suit is brought, the Administrative order is
likely to be assigned significant weight by a reviewing court. £/
Resource Conservation and
that a general
8/ As noted above, the failure to act upon requests for
Section 301(i) extensions gives rise to potential actions
by POT'.vs or others to compel Agency action. Moreover, in a
recent case decided under the
Recovery Act (RCRA), the Court held
policy not to issue RCRA permits to certain types of facilitic;
jeopardized the4rights and interests of parties and was
therefore a rule reviewable in the U.S. Circuit Court of
Appeals. Environmental Defense Fund v. Gp_rsuc_h_, 713 F.2d 602
(D.C. Cir. 1983). Extending this line of
agency
reasoning,
a petitioner
might argue that an EPA "decision" not to act upon Section
301(i)(l) applications is a rule and challenge this "rule"
in the U.S. Circuit Court of Appeals, alleging that the rule
is arbitrary and capricious or is otherwise without legal
basis.
J9/ 'The issuance of A.O.s with reasonable compliance schedules
also might help EPA defend against a Section 505 action
seeking to compel Agency action on the Seccion 301(i) application,
cc: Louise Jacobs
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VI.A.7,
"REGIONAL AMD STATE GUIDANCE ON THE NATIONAL MUNICIPAL POLICY", dated
March, 1984.
I /
I/
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\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCV
I WASHINGTON. D.C. 20460
_~_ , r v.- Of
APR 1 < bjH WAT. R
MEMORANDUM
SUBJECT: Regional and State Guidance on the National Municipal
Policy
FROM: Jack E. Rava
Assistant Administrator for Water
TO: Regional Administrators
State Program Directors
On January 23, 1984, the Administrator signed the National
Mun'cipal Policy. The release of the signed Policy was preceded b<
a series of public briefings and other announcements to alert ou.
various constituencies that we intend to carry out the Policy
immediately. The issuance of this Policy signaled a new era in
municipal compliance and enforcement, and we must now move forwarc
to carry out its objectives.
Since the release of the Policy, we have tracked the development
of State municipal strategies through the Regional Offices. The
target date for completion of those strategies was April 1, 1984.
Thus far, only Rc-.p.on VI has submitted strategies for its States,
and we appreciate- :.;.ieir timeliness. I expect the remaining State
strategies, including the categorized list of noncomplying facilities,
to be completed immediately, as they are an essential element of
your §106 program planning for FY85. We must adhere to this schedule
to ensure our ability to establish enforceable schedules by the end
of FY85 for all noncomplying POTWs that need construction to meet--
the requirements of the Clean Water Act.
In order to. f.acil.• tate the coordination between Regions and
States in this critical early period, we are providing the attached
guidance for carrying out the Policy. This product was jointly
developed over a long period by Regions, States, and representatives
of ASIWPCA. We consider this our operational guidance, but it has
been forwarded to OMB for clearance under the Paperwork Reduction
Act, and it will become final upon OMB clearance (30-60 days). Yo«
will note that we have withheld the sample financial capability
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REGIONAL AND STATE GUIDANCE
on the
NATIONAL MUNICIPAL POLICY
U.S. Environmental Protection Agency
Office of Water
March 1984
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CONTENTS
REGIONAL AND STATE GUIDANCE
on the
NATIONAL MUNICIPAL POLICY
Page
Background 1
Introduction 2
Guiding Principles 3
State Strategies: The Framework for Carrying 6
out the Policy
Executing State Strategies 7
0 Approach to Completed POTWs 8
0 Approach to POTWs in the Grants Process 9
0 Approach to Unfunded Municipalities 10
0 Compliance Monitoring and Enforcement 11
Program Management Activities and Overview 12
Attachments:
0 Permit Issuance and Compliance Schedule
Development Table (and associated activities)
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REGIONAL AND STATE GUIDANCE
ON THE
NATIONAL MUNICIPAL POLICY
BACKGROUND
The Clean Water Act (CWA) originally established July 1, 1977,
as the statutory deadline for publicly-owned treatment works (POTWs)
to comply with both water quality-based and technology-based per-
mit requirements. Congress later authorized the Agency to extend
the compliance deadline for certain municipalities. In order to
receive an extension under §301(i) of the CWA, a municipality had
to apply by June 1978 and to demonstrate in its application that
construction could not be completed by the July 1, 1977 deadline,
or that the Federal Government had failed to provide grants in
time to allow the POTW to meet the deadline. EPA or the State was
authorized to extend the compliance date for such POTWs to the
earliest date by which grants would be made available and construc-
tion could be completed, but no later than July 1, 1983.
In 1981, Congress recognized the need to provide additional
time for some POTWs to achieve compliance and amended §301(i) to
allow eligible facilities additional time to comply with their
applicable effluent limits. EP,A or the State is authorized to
extend the compliance date for eligible POTWs to the earliest date
by which grants are available and construction can be completed,
but no later than July I, 1988. A POTW is eligible for an exten-
sion beyond 1983 only where reductions in the amount of financial
assistance under the CWA or changed conditions affecting the rate
of construction, beyond the control of the owner or operator, made
it impossible to complete construction by July 1, 1983. Any muni-
cipality that is not currently in compliance with its permit re-
quirements and has not received a §301(i) extension, is in viola-
tion of the July 1, 1977, statutory compliance deadline. There
are, however, many §301(i) applications that have never been acted
upon.
In 1981, Congress also amended other sections of the CWA to
provide significant reform and redirection to the Federal Construc-
tion Grants Program. Congress, for example, amended §201 of the
CWA to reduce both the number of categories of POTW construction
costs that are eligible for Federal funding after September 1984,
and the Federal share of the total eligible costs. These changes
indicate a Congressional intent to reduce local dependence on
Federal funding assistance and to increase local accountability
for achieving compliance with the requirements of the CWA.
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Also in 1981, §304(d) of the CWA wa~s amended to specify cer-
tain less costly treatment technologies that are the equivalent of
providing secondary treatment. The Agency has published a proposed
regulation that establishes a class of equivalent secondary treat-
ment works. The issuance of the National Municipal Policy has been
timed to follow the proposal of the new definition of secondary
treatment.
Because of historic and current problems with municipal compli-
ance, the Agency developed the National Municipal Policy, which
places renewed emphasis on improving municipal compliance rates in
order to protect the Nation's water quality. The policy basically
reaffirms that municipalities must comply with the statutory dead-
lines in the CWA, whether or not they receive Federal funds. While
the deadlines in the CWA apply to all POTWs, the policy states that
the Agency will focus its compliance efforts on 1) fully constructed
POTWs that previously received Federal funding assistance and are
not currently meeting their permit limits, 2) on all other major
POTWs, and 3) on minor POTWs that are contributing significantly
to an impairment of water quality. The policy also recognizes that
there may be extraordinary circumstances that make it impossible
for some municipalities to comply even by 1988. In such cases,
provided that the municipality has acted in good faith, the Agency
will work with the States and the affected municipalities to estab-
lish enforceable schedules for achieving compliance as soon as pos-
sible thereafter. These schedules will also require such munici-
palities to undertake appropriate, interim abatement measures.
Nothing in the Policy is intended to impede or delay any ongoing or
future enforcement actions.
This guidance sets forth a logical approach for implementing
the National Municipal Policy. The document is divided into four
main sections: an introduction, which presents a tiered approach
for addressing the problem of municipal noncompliance, as well as
guiding principles for implementation; a section that describes
Regional/State strategies, which are the basic planning documents
that permitting authorities should use to carry out the policy; a
section that discusses specific problems that permitting authori-
ties may encounter in implementing the policy, as well as suggested
mechanisms for addressing particular kinds of noncompliance; and
a final section that describes how Regions and States should use
the annual §106 program planning process to reach agreement on the
specific activities that States and EPA will undertake to carry
out the policy.
INTRODUCTION
The National Municipal Policy identifies certain planning and
program management activities that are considered essential in car-
rying out the Policy. State-specific strategies are the primary
planning mechanisms for coordinating Regional and State efforts
and resources to accelerate effective regulatory action across the
broad front'Of municipal noncompliance. To develop comprehensive
strategies, Regions and states need to coordinate carefully their
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permit, grant, and compliance/enforcement programs to provide the
mutual assistance necessary to meet the goals of the Policy. The
content of State strategies is discussed on page six of this guidance
The Policy also sets forth clear National priorities for
action. In support of these priorities, this guidance presents a
three-tiered approach for Regions and States to use in addressing
the POTW noncompliance problem. It places primary importance on
completed facilities that are not in compliance, especially those
that used EPA funds for construction. The goal here is to achieve
maximum pollution abatement through effective operation, and to
realize the full water quality benefits of construction grant
funding.
As this first universe is addressed, Regions and States
should next consider affected municipalities that are already in
the grants process; this includes those municipalities that have
already received a construction grant and those on the fundable
portion of the State's priority list. The goal here is simply to
move these projects through the grants and construction phases as
quickly as possible, and to manage the grants and the schedules
so that the completed plants will meet certification requirements
one year after initial operation.
Next are those affected municipalities that need construction
to meet statutory requirements and will not, or are not likely to,
receive EPA grant assistance. This group poses the most difficulty
in designing reason-able schedules, and will require the most sensi-
tivity on the part of Regions and States. The goal here will be to
work with these affected municipalities to develop schedules that
enable them to achieve compliance as soon as it is technically and
financially possible. Within this group, the focus should be on
major POTWs and on minors that are contributing significantly to an
impairment of water quality.
The following principles should be used by the Regions and
the States as a guide in developing State-specific strategies and
compliance schedules for affected municipalities.
Responsibility for compliance rests with each municipality.
Municipalities should make every effort to comply expedi-
tiously with the requirements of the CWA, whether or not they
receive Federal funds. Local governments should select an appro-
priate treatment technology and explore the full range of alter-
native financing methods available to them not only to construct
these treatment works, but also to provide for adequate operation,
maintenance, and replacement (OM&R) .
Funding decisions should be based on the potential for water quality
improvement.
States should dedicate available EPA funds on a priority basis
toward those POTW construction projects with the greatest potential
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for environmental benefits as'provided by the CWA, EPA regulations,
and priority list guidance.1 This may be accomplished by sound State
management of construction grant project priority systems and lists,
and State review and revision, as appropriate, of water quality
standards (WQS) and waste load allocations (WLA).
Special emphasis should be placed on compliance by POTWs that have
completed construction of the necessary treatment facilities.
Municipalities with fully constructed POTWs must achieve and
maintain compliance with their permit limits. EPA and the States
will exercise all available administrative and judicial options
needed to assure that noncomplying POTWs achieve and maintain
compliance with their NPDES permits.
Construction grant agreements must be honored, and grant and permit
schedules must be coordinated.
Municipalities that receive EPA construction grant assistance
are responsible for meeting the terms of their grant agreements.
EPA will enforce grant conditions, if necessary, to assure that
POTWs constructed with EPA funds achieve compliance with final
effluent limits. EPA and the States will ensure that compliance
schedules in construction grant agreements are consistent with com-
pliance schedules in NPDES permits (when a §301(i) extension has
been granted), and also Administrative Orders (AOs), judicial
orders, or comparable State actions. Any changes in grant sched-
ules should be justified and coordinated with the others.
EPA and States should provide municipalities with as much certainty
as possible regarding applicable permit limits prior to requiring
commitments to major capital investments.
EPA will provide technical information on the redefinition of
secondary treatment (consistent with the 1981 CWA Amendments) and
will issue tentative §301(h) variance decisions as quickly as pos-
sible. EPA and the States are responsible for the review and,
where appropriate, modification of permits to accommodate revised
WQS, WLAs, and secondary treatment criteria in accordance with EPA
regulations. In this context, States should act quickly to notify
municipalities of any proposed secondary treatment changes or modi-
fications to WLA for POTWs. However, municipalities are account-
able for POTW compliance with statutory requirements at all times.
Compliance schedules should be reasonable.
Regions and States will reissue permits to those municipali-
ties eligible under §301(i) of the CWA, or will issue AOs (or will
obtain judicial orders in appropriate cases) with fixed-date compli-
ance schedules. These schedules should provide municipalities with
§216 of the CWA and EPA1s construction grant regulations,
40 CFR 35.2015(b).
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sufficient time to design and construct needed treatment facilities,
and to achieve compliance with applicable effluent limits and other
enforceable requirements; schedules should generally require munici-
palities to be in compliance with their applicable effluent limits
as soon as possible and no later than July 1, 1988.
Where extraordinary circumstances preclude compliance by July
1988, EPA will work with the State and the affected municipal author-
ities to ensure that these POTWs are on enforceable schedules for
achieving compliance as soon as possible thereafter; the presumption
is that any extension beyond July 1988, will be through a judicial
enforcement action. These municipalities should be asked to explain
how they plan to finance interim abatement measures, as well as how
they plan to finance any construction necessary to meet statutory
requirements by the earliest possible date after July 1, 1988.2
Where compliance cannot be achieved promptly, POTWs should take
appropriate, interim steps toward compliance with applicable
effluent limits.
At any time, EPA and the State may establish compliance sched-
ules that require interim steps toward compliance (phased reduction
of pollutant discharges). Such interim steps may be appropriate
when final resolution of permit limits or final compliance will be
significantly delayed and there are logical abatement measures that
can be accomplished promptly, or where EPA or the State determines
that final compliance cannot be achieved by 1988. However, resolu-
tion of final or applicable permit effluent limits and the setting'
of appropriate final compliance schedules should remain the highest
priority.
Phased reductions may also be warranted where States are re-
vising secondary treatment standards, WQS, or WLA, or are conduct-
ing studies to determine water quality-based effluent limits and
the need for related advanced treatment (AT) facilities. Finally,
EPA or the States may establish interim effluent limits and asso-
ciated compliance schedules, on a case-by-case basis, as noncom-
plying POTWs move toward compliance with final (applicable) efflu-
ent limits. The use of Federal grant assistance may not allow
phased or segmented projects in some cases (see 40 CFR 35.2108).
2 The Agency will be providing additional guidance showing how the
information necessary to demonstrate financial capability might
be displayed. in addition, the municipality may use any format
it chooses, a capital improvement plan, a financial plan, a
separate chapter in the Facility Plan, or procedures prescribed
by an approved State, provided that the information required is
adequately addressed.
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STATE STRATEGIES: THE FRAMEWORK FOR CARRYING OUT THE POLICY
The National Municipal Policy requires Regions and States to
develop long-range planning documents or "strategies" that describe
how they plan to bring noncomplying facilities into compliance by
the target dates. These documents should be the lon'g-term plans
for achieving compliance based on the specific circumstances that
face affected municipalities and the laws and regulations that
govern each State's actions. The process of developing a strategy
provides each Region and State with an opportunity to establish the
proper protocol and control mechanisms, consistent with the Policy,
for carrying out the goals and intent of the Policy.
From a National program management perspective, development of
strategies will promote uniform, consistent implementation of the
Policy. From the Regional and State manager's point of view, the
strategies will provide a hierarchy of work priorities, a phased
approach to implementation, a reasonable schedule of target dates,
and a convenient way to track accomplishments. Properly prepared,
the strategies will provide contingency plans in the event of cir-
cumstances beyond the control of the regulatory agency.
Regions and the States should form a partnership to develop
State-specific strategies so that the interests of both agencies
are served in reaching a common goal. These strategies should:
1. Describe the basis and method for setting priorities consistent
with the National Policy.
2. Identify (list) all municipalities that are out of compliance
with their statutory requirements.3
3. Develop a schedule for working with affected municipalities to
provide final decisions on applicable effluent limits and com-
pliance schedules by the end of FY 1985. Wherever possible,
such schedules should generally require compliance with statu-
tory requirements as soon as possible, and no later than
July 1, 1988, unless extraordinary circumstances make compliance
by July 1, 1988, impossible.
4. Describe the procedures and coordinating mechanisms to ensure
program consistency, especially between compliance schedules in
permits, AOs or judicial orders, and construction grants sched-
ules.
It is recommended that Regions and States review the attached
"Permit Issuance and Compliance Development Table," and the
accompanying sequence of activities. This will help organize
the universe of noncomplying municipalities into manageable
subcategories and to identify the basic steps to take in deter-
mining applicable effluent limits and establishing compliance
schedules.
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Examples of such activities included
a. Criteria development for setting priorities for permit,
grant, and compliance actions to carry out the State
strategy.
b. Information gathering for making decisions on applicable
effluent limits.
c. Case-by-case technical review and decision making.
d. Management and information systems, including policies and
procedures.
e. State/EPA coordinating mechanisms to develop and modify
permit and grant schedules, and to. track and report compli-
ance improvement activities.
f. Integration with §106 program planning, leading to the
establishment of firm commitments for each fiscal year.
g. Periodic adjustment of State strategies, if appropriate,
during §106 program reviews.
5. Describe a general schedule, by fiscal year, for achieving com-
pliance with all statutory requirements as soon as possible, and
no later than July 1988. Where extraordinary circumstances pre-
clude compliance by July 1, 1988, describe a contingency plan
for achieving compliance beyond that date and develop criteria
and schedules for achieving compliance by the earliest possible
date thereafter, including interim abatement measures as appro-
priate. The presumption is that all schedules that go beyond
1988 should be established through a judicial enforcement action.
Data to establish applicable effluent limits and compliance
schedules for many noncomplying POTWs should be available imme-
diately; the schedules for these and many other POTWs can be de-
veloped and included in State strategies by March 31, 1984. The
general goal is to establish enforceable compliance schedules for
all affected municipalities by the end of FY 1985.
State activities associated with developing and carrying out
the strategies are eligible for EPA funding under §106 and §205(j)
of the CWA. States with delegated construction grant programs
under the CWA may also receive grant funds to carry out this policy
under §205(g) of the CWA.
EXECUTING THE STATE STRATEGIES
The State strategies described above will provide Regions and
States with a complete inventory of all noncomplying facilities,
4 The guidance established in the "Enforcement Management System"
(EMS), March 1977, is recommended in developing State strategies.
Use of the Permit Compliance System (PCS) as the primary data
management system will facilitate effective coordination, com-
munication, and data management. States will also benefit from
increased participation in PCS.
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will identify affecte'd municipalities consistent with the National
policy and guidance, and will establish the most appropriate way to
achieve compliance given the particular circumstances facing each
affected municipality.
As stated earlier in this guidance, noncomplying municipali-
ties should be addressed in three tiers: completed facilities that
are not in compliance with their final effluent limits; municipali-
ties that have or will receive Federal grant assistance for needed
construction by September 30, 1985; and municipalities that are not
expected to be funded. The following sections describe the special
problems that the permitting authority may encounter in dealing
with each of these categories of noncompliers, as well as the mech-
anisms that should be used to achieve compliance. The final section
presents some special considerations related to routine compliance
monitoring and enforcement activities.
Approach to Take with Completed POTWs
Municipalities that have completed POTW construction, but are
failing to achieve final effluent limits, may be required to per-
form an in-depth, diagnostic evaluation (analysis) of the causes of
noncompliance and to develop a detailed Composite Correction Plan
(CCP) for bringing the POTW into compliance as soon as possible.
The permitting authority can require a CCP through an AO or through
other appropriate enforcement mechanisms. The affected municipality
may choose to complete the CCP with its own in-house expertise or
may use an outside consultant.
Based on the results of the diagnostic evaluation, the CCP
should:
1. Discuss/explain the cause(s) of noncompliance.
2. Discuss the corrective steps required to achieve compliance,
their cost, and the proposed method of financing those steps,
including whether there is:
a. A plan of operation that identifies annual O&M costs.
b. A financial management system that adequately accounts
for revenues and expenditures.
c. A user charge/revenue system that generates sufficient
revenues to operate, maintain, and replace the treatment
works.
3. Provide an expeditious schedule for completing the required
steps and for achieving compliance.
Once the CCP is completed, it should be submitted to the Re-
gion or the State for review. If the CCP appears technically and
financially sound, the permitting authority should use an AO or
judicial Consent Decree to require the municipality to carry out
the plan at its own expense.
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While CCPs will be the most common mechanism for returning
constructed facilities to compliance, there are two other kinds of
situations that Regions and States will encounter. First, section
204(d)(2) of the CWA, as amended in 1981, requires municipalities
that construct POTWs with EPA grants made after May 12, 1982, to
certify the performance of those POTWs one year after initial oper-
ation. Grantees that cannot certify compliance with both perform-
ance and design standards are required to submit a Corrective Ac-
tion Plan (CAP) and to correct the operating deficiencies promptly
at other than EPA expense. EPA will place a high priority on track-
ing the performance certifications, the CAPs, and the resulting cor-
rective actions. Since the CCP and CAP are similar documents, the
CAP should be used in lieu of the CCP where appropriate. The re-
quired elements of a CAP are described in EPA regulation 40 CFR
35.2218(c)(1).
Once a plant has been certified as operational, it must con-
tinue to meet its final limits or it is subject to any of the en-
forcement mechanisms available to the permitting authority. The
requirements under §204(d)(2) are designed to protect the public's
investment in the project. If a plant cannot meet certification
requirements, the grant program can enforce grant conditions.
Appropriate enforcement actions may also be taken under §309.
The second situation involves the .special circumstances asso-
ciated with enforcement actions against completed POTWs that were
not originally planned, designed or constructed to meet the current
secondary treatment requirements, e.g., P.L. 84-660 facilities.
Since POTWs previously funded under P.L. 84-660, or otherwise
funded prior to the August 17, 1973, secondary treatment regulation,
may be incapable of meeting secondary treatment, State strategies
must make a conscious determination of whether such facilities
will be treated as completed (tier one) or unfunded (tier three)
facilities.
Finally, Regions and States should exercise sound judgment in
dealing with any Federally funded facility. Since enforcement
actions against these facilities can raise issues affecting the EPA
Construction Grants Program, proposed actions against these munici-
palities should be thoroughly discussed and continuously coordinated
between the compliance and Construction Grants Programs before the
action is taken.
Approach to Municipalities in the Grants Process
Affected municipalities that are currently in the grants pro-
cess, and that have approved §201 facility plans, do not need to
develop other plans that describe how they plan to come into compli-
ance. This includes municipalities that already have an approved
construction grant and those that are on the fundable portion of
the State project priority list. The goal is to move these pro-
jects through the grant and construction phases as quickly as
possible, which has the dual benefit of improving compliance plus
reducing unliquidated balances in the Construction Grants Program.
-------
Many of these municipalities are currently operating on ex-
pired permits and/or compliance schedules. Consequently, the
permitting authority should reissue the permit and/or use AOs or
§301(i) extensions, if eligible, to establish final compliance
dates in these schedules, and to establish appropriate interim
effluent limits for existing facilities that achieve the maximum
degree of pollution abatement possible in the meantime. Construc-
tion grant schedules should always be coordinated at critical
milestones with any related permit compliance schedules in §301(i)
permit modifications or other enforceable EPA/State mechanisms.
If either document is modified, the change should be reflected in
the other so that the.POTW receives a unified response from the
regulatory agency.
Approach to Unfunded Municipalities
Any municipality that requires construction of a wastewater
treatment facility in order to achieve compliance should be.re-
quired to develop a Municipal Compliance Plan (MCP) to show how it
plans to meet the enforceable requirements of the CWA. State
strategies should identify the affected municipalities that need
to develop MCPs, and the permitting authority should then work with
these municipalities to establish reasonable compliance schedules
based on the information supplied in the MCP.
MCPs for municipalities that have not constructed the appro-
priate treatment to meet the statutory requirements should identify:
1. The treatment technology needed to achieve compliance, as well
as estimates of capital requirements and OM&R costs.5
2« The financial mechanisms (sources of revenue) to be used to fund
construction and OM&R.
3. The proposed, fixed-date compliance schedule, including, at
a minimum, the milestones by which the municipality plans to
start and complete construction, to attain operational levels,
and to achieve compliance with applicable effluent limits.
4. Any appropriate interim" steps that will ensure progress toward
compliance with statutory requirements, such as the completion
of the secondary treatment component of an AT facility, improved
O&M procedures, the implementation of an approved local pretreat-
ment program, or the upgrade of the-existing facility.
The permitting authority should require unfunded municipali-
ties to develop MCPs through a §308 information request, an enforce-
able §309 AO, a judicial order, or an equivalent State action. EPA
Headquarters has issued draft guidance on the form and content of
these §309 AOs and §308 requests. These municipalities should be
given a reasonable length of time to develop MCPs so they can real-
See footnote on page five.
-------
-11-
istically assess their compliance needs, examine their financing
alternatives, and work out reasonable schedules for achieving
compliance. In most cases six months from the notification of the
requirement to submit an MCP should be adequate.
Within the group of noncomplying municipalities that will not
receive Federal grant assistance, Regions and States should concen-
trate on major POTWs and then on minor POTWs that contribute signi-
ficantly to an impairment of water quality. Finally, lowest prior-
ity for EPA or State action should be assigned to unfunded, minor
POTWs that are not causing significant water quality problems.
EPA or the State agency should review each MCP and, if it is
acceptable, should incorporate the schedule into a §301(i) permit
(if the POTW is eligible), a §309 AO, or a judicial order. If the
MCP is not acceptable, EPA or the State may establish an appropri-
ate compliance schedule under its own authority or may initiate
other appropriate enforcement actions.
In dealing with unfunded municipalities, Regions and States
should exhibit great sensitivity to their special problems and
needs. In working with these communities, for example, every
effort should be made to provide them with available technical in-
formation on financial capability assessment and on alternative,
less costly, wastewater treatment technologies. The objective is
to help these municipalities develop reasonable and enforceable
schedules, even though it may require a judicial enforcement action
to extend the schedule beyond 1988 where extraordinary circumstances
are shown.
For unfunded municipalities, Regions and States are encouraged
to adopt a community-by-community strategy that involves advance
discussion with each affected municipality before establishing a
final schedule that requires a substantial capital investment.
Since actions against these communities are likely to be controver-
sial, the permitting authority should also inform its Regional Ad-
ministrator or State Director, as appropriate, of the negotiations
with the affected municipality and the proposed actions necessary
to achieve compliance.
Compliance Monitoring and Enforcement
Regions and States should carefully monitor compliance with
the requirements to develop and submit MCPs and CCPs, and should
take follow-up actions as needed. They should also monitor enforce-
able compliance schedules that are established in §301(i) permits,
§309 AOs, or judicial actions, and should initiate follow-up action
where schedules are not being met. All activities should be con-
sistent with the priorities in the Policy and the approaches out-
lined in this guidance.
Section 309 AOs (or equivalent State actions) should be used
when such actions are necessary to obtain corrective actions, but
civil enforcement actions should be initiated when necessary.
Negotiated consent decrees can be a useful element of many EPA and
-------
-12-
State civil enforcement actions. Appropriate civil penalties
should be established to deter future violations. Sewer connection
bans (§402(h), CWA) should be sought, when they are needed, to
achieve and maintain compliance. Nothing in the Policy or the
guidance is intended to impede or delay any on-going or future
enforcement actions.
Since municipalities are ultimately responsible for meeting
the contractual terms of construction grant agreements, grant
conditions should be enforced, if necessary. If grantees fail
to correct problems in a timely manner, the regulatory agency
should take prompt action, which may include annulment or termina-
tion of the grant. If required, appropriate legal actions should
also be taken, usually under §309 of the CWA or under comparable
State authority.
PROGRAM MANAGEMENT ACTIVITIES AND OVERVIEW
Regions should use the annual State program grant negotiation
process to reach agreement on the specific activities they will
undertake to carry out the State strategies. EPA and State §106
work plans for FY 1985, for example, should include the necessary
commitments to update State strategies, and to identify any remain-
ing POTWs for which applicable effluent limits and compliance sched-
ules need to be established. Such commitments should include those
contained in the Office of Water Accountability System (OWAS) FY 85
guide and should cover the following areas:
0 The identification of noncomplying POTWs (list) and those that
need construction to meet statutory requirements.
0 The review, approval and/or modification of §201 plans.
0 The request, review, and approval of CCPs and MCPs.
0 The establishment of compliance schedules.
0 The issuance and reissuance of municipal permits.
0 The taking of enforcement actions to obtain compliance.
0 The return of POTWs to compliance (and the improvement in the
level of municipal compliance).
0 The termination of Step 1 and 2 grants.
0 The physical and administrative completion and close out of
active Step 3 or Step 2/3 grants.
By the end of FY 1985, to the extent possible, final decisions
should be reached on applicable effluent limits and compliance
schedules for all noncomplying POTWs and State strategies should be
updated accordingly, updating State strategies should be a contin-
uous process from FY ,1.984 through FY 1988. Annual EPA permit, con-
-------
-13-
struction grant, compliance monitoring, and enforcement commitments
will be included in the appropriate sections of EPA's annual Office
of Water Accountability System (OWAS), and the Administrator's
Strategic Planning and Management System (SPMS). This will help
assure that EPA's actions under the Policy are conducted in coordin-
ation with related State actions and are consistent with the State
strategies and annual §106 plans.
EPA Headquarters will overview implementation of the Policy
and will prepare appropriate reports to the EPA Administrator and
to Congress. Headquarters will also analyze the State strategies,
PCS data, and other available information to determine the adequacy
of EPA and State resource commitments, the need for additional guid-
ance and/or technical assistance, and any need for mid-course cor-
rective actions. During this process, the Agency will be looking
for successful State and Regional approaches and management tech-
niques in order to share them with other States and Regions. All
Headquarters overview will be carried out within the context of
OWAS and SPMS, and the EPA/State oversight protocol agreements,
which will be individually negotiated with each State, consistent
with the FY 85-86 Agency Operating Guidance.6
6 See FY 85-86 Agency Operating Guidance, February 1984, pp. 9-10.
-------
SEQUENCE OF ACTIVITIES
FOR
ISSUING PERMITS AND DEVELOPING COMPLIANCE SCHEDULES
A discussion of EPA and State actions that should be taken during the
development of the State strategies is presented below. These actions may
occur simultaneously or in sequence. This sequence is consistent with the
attached Table.
1. Review available data and identify those POTWs that are not in compliance
with statutory requirements. This includes those that need construction
to meet the 1988 compliance deadline under §301(i).
2. Identify POTWs for which treatment requirements or compliance status
may change as a result of revised WQS and WLA, the redefinition of
secondary treatment, §301(h) variance decisions, §301(i) eligibility,
or EPA's AT review and Federal funding decisions.
3. Identify POTWs that need construction to achieve compliance with statutory
requirements.
4. Identify POTWs that have received, or are likely to receive, EPA con-
struction grant funding. States are encouraged to review and revise
their Project Priority Lists (PPL) in order to identify the optimum
number of POTWs that can be funded.
5. Establish applicable effluent limits -and tentative compliance schedules
for noncomplying POTWs for which information is already available. For
many POTWs, the applicable effluent limits have already been established
in existing NPDES permits.
6. Establish deadlines by which POTWs must prepare and submit MCPs or
CCPs. To the extent possible, Regions and States should work with
affected communities to require such plans in phases through the end of
FY 1985, with CCPs for constructed POTWs in noncompliance due in the
near term, and MCPs for POTWs facing somewhat uncertain permit effluent
limits or funding problems at the far end of the schedule.
7. Establish firm compliance schedules and incorporate them into §301(i)
NPDES permits, if eligible, §309(a)(5)(A) AOs, judicial orders, or
comparable State actions (see attached Table). If the Region or State
agrees with the proposed schedule in the MCP or CCP, it may be incor-
porated by reference in the POTW's permit, AD, judicial order, or
comparable State action. Otherwise, the Region or State should work
with the POTW to develop a reasonable schedule for achieving compliance
as soon as it is technically and financially possible.
8. Establish firm commitments in §106 workplans for actions on POTWs for
which applicable effluent limits are already known or can readily be
made, and action plans for POTWs for which decisions on applicable
limits will be made (in stages) up to the target date, the end of
FY 1985.
9. Carefully monitor compliance with all of the above requirements and
take follow-up actions as provided for in State strategies, or as
necessary to meet the intent of the Policy.
-------
DRAFT PERMIT ISSUANCE AND COMPLIANCE SCHEDULE DEVELOPMENT TAOLE
' — 1
K «
*^ *
coNsin
NOI N
1
1
IICIION NOT Arricironv
" ut ° [ on 130 1 ° ™oi asioN
1 1
— -— "1
1
1
ICONS IIIIICI ION 1
NtlOtO 1 |
1
AffCCHOBY
on 301 (MIoicisioN
1
Comtiurtrd; not
•Hrcin
Nol iffeclfd by
f*viifxf WOS. Indy.
| 30 Mh) decitton:
•tolil.nt fCt.
AfUclvd by f«KniH
WOS. ?ntly, f 301 |h|
Authntlrcd f-.ln.al
Sli|f lit 10 mMt
July IOOH.
Ai.tltntirrfl Fttlml
11null unmtvln io
inflftl July 19118.
r^l"t*l fund* nal
•ulKn.tivd for
p(0)«trH,
Aulnntiftd r«l«r»l
fondl •rtilthl* thtu
Sifp III In m»«l
Ally 1908.
Auiho«itrp|«opil
CCP. «u opiii
infmcxmntl «ct.on
.. . . . .
Mod,fyp«.n,,lln
tcconLne. w,,h
• II netmlt ••pliM*.
f pit tut *nd I*V«
••t'oicrmcnl •rllon
•t .ppiopricU.
1 § 30l(n| modlfic.llon* m«y only bt limwd by I^A.
2 Whn« Sum do nol h»«« lh« ley.*! nflhotllV to ritl.y ptrmll rvltii.
fumlfi . methMihm iinnl*f lo Ih* ATA|. In* pfrmil thouM b« **li
n*ed. «nd »nii«.
WOS - Wkltt qii*Hty ilcnlwth .nrf/of wtiMlo»d sllocallon..
Inrfy — n*d«tinllion ol »*rof*l»«y trtBtmtnl.
Ar*A — Artmlmiltcliv* fioi.^«tiir«« Ad.
rtL - Ffnal lp«'mil| tUhnrnf hmili
AO - Adminrtlfttirt O'dtf.
CCO - ConlllHMHtt eomiJi»nc» dtr^wtllc (midil) Intpacllon.
CCf - Cofitpotil* Co*f*clion flan |i«t.uifW by CCO-»•*•» 10
Munk>p^ Conlrnwoui Comp|i*nM fottcy. Aujtnl 19S1).
MCP - Mtmlclfwl Co*«tf*»n<* fl*n.
* Includes POTWs that need
construction under §301(1)
.«.,„., ,„„(,
11 .fiqilil.. of
him AO.3
> CoOMlitHU
f»nt ichrduU
with rnfofc*nMint
ichvtlglc In |w«.
*' ""10. «
'"••• r"tml
.
„ „, ,,„ „,
• Con>dm»l«
j»«nt iflintiil*
**.)!. f.llfMt#
nwnl iiliftliflt
• if SI-HB/EPA
bjiifrf nn luth-
Oiifrd Iryrti,
lundi will mil
bC •VJlMI|ll>
In nwei 130B.
lime AO o*
1.108 Irlin
• 0*»H Of* MCP.
ftMhlitli i|«
beyond which
roi
w/n
AO. mchiding •
cotni»lin»e*
. « nl „„ Mcp
i PfHW
• nriii«« i*»-
mit «/f 101(11.
il fhj.l.U. o*
AO. Incluif
tcl>fdt.l«i.3
. n . ,. i
H" "' , ^K"
t«o.d».« ~ h
' M n*c«ti»ry. »•-
quit* MCP lo ti-
t«Mnh «n ipp«o
p>i*l* coniplianc*
lo vt»
not nculrt. t»
'""' '" »««oid-
> II eon* Intel ion
It nverird tnd
tundt *r« «v|j|
*f>l«. f^iiui* w/
| 30 H.I. il tl>.
• Cootriin.lt
iclwiliilt wtl
uto In fttmtit/AO.
• IISuu/rPAd*
b* •»«>Utilt to
me*t 1MB. tnu«
AO o* |300 Ittlw
lith i|»erific rniUfltin*
oeynnd which PO>TV
a flCMw.* p«tml| with
O* AO. Including •'
r*t*<*l f.milt
nol *nlhnti4«Uy t*l|iii.nt*
unlil •pfi.opfi*l*
•flliirnl lintin
ni.bZ
1« mff*nA*ru»
• tf fWmll «fttc-
l«v». luu* AO
which i*r,uif«t
CCD »nd CCF.
• Btitil on CCO §od
• Ui« »|»n»opMai»
tn(orc«n«4nt .e-
lion 10 vttalilith
compli»noi
ichrduto.
• II .Iff li«t
ifilltit |*i mil
•nil fnoilily un-
iVf t 30 l(i,.
It eliyblt Of
litut AO.'
• If SlaU/tTA
dripiminrt.
b»t(il o* »nlh
orird b-vrti.
lundi Mill Ix
nwH>« t
-------
VI.A.8,
"Available Techniques for Obtaining Compliance with National Municipal
Policy by Unfunded POTWs Requiring. Construction", dated September 13, 1984
-------
-------
WASHINGTON. D.C. 20460
OFFICE OF
WATER
SEP 131984
MEMORANDUM
SUBJECT
FROM:
TO:
Available Techniques for Obtaining Compliance with
National Municipal Policy by Unfunded POTWs
Requiring Construction
Rebecca W. Hsrimer, Director
Office of /Water Enforcement & Permits
*.
Water Management Division Directors, Regions I - X
The Office of General Counsel (OGC) responded to our request
for legal opinions concerning the applicability of the §301 (i)
compliance extension and the legality of various methods for
obtaining compliance with the National Municipal Policy.
Attached are copies of those responses dated April 11, 1984
and June 29, '1984. These memoranda address the legal basis for
-use of enforcement or permitting techniques- in establishing ........
compliance schedules for unfunded POTWs (those which will receive
no Construction Grant funding) and the potential risks in the
use of administrative enforcement techniques when an unfunded
POTW proposes to meet the 1988 deadline and is eligible to receive
a §301(i) extension. These memoranda should assist you in the
implementation of the National Municipal Policy.
The first OGC memorandum, dated April 11, 1984, states
(1) that an unconstructed
of meeting the July 1
Clean Water Act may receive an
section if it is otherwise eligible
2, pp. 1 - 5) ;
of
and unfunded POTW which is
, 1988 deadline in §301(i)
extension under that
(Questions 1 and
capable
the
(2) that such a POTW remains in violation of a permit issued
using §301 (b ) { 1 ) ( B ) or (C) deadline requirements until
the extension is granted (Question 3, p. 6); and
(3) that such a violator may be subject to an EPA
action (Question 4, pp. 6 - 8).
enforcement
-------
The second OGC memorandum, dated June 29, 1984, confirms that:
compliance with an Administrative Order does not preclude further
enforcement action by EPA on the underlying violation.
If you have any questions concerning the memoranda, please
contact David Shedroff at FTS - 475-8307 or Greg McBrien at
FTS - 426-2970.
Attachments
cc: Regional Counsel, Regions I - X, with attachments
Associate Enforcement Counsel, Water, with attachments
Associate General Counsel, Water Division, w/o attachments
-------
VI.A.9.
"Finance Manual for Wastewater Treatment Systems", dated April 1985.
(Table of Contents only).
-------
-------
FINANCE MANUAL
FOR
WASTE WATER TREATMENT SYSTEMS
' APRIL 1985
Prepared by:
Government Finance Research Center
Govenrment Finance Officers Association
Washington, D.C.
Prepared for:
U.S. Environmental Protection Agency
Office of Water Enforcement and permits
Under Contract No. 68-01-7050
-------
Table of Contents
CHAPTER PAGE
Acknowledgments ii
I. Introduction
o Objective . 1
o Organization and Limitations of the Manual 1
II. What is Financial Management?
o The Role of Financial Management 3
o The Elements of Financial Management 4
o The Tools of Financial Management 8
o Conclusion 11
III. Planning and Budgeting
o Understanding Planning and Budgeting 13
o Capital Planning and Budgeting 17
o Operations planning and Budgeting 25
o Improving organizational Planning 38
o Planning/Budgeting System Checklist 42
IV. User Charges and Cost Recovery
o The Role of User Charges in Wastewater
Treatment 45
o User Charge Policies 45
o The Rate Study Process 48
o Cost Recovery/User Charge Checklist 59
-------
V. procurement
o Introduction: Organization of the procurement
Function 61
o The Purchasing Process 62
o Completing the procurement Cycle 70
o Procurement System Checklist 74
VI. Accounting
o Introduction: The Importance of Accounting 81
o Accounting Systems 83
o Accounting for the Financial Functions 107
o Accounting Systems Checklist 108
o Revenue Accounting checklist 112
o Expenditure Accounting Checklist 117
o Payroll Accounting Checklist 122
o Asset Accounting Checklist 126
o Liability Accounting Checklist 130
VII. Cash Management
o Introduction 133
o Maximizing and Knowing Cash Availability 133
o Investing Excess Cash 140
o Banking Services 144
o Cash Management Checklist 151
VIII. Debt Management
o Debt—Its Uses and Role 155
o Long-term Debt 156
o Short-term Debt 168
o Debt Administration 170
o Debt Management Checklist 173
IX. Conclusion 177
X. Bibliography 179
XI. Glossary 185
-------
VI.A.10.
"NATIONAL MUNICIPAL POLICY IMPLEMENTATION", dated April 1, 1985.
-------
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20450
APR' ' 11985
OFFICE OF
MEMORANDUM WATER
SUBJECT: National Municipal Policy Implementation
FROM: Rebecca W. Hanmer, Director e ecca W. Banner
Office of Water Enforcement and Permits (EN-338)
TO: Water Management Division Directors
Regions I-X
During the past year, as we received State municipal strategies
at Headquarters, the Enforcement Division attempted.to create a
national inventory of major POTWs (by name) affected by the Policy.
This list is necessary to stabilize the universe of POTWs, as well
as to track, with confidence, Regional and State progress. Due to
the high visibility of the Policy, information is required that we
cannot presently provide to Congress and other public institutions.
The data we have obtained from the original strategies do not correlate
well with data in PCS. In follow-up discussions with Regional staff
we have been unable to verify, on a name basis, all the POTWs that
are affected and their status with respect to compliance schedules,
final limits, and financial capability.
The attached list has been prepared from the names and permit
numbers of POTWs identified by Regions and States as of the end of
January. In addition to the named permittees, we have succeeded in
merging relevant data from the NEEDS and GICS information systems
using a crossover file linking NPDES permit numbers and their related
Authority/Facility numbers used in the 84 NEEDS survey. The data
is presented to you for your review and use in enforcement decision
making.
We are not certain if this printout represents all major NPDES
permittees affected by the Policy. Late arriving State inventories
indicate some of these POTWs may be incorrectly listed. Please
review the attached printout to assure that it represents all major
POTWs that: (1) are under construction, (2) need construction to
meet statutory requirements, and (3) have a high probability for
construction once decisions on"final effluent limits are made. The
corrected list should include all POTWs already on a schedule,
regardless of compliance status.
-------
— 2 —
Attached is an instruction sheet to explain the layout of the
information and a sample page that highlights the critical elements
that need verification immediately. Chuck Evans (FTS 475-8327) of
the Enforcement Division will work with your staff to complete this
inventory. I ask that you give this a high priority and submit
the corrected information to the Enforcement Division by Monday,
April 15, 1985. Regions may submit this data by telephone if the
updates are not large.
Once we have stabilized the list of affected major POTWs, we
intend to update the construction milestone dates quarterly through
PCS. For the short term, we need your assistance to learn as many
actual dates as possible. As Regions and States update "facility and
NEEDS data, we will amend the merged data set and continue to provide
you with revised lists. At the recent PCS Steering Committee meeting
in Washington, on March 19-20, 1985, we discussed a method for tracking
final schedules and POTW funding capabilities. The use of the PCS
data field to do this (RDF6) needs further evaluation and will be
discussed in a Regional conference call on Thursday, April 4, 1985.
When the codes have been established, our office will provide detailed
guidance on their use and update.
Along with the corrected MCP inventory, Regions should also submit
a list of completed, major POTWs that have been identified in original
and updated State strategies as requiring Composite Correction Plans
(CCP). Once this list is established, we will review it periodically
with the Regions to follow trends.
I would also like to emphasize a few other developments that
have a significant bearing on this program's success in FY85. At
the National Branch Chief's meeting early in May, one of the main
topics will be the National Municipal Policy. Our office sent a
memorandum to you about this meeting on March 27, 1985. I encourage
each of you, or your Compliance Branch Chief, to attend this meeting
as there are some developing enforcement issues that must be resolved
before all final schedules are established.
Recently, OWEP and the Office of Municipal Pollution Control
(OMPC) have coordinated to present a series of workshops on financial
capability analysis that will provide basic information on the review
and evaluation of the financial components of MCPs and/or other
demonstrations of affordability. Knowledge in this area is of
increasing importance as we enter the enforcement phase of the National
Municipal Policy. Bill Whittington and I have announced this under
separate memo and urge you to make arrangements for the appropriate
Regional and State personnel to attend.
-------
- 3 -
I realize we have given you a short time to review and update
this information on your affected universe of POTWs. Please make
every effort to work with our staff to complete this inventory so
that we can summarize the data and prepare it for discussion at
the National meeting in May. The workload and compliance implications
of the current status of schedules will have a significant impact on
our priorities for the remainder of the fiscal year. The emphasis
placed on the Policy by the Administrator requires that we not lose
any momentum gained in the States by our present activities.
For further assistance with these issues or plans, please call
me (FTS 475-8438) or Bill Jordan, Director, Enforcement Division
(FTS 475-8304).
Attachments
-------
VI.A.11
"NATIONAL MUNICIPAL POLICY IMPLEMENTATION", dated April 12, 1985.
-------
i /i
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20450
OFFICE OF
WATER
MEMORANDUM
SUBJECT: National Municipal Policy Implementation
FROM: Jack E.
Assistant Administrator
for Water (WH-556)
TO: Regional Administrators
Regional Water Management Division Directors
Regions I-X
At the recent National Enforcement Conference, Administrator
Lee Thomas publicly reaffirmed the Agency's intention to uphold the
National Municipal Policy in its dealings with States and to enforce
the statutory deadline of July 1, 1988. I made similar remarks
during that Conference and during the Water Pollution Control
Federation (WPCF) Government Affairs Seminar in March. Also, at the
winter ASIWPCA National meeting, the Director of the Office of Water
Enforcement and Permits (OWEP) again reconfirmed this Agency position.
Now that we are mid-way through the year, I would like to take
this opportunity to discuss my current thoughts regarding
implementation of the National Municipal Policy. We must be convinced
and we must assure the States that FY 1985 is not a trial period.
Each Region must have current, workable, and complete State strategies
that reflect the underlying principles of the Policy. As you know,
enforceable compliance schedules are required, with or without Federal
grant assistance. It is presumed that all schedules beyond July 1988
will require judicial action. Strategies should contain updated
inventories that present current compliance status with applicable
effluent limits, as well as any technical or financial requirements
for full compliance. Regional municipal strategies (or the State
equivalent) should serve as a current work plan as well as the long- •
term framework for coordinating EPA and State activities to: (1) set
as many schedules as possible by the target date of September 30, 1985,
and (2) achieve as much compliance as possible before the final
compliance date of July 1, 1988.
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- 2 -
Potential Implementation Problems
During our National Municipal Policy workshops in the spring
of 1983, one of the main themes was that this program would not
become "business as usual." Current commitments for FY 1985, for
all facilities that need schedules, indicate that only 29% of the
universe is being addressed, including only 67% of the majors that
are not on enforceable schedules. Even if we achieve these commitments,
much work will have to be done in the 33 months after FY 1985 to
meet the goals of the Policy. Examination of the first quarter
SPMS/OWEG results revealed that, although it appears we exceeded our
commitments, we may not have achieved the solid compliance results
we were seeking. For example, we have learned that some NPDES State
Administrative Orders (AO) contain schedules that are reported as
"final" by the State, but are considered to be interim schedules in
many cases until final negotiations with the permittee are completed.
The compliance schedules established in FY 1985 should address
facilities causing significant impacts to water quality or that need
as much time as possible to meet the 1988 compliance date. Otherwise,
we will experience even greater problems as we near the statutory
deadline of July 1, 1988. I urge you to review your basic working
agreements with the States to be certain that they are actively
attempting to achieve the Municipal Policy goals, deadlines, and
other enforcement requirements.
Special Issues Identified
Over the past several months, several questions have arisen as
Regions and States move forward to establish enforceable schedules
pursuant to the conditions of the Policy and its Regional and State
Guidance. Since this is a critical step in the successful management
of State strategies, there is a need for National consistency in the
preparation and execution of these legal instruments. Regions need
to make firm and consistent responses to the States on these issues.
The questions raised include:
1. Can EPA or the States issue permits with final compliance dates
past July 1, 1988?
Permits cannot contain a schedule to meet secondary treatment
requirements later than July 1, 1988. In fact, only those POTWs
that applied for and are eligible for a £301(1) extension may be
issued a permit with a schedule to meet secondary treatment past
July 1, 1977. In these cases, the requirement to meet final limits
should be as soon as possible, but not later than July 1988. All
other permits must contain a requirement to meet secondary limits at
the time of issuance, since (as stated above) the final compliance
date for these POTWs was July 1, 1977. Any POTW not meeting
secondary treatment requirements and not eligible for a 301(i)
extension is in violation of the Act and is subject to an enforcement
action. Any compliance schedule to meet secondary effluent limits
for POTWs not eligible for a §301(1) extension must be contained in
an AO and not in an NPDES permit.
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- 3 -
2. Can EPA or the States issue an AO that contains a schedule to
meet final effluent limits that extends beyond July 1, 1988?
.The National Municipal Policy does not specifically require
that schedules beyond July 1988 be sanctioned by a court. However,
the Regional and State guidance on the Policy that I issued on
April 17, 1984, presumes that all such extended schedules will be
established through the judicial process. This is the Agency's
enforcement policy with respect to the statutory compliance deadline.
Since the April 17, 1984, guidance is not binding on State NPDES
programs, a State could choose to issue an AO with a schedule beyond
July 1988, in direct conflict with the spirit of the Administrator's
Policy and the letter of the subsequent guidance. In such cases,
especially where the State's order does not involve imposition of
administrative penalties, EPA Regions should consider: 1) issuing an
AO that specifies a compliance date no later than July 1988, which
then supercedes the State AO, or 2) filing a civil action to obtain a
judicial order that contains a final compliance date deemed appropriate
by the court.
3. What constitutes a "final" and "enforceable" schedule under the
Pol icy?
One of the main principles upon which the Policy is based is
the assurance of "certainty" prior to requiring commitments to major
capital investments. In order to do this, Regions, States, and
communities should strive to eliminate as many of the "unknowns" as
possible, and as quickly as possible, with respect to final limits,
correct treatment technology, actual costs, available funds, and
revenue systems that are necessary to maintain the plant once it is
completed. Schedules established by Regions and States must reflect
the appropriate legal, technical, and economic circumstances.
Additionally, enforceable schedules must contain sufficient interim
milestones that require demonstrations of progress and allow for
subsequent enforcement actions, if necessary, prior to the final
compliance deadline.
Delays in eliminating the uncertainty of final effluent limits
have focused on three situations. First, limit changes associated
with the secondary treatment redefinition/percent removal should not
cause major problems. The Office of Water Enforcement and Permits
recently sent out draft guidance for Regional and State review and
requested data on how many municipal permits appear to need alteration.
Second, for those cities where 301(h) decisions are pending, Regions
should continue to adhere to the direction contained in Al Aim's
October 29, 1984 memorandum, "Expediting Achievement of Water Quality
Improvement by 301(h) Applicants." And third, advanced waste treatment
(AWT) may be needed to meet Section 101(a)(2) goals (fishable/swimmable)
of the Act. The Water Quality Standards Regulation requires States to
review water quality standards to assure that the standards do reflect
these goals. If a State believes that AWT may be necessary, then
priority should be given to completing those use attainability analyses
first.
-------
In closing I want to reemphasize how essential it is for Regions
and States to have as many noncomplying communities as possible on
final, enforceable schedules by September 30, 1985. Unless we show
outstanding results, we will not be able to achieve the statutory
compliance deadline of July 1, 1988. If my office can be of
assistance in resolving additional implementation issues, please
contact us.
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vi.A;12,
Letter to House of Representatives from EPA regarding the NMP with
Congressional Record materials attached, dated July 22, 1985.
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-------
UNNLD STATES ENViKGNMnN I AL rnU i cu i 10.-.
WASHINGTON. DC. 20460
OFFICE OF
WATER
JUL221985
Honorable Ed Jones
House of Representatives
Washington, D.C. 20515
Dear Mr. Jones:
Thank you for your letter of June 25, 1985, requesting
our comments on a letter from James E. Word, Commissioner of
the Tennessee Department of Health and Environment. Commissioner
Word is concerned that no more Federal grants for sewage con-
struction projects would be made for publicly-owned treatment
works (POTW's) not in compliance with the Clean Water Act (the
Act) effluent limitations by July 1, 1988.
The key to understanding the issue that Commissioner Word j;
has raised is to distinguish between our enforcement policy and
our policy for awarding grants to municipalities for construction
of wastewater treatment facilities. Our enforcement policy is
set forth in the National Municipal Policy (NMP), which was
published in the Federal Register on January 30, 1984, and says
that: "The Clean Water Act requires all publicly-owned treatment
works to meet the statutory deadlines and to achieve the water
quality objectives of the Act, whether or not they receive
Federal funds." The policy also provides for flexibility in
dealing with communities that face extraordinary hardships in
meeting the statutory deadline for reasons of financial or physi-
cal incapability.
EPA grant policy with respect to funding construction of
wastewater treatment facilities does not prohibit EPA (or a
delegated State such as Tennessee) from awarding grants to munici-
palities that may not be able to complete construction by a
statutory deadline. In fact, many municipalities that are now
being addressed under the NMP were supposed to be in compliance
with the earlier statutory deadline (1977), and we have continued
to provide grant funds to these facilities.
Clearly, some of the facilities that are of concern to
Commissioner Word may be eligible for extensions based on the
finding of physical impossibility. These decisions have to be
made on a case-by-case basis, however. In guidance we issued to
the EPA Regions to help promote consistent nationwide implementa-
AL502187
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iicn ot tae N.'-iP, we advised that the Region or Stato shoula work
witn any community that is seeking an extension based on a finding
o: eir.iier tinancial or physical impossibility. Where sucn a
f. incing can be supported by the tacts, we expect the Region/State
to reacn agreement on a compliance schedule that results in
compliance as soon as possible atter the July 1, 1988, deadline,
anc to incorporate this schedule into a consent decree tnat is
sanctioneo by 'a State or Federal court.
If I or my statt can provide furtner information or assis-
tance on this issue or any other, please contact me.
^lincerel
Act ing
Administrator
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H 6094
CONGRESSIONAL RECORD — HOUSE
Julv 2J. l'JS5
the House of Representatives and the Com-
mute* on Environment and Public Worts of
the Senate.
••(") ACTMORILATION Of (LPMOfRlATlONS.—
There LS authorized to be appropriated to
carry out this subsection 125.000.000 per
fiscal year lor nct\ of the fiscal years
ending September 30. 1988. September 30.
1987. September 30. 1988. September 30.
1S89. and .September 30. 1990. Amounts ap-
propriated under '.his lubsection snail
remain available until expended.".
Page 11. line 4. striie out "(e)" and Insert
In lieu thereof "if)".
Page "4. line 13. strike out "and id)" and
insert in lieu tne.-eof ". . and (e)".
Page 74, line U". after "Act" Insert "and
uncer section 38 of this Act. relating to
maintenance of water Quality in estuaries.".
Mr. OSERSTAR (during the read-
ing). Mr. Chairman. I ask unanimous
consent that the amendment Se con-
sidered as read and printed in the
RECORD.
Mr. CHAIRMAN. Is there objection
to the request of the gentleman from
Minnesota?
There was no objection.
Mr. OBERSTAR. Mr. Chairman.
this amendment is in concert with the
previous amendment just adopted by
the Committee. It would provide fund-
ing to States to establish surveys of
their intrastate waters, surface waters.
within their State to determine their
condition of acidity, whether due to
acid deposition of mine drainage to
enable such States to set up programs
for acid rain cleanup.
Mr. ROE. Mr. Chairman, will the
gentleman yield?
Mr. OBERST.
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July JJ. 1985
CONGRESSIONAL RECORD — HOUSE
H6095
more projects than originally contem-
plated by the administrution.
Mr. YOUNG of Missouri Mr. Chair-
man. I thank the gentleman. I am
pleased to know that our agencies can
continue to expect Federal assistance
in meeting these deadlines.
Mr. Chairman. I yield back the bal-
ance of my time.
Mrs. JOHNSON. Mr. Chairman. I
move to strike the last word.
(Mrs. JOHNSON asked and was
given cermission to revise and extend
her remarks.)
Mrs. JOHNSON. Mr. Chairman. I
rise In very strong support of the pas-
sage of H.R. 8. and I want to take this
opportunity to commend the chairman
of the subcommittee, the gaccleman
from New Jersey [Mr. ROE), the chair-
man of the committee, the gentleman
from New Jersey [Mr. HOWARD], and
the ranking members, the gentleman
from Kentucky [Mr. S>rrDER] and the
gentleman from Minnesota [Mr.
STA.VC ELAND). These gentlemen have
together worked to craft for us a supe-
rior piece of legislation.
This is not merely a reauthorization
of legislation that has gone far to
clean the rivers and sources of water
in America but Ls a refinement of that
legislation. It represents the best in
the legislative tradition of oversight.
and it improves as well the ability of
States to utilize their resources to im-
plement more economically the re-
qu:rerr.ent3 of this important legisla-
tion. • ;
I also want to point out that it has
In it three portions that are of particu-
lar importance to the Northeast area
that I represent. I do want to call to
the Members' attention that the com-
bined sewer overflow program, which
in the past was not eligible for ordi-
nary sewer grant funds except on a
limited basis, will, as a result of this
thoughtful and thorough piece of leg-
islation, be eligible for any amount of
funding the State desires to make
available to It. That is extremely Im-
portant, especially to the older cities
of America.
It also addresses the crying need for
prevention of non-pomt-sQurce pollu-
tion and for addressing the serious
problem of ground water eon mm in a..
tion.
Mr. Chairman. I merely want to
commend the chairman of the com-
mittee and the chairman of the sub-
committee for their thoughtful and
able leadership, and I Join them In
supporting this reauihorization.
Mr. ROfc. Mr. Chairman, will the
gentlewoman yield?
Mrs. JOHNSON. I yield to the chair-
man of the subcommittee.
Mr. ROE. Mr. Chairman, we express
to the gentlewoman our great appre-
ciation for the superb Job she has
done and for having contributed to the
legislation. It would not have been
possiole without her.
Mrs. JOHNSON. Mr. Chairman, I
thank the gentleman.
IT lot. rauox
Mr. BREAUX, Mr. Chairman. I offer
an amendment.
The Clerk read as follows:
Amendment offered by Mr. BRCAUX: On
page 80. strike out lines 7 through 14 and
insert In lieu thereof tne following:
"ing precipitation runoff and which do not
come into contact wtln wvy overourden. raw
material, intermediate product, finished
produce: by-product, or waste product locat-
ed on the sue of such operations. Any
person discharging stormwater runoff not
described In the preceding sentence from
mining operations or oil or gas exploration.
'.production. 'processing, or treatment oper-
ations or transmission facilities snail moni-
tor the Quality of water in sucn flows and
snail report not less often tram annually to
the Administrator, or at such intervals as
the Administrator or the State deems ap-
propriate.".
Mr. BREAUX (during the reading).
Mr. Chairman. I ask unanimous con-
sent that the amendment be consid-
ered as read and printed In the
RECORD.
The CHAIRMAN. Is there objection
to the request of the gentleman from
Louisiana?
There was no objection.
(Mr. BREAUX asked and was given
permission to revise and extend his re-
marks.)
Mr. BREAUX. Mr. Chairman, I
would say to the members of the com-
mittee that the amendment I am of-
fering goes to a section of the bill, sec-
tion 26, which sets up a procedure for
various exemptions from the permit-
ting of certain storm-water rur.' if.
What we are dealing with, for in-
stance. is'rain water tnat runs across a
field.
Mr. ROE. Mr. Chairman, will :he
gentleman yield?
Mr. BREAUX. I am glad to yield to
my subcommittee chairman.
Mr. ROE. Mr. Chairman, we have
looked at this amendment. We feel the
amendment Is reasonaole; and we have
no objection to it on this side.
Mr. SNYDER. Mr. Chairman, will
the gentleman yield?
Mr. BREAUX. I am glad to yield to
the gentleman from Kentucky.
Mr. SNYDER. Mr. Chairman. I want
to say that this is a good amendment.
-and we are pleased to accept it.
Mr. BREAUX. Mr. Chairman, I am
prepared to provide a further explana-
tion of the amendment, but now, with
the assurance of the chairman of the
subcommittee and the ranking minori-
ty member. I ask for an aye vote on
my amendment.
The CHAIRMAN. The question Is on
the amendment offered by the gentle-
man from Louisiana [Mr. BRZAITXJ.
The amendment was agreed to.
AjtfCTDMKrr orraxD BY tot. CKAIO
Mr. CRAIO. Mr. Chairman. I offer
an amendment.
The Clerk read as follows;
Amendment offerea by Mr. CRAIG: Page
56. line 10. before "Section" Insert: "'.a) Is
Page 57. after line 4. insert the following:
(b) Scist or COHORTS*.— It U toe aenoe o(
Congress that tne Admiauirauon ana the
State*, in developing. publUhln*. aad revis-
ing water quality criteria under
3CM(aXl> of the FVdervl-Wn.tr Pol
Control Act should—
(1) consider the economic effects of \
mentation of the proposed water ouXiiy cri-
teria;
(2) consider cyclical chanstts in me c:i-
mate and environment: and
(3) taxe Into account tne recorr.rr.er.ca-
tloas of the concerned States and tr.e (Ina-
Ings and result! of site specific and areawiae
research. UiLs. experiments, ind aemonsira-
tlon programs conducted by the concerned
States.
Mr. CRAIO (during the reading).
Mr. Chairman. I ask unanimous con-
sent that the amendment be consid-
ered as read and printed In :r:e
RECORD.
The CHAIRMAN. Is there objec'.ion
to the request of the gentleman from
Idaho?
There was no objection.
Mr. CRAIG. Mr. Chairman, in 1981.
in concurrence with the Idaho Health
and Welfare Department, the State
legislature acted to modify proposed
State water quality standarcs below
hydroelectric facilities to establish a
dissolved oxygen standard of 5 milli-
grams/litre (m/1) average during a 4-
hour period between the. cont.w_s of
May and October and a 6 m/1 average
during the remaining months. EPA
later disapproved these standards
siting that they would not adequately
protect salmonid spawning and
other life processes of these fish.
Her this year, the EPA argued tha
dissolved oxygen standard should be
6.5 m/1 on a 30-day average. 5 m/1 for
a 7-day average, and a minimum cf 4
m/1 during nonspawning periods.
If the EPA's proposed standard was
adopted, dams in Idaho would be
forced to install monitoring devices
and other expensive equipment :o in-
crease the level of oxygen in water
below the dams. The issue to be ad-
dressed here is the legitimacy of EPA's
claim that their standards are neces-
sary. The EPA has testified before the
Idaho Legislature that it cannot iden-
tify any areas of adverse impact to
fisheries or aquatic life but all the
same, they feel we should modify our
standards in order to meet these arbi-
trary levels.
If the EPA and Idaho can't reach an
agreement regarding the disputed
standards, the EPA will promulgate its
own and enforce them. If the State re-
fuses to follow the EPA's standards.
we would lose Federal funds for con-
struction of city wastewater treatment
plants.
In closing. Mr. Chairman, my
amendment is a sense of the Congress
that the Administrator and the States
In developing, publishing, and revising
water quality criteria under secon
304(aXl) of the Federal Water
tlon Control Act should ccnsidel
economic impact of their decisions"T5n
the impacted States.
Mr. ROE. Mr. Chairman, will the
gentleman yield?
-------
VI.A.13
|*IMPLEMENTATION OF THE NMP", dated July 24, 1985.
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1 .. /-*~N >.
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VI.A.13.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20450
JUL 2 4 IS85
OFFICE OF
WATER
MEMORANDUM
SUBJECT: Implementation of the Nat/ional M.u/ii
FROM: . Henry L. Longest, II
Acting Assistant Admini/
for Water A
Courtney M. Price
Assistant Administrator for Enforcement
and Compliance Monitoring
TO:
Regional Administrators
Regions I - X
The purpose of this memorandum is to reaffirm the Environmental
Protection Agency's (EPA) commitment to implementing the National
Municipal Policy and focus your attention on specific actions EPA
must pursue in order to obtain compliance by the July 1, 1988,
statutory deadline. All noncomplying facilities must achieve
compliance as soon as possible, regardless of the availability of
Federal grant assistance. Publicly-owned treatment works (POTW)
that demonstrate their inability to meet requirements by the
compliance deadline due to extraordinary circumstances may obtain
reasonable schedules with final dates after July 1, 1988, with the
presumption that all such schedules must be established through
judicial orders.
On April 12, 1985, then Assistant Administrator for Water,
Jack Ravan, issued a memorandum clarifying certain enforcement
positions we are taking concerning the National Municipal Policy
(the Policy) and urging .that we strive to meet the interim goal of
establishing enforceable schedules for all noncomplying POTWs by
September 30, 1985. Since that time, we have reviewed the second
and third quarter Strategic Planning and Management System/Office
of Water Evaluation Guide (SPMS/OWEG) results, discussed our
implementation progress at the Office of Water Enforcement and
Permits (OWEP) National Branch Chief's meeting on May 2, 1985, and
reviewed the findings of the Office of Management Systems Evaluation
(OMSE) study on how the Regions and States are carrying out the
Policy. You will recall that, at the recent Regional Administrators
-------
- 2 -
meeting, the Policy was one of the key items on the agenda. During
this session, these matters were reviewed along with the status of
the Policy. Lee Thomas also emphasized the role of enforcement in
carrying out the Policy and the need for Regional leadership to
assure equitable and consistent enforcement toward municipalities.
Highlights of these activities are discussed below, including a POTW
enforcement initiative scheduled for late FY 1935/early FY86. In
addition, we have provided direction on five current enforcement
issues related to the Policy in an attachment.
Status of Enforceable Schedules
As stated previously, one of the goals of the Policy is to have
all noncomplying POTWs on final, enforceable schedules by_the end of
FY 1985. Despite good efforts by some EPA Regions, the combined
efforts of Regions and States have addressed less than half the
national workload for major POTWs as of the end of the third fiscal
quarter. We will need a tremendous fourth quarter effort in order to
meet our SPMS commitments, let alone the interim Policy goal for all
noncomplying POTWs. .,• :
Obtaining Management Information
Additionally, we are concerned about the OMSE study finding that
EPA Regions and States may not have all the necessary information to
carry out their oversight and enforcement roles. Such information
needs should have been a significant component of original State
municipal strategies and deficiencies should have since been addressed
in State/EPA agreements. OWEP is presently working with EPA Regions
and States to automate fully the tracking of municipal data in the
Permit Compliance System (PCS). Unfortunately, this cannot be
accomplished until late FY 1985 or early FY 1986. In the interim,
Regions and States must establish information sharing procedures so
that administrative activities proceed smoothly. Regional Water
Enforcement staff must also coordinate with Construction Grants staff
to make better use of the available information on grant and funding
status. Toward this end, OWEP and the Office of Municipal Pollution
Control (OMPC) have initiated an effort to integrate PCS, NEEDS, and
GICS files so that users can review pertinent compliance schedule,
treatment, and construction grants information on POTWs by using the
appropriate NPDES permit numbers.
Enforcement Initiative
In order to underscore EPA's resolve to enforce the July 1988
statutory deadline and the other National Municipal Policy requirements,
EPA Headquarters, working with the Department of Justice, is developing
a municipal enforcement initiative to supplement previous municipal
referrals. The initiative will focus on major POTWs that need
-------
construction to comply with FELs. Regions should closely examine
all POTWs that are possible candidates for this initiative; the
more varied they are in terms of location and size, the more likely
the initiative will achieve its desired impact. Each Region will be
expected to prepare its best case(s) for referral early in FY86 so as
to send a truly national message to the POTW community. Our offices
are already in touch with Regional staff to identify appropriate
candidates. In the near future, we will send you further information
about this initiative by separate memorandum.
It is clear that Regions and States must act now in concert to
address the backlog of uncompleted schedules and to establish an
effective working relationship that will allow them to gain the
momentum necessary to achieve full compliance by 1988. We believe
this will take your personal support and involvement, as well as
that of your program and legal staff, in order to maintain EPA's
resolve that the Policy be carried out with equal determination by
all partners in the NPDES program. We ask that you lend additional
emphasis to this Policy and see that EPA/ State activities are
coordinated in a way that assures the integrity of the Policy.
We have also asked the technical and legal staffs in our offices
to work closely with you and your staff to resolve any matters of
concern. Should you need assistance, please contact William Jordan,
Director, Enforcement Division, OWEP at (FTS) 475-8304, or
Glenn Unterberger, Associate Enforcement Counsel for Water, OECM, at
(FTS) 475-8180.
Attachment
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ATTACHMENT
Enforcement Issuest
Issue:
Action:
Issue:
Action:
Issue:
Action:
Necessary EPA action where final, enforceable schedules are
not in place by September 30, 1985.
OWEP will prepare a summary report of the POTWs in this
category for the Administrator. EPA Regions should work
with their States now to develop individual action plans
for each POTW, beginning with those that need long-term
construction schedules. Where States do not take action to
require schedules or to establish enforceable schedules,
• the Region should take independent actions to .do so. FY86
SPMS commitments should reflect the most expeditious time-
table for completing enforceable schedules for the remaining
majors and a substantial percentage of the minors.
EPA's position concerning POTWs eligible for grants in
FYs 1986, 1987, or beyond.
In all, cases, Regions and States are to continue to require
POTWs to comply with orders to establish schedules and meet
statutory requirements by July 1, 1988, regardless of future
eligibility for Federal grant assistance. POTWs must begin
the work now to achieve compliance.
EPA's response where States extend the 1988 compliance
deadline in a manner inconsistent with the "extraordinary
circumstances" provisions of the National Municipal Policy
(and its associated Regional and State guidance), or extend
the deadline by using nonjudicial actions.
Approved States must obtain judicial orders to establish
enforceable schedules beyond the 1988 deadline to be in
conformance with the Policy. If not, they must defer to EPA
enforcement. All extensions beyond the statutory deadline
should receive judicial review, be sanctioned by a Federal
or State court, and be based on a demonstration of physical
or financial impossibility. If a State does not wish to
use court actions, or subscribe to the physical or financial
impossibility requirement for extensions, or will not accept
the Agency's premise that all extensions must be sanctioned
by a court, Regions should: 1) issue an Administrative
Order (AO) that specifies a compliance date no later than
July 1, 1988 (where compliance by the statutory deadline
is possible), or 2) prepare referrals of these POTWs to
the Department of Justice, starting with the most serious
cases. Regions and States are to confer on all schedules
that are expected to go beyond July 1, 1988, to assure
consistency with the National Policy and the accompanying
Regional and State guidance.
t Detailed discussion papers have been prepared on each issue and
will be provided to your staff in the near future.
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- 2 -
Issue: - Treatment of §301(h) applicants within the Policy.
Action: In all cases where a §301(h) waiver is denied, the POTW
should be placed on an enforceable schedule to achieve
compliance as soon as possible, but not later than
July 1, 1988. In cases where the POTW demonstrates it
cannot achieve compliance by the statutory deadline, the
schedule should be incorporated in a judicial order. If
a final decision on the waiver application has not yet been
made, the Region should continue to monitor the permittee
for compliance with applicable requirements and act on
.those items which the POTW will have to do regardless of
the decision on the application.
m
Issue: Treatment of wet-weather bypasses within the Policy.
Action: Wet weather bypasses are not a priority category within the
Policy. The Policy does apply to dry weather bypasses and
the Region should use appropriate enforcement action to
eliminate such'activities and assure compliance.
Issue: Up-front penalties for violations of the July 1988
compliance deadline.
Action: As a matter of policy, EPA will seek up-front penalties for
violations of the July 1, 1988, deadline. These penalties
should consider the economic benefit to the municipality
from npncompliance and the fact that EPA could not obtain
acceptable action by the municipality short of litigation.
In addition, these penalties should result from the exercise
of sound, case-by-case judgment which reflects past violations
and mitigating circumstances such as good faith efforts to
comply, other regulatory issues affecting the certainty of
final limits (revised water quality standards, wasteload
allocations, pending §301(h) decisions, or §208 studies)/
and the ability to pay.
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APR 1 2 1985
MEMORANDUM
SUBJECT:
FROM:
TO:
f^ational Municipal Policy Implementation
Jack E. Ravan
Assistant Administrator
for Water (vrH-55fi)
Regional Administrators
Regional Water Management
Regions I-X
Division Directors
At the recent National Enforcement Conference, Administrator
Lee Thomas publicly reaffirmed the Agency's intention to uphold the
National Municipal Policy in its dealings with States and to enforce
the statutory deadline of July 1, 19S8. I niade similar remarks
during that Conference and during the Water Pollution Control
Federation (WPCF) Government Affairs Seminar in March. Also, at the
winter ASIVvPCA National meeting, the Director of the Office of Water
Enforceraent and Permits (OWRP) again reconfirmed this Agency position!
How that we are mid-way through the year, I would like to take
this opportunity to discuss n>y current thoughts regarding
implenentation of the National Municipal Policy. We must be convinced
and we must assure the States that PY 1985 is not a trial period.
Each Region must have current, workable, and complete State strategies
that reflect the underlying principles of the Policy. As you know,
enforceable compliance schedules are required, with or without Federal
grant assistance. It is presumed that all schedules beyond July 1988
will require judicial action. Strategies should contain updated
inventories that present current compliance status with applicable
effluent limits, as well as. any technical or financial requirements
for full compliance. Regional municipal strategies (or the State
equivalent) should serve as a current work plan as veil as the long-
term framework for coordinating EPA and State activities to: (1) set
as many schedules as possible by the target date of September 30, 19R5
and (2) achieve as much compliance as possible before the final
compliance date of July 1, 198B.
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Potent ial Implementation Problems
During our National Municipal Policy workshops in the spring of
1983, one of the main themes WAS that this program would not hocone
"business ar> usual." Current commitments for FY 1985, for all
facilities that need schedules, indicate that only 29' of the universe
is beinq addressed, including only 67? of the majors that are not on
enforceable* schedules. Even if we achieve those comm} tnents, much
work will have to be done in the 33 months' after FY 1435 to meet the
goals of the Policy. Examination of the first quarter SPMS/OWEO
results revealed that, although it appears we exceeded our commitments,
we may not have achieved the solid compliance results w_«^ were seeking.
For example, we'have learned that some NPDES State Administrative
Orders (AO) contain schedules that are reported as "final" by the
State, but are considered to be interim schedules in many cases until
final negotiations with the permittee are completed.
The compliance schedules established in FY 19f?5 should address
facilities causing significant impacts to water quality or that need
as much time as possible to meet the 19RR compliance date. Otherwise,
we will experience even greater problems as we near the statutory
deadline of July 1, 19f?fl. I urge you to review your basic working
agreements with the States to ho certain that they are actively
attempting to achieve the Municipal Policy goals, deadlines, and
other enforcement requirements.
Special Issues Identified
Over the past several months, several questions have arisen as
Regions and States move forward to establish enforceable schedules
pursuant to the conditions of the Policy and its Regional and State
Guidance. Since this is a critical step in the successful management
of State strategies, there is a need-for National consistency in the
preparation and execution of these legal instruments. Regions need
to make firm and consistent responses to the States on these issues.
The questions raised include*
1. Can EPA or the States "Issue permits with final compliance dates
past July 1, 198R? >
Permits cannot contain a schedule to meet secondary treatment
requirements later than July 1, 19^8. In fact, only those POTNs
that applied for and are eligible for a S301(i) extension may be
issued a permit with a schedule to meet secondary treatment past
July 1, 1977. In these cases, the requirement to meet final limits
should be as soon as possible, but not later than July 198R. All
other permits must contain a requirement to meet secondary limits at
the time of issuance, since (as stated above) the final compliance
date for these POTWs was July 1, 1977. Any POTW not meeting secondary
treatment requirements and not eligible for a 301(i) extension is in
violation of the Act and is subject to an enforcement action. Any
comoliance schedule to meet final effluent limits for POTV.'s not
.eligible for a extension nust bt» conta ioed1- ini-acL. AO -=f«j>T- not
in-an NPp.ES permit. _.'._.- - " " . . -i~ ^'_r ^T-:=^->.' "-•_;. "
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2. Can F.PA or the states issue an AO that contains a schedule to
meet final effluent limits that extends beyond July 1,
The National Municipal Policy does not specifically reouire
that schedules beyond July 19BR be sanctioned hy a court. However,
the Regional and State guidance on the Policy that I issued on
April 17, 1984, presumes that all such extended schedules will be
established through tho judicial process. This is the Agency's
enforcement policy with respect to tho statutory compliance deadline.
Since the April 11, 1984, guidance is not binding on State NPDES
programs , a State could choose to issue ?.r\ AO with a schedule beyond
July 1988, in direct conflict with the spirit of the Administrator1?
Policy and the letter of the subsequent Guidance. In such cases,
especially where the State's order does not involve imposition of
administrative penalties, EPA Regions should consider: 1) issuing an
AO that specifies f>. compliance date no later than July 198$, which
then supercedes the State AO, or 2) filim; a civil action to obtain a
judicial order that contains a final compliance date deeded appropriate
by the court.
3. V/hat constitutes a "final" and "enforceable" schedule under the
Policy?
One of the main principles upon which the Policy is based is
the assurance of "certainty" prior to requiring co^^ni tments to major
capital investments. In order to do this, Regions, States, and
communi ties should strive to eliminate as many of the "unknowns" ^s
possible, and as quickly as possible, with respect to final limits,
correct treatment technology, actual costs, available funds, and
revenue systems that are necessary to maintain the plant once it is
completed. Schedules established by Pegions and States must reflect
the appropriate legal, technical, and economic circumstances.
Additionally, enforceable schedules raust contain sufficient interim
milestones that require demonstrations of progress and allow for
subsequent enforcement actions, if necessary, prior to the final
compliance deadline.
Delays in eliminating the uncertainty of final effluent limits
have focused on three situations. First, limit changes associated
with the secondary treatment redefinition/percent removal should not
causa major problems. The Office of Water Enforcement and Permits
recently sent out draft guidance for Regional and State review and
requested data on how many municipal permits appear to need alteration.
Second, for those cities where 301 (h) decisions are pending Regions
should continue to adhere to the direction contained in Al Aim's
October 29, 1984 memorandum. "Expediting Achievement of Hater Quality
Improvement by 301 (h) Applicants." And third, advanced waste treatment
(AWT) may bo needed to meet Section 101 (a) (2) goals ( f ishable/swimmable )
of the Act. The Uater Ouality Standards Regulation requires States to.
review water quality standards to assure that the standards, do reflect'
these cjoals. If a State believes that AWT may be necessary, then
priority should be given to completing those useS»ti:airt$bli Li tvkar, aijyr.es
first. • - ""."". . -_ ^_: r.-.r^-v--1 '-••'•.-
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In closing I want to reemphasi^e how essential it is for Ptonco
in resolving additional inple^entatiop. issuns, pipage contact us.
03-26-85/EN-338/C.EVANS/me/475-R31n/S
REVISED: 04-02-R5
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VI.A.14.
"Relationship Between the National Municipal Policy and Construction Grants
Extending Beyond FY 1988", dated July 26, 1985. (See also number 12 above
for a copy of the letter referenced in this document)
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/ ifL \ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
I ^O^Z « WASHINGTON. D.C. 20460
\^t/
OFFICE OF
WATER
JU1261985
MEMORANDUM
SUBJECT: Relationship Between National Municipal Policy
rartd Construction Grants Extending Beyond FY 1988
l
FROM: Rebecca W. Hanmer, Director
Office of Water Enforcement and Permits
TO: Water Management Division Directors
Regions I - X
There has recently been some confusion about EPA's
policy with respect to award of grant funds for construction
of facilities that will not be completed until after the
July 1, 1988 statutory deadline. This has prompted me to
reinforce with you the importance of maintaining close coordi-
nation between the staffs assigned to implementation of the
National Municipal Policy (NMP) and those working with Con-
struction Grants for municipalities that are affected by the
policy. Misinformation and poor coordination can seriously
undermine our efforts to implement the NMP.
On the policy issue, we recently responded to a Con-
gressional inquiry on behalf of a State official whose staff
was verbally advised that no more Federal grants for sewage
treatment construction projects would be made where construc-
tion would be completed past July 1, 1988. Furthermore, he
believed that EPA was about to transmit this policy to the
States in written form. Exactly the same issue was raised
during the House of Representatives floor debate on the Clean
Water Act earlier this week. I have enclosed a copy of the
transcript of the colloquy between Congressman Young (Missouri)
and Congressman Roe (New Jersey) so that you will better
understand the nature of the concern.
Our enclosed response to Congressman Jones sets forth
what has always been our position on this issue: neither
the NMP nor EPA policy with respect to funding construction of
wastewater treatment facilities prohibits EPA or delegated
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-2-
States from awarding qrants to municipalities that may not be
able to complete construction by the statutory deadline. In
fact, we have been doinq it for years with respect to funding
POTWs that missed the 1977 statutory deadline for compliance.
I urqe you to distribute copies of this letter and the
House debate to all members of your qrants and enforcement
staffs. Where there seem to be problems, I would also ask
that you make every effort to set the record straight with
your States as well. If we hear of similar problems in any
other Regions, I have asked Jim Elder to get in touch with
you personally.
Attachments
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VI.A.15.
Speech by Assistant Administrator, OECM to Association of Metropolitan
Sewerage Agencies, dated August 8, 1985.
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-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
AUG 8 1985
OFFICFOF I'NKlKCtMl M
ASDCOMI'I IANCI
MOMTORIN't;
MEMORANDUM
SUBJECT: Speech by Assistant Administrator, OECM to
Association of Metropolitan Sewerage Agencies
FROM: Glenn L. Unterberger >'-
Associate Enforcement Counsel
for Water
TO: Regional Counsels
Regions I - X
Attached is a copy of Courtney Price's recent enforcement
speech on the National Municipal Policy and pretreatraent. She
gave the speech on July 3J at the summer meeting of the
Association of Metropolitan Sewerage Agencies (AMSA) held at
the Greenbrier Hotel in White Sulpher Springs, West Virginia.
This forceful statement concerning the Agency's responsibi-
lities for the National Municipal Policy and pretreatment
should be of assistance to you in the Region's water compliance
and enforcement program.
Attachment
cc: Water Management Division Directors,
Regions I - X
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\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
JAN 3 0 i385
OFFICE OF ENFORCEMENT
•VNDT'IMP! UM'E
MONITORING
MEMORANDUM
SUBJECT: Deadlines and the National Municipal Policy
FROM: Glenn L. Unterberger .^j.^
Associate Enforcement Counsel
for Water
TO: Regional Counsel I - X
Introduction
Recently I have noticed, both in the Agency and outside,
some imprecise language about "statutory deadlines" and the
National Municipal Policy. I am afraid this may lead to some
confusion, particularly among those who do not have to deal
with the policy often. Therefore, I have prepared in this
memorandum a brief summary o£ the legal basis for the July 1,
1988 deadline in the policy, and the legal consequences of that
basis, for anyone who would like a more detailed background
than is presented in the policy itself.
ISSUE NO. 1
There is no uniform July 1, 1988 statutory compliance deadline.
The legal compliance deadline for a Publicly-Owned Treatment
Work (POTW) is the date set in its permit.
The July 1, 1988 date is set forth in the Clean Water Act
to address a single specific situation. In Section 301 (i),
Congress authorized NPDES permitting authorities (delegated
States or EPA) to modify the permits of those POTWs that applied
and qualified to extend the deadline for compliance with final
effluent limits (as described in Sections 301(b)(1)(B) and (C))
until, but not beyond, July 1, 1988. For all other POTWs, the
Congressional mandate of 301(b)(1) typically remains in effect:
the permitting authority must issue them permits requiring
compliance with statutory requirements by July 1, 1977. And
under the Clean Water Act, the POTW is required to comply by
whatever date appears in its permit.
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- 2 -
Although July 1, 1977 constitutes in most cases the date
for compliance with final effluent limitations, the Clean
Water Act sets out no uniform statutory deadline which will
apply in all situations. This legal structure has a number of
consequences for enforcement. First, any POTW not in compliance
with final effluent limits by the date specified in its permit
(even if it is 1977) is in violation of the Act. (See pages
6-8 of the attached memorandum from the Office of General
Counsel, dated April 11, 1984.)
In the National Municipal Policy, the Agency recognized
that many POTWs were in violation of the Act long after 1977,
and that sound policy after promulgation of the 1981 Clean
Water Act Amendments required these POTWs to come into
compliance as soon as possible. The Policy called for the
development of compliance schedules for municipalities affected
by the Policy. As a policy matter, the Agency selected July
1, 1988 as the latest date to be included in such schedules
(unless a POTW,could demonstrate extraordinary circumstances).
The date seemed a sensible choice, in part because §301(i)
Congress authorized permit extensions up to no later than
1988. However, it must be remembered that the legal, statutory-
based deadline for compliance for each POTW is and will remain
the deadline in its NPDES permit, which will be July 1, 1988
o.r .earlier.
ISSUE NO. 2
As a general matter, EPA has clear authority to sue a POTW
which will not meet the July 1, 1988, deadline only if that
POTW is violating or has violated applicable permit require-
ments.
The second consequence for enforcement is a corollary of
the first. As a general matter, a POTW in compliance w'ith its
permit is in compliance with the Act. Section 402(k) of the
Act states this expressly. Therefore, in the absence of com-
pelling circumstances, the Agency typically should not sue a
POTW because it will not complete construction by July 1,
1988, 'if it is and has been in compliance with all its present
permit requirements.
ISSUE NO. 3
As a legal matter, administrative or judicial orders
establishing enforcement compliance schedules lasting beyond
July 1, 1988, are not "extensions" of final compliance deadlines.
Although such orders may have the effect of staying further
enforcement action, the legal deadline is still in effect.
Section 309 is the basis for Agency enforcement of most of
the provisions of the Clean Water Act, and NPDES permit
provisions. Section 309 authorizes the Administrator, upon
finding a violation, to issue an administrative order or file
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ADDRESS BY COURTNEY PRICE, ASSISTANT ADMINISTRATOR
FOR ENFORCEMENT AND COMPLIANCE MONITORING
TO ASSOCIATION OF METROPOLITAN SEWERAGE AGENCIES
JULY 31, 1985
Introduction
Thank you for inviting me here to speak today. Your
timing is excellent, as we are into perhaps the most momentous
task your organization and my Agency have undertaken since
the passage of the Clean Water Act - implementation" of the
National Municipal Policy. I would also like to bring you
up-to-date on pretreatment, a highly significant area which
we think will strongly reinforce and supplement the National
Municipal Policy. I believe you may be familiar with some of
the things I am going to say, but since this is my first meeting
with you, I want you to know where I am coming from.
EPA has set the National Municipal Policy and implementation
of pretreatment requirements as the two highest priority
objectives for the Agency in the water enforcement area for
this year and probably for the rest of this Administration.
These are the areas where the most remains to be done, and
where the most can be accomplished. Let me turn first to the
National Municipal Policy.
National Municipal Policy; background
As you know, the Clean Water Act has never distinguished
between the fundamental obligations of municipal and industrial
sources to comply with the terms of their NPDES permits.
Congress set up various mechanisms for developing effluent
guidelines and obtaining exceptions and waivers, and put in
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different deadlines for different levels of technology. But
once those requirements are incorporated into NPDES permits,
the obligation to comply is absolute. As we lawyers say, the
Clean Water Act is a strict liability statute. There are no
defenses.
Aware that after decades of neglect, compliance would
be very expensive for many municipalities in the 1970's,
Congress appropriated billions of Federal dollars to get
compliance going, and to work out what bugs there were in the
technology. In the CWA amendments of 1981, however, Congress
reduced appropriations, and made clear its view that ulti-
mately compliance with the Act remained a State and local
responsibility. As you know, whatever happens in this and
subsequent Congresses, there is little likelihood that
construction grant funding will go back to what it was, and
will never be sufficient to pay for the whole program.
Therefore, in January 1984 Bill Ruckelshaus issued the
National Municipal Policy. The policy was issued after a year
of deliberation and extensive consultation with you, with cities,
with states, and with other interested groups. It has been
strongly endorsed in public testimony and many private meetings
by our present Administrator, Lee Thomas. As you know, the
National Municipal Policy sets forth two fundamental principles:
1. All municipalities must achieve compliance with
their NPDES permit limits as soon as possible but
no later than July 1, 1988, unless it is physically
or financially impossible to do so; and
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- 3 -
2. Municipalities must comply on time whether or not
they receive federal funds.
In a sentence, the National Municipal Policy decouples compliance
from Federal funding.
As I mentioned at the outset, carrying out the National
Municipal Policy has become - and probably will remain - the
Agency's top priority in the water enforcement area for some
time. It is particularly important because in none' of the
discussions of re-authorization of the Clean Water Act has
anyone suggested that the 1988 date be extended. It is as
firm a deadline as any I have seen.
National Municipal Policy; progress to date
When the Agency issued the National Municipal Policy in
January 1984, we knew that we had set ourselves and the country
a highly ambitious goal, one that would require a great deal
of work, local money and determination to accomplish.
Nevertheless, eighteen months into the program, I can
report some solid progress. Knowledge of the National Municipal
Policy is virtually universal. Word of its requirements has
reached every municipality that will have to take action.
The Agency has received a good deal of support for its firm
position from both States and localities despite the logistical
difficulties that we all recognize.
EPA's immediate goal has been to put all cities required
to construct on realistic, enforceable schedules by October 1,
1985. This is a big chunk of work for both the Agency and the
thirty-six states that manage the NPDES program: we estimate
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- 4 -
that there are about 1300 - 1400 major POTWs (out of a total
of 3700) which will need construction. To date, schedules
have been established for almost 50%. States and EPA Regional
offices are at this very moment drawing up detailed strategies
for finishing work with the rest.
In the meantime, the Agency is trying to expedite the
process by removing as quickly as possible whatever obstacles
remain to the determination of final effluent limits. We are,
for example, trying to reduce the backlog of expired permits,
resolve pending §301(h) waiver applications, and speed water
quality decisions. We are also trying to anticipate problems
in such areas as sludge and toxics. Rebecca Hanmer, the Director
of EPA's Office of Water Enforcement and Permits, will discuss
these areas later at your meeting. Pursuant to the 1981
amendments to the Clean. Water Act, we-revised the definition
of secondary treatment to permit some relaxation of effluent
limits, particularly for smaller cities that build trickling
filters and waste stabilization ponds. Within our own organi-
zation, we in enforcement are trying to work more closely with
the offices responsible for permits and construction grants in
order to take advantage of their accumulated expertise. EPA's
Office of Water, for its part, is revising the construction
grant regulations to be sure that no one receives further
funding until a schedule meeting the requirements of the National
Municipal Policy is in place.
National Municipal Policy - most important message
In a few words, this is what we are doing. What do we
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.expect of you? If there is one message that I want you to take
away from these brief remarks, it is this: we expect every
municipality that is not in compliance with final NPDES permit
limits now to begin work immediately to achieve compliance by
July 1, 1988, or before. This applies to each municipality
which is presently in violation of the Act, whether or not it
received federal funds in the past, whether or not it is likely
to receive a grant in the future, whether or not it knows if it
will receive a grant. Even if you are certain you will receive
a grant in 1986 or 1987, we expect you to begin construction
as soon as you can and proceed as quickly as possible, using
locally raised money if necessary. We will provide what
assistance we can in suggesting methods to raise funds locally.
However, I cannot sufficiently stress that the time for action
is NOW.' Many cities have already begun work on their own ;
indeed, many have completed secondary treatment and more, on
their own. It can be done. Both the Clean Water Act and
fundamental fairness require that the Agency not allow other
cities to continue pollution unabated for years after the
announcement of the National Municipal Policy, in the hopes
that the law will be changed or new funds forthcoming. The
best way for a city now in violation to avoid formal EPA enforce-
ment action - a lawsuit, with penalties - is to agree to a
federal or State administrative order with a schedule providing
for compliance by July 1, 1988.
On the positive side, Agency analysis suggests that most
major POTWs can finance adequate treatment on their own, without
imposing undue burdens on local residents and ratepayers.
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Moreover, there are real advantages to 100% local financing.
Cities have found that they can often build projects faster,
and at a significantly lower cost, when they are not subject to
federal construction grant regulations. Some cities have
found that they can meet all their permit limits with smaller,
more practical, easier-to-operate facilities than those presently
called for in their Facility Plans.
An active and effective pretreatment program, as now
required by law, should reduce the size or the cost, or both,
of facilities in municipalities with significant industrial
contributors.
National Municipal Policy; enforcement
Enforcement is not a particularly upbeat subject: clearly
the Agency prefers and expects voluntary compliance, and many
cities are already complying as quickly as they are able. In
addition, of course, the federal government is particularly
reluctant to sue sister governments. I know too that munici-
palities often have fewer resources and more complicated
management than a private corporation. Nonetheless, as the
senior Agency official responsible for enforcement, I must tell
you that the Agency plans to enforce the law vigorously against
any municipality that fails to comply with the National Municipal
Policy. The Administrator feels this is necessary to be fair
to those cities that have already gone ahead on their own, often
at significant expense. Stiff enforcement is also necessary
to maintain the momentum of the policy so that the 1988 goal
can be met. We plan to take action in all Regions and against
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- 7 -
municipalities of all sizes that are violating the Clean Water
Act. Indeed, about 50% of the cases filed- by the Agency in the
last two years under the Clean Water Act have been against
municipalities, and frankly, I expect that percentage to grow.
Enforcement of the National Municipal Policy comes at a
time when the Agency has increased its enforcement presence
generally as measured by the total number of Clean Water Act
cases filed. In fact, the number of water cases filed nearly
doubled between FY83 and FY84. In addition, a multi-case
initiative against municipalities is contemplated for FY86 to
emphasize the importance we attach to compliance with the
National Municipal Policy.
You should also know that the Federal courts have uniformly
upheld the Agency's position in regard to municipalities under
the Clean Water Act. Four courts - including the U.S. Court of
Appeals for the 6th Circuit last year - have looked at the
question of whether a city can be required to build if it fails
to receive federal funds. These courts have decided that Federal
funding (or lack of it) is irrelevant. The courts all held
without qualification that a city's obligation to comply with
its NPDES permit limitations is absolute. This responsibility
does not and cannot depend on whether a city receives grant
funds. In addition, in at least two recent cases where the
courts issued written opinions [Providence, R.I., Woodbridge,
N.J.], the courts upheld the imposition of stipulated penalties
against municipalities for failure to meet compliance schedules
established through judicial consent decree.
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Finally, in the last two years, there have been at least
five decided cases holding that Discharge Monitoring Reports
disclosing effluent violations can be sufficient grounds for
summary judgment on liability against a discharger. While these
were all cases against private industry, there is no reason to
think the result is not equally applicable to municipalities.
A city that gets into difficulty complying with the National
Municipal Policy should not look to the courts for relief.
National Municipal Policy: objectives in new enforcement cases
Therefore, you should know that in every case we file
against a municipality from here on out, we will seek compliance
by July 1, 1988, or sooner, unless it is physically or financially
impossible. If ability to pay is raised as an issue, we will
bring in financial consultants to scrutinize the numbers. We
have also asked our Regional offices to take federal enforcement
action - either an administrative action or a lawsuit - in the
case of any state order which goes beyond July 1, -1988, without
adequate justification [Price/Longest memo of July 24, 1985].
In addition, as a matter of policy, we plan to seek
penalties in National Municipal Policy cases. Indeed, the Agency
is presently drawing up a formal water penalty policy which
will in part expressly address municipalities. The Agency's
position on penalties steins at least in part from the fact that
a municipality typically will have failed to respond to an
opportunity to commit to an acceptable, enforceable compliance
schedule in an Administratve Order without penalties before
EPA takes the POTW to court. In each of 12 municipal cases
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- 9 -
recently concluded, the Agency has obtained signficant cash
penalties in settlement, ranging from several thousand dollars
to $250,000. In the future, the Agency will be looking parti-
cularly hard at whether a city started to take action to meet
permit limits after the announcement of the National Municipal
Policy, or whether it waited for a grant. The Agency is totally
serious about the expeditious municipal compliance. Compliance
is no longer dependent on any grant action.
Pretreatment
Let me now turn to pretreatment, where you and I should
be on the same side - ' national, state and local governments
working together to clean up the environment and spread the
cost equitably.
In 1977, Congress revised the Clean Water Act to place
the responsibility for developing, implementing and enforcing
the pretreatment program with those most affected by disruptive
industrial pollutants. And who is most affected by such
disruption? It is you, the POTWs. That is why it is very
appropriate for us to talk now about pretreatment.
After 1977, EPA adopted regulations to implement the
n-
pretreatment program enacted by Congress. We required all POTWs
with a design flow greater than 5 million gallons per day, and
other POTWs (as determined by the approved pretreatment State
or EPA) to obtain approval of pretreatment programs no later
than July 1, 1983. Generally, an approvable program will
contain mechanisms for identifying the industrial users and
the character of their effluent, and for establishing local
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- 10 -
limits when necessary. The approvable program must also provide
authority for the POTW to require effluent monitoring and to
enforce both the categorical standards and applicable local
limits.
The objectives of the pretreatment program are (1) to
provide the POTW with a means of insuring its own operational
integrity and (2) to place the financial burden of treating
large amounts of toxic or hazardous pollutants which POTWs
typically are not built to control where it belongs, with'the
industry which produces them.
Of course, in those instances where a POTW is capable of
removing large amounts of industrial pollutants, the pretreatment
program provides that POTWs with approved programs may apply
for removal credits. ,If approved, removal credits allow the
POTW some flexibility to relax the requirements for one or
more of its industrial users so long as that relaxation does
not cause the POTW to violate its National Pollutant Discharge
Elimination System (NPDES) permit.
2. Prior Agency focus
In the last ten years, the Agency has sought to implement
the pretreatment program by promulgating two types of pretreatment
regulations. We issued "general" regulations which interpret
statutory phrases such as prohibitions against "interference"
and "pass-through" and set up procedures that apply to indirect
dischargers. We also promulgated "categorical" standards,
which set technology-based numerical limits on discharges of
toxic pollutants from specified categories of industrial sources.
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- 11 -
The Agency's most notable success is the establishment of
categorical standards for the electroplating category. Electro-
plating, with approximately 10,000 dischargers, is by far the
largest industrial category to be regulated.
For EPA's part, we have brought nationally coordinated
cases against two major integrated electroplaters, Chrysler
and General Motors, as well as against several smaller industrial
dischargers. In a precedent setting settlement, Chrysler
agreed to pay a penalty of $1.5 million in cash in addition to
meeting interim and final compliance requirements. Pursuant
to our Clean Water Act authority, we expect to maintain a
national presence in enforcing the electroplaing standards as
well as other categorical pretreatment standards as they take
effect. Nevertheless, in the pretreatment provisions of the
Clean Water Act, Congress clearly was looking for local munici-
palities such as yourselves to be the primary implementation
and enforcement arm of this program. Just as clearly, EPA is
ready to use the strong enforcement authorities Congress
established to make sure that all parties, including munici-
palities, are pursuing their legal responsibilities to implement
successful pretreatment programs.
3. POTW emphasis (1983 - present)
While the Agency was expending resources on establishing
regulations and standards, very little was done beyond the
issuance of a few guidelines between 1978 and late 1982 to
establish the local POTW pretreatment programs as required by
40 C.F.R. §§403.8 and 403.9. As a result, in early 1983 about
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- 12 -
73% of the 1455 POTW's required to develop pretreatment programs
either had not submitted plans or had submitted incomplete
plans. With the deadlines for the development of approved plans
(July 1, 1983) and for compliance with categorical standards
(April and June 1984 for electroplaters) rapidly approaching,
the Agency became concerned that an indeterminate portion of
these POTWs without approved plans were not prepared to enforce
pretreatment requirements.
In February 1984, the Agency convened an advisory committee,
the Pretreatment Implementation Review Task Force (PIRT), to
assist the Agency with' implementation of the pretreatment
program. The committee was composed of representatives of
industry, State regulatory agencies, POTWs, environmental
groups and EPA personnel. In January 1985, PIRT submitted its
Final Report to the Administrator. It recommended issuance
of a strong Agency policy statement to support enforcement of
the national pretreatment program. PIRT further recommended
aggressive Agency enforcement action to compel the remaining
1152 affected POTWs (as of April 1, 1984) to submit approvable
pretreatment programs.
Since April 1984, many POTWs have developed POTW
pretreatment programs which have been approved. EPA has set
as a national goal in this area to have all required POTWs
obtain approval programs or be referred for court action by
September 30, 1985. In support of this goal, EPA launched a
Pretreatment Multi-Case Enforcement Initiative earlier this
year. Lawsuits were filed simultaneously on April 18, 1985,
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- 13 -
against eight non-complying POTWs that had failed to develop
approvable programs. These cases are now in the negotiation
stage, but EPA expects to obtain from each case a judicial
decree requiring expeditious submittal of an approvable program,
specific steps to ensure proper implementation of that program,
and significant penalties because the POTW failed to meet
responsibilities which many others pursued more seriously and
effectively. If you read the trade press, you will also know
that the Agency expects to file a second wave of similar cases
against a number of remaining non-complying POTWs by our
September 30 target date.
There is good news that emerges from all this. By combining
your efforts with those of the State and Federal approval
authorities, the list of POTWs without approved programs has
dwindled from 1,152 as of April 1, 1984, to 377 as of June 30,
1985. The bad news is that 377 POTWs still do not have approved
programs or schedules for submitting them. The Agency and
States intend to make every effort to obtain approvable local
pretreatment programs from this group by the end of FY 1985 by
whatever means are necessary, including the use of judicial
enforcement and the imposition of penalties. Indeed, we have
made it clear to all levels within the Agency that "good progress"
on program developments is no longer sufficient. If approvable
programs are not forthcoming, it is time to take the action to
court.
In addition, the Agency is hard at work developing a
national strategy to insure effective implementation of approved
-------
- 14 -
pretreatment plans through Federal State and local efforts.
An important objective for FY86, and beyond, will be to help
you to insure that your industrial contributors comply with
the applicable pretreatment standards, both categorical standards
and the highly important local standards. Again, EPa is quite
prepared to use the enforcement authority provided to it, not
only against your industrial users where a matter of Federal
interest is at stake, but also against POTWs which are failing
to implement or adequately enforce approved local pretreatment
programs. Now that I have come on as the "heavy", let me offer
that if we (the States, EPA and the POTWs) work together,
we can jointly obtain three important things. We can ensure
(1) that all industrial users comply with pretreatment standards,
(2) that you are able to remain in compliance with your own
NPDES limits, and (3) that the costs of compliance with the
Clean Water Act are paid by. the parties responsible for the
pollution.
I have appreciated this opportunity to talk with you about
pretreatment and the National Municipal Policy. I look forward
to your help as we continue to implement these important
programs.
-------
VI.A.16,
"HIGHLIGHTS FROM DECIDED AND SETTLED CASES UNDER THE NMP", dated August 21,
1985.
-------
IMTKD Si A IKS F.\\ IKON.MF.M AI. PKOTKC 11()\ ACK.NCV
\\ ASUINCION. !).( . :t>4hll
!£ 97 [GCV!
\U'J I- I l-Vjs
MEMORANDUM
SUBJECT: Highlights from Decided and Settled Cases under
the National Municipal Polic
FROM: Glenn L. Unterberger
Associate Enf orcerr.ent Counsel
for Water
TO: Regional Counsels
Regions I - X
The Agency has accumulated considerable enforcement
experience under the National Municipal Policy (49 FR 3B32,
January 30, 1934) during the oast year and a half since the
Policy was signed by the Administrator. I want to review some
of the results of this experience with the hope that it will
help you to enforce the National Municipal Policy during the
months ahead. As I look at our enforcement track record, I
find it most useful to review (1) relevant uecided cases, (2)
noteworthy consent decrees and (3) statistics on the amounts of
municipal penalties obtained. Accordingly, I will briefly
discuss each of these areas.
I. Case Law Has Established that POTWs Must Comply
with the Clean Water ^ct in the Absence of
Federal Funding
As you know, the most important principle established
by the National Municipal Policy is that compliance by publicly
owned treatment works (POTWs) with final effluent limits is
independent of Federal construction grants funding. More simply
put, the Policy decouples compliance and Federal funding. Case
law, which establishes the appropriateness of compliance with-
out funding, therefore becomes strong support for implementation
of the Policy.
The most significant case establishing the requirement of
compliance in the absence of Federal funding is State Water
Control Board v. Train, 559 F.2d 921 (4th Cir. 1977),an opinion
seven years older than the National Municipal Policy itself.
In that case, Virginia's Water Control Board sought a declaratory
judgment that POTWs were not subject to certain effluent
-------
Limitations if those POTWs had not received Federal grant
funding. The Fourth Circuit denied relief to Virginia and held
the following:
"Section 301(b)(l)'s effluent limitations
are, on their face, unconditional, and no
other provision indicates any link between
their enforceability and the timely receipt
of federal assistance." 559 F.2d at 924.
The -Sixth Circuit has taken a position similar to the
Fourth Circuit. In U.S. v. Wayne County (Mich.) Dept. of
Health, City of Detroit, et al". 720 F.2d 443, 19 ERG 2091
(6th Cir.1983),the District Court below had unilaterally
reserved allocated but unobligated Federal construction grant
funds to defendant Ci'ty of Detroit. EPA appealed this a.ction
as unauthorized and prevailed before the Sixth Circuit. The
Circuit Court held:
"It is fundamental that Title III compliance
may be sought by the EPA without a corresponding
conditioning of Title II grant funds. State
Water Control Board v. Train, 559 F.2d 921
(4th Cir. 1977)." 720 F.2d at 446, ERC at
2091.
". . . it is fundamental that the compliance
and grant provisions of the FWPCA are not
mutually dependent. State Water Control Board
v. Train, 559 F.2d 921 (4th Cir. 1977).If the
federal forurn possessed the authority to mandate
EPA contributions under Title II in Title III
compliance actions, then the EPA would b-e
pragmatically restricted to seeking compliance
only in actions where it would guarantee federal
funds to effect the compliance judgments obtained.
This was patently not the intent of Ccnaress.
Train, supra." 720 F.2d at 451, 19 ERc'at 2096.
The two cases above provide a background for several
court orders which have discussed the legal question or the
National Municipal Policy. In U.S. v. City of Kansas City,
Kansas (Civ. Action No. KC-3628, D. Kan. , April 25, 1984)", the
City sought to tie compliance with final effluent limits by
July 1, 1988, to the availability of Federal grant funds. The
Court rejected the City's position and required final compliance
by June 30, 1988. The one limiting feature of the order is
that the Court obtained signatures of counsel, as if it were a
consent decree, subsequent to issuance of the decree. Neverthe-
less, the Court transcript shows that the matter was fully
litigated.
The Court noted in its unpublished order in U.S. v. City of
Kansas City at page one that
-------
"the statutory oblicati.cn of publicly owned
treatment works to comply with the July 1, 1977,
•deadline [subsequently extended by statutory
amendments to July 1, 1988 for eligible muni-
cipalities] is not conditional on the receipt
of federal grant funds or any other
circumstance ..."
The Court also quoted specifically from the National
Municipal Policy, finding that only extraordinary circumstances
are allowed under the Policy a^ a basis for compliance beyond
July 1, 1988. Specifically, the Court wrote at page two of its
order that:
^«
"... Defendant has not made or endeavored
to make any showing concerning the existence of
extraordinary circumstances that would preclude
its compliance with the statutory July 1, 1988,
deadline, and EPA has made no determination that
such extraordinary circumstances either do or do
riot exist. "
Although the order did not define extraordinary
circumstances (which EPA considers to be only physical impossi-
bility or financial incapability to complete construction
by July 1, 1988), the Court did find that under the policy the
POTW bears the burden of showing extraordinary circumstances,
not EPA. The Court also implicitly affirmed the National
Municipal Policy as an appropriate enforcement response by
EPA. The order should be useful in future litigated cases or
in settlement discussions.
There have also been a series of court orders in the case
of Township of Franklin Sewerage Authority v. Middlesex County
Utilities Authority (Civ. Action No. 80-4041, D.N.J., Feb. 24,
1984, Dec. 15, 1984, July 5, 1985) holding, and subsequently
reaffirming, that a. municipality's obligation to comply with
its NPDES requirements is not contingent on Federal funding.
Indeed, in the July 5, 1985 order at page 2, Judge Thompson
held the Township of Woodbridge, N.J. in contempt for failing
to comply with an earlier order and advancing lack of federal
funding as a defense:
"We will deny Woodbridge's motion. We have
addressed the issue presented - whether the
obligation to comply with the Act is
contingent upon the receipt of funding from
the United States - on two previous occasions.
Woodbridge offers no new analysis or
authority which would lead the court to
modify its holdings on this issue. The
specific argument advanced, that the 1981
amendment to 33 U.S.C. §1311 allows Woodbridge
to avoid liability, has been explicitly
-------
- 4 -
rejected by the court. We find that
Woodbridge's motion is without merit and
borders on the abusive."
With this backdrop of (1) appellate holdings and judicial
orders that funding and compliance are independent under the
Clean Water Act and (2) a District Court order requiring compli-
ance by July 1, 1988, while pointing to the requirements of
the National Municipal Policy, I wish to turn to examples of
recent case settlements.
. II. Case Settlements Are Being Obtained
Consistent with the National Municipal Policy
A detailed review of selected municipal compliance cases,
including some settlements jointly obtained by .EPA and DOJ and
referenced in this memo, is being released by the Program-
Evaluation Division of EPA's Office of Management Systems and
Evaluation. I urge you to study this excellent analysis. I
wish here to mention several cases that indicate possible
approaches to typical problems under the National Municipal
Policy.
A. The Financial Incapability Defense
An excellent example of how to overcome a financial
incapability defense is the Agency's 1984 consent decree with
St. Bernard Parish, Louisiana. St. Bernard argued that it
could not construct a secondary .treatment plant due to financial
incapability. EPA's Region VI and Headquarters engaged an
outside financial consultant to make a detailed analysis of the
finances of the parish (county). The consultant made an on-
site analysis of parish financial records and completed a
detailed report that was provided to the parish. At the same
time, the Agency pressed for trial. Upon review of the finan-
cial analysis, the parish accepted its findings of financial
capability to construct by 1987, without any federal funding,
and agreed to pay a $40,000 upfront penalty, a substantial
amount in light of the size and demographics of the parish. A
final consent decree embodying these terms was entered on
December 3, 1984.
The Agency continues to have contract funds available
through the Office of Water Enforcement and Permits to hire
outside financial consultants for cases where the POTW's
financial capability to construct may be an issue.
B. From Counterclaim to Upfront Civil Penalty
Garland, a Texas suburb near Dallas, filed a counterclaim
against EPA when the Agency sued to obtain compliance with
final effluent limits by July 1, 1988. Garland argued that the
Agency had given incorrect technical advice as to designs for
past POTW construction. The Agency aggressively moved to dismiss
-------
- 5 -
the counterclaim, enlisting the assistance of construction
nrants attorneys in the Agency's Office of General Counsel, who
wrote much of the brief. The Agency pursued extensive discovery
and negotiations in the case, which also involved a number of
private parties (contractors) who had participated in the POT'.-;
construction. In the end, Garland agreed, to achieve compliance
by July 1, 1933, and to nay an upfront civil penalty of $150,000
in a consent decree filed June 24, 1985.
C. Compliance Not Contingent on Federal Funding
• The Wyoming Valley Sanitation Authority, located near Wilkes
Barre, Pennsylvania and made up of some twenty municipalities,
had been slow to comply for years. In fact, it took_twenty-
five years of State pressure to get the Authority to build a
primary facility. EPA filed suit on May 3, 1983, to obtain
secondary treatment by July 1, 1988.
Only after issuance of the National Municipal Policy did
negotiations with the Authority become productive. The Authority
tried to tie compliance to Federal funding. However, the
Authority finally agreed to a consent decree that made compliance
by 1988 independent of Federal funding, which is the standard
language we like to see in 'all municipal consent decrees. EPA
and Pennsylvania (also a party) did agree, however, to expedite
consideration of the Authority's grant application. The authorit
also agreed to pay an upfront penalty of $66,000 to the Federal
government and $56,500 to the State. The -consent decree was
filed on May 6, 1985.
D. Use of Environmental Security Account
One of the most difficult series of recent negotiations
involved Cincinnati's Mill Creek POTW. This case involved
negotiations with the Sewer District, the City of Cincinnati and
Hamilton County in which the facility is located. Mill Creek
had completed secondary treatment construction in 1978, but the
POTW's sludge unit, heat exchangers and vacuum filters have
never worked properly. Consequently, only a small portion of
the effluent received secondary treatment. This made the Mill
Creek POTW one of the worst polluters on the Ohio River. The
case was complicated by State administrative action that could
be construed as permit modification.
As negotiations continued, it became apparent that the
penalty issue was a major obstacle to obtaining a settlement.
In the end, the Agency obtained a commitment to final compliance
by 1988, significant combined sewer overflow relief, and estab-
lishment of a $750,000 Environmental Security Account to be
managed by a court-appointed trustee. The Account must be
used to finance environmentally beneficial projects connected
to the Clean Water Act which will benefit the general public.
The account should address the particular type of environmental
effect of the defendant's noncompliance and be in addition to any
-------
- 6 -
legal obligation defendant might have. A final consen
was lodged on March 11, 1985, and should be entered shortly.
Although the Agency now generally requires, as a matter of
policy, upfront penalties rather than environmental projects,
a combination of a substantial upfront penalty (which as a
matter of policy is now an Agency objective in all municipal
cases) and an environmental security account may be 'acceptable
in other municipal cases. In addition, stipulated penalties
tied to a compliance schedule are required.
Ill . Penalties Assessed Aoainst POTWs
We typically expect to obtain penalties in POTW cases.
Penalties act as a substantial deterrent to noncompli-ance and
speed the municipality's effort to comply. As explained below,
in recent cases, penalties have had a demonstrable effect on
securing POTW compliance.
Since the passage of the NMP, penalties have been sought
and assessed against many POTWs violating the CWA . During the
last three years, from 1983 to 1985, the Agency has obtained
penalties in 17 of 27 cases brought against POTWs.
The two largest penalties are $170,000 and $150,000,
assessed against two Region VI municipalities. There are
also four cases with $100,000 penalties. Two of these cases
are in Region VI, one .is in Region III and one is in Region
II. The remaining twelve cases have penalties under $100,000,
the smallest being the Welch Sanitation Board, Welch, West
Virginia, in Region III. Noting this community's depressed
economy with 28% unemployment, the court advised the parties
to work out :a mutually agreeable solution in lieu of litigation.
The Board agreed to pay a penalty of $1,000 each to the United
States and the State for violations of the CWA. Finally, in
four of the ten cases in which cities did not pay a cash penalty,
they agreed to complete environmentally beneficial projects not
required by £
An example of a municipal case where a penalty was not
imposed involved the City of Tallulah, Louisiana, in Region VI.
The court informally advised the United States that no penalty
would be assessed in this case due to the community's economic
situation. ^here is very low per capita income and many
residents ar'^ on welfare.)
Another case where a penalty was not sought involved a x
small suburb of Louisville, in Okolona, Kentucky, Region IV.
The POTW agreed to stop dumping the effluent into a creek and
to hook into the County's Municipal Sewer District (MSD) line.
In order to use the line, the POTW had to legally dissolve
itself as an entity. An imposition of a penalty would have
delayed the POTW ' s dissolution and MSD's ability to assume its
responsibilities. In order to facilitate Okolona 's prompt
compliance, EPA did not seek penalties for past CWA violations.
-------
A chart is attached listing all reported CWA cases
during 1983 to 1985 including the amount of the penalties we
obtained against certain POT'.vs. In sor.:e instances penalties
violations.
to
I trust the information in this memoradur. will be helpful
vcu. If vou have anv auestions or corrections to the
information in this report, please feel f
Maria Orozco of my staff at 475-8320. I
ree to call me or
anticipate issuing
updates of this report on a periodic basis.
Attachment
cc: Rebecca Hanmer
Jim Elder
Bill Jordan
Regional Water Division Directors
OECM Water Attorneys
Cheryl Wasserman
David Buente
Carol Green
-------
Page 1
CWA MUNICIPAL CASES CONCLUDED IN CALENDAR YEARS 1903-1985
WL'l'll AND WrillOuT PENALTIES ASSESSED AGAINST POTWS
Fulfil ON CASK
1 U.S.
1 U.S.
2 U.S.
2 U.S.
3 U.S.
NAME
v. M.D.C.
v. City of
v. PRASA (
v. City of
v. City of
(City of Boston)
Providence
II PR Aqued. & Swr)
Utica
Philadelphia
STATE
MA
RI
PR
fJY
I'A
DATE
CONCL.
3/20/04
6/0/04
3/1/05
9/12/84
12/15/03
PENAL'IY
AMOUNT
$ 15,000, Offer of Judcj.
No cash. 250,000 Environ.
credit, contempt action
100,000
5,000
No cash. C.D. established
U.S. v. City of New MartinsvL 1 l.o
V/V
12/28/03
U.S. v. City of Welch (Welch Sanit. lid)
U.S. v. District of Columbia (Hlue Plains
VJWI'P)
U.S. v. City of Wilkes Barre (Wyoming
Volley Sanitary Authority)
U.S. v. City of Jacksonville (Dist. 11 WTP
and I3ucknvm Street V/I'P)
U.S. v. City of Okolona ,
v,v
ix;
PA
1-1,
IsY
1/30/05
1/31/05
7/1/05 '
5/20/03
11/0/04
an env. trust fund in
the aiiount of $2,165,000
None. CD did not request
l>enalties for past viol.;
j>enalties for future viol.
v;ere sourjht Vmt IJni PO1W
cano into coi'p.l. w/it.s
[K^rmit after the case was
referred to nOJ
1,000 to USI'.PA and
1,000 to State
50,000 penalty and 200,000
env. credit
56,500 [>enalty to USFJPA
plus 66,000 to Perm.
Mo cash. 300,000 Environ.
Credit
None. Oissolut.ion of
the I"OTW v.ns r'.s|uir»i«l
in order tD'n
faci1 it ies
-------
Page 2
KhX'.lON
CASK NAME
STATE
COrvCL.
AMOUNT
4 U.S. v. City of Orlando (iron Bridge WWTP)
5 U.S. v. Gary Sanit. District
5 U.S. v. City of Cincinnati (Mill Creek WI'P)
G U.S. v. City of Baton Rouge
G U.S. v. City of Roswcll.
G U.S. v. City of Fort Smith
G U.S. v. St. Bernard Parish (Munstor
Troabiiont Facility)
G U.S. v. City of Tulsa (R.MUA 1 la iky Ctk)
G U.S. v. City of Tallulah
G U.S. v. City of West Menphis
G U.S. v. City of Vernon f. Celenese
Fillers, Trie.
G U.S. v. City of Garland (Duck Crook,
Rowlrtt Crook WTP)
G U.;;. v. .'Jefferson Parish (West Hank
FL
IN
OH
JA
rw
AR
l.A
OK
LA
TX
TX '
IA
6/26/05
6/15/03
Lodged but not
yet entered
1/7/03
6/3/03
6/20/03
12/3/04
10/15/04
12/12/04
0/7/05
9/9/03
6/1/05
lodged l.ut not:
40,000
None. Old case, filed
1/23/70, decree inclu-
ded stipulated penalties
No cash. 750,000 environ.
security trust account
100,000
20, 000
100,000
40,000
None. This was a o *i-
tenpt action. Original
suit carried a jx>nalty
of $140,000
None. City had insuffi-
cient resources with
which to pay any penalty
anount
30,000
65,000
150,000
170,000
Str/Aigo l-'i strict)
yi:t entered
-------
Page
KJOG.ION
CASK NAMF.
STATIC
CONCL.
AMOUNT
0
U.S. v. City of Richfield
10 U.S. v. City of Twin Falls
]0 U.S. v. City of Twin Falls
UT
ID
ID
2/18/83
4/24/84
None, (old case) stip.
penalties were sought
22,OHO
Lodged but not 50,000, contempt action
yet entered
-------
VI.A.17.
-------
VI.A.17,
"DEADLINES
AND THE NATIONAL MUNICIPAL POLICY", dated January 30, 1986.
-------
-------
- 3 -
a .lawsuit. Therefore, an administrative order issued under
Section 309(a)(5)(A) setting a date for compliance for a POTW
which is later than the date in its permit is an enforcement
remedy, not an extension of the POTW's legal deadline. The
same is true for a comparable judicial order.
As indicated above, a POTW can obtain an extension of its
legal deadline only by having its permit modified. The legal
consequences of this distinction between a deadline in an
administrative order and a permit modification are explained
in more detail on pages 8-10 of the attached memorandum from
the Office of General Counsel previously mentioned. The
distinction between extensions and enforcement remedies also
is relevant to the extent to which EPA establishes enforcement
compliance schedules lasting beyond July 1, 1988. EPA does
not in such instances establish a legal deadline beyond July
1, 1988. It merely establishes an additionally enforceable
schedule without acquiescing in the underlying statutory
violation. In fact, a recent federal decision handed down in
the Boston Harbor litigation, the court held.that the issuance
of an administrative order did not constitute acquiescence in
a violation. U.S. v. Metropolitan District Commission, et al,
(D. Mass. Sept. 5, 1985, Civil Action Nos.85-0489-MA and
83-1614-MA) .
If you have any questions about the points raised above,
please contact Patricia Mott of my office at FTS 475-8320.
Attachment
cc: Courtney Price
Richard Mays
Rebecca Hanmer
Bill Jordan
Regional Water Management Division Directors
Jim Hanlon
Bob Blanco
Colburn Cherney
David Buente, DOJ
-------
PCS DELAY CODES; LEGEND
Column 1; Status Codes
0 = Unresolved state water Quality standard(s)
V = Variance (pending Section 301(h) decision)
W = Unfinished wasteload allocations
X = Administrative order issued requiring submission of MCP
Y = Other delay
2 = Enforcement action under development
Column 2; Financial Factors
0 = Unknown
1 = Affordability not an issue
2 = Affordabiliy is an issue
3 = Under construction P.L. 92-500 funds
4 = Under construction other funds
Column 3; Quarter Code
A, B, and C = Second, third and fourth fiscal Quarters, 1984
D, E, F, and G = Fiscal year 1985 fiscal quarters
H, I, J, and K » Fiscal year 1986 fiscal quarters
L, M, N, and 0 » Fiscal year 1987 fiscal quarters
-------
VI.A.18,
"Letter of the Administrator to James Borberg, President of the Association
of Metropolitan Sewerage Agencies", (concerning penalties against
municipalities), dated October 21, 1986, (See No. IV.C.ll this Compendium).
-------
-------
VI.A.19.
"National Municipal Policy Litigation," dated December 23, 1986.
-------
0|
*
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF ENFORCEMENT
AND COMPLIANCE
MONITORING
DEC 2 3 1986
MEMORANDUM
SUBJECT: National Municipal Policy Litigation
FROM: James R. Elder, Director .
Office of Water Enforcement and Permits
Glenn L. Unterberger
Associate Enforcement Counsel
for Water
TO: Regional Counsels, Regions I-X
Water Management Division Directors, Regions I-X
In this memorandum, we re-emphasize the need for continued
and firm effort on municipal enforcement litigation on the
part of enforcement staffs at EPA and the Department of Justice.
Obtaining municipal compliance remains the Agency's highest
Clean Water Act priority. In addition, this memorandum
identifies some specific actions which we are pursuing at
Headquarters and DOJ and others which we suggest the Regions
take to aid the national municipal enforcement effort.
Obtaining municipal compliance remains the Agency's highest
Clean Water Act priority. We have made considerable progress
in implementing the National Municipal Policy (NMP) , but much
work remains. Although the Agency's non-1 itigative efforts
will continue, civil actions against publicly owned treatment
works will remain an important part of obtaining cities'
compliance with their permits.
The Agency has achieved considerable success in its
municipal lawsuits to date. Currently the universe of municipals
which most urgently need to be addressed includes two categories,
as follows:
1. Major POTWs which have not been placed on enforceable
schedules achieving compliance by July 1, 1988. (See
attached a list of approximately 63 facilities as of
the end of the fourth quarter of FY 86, derived from
data in the national tracking system.)
-------
- 2 -
2. POTWs not complying with milestones in enforceable
schedules that will prevent compliance by July 1, 1988.
Headquarters/National Activities
The two categories of POTWs listed above which have current
priority under the NMP should produce a considerable number of
potential cases. To deal expeditiously with this litigative
load, Headquarters will pursue a concerted effort at the national
level to support municipal litigation.
The Agency has informed Department of Justice managers
that NMP cases should be given their highest Clean Water Act
priority. Department officials have agreed to participate
in efforts to expedite cases.
We will continue to meet on approximately a monthly
basis with Department officials to review the national docket
of referred and filed cases. The focus of the meetings will be
-to identify issues, track progress of cases and where necessary
break logjams to move cases along.
We and DOJ have agreed to the following trigger dates to
flag cases for closer management attention/ with the under-
standing that they are subject to further consideration at our
monthly meetings.
0 35 days for OECM to act on a municipal referral received
from the Regions (typically, to refer the case to the
Department).
0 60 days from referral to the Department to filing in
the appropriate court.
0 6 months from filing to a motion for summary judgment on
liability.
0 One year and a half from filing to conclusion.
We understand that many Regional water program managers
feel that 3 months or less for summary judgment filing and 1
year for case resolution would be more appropriate as action-
oriented goals for these activities, and will strive toward
these goals where possible.
The Office of Enforcement and Compliance Monitoring and the
Office of Water will issue quarterly activity reports on NMP
implementation and litigation. In the report, we will track
the progress of scheduling activity, the filing and conclusion
of cases, and any issues of interest.
-------
- 3 -
The Office of Water will continue to provide expert
services on financial and technical issues through in-house
capability and national contracts.
Finally, we are close to agreement, along with the Depart-
ment, on ways to expand the Region VI pilot project for using
a limited period to pursue profiling settlement negotiations
as an option for other Regions.
Matters Requiring Regional Attention
To support this national emphasis, we need help from the
Regions in several specific areas.
Regional compliance and enforcement staffs should continue
to track noncompliance and to target, consistent with NMP
priorities, municipal violators for enforcement action. We
wish to emphasize the importance of selecting for judicial
enforcement those municipalities that further the NMP or lend
credibility to the national effort.
When Regions forward a case against a POTW to Headquarters
for review and referral to the Department, the case should be
ready for immediate filing. To ensure that the Department can
file or prosecute a proposed case on an expedited basis
consistent with the time-frames set out above, the Regions must
pay increased attention to providing certain basic information
in its litigation reports, including the following:
0 information on the POTW's financial capabilities for
funding necessary compliance work which is at least
sufficient to provide EPA and DOJ with a reasonable basis
for a position on the issue at the outset of the case and
settlement negotiations.
0 the grants history of the potential defendant,
including applications; past funding; and, if
applicable, current status on the state priority list,
current status of any present projects, or future
prospects for funding.
0 a complete list of EPA and state contacts with defendant
POTWs on issues relating to compliance.
0 a summary of violations reported in the potential defendant's
Discharge Monitoring Reports. Inclusion of the Discharge
Monitoring Reports themselves will enable the Department to
file a motion for summary judgment most expeditiously.
0 a bottom-line settlement amount consistent with the
Agency's penalty policy.
0 a target final compliance date and schedule.
-------
- 4 -
Recent litigation reports have lacked information in
these areas in some instances. Absence of this information has
impeded the government's ability to file and prosecute municipal
cases expeditiously. We attach existing guidance on municipal
case litigation reports to assist in their preparation.
To support the development of litigation reports for cases
which are readily filed, Headquarters will strive to better the
above target dates in support of municipal referrals which are
complete in all these respects. Conversely, we will take a
hard look at whether to return referrals to the Regions for
further development where significant pieces of requisite
information are still incomplete, or where the Region prefers
to conduct pre-filing settlement discussions with the POTW on
anything other than a strict timetable.
On occasion, the Regions have conducted administrative nego-
tiations with a POTW with the result that a POTW might expect a
non-judicial resolution of its compliance problems. Where a
Region decides that such negotiations are at an end for whatever
reason, the Region should indicate to the POTW that judicial
action is under consideration. This will help us avoid complaints
from a POTW that EPA unfairly "blindsided" it with a lawsuit.
Finally, we must stress that it is crucial for the Regions
to continue both their support of cases once referred by
assisting in the firm and prompt prosecution of cases through
to closure. It is through broadened success in completed
prosecutions that the national enforcement effort is most
likely to ensure broadscale POTW responsiveness to compliance
requirements of the Clean Water Act.
Conclusion
We believe that the above measures will result in the
expeditious filing and prosecuting of municipal cases.
Developing these streamlined procedures and case management
techniques ought to assist in working through the present
case load as well as to prepare the Agency and the Department
to deal with the expected burden of future NMP enforcement.
We ask the Regions to contact us with any suggestions they
have regarding improved support for our mutual efforts on
Clean Water Act municipal litigation. We thank you for your
cooperation and significant investment of time and resources
in this effort.
Attachments
cc: F. Henry Habicht Lawrence Jensen
David Buente Rebecca Hamner
Scott Fulton Richard Mays
Sheila Jones Thomas Adams
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PCS DELAY CODES; LEGEND
Column 1: Status Codes
0 = Unresolved state water quality standard(s)
V = Variance (pending Section 301(h) decision)
W = Unfinished wasteload allocations
X = Administrative order issued requiring submission of MCP
Y = Other delay
Z = Enforcement action under development
Column 2; Financial Factors
0 = Unknown
1 = Affordability not an issue
2 = Affordabiliy is an issue
3 = Under construction P.L. 92-500 funds
4 = Under construction other funds
Column 3; Quarter Code
A, B, and C = Second, third and fourth fiscal quarters, 1984
D, E, F, and G = Fiscal year 1985 fiscal quarters
H, I, J, and K = Fiscal year 1986 fiscal quarters
L, M, N, and 0 = Fiscal year 1987 fiscal quarters
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L.S. Department of Justice
DTB:RWN.;-ar '
90-5-1-0
Washington. D.C. 20530
October 25, 1985
Glenn L. Unterberger, Esq.
Associate Enforcement Counsel
for Water (LE-134W)
U.S. Environmental Protection
Agency
401 M Street, S.W.
Washington, D.C. 20460
J. William Jordan
Director, Enforcement Division (EN-338)
U.S. Environmental Protection
Agency
401 M Street, S.W.
Washington, D.C. 20460
Re: National Municipal Policy Enforcement Initiative
Dear Glenn and Bill:
As promised, enclosed please find materials we have
prepared to aid In processing and Initiating NMP referrals.
These materials Include a model complaint, model litigation
report outline and memoranda on remedial and financial capability
Issues.
In addition, we have enclosed a proposed filing schedule
for the approximately twelve NMP cases currently on target for
the Initiative. The proposed schedule shows a single, coordinated
filing date as was Initially planned; however, recent conversations
with your staffs Indicate we may wish to consider a rolling series
of filings as cases become ready, cumulating In a comprehensive
media event. I suggest we discuss this possibility further In
the next few weeks. Also, It appears a second group of ten or
so NMP referrals may come to Headquarters by mid-December. We
should discuss the structure and timing of a "second wave" In
the near future.
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- 2 -
We were pleased by the effort and enthusiasm reflected
In the regional conference calls last week, and it appears the
initiative Is on the right track. We look forward to continuing
this endeavor with you.
Very truly yours,
Assistant Attorney General
Land and Natural Resources Division
By
WAT
Senior Attorney
Environmental Enforcement Section
Section
Land and Natural Resources Division
U.S. Department of Justice
Washington, D.C. 20530
cc: EPA Regional Counsels, Regions I-III, V-VIII
David Buente *^
Carol Green
Ken Reich
John Wlttenborn
Bruce Buckhelt
Wayne Walters
Sheila Jones
Ross Connealy
Robert Oakley
David Hackett
Eva Heffernan
Ellen Mahan
Mary Ellen Leahy
Alan Miller
Bruce Eerger
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CLEAN WATER ACT - NATIONAL MUNICIPAL POLICY
MODEL LITIGATION REPORT OUTLINE
I. SYNOPSIS OP CASE
Brief summary of referral, nature of violations,
relief requested and EPA efforts to gain compliance.
II. REGULATORY PROGRAM
Description of the statutory and legal authority
by which POTW's are required to comply with secondary
treatment or water-quality based standards, and a
description of the permitting process. Include summary
of National Municipal Policy.
III. FACTUAL NARRATIVE
A. Facility Description - Age of plant, design capacity,
type, of process, Industrial users, discharge point(s)
description of stream or river to which discharged, etc.
B. Effluent and Other Violations - List NPDES permit
limitations and effluent violations as indicated by
discharge monitoring reports and Inspection reports.
Summarize on-site inspections. Describe other violations,
i.e. bypasses, monitoring deficiencies, etc.
C. Construction Grant Status - Provide details on any
outstanding grants or applications, including all pertinent
documentation, and evaluate prospects for future grants
as may affect case.
D. Environmental Harm .- Information on known or suspected
impact of discharges to receiving waters.
IV. INFORMATION IDENTIFYING DEFENDANT
A. Name
E. Location and Judicial District
C. Size of plant (MGD), Industrial usage .
(number and percentage) and population served.
D. Agent for service of process
E. Name and address of appropriate state official
for service of process
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V. ELEMENTS OF PROOF
A. Elements of Violation - Identify each element
of each clalrr.
B. For each claim and each element:
1. Summarize evidence (facts, documents, expert opinions),
Including table of violations
2. Identify documents
3. Identify witnesses
VI. ENFORCEMENT HISTORY
Include discussions of:
A. Contacts with POTW, Including pertinent contacts in
grant areas (update with current contacts if appropriate);
B. Administrative orders Issued and responses;
C. Recalcitrance;
D. FPA attempts to resolve prior to referring case;
E. State activities;
F. 301(1) status.
VII. REMEDY AND COMPLIANCE SCHEDULE
A. Injunctive Relief
1. Available Control Technology and Remedial Action -
describe what is needed for compliance (new construction,
O&M improvements, both?). Include details and status
of any facilities plan. Break down critical elements
and cost of remedial options. (See DOJ Memo on Remedial
Issues). Specify POTW's likelihood of meeting 7/1/BS
deadline, and whether outside expert will be needed on
this point.
2. Compliance schedule - with and without grant
funding.
3. Prohibitory relief - e.g. enjoin new sewer connections.
4. Economic feasibility - showing that reasonable
compliance measures not Impossible to finance. Provide
limited analysis of financial capabilities, identify who
prepared the analysis (see DOJ Memo on Financial Capability),
and state whether outside expert will be needed on this
point. Summarize grant prospects.
-------
B. Penalty -
Include anticipated penalty request at trial, suggested
negotiating figure and bottom-line settlement figure
(based on known facts and litigation risks), and explanation
of basis for calculation of penalty. Discuss known aggravating
and mitigating factors.
VIII. ANTICIPATED DEFENSES AND OTHER ISSUES
A. Legal defenses
B. Equitable problems
C. Precedential issues/policy Issues
D. Evidence or other matters favorable to defendant,
or other significant litigation risks
IX. ATTACHMENTS
A. Current NPDES permit plus any application for
renewal or modification
P. Facility diagram
C. Discharge Monitoring Reports
D. Inspection or other evaluative reports
E. Correspondence and other contacts with POTW
F. Administrative Orders and response
G. Draft complaint
H. Table of effluent and other violations
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Remedial measures
For purposes of evaluating and Initiating civil
actions against POTW's, all referral packages should contain
an analysis of the POTW's compliance deficiencies and the
possible solutions to those problems. As explained in prior
communications with your office _V, our goal is to develop
sufficient information to allow us to present a particularized
plan of action for compliance, including practical alternatives,
to the court. The need for such information is three-pronged:
1) development of an appropriate remedial program Is important
in these cases; 2) consideration of available remedies is
vital to a financial capability evaluation; and 3) it is
crucial that we demonstrate that compliance is reasonably
attainable by the municipality.
In a memorandum dated December 14, 19fl2, former
Associate Water Enforcement Counsel Louise Jacobs stated that
municipal enforcement referrals should contain the following
regarding remedy:
Information about alternatives for
solving the problem which are likely,
in the opinion of an Informed individual,
to be successful. The Informant should
be someone who knows the plant, Is familiar
with the kind of violations occurring, is
knowledgeable about sewage treatment systems
In general, and Is of the opinion that.these
particular violations are possible to solve
by one of several alternatives posited. The
See memorandum of Stephen D. Ramsey dated January 3. 1983.
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- 2 -
Informant should be Identified in the referral.
A JRB [diagnostic] report may ordinarily
suffice to meet this requirement.
We concur with these criteria. Such Information should
overcome any threshhold concerns regarding whether compliance
Is reasonably attainable by the POTW.
At a minimum each referral should Include the
following Information concerning compliance:
1. A technical explanation of the causes
of the violations, Including what equipment
and/or management systems are Inoperative or
Ineffective; problems caused by excessive
hydraulic or organic loadings; causes of
any bypasses of treatment -or collection
systems; and how the breakdown or deficiency
relates to the particular violations.
2. A description of the types of corrective
actions which will remedy the violations.
This should Include an analysis, based on
knowledge of the treatment works and load
characteristics, of whether the problems
can be cured by changes In operation and
maintenance practices, whether new equipment
Is needed, or whether some combination
thereof Is necessary.
3. Where construction appears warranted,
a general description of the appropriate
technology should be given, Including
Information on whether any special or
unique circumstances exist that would
necessitate more elaborate equipment,
construction problems, etc.
1». Where construction appears warranted,
credible estimates of the costs Involved
and the time needed for Implementation*.
This should Include an evaluation of whether
the 7/1/88 date can be met.
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5. A full description of the POTW's
past and current grant activities and future
prospects, including documentation of
significant events or agreements. This would
include all funded projects or eligible
projects under application.
Also, evidence and analysis of a recent plant
Inspection by EPA (or the State) should be Included, which
would document the violations and assess compliance problems.
Also, we strongly urge that to the extent possible each
referral be accompanied by a JRB report or other detailed
diagnostic report. Such Information quickly puts us in
command of salient facts, aiding both trial preparation and
settlement discussions. V
The Information listed above should be Included
in all referrals, regardless of the potential for quick
settlement. To evaluate the merits of settlement or to
proceed with litigation of any referral, we need to have the
background information necessary to support a fully-litigated
case.
V We suggest that, to the extent possible, the "informant"
"" supplying this Information be FPA or contractor personnel
who presumably would be available for case preparation and
trial purposes.
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Financial Capacity
We will contend In litigation that a municipality
must comply with the Clean Water Act regardless of the availability
of public grant funds or the existence of other municipal
expenditures. Thus, as a matter of law, we argue that munici-
palities cannot raise financial impossibility as a defense to
Judicial enforcement actions. Nonetheless, municipalities
frequently attempt to make showings of financial hardship,
often with -the sanction of the court.
Thus, where the region reasonably anticipates at
the time of referral that the municipality may raise financial
capability as an issue in litigation, civil referrals should
Include a threshhold financial evaluation. Financial evaluations
are particularly necessary in those cases which will Involve
large capital outlays to finance large, long-term plant
construction, expansion and/or rehabilitation projects by the
municipality. Such projects typically require outside financing.
Also, in cases where a large upfront penalty Is sought or
where sizeable amounts need to be spent to revamp operation
and maintenance practices, financial information is necessary.
The analysis should allow a determination that a
given remedy or range of remedial options, reasonably related
to compliance, will not be Impossible for the municipality to
finance. Through such analysis we should be able to determine,
for purposes of evaluating the litigation merits of a given
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- 2 -
referral, that financial capacity issues will not be a bar to
obtaining relief. This test would assure that the government
can expect to rebut competently (at a later stage in the
litigation) a showing by the municipality that it cannot
afford to comply. This initial analysis would not approach
the scope or detail of an evidentiary presentation necessary
to rebut a well-presented financial hardship showing.
To facilitate a preliminary financial capability
determination, we recommend that the regions gather and
analyze two types of basic information: 1) financial condition
and revenue-raising ability of the municipality and 2) cost
of necessary remedial measures.
First,, we understand that the Agency will use its
Financial Capability Guidebook and other guidance materials
to do a basic work-up of the municipality's financial picture.
Information necessary for the analysis should be obtainable
by the regions from local authorities and other sources.
This basic evaluation would Include the following information:
1. the current bond rating and capacity
of the municipality;
2. the amount of outstanding Indebtedness
and other factors which may impinge
on the municipality's ability to fund
remedial programs;
3. population and Income information;
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4. grant eligibility and past grant
experience;
5. state or local laws which limit the
municipality's ability to raise funds
for remedial programs; and
6. the presence or absence of user charges
and whether increased user charges would
be an effective fund-raising mechanism.
Second, the Agency should develop credible cost
figures on the major components of the necessary remedial
program. Such Information should be generated as part of
the remedial analysis of the referral. For purposes of
preliminarily evaluating financial condition and preparing
to rebut financial impossibility showings, we suggest an
analysis of the "worst case" scenarios, I.e. the most
expensive (but reasonable) compliance options. For such
remedies, or anything less expensive, we can prepare to
effectively rebut a hardship claim.
In this perspective, then, the referral can produce
a rough-cut "snapshot" of the financial burden of a given
project.
Should the municipality make claims of financial
hardship In the litigation, we will need to develop this
information further with the assistance of a municipal finance
-------
expert. For NMP referrals, we understand that the Agency
will also utilize the services of its outside financial
consultants (who presumably would later be our expert witnesses
as well) for this purpose. Such an expert should be retained
before discovery commences to enable the expert to participate
In developing a discovery plan, Interrogatories and requests
for production on this Issue.
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UNJTED STATFS DISTRICT COURT
] DISTRICT OF [
UNITED STATES OP AMERICA, )
)
Plaintiff, )
)
v. ) CIVIL ACTION MO.
)
[CITY OF / UTILITY AUTHORITY])
and THE STATE OF [ ] )
)
Defendants. )
COMPLAINT
Plaintiff, the United States of America, by authority
of the Attorney General of the United States, and at the request
of the Administrator of the United States Environmental Protec-
tion Agency ("EPA"), alleges as follows:
1. This Is a civil action brought pursuant to
Sections 309(b) and (d) of the Clean Water Act ("the Act"),
33 U.S.C. §§ 1319(b), (d) for Injunctlve relief and the assessment
of a civil penalty against the [City of / Utility Authority] for
violations of the Act and the [City's/Utility Authority's] National
Pollutant Discharge Elimination System (nNPDESn) Permit
Issued by [EPA /State of ] pursuant to Section
402 of the Act, 33 U.S.C. § 13^2, and against the State of
[ ] pursuant to Section 309 (e) of the Act, 33
U.S.C. § 1319(e).
2. This Court has Jurisdiction over this action
pursuant to Section 309(b) of the Act, 33 U.S.C § 1319(b),
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- 2 -
and 28 U.S.C. § 13^5. Plaintiff has notified the State of
[ ] of the commencement of this action pursuant to Section
309(e) of the Act, 33 U.S.C. § 1319(e), by naming the State
of '[ ] as a party.
3. Defendant [City of / Utility
Authority] ("the City"/ "Utility Authority"), is a political
subdivision of the State of [ ] within the [ ]
District of [state] and is a "municipality" within the meaning
of Section 502(4) of the Act, 33 U.S.C. § 1362(1).
H. Defendant State of [ ] is a party to this
action for relief pursuant to Section 309(e) of the Act,
33 U.S.C. § 1319(e).
5. At all relevant times the [City/Utility Authority]
owned and operated, and continues to own and operate, a
sewage treatment plant known as the [name] Sewage Treatment
Plant ("[ ] STP"), a publicly-owned treatment works located
in the City of [ ], [ ] County, [State]. The
[name] STP treats and treated wastewater from residential,
commercial, and Industrial sources located In [city, state ].
6. The [name] STP discharged and discharges pollutants
into [receiving stream], thence Into the [name] Fork of the [name]
River, thence Into Lake [name] of the [name] River Basin.
These discharges were and are discharges of poll-utants Into
navigable waters as defined by Sections 502(7) and (12) of
the Act, 33 U.S.C. §§ 1362(7) and (12).
-------
7. Section 301(a) of the Act, 33 U.S.C. § 1311(a),
prohibits the discharge of any pollutant except In accordance
with Section 301 of the Act, 33 U.S.C § 1311, and as authorized
by and In compliance with a penr.lt Issued under Section 402
of the Act, 33 U.S.C. § 1342.
8. Section 308 of the Act, 33 U.S.C. § 1318, requires
the owner or operator of a point source to monitor Its discharges
and make reports as mandated by a permit Issued under Section 402
of the Act, 33 U.S.C. § 1342.
9. Sections 309(b) and (d) of the Act 33 U.S.C.
§§ 1319(b) and (d), authorize the commencement of a civil action
for Injunctlve relief and for civil penalties not to exceed
by the Administrator $10,000 per day for each violation of
Sections 301 or 30S of the Act, 33 U.S.C. §§ 1311 or 1318, or
of any permit condition or limitation implementing Sections
301 or 308 of the Act, or of any violation of an administrative
order Issued pursuant to Section 309 of the Act.
FIRST CLAIM FOR RELIEF
(City of /Utility Authority)
10. Plaintiff realleges and Incorporates herein para-
graphs 1 through 9.
11. Effective [date], [EPA/State of ] issued,
pursuant to Section *»02[(a) or (b)] of the Act, 33 U.S.C.
•
§ 1342[(a) or (b)], NPDES Permit No. [ ] to the [City
/Utility Authority], setting effluent limitations and other
conditions for the discharge of pollutants from the [ ]
STP, with an expiration date of [date]. On or about [date],
-------
[EPA/ State of ] extended the perrlt administratively,
and [EPA/ State of ] reissued the permit effective
[date], with an expiration date of [ date ]. [EPA/
State of ] modified the permit, effective [ date ],
The NPDES permit authorized the discharge of pollutants from
the [name] STP to [receiving stream] subject to the terms and
conditions of the permit.
12. On [date], pursuant to Section 309(a) of the
Act, 33 U.S.C. § 1319(a), EPA Issued Administrative Order
[number] to the [City of / Utility Authority].
Administrative Order [number] found "that the [City/Utility
Authority] had failed to comply with the effluent limits
contained in the permit, had failed to monitor correctly the
effluent from tre [name] STP, and had failed to notify EPA of
permit violations. Administrative Order [number] ordered the
[City / Utility Authority] to take, within [ ] days of
the effective date of the order, whatever corrective action
was necessary to comply with the NPDES permit.
13. The [City / Utility Authority] failed to
comply with Administrative Order [number] within the time
limit specified In the order. Thereafter, EPA Issued
Administrative Order [number] on [date]. This Administrative
•
Order found that the [City/Utility Authority] had exceeded
the effluent limits contained In the permit, had failed to
monitor effluent discharges as frequently as required by the
-------
permit, and had failed to operate and maintain the [name] STP
properly. Administrative Order [number] directed the [City/
Utility Authority] to come into full compliance with Its
NPDES permit by [date]. The [City/Utility Authority] failed
to comply with Administrative Order [number],
14. During the following periods, the [City/Utility
Authority] discharged the following monthly (30-day) average
and weekly (7-day) average concentrations of 5-day Biological
Oxygen Demand ("BOD5") from the [name] STP Into the [receiving.
stream], In excess of the effluent limits for 6005 contained
In NPDES Permit No. [ ]:
Period -30-day Average (mp/1) 7-day Average (mp/1)
a) [month/year] [concentration] [concentration]
b) [month/year] [concentration] [concentration]
etc. etc. etc.
15. During the following periods, the [City/Utility
Authority] discharged the following monthly (30-day) average and
weekly (7-day) average quantities of 8005 from the [name] STP into
the [receiving stream], in excess of the effluent limits for
BOD^ contained In NPDES Permit No. [ ]:
Period 30-day Average (Ibs) 7-day Average (Ibs)
a) [month/year] [quantity] [quantity]
•
b) [month/year] [quantity] [quantity]
etc. etc. etc.
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16. During the following periods, the [City/
Utility Authority] discharged the following monthly (30-day)
average and weekly (7-day) average concentrations of Total
Suspended Solids ("TSS") from the [name] STP into the [receiving
stream], In excess of the effluent limits for TSS contained
in NPDES Permit No. [ ]:
Period 30-day Average (mg/1) 7-day Averace frr.c/1)
a) [month/year] [concentration] [concentration]
b) [month/year] [concentration] [concentration]
etc. etc. etc.
17. During the following periods, the [City/
Utility Authority] discharged the following monthly (30-day)
average and weekly (7-day) average quantities of TSS from the
[name] STP Into the [receiving stream], in excess of the
effluent limits for TSS contained In NPDES Permit No. [ ]:
Period 30-day Average (Ibs) 7-day Average (Ibs)
a) [month/year] [quantity] [quantity]
b) [month/year] [quantity] [quantity]
etc. etc. etc.
18. During the following periods, the [City/Utility
Authority] discharged the following monthly (30-day) average
and weekly (7-day) average concentrations of Pecal Coliforrr
from the [name] STP Into the [receiving stream], in excess of
the effluent limits for Fecal Coliform contained in NPDES
Permit Mo. [ ]:.
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- 7 -
Period 30-day Average (rcg/1) 7-day Averas-e "re/I
a) [month/year] [concentration] [concentration]
b) [month/year] [concentration] [concentration!
etc. etc. etc.
19. At relevant times the [City/Utility Authority]:
(a) discharged pollutants from the [name] STP
Into navigable waters on numerous occasions In a manner that
bypassed the treatment plant;
(b) failed to adequately operate and maintain
the [name] STP;
(c) failed to monitor effluent discharges as
required by NPDES Permit No. [ ];
(d) failed to report monitoring results properly; and
(e) failed.to notify EPA of permit violations as
required by NPDFS Permit No. [ ].
20. The discharges described In paragraphs 14
through 18 above violated Section 301 of the Act, 33 U.S.C.
§ 1311, and/or permit conditions or limitations Implementing
Section 301 of the Act. The discharges and omissions described
in paragraphs 19(a) and (b) above violated permit conditions
or limitations Implementing Section 301 of the Act, 33 U.S.C.
§ 1311. The failure to comply with the monitoring requirements
described In paragraphs 19(c) and (d) above violated permit
conditions Implementing Section 308 of the Act, 33 U.S.C.
§ 1318. The omissions described In paragraph 19(e) above violated
-------
permit conditions implementing Section 308 of the Act, 33
U.S.C. § 1318. The discharges, omissions and violations
described In paragraphs H»-l8, and 19(b), (c), (d), and
(e) above violated the Administrative Orders Issued by the
EPA pursuant to Section 309(a) of the Act, 33 U.S.C. § 1319(a).
21. Pursuant to Sections 301 and 309 of the Act,
33 U.S.C. §§ 1311 and 1319, the [City of / Utility
Authority] is liable for the imposition of Injunctlve relief
and the assessment of a civil penalty not to exceed $10,000
per day for each violation based on the [City's/Utllity
Authority's] violations of Sections 301 and 308 of the Act,
33 U.S.C. §§ 1311 and 1318, and/or of any permit condition or
limitation implementing Sections 301 and 308 of the Act, or
of any violation of the Administrative Orders. On information
and belief, the [City/Utility Authority] may in the future
continue to violate Sections 301 and 308 of the Act, 33
U.S.C. §5 1311 and 1318, and the conditions and limitations
of its permit Implementing Sections 301 and 308 of the Act,
unless the Court orders the relief sought herein.
SECOND CLAIM FOR RELIEF
(City of7Utility Authority)
22. Plaintiff realleges and Incorporates herein
paragraphs 1 through 21.
23. Pursuant to the National Municipal Policy on
Publicly-owned Treatment Works ("POTW's") Issued by EPA on
January 23, 1984, l»9 Fed. Reg. 3832 (Jan. 30, 198H), certain
types of municipal wastewater treatment facilities, or
POTW's, of which-the [name] STP is one, were notified of
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- 9 -
Impending enforcement activities by EPA for failure to comply
with statutory requirements and compliance deadlines in 'the
Act. Under the Policy, affected municipalities would be
required to submit to EPA either a Composite Correction Plan
(for a municipality with a constructed POTW) or a Municipal
Compliance Plan (where construction of new facilities was
required), with schedules In either event requiring compliance
as soon as possible but in no event later than the July 1,
1988 statutory deadline.
24. Implementing the National Municipal Policy,
and citing the violations described in the United States'
First Claim for Relief above, EPA on [date] Issued Administrative
Order [ number ] to the [City/Utility Authority] under
Section 309(a) of the Act, 33 U.S.C. § 1319(a), requiring the
[City/Utility Authority] to submit a [Municipal Compliance
Plan/Composite Correction Plan], requiring compliance not
later than [ date ], to EPA by [ date]. The [City/Utility
Authority] has failed to comply with Administrative Order
[number].
25. Pursuant to Section 309 of the Act, 33 U.S.C.
S 1319, the [City of / Utility Authority] is
liable for the Imposition of Injunctlve relief and the assessment
•
of a civil penalty not to exceed $10,000 per day of violation
based on the [City's/Utility Authority's] violation of Admini-
strative Order [ number]. On Information and belief, the
[City/Utility Authority] may In the future continue to violate
-------
Administrative Order [ number ], unless the Court orders
the relief sought herein.
THIRD CLAIM FOR RELIFF
(State of [ IP
26. Plaintiff realleges and Incorporates herein
paragraphs 1 through 25.
27. Pursuant to Section 309(e) of the Act, 33 U.S.C.
§ 1319(e), the State of [ ] Is Joined as a party and Is
liable for the payment of any Judgment, or any expenses Incurred
as a result of complying with any Judgment, entered against
the [City of / Utility Authority] In this action to
the extent that the laws of the State prevent the [City/Utility
Authority] from raising' revenues needed to comply with such
Judgment.
WHERFFOP.E, the United States of America prays that
the Court order:
1. Defendant [City of / Utility Authority]
to undertake a diagnostic study to (a) Identify all aspects
of noncompliance with the Act, the permit, and the Administrative
Orders Issued by EPA, (b) identify the causes of the violations,
(c) evaluate fully the need to construct additional capacity
or to take other steps to treat properly Influent to the plant,
and (d) to submit such study to EPA;
2. Defendant [City of / Utility Authority]
to develop a [Municipal Compliance/Composite Correction] Plan
for the [name] STP that describes the corrective actions
-------
- 11 -
necessary to achieve compliance with the NPDES permit and the
Act with respect to both current and projected future wastewater
loadings and flows, and that provides a schedule for completinp
the required work and for achieving compliance at the earliest
possible date but in no event later than July 1, 1988, and
that the [City/Utility Authority submit such plan to FPA and
make revisions to the plan as directed by EPA;
3. Defendant [City of / Utility Authority]
to implement the [Municipal Compliance/Composite Correction]
Plan including, as necessary, the construction of additional
t
capacity to treat Influent;
4. Defendant [City of / Utility Authority] to
comply with the Act and the NPDES permit Issued thereunder;
5. Defendant [City of / Utility Authority]
be permanently enjoined from any and all discharges of pollutants
except as authorized by the Act and the NPDES permit;
6. Defendant [City of / Utility Authority]
be assessed, pursuant to Section 309(d) of the Act, 33 U.S.C.
§ 1319(d), a civil penalty not to exceed ten thousand dollars
($10,000.00) per day for each violation of Sections 301 or
308 of the Act, 33 U.S.C. §§ 1311 or 131R, or of any permit
condition or limitation Implementing Sections 301 or 308 of
the Act, or of the Administrative Orders Issued by EPA;
7. This Court order relief as appropriate in favor
the United States and against the State of [ ] pursuant to
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- 12 -
Section 309(e) of the Act, 33 U.S.C. § 1319(e);
8. Defendants be ordered to reimburse the United
States for the costs and disbursements of this action; and
9. This Court grant the United States such other
relief as it may deem Just and proper.
Respectfully submitted,
F. HENRY HABICHT II
Assistant Attorney General
Land and Natural Resources Division
United States Department of Justice
Washington, D.C. 205530
[ Name ]
United States Attorney
[ ] District of [
I Name J
Assistant U.S. Attorney
[address]
OF COUNSEL:
C ]
Office of Regional Counsel
United States Environmental
Protection Agency
[Name J
Environmental Enforcement Section
Land and Natural Resources Division
United States Department of Justice
Washington, D.C. 20530
(202) 633-C ]
-------
VI.A.20.
"Interim Guidance on Joining States as Plaintiffs," dated December 24,
1986, as corrected February 4,. 1987. Reproduced at IV.B.32., this
compendium.
-------
VI.A.21.
"National Municipal Policy Enforcement", dated September 22, 1987, with
attachment.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
\ **>«?*' WASHINGTON. D"C.. 20460
SEP 2 Z 1997 ' •
_ .. . . . _ THE ADMINISTRATOR
MEMORANDUM
SUBJECT: National Municipal Policy Enforcement
TO: Regi. -1 Administrators
Following the Office of Water's FY 1987 National Municipal
Policy (NMP) Regional Audits and mid-year program evaluations,
I received an update from Larry Jensen on EPA Regional and State
progress in carrying out the Policy. I then discussed our
progress with you at the June 25th Regional Administrator's
meeting. I am convinced we must continue to demonstrate strong
senior management support in the final phases of-the NMP effort.
We have achieved a great deal since the Policy was signed
in January 1984. At that time, about 41Z of our major POTWs
had not installed the treatment necessary to meet CWA require-
ments (over 1500 facilities). Since 1984, over 400 major POTWs
have achieved compliance and all but 30 of the remaining majors
are on enforceable schedules or have been referred for judicial
action. Although this represents an early positive return on our
efforts, I am still concerned about the remaining workload that
must be addressed.
If we are to fulfill the objective of the Policy, we must
continue to push for the settlement of more than 100 EPA and
State referral actions as well as oversee and enforce over 100
£PA and State consent decree settlements or judicial actions.
Further, and equally important, we must assure that wastewater
treatment system construction for over 800 major POTWs on permits
or administrative orders is completed in a timely manner to
bring these facilities into compliance. Recently surfaced
facts on construction schedule slippage are alarming. In the
Office of Water FY 1987 NMP audits, the EPA Regions estimated
229 major POTWs with schedules .ast July 1, 1988 (96 with
existing post-1988 schedules ar.j 133 with anticipated schedule
slippage past July 1988). The Association of State and Inter-
state Water Pollution Control Administrators (ASIWPCA) in a
Spring 1987 survey covering forty-two States estimated 280
post-1988 schedules for major POTWs. ASIWPCA also estimated
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- 2 -
over 750 minor POTWa will require schedules past July 1988.
EPA and Che States muse ace to sec initial enforceable schedules
for many facilities and take timely and appropriate enforcement
action Co seem Che mounting number of violated schedules.
Given Che size of Che job and Che time remaining until
July 1, 1988, I ask that you become personally involved in
seeing that your Region and States work together to: 1) maintain
intensive oversight and cracking of remaining uncompleted POTWs,
2) enforce compliance schedules, and 3) assure that all Region
and State actions are taken in a nationally consistent manner.
To assist in this final push toward July 1988, I have
approved an enforcement strategy aimed at the following types of
noncomplying POTWs:
* Majors not yet oh enforceable construction schedules
or referred.
0 State nonjudicial construction schedules past July
1988.
0 Construction schedules that are not making acceptable
progress.
* Deficient State judicial actions and unfiled referrals.
This strategy has been transmitted to your Water Management
Divisions along with a mutually developed list of candidates
for enforcement action. I plan to monitor our progress regularly
on the remaining workload. This activity will continue to be a
focal poinC of our future meetings and I expect that you will
keep this high on the agenda with your States. We must work
together in Che coming months to successfully complete implemen-
tation of' the National Municipal PolJ.cy.
Lee M. Thomas
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. O.C. 20460
SE? J . 1397 ' Of net or
WATEH
MEMORANDUM
SUBJECT: NMP Enforcement Strategy
FROM: James Jr/^IHSerT Director
Water Enforcement & Permits
TO: Water Management Division Directors
Regions I-X
Attached is the NMP Enforcement Strategy, and the list of
your Region's enforcement candidates that is the key to carrying
out the final push to July 1, 1988. We have reviewed comments
from nine Regions and have incorporated them into the final
strategy. Regional responses were generally positive and sup-
portive of the strategy. The draft strategy was also discussed
with ASIWPCA's Compliance Task Force which agreed in principle.
There were some concerns expressed over the proper use of §309(-;:)
administrative penalties and these have been addressed in this
strategy as well as the agency guidance on the subject. Each
Region should work with its States to carry out this strategy.
Approximately 60 POTWs in seven Regions have been targeted by
either the Region or the State for enforcement action. In most
cases, this will occur before the end of the first quarter
FY 1988.
The Administrator is sending a memorandum to your Regional
Administrators stating his interest and asking for support in
achieving the goals of the Policy. The Enforcement Division will
continue to track the progress of these candidates (and others)
monthly and will keep the Adminstrator apprised of the status of
the Policy throughout the year. The status information the Regions
provided in response to our draft list of enforcement candidates
gave evidence of good State oversight and we look forward, to main-
taining this level of knowledge. I encourage you and your staffs
to wor< closely with my staff to make the best accounting possi Le
of our achievements.
Attachments
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NATIONAL MUNICIPAL POLICY
ENFORCEMENT STRATEGY
August 1987
I. Background
Since issuance of the National,Municipal Policy (NMP) in.
January 1984, EPA and the Scales have made substantial progress
toward bringing nor.complying POTWs into compliance with the goals
and requirements of the Clean Water Act (CWA). However, the
results of the most recent NMP audit show that a significant
number of facilities have 'not yet started construction, and,
where construction has commenced, many facilities are in violation
of the interim milestones in their schedules.
There are several different estimates of the number of major
POTWs that will not meet the July 1, 1988 deadline: the Regions
identified 229 major POTWs during «-he NMP audits? ASIWPCA reported
290 aajor POTWs (based on a 42 State survey)? and OWEP estimates
300 - 400 aajor POTWs by next year. The estimates with respect
to minor PCTWs no' r.eeting 'he deadline are even larger: the
Regions reported IE" -inor ?OTWs? ASIWPCA's survey identified 792
ninor POTWs? and OWE? expects the number to reach 1000 (which is
about one half of the universe of unconstructed NMP minors).
The NMP audit results show that, out of a total of 638 major
facilities that were scheduled to start construction by 12/31/86,
82% had actually begun construction, leaving 114 facilities in
violation of their start construction date. In addition, cu' of an
audit sample of 252 facilities, the Regions/States had verified
that 78% of «-he major POTWs scheduled to start construction had
actually done so. Finally, t;iere are a large number of aajor
facilities (412) that were not scheduled to start construction by
12/31/36, which puts in doubt that 'hese facilities will be able
to complete construction by the July 1, 1988 deadline.
In addition to problezs with schedule slippage, there are
also some problems with the requirements and provisions in the
enforceable schedules that are in place. Several States have
recently initiated or settled cases involving NMP facilities 'ha*
will r.s* meet the July 1, 1988, deadline for-compliance wi-h
applicable effluent limits: nore than 65 cases have been set-led
in State courts to date, and another 40 cases have been referred
fo State Attorneys General for action. Based on an analysis of
available settlements, i' appears tha' many of the schedules
allow far too much time for compliance without sufficien' jus'i-
fication on either a 'echnical or financial basis, extend well
oeyond 'he July 1, 1998 deadline, and/or are based on receipt of
construction grants. In addition,, very few Si-a'es have been
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-2-
collecting civil penalties or imposing equivalent sanc-icns fcr
past violations.
II. The Regions' Approach to These Issues
A" "he recent National meeting of the Compliance and Permits
Branch Chiefs, the Regional representatives from all Regions
discussed the issues outlined above and how these problems ffligh"
be handled. The discussion resulted -in formulation of four basic
questions, and, in a subsequent poll of all the Regions, the
majority concluded the following:
1. Q: Should administrative orders (AOs) be used to establish
schedules "hat extend beyond July 1, 1988 (majors and minors);
A: EPA and the States should not use AOs for major POTWs
with schedules that extend beyond July 1, 1988; all such
schedules should be contained in judicial orders. EPA should
also consider judicial action for minor POTWs; where available
resources preclude judicial action, EPA and the States should
use AOs with penalties.
2. C: How should EPA respond where States establish enforceable
schedules that are unnecessarily long or that are based on
• receipt of grant funding?
A: Where States establish inappropriate schedules (excessively
long without a sound technical basis or based on receipt, of
a construction grant), EPA should initiate direct Federal
action in order to obtain the most reasonable, expeditious
schedule.
3. 0: How should EPA respond where State actions do not contain
appropriate penalties or equivalent sanctions?
A: Where States assess penalties that are grossly deficient cr
fail to impose equivalent sanctionr, EPA should initiate
direct Federal action in selected cases. Where resource's
preclude judicial action. Regions may also want to consider
using their administrative penalty authority in certain
cases.
4. 0: How should EPA respond **o serious delays in schedules
Cjudicial and non;udicial), especially where such .3 delay
jeopardizes the July 1, 1938 deadline? What w-arran"s an
escalation of enforcement response?
A: Where "here is significant slippage in meeting compliance
schedules, EPA shcuid escaia'e enforcement action (including
situations in which "he S"ate does not take appropria*e
er.forcemen" response). Significant delays are defined as: 90
days or r.ore beyond -he s-art cons" rue" ion da-e; and 12C lay
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-3-
or aore beyond '•he end cons^rjcr ion da'e. EPA should escala-e
enforcement by firs*, exercising its administrative penal'/
authority, and la'er moving *-o Judicial action if violations
continue.
EPA should consider judicial action in all cases where schedule
slippage far major POTWs jeopardizes the July 1, 1988 deadline
(and for amors as resources allow).
III. Candidates and Priorities for Enforcement Action ,
CATEGORY A; MAJOR POTWS NOT YET ON SCHEDULES OR REFERRED. All
aa-jor POTWs that are not yet or. enforceable schedules should
be considered candidates for judicial action except where
there is a reasonable expectation that the POTW can meet the
July 1, 1988 deadline"Regions and States should typically
place low priority on action against §301(h) facilities,
except where there are violations of requirements that will
not be affected by the v/aiver process. Where a POTW does not
have final effluent limits, that facility should be excluded
froa enforcement until resolution of applicable effluent
limits.
CATEGORY 2; POTWs ON STATE SONJUDICIAL SCHEDULES PAST JULY 1,
1988. Where r.ajcr POTWs are on State nor.jucicial schedules
"hat extend beyond July 1, 19B8. especially where schedules
appear to be excessively long, Regions should initiate judicial
actions for those facilities with schedules that extend the
farthest past the deadline. In other cases, especially where
it appears that the facility will complete construction
before the deadline but not achieve compliance until afterward.
Regions should issue administrative orders for penalties.*
Regions should also initiate some judicial actions against
zinor PCTWs in this category. Where resources preclude
judicial action. Regions should use administrative orders
for penalties.
CATEGORY C; POTWS WITH SERIOUS SCHEDULE DELAYS. Where major
POTWa on Federal and State enforceable schedules are not
aaVing acceptable progress, Regions should escalate the
enforcement response based on the length of delay in meeting
Key milestonesT*Where major PCTWs are on administrative
schedules and have missed their "start construction" date by
-ore »-han 90 days and are likely to aiss tr.e July 1, 1999,
deadline as a result, Regions and States should take judicial
action; adziir.is'-ra'- ive orders for penal" ies .-nay be used for
some of >-he less serious cases involving major POTWs and fo.-
ni.-ior POTWs if resources are not sufficient ^o proceed wi-h
judicial action.* In cases where major and ninor POTWs are on
non-judicial schedules and slippage of 90 days will no*- jeopar-
dize needing <-he July l, 1938 deadline. Regions and S'a'-es-
should issue •adninis* ra-ive orders for penalties.
" Ir. .-hese "wo cases, AOs :or penalties only should be used
rar'r.er 'nan AOs 'o expend '•he schedule.
-------
Where any facility fails "o comply wi"h any 3Ules"o.-.e in a
judicial order. Regions and S"a"es should demand s"ipula-ed
penalties or impose sanctions as defined in "he judicial
order.
CATEGORY D; DEFICIENT STATE ACTIONS/REFERRALS THAT AR£ .VQT
FILED IN A TIMELY MANNER; Where major POTWs are on s»ate
judicial orders that do""not contain appropriate timetables
and/or obtain a grossly deficient penalty or equivalent s"anc-
~ion EPA should initiate direct Federal action. Where cases
have been referred but not filed in a timely manner, EPA
should initiate direct Federal action. In making deteraina-
tions regarding appropriate timetables. Regions should consider
the following factors: schedules that do not appear "o have £
sound technical basis or financial justification; schedules
that are significantly extended in. order to allow a facility
"o obtain a construction grant; and schedules that depend on
receipt of a construction grant and would be unenforceable•in
the event .the grant is not awarded. With respect to penalties
or equivalent sanctions, Regions should adhere to the National
Oversight Guidance tha" calls for direct Federal action where
a penalty (or equivalent sanction) is grossly deficient in
the circumstances of a given case (page 19). With respect to
timeliness of referrals. Regions should use the guidelines in
the National Oversight Guidance that call for cases to move
from referral to filing in 60 - 90 days (page 13).
In carrying out this entire enforcement strategy. Regions should
be faailiar with the "Guidance on State Actions Preempting Civil
Penalty Actions," which was recently circulated in conjunction
with the materials prepared to support implementation of the new
WQA administrative penalty authorities.
Regional Comments on the Draft Enforcement Strategy
The primary comments on the strategy involved EPA's ability
to assess administrative penalties when there are violations of
administrative schedules. A strict reading of the statute shows
that 309fg) administrative penalties may not be assessed direc-ly
for violations of a compliance schedule in an 309(a) administ'ra" ivs
order. . This, however, is not inconsistent with the enforcement
strategy. A penalty assessment in such a case would be based on
violations of the underlying permit limits (which were used as
"he basis for issuing the 309(a) order.) Essentially, a 309(a)
order implies that EPA will refrain (inforaally) from enforcing
••he underlying permit violations if the permittee complies wi-n
-he 309(a) adminis"ra" i ve schedule. When the permittee violates
"he administrative schedule, the underlying perai" viola" ior.s ara
not (informally) 'excused1 and are subject to further enfores-en*.
In this case, "he enforcer-ten" is "hrough assessmen" of an
administrative" penal"-/. The s-a^ed basis of a 309(g) penalty :n
•hese cases will always be "he underlying permi" viola"ions,
which is consis."enr *:"h 'he guidance on adaini3"ra"ive penai-125.
-------
VI.A.22.
"PRESS BRIEFING MUNICIPAL COMPLIANCE WITH THE CLEAN WATER ACT", dated July
27, 1988. Selected portions.
-------
PRESS BRIERNG
MUNICIPAL COMPLIANCE
WITH THE CLEAN WATER ACT
JULY 27,1988
LEE M. THOMAS
ADMINISTRATOR
OFHCE OF WATER
U. S. ENVIRONMENTAL PROTECTION AGENCY
-------
MUNICIPAL COMPLIANCE WITH THE CLEAN WATER ACT
National Press Briefing
July 27, 1988
Table of Concents
National Press Release
Graphs and Charts
Progress Meeting National Municipal Policy (NMP) Goals
- Meeting the NMP Coal
- Status of NMP Majors
- State-by-State Compliance Achieved by
Major Sewage Treatment Planes
- Treatment Levels of Post 1988 Majors
- Status of NMP Minors
- Major vs . Minor
Status Sheets
- Summary Tables of National Status as of July 15. 1988
Majors and Minors
- List of NMP Majors that met Clean Water Act Requirements
- List of NMP Majors'that did not meet Clean Water Act
Requirements but which are on a Schedule
- List of NMP Majors that did not meet all Clean Water Ace
Requirements and are not on Final Schedule
List of Federal Judicial Enforcement Cases
Fact Sheets
- Background on Municipal Treatment Plants and the Environment
Impact of Compliance with the Clean Water Act
- Outreach Activities to Promote Compliance
. - Summaries of Key Enforcement Cases
Questions and Answers
-------
PRESS BRIBING
MUNICIPAL CGNPUANd
WITH THE CLEAN WATZ3 ACT
JULY 27,193d
GRAPHS AND CHARTS
- Progress Meeting 'IMP Goals
- Meeting the NMP Goal .
Status of the NMP Majors
- Status of the NMP Minors
- Treatment Levels of Post 1988 Majors
State-by-State Compliance Achieved by Major Sewage
Tre*«:ment Plants
- Major vs. Minor
DEFINITION OF TERMS
NMP - National Municipal Policy which was signed in January 1984
and is discussed in the press release.
ftr
Majors - generally those sewage treatment plants which provide
service to a population of 10,000 or more persons or have a flow
of one million gallons or more per day.
Minors - all sewage treatment plants other than the majors which
provide service to a population of under 10,000 or a flow of
under one million gallons per day.
Treatment Levels - primary treatment, secondary treatment and
advanced wastewater treatment processes; for a detailed
discussion please see the Fact Sheets in this package.
OFRCE CF WATER
U. S. ENV3KJNMENTAL FflOTECTCN
-------
United-State*
Environmental Protection
Agency
Office of
Public Affeir* (A-107)
OC 20440
x>EPA Environmental News
FOR RELEASE: WEDNESDAY, JULY 27, 1988
Dave Ryan (202) 382-2981
iPA ANNOUNCES
SIGNIFICANT
PROGRESS IN
1EETING U.S.
:LEAN WATER
DEADLINES
Eighty-seven percent of all publicly-owned sewage
treatment plants in the country met the congressionally-
established July 1, 1988, deadline for legally-required
pollution cleanup, EPA Administrator Lee Thomas announce-!
today. As a result, 95 percent of the total sewage
processed in the United States receives secondary or
better treatment. Secondary treatment protects punlir
health from the disease potential of human waste and a'.--
protects fish and other aquatic life.
Thomas cited both voluntary compliance and federal
and state enforcement efforts as reasons for achievement
of the 87-percent compliance figure. Municipal compli-
ance with water pollution control laws has been an ZP\
priority since 1984, when the agency established its
National Municipal Policy (NNP). The NMP required
municipal compliance by July 1, 1988, whether or not a
city got federal funding for sewage treatment plant
construction.
The 87 percent which achieved compliance with the:-.
water pollution control permit requirements serve 108
million people nationwide. Of the remaining 13 percent
of sewage treatment plants in the United States, most
are oh enforceable timetables leading to compliance 01
are in some stage of a judicial process leading to the
establishment of these timetables.
Speaking at a joint Washington press briefing wi-i
Roger Harzulla, U.S. Justice Department Assistant
Attorney General for Land and Natural Resources, and
Roberta Savage, Executive Director of the Association ie.
State and Interstate Water Pollution Control. Artminist: a-.-
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-2-
rhomas praised th« cooperative federal and state effort that made this
compliance success possible:
"Under the landmark 1972 Amendments to the federal Clean Water
^ct, Congress set for a pollution-plagued nation the formidable goal -'.
naking most U.S. waters fishable and swimmable again," Thomas said. "^
large part of this task was cleaning up wastewater from our often over'.:i*a
and overworked municipal sewage treatment plants. To meet this cnall-*-!;-. -;
goal, Congress mandated a joint federal-state cooperative effort in poll..-.*
cleanup. Since 1972, EPA has provided over S45 billion in federal gra-t;
;o help local communities build and upgrade sewage treatment facilities.
vith state and local governments contributing an additional S15 billir-. -.-
Hatching funds. Although the majority of municipalities have met the
nation's clean water goals, there has been recalcitrance, but EPA, the
J.S. Justice Department and state officials have been aggressive in briiv.--
:hese cities into compliance. More than 125 lawsuits have been filed ~>y
:he federal government against municipalities since 1984 to obtain coniplu-
mder the NMP. The 87 percent compliance rate of U.S. sewage treatment
jlants is a success story of which state and federal environmental ofific: il
ran truly be proud."
The vast majority of Americans are served by publicly-owned (taxpay-
supported) sewage treatment plants (POTWs). Of the rivers and streams
Jnited States that do not meet their state water quality standards, 1"
>ercent are failing because of pollution from POTW's. For estuaries, : I
lercent are not meeting their standards because of POTW's.
For Treatment plants, meeting the July 1 deadline meant complyi-- - . --
ermit requirements to provide at least secondary treatment of wastes.
econdary treatment is the second stage of sewage treatment, in which
acteria is used to eliminate organic human waste. (The first step i-
ewage treatment is called primary treatment, in which screens and se::-->--
anks are used to remove most materials that float or settle.) Secorla:/
reatment protects communities from the disease potential of untreated
.uman waste and removes materials that can rob waters of oxygen necessj; .
or aquatic life. For some treatment plants, the July I deadline was -..-?•
.0 permits requiring more advanced waste treatment that significantly
educes materials like nitrogen and phosphorus, which can also chT
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-3-
The NMP mad* it clear that, with or without federal funding, EPA and
the states would b« pushing municipalities to meet their permit requirements
by July 1, 1^88, or sooner i'f possible. The sole exceptions were those
cities that could prove they were physically or financially unable to
complete construction by this deadline; however, they generally would have
to abide by court-enforceable schedules to achieve compliance as quickly
as possible.
There are about 15,500 publicly-owned treatment plants in the United
States. About 3700 are what EPA calls "majors," defined generally as
plants designed to serve 10,000 or more people and to process one million
gallons or more of wastewater a day. The rest, which EPA calls "minors,"
total about 11,800.
Of the 3,700 total majors, 2,200 had achieved compliance by 1984.
The NMP focused on the remaining 1,500 major sewage treatment plants
which had not achieved compliance as of 1984. As of the July 1, 1988,
deadline, over 1000 achieved compliance. Of those not achieving compliance.
the majority are on enforceable court schedules or are the subject of
federal or state judicial actions. Further, over 60 percent of the remainvn-
.NMP majors not in compliance already provide secondary treatment or better.
Of the ll,8no total minors, 9,300 had achieved co-npliance by 1984. The
> focused on the remaining 2,500°minor sewage treatment plants which had
not achieved compliance as of 1984. As of the July 1, 1988, deadline, ov-?;
800 have achieved compliance. . Of the rest, approximately 1,500 are on
enforceable schedules or are the subject of federal or state enforcement
actions.
"As impressive as these figures are," said Thomas, "EPA and the states
have no intention of slacking up on our enforcement efforts. We are
reaffirming our commitment to bring all sewage treatment plants in this
country into compliance with the law and to make sure these plants remain
in compliance. Together, we will ensure that all plants currently on
enforceable compliance schedules stay on those timetables and that those
plants not yet on schedules are put on them as soon as possible. I want *."
make it absolutely clear that EPA is prepared to take additional enforceme-*.
actions against cities that refuse to cooperate in orotecting the environ----
and health of th«ir citizens."
-------
1
o:
O
MOO-
MOO
1200
1000
800
•00
4OO
200
PROGRESS MEETING NMP GOALS
MUNICIPAL POLICY |
OKSCHEOULC
OR UNOCR WJtURAL
.^[CONSTRUCTION SURT5] f
^
lACmCVCD COMPUAMCtl
12341234123412341234
nrss
FISCAL QUARTERS
nrae rrs?
rraa
-------
Progress Meeting NMP Goals
-------
STATUS OF NMP MAJORS
ALL MAJORS
POST 1988 NMP
TOTAL MAJORS UNIVERSE - STStlttSS PNE-NMPI
TOTAL NMP MAJOM UNIVEHCC - M7S
ACHIEVED COMPLIANCE - 22SS+ IOM a nm OF ALL MAJOM)
• JUDICIAL - tM
ADMINISTRATIVE - 4O
•• FILED - SO
MKMIO MIT NOT YET FILED - M
F1ANNCD MEFEHHAL OB OTHEM ACTION - *•
-------
[TREATMENT LEVELS OF POST -lass MAJORS
ALL MAJORS
NMP ACHIEVED
COMPLIANCE:
i'J •
TOTAL fOTVTS SECONDARY OH MCATf N - MT4 1MB TOTAL POTWI
PflE-NMP - £U>
NMP ACHIEVED COMPUANCf - 10M
POST )••• NMP - 2*4 (174 SEC/10 AT.)
-------
LJ j oi MIL!, ^W^-LlAlNUfc AUtllE VU1J
BY MAJOR SEWAG! ^ ilMENT PLANTS
IIIMI'I IANI.K
I I HI •»•»
. /Vl "10
-------
STATUS OF NMP MINORS
ALL UINORS
POST 1988 HUP
TOTAL UINOMI UNIVEHM - 1I7M(»U7 PME-MUP)
TOTAL NUP UIMOftt UNIVERSE - MM
ACHIEVED COUPUAMCZ - M«7+*M (••« OF AU UIMOM)
PO*T !••• NUP - \m |M« OF AU UIMOM)
ON ENFOMCEAILE
•CHBMJLU - U3I •
• JUDICIAL - 3U
AOUINKTMATIVC - tn
1 KfamGD - IM
PLANNO) RCPGHIIAL Oil OfMEN ACTION - IM
-------
MAJOR VS MINOR
TOTAL SEWAGE TREATMENT FLOW
POPULATION SERVED
TOTAL SEWAGE TREATMENT FLOW - *0,OOO MOO
MINOH iEWAaf THEATUENT ROW - I.JM MOO
TOTAL POPULATION KNVEO - I4O MILUON
MINOfl POPULATION KHVED - !• 7 MILLION
-------
PRESS BRIERNG
MUNICIPAL COMPLIANCE
WITH THE CLEAN WATER ACT
JULY 27,1988
STATUS SHEETS
OFFICE OF WATS*
U. S. BMRONMBfTAL PROTECTION
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Municipal Compliance
with che
Clean Water Ace
National Municipal Policy ,
(Issued January 1984)
Total Major Sewage Treatment Plants: 3731
1478
1055*
423
235
2253 majors net
CWA by Jan 1984.
(NMP Date)
40% Needed Construc-
tion as of Jan 1984.
71X (of .NMP)
89% (of all Majors)
Affected by the Policy:
Met CWA Requirements:
Have Not Met CWA Requirements:
On Enforceable Schedules:
0 Judicial 195
0 Administrative 40
Not On .Schedules :
e Judicial Referrals-. 150
0 Planned Referrals 28
0 Other 10
Figure includes 90 POTWs that have either completed construc-
tion and are operational, but whose effluent data have not been
verified, or_ who will achieve compliance by the end of September.
188
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Municipal Compliance
with che
. Clean Water Ace
National Municipal Policy
(Issued January 1984)
local Minor Sewage Treacmenc Planes: 11755 9257 minors (79%)
raec CWA by Jan 1984.
(NMP Dace)
Affected by Che Policy: 2498 211 Needed Conscruc-
cion as of Jan 1984,
«.
Mec CWA Requiremencs: 826 33X (of NMP)
861 (of all Minors)
Have Not Mec CWA Requiremencs: 1672
On Enforceable Schedules: 1231
s
0 Judicial 252
0 Adni-niscracive 979
Noc On Schedules: 441
0 Judicial Referrals: 259
0 Awaicing Accion: 182
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PRESS BRIERNG
MUNICIPAL COMPLIANCE
WITH THE CLEAN WATER ACT
JULY 27,1988
MAJOR MUNICIPAL FACILITIES
LIST A : NMP Majors Sewage Treatment Plants
that have met requirements
3300
(2253 Pre-NMP,
1055 NMP)
LIST B : NMP Majors that did not meet all
CUA requirements and final
schedule is established 235 •
LIST C : NMP Major that did not meet all
CWA requirements and final
schedule not established or
other unresolved issues 188
NOTE: The National Municipal Policy majors 'are presented i:
Lists A, B, and C which follow.
(See Fact Sheets for definition of treatment level)
OfflCE OF WATER
U. S. BMRONMBYTAL PROTECTION AGENCY
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