S UNITED STATES ENVIRONMENTAL PROTECTION AQENCY
    i                :WASHINGTON> D.C. 20460 ;   ^-i   ^   ;, -:r
       ••'••'. •••"". ';.-.: 2G-->.'    ;••„  '  ,,  _         '...-- •>>cs^..'.J ,
                          APR 2 3 1984
                                                           OFFICEOF
                                                         ENFORCEMENT AND
                                                        COMPLIANCE M6NITORING
MEMORANDUM
SUBJECT:
FROM: ,
TO:
  Water Enforcement/Compliance Guidance^Maftual—
      pendium of.. Operative' Pblici.es     -      .;
   Courtney M.
  Assistant Administrator for. Enforcement
     and Compliance .Monitq^i
                E. Ravan .
                     Admi
(/ Regional .Counsels-^             • .;i. .---: -...-.irt. ;?\"
•  Regional Water Mana.geme/ri-t.-Division^ Di-j35;cto^3g&, '^' s _••'•'
'•..-. Director, Off ice. of.,-W.a.'i:er"::Enfo-rcement~ andrP^:tti.i:t.g:
  Associate Enforcement'Spuhsel  for Water -Etiif^rc;ein^nt
.  Director, National  Enforcement- Inve.stigati'i^'^Ceriter
  Assistant Administrator for Policy,  Planning ...
     and Evaluation-     ;    .  -...,:-
  General. Counsel       x     -:".-.   '   . '•'-
     As  a  part of our  effort to produce guidagce"( mapusi'ls {f ar1'";
personnel  involved,  in. case, developmiaiit  activities- -for.Ith4.'^ljna.:te.d
States Environmental Protect ion. Agency;, -we .are transiri^t9tsih^;: tOv;
you the  Compendium  of  Operative Water 'T2nforceme'nt  Pbl^ise.ies^.. ,50 «i
The Compendium contains" currently -effective en'forceme'itt ppl4cles
and guidance as well as procedures  governirng csertain. aspects
of the day-to-day operation of .iegal  and technical .compliance •'
and enforcement activities.  "   .  .    "  . .; -';:. '   =     :•':•  . •    .-•:•„:-;

     While the Compendium is up-to-date', we have 'hote'<|-therein
that some  policies  are under?.review, and have provided qualifi-
cations  for other policies.  'As new.(policies are formulat'e'd  ''•
and new  guidance is issued,'we will also; inform you of'a'ny
changes.                   .  /

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                              -2-

     We intend to update the Compendium periodically and welcome
comments on it or on policy issues which might be addressed in
the future.  Ques'tions or comments on the contents of the
Compendium can be addressed to Allen Danzig, of the Office of
Legal and Enforcement Policy (FTS-426-7503, Mail Stop LE-130A).

Attachments

cc:  Regional Administrators (w/o attachment)
     Regional Enforcement Contacts (w/o attachment)
     Chief, Enforcement Section, Lands and Natural Resources
            Division, DOJ (w/o attachment)

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TABLE OF CONTENTS

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TABLE OF CONTENTS

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TABLE OF CONTENTS

This compendium contains the following Water Compliance/Enforcement
related policies and guidance currently in effect.
  TITLE OF DOCUMENT
DATE' OF DOCUMENT
General Guidance

Guidelines for the Issuing of
Administrative Compliance Orders
Pursuant to Title III, Section
309(a)(3) and (a)(4) of the Federal
Water Pollution Control Act, as amended
(33 U.S.C. 1319 (a)(3) and (a)(4).

Computation of Economic Benefit of
Delayed Compliance Under Civil
Penalty Policy

Statements by Agency Personnel
Purporting to Sanction Source
Actions Which are Inconsistent
with Statutory Requirements

Civil Penalty Policy

Neutral Inspection Plan for the •
NPDES Program

Direct Referral

Municipal and Pretreatment Enforcement

POTW Compliance with NPDES
Permit Effluent Limitations

Coordination Between Regional
Enforcement and Water Programs
Personnel in Implementing
the National Pretreatment
Program
April 18, 1975
September 27, 1-9.78.



May 287 1980




July 8, 1980

February 17, 1981


October 17, 1983



January 5, 1977


November 29, 1978

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                               -2-
Municipal Management
System, (Appendix E Only)

Pretreatment Compliance
Strategy (Short Term)

National Municipal Policy

FY 84 Pretreatment Enforcement
Activities

Section 311 Enforcement

Oil Spill Enforcement
                                      «
Civil Penalties Collected for Violations
of 40 CFR Part 112-Transmittal to USCG
Districts of Deposit in Revolving Fund
Account .

Spill Prevention Control and
Countermeasure (SPCC) Plan Program

Section 404 Enforcement

Letter From Attorney General
to Secretary of the Army
regarding Section 404 of the
Clean Water Act

Solid Waste Discharges under
Consolidated Permit Regulations:
Procedures Pending Corps of
Engineers Agreement with Changed
Definition of Fill Material

Enforcement of Section 404 of the
Clean Water Act

NPDES Permitting

Permits Division Policy Book - Contents

NPDES Permits Authorization
to Discharge

State Regulation of Federal
Facilities Under the Federal
Water Pollution Control Act
Amendments of 1977 (Clean
Water Act) — POLICY GUIDANCE
MEMORANDUM

Confidentiality of NPDES
Permit Applications
March, 1980


October 28, 1983


January 30, 1984

April 13, 1984




January 8, 1974

December 24, 1974
April 23, 1975
September 5, 1979
August 18, 1980
November 25, 1980
June 23, 1982

April 28, 1976


March 10, 1978
April 6, 1978

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                               -3-
Certification and Permitting
of Dischargers Located on
Waters Forming Boundaries
Between States

Use of Biomonitoring in the
NPDES Program

Inclusion of Compliance Schedules in
Se'cond Round Permits and
Newly Issued Permits

Incorporation of Pretreatment Program
Development Compliance Schedules
Into POTW NPDES Permits

Policy for the Second Round Issuance
of NPDES Industrial Permits

Continuance of NPDES
General Permits Under the APA

Policy for the Development of Water
Quality-B-ased Permit Limitations for
Toxic Pollutants

NPDES Hearings

Ex Parte Contacts in NPDES
Adjudicatory Hearing Decisions

NPDES Evidentiary Hearing
Management Program

Drinking Water Enforcement

Regional Guidance - Emergency
Action on Water Supply Hazards

Safe Drinking Water Act Public
Water System Settlements-
Interim Guidance

Public Water Systems Compliance
Policy

Water Supply Guidance on
Expired Exemptions

Draft Enforcement Guidance
Regarding Public Water Systems
in States Which Have Primary
Enforcement Responsibility
April 19, 1978
January 11, 1979
January 19, 1979
January 28, 1980
June 2, 1982
January 16, 1984
February 3, 1984
June 16, 1978
October 3, 1980
December 28, 1976
November 17, 1983
January 18, 1984
January 31, 1984
April 10, 1984

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General ©uidanee

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General Guidance

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      i)'   UNITED STATES ENVII?ONMl£N : AL 1-RCTLCriCN AL-L.NCY
      .-
"*.    .v                  WASHINGTON. f.C. 20-1150
 '"I oao'*-


                           April la,  1975
                                                   •:>! i-icr OF !Cf.,''v;;c. .••:£::"


     MSHORAMDUM

     To:       Regional  Enforcement Directors

     From:     Acting Deputy Assistant Administrator  for
                 Water Enforcement

     Subject:  Guidelines  for the Issuing of Administrative
               Compliance  Orders Pursuant to Title III, Section
               309~(a) (3) and- (a) (4)  of the Federal Water
               Pollution Control Act,  as amended  (33  U.S.C.
               1319(a)(3)  and (a)(4))
          Attached are  guidelines for the use of Section
     309 (a) (.3) Administrative Orders in the enforcement process

          These requirements  and recommendations are  the  result
     of a Headquarters'  review of the Section 309 Findings  and
     Orders issued by  the  various regions.
                 i
          In line with  EPA policy for even-handed not Lena I
     enforcement of  the Federal Water Pollution Con tr/\l Ac'c,.
     as amended, adherence with these guidelines should result
     in more general uniformity in the use, preparation and
     processing of this valuable enforcement tool.

          If you have any  questions or comments, olease contact
     S. I. Olson,  (202)  755-0994.
                                    J .  Brian Mo I.lay

     Attachment

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                     Section 30'J(a)(3) Adrr,.i uist.r;it ivc  Oruor:;
               VLJNUL-:,  T.LTL.K,  DOCKJ:'" ••.\.viiiLi-. /-.NO  i-i--i-:,\i\i'.:.i-: I'/M'-ACI-'AI
      Using  legal-sise  caper, Uho foilovj.::<;  ?oi---,ac  r.ho'J.i'1 !•.• folio-.
the venue, title, .docked identification and  nfaamijle paragraph:
                                  UNITED STATES
                         ENVIRONMENTAL PROTECTION  AGIiUC'/
                                    REGION XI
IN THE MATTER OF

DCE-ROE CHEillCAL  COMPANY

PROCEEDINGS  UNDER SECTION
309(a) (3)  and. (a) (4) ,. FEDERAL WATER
POLLUTION  CONTROL ACT,  AS AMENDED
(33 U.5.C. Sections 1319(aH3) and
(a)(4) in  re MPDES PERMIT NO.   	
DOCKET MO.   XI-75-06
FINDINGS OF  VIOLATION
         AND
ORDER FOR CGMP MANGE
       "The  following FINDINGS are made and ORDER issued pursuant to  the

authority vested in the Administrator of ths Environmental Protection
                    |
 \gency by the  above referenced statute  (hereinafter the Ace)  and by  hi:r.
                    i .
duly delegated to the Regional Administrators of said Ar-ency."

                                 Venue and Title       •-.       '    •-*'•'•

       The Region identification is added to the  venue to establish ':hc
specific venue of the issuing authority.  Also,  unless the full address
of the Region  is given under the Regional Administrator's signature  to
the Order or on the blueback cover (which is to  be  preferred), it would
be helpful  to  add. it to the venue here.

       The offender is net designated in the title as "PERMITTEE" or  other-
wise.  Although not necessarily objectionable such  designation, where
.appropriate, is not required.  However, the designation of "DEFENDANT"
definitely  would be inappropriate and should not be used.

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                                       -2-
     To  identify the prcc-jcd.i:ic, 5 docket i-.'j;-.i:er is  r-./:'..i-.red.  r-:!:i;r:r
 .han the  use  of the :-i?Ci:S r.^Ti^r (vhich if used in the  :"or-.T-  at -nil
should r.ore  logically be referred to under the ?rocao:Iir.g-  idcntificcition
in the'title).   The docket number above ider.tifios the  Ordr:r -in  hoir.g
the 6th  Order issued in 1975 in Region XI and should bo sufficient,
assuming  that an Administrative Order docket is kept separate  from any
other docket  for such natters as adjudicatory hearings.   If a  ccr^.on
docket is kept (which would appear inadvisable) then a  prafi:-:  should
be added  to  the docket nunber thus:  "XI-AO-75-Qi?" (Underlining  supplied).

                               Preamble Paragraph.

     The  preamble paragraph is important not Only to establish the
Administrator's authority to issue the Order but also to  ustnblir.h th~
delegation of authority to the Regional Administrator.   If  the Kccricr.ni
Administrator re-delegates his authority to the Director  of the  F.agirriai
Enforcement  Division under EPA Order 12GO. G • (Sept. 14,.1273),  thi:i re-
delegatinn should also be alleged here or in the"prea.Tbla to the Crdcr
portion  of the Findings and Order.  It should be not'^d  that t.hero in .no
authority to  re-dsiegate this authority to snyor.2 else.   If the  re-delegation
is alleged here,the paragraph should be amended by  adding:


          "which authority has been duly re-delc.c:ated by  the .::;egionnl

     Administrator of -Region XI to the (undersigned) Director,  Knfcrcerr.ent

     Division,'Region XI".

     AJI  Administrative Order can be sighed by a duly authorized  Acting
Regional  Director.   Hov/avar, it should never be signed  by anyone
"for" the Regional  Director.

                              Fi:mi:-iG3 or VIOLATION

     Most of  the Findings and Orders reviewed contain adequate allegations
as to specific permit (or statutory or regulation)  rcauirGmnni-<;  "iolat-.^d
and Che  specific nature of the violations.  flow-ever, in scr.,-> cas'.-r; it: is
difficult to  determine from the face of a given set of:  rind Lnr':i  wlietin-'c
the Order v;as necessary, tiinely, and the rcir.edy wna appropriate  dtr vhctlsor
the terms of  the Order appear too severe or too l^nienf.  The KincUnos  and
Order should  be able to stand by itself without r^ferencr to t:xtrancou.t
facts.  Seme  of the Findings examined speak to ail the:  portintnt factr; <'ir.d
law much  as a complaint in a civil action.  In sorr.e instance's., it i^- necc^s^.r

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to know  fact:;  not  .o.lloc'jd,  although the/ T.V/ be inf^rro.:;,  by  ::••• LY. i: i"L.-:-.r
to background  and  c-iior  data noc explicitly oreilcd out:  in the  i ::;-Lrur;:ent
itself.  V.'ith  these  cbservauions in mir.d t'.c folloving r^quir':mr:ntr or
BGCornendations  are  nade with respect to tie specific facts  to bo  'illsged
in the Findings  of Violation:
                  Allegation as to Legal States of ?cr.~i':'.:ee

     It is sound  legal  practice as a practical natter ..-.r.d  frcm  a  iony
ranee Isgal standpoint  to  spell out the specific legal s'-.atu.s of  the
permittee  (corporation, partnership, name of municipality)  in the  first
paragraph of  the  findings  in order to establish of record  the yorKcns
designated for  service  by  section 309 (a) (4) .

     While objections to personal jurisdiction may not vftcn be r~ir:ed,
it would be good  practice  to make as positive a record as  por:;iL.-li;  from
the Findings  and  Order'and the Return of Service or other  file  record
such as a copy  of a  letter of transnittal, v/i-h return receipt  attached,
that sufficient service has been made and reasonable nctic-? given.   This
practice would  se'em  particularly acviS'ible in view of the  fact  that,  v/icH
few exceptions, the  Regions have been making service by certified r.nil.
(For further  ccrrir.ent on this oractice see discussion under ::nr.'/TC"£  infri) .
                '':             .          II
                                                   .           . V
                               Statutory Authority

     Recite statutory authority  under which permit was granted,  to  vhom
 (adding "hereinafter the COMPANY"  or "the MUNICIPALITY") , I/ tho  riata  ifi
and the permit number.  In  the case  of cuch pre=pej::nit violations as
failure to apply for a permit, the pertinent authority under which  the
issuing of an Order is authorized  should be stated..

     The date the pernit was  issued  is important: in that it .shov/r; how  Icricr
the violator has been on notice  as to what he was required to do  under the
permit.
I/  Where COUPANY is referred  to hereinafter,  read MUNICIPALITY, if a
    municipal corporation is the sobject  of the action.

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                                     -4-


                                       u:

                       Permit or .thcr [Jrcvi::ior:s '.•'ioIaCr.-d

      In this paragraph detail the specific terms of the pcrr.iit,  regulation
or statute involved.

      This recital  should r.ot or.I1/ spell out what vas' to be den-..-  but:  vi^:n
it was to be dor.e to  avoid,  if possible, the need for outside reference or
for attachment of the permit on other voluminous material.

                                       IV

                               Specific Violatic.-.s

      Allege specif ic. violations.   If more "than one violation is  ir.vclvcd,
use a numbered paragraph or  a lettered subnaragrach for each alienee:  vioiaticr


                                        V
                                                          *
                           .  Requests for Compliance

      Recite specific requests to the COMPANY for information,  reports,
delayed timetables  or whatever is required.
                    i
      This can be done by cataloguing the letters, tslcphon* call;-, etc.
made in an attempt  to s'ccure voluntary compliance or by stating  that:
repeated attempts wcr-a made  "as more fully set out in the log attnciir.c:
hereto as "Attachment A", and then actachir.g such a log and incluriin-: it
by reference.   (See Attachment' A for example of appropriate allr.gaticns
and sample log.)

                                       VI .

                       Ocportunity for Prior Consultation
                          (SECTION 308 VIOLATION'S Oul//)  "     •          .

      Csctiou 3u3(a) (4)  requires that whera a violation of s.-jcti.on  300  is
alleged, the Order  shall not take effect until the cordon ^: v/honi it
is issued has had an  opportunity to confer with the "Admiii.irt.rai:or"
(or his duly nuthorir.ed representative) concerning Uho ailo
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                                         -5-
 attempt for such a  conference  would not be fruitful,  then  tli.lr;  •?! lea?*•: ion
 can be omitted ar.d  the Ordor issued .forth'.-.-: ;:h with n  :;!:-V-'.:::.'.:n!.  :-.!iot
 it shall not start  to run  until  the CCXPAKY has !;COM  •-;;.-.".•;•.  :•:  ••.:.•.••.•:.
 to ccr.fer.  (c'ec discussion  unacr "Effective Dac'j uf  Or^er",  L::Lr.':.)
                            rHE  ORI;EF. FOR CC::?LIA:;CE
      The format  for  the  Order should be as follows:

     •               •                  ORDER
          «
                                Preamble Paragraph

      "Based on the foreqoing  ~Il'.'jI''.CS (ar.d pursuant ~o  the  authority v!;.sc
 in the 'Administrator, Environmental Protection Agency,  under  "action '.09
 (a)(3)  of the Act, and by  him delegated to th« undersigned) cr  (if the
 Regional Administrator re-delegates his authority  to  the' Enforct-ncjn!;
 Director, add after  "of  the Act" - "and by him dele-gated to the  P.?.gicr.al
 Administrator, which authority has been duly re-delegated to  the
 undersigned"), i't'is "hereby ordered:".

      Where the delegation  and re-delegation, if any,  has been recited
 in the preamble  to the Findings (supra),  only the  underlined  portion
Npeed b'e used.

                                Ter-s of the Orclar

      The terms of the Order need only state what the  violator is '.r.:oc; fi-
 cally ordered to do,  th.us:

           1.  That the Consolidated Chemical Company  shall  within

      	 days from the  effective date  of this Order  furnish  (cr,
      complete and submit)  to  the  undersigned (or, if someone else

      is designated, "to Mr. Edward Johnson,  Enforcement Division,

      Environmental Protection Agency,  Region XI, Room 5001, Old

      National Dank Builcijng,  141'! Main Street,  Browstcrvilic,

      Centralia, 11101  (555) 123-4567"),  the  July 197_ Kcport ... a

      revised schedule  ....  a  certification that the alleged dis-

      charge violation has  ceased  ....  or whatever corrective action

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      may be required.
           2 , 3, 4 . . . . that, within 	 days  fi.-jm  the  af u.-ct-iv.: -l.rco of

      this Order the COMPANY shall,  (alleging whctovjr jTunt!.-..-. :;['.'Ci;!ic
     •
      actions  are  required) .

           5.   That the COMPANY shall immediately  (or within 	 ci.v/s)

      notify'the Agency representative designated above in writing that the

      actions  hereinbefore required  have been taken.


      It is important that a tine frame be specified  both for the
 taJcing of the r.ecassary action ar.d  for the report ing to t;ie region
 of  its accomplishment.  This additional roquirenont  is e.r.phar.iseci
 because it has been noted that in many Crr.ers  issued,  particular
 actions have  been  ordered to be taken "and the  Region advised thot the-
 action has been dene", but that no  date is. specified for tr.-.» rej.cr!: c:
 compliance (cr rioh-ccr.pliance) to be in the hands  of an appropriate
 Agency official.                                         -- -

                             Effective Date of Order

      Where section 3C8 is not involved, the ORDER  can merely recite- that:

           "this ORDER siiall become  effective upon  its receipt by

      (service upon)  sai,d COMPANY."

      Where an opportunity for conference before the  OI-X-EU cc:: become
.effective is  required by section 308 and this was  not done prior to tha-
 issuing of the OP.DER,  2/ the last paragraph should read:

           "That the  COMPANY shall have the opportunity,  for a period

      of 	 ( ) days  from receipt  of this ORDEH,  to confer with the

      following designated Agency representative:   George  F. Smith,

      Assistant Director,  Enforcement Divir.io.i,  Lnvironmenta.L I/ro^-jct: i on

      Agency,  Room  5013,  Region XI,   Old National U.-»nk Uuildino,  i-'l-'
 2/   See  discussion supra at Finding vl  (Opportunity For  Prior Consultation)

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                                      -7-
       Main Street,  arev/sterviile,  Centralia, 11101,  (5'53.j  U.i-v ,'L2;
    *
       that this GRDiK shall become effective at the expiration of  said

       period for consultation; and that the COMPANY shall  have. 	(_)

       days from and'after said effective date to comply with the terms

       of this CP.DER.   To constitute ccrr.pliar.ee, material required  to  be

       submitted by the COMPANY uo  the Agency must be in the hands  of

    •   -the designated Agency representative prior to the expiration of

      •said 	(_)  day period."

                       Order Exceeding 3C-Day Limitation

       Several Regions have raised the question of whether  -in Ci;D£P. under
 Section 309 can specify a time in  excess of 50 days.  On this problem a
 memorandum issued on ::arch 20, 1974, by the Assistant Administrator for
^Enforcement and General Counsel to the Region's Enforcement Division
 director, states:

            "The background to Section 309 makes it clear th?.t Congress
       feared "open-ended" orders would be a tool for ellcv/ir/: ~r.e  in-
       sidious delays that.of ten occurred £:: abatement schedules estab-
       lished under prior federal laws.  Orders should, therf; lore,  r.-qnirs
       compliance within 30 cays of issuance with the term;" of the  permit
       (if one has been issued) or  with other applicable requirements
       of the law.  An order may also contain instructions  as to future
       compliance requirements beyond. 30 days which would bn confirmed by'
       additional orders issued withion 30 days prior to such future dates.
       For example,  an order might  require the submission of overdue
       engineering plans within 30  days and also contain a  direction that
       the discharger adhere to an  existing da-te .for commencun-ent of
       construction six months hence.  If failure to comply with thi;
       construction date was considered likely, a second oroi:r could bo
       issued 30 days prior thereto confirming tiic earlier  di.ri.-ct.Iv-.:.
       Obviously,  "mult.inle" orders should not bo u.scrf in every case;
       in some situations, however, they will prove valuable."

                             Signing of the Order

       When che Order is dated, and  signed, u.he nerr.ii of the  signir.cr  official
 (Regional Administrator, Acting Regional Administrator, or Director,
 Enforcemen-t Division) should be typed below the signature, toother :.'ith
 :he identification of the-Region,  thus "Region XI, Environmental "rc-.octie:
 \cer.cy".  If the address of the Regional office is not giv:n in the venue
 ir on a blueback cover  (preferred), it should be adeed here.

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                                       -8-
                                     SEP.VI::;. .

     Section  200 (a) (-1)  provide:.; that service of  r.ny Ord-.rv i::: •!••'! -j.-ifl. ;
sccti.cn  309 (a)  chall be by ;-.crr:--:p..-.l r;qrv: o:;; that  wl.on  tho '.;)•<•:-.• r i:; :."v;;:^d
to a-corporation,  a copy of such Grd™r shall be  served  on any or-i'rnprJ .TCU
corporate  officer  and that ccpies shall be sont  immediately tc the State
in which the  violation occurs and to other affected Statics.   (I^.vv.'iiar.is
added.)

    •In  only  a  few of the Orders reviewed was per-icp.ol  servi ro V.-icio.   In
most instances  service was made by certified nail, return recei'rt ro::uos'.cd,
of a copy  of  the Findings and Order covered by a leccar of tranr:ni-tal.   Cn
the problum of  whether pcrcor.al service of 309 (a)  Orders means that an
Order  must actually be delivered by hand, the Assistant Administrator for
Enforcement and General Counsel, in his memorandum of Marc!1. 20,' 1974,
(supra)-  states:

           "The  answer is that v.'herrjver possible  Order.-  s;houl .i ~b'->
     delivered  in  person.  This can be done by ^i'A personnel,  fr---"oraJ
     marshals,  professional process servers, or  other 
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      In  lih'j  case of corporations,  tine  and vxtjon.';!; in ;.•'..• !::;on.:il  :•' -rv.fr'.>
•Jean usually  he reduced nhr.rply !>y  making :•••. .-vie'.- on  Hi"  rr.-rj •;?-.-.' V;M '•
^registered agent.  Registered agents  for foreign corporal: i'.:nr; .-:!:•: -.1 :•;•.;.,.'. 1 •/
/located  in the 'State Capitol ci'cy,  where the U . S . ' ;::;r;:i.all  n;- a;i : ?A
 raprasentative is available to make fast,  local  service  at.  tii':;  coat CJL
 only a few dollars.  In the case of local corporation:: the  :;u;r.e r.i f.uaticn
 oftan also exists.   Personal service  on a registered 5.721-. t  alro hr.s the
 advantage of making service on ,1 proper party without: the  nccr!  for
 determining  and  reaching the proper corporate official empower'':'.! to accept
 service.   (See Attachments C-l and C-2  for Affidavit of  Service !;orr.s*)
      The use  of legal rather than  latter size paper a.-.c  of  a leg=l blue-
 back at least en the primary cony  of the Findings and Order served, vhile
 not necessary,  tend to irr.press  the person served of the  local scricusmss
 of the action being taken.  (See Attach.r.'.:.-" 3 for proper  form in ::illi:ig out
 the back of the blue cover.)

      As in court actions the original crd.-.-r should bo retained a.'ici i'iaccc:
 in a pernanent file with the Docket  Clerk, with the affidavit or certificate
 of service attached.  If service is  made by certified --nil,  .5 c.-rhcn c^ry
 of the letter oT trairsmittal, togetiier with t;;a Post Office rr.-iiling receipt,
 and the return receipt, when returned, should be stapled- to the front of
 the original  Order, just 'as a return of personal service would be:.

                              FCLLCV;-U? A;;O FILE CLOSING

      As good  housekeeping practice,  and r.or-=s i.-r.-ortir.rly , fro;- ti-o
k.'candpoint of possible rofere-ncc for,  or avidence in, future: niirinistyativc
 or court actions,  it is highly  important thac cv';ry f i I'.- con'-oi.:; ,  -~''. •.'•.'.<^
 nini.-u.n, a closing nemo, to  the  files,  delineating the final dispo.-iticit
 of the matter.

      When a file i.~ cloned out, a  brief mcr-.orandUiT. or letter s!:c::idi:-i-
 sent to Headquarters acvisir.rj ti:at tr.e action has i:a'.-:n co.T.pl'j ted .
' (Attacnr.cnt D is an example of  a file closing nemo rar. dun. )
 *V.'hen service  is  .-?ade by the U.S. Marshall,  he will furnish  hi-
  Return Service  forn.

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ALLHUA'HO"  OK AT I'KM I1 IT>  iK!  Si.CUKL T:."L-'IJ!:. ;A
      "That,  pursuant Co  the  above-rc-l-^rcp.cud joi-.i lc;;.', ;••."  L!I-J  ACL,  i.u.2

COMPANY vas  informed by  letter dated Qacer-ber 7, 1973, or  -.he ir.ccntLcn

of Ayencv  represunUa.ives  co visit; .its u.'ii.:!  p.l.;uiL in c.:n;uii.-c t i.on with th.j

development  of effluent  limitation guidelines and standard:;  For the iron

and steel  manufacturing  point source category.   Inforn.-u.ion v.-as rcji-iuebtuti

concerning the plant's seanieso tube, 11  inch bar mill and  rod mLLl

operation  in said letter and again in r.ora detail in d LoCuno ions oi

requirer.snts for conplee'inc  the plant Via it  Log ouppli.id  \iy Ar,^"i;y

representatives ac the cir.c  of the visit  to  cli-i plant en  !JocT-.b-»r 1.0-12;

1973.  Despite repeated  written and teiephcnic requests,  aj tr.ure fully set

out in che Log attached  hereto as Exhibit A  and m.ida a part hereof by

reference,  the COM!'A;.T,  in violation of section 30." or _;K^ Acl, h.io n«.'t

supplied  the requested infcrr..ition."
LOG SAIIPLE

     12/4/73

     12/7/74

     12/10-

     4/23/74
     4/26/74


     5/6/74
Telccn:   ELD - E.r. Jones      out; roturncj.d  call 12/5
                                     •

308 Letter   AC - E.I7. Jonas

Plant Visit:  Have some data - hold off  10 clay:;

Telcon:   ELD - T.C.  follo*.v-i:p request"  for  infor-.ntion
                        t'ro.Ti  A & ij f.'o.

Telcon:   LiLD - T.C.  To advi.';.^ i I: ;.;e" /'.li.in'l  a.it.;. !>y
                        phono, frow A & o  (!M.

Telcon:   ELD - T.C.  .A i i] Co.  uuppo.sad  t:o tmvc  r.nilid
                        letter

T.C. - ELD    :.'o letter or  further tcicor.  L rnia A  c. 15 Cio.

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    . CCZ-P.GE  CiHiZCAL  CGMPAiiY,
          j^-rrro £ 37"'  CCLUI'LBZ-T-
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   - fc ••w^ '   i /^•tvjO L«*i^^^__Bv . i«.^^  ^ «_^«»«^
  •' WAi"i_-i POLLUTZCri COrrTuCL ACT
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       Hagi«. XZ    '  '
       •1775  Li-bsrT}- Stree
                       '


-------
                               UNITED ST.-YIT:;
                      f-:NV IRONMEl-iTAL PROTKC 1' IOM ACKNCY
 IN  THE MATTER OF

 CONSOLIDATED STEEL CURl'OKATLUN

 Proceedings Under Section 309(a)(3)
 and (a) (4), Federal '.v'.ntcr Pollution
 Concrol  ACL, as amended  (33 U.S.C.
 Section  1319(n)(3) and (a)(4))
                                    A:: i: iduvi i  of
•STATE OF ILLINOIS
COUNTY OF COOK
        SS
     	,  being first: duly s vi-rn  (k'.pnsos ;i;u.l s;:vs
 that on 	•*_;_!. ^^7_, at  9&00  '^est Madison Avenue,  Ch io.r,;o ,  liLi;i»is,
 he  served the annexed Finding  of Violation and Order  Cor Compliance,
 issued	,  19 7_, by Alln'n Johnson,  Assistant Administrator for"
 Enforcement, Environmental  Protection Agency, Washington,  U.C., in c!u:
 above  entitlc-c
 to  and lenvin;
 Consolidated otciel Corporation)  or (	cliv/.-i	
 of  said  Consolidated Sueel  Ccrpocaticn,  be/siic bein;;  a person  ol" fnl
 age represent Lr.;; hi;;isc If /herself to be .?.u nuciiorir.oil  of fir.er/c'.!!p 1 oyc-
 of  said  Consolidated Steel  Corporation to accept service of
matter on :hc ConsolidaLed Stc-ul Corporation  by !
a true cony  thereof, with (Daniel II. Srcith.  P. res i ;!t:;i L
      Subscribed and sworn  to  before me,  a Notary Public  and for the
 County  of Cook, State of Illinois,  this  	 day of	,  197
 *Scrve  Pres ido.n t of Company,  if  possibJ c; if not serve  on  bcsl  rer-rpor.s ib le
 person  av;n'lubJe .'ui'.i ui-f. nl torn;: t J ve dc:-. i ,;nutior. u-. r.. ".J;.i!in  n<-r,  ci:i
 General Office Manager  (or  Richard Roe,  Vice 1'res idon c  Cor Operal Jons)
 he  being, .eLc."
                               ATTACHMENT C- I

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                               L'MLTF.D STATi:::
                      !•:?•:VJRUNMHi.TAL PKOTrX:!' 1 ON  ACKMCV
IN TiiE  MATTER Oi-

COnSOLLIUTI-ID STEML CUHI'OKATIiJN

Proceedings Under Section  309(a)(3)
and  (a) (•'«) , Federal Water  Pollution
Control  Act, as amended •( 33  U.S.C.
Section  1319(a)(3) and  (a)
                                       Af f i.d;iv i L "I SiM'vire
STATE OF  ILLINOIS
COUNTY OF COOK
      SS
                           bcin;j first duly sworn  deposes and :;nvs  t!i;it  '.in
              197 ,  at Suite  401,  918 Sixteenth Street,  N.'.•-'..  Ch i c:r.v.o,
Illinois,  he served the  annexed Finding G'2 Violation  and Order !>>r
Compliance issued	,  197 ,  by	, Assistant
Administrator for Enforcement,  Environmental Protection i\\;cni-y, K,-ir.hin;;ton
D.C.,  in  the nhove entitled  ".latter, personally on  Consul i d.-icr-.i Slfi.-l
Corporation fay hanJinj;  to  snd  leaving a true; copy  thereof  v.'it!; Ccor;.7.';-
C. Jones,  Senior Process Officer,  C D Corporation, said  <~! I.1 (".-•> rpor.-it ion
being  the  aeunt duly ci.-.s ignaced and rei;istci:od by  C(jnsr> L.id;n i.-d .SLe-.:l
(a	
Illinois.
corporat i.cn)
to
i
   receive such service  in the St.nto of'
     Subscribed cind sworn  to  before me, a Noi.-jry  Public  and for
County  of  Cook, State of  Illinois, this 	day of  	, 197
                               ATTACHMENT C-2

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                    STATES ENViRONMTM fAU :flRO I'llC TION A(,I.NCY
    4?                      WASHINGTON. ".C.-, 2CMGO
                                                             orr;ci: OF
MEMORANDUM                                     fi'  •

                                              ;V  ''
TO:       The  Record              -           . _,.,
                                             •V)    '
FROM:     Director, Enforcement  Division   ••  . j

SUBJECT:  Section 309 Order  Issued  Co Cor.sol.j.J;icod  Steel
          Corporation to Produce Section '30S..D-ji;a
     On April  7,  L975, at ^t:30  P.M.,  I r«cuivc
-------
            COMPUTATION OF ECONOMIC BENEFIT OF DELAYED




              COMPLIANCE UNDER CIVIL PENALTY POLICY








Note;  This policy is based on the old Civil Penalty Policy of



April 11, 1978.  EPA approved a new Civil Penalty Policy on




February 16, 1984.  However, the "Economic Benefit" Policy remains




effective until EPA develops a medium specific, water penalty



policy.

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" 1   UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
^/                 WASHINGTON. D.C. 20460
                    September 27,  1978
                                             OFFICE OF ENFORCEMENT
 MEMORANDUM

 TO:       Regional Administrators
           Regional Enforcement Directors

 FROM:     Assistant Administrator for Enforcement

 SUBJECT:  Computation of Economic Benefit of Delayed
            Compliance Under Civil Penalty Policy
          »

      A principal.objective of the EPA Civil Penalty Policy
 (described in my memorandum of April 11, 1978, entitled
 "Civil Penalty Policy—Certain Air and Water Act Violators")
 is the recovery of the economic benefit that a source enjoys
 by postponing pollution control expenditures.  The technical
 support document attached hereto describes the method for
 measuring that benefit.

      The measurement of economic benefit of delayed com-
 pliance was described in a general manner in earlier guidance.
 It was also reviewed in greater detail in regional seminars
 held earlier this year.  The method of measuring economic
 benefit' described in the attached technical support document
 differs from that earlier guidance only in that it now
 recognizes that some sources may have financial structures
 that include preferred stock as well as common stock and
 long-term debt.  Accordingly, for sources that have issued
 preferred stock, the method requires certain information
 regarding such stock that was not previously required..

      To facilitate its use, the method described in the
 attachment to the memorandum has been reduced to a set of
 mathematical formulae; even the formulae, however, involve
 fairly lengthy calculations.  To simplify these calculations,
 EPA has developed a computer program that is available to
 state and federal enforcement officials.  Subsequent
 guidance will describe the computer program and its usage.
JJ
                                                  H/v*
                       ~7
Marvin B. Durning
 Attachment

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       «   UNITED STATES ENVIRONMENTAL.PROTECTION AGENCY
\,   -•/                  WASHINGTON. D.C. 20460
                                                    OFFICE OF ENFORCEMENT
                     TECHNICAL SUPPORT DOCUMENT
                               FOR THE
                        CIVIL PENALTY POLICY
                           SEPTEMBER  1978
                FOR DETERMINING THE  ECONOMIC BENEFIT
                   OF DELAYED COMPLIANCE PURSUANT
                      TO THE EPA CIVIL PENALTY
                          POLICY ISSUED ON
                           APRIL 11,  1978

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          ACKNOWLEDGEMENT
The material contained in this manual.
has been based largely upon the tech-
nical support document being prepared
for regulations that will be proposed
for implementation of Section 120 of
the Clean Air Act.
That document is being prepared foir
the Economic Analysis Division of the
Office of Planning and Evaluation,
U.S. Environmental Protection Agency,
by Putnam, Hayes and Bartlett, Inc.,
Newton,- Massachusetts.

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90
                                  TABLE OF CONTENTS

                     COMPUTATION OF ECONOMIC BENEFIT OF DELAYED
                        COMPLIANCE UNDER CIVIL PENALTY POLICY

                             TECHNICAL SUPPORT DOCUMENT
               I.         Introduction	   1

               II.        Explanation of the Two Components of
                           .Economic Benefit of Delayed Compliance   1

               III.       Determining the Amount of the Benefit
                           of Delayed Compliance  .........   2

                         A.  Pollution Control Costs the Source
                             Would Have Incurred had it Achieved
                             Timely Compliance	   3
                                           *       — •
                         B.  Discounting of Cash Flows	   4

                         C.  Pollution Control Costs the Source
                             Will Experience When, After--Delay,
                             it Actually Makes the Expenditures
                             Necessary to Achieve Compliance  . .   5

                         D.  The Economic Benefit of Delayed-
                             Compliance 	   6

                         Financial Parameters to be Used in Cal-
                          culating the Economic Benefit of Delayed
                          Compliance and Sources of that Data . .   7

                         A.  Total Deferred Capital Cost of
                             Pollution Control Equipment  ....   8
                         B,  Annual Operating and Maintenance
                             Ex^snss that Should Ha.Tre Been Tn
                             in First Year of Operation-	   9

                         C.  Investment Tax Credit	  .   9

                         D.  Marginal Income Tax Rate	10

                         E.  Annual Iii-CldCJ.GH Ro.L« of Pollution
                             Control Equipment  	  10

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                          110.
          F.   Source's  Rate of  Return on  Equity  .   11

          G.   Interest  Rate on  Source's Long-Term
              Debt	11

          H.   Preferred Stock Dividend Rate   ...   12

          I.   Equity Share of Violator's  Total
              Investment	12

          J.   Preferred Share'of Violator's  Total
              Investment	12

          K.   Income Tax Depreciation Method ...   13

          L.   Depreciable or Tax Life of  Pollution
              Control Equipment  	   13

          M.   Useful Life of Pollution Control
              Equipment  . . '.	13

          N.   Period of Delayed Compliance ......   13

          0.   Length of Time Between Beginning of
              Delayed Compliance Period and  Time •
              Penalty Will be Imposed  .......   14

V.        Assumptions Underlying the Calculation of
           Economic Benefit of  Delayed Compliance   14

          A.   The Relative Mix  of Debt, Preferred
              Stock and Common  Equity Associated
              With the  Acquisition of Pollution
              Control Equipment is the Same  as that
              of the Source's Overall Capital Struc-
              ture as Shown on  Its Balance Sheet .   15

          B.   Cash Flows are Discounted Using the
              Equity Method  	   15

          C.   The Computation of Economic Benefit
              of Delayed Compliance Assumes  that the
              Civil Penalty Will Not be a Deductible
              Expense to the Source	16

          D.   Cash Flows Take Place at the End of
              the Year	16

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          E.  The Rate of Inflation of Pollution
              Control Operating and Maintenance
              Expenditures is the Same as That for
              Pollution Control Equipment Costs  .  16

          F.  A Continuous Sequence of Replacement
              Cycles is Required	17

          G.  Capital and Operation and Maintenance
              Expenditures are Instantaneously
              Incurred on the Dates That Compliance
              was Required	17

          H'.  Long-Term Debt Incurred to Finance
              Pollution Control Equipment Is Retired
              By.End of Depreciable Life of Equip-
              ment 	18

          Derivation of Formulae to Measure Economic
           Benefit of Delayed Compliance 	  18

          A.  Pollution Control Cash Flows ....  19

          B.  Discounting Cash Flows .........'23

          C.  The Economic Benefit of Delayed
              Compliance	26

VII.      Calculation of Economic Benefit of Delayed
           Compliance Obtained by Violators Other
           Than Privately-Owned Sources Subject to
           the Federal Income Tax	27

          Appendix A - Definition of Symbols ...  29

          Appendix B - Investment Tax Credit
           Qualification 	  31

          Appendix C - Depreciation  .......  32

          Appendix D - Tax Rate Adjustments  ...  34

          Appendix E - Sample Calculation of
           Economic Benefit  ..-.,- .  =  . .  .  .  35

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                V
A.  Cash Flows Over the Useful Life  of  the
    Pollution Control Investment That Should
    Have Been Made	37

B.  Present Value of Pollution Control  Equip-
    ment Costs That Should Have Been Incurred    39

C.  Present Value of Pollution Control  Costs
    That Will Be Incurred	•  .  .  .  .   41

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I.   Introduction

     The decision to install pollution control equipment
necessitates an initial capital investment as well as a long
term commitment to the payment of operation and maintenance
expenses.  While such a decision will lead to improved
environmental quality, it ddes not necessarily yield any
direct economic benefit to the source.  If financial resources
were not used to implement the source's decision to install
pollution control equipment, they presumably would be invested
in activities which would be economically beneficial to the
source.  Thus, from a strictly economic point of view, it is
usually in a source's best interest to delay the commitment
of funds for pollution control equipment.

     The EPA Civil Penalty Policy is designed to eliminate
this incentive to avoid or delay compliance; and this
technical support document is designed to describe in
greater detail the concept of economic benefit of delayed
compliance, to provide an exact method for calculating that
benefit, and to provide additional information that may be
helpful in making such calculations.

     The method described in this document should be used in
most instances to calculate the economic benefit of delayed
compliance.  It is recognized, however, that there may be
unusual circumstances in which a different method of measur-
ing economic benefit may be appropriate.  The acceptability
of any such alternative method will have to be: determined on
a case-by-case basis.

II.  Explanation of the Two Components of Economic Benefit
     of Delayed Compliance

    •The economic benefit of delayed compliance has two
components:  (1)  the returns which can be earned on capital
that should have been invested in the pollution control
equipment whose purchase was delayed (or that was saved by
not having to pay interest on capital that would have been
borrowed), and (2) the operating and maintenance costs
avoided as a result of not having installed the equipment.
The first component arises because'owners of noncomplying
sources have the opportunity to either invest their funds in
projects other than pollution control equipment (and

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that, unlike such equipment, would yield  a. monetary  return)
or to avoid paying interest on capital that would have been
borrowed.

     The second component of benefit of delayed  compliance
is based on the operating and maintenance costs  which would
have been incurred -if the pollution control equipment had
been installed.  These include the costs  of labor, raw
materials, energy and any other expenditures directly
associated with the operation of the pollution control
equipment.  Delaying compliance allows these expenditures to
be avoided altogether.  Therefore, the noncomplying  firm
benefits by retaining these funds which should have  been
spent in order to achieve compliance  (and, additionally, by
investing these funds in income producing ways).

     The two components of economic benefit can  be quanti-
fied using generally accepted economic and. financial
principles and estimates of a number of parameters.

     An explanation of these parameters and their relation-
ship to the calculation of the economic benefit  of delayed
compliance follows.

III. Determining the Amount of the Benefit of Delayed
      Compliance

     The direct costs associated with installing pollution
control equipment are the original purchase cost of  the
capital equipment, the costs associated with financing the
purchase or construction of the equipment, and the annual
operating and maintenance expenditures,

     In addition to the direct costs, other indirect finan-
cial impacts result from the purchase of  equipment.  Depreci-
ation, for example, has the effect of reducing income tax
liability in years subsequent to the original investment.
Similarly, the original purchase may result in an investment
tax credit, which operates as if a discount were given on
the purchase price.  Both of these lower  the net cost to the
source.

     To calculate the source's total economic cost of
installing equipment to comply with pollution control
•V-O^TII T >*^m4a r* 4- e  i •*- -i e rt^^^oea y~ir 4» /"s /^ ^4- ta^-m -i T^ ^ all *-*-P ^t^^i i^-iT-a^^
-^ »— -^ «—•—• >»•« <«*.** WMf -*. W MM **M WM —* W —»«. ^ W 4
-------
to a single economically equivalent value.  Because these
various costs do not all occur at  the  same time, they must
first be converted into values which are comparable with
respect to the time-value of money (that is, the sooner a
cost must be incurred, the greater is  its economic impact.)
This conversion is accomplished by discounting all estimated
future costs to "present value" equivalents, a technique
described below.

     The economic benefit of delaying  compliance with pol-
lution control requirements is the difference between the
total economic cost that should have been incurred to comply
with environmental requirements and that which will actually
have to be incurred to come into compliance with those
requirements.

     A.-   Pollution Control Costs  the  Source would have
           Incurred had it Achieved Timely Compliance

          1.   Initial Capital Outlay

               The direct costs and indirect financial
impacts associated with the initial capital outlay to
purchase and install pollution control equipment are equal
to the cost of purchasing or constructing the equipment,
less the amount of any applicable  investment tax credit.
The investment tax credit constitutes  a reduction in tax
liability which has the effect of  a discount on the purchase
price.

          2.   Annual Capital-Related  Costs

               The direct costs and indirect financial
impacts associated with financing  and  depreciating pollution
control equipment are .the cash flows occurring in subsequent
years as a direct result of the initial capital expenditure.
Depreciation does not itself involve a cash outflow; however,
its effect is to reduce pre-tax income and hence to reduce
the source's income tax.  If the source had installed the
equipment, the tax saving in subsequent years associated
.with depreciation would have the effect of reducing the cost
of such equipment.  The other annual capital-related cash
flows are those which arise from the financing of the
incremental capitaj. outlay for the pollution control equip-
ment in question.  If the equipment is partially financed

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with debt, both principal and interest payments will result.
The payment of interest will, of course, give rise to
associated tax savings.  Similarly, if preferred stock is
used, its redemption and its dividends will give rise to
cash outflows, although no tax savings will occur here.

          3.   Operation and Maintenance Costs

               The final category of cash flows consists of
those resulting from operating and maintenance expenditures.
Since these costs are tax deductible, the relevant cash
flows are simply the after-tax value of their estimated
amount in each year.  These cash flows are assumed to
increase each year due to inflation.

     B.  ( Discounting of Cash Flows

          Once all' present and future direct costs and
indirect financial impacts have been determined, they must
be converted into a single, present-value cost of the pol-
lution control equipment.  This is done by converting each
amount into values which are discounted.  This is necessary
because two cash flows of equal dollar value occurring many
years apart do not have equal financial impacts on the
source.  This differential arises because the firm can
invest funds at some positive rate of return.  If a dollar
of expenditure can be postponed for one year, that dollar
can be invested in the interim.  At the end of the year the
dollar of expenditure can be made and the return on the
investment during the intervening period accrues to the
benefit of the source.

          The technique used to compensate for this effect
is called discounting.  Discounting involves reducing the
value of future cash flows to amounts which are equivalent
in terms of present dollars.  Suppose, for example, that a
source faced with a $100 expenditure could delay that
expenditure by one year (For simplicity, assume no infla-
tion.  Inflation must, of course, be, and is, taken into
account in estimating future expenditure requirements.) If
the firm could invest money for that year at a 10 percent
return, it would not need to put aside a full $100 to make
the payment one year later.  In fact, if it invested only
$90.91 at a 10 percent return, that amount would grow to
$100 in one year.  Therefore, $90.91 is the present value,
at 10 percent, ot a $iuO cash flow one year in the

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     Similarly, $82.64 invested at 10 percent would grow to
$100 in two years (it would grow to $90.91 in one year and
to $100 in the second year).  $82.64 is therefore the present
value, at 10 percent, of a $100 cash flow two years hence.
The present value of cash flows for other numbers of years
in the future is found in a similar fashion. The formula for
discounting is given by:
     Present Value = Future Value
                            j
                       (1+E)
where E = the discount rate.
      j = the number of years in the future in which the
          cash flow occurs.

     Future Value = the cash flow expected in the future.

     Applying this technique to-all future pollution control
cash flows converts each of them into its present value
equivalent..  The sum of these individual values represents
the equivalent after-tax cost, in terms of a single present
value, of all future cash flows arising out of the require-
ment to purchase and operate pollution control equipment.

     C.   Pollution Control Costs the Source will Experience
           when, After Delay, it Actually Makes the
           Expenditures Necessary to Achieve Compliance.

          For each polluting facility there is a date by
which compliance should have been achieved.  Therefore, for
purposes of calculating the penalty, it is assumed that all
capital expenditures should have been made by that date and
that operating and maintenance expenditures should begin on
that date.

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     In computing the economic benefit of  delayed compliance
there are two sets of cash flows  (or costs and  indirect     l
financial impacts) to be considered.  The  first consists  of
the flows that the source would have experienced had it made
the expenditures necessary to come into compliance on time.
These include the cash flows attributable  to  the purchase
and operation of the original equipment as well as those
associated with all future replacement cycles.   The second
set of cash flows consists of those which  the source will
experience when, following the delay, it actually makes the
expenditures necessary to come into compliance.   This second
set of cash flows will have three properties:

          1.   It will be similar to the first
               set in that it will have the same
               sequence of capital expenditures,
               depreciation tax savings, operating
               and maintenance flows, etc.

          2.   Each cash flow will occur at some
               time after it would--have occurred if
               the expenditures necessary  for timely
               compliance had been made.

          3.   The magnitude of each of its
               individual component flows  will  be
               greater than the corresponding flow .
               in the first set.  This results  from
               the fact that any given cost will
               have inflated during the period
               of projected delay.

     D.   Economic Benefit of Delayed Compliance

          The present values of both sets  of  cash flows
 (those which should have been incurred  to  come  into timely
compliance and those that actually will be incurred to
come into compliance) can be calculated in the  manner
described above.  The present value of  the second set
W-LJ.-L oti j_uwt:.L , ZeJ. J.SC uiiiy Luc .uaCi, Luo.L u.& j-ci'y j-iiy cJOiuu l-
yields a financial benefit to the source.   It is the
difference between the first set of cash flows  -and the
second set of cash flows  that is the economic  benefit
the source gained from having delayed its  compliance.

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IV.  Financial Parameters to be Used in Calculating the
     Economic Benefit of Delayed Compliance and Sources
     of that. Data

     Calculation of the economic benefit of delayed com-
pliance requires estimates of a large number of financial
parameters,  many of which are peculiar to the noncomplying
source.  This section defines these parameters and identi-
fies sources from which their actual numerical values may be
drawn.

     The correct values for these parameters are the ones
that pertain to the particular source involved, since it is
the economic benefit of delay obtained by that source that
is being sought through the civil penalty authority.  In
some instances, however, it will not be possible or, if
possible, not desirable, to obtain specific information
regarding the source prior to the time that civil penalty
evaluations must be prepared.  In those cases, reasonable
estimates can be made from the data contained in the sources
referenced, below.

     Except for the parameters.concerning the capital and
operation and maintenance cost of.the pollution control
equipment, the values for parameters must be estimated based
upon likely values that will pertain in the indefinite
future.

     The best approximation of these parameters should be
the average values which have occurred over the recent
years, except when those values are clearly atypical.  For
example, if the recent rates of return on book equity have
been very low or. even negative, the average of such values
should not be used.  In such cases, it is obvious that the
violator would expect to make a. reasonable profit in future
years.  Otherwise it would hot make economic sense for the
source to remain in business.  As described below, in such
cases, the published industry average value may be the best
available estimate of the anticipated future value.

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     A. •  Total Deferred Capital Cost of Pollution Control
          Equipment

          This is an estimate of the capital expenditures
that should have been made for purchase and installation of
the required pollution control equipment.  It includes not
only direct purchase costs, but also such expenditures as
site preparation and engineering design.  It is measured in
constant dollars as of the first day of noncompliance..

     In the event that contracts have been signed for con-
struction or 'purchase of the required equipment, they should
be used as the basis for such costs.  Other possible bases
include engineering estimates, quotations from equipment
manufacturers, and the actual cost experience of other
sources which have installed similar equipment.

     If a violator installed some, but not all of the equip-
ment that was required for pollution control compliance and
is in violation because the equipment constructed or
installed is insufficient, then the appropriate value for
total deferred capital investment expenditure is equal to
the additional capital expenditure required for compliance.

     If the violator installed all of the pollution control
equipment required for compliance but is in violation because
the equipment is inadequate or ineffective, then the amount
of deferred capital expenditure depends upon the reasonable-
ness of the source's expectation that the installed equip-
ment would satisfy pollution control requirements.  If
equipment was reasonably calculated to achieve compliance,
then there has been no inappropriate deferral of capital
expenditure, notwithstanding the fact that additional capital
expenditures are now required.  In making this determination,
it is important to insure that sufficient consideration was
given to providing adequate capacity for continuous control
and that reasonable design and construction standards were
observed in installing or constructing the pollution control
equipment.  It is also important to insure that the inade-
quacy or ineffectiveness is not attributable to increased
levels of production or to production process changes.

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     If the violator installed all of the pollution control
equipment required for compliance but under conditions in
which, it was not reasonable to expect that pollution control
requirements would be satisfied, then the total deferred
capital expenditure is equal to the amount that will have to
be expended to come into compliance.  No reduction or credit
will be allowed for the amounts actually expended.

     B.   Annual Operating and Maintenance Expense that
          Should Have Been Incurred in First Year of
          Operation

          This parameter is an estimate of the annual cost
of operating and maintaining the required pollution control
equipment.  It must be expressed' in the same terms as
capital costs.  That is, the amount should represent the
annual operating and maintenance expense in constant dollars
as of the beginning of the first year of noncompliance.
There is a provision in the formulation which automatically
adjusts, future years' operating and maintenance expense for
anticipated inflation.

    • Losses in production and incremental energy costs which
will be incurred as a direct result' of operating the pol-
lution control equipment should be counted as an expense in
this category.  On the other hand, the value of any by-
product recovery resulting from such operation should be
deducted.

     Sources of estimates for operating and maintenance
expense include equipment manufacturers and engineering
consultants.  These estimates should include all recommended
operating and maintenance procedures, training and planning
costs, cost of warranties, record-keeping and costs of
monitors.

     G.   Investment Tax Credit

          This is a reduction in Federal income taxes
payable as a result of making qualified capital investments.
It  is equal to a specified percentage of the portion of .the
initial capital costs which qualify under IRS regulations.
The investment tax credit is included in the formulation
because it has the effect of reducing the cash outflow
required  to purchase the pollution control equipment.

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                           10
     The applicable percentage is given in the Internal
Revenue Code as are the criteria for qualifying investments.
If not all of the initial capital cost qualifies for the
investment tax credit/ an adjustment must be made as described
in Appendix B.

     D.   Marginal Income Tax Rate

          This rate is the average anticipated future value
of the fraction of the last dollar of taxable income which
must be paid by the source to Federal, State and local
governments.'- It is the amount by which taxes would increase
if taxable income were to increase.  It is different than
the average tax rate  (i.e., total tax divided by taxable
income).

     The tax rates' of the various levels of government are
specified by statute and typically depend on the level of
taxable income reported by the owner-of the polluting
facility.  A formula for computing the marginal income tax
rate for a firm subject to income taxation by more than one
level of government is given in Appendix D.

     E.   Annual Inflation Rate of Pollution Control
          Equipment

          This is the annual rate at which both capital and
operating and maintenance costs are expected to grow.  These
cost increases are the result of inflation of various
factors such as labor, capital goods and energy.

     For purposes of computing the economic benefit of
delayed compliance, the compounded change in the Chemical
Engineering Plant Cost Inflation Index1 may be used as an
estimate of the future rate of increase in pollution control
expenditures.  For the years 1970-1977, this rate was 7.2
percent.  The Chemical Engineering Plant Cost Index is based
on a weighted' average cf four components.  These are;
fabrication and equipment, engineering and supervision,
construction labor and building costs.  The weights are
determined by a survey made by Chemical Engineering maga-
zine.  The cost components' are derived from the producer
price indices compiled by the Bureau of Labor Statistics.
1
 Chemical Engineering, McGraw-Hill, Inc., April 28, 1975,
 and subsequent issues.

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                             11
     There is no widely available index of pollution control
equipment costs as such.  The Chemical Engineering index is
based on factors which are clearly important components of
such costs.  The principal alternative considered was to use
some broader and more universally recognized index, such as
the GNP implicit price deflator.  This was considered to be
a greatly inferior choice since it is based primarily on
factors only loosely related to the cost of pollution control
equipment.

     F.   Source's Rate of Return on Equity

          This is the percentage used as the basis for
discounting cash flows occurring in future years to equiv-
alent present values.  It is the average anticipated future
value of the source's annual after-tax income divided by
the total value of common shareholder interest.

     Where this value cannot be estimated for any particular
source (as, e.g., when recent rates of return have been
unusually low or even negative) it is sufficient to use the
industry average _return on the book equity value.  Such
rates are reported by the Federal Trade Commission in its
Quarterly Financial Report for Manufacturing, Mining and
Trade Corporations. •It is based on a. large sample of sources
in each industry and, subject to the limitations found in
all accounting data, represents an accurate estimate of the
past performance of U.S. industries.

     G.   Interest Rate on Source's Long-Term Debt

          This is the rate of interest which would be paid
by the source if additional long-term debt were to be incurred.
The interest rate may be estimated as the current rate of
interest on bonds of a grade equal to that of the source's
bonds having the highest rating as published in Standard and
Poor's The Outlook.

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                             12
     If a source's debt is not rated, the interest rate may
be estimated as the current rate of interest on grade "A"
corporate bonds, published in Standard and Poor's The Outlook
or in Standard and Poor's Statistical Service, "Current
Statistics".

     H.   Preferred Stock Dividend Rate

          This is the rate paid by the source   to its
preferred stockholders.  Like return on equity and interest
rate-, dividends paid on preferred stock represent a cost of
long-term financing.

     If a source has preferred stock outstanding which has a
rating, the preferred stock dividend rate may be estimated
as the current yield on stock of that rating as reported in
Standard and Poor's The Outlook .  If the stock is not
publicly traded or has no rating, the rate may be estimated
as the current preferred stock yield on grade "A" issues
published in Standard and Poor's The Outlook or in Standard
and Poor's Statistical Service, "Current Statistics".

     I.   Equity Share of Violator ' s Total Investment

          This parameter is equal to the proportion of the
source's long-term financing which is provided by common
shareholders.  It is a fraction, the numerator of which is
the sum of all common equity accounts on the source's
balance sheet including common stock, retained earnings,
capital surplus and any other accounts representing common
equity investments .  The denominator of the fraction is
given by adding to the numerator the sum of the preferred
stock account plus all long-term debt incurred by the owner
(excluding portions of such debt in the current account) .

     J.   Preferred Share of Violator's Total Investment
          This share is the fraction of loner— tisnr f
provided by preferred stock.  The numerator is given by the
preferred stock accounts in the source's balance sheet and
the denominator by the source's long-term debt plus its
preferred stock plus its common equity interest.

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                             13


     K.   Income Tax Depreciation Method

          Computation of the economic benefit of delayed
compliance involves consideration of depreciation-related
tax benefits of an investment in pollution control equipment.
The source may choose the method of depreciation to be used,
subject to conformity with Internal Revenue guidelines.

     The computer program used by EPA to calculate the
penalty automatically selects the depreciation method which  .
results in the lowest cost of compliance (hence the least
amount of economic savings due to delayed compliance).  This
is based on the assumption that the source would use the
depreciation method which resulted in the lowest possible
cost of compliance.

     L.   Depreciable or Tax Life of Pollution Control
           Equipment

          The depreciation life is the minimum number of
years over which a particular investment Ln pollution control
equipment may be depreciated.  A data source for this value
is the lower limit on the asset depreciation range for the
appropriate class of assets as given in the Internal Revenue
.Service publication Revenue Procedure 77-10.

     M.   Useful Life of Pollution Control Equipment

          The useful life of the pollution control equipment
is the number of years it can be expected to operate before
replacement.

     A source of data for the useful life of various types
of pollution control equipment is the asset guideline period
developed by the Internal Revenue System for certain asset
classes.  These are provided by the Internal Revenue Service
in Revenue Procedure 77-10.  They represent IRS estimates
of the average lives of assets within a particular industry.
They were based upon a study of actual asset lives and they
are continually updated as the need arises.

     N.   Period of Delayed Compliance

          The period of delay used to measure economic benefit
should be the period of time that violations resulting from
a  failure to make pollution control expenditures can be
proven.  Typically, that period will be equal in length to
the period that such expenditures were or will be unjustifi-
ably delayed.

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                            14
     In actions under the Clean Water Act, .the period should
commence July 1, 1977,' unless an earlier compliance date was
required by the terms of the violator's discharge permit.
In the case of violators of the Clean Air Act, the period
should begin on August 7, 1977, or, if later, .the earliest
provable date of violation.  (it should be noted that many
Air Act violators had long been in violation on August 7,
1977, and had, by that time, already obtained a substantial
benefit through their compliance delay.)  In both Air and
Water Act cases, the period of delayed compliance should
extend until full compliance is or will be obtained, except
in the case 'of major stationary source Air Act violators
which will be out of compliance beyond August 7, 1979.  In
that case, the period of delayed compliance should only
extend to August 7/ 1979, or such later date as the man-
datory, administratively-imposed noncompliance penalties
will commence pursuant to Section 120 of the Clean Air Act.
                                   r-'
     The period of delayed compliance continues until all
violations resulting from delayed expenditure are eliminated.
The period does not end simply when all required expendi-
tures have been made unless compliance is also achieved
then.  This* is because sources should have reasonably
anticipated start-up or post-construction compliance delays
and have planned accordingly.

     O.   L'ength of Time Between Beginning of Delayed
          Compliance Period and Time Penalty will be Imposed

          The method of measuring economic benefit described
above determines that value as of the beginning of the
period of noncompliance.  Because this amount must be
adjusted to its present value as of the time of assessment,
the period of time between the beginning of the noncom-
pliance period and the time of penalty assessment must be
determined.

V.   Assumptions Underlying the Calculation of Economic
     Benefit of Delayed Compliance

     The method described herein for calculating the economic
benefit of delayed compliance was based upon several important
assumptions, many of which were only implicit in the discus-
sion in. the previous section.  The following identifies
those assumptions and explains why they were made.

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                            15
     A.   The relative mix of debt, preferred stock and
          common equity associated with the acquisition
          of pollution control- equipment is the same as
          that of the source's overall capital structure
          as shown on -its balance sheet.

          On the balance sheet of any source, total net
assets, including net working capital, are exactly equal to
total long-term financing (long-term debt, preferred stock,
and equity).  Any increase in net assets must be accompanied
by a similar change 'in long-term financing.  It has been
assumed in developing the method set forth herein that
relative proportions of the long-texm-financing associated
with the acquisition of pollution control equipment are the
same as those of the source's overall capital structure.

     B.   Cash flows are discounted using the equity method.

     The rate used to discount future cash flows is the
source's, rate of return on equity.  This equity discounting
method is one of several different approaches to evaluating
capital investments which have been developed.  No single
one has won universal acceptance from financial theorists.
However, despite the theoretical and computational dif-
ferences among the various approaches, in mosl: practical
applications they tend to give results which differ only
slightly.

     The equity discounting method is based on an analysis
of the cash flows affecting common shareholders.  All cash
flows arising out of debt or preferred stock financing are
netted out.   The residuals, which represent amounts avail-
able for distribution to common shareholders, are then
discounted at the rate of return on equity.

     This method has several advantages.  The most important
is that it meas-ures the benefit of noncompliance from the
point of view of the true beneficiary, the common stock-
holder. The benefit obtained from delaying pollution control
expenditures does not directly benefit the bondholders of
the company.  They will continue to receive the same interest
payments as before.'  When their bonds mature they will be
paid, the face value of the bonds.  Similarly, preferred
stockholders will receive no direct benefit from delay.
Therefore, any delay primarily benefits the common stock-
holders since they are the owners of such residual amounts.

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                            16
     C..   The computation of economic benefit of. delayed
          compliance assumes that the civil penalty will
          not be a deductible expense to the source.

          In calculating the costs on which the economic
benefit of delayed compliance is based, the normal tax
consequences of interest, depreciation, etc., are taken into
account-  In addition, .in setting a civil penalty amount  so
that it imposes the same after-tax burden as timely com-
pliance, it is assumed that the penalty will not be allowed
as an income, tax deduction.  If the civil penalty were
allowed as a deductible expense for tax purposes, the
penalty would have to be adjusted upward so that its after-
tax cost to the firm would be equal to the otherwise  .
appropriate civil penalty.

     D.   Cash flows take place at the end of the year.

          While expenditures such as- those for operating  and
maintaining equipment obviously are incurred throughout the
course of the year, the assumption that all cash flows take
place at the end of each .year greatly simplifies the compu-
tation of economic benefit through delayed compliance. Its
effect is to lower the penalty very slightly from the level
it would have if these expenditures were assumed to be made
on a continuous basis throughout the year.

     E.   The rate of inflation of pollution control
          operating and maintenance expenditures is
          the same as that for pollution control
          equipment costs.

          Most of the Environmental Protection Agency's
studies of pollution control costs have estimated operating
and maintenance expenses as a constant fraction of capital
costs.  This relationship between the two, in addition to
the fact that no clear reason was observed for using
5Sw5.IT5.t£ ITatlesS , J-SCi Lu Lllfe uS« Oi. a. 3J.liy-i.ts
rate.

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                             17
     P.   A Continuous Sequence of Replacement Cycles
          is Required.

          As the equipment approaches the end of its useful
life, it is replaced at a cost which reflects the rate of
inflation.  This process continues for an indefinite period,
implying that the underlying source of pollution is never
eliminated.

     This is a more prudent assumption than choosing either
that the equipment is needed only for a fixed number of
replacement cycles or a fixed number of years. The former
assumption is unreasonable in that it implies the economic
life of the underlying source of pollution somehow depends
on that of the pollution control equipment. The latter is
unworkable because it would require the selection of an
arbitrary horizon 'at some distant time in the future.  (It
would be extremely difficult to provide a reasonable esti-
mate of the period of need for pollution control equipment,
that is, the life of the underlying source of pollution.)
Fortunately, however, the effect of discounting is to reduce
the importance of distant cash flows.  That is, the present
value of cash flows occurring twenty or thirty years in the
future is very small and hence the effect of these flows on
the penalty is likewise very small.  This, plus the increased
computational convenience *and the ability to avoid having to
choose a fixed horizon, led to the adoption of the con-
tinuous replacement assumption.

     G.   Capital and Operation and Maintenance Expenditures
          are Instantaneously Incurred on the Dates That
          Compliance was Required.

          It is assumed herein that the capital expenditures
associated with delayed compliance were made in a single
payment on the first day that the source will or should have
come into compliance, and that no operating and maintenance
expenditures were required prior to that time.  If these
expenditures instead involve a series of payments made prior
to the date the source will or should have come into compli-
ance, then additional costs will have been avoided prior to
the date compliance was required, but corresponding, compen-
sating amounts will actually have been incurred (and not
avoided) prior to the date that compliance will be scheduled.
The assumption, therefore, greatly simplifies penalty calcu-
lations but does not significantly affect the accuracy of
these calculations.

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                             18
     H.   Long-term Debt Incurred to .Finance Pollution
          Control Equipment Is Retired by End of
          Depreciable Life of Equipment.'

          As indicated above, the pollution control invest-
ment is assumed to have been financed by the same methods
and in the same relative proportions as the source itself is
financed  (i.e., if the source's long-term financing is one-
third preferred stock and one-third equity or common stock,
then the pollution control equipment is assumed to have been
financed by the same methods and in the same proportions).

     Each year, as the book value of the pollution control
equipment is reduced through depreciation, the principal
balance on long-term debt and the amount of outstanding
preferred stock is assumed to be correspondingly and pro-
portionally, reduced, by bond and preferred stock redemption
payments, so that the relative financing proportions are
preserved with, respect to the outstanding book value.
Accordingly, when the equipment has been fully depreciated,
all outstanding bonds and preferred stock associated with
financing the acquisition and installation of the pollution
control equipment, will,- correspondingly, be assumed to have
been retired.

VI.  Derivation of Formulae to Measure Economic Benefit of
     Delayed Compliance.

     This section generally describes the procedure used to
determine the economic benefit of delayed compliance.  This
section follows the same general outline in deriving the
formulae used to calculate that benefit.

     In most instances the formulae will have to be applied
for each item of equipment.  Where items of equipment have
the same useful .and depreciable tax lives and where the same
period of delayed compliance and inflation rate are involved,
it is possible to combine capital and operation and main-
tenance expenditure amounts and determine total economic
benefit in a single calculation.

     All symbols are defined in Appendix A to this section.
A complete description of the parameters used and their
sources is given in Section V.

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                             19
     A.   Pollution Control Cash Flows .

          The computation of the benefit from delaying pol-
lution control investment requires that cash flows be
estimated for a continuous series of pollution control
equipment replacement cycles and that- these cash flows be
reduced to a single present value.  The simplest approach to
calculating the present value of all < future flows is to
calculate the present value of cash flows in the initial
useful life cycle and to then use that value as a basis for
all others.  The derivation described below uses such an
approach .

     The first cash flow results from the initial investment
of equity.  It may be expressed as:
                                    %

     El = II * Q  '               .                      (1)
where II = the capital cost of the "pollution control equip-
ment.
       Q =» the fraction of the source's capital structure
           made up of equity.
     From this quantity must be subtracted an amount to
reflect the effect of the investment tax credit.  This
amount may be expressed as:
     ITC = II * t                                      (2)
                 ITC
where t    = the investment tax credit rate.
       ITC

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                           20
The investment tax credit rate must be adjusted if not all
of the investment qualifies, for the credit.  This adjustment
is explained in Appendix 3.  Further, if rapid amortization
is selected (see Appendix C) only one-half of the normal
investment tax credit is allowed.

     Additional cash flows result from capital-related
expenditures which occur over the depreciable life of the
equipment.  These amounts account for tax depreciation
effects and for the cash flows associated with financing the
pollution control equipment.  The effect of depreciation is
to reduce the source's, tax liability.  The cash flow related
to depreciation in year j may be expressed' as:
                            »
     DEP  = II * d  * t
        j        • j    TR                              (3)

where d. = the fraction of the original cost depreciated
       J   in year j (see Appendix" C).

         = the source's marginal income tax rate  (see
           Appendix D)..
  ^ '
     The other annual capital-related cash flows consist ofI
principal repayments and financing charges (i.e., interest
and dividends) on the debt and preferred stock issued to
finance the equipment purchase.  The fraction of the initial
investment financed by debt may be expressed as:

     DEBT SHARE = II * B                   "             (4)

where B = the fraction of the firm's capital structure made
up of. debt.  Debt is assumed to be repaid each year in
proportion to the depreciation of the asset.   That is, at
the end of each year the same fraction of the principal is
repaid as the original book value of the investment is
depreciated.  Therefore, the repayment of principal in year
j may be expressed as:

     PRIN  = d  * II * B                                (5)
       .  J    J

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                            21
     Interest is assumed to be paid at  the  end  of  each year
on the principal outstanding at the beginning of that year.

     (INTEREST CHARGE)  = R    *  (PRINCIPAL OUTSTANDING)  (6)
                      j    INT                           j

where R    = the source's interest rate.
       INT

Since interest is tax deductible, only  the  after-tax effects
should be considered in calculating "the cash flow.   Therefore,
the interest .payment cash flow in year  j becomes:

     INT  = R    *  (PRINCIPAL OUTSTANDING)  *  (1-t  )     (7)
        j    INT                          j       TR

The principal outstanding is the original amount borrowed,  .
II * B, less the amount which has been  repaid prior to the
beginning of the year.  The ampunt repaid prior to the
beginning of year j is:           • ---   *

                       j-l
     (AMOUNT REPAID)  = Z  II * d  * 3                    (8)
                       k=O   .    te

The principal outstanding at the beginning  of year j is the
amount initially borrowed less the amount repaid by the end
of year j-l.                                     •     .

                                        j-l
     (PRINCIPAL OUTSTANDING). = II * B  - £   II *  d  *B  (9)
                            3           k=0        k

Combining equations  (7) and  (9) yields  a formula for the
interest-related cash flow in year j:

                                            j-l
     INT  = R    *  II * B *  (1-t  ) *  (1 -  2   d )       (10)
        j    INT                TR          k=O  fc

     The fraction of the ini'tial pollution  control investment
that would be financed" fay preferred stock may be expressed
as follows:

     PREFERRED SHARE = II * F                            (11)

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                          22
where F is the fraction of preferred stock in the source's
capital structure.  Just as the additional debt is repaid
over the depreciable life of the pollution control equipment,
it is assumed that the preferred stock must be redeemed as
the asset is depreciated.  At the end of each year, the same
fraction of the preferred stock is redeemed as the original
book value of the investment is depreciated.  Redemption in
year j is given by:

     PREF  = d  * II * F                                (12)
         j    J

     Dividends on preferred stock are assumed to be paid at
the end of each year on the amount of stock outstanding at
the beginning of the year.

     DIV  = R    * (PREFERRED OUTSTANDING)              (13)
        j    DIV '                         j

where R  .  = the dividend rate on preferred stock.
       DIV

These dividends are not tax-deductible.  The preferred stock
outstanding in any year is the original amount issued, II *
F, less the amount redeemed prior to the beginning of the
year.  The amount redeemed prior to year j is:

                          j-l
   '   (AMOUNT .REDEEMED) . =  Z  II * d  * F               (14)
                      3   k=O       k

The amount of preferred^stock outstanding at the beginning
of year j is equal to trie amount originally issued less the
amount redeemed.

                                        j-l
      (PREFERRED OUTSTANDING). = II * F   E II * d  * F  (15)
                            :           k=0      k

The dividend paid at the end of year j is found by combining
equations (13) and (15) .         ,

                                 j-l
     DIV. = R    * II * F * (1 -  I dj           (16)
        1    DIV                 k=Q K

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                            23
     The final category of cash  flow is  that  associated
with annual operating and maintenance expenditures.   These
expenses increase each year  at the  inflation  rate.   Like
interest and dividend payments,  they are assumed  to  be  paid
at the end of the year.  They are tax deductible  so  their
associated cash flows must reflect  the effect of  income
taxes.  If Mj is the cash flow resulting from operating and
maintenance expense in year  j, and  MQ is the  annual  operating
and maintenance expense in current  dollars,  the resulting
cash flow may be expressed as:

     M  = M  *  (1-t  ) *  (1+1)
      10       TR

     M  = M"'*  (1+1) = M *  (1-t   )  *  (l+I)2
      21            0      TR

     M  = M    *  (1-KE) = M * (1-t   ) *  (1+1)3          (17)
      j    j-1    ,        °      TR

     B.   Discounting Cash Flows
                                                            »
          The cash flows just calculated must next be dis-
counted to their present values. The cash  flows  related
to the initial equity investment and the investment  tax
.credit, take place immediately;  therefore,  no discounting
is required to convert them  to their present  value.   Using
equations  (1) and  (2), that  present value is  given by:

     PV        = El - ITC
       INITIAL
               = II * Q - II * tITC


               = II *  (Q - tITC)                        (18)

     The present value of the net cash flows  associated
with the additional capital-related cash flows may be
calculated in three steps.   First,  the total  cash flow  in
year j is given by algebraically summing the  individual
components.  The second step is  to  discount this  sum to
determine its present value. These two  steps are combined
in a single equation as follows:

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                            24
                   -DEP  + PRIN  + INT  -I- PREF  4- DIV
                       J	J      J	j	1
       ANNUAL                         j
       CAPITAL                    (1+E)
       RELATED.                                         (19)
              :
where E = the discount rate.

The negative sign preceding the depreciation cash flow
results from the fact that this component represents a
reduction in cash outflow.  The third step is to sum the
individual present values for each year of the depreciation
life of the equipment  (n years).

                  n
     PV         = Z  PV
       ANNUAL    j=l   ANNUAL
       CAPITAL    •     CAPITAL
       RELATED         RELATED j                         (20)

     The final category, operating and maintenance cash
flows, must be considered over the entire useful life of  the
equipment.  The present value of the flow in year j is given
by:  .

                M.
     PV     =    J

       OSM:  ~7I^P                                    <2D

The present value over the. N years of useful life is given
by summing the present values for each year:

              N
     PV    =  r   PV
       O&M   j*!    .OfiMj                                (22)

     The present value of all cash flows resulting from the
purchase and operation of pollution control equipment through-
out: the N year life of the original squipir.snt, PV^-p^/  ^
given by summing the contributions of each of the three
types of pollution control expenditures.

     PV1    = PV        + PV         -(• PV
       PCE      INITIAL     ANNUAL       OSM
                            CAPITAL
                                                        (23)

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                          25
     The present value of all cash flows associated with the
initial useful life cycle must next be expanded to include
the present value of cash flows in all future replacement
cycles.  This can be accomplished by recognizing that any
given future cycle is identical to the original one except
that its costs have increased by the inflation rate.  For
example, the replacement made in year N, when the original
equipment wears out, gives rise to cash flows whose present
value in year N is equal to:

     PV1    * (1+DN
        PCE

where I = the annual inflation rate.

The 'initial present value of these flows (at time zero) is
then determined by discounting:

     PV1    * (1+I)N
        PCS    	
              N
         (1+E)

where E = the discount rate.

The present value of the cash flows from the original cycle
and all future replacement cycles is therefore given by
summing:
PV
PCE
                PCE
             4-
     (1+I)
1-   *
 PCS  (1+E)
                                  N
                                  vr
                                  "*
                                    PCE (1+E)
             pv-1-    *
                PCE
                                         E >
                                                        (24)

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                           26
     C.   The Economic Benefit of Delayed Compliance

          The quantity just calculated is the present value.,
as of the day on which compliance should have been achieved,
of all future pollution control cash flows which the source
would have experienced had it not delayed.  If compliance
is delayed, inflation will result in the source's facing
higher costs.  Once it does comply, the present value of
those costs, as of the day on which compliance is actually
achieved, is given by:

     PV1     = PV    * (1-KL)L                     (25)
        DELAY     PCE

where I = the annual inflation rate.

      L = the period of delayed compliance..

The present value as of the day on which compliance should
have been achieved is given by discounting:

               PV^DELAY
     PV      =
       DELAY     (1+E)L
where E = the discount rate.

The-economic benefit from delay is thus given by the differences
between these-two present values:

     ECONOMIC BENEFIT = PV    - PV
                          PCS     DELAY
                        PV    *
                          PCF

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                         27
VII. Calculation of Economic Benefit of Delayed Compliance
     Obtained by Violators Other Than Privately Owned
     Sources Subject, to the Federal Income Tax

     The method described herein for calculation of economic
benefit assumes that the source is a privately-owned entity
subject to federal and perhaps state and local income taxes.
There are sources other than these, however, within the scope
of the EPA Civil Penalty Policy (e.g., public sector sources
such as, state or municipal sources or publicly-, not
investor-, owned utilities).  For such sources, the economic
benefit of delayed compliance can be determined by adapting
the method presented here.

     Public sector sources typically do not have an annual
taxable "income";, accordijigly, the income dependent para-
meters should be set equal to zero for such sources (i.e.,
the tax depreciation method used,  the marginal income tax
rate, and the investment tax credit).

     One income dependent parameter, the depreciable life,
should not be set equal to zero.  That is because the
•depreciable life .period is also used as the-period of time
over which debt incurred to finance the pollution control
equipment is repaid.  Accordingly, the value of that para-
meter should be set equal to the debt retirement period that
the source uses for such equipment.

     Public sector sources additionally do not finance
pollution control expenditures through the issuance of any-
thing analagous to either preferred or common stock.  Their
share of such expenditures is typically financed entirely
through long-term debt.  Accordingly, the parameters related
to common or preferred stock financing should also be set
equal to zero  (i.e., equity share of violator's total invest-
ment and the preferred stock share of the violator's total
investment) .

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                          28
     Since public sector sources do not use anything compar-
able to equity financing and do not have a taxable "income",
there is no quantity analagous to a rate of return on equity
that can be used to discount future cash flows.  Some of
these sources may have established discount factors to evalu-
ate alternative capital expenditure programs.  If so, the
source's own discount factor may be used.  If they have not.
established discount factors, the rate used for inflation of
pollution control equipment may be used as the discount rate
(i.e., in applying the calculation method described herein,
the rate of return on equity (or discount rate) should be
set equal to the inflation rate of the pollution control
equipment).

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                         29
                      APPENDIX A
                 DEFINITION OF SYMBOLS
B         =    the fraction of debt in the owner's capital
               structure (book value).

Capital   =    the sum of the stockholders'  or owners'
               net equity, preferred stock and long-term
             •  debt accounts at book value.

DEP       =    the net after tax cash flow in year j  resulting
   j          , from depreciation of the initial investment.

d         =    the fraction of original asset value depreciated
 j             in year j.

DIV       =    the dividend payment.in year j on the  preferred
   j           stock used to finance the initial investment.

E         =•    the discount rate.

El    '    =    the amount of cash provided by equity
               investors to finance the initial investment.

F         =    the fraction of preferred stock, (at book
               value) in the owner's capital structure.

I         =    the annual rate of inflation for pollution
               control expenditures.

INT       =    the interest payment cash flow (after  the
   j           effect of taxes) in year j on the debt used
               to finance the initial investment.

II        =    the initial investment in pollution control
               equipment; the amount which will be capitalized
               on the books of the firm and amortized over
               the life of the equipment.

ITC       =    the investment tax credit.

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                                 30
    j,  k      =    indices,  usually indicating the year or
                   quarter in which a cash flow occurs.

    L          =    the period of delayed compliance.

    M.         =    the operating and maintenance expense in
     3              year j.

    N          =    the useful life of the pollution control
                   equipment.

    n        '  =    the depreciation life of the pollution control
                   equipment.

    P^         =    the penalty payment to be made at the begin-
                   ning of quarter k.

    PV         =    the present value of a cash flow.

    PREF.:      =    the repayment or reallocation of debt in
                   year j.

    Q .        =    the fraction, of common equity (at book value)
                   in the owner's capital structure.

    RTAI_      =    the annual rate of interest on long-term
     iNT           debt.

              =    the investment tax credit rate.

              =    the marginal income tax rate' (tpED is the
                   marginal federal rate and ts&L is the
                   marginal state and local rate!.

    W.         =    the fraction of common stock held by
i     3             . shareholder j.

    Y          =    the statutorv investment tax credit rate.

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                            31
                         APPENDIX. B
             INVESTMENT TAX CREDIT QUALIFICATION
     Only certain assets qualify for 'the investment tax
credit, a notable exception being most buildings.  If the
installation of pollution control equipment involves expendi-
tures which will be capitalized and amortized over the tax
life of the equipment, but which do not qualify for the
investment tax credit, the calculation of the credit must be
adjusted.
     Let Iqual ke t^ie investment which qualifies for the
investment tax credit and let Inon be capitalized expendi-
tures not qualifying for the credit.  (^cmal + Xnon = IIf
the initial investment) .  If the investment tax credit rate
specified in the Internal Revenue Code is Y percent, the
adjusted rate for use in the noncompliance penalty calcula-
tion is:
     tITC =     T3ual     * y
     An adjustment must also be made i.f the pollution control
equipment has a tax life of less than seven years.  Values
of "Y" in these cases are given by:

     Depreciable Life                        Y
         (years)	                     (Percent)
     Less than 3                             0 -
     At least 3 but less, than 5              3.33
     At least 5 but less than 7              6.67
     7 or more                              10.00

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                           .  32

                         APPENDIX C


                       DEPRECIATION
     The cash  flow resulting  from  depreciation  is  given
by:

     DEP . = d  * II * t
         D     j         TR
where d. is the fraction of the original cost depreciated  in
year j and t,.,^ is the marginal income tax rate.  The  value of
dj^ will depena on the method  of depreciation used  by  the owner
or the facility.  Formulae for the more common  methods  are
shown.

     Straight  line.  Under this method, depreciation  is
the same during each year of  the equipment's tax life (n) .
     Sum of years digits.  Under  this method, depreciation in
year j is given by:

     d  = 2 *  (n-j+1)
      j   n *  (n+1)

     Double declining balance.  Under, this method,  depreciation
in any year is the product of  the remaining book  value  and
twice the straight line  rate.  Switching  to the straight line
method is permitted  after part of the asset has been  depreciated.
This switch, properly timed, increases  the present  value of the
depreciation tax  shield.  The  formula for double  declining
balance depreciation in  year j is:
                          (1 -  S
                             k=0
a.  = max
                              j-l
                          (1 -  Z      d.)
                              k=o      ^'

where "max" means  that  the rr-»at-_pr of the  tt-.'o qu3.r.-
right of  the bracket  should be chosen.

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                          33

     Rapid Amortization.  A'firm generally empolys a
depreciation method which minimizes the present value
of its future accelerated depreciation methods, the most
common of which are described above.  Special rules
governing the depreciation of pollution control equip-
ment allow even faster write-offs than the accelerated
methods, often resulting in still greater reductions
in the present value of future tax liability.  This
approach, known as rapid amortization, was provided for
in the Tax Reform Act of 1976.

          The rules of rapid amortization are as follows:

          Divide the investment into'two parts:

               i    the .amount which  would be depreciated
                    during  the first  15 years under straight
                    line depreciation, and

               ii   the residual.

          The first part may be depreciated on a straight
          line basis over 5 years..  Only one-half of the
          normal investment tax credit may be taken on
          this part*

          The second part may be depreciated over the full
         " tax life of the investment  using whichever
          depreciation method the owner chooses.  The full
          investment tax credit may be taken on this part.

          The formula for the fraction depreciated in year
j is most easily developed  by considering the two parts
.separately.  The fraction in year j for the first part is
given by:

     dl      =  L      *      f
      3         -5
where:             15
                    n

     f = min       1.0

          The fraction of the second  part depreciated in
year j is given by the formula shown  above depending on
the method used.  This must be multiplied by  (1-f), the
fraction of the initial investment in the second part.

     d. =  (1-f) *  (standard fraction  given above)

          The depreciation  fraction for year j under rapid
amortization is then given  by summing the two components:

     d. = d^-  4- d2

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                            34


                     APPENDIX D

               TAX RATE ADJUSTMENTS
          The calculation of the economic benefit of
noncompliance requires use of  the firm's marginal income
tax rate.  For most large corporations operating  in states
with no state income tax, this  figure would be 48 percent.
However, state income taxes on  a non-corporate form of
organization complicate  the matter.  This appendix dis-
cusse's the adjustments necessary to deal with these two
factors.

     State and Local Income Taxes

          Firms  in some  locations are subject to income
taxation by more than one level of government.   If state
and local income taxes are deductible on the federal  return,
the rate of taxation on  income  t^, must be computed  accor-
ding to the following procedure:

          Let tpED.be the federal marginal tax rate and
tS$L be tiie raar9:i-nal rate on state and  local returns.  Taxes
paid to state and local  governments are deductible expenses
on the federal return.   Hence,  this after-tax rate is  given
by:
                 *   (1-tpED)
The overall tax rate is the sum of federal  and  state  and
local effects.  It is given by:

          4-   — -h  •  4- +•     *  M -f-    1
          ^TR.  CFED    S&L     \-L~1-FED'

          It  is possible  that certain  local income  taxes
will be allowed as deductions when state  income taxes are
computed.  In such cases,  t_   'is given by:
                           O 6tJ_i

               = tS + tL  *  (1-tgO
          The  assumption used  in employing  the  tax rate,
and its components,  tpEn and tg&L/ was  that these  rates
represent the  marginal  income  tax rates  applicable to  the
owning source.   If  there is. more than one owner, as might
be the case  if the  source were a partnership or a  Subchapter
3 curporation,  the  rate used, in calculating the economic
benefit of delayed  compliance  should be  a weighted average
of the rates appropriate to each owner.

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                             35




          The formula for either t    or t    would then be
given by:                         FED     S&L


         ^  -  -r    -_
          1-1    22
W  t  + W  t  +     +' W
          K


       =  I   \\

       .  k=l


where:


     t = the weighted average marginal income  tax rate.


     W,= the fraction owned by the k   owner.

                                               th
     t, = the marginal income tax rate of the k  owner.


     K = the number of owners.

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                              36


                        • APPENDIX E

           SAMPLE CALCULATION OF ECONOMIC BENEFIT
     To illustrate the calculation of economic benefit of
delayed compliance the following sample is provided for
a .hypothetical discharger in the following economic
situation:
     Delayed Capital Cost of Pollution
       Control Investment

     Annual O&M Cost of Delayed Pollution
       Control Investment

     Investment Income Tax Credit

     Marginal Income Tax Rate  (Combined
       state and federal)

     Inflation Rate for Pollution Con-
       trol Investment

     Discharger's Interest Rate on Bor-
       rowed Capital (long-term debt)

     Equity Share of Discharger's
       Total Investment

     Preferred Stock Share of Source's
       Total Investment

     Depreciation Method Used

     Depreciable Life of Equipment

     Useful Life of Equipment

     Overall After-Tax Rate of Return
       on Discharger's Book Equity

     Period of Delayed Compliance
     Period of Time from Beginning of Delayed
     Compliance to Time Penalty is to hs»
     O*a 4-«a f in TTI^/^ == M/^-M *a  a e eiiTn«a O
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                            37
     A.   Cash Flows Over the Useful Life of the Pollution
          Control Investment that Should Have Been Made.

          The first step in the calculation of the economic
benefit of delayed compliance is the identification of all
cash flows (including both direct costs and indirect finan-
cial impacts) that would have occurred over the useful life
of the pollution control equipment that should have been
constructed or installed (including the initial capital
investment, those cash flows associated with financing the
balance of the capital cost of the investment, and those
associated with the operation and maintenance of that
equipment).

     The following table identifies those cash flows for 'the
hypothetical situation described by the values assigned
above to the parameters .used to determine the economic bene-
fit of delayed compliance.  The footnotes that accompany the
table indicate how the financing assumptions described above
are used to calculate these costs.

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        A.  CASH FLOWS OVEU THE USEFUL LIF13 OF'THE POLLUTION CONTROL INVESTMENT THAT SHOULD HAVE BEEN HADE
Invest- Interest Total
Annual ment Balance Debt on Deduction Total Total
Year Depre- Book on Pay- Debt Annual Related to Tax Operating Cash
(End) elation Valuu Debt 1) ment 3) Balance O6M 0) Investment-!) Savings 5) Expense 6) Flow 7)

1
2
3
4
5
(i
7
ft

9
10

14,286
14,286
14,206
14,286
14,286
14,286
14,284
-

-
-
100,001)
85,711
71,421)
57,142
42,055
28,57:)
14,28)
-
-

-
-
40,000
34,286
28,572
22,858
17,144
11,430
5,716
-
. -

-
-

5,714
5,714
5,714
5,714
5,714
5,714
5,716
-

-
-

2,800
2,400
2,000
1,600
1,200
800
400
-

-
-

15,900
16,854
17,865
18,937
20,073
21,278
22,554
23,908

25,342
26,863

32,986
33,540
34,151
34,823
35,559
36,364
37,240
23,908

25,342
26,863

16,493
16,770
17,076
17,412
17,780
18,182
18,620
11,954

12,671
13,431

10,700
19,254
19,865
20,537
21,273
22,078
22,954
23,908

25,342
26,863
50,000 2)
7,921
8,198
8,504 '
8,840
9,208
9,610
10,048
11,954
i
12,671 t
13,431
11) The discharger's debt/equity ratio is assumed to remain constant.  Accordingly, the.$100,000 Investment is
   financed by using $60,000 of firm capital and by borrowing $40,000.
;>) The initial cash flow, at the beginning of year one, is the $60,000 of the source's capital, less an Investment
   tax crecUt of. $10,000.
3) It iti assumed that the iebt is repaid over the depreciable life of the pollution control investment.
4) Total deductions relate! to Investment = Annual O&M + Depreciation + Interest on Debt Balance.
5) Tax Savings = Marginal Income Tax Rate X Total Deductions Related to Investment.
ft) 'total Operating Expense - Annual O&M t Interest on Debt Balance.
7) Net Cast) Flow - Operating Expenses t Debt Repayment - Tax Savings
8) Annual CfcM Cost is inflated at rate equal to overall Inflation Rate.

NOTE:  Figures may be sllglitly off due to rounding error.

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                            39
     B.   Present Value of Pollution Control Equipment Costs
          that Should Have Been Incurred
     The next step in calculating the economic benefit of
delayed compliance is the calculation of the present value
of the annual cash flows that should have occurred over the
useful life of the pollution control equipment.
Year
(End)

1
2
3
4
5
6
7 "
8
9
10
Net
Cash
Flow
50,000
7,921
8,198
8,504-
8,840
9,208
9,610
10,048
11,954
12,671
13,431
Discount
Factor 9)
1.000
.909
.826
.751
.683
• .621
.564
.513
- .467
.424
.386
Present Value
of Net Cash
' Flow
50,000
7,201
6,775
6,389
6,038
5,718
5,425
5,157
5,577
5,374
5,178
                                                 108,831   :


     'The total present value of the cash flows that should
have occurred over the useful life of the pollution control
equipment is then converted into the total present value of
all cash flows that will occur during that useful life period
and during all future replacement cycles.  This may be done
using the formula described in section VI, on page 26, above.
     9)  Equal to 1/(1 •*• rate of return on equity) Year

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                             40
                      Value  (in year              Present
                      year indicated)             Value of
Year
(End)
0
10
20
30
40
50
0
0
0
Inflation
Factor 10)
1
1.79
3.21
5.74
10.29
18.42
o •
0
0
of the next re-
placement cycle
108,831
194,900
349,036
625,070
1,119,405
2,004,684
0
0
0
Discount
Factor 11)
1
.386
.148
.057
.022
.008
0
0
0
the next
Replacement
Cycle
108,331
75,142
51,882
35,822
24,733
17,077
0
0
0
                         Total Present
                         value of all
                         replacement
                         cycles 12)               $351,577
10)  Equal to  ( 1 4- inflation rate) Year

11)  Equal to  I/  (1 4- rate of return on equity) Year

12)  Given by  formula described above in Section VI on
     page 26. •

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                          41
     C.   Present Value of Pollution Control Costs
          That Will Be Incurred.

     The present value of the pollution control cash flows
that will result from the pollution control facility that
was or will actually be constructed may be determined by
the formula described above in section VI and page 27.

     PV       =  PV             _       '
       DELAY       PLE ( 1 + I ) •
                       ( 1 + E )

              -  $351,577  ( 1 + 0.06 ) 3'
                            ( 1 -h 0.10 )
     PV
       DELAY  =  $314,601
     D.   The Economic Benefit of Delayed Compliance

     The economic benefit that" the source gaiaed through
its three years of delayed compliance is the difference
between the costs that it should have incurred ,to come
into timely .compliance and the lower costs that • it will
actually incur/i.e.,
          Present value of cash
             flows that SHOULD
             have been incurred     '          351,5',77
          Present value of cash
             flows that WILL
             actuallv be incurred             314,60,"
          Economic Benefit of
             Delayed Compliance                $36,976

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  INSTRUCTIONS FOR CALCULATING
         CIVIL PENALTIES
              DUE TO
        DELAYED COMPLIANCE
            March 1979
Environmental Protection Agency
     Office of Enforcement

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                       INTRODUCTION



     These instructions are intended to be used in con-

junction with the September, 1978, Civil Penalty Policy

Technical Support Document.  Portions of that document

have been summarized to create this calculation "cookbook1

which stands on its own.  However, you should still refer

to the Technical Support Document for amplified explana-

tions.  Throughout these instructions, for the purpose of

convenience, the economic savings of delayed compliance
                                          «
component of the civil penalty will be referred to as

the civil penalty.  Please remember, however, that these

instructions relate only to that economic benefit compo-

nent.



     Questions and suggestions on this paper should be

directed to:

                  Terri Bishop (EN 341)
                  Compliance Analysis Section
                  Compliance Monitoring Branch
                  Division of Stationary Source
                    Enforcement

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I.  DATA NEEDED TO DETERMINE ECONOMIC  SAVINGS  OF PRIVATELY-
    OWNED TAX PAYING SOURCES  "                   '•
     The information needed to determine  the value  of economic
                                             **
savings due to delayed compliance includes  (A)  information
which confirms the period of time of non-compliance (in months)
and the period of time between the start  of non-compliance and
assessment of the penalty (in months);  (B)  data associated
with the delayed pollution control investment;  and  (C)  finan-
                          »
cial information related to the specific  source.       *•

    A.  AGENCY-RELATED INFORMATION REGARDING NON-COMPLIANCE

        The period- used to measure economic savings should be
the period of time that required capital expenditures were or
will be delayed.  In actions under the Clean Water Act,  the
period should commence July 1,  1977,  unless an  earlier date
was required by the terms of the violator's discharge permit.
In the case of violators of the Clean Air Act,  the period
should begin on August 7, 1977  or the earliest  provable  date
of violation,  if that date is later.   In both cases, the
period of delayed compliance should extend until full compli-
ance is or will be obtained;  however,  there is an exception
in the case of major stationary source Air Act violators

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that will be out of compliance beyond August 7,  1979.   In
these cases, the period of delayed  compliance should only
extend to August 1, 1979, when the  mandatory, administra-
tively-imposed non-compliance penalties  will "commence.

     The method of measuring economic savings computes
that value as of the beginning of the period of  noncorapli-
ance.  Because this amount must be  adjusted  to its present
value as of the time of assessment, the  period of time
between the beginning of the noncompliance period and the
time of penalty assessment must be  determined.
     In the sample case of Company X the non-compliance
     period has been determined to be from 8/77 to
     6/78 (10 months).  The period between noncorapli-
     ance and assessment of penalty has been determined
     to be from 8/77 to 2/78  (6 months).
     B.  DATA RELATING TO THE DELAYED POLLUTION CONTROL
         INVESTMENT

         The following information related to the delayed
pollution control investment is required:  (1) the deferred
capital investment cost; (2)  the deferred annual O&M cost;
(3) the useful life of the control equipment; (4)  its de-
preciable tax life; and (5)  the annual rate of inflation

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                                                          4.
for such equipment and  its operating  and maintenance  expenses



        1.  Capital Investment Cost:   This consists of
                                             «^
all capital expenditures that should  have been made for

purchase and installation of the required pollution con-

trol equipment.  It includes only  those expenditures  which

are normally capitalized and depreciated over the life of

the equipment.


              \
     If the violator, after having made approved invest-

ments in pollution control equipment, -remains in violation

due to inadequate or ineffective equipment, then there is

no inappropriate deferral of capital  expenditure.  Where

the expenditures were not made with the approval of en-

forcement officials or  were not reasonably calculated

by the source owner to achieve compliance, then the deferred

capital amount should be based upon the expenditures  that

will be required to achieve compliance.



     When several types of equipment can be used to achieve

compliance,  the civil penalty should be based on the cheap-

est,  since this is the cost avoided.

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     The capital values used to determine the economic

savings of delayed compliance should be the values that

existed as of the beginning of the delayed compliance

period.  It is therefore important to relate "any cost

figures to the dollar value of the equipment at the

beginning of the noncompliance period.
     The equipment in the case of Company X
     is a wet scrubber.  One million, two hundred
     thousand dollars  ($1,200/000) is the cost of
     the equipment as of the installation date
     (6/78).  Converting this cost to a value at
     the beginning of the noncompliance period is
     shown on page 2 of the Worksheet.  The result-
     ing amount is then entered on the Penalty Data
     Sheet.
     SOURCES:


     1.   Quotations from various publications
         such  as the MeIIvane Manual

     2.   Ouotes from vendors

     3.   Engineering estimates

     4.   Headquarters (Enforcement Office)

-------
         2.  Operating  and  Maintenance  Expense.   This  is

an estimate of the annual cost  of  operating  and maintain-

ing the required pollution  control equipment (excluding
                                             i*.
annualized interest).   It must  be  expressed  in terms of

the amount of operations and maintenance  expense  avoided

in the first year of noncompliance.   There is a provision

in the formulation which automatically  adjusts future

years' operating and maintenance expense  for anticipated

inflation.
     In the case of Company X, the operations and
     maintenance cost for the scrubber has been
     entered on the Penalty Data Sheet as 10% of
     the capital cost.
     SOURCES:

        Same as Capital Investment Cost
         3.  Useful Life.  This is the expected number of

years which the pollution control equipment can be operated

before it must be replaced.

-------
          In determining useful life of control equipment,
use the  asset  guideline period for the appropriate industry
as given in Revenue  Procedure  No.  77-10.
                                             ««.
     The useful  life for Company X is  IS  years.
     SOURCES:

     1.  The Company
     2.  I.R.S. Revenue Procedure  177-10
         4.  Tax Life.  This is 'the minimum number of years
over which £ particular investment in pollution control equip-
ment may be depreciated.

             A short tax life has an effect similar to that
of accelerated depreciation.  It serves to move forward in
time the benefit of depreciation, thus increasing the present
value of its benefit.  Reducing the tax life therefore reduces
the cost of compliance and lowers the savings from noncompliance,

-------
     (NOTE:   Both useful and tax life must be integers.
             If rounding is required, round up for use-
             ful life and down for tax life.  This errs
             slightly in favor of the source.)
     The  tax life or depreciable  life  for Company X has
     been entered as 12  years.  This  figure represents
     the  lower  limit of  the  asset depreciation range for
     Company X's  industry.
     SOURCE:


     1.  The Company

     2.  I.R.S.  Revenue  Procedure  £77-10
         5.  Inflation Rate.  This is the annual rate  at

which both capital and operating and maintenance costs are

expected-to grow over the useful life of the equipment.

These cost increases are the result of various factors

affecting supply and demand for particular products, as well

as general inflationary pressures in the economy.



             The future rate of inflation shall be estimated

as an average of inflationary trends in recent years.  In-

flation rates specific to pollution control equipment or

-------
similar  products  would be appropriate.   Lacking equipment-
specific data,  it is  acceptable to use  the recent 5 year
average  inflation rate for plant construction,  as identi-
fied in  Chemical  Engineering magazine.
     The average  annual  inflation  rate  for Company X
     for 1972  through  1977  is  8.3  percent.  It was
     calculated on  Page  2 of the Worksheet and then
     entered on the Penalty Data Sheet.
     SOURCES:

     1.  Chemical Engineering's Annual  Index
          (summary attached)
     2.  Equipment-specific annual index
     C.  FINANCIAL DATA RELATED TO THE VIOLATOR

         The following information related to the violator's
financial status is required:  (1) stockholder's equity;
(2) capitalization; (3) the violator's rate of return on book
equity; (4) the violator's equity, preferred stock, and debt
shares of the investment; (5) his combined marginal federal
and state income tax rate; (6) his method of depreciating

-------
                                                          10.
pollution control equipment;  (7)  his  federal  investment tax
credit for pollution control  equipment;  (8) the  interest '
rate that the violator pays on his  long-term  debt;  and (9)
the dividend rate paid on preferred stock.

         The specific data relating to the violator's
financial condition that are  needed to measure economic
savings are the anticipated values  of these factors over the
useful life of the pollution  control investment  that was
delayed.  A good approximation of these factors  is usually
found by taking the average values  which have occurred over
the recent years, except when those values are clearly a-
typical.  For example/ if the recent rates of return on
book equity have been small or even negative, those values
should not be used.  In such cases, it is obvious that the
violator would expect to be able  to make a profit in future
years or it simply would not make economic sense to remain
in business.  In these instances, the average rate of  return
for the appropriate industry should usually be used.

         1.  Stockholder's Equity.  This is that portion
of the violator's assets against which the stockholders have
claim.  It is the sum of the capital stock contributed by
the stockholders as permanent capital, plus retained earnings

-------
                                                          11.
 (total cumulative earnings  less amounts distributed  to  stock-
holders as dividends), plus capital  surplus  (all  other  addi-
tions to common equity that do not represent earned  surplus),
minus treasury stock  (capital stock  which has" been issued  and
paid for in full and  later  reacquired by the issuing corpora-
tion as a result of a purchase or donation).
     The.stockholder's equity for Company X has been
     computed from the sample data for Company X on
     page 1 of the Worksheet.
     SOURCES:
     1.  Financial statement from Moody's
     2.  Annual Reports filed with S.E.C.
     3.  Violating firm
     2.  Capitalization.  Capitalization is the sum of the
violator's long-term debt (liabilities such as mortgage notes
payable and bonds that will not mature for a comparatively
long period of time, usually more than one year),  plus its
preferred stock and its stockholders' equity.

-------
                                                          12.
      The capitalization figures for Company X were taken
      from its financial statements as shown on Page 1 of
      the Worksheet.
      SOURCES:

      1.   Financial  statement from Moody's
      2.   Annual reports filed with S.E.C.
      3.   Violating  firm
          3.  Rate of  Return on Book  Equity.   This  is  the rate
 (expressed as a decimal  fraction) which will  be  used  as  a
basis for discounting future years'  cash  flows.  Such.discount-
ing is necessary to convert cash flows occurring in different
years to  present values.

             The discount rate may be thought of as the  return
available on alternative investments which the owner may make.
Viewed this way, the  greater the discount rate —  the greater
is the opportunity gained when investment in pollution control
equipment is delayed, and hence the greater is the benefit of
delayed compliance.   The discount rate is normally estimated
by the firm's rate of return on equity (equal to its after tax

-------
                                                          13
 profit,  net  of  preferred,  divided by the stockholders'
 equity).   An alternative basis for estimating a company's
 available  return on equity is the 2-
-------
                                                          14.
            Debt.share of investment is the portion of long

term financing provided by other  lenders.   It is  equal to

long term deist divided by capitalization.

                                             **


            Equity is typically the  most expensive  form of

long-term financing.  Therefore,  the greater the  share of

equity, the greater the total cost of financing.  This, leads

to increased savings from delaying compliance.



            Debt is typically the least expensive form of

long-term financing.  Therefore, an  increase in the  debt share
                                                           *

leads to decreased savings from delay in compliance.



            Preferred stock normally  has the  smallest  share

of long term financing.  It is generally less expensive  than

common equity financing but more expensive  than debt.   If

the preferred stock share increases,  the effect on savings

from delaying compliance depends on how the debt and common

equity shares are affected.
     The equity, debt, and preferred stock shares of
     investment for Company X were taken from the
     sample data, computed on the Worksheet and then
     entered on the Penalty Data Sheet.

-------
                                                          15,
     SOURCES:

     1.   3-5  year average from Moody's
     2.   Annual reports
     3.   F.T.C.'s  Quarterly Financial Report
     4.   Headquarters (Enforcement Office)
     5.   Violating firm
         5.  Marginal  Income Tax Rate.   This is the fraction
of the last dollar of  taxable income which must be paid by
the owner to federal,  state  and local governments.  It is the
amount by which taxes  would  increase if taxable income were
to increase.  It is different from the  average tax"rate (i.e.,
the total tax divided  by total taxable  income).   For a source
subject to the maximum federal tax rate of 0.43,  one may
determine the amount of state tax included in the combined
rate by multiplying the state tax rate  times (1 minus .48).
The combined marginal  tax would then be that portion of the
state tax included, plus the  .48  required  by federal statute.
             The marginal income tax rate is included in the
formulation because it in essence represents the share of
certain expenditures which are borne by the government.  For
example, operating and maintenance expenses are ordinarily

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                                                          16.
deductible expenses, hence  they  reduce the  amount of the
violator's income that is subject  to  tax.   The  greater the
tax rate/ the greater is the corresponding  savings in tax
liability for a given amount of  operations  arid  maintenance
expense.  Similarly/ depreciation  of  capital assets reduces
taxes because it reduces the amount of pre-tax  income, subject
to taxes.  As with operations and  maintenance expenses/  the
greater the tax rate the greater the  reduction  in tax liabi-
lity for a given size depreciation expense.  Since tax
savings from deductions of  both  operating expenses and depre-
ciation is greater with a higher tax  rate,  the  effect of a
higher rate is to reduce the cost  of  compliance.-
     Company X 'is located in Alabama.  Its marginal
     income tax rate was taken from the Marginal
     Federal/State Tax Rate Table  (attached).
     SOURCE:

     1.  Marginal Federal/State Tax Rate Table
         6.  Depreciation Methods.  Depreciation is a mecha-
nism to allow the cost of the equipment to be distributed
systematically over its useful life.  One effect of deprecia-
tion is to shield income from taxation by reducing pre-tax

-------
                                                          17.
income in the years following purchase of the equipment.

             Accelerated depreciation results in a dispropor-
tionately large fraction of these tax savings* occurring in
the earlier years of an asset's life.  It therefore increases
the present value of the tax shield, in effect reducing the
cost of the asset.  Accelerated depreciation therefore leads
to reduced cost of compliance and reduced savings from non-
compliance .

             For civil penalty purposes, the following de-
preciation methods are used:

             a.  The Straight-Line Method:  The depreciation
is computed by dividing the original cost into equal amounts
over the equipment's tax life.  This means that if the control
equipment cost $200,000 and it has a 10 year tax life, with
no salvage value, there will be a yearly depreciation of $20,000
($200,000 divided by 10).

             b.  The Double-Declining Balance Method;   This
depreciation is computed by charging a constant percentage
against the undepreciated balance each year.   That fraction
is equal to twice the straight line rate.   In addition,  at

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                                                          18.
some point  the depreciation  may  be  shifted to  a straight-line

basis to write off the remaining book  value.
                To illustrate  this depreciation method/  assume

that the same $200/000 equipment with  a  10 year tax  life is

depreciated using the double declining balance method.
Year

 1
 2
 3
 4
 5
 6
 7
 8
 9
10
Book Value
Beginning
of Period
Annual
Depreciation
Book Value
End of
Period
$200/000
$160,000
$128,000
$102,400
$ 81,920
$ 65,536
$ 52/429
$ 39/322
$ 26,215
$ 13/108
c. The
$40,000
$32,000
$25,600
$20,480
$16,384
$13,107
$13/107
$13,107
$13/107
$13/108
Sum-of-the-Years-Diaits
$160,000
$128,000
$102,400
$ 81,920
$ 65/536
$ 52,429
$ 39,322
$ 25,215
$ 13/108
-0-
Method: This dt
preciation is computed by summing the years' digits and making

a fraction by using the total as the denominator and each year's

digit  (beginning with the last year) as the numerator to

depreciate the cost of the equipment.  A piece of equipment

with a ten-year life would be depreciated by summing the •

years' digits (1+2+3+4+5+6+7+8+9+10 =» 55 - the denominator).

-------
                                                        19.
The depreciation for the first year would then be 10/55, the

next year 9/55,  then 8/55....etc.  of  the cost of the equip-

ment.
                                            w


                 Where the useful  life of the equipment is

relatively long, the denominator may  be calculated with the

following formula,  where N is  the  number of years of useful

life:
(M-4
                                  X  N  =  denominator
                  For example, if the useful life of the  equip-
ment were 10 years:
                                  X  10 •  55
                  The following illustrates the use of this

method with the above example:
        Year

          1
          2
          3
          4
          5
          6
          7
          8
          9
         10
 Fraction

  10/55
   9/55
   8/55
   7/55
   6/55
   5/55
   4/55
   3/55
   2/55
   1/55
Depreciation

  5 36,364
    32,727
    29,091
    25,455
    21,818
    18,182
    14,545
    10,909
     7,273
     3,636

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                                                          20
      SOURCE:

      1.  The Violating Company
         7.  Investment  Tax Credit,   This is  a  reduction  in
federal income taxes  that  results  from making qualified cap-
ital investments.  The investment  tax credit  is,  in  effect/
a tax rebate given on the  purchase of qualified depreciable
equipment.  However,  instead of  giving.the investor  the
rebate in cash, the Treasury lets  the investor  take  the
credit as a direct reduction of  the  tax he owes;  Thus, if in
1979 the firm's qualified  investments amounted  to 5150,000,
the firm would serid IBS  $15,000  less  in taxes than it other-
wise would.  The investment  tax  credit is  set by statute  at
10%.

             The investment  tax  credit is  included in the
formulation because it has the effect  of reducing the cash
outflow required to purchase the pollution control equip-
ment.  Thus, the higher the  investment tax credit rate, the
lower the cost of compliance and the lower the amount saved
by noncompliance.

-------
                                                          21.
     The investment tax credit for  Company  X  is  10%,
     SOURCE:
     1.  I.R.S. Code, Chapter 1, Subpart B -
         Rules for Computing Credit for Invest-
         ment in Certain Depreciable Property.
         8.  Interest Rate.  This is the rate of interest which
would be paid by the owner if additional debt were to be acquired.

             Like the rate of return on common equity, the
interest rate represents the cost of part of the funds used
to finance the pollution control equipment.  The greater
the intarest rate, the greater the cost of compliance and the
greater the savings from noncompliance.

             Lacking a specific long-term debt issue by
the violator within a year of the beginning of the period of
noncompliance, use an interest rate based on the bond rating
assigned the company's most recently issued bonds by Moody's
rating service.
     The interest rate for Company X (taken from the
     sample data) has been entered as 3%.

-------
     SOURCES:
         Company-specific debt  obligations  from
         Moody's or  similar  financial  sources
         Interest  for ,"A" rated corporate bonds"
         as given  in Moody's.
                                                          22,
         9.  Preferred dividend rate.  The method used  for
determining the preferred dividend rate is identical  to that
used to select the interest rate.  The quality rating of the
firm's preferred shares is found in Moody's Bond Record in the
Preferred Stock section.  If the stock is not rated,  an "a"
rating is assumed.

             Average yields are reported for only "aa",  "a",
and "baa" preferred stocks issued by utilities.  However,
these figures should be used for non-utilities as well.   If
the stock has a rating of "baa" or lower, use the "baa"  average
yield.  Preferred rated "aa" or higher should use the "aa"
yield.
     Company X has no preferred stock.
     SOURCE:
     1.   Moody's Bond Record

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                                                         23,
II.  CALCULATION OF ECONOMIC SAVINGS OF VIOLATORS OTHER
     THAN PRIVATSLY-OWNED, TAX PAYING SOURCES~~
     Appropriate data for calculating the economic savings

of violators that are not privately owned business organi-

zations subject to the federal income tax will have to be

individually considered.  Generally/ economic savings for

such sources can be determined by treating the pollution

capital expenditures as ones that would have been paid for

entirely by using long-term debt.  Accordingly, the only

financial data generally needed for such violators are:
     1)  the source's interest rate on its long-term
         debt;

     2)  the percentage rate of return on investment
         actually used by the source to evaluate
         alternative investments (i.e., the rate
         analogous to a private company's rate of
         return on book equity);

     3)  the capital investment cost and the annual
         cost of the operation and maintenance expenses
         that were avoided;

     4)  the useful life of the pollution control
         equipment that was deferred;  and

     5)  the inflation rate associated with the
         pollution control equipment that has been
         delayed

     6)  tax credit =» 0

     7)  tax rate = 0

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WORKSHEET
           1976
1975
1974
1973
1972
STOCKHOLDERS' EQUITY = Capital Stock par value
+ Retained earnings ' +
+ Capital surplus +
- Treasury stock
Stockholder's equity =
CAPITALIZATION = Long term debt
•f Preferred stock -»-
•f Stockholders' Equity +
*
Capitalization =
$ 19,869
108,401
66,632
123
194,779
$ 19,869
95,231
66,632
123
181,609
$ 19,869
94,469
66,632
123
180,847
$ 19,069
82,019
66,632
123
168,391
$ 19,869
79,511
66,626
123
165,883
SOURCE: Sample Data for Company X
$ 65,429
0
194,779
260,208
$ 29,000
0
181,609
210,609
$ 33,000
0
180,847
213,847
$ 40,693
0
168,391
209,084
$ 62,990
0
165,803
228,873
SOURCE: Sample Data for Company X
RETURN ON EQUITY = After tax profits - Pref. Stock
Stockholders * Equity ~
RETURN =
Industry's Avg. Source's
or SIC Average Return = .1386

EQUITY SHARE OF
INVESTMENT = Stockholders' Equity
Capitalization
Average Equity Share = .7968
$ 32,999
194,799
- .169
SOURCE? Sa
$194,779
260,208
= .748
$ 38,438
181,609
= .211
mple Data I
$181,609
210,609
= .862
$ 35,451
180,847
= .196
cor Company
$180,847
213,847
= .845
$ 13,458
168,391
= .079
X
$168,391
209,084
= .805
$ 6,430
165,883
= .038
$165,883
228,873
= .724
SOURCE: Sample Data for Company X

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                                                       1976
                                             1975
1974
1973
1972
SHARE OF INVESTMENT = Long Term Debt
Capitalization
Average Debt Share - .2032
$ 65,429
200,208
= .252
$ 29,000
210,609
= .138
$ 33,000
213,047
= .155
$ 40,693
209,084
= .195
$ 62,991
228,87
= .276
                                                     SOURCE:   Sample  Data for Company X
PREFERRED SHARE OF INVESTMENT =  Preferred Stock
                                 Capitalization

                                 Not Applicable
                                 (Would be computed in same manner  as  equity)
                                                   share
INFLATION FACTOR
1977 index = 204. 1  _  ,
1^2 index   TTTt  ~  1'

Average annual inflation rate =  (Inflation  factor)*'-* =  1.083

                                            =  8.3 percent

Monthly inflation rate        =  (1.083)1/12           =  1.0066

                                            =  0.66 percent
CONVERT CAPITAL COST TO DOLLARS AS OF FIRST  DAY  OF  NONCOMPLIANCE
                    Deflated Cost
                                       (1
                         _ Actual Cost _
                       Monthly Inflation Rate)'101111111™111?"
         1,200,000
        (1 -i- .0066)10
                                                    1,200,000
                                                     1.0684
                                              1,123,138

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                            CIVIL  PENALTY DATA SHEET
SOURCE NAME/LOCATION:
       Company X/Alabama
PROCESS:

CAPITAL COST:

ANNUAL 0 & M:

DEPRECIABLE
  LIFE (YRS):

USEFUL LIFE
       (YRS):

MONTHS OF
 VIOLATION:

MONTHS TO
 SETTLEMENT:

PENALTY AMT:
Scrubber

$1,123,138

S  112,314


    12


    13


    10


     6

$   92,480
                          COMMON FINANCIAL PARAMETERS

                  Tax Credit Rate                     »  .1
                  Federal & State Income Tax Rate     =  .506
                  Inflation Rate                      =  .083
                  Rate of Return on Equity            «  .14
                  Interest Rate                       =  .08
                  Preferred Dividend Rate             a    o
                  Equity Share of Investment          =  .7968
                  Preferred Stock Share               =    o
                  Debt Share                          =  .2032
                  Depreciation by Sum of Years Digit
                  Standard Amortization

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                                                     TAX
                                     1978
       Cmanret                  .-mil...,  __ ,,                            MARGINAL
       STATE                  STATE TAX          FEDERAL TAX       TAX RATS
      Alabama                  5%                  4fla              ~ne,
      Alaska                  18*                  4438%             -f°f6
      Arizona                 10.5                  48               534!
      Arkansas                 6                    48  -             5112
      California               9                    48               52fil
      Colorado                 5                    48       '      *|o6
      Connecticut              8                    4S              s-jV*
      Delaware                  7.2                  4|             '""
     Dis. of Col.             8                    48              'file

     £10rida                  5                   48              *fo6
     Georgia                  6                   43              -?r°
   -  Hawaii                   6.435                43              'Ittfi
     Idaho                    6.5                  41              -|"|
     Illinois                 4                    ?|               'f™
     T_j.-,_,                  ,                    48               .5008
     Indiana                  3                    48

     Iowa                    10                    J|              -'If6
    Kansas                   5                    48              -f~
    Kentucky                 5.8                  43               5^,
    Louisiana                4               -     48              *500a
   Maine                    7                    4|              -JJJJ
   Maryland                  7                    4|              -|J|J
   Massachusetts            7.5                  43              '|,q
   Michigan                 7.3                  43              '|;rfi
   Minnesota               12                    48              -|"J
   Mississippi     •         4                   43               SOOa
   Missouri                 5                   43              -|°°8
   Montana                   6.25                 43               5.°?.
   Nebraska                 2.75                 43              494!
   New Hampshire            7                    43             "efr^
   New Jersey               5.50                 48              'Inlfi
   New Mexico               5                    43              '|°|6
  New York                 9                    48               5263
  North Carolina           6             .      43              "Ji??
  North Dakota             6                   43              •?,,,
  Ohio                     8                    4J             .-|"|
  Oklahoma                  4                    43             :"J|
  Oregon                   6                    43              '|???
  Pennsylvania             9.5                  43               „£?
  Rhode Island             8                    43              '?;fj
 South Carolina           6                   43              •!,,?
 South Dakota             5.50                 48              'Insl
 Tennessee                 6   '                43              *f?lf
 rT*-ah                     /r                                    . 31X*
 Ll-an                     °                    48              S717
 Vermont                   7.5                  43              'f^2
 Virginia                 6                    43             -|"
west  Virginia            6                    43              'J,1"
Wisconsin                7.9                  43              '|rf*

                                                             • J A ^» v.

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      INFLATION RATE INDEX
              FOR
CHEMICAL ENGINEERING PLANT COS:
         ANNUAL INDEX
1970
1971
1972

1973
.1974
1975
1976
1977
1978
SOURCE:
125 . 7
132.2
137.2
- • *
144.1
165.4
182.4
192.1
204.1
213.8
Chemical Engineering

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         FEDERAL TRADE COMMISSION RETURN ON EQUITY  STATISTICS


                               (Percent)

                                               w


     Industry                           Five-year Average  (1974-73)2


All Manufacturing Corporations                      13.9

Nondurable Manufacturing Corporations               14.4

  Pood and Kindred Products    .                     14.0

  Tobacco Manufactures                              16.6

  Textile Mill Products                 _. .            8.1

  Paper and Allied Products                         13.9

  Printing and Publishing      •                     15.2

  Chemicals and Allied Products                     15.9

    Industrial Chemicals and Synthetics1            14.5

    Drugs1                                          13.5

  Petroleum and Coal Products                       14.9

  Rubber and Miscellaneous Plastic Products         11.2

  Other Nondurable Manufacturing Corporations       13.0
 Included in major industry above.

2Data for 1978 includes first three quarters only.   Quarterly
 statistics can be found in the Federal Trace Commission's
 Quarterly Financial Report.

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                                -2-
     Industry                           Five-year Average  (1974-78)2
                                               w

Durable Manufacturing Corporations                  13.3

  Stone, Clay and Glass Products                    12.1

  Primary Metal Industries                           9.4

    Iron and Steel1                                  9.3

    Nonferrous Metals1                               3.3

  Fabricated Metal Products                         15.3

  Machinery, Except Electrical          .            15.2

  Electrical and Electronic Equipment               12.8

  Transportation Equipment                      '    13.0

    Motar Vehicles and Equipment1                   13.1

    Aircraft, Guided Missiles and Parts1            13.2

  Instruments and Related Products                  15.8

  Other Durable Manufacturing Corporations          13.5
 Included in major industry above
      for 1978 includes first three cuarters only.  Quarterly
 statistics can be found in the Federal Trade Commission 's
 Quarterly Financial Report.

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INSTRUCTIONS FOR USING THE PROGRAMS TO CALCULATE ECONOMIC SAVINGS
There are two programs available for calculating the economic
savings component of the civil penalty.  The first, CIVPEN, is
intended to be used largely for illustrative calculations and
in response to requests for copies of the program.  CIVPEN is
written in the FORTRAN computer language and is designed to
correspond closely to the September 1978 Technical Support
Document for the Civil Penalty Policy.
                                              •

The second program, CPREPEAT, performs the same calculations as
CIVPEN but allows multiple calculations without having to re-
enter all parameters.  That is, it is possible to calculate
economic savings using one set of numbers and then make new
calculations by changing only as many input parameters as desired.
Creating this flexibility for the user required adding substantial
complexity to the program.  It is therefore suggested that copies
of this program not be released.
     CIVPEN
     1.  Sign on EPA's WCC computer system.

     2.  Type EXEC CIVPEN:EPABOH (key return).   The system
         will print:  Job submitted, job started, and
         request the first data input, INITIAL CAPITAL
         INVESTMENT^, -in the next several seconds or
         minutes, depending on user demand.

         Additional questions will follow each data input
         (and "return").  Caution;  When user demand is
         high, response time can be very slow.   Be certain
         the computer has given you your complete prompt
         before answering input questions.  A prompt is
         generally a two digit alpha-numeric job identifier
         and a question mark (e.g., 2B?).

         When a percent is called for, it should be entered
         as a decimal.  For example, an interest rate of 9
         percent would be entered as .09.

     3.  To make a copy of the program,  type LOAD CIVPEN:EPABOH
         (key return)  and then type LIST (key return).   A
         complete listing will take approximately 10 minutes.
                                           TCS Financial Consultants

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                               -2-
Instractions (cont.)
     CPREPEAT
         Sign on EPA's WCC computer system.

         Type EXEC CPREPEAT:EPABOH (key return).  The system
         will print:  Job submitted, job started, and request
         the first data input, INITIAL CAPITAL INVESTMENT*,
         in the next several seconds or minutes, depending
         on user demand.

         Additional questions will follow each data input
         (and "return").  Caution;  When user demand is high,
         response time can be very slow.  Be certain the
         computer has given you your complete prompt before
         answering input questions.  A prompt is generally
         a two digit alpha-numeric job identifier and a
         question mark (e.g., 2B?).

         When the calculations have been completed and the
         results printed, the computer will ask how many
         changes are to be made.  Typing in a C (zero)  causes
         the program to stop.  Typing in a number from 1 to
         12 causes a series of questions to be asked con-
         cerning the item number to be changed and its new
         value.   Asking for more than 12 changes will cause
         the program to request all 17 input parameters.
         Typing in 999 will result in a list of all current
         variable values being printed.

         Caution:  Changes are cumulative.   That is, if you
         change  the value of a parameter, the old value is
         lost.  You must therefore be careful to keep track
         of the  current values of each'of the parameters as
         you make changes.  After you have  made several
         changes, it is wise to have a current list printed
         by typing 999 as described above.
                                           TCS Financial Consultants

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         'NiTED STATES ENVIRONMENTAL PROTECTION AGENCY"
                       WASHINGTON. O.C.  2C-lcQ


                          - UAV 9 ? 
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         UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

                        WASHINGTON. 3.C.  20-cO
                              2 8  1330-
MEMORANDUM
SUBJECT:  Statements by Agency Personnel Purporting  to
          Sanction Source Actions Which Are  Inconsistent
          With Statutory Requirements

TO:       Regional Administrators
          Regions I-X


     This memorandum restates EPA policy against making any
formal or informal commitment to refrain from taking enforce-
ment action against, or other-vise to sanction activities by,
sources that violate statutory or regulatory requirements
administered by the Agency.  Unless the procedures contained
in the relevant statute, regulation or permit are followed,
•the policy generally forbids sanctioning the construction or
opera-ion of any source -without a required permit, or the
operation of any' source in violation of an applicable emission
or discharge limitation.

     Failure to adhere to this policy may have effects that
reach beyond a specific source or Region.  Any commitment not
to enforce a statutory requirement against a particular source
may severely hamper later enforcement efforts not only against
that source but also against other sources that may  claim to be
similarly situated.

     I recognize that exceptions may arise under this policy,
and that a' commitment may be appropriate in  a very unusual case.
Because the need for national consistency in this area is
essential, any written or oral commitment on the part of a
Regional office not to take action under an  Agency administered
statute must receive advance concurrence by  the Assistant Admin-
istrator for Enforcement.  If a Regional Enforcement Director
believes the Agency should make such a commitment, she or he
should first discuss the matter with the appropriate Headquarters
Deputy Assistant Administrator.  This should normally be done in
the context of a written memorandum to the Assistant Administra-
tor, sen- to the attention of the appropriate Headquarters Deputy
Assistant Administrator, fully explaining all relevant facts.

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This  policy  does  not  change  the  manner  in which  the Agency  has
dealt with bypass or  upset  situations affecting  NPDES  permittees,
or other  situations covered  by specific regulations.   Upset and
bypass  situations will continue  to  be handled  by the Regional
Enforcement  Division  Director, or the Director of  the  State
agency, as set  forth  in 40 CFR §122.14(k)-(1).   Please ensure
•that  all  appropriate  members of  yoxf staff rally understand this
oolicv..
cc:
Deputy Assistant Administrators
  for Enforcement

Enforcement Division Directors
Reaions I-X

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                       CIVIL PENALTY POLICY





Note:  This policy is dated July 8, 1980.  EPA approved a new



Civil Penalty Policy on February 16, 1984.  However, the water-



specific parts of the July 8, 1980 policy remain effective until



EPA develops a medium specific, water penalty policy.

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f     \       UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
     ''                     ' WASHINGTON. D.C.  20460
                                                       OFFICE 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

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                       TABLE OF CONTENTS


     CIVIL PENALTY POLI.CY - CLEAN WATER ACT VIOLATORS AND

      STATIONARY SOURCE VIOLATORS OF 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	.x  .  10

          B.  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
                •by the Government Itself	13.

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          F.-  Mitigation for Impossibility	13

          G.  Other Bases for Mitigation    	 14

          H.  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
 a                          *
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.

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                             -2-
     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 lcco.1. snfcrcsmcnt 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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                               -3-


II.  Statutory Basis for Civil Penalty under Water and
     Air Acts

     Civil penalties are provided for in Section 309(b) of
the Clean Water Act, which subjects violators to civil penalties
of up to $10,000 per day of such violation.  The Water Act has
no further statutory criteria for determining the precise
amount of the penalty, leaving that to be determined by the
court.  Authority for such civil penalties has been in the
Act since its passage in 1972.

     Since 113(b)of the Clean Air Act provides for civil penalties
of up to $25,000 per day of violation and requires courts to "take
into consideration  (in addition to other factors) the size of the
business, the economic impact of the penalty on the business and
the seriousness of the violation."  The authority for civil
penalties was added by the Amendments of 1977.  There was no
authority for civil penalties in the Air Act prior to these
amendments, at least for violations such as the ones within the
scope of this policy.

     In addition to adding civil penalty authority in Section 113,
the Clean Air Act Amendments of 1977 also established, in Section 120,
mandatory administratively imposed, noncompliance penalties.

     Regulations implementing Section 120 noncompliance penalties
have now -been promulgated.  Such noncompliance penalties are .not
covered by this civil penalty policy, and nothing stated in this
policy should be taken to refer to them in any way, except
that provision has been made in this civil penalty to avoid
duplication of penalties based upon the economic benefit of
delayed compliance during the same time period (see discussion
in part X below.)1

III.  Type's of Violations to Which Policy Applies

     The civil penalty policy is to be used by federal, state
and local officials in enforcement actions involving certain
violations of the Clean Air Act, as amended, and certain
violations of the Clean Water Act, as amended.
1
 The preamble to EPA1s final noncompliance penalty regulations
provides that no notices of noncompliance will be issued, or
penalties assessed, prior to January 1, 1981.  For purposes
of determining an appropriate civil penalty, EPA will only
calculate the economic benefit of" delayed compliance prior
to this date.

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                               -4-


     The policy applies to major and.minor water pollution
sources which violate those requirements of the Water Act made
subject to civil penalties by Section 309(d),  and to major
and minor stationary air pollution sources which violated those
requirements of the Clean Air Act made subject to civil penalties
by Section 113(b).3

     The application of this civil penalty policy to situations
in which full compliance is required prior to operation (as,
e.g., under the New Source Performance Standards under Section 111
of the Clean Air Act) should not be interpreted as suggesting
that noncompliance can be tolerated if penalties are paid.
1 cont.

With respect to any emission limitation or other requirement
approved or promulgated by the Administrator after August 7, 1977,
which is either more stringent than those in effect at that time
or which establishes a requirement-where none existed before,
Section 120(g) of the Act provides that the effective date for
noncompliance penalties will be the date that full compliance
is required with such limitation or requirement  (though not
later than three years from such approval or promulgation, nor
earlier than the effective date that noncompliance penalties
begin with respect to violations of existing limitations).

2
 i.e., violators of effluent limitations under Section 301
of the Clean Water Act; water quality related effluent limitations
under Section 302; national standards of performance under Section 306;
toxic and pretreatment standards under Section 307; monitoring
under Section 308; aquaculture under Section 310; disposal of
sewage sludge under Section 405; violators of permit conditions
or limitations under Section 402 and 404; and violators of orders
issued under Section 309(a).

3
 i.e., violators o£ an administrative order issued under Section 113(a)
of the Clean Air Act; a  state implementation plan requirement
approved under Section 110; a New Source Performance Standard under
section 111; National Emission Standards for Hazardous Air Pollutants
under Section 112; a compliance date extension issued to a source
converting to coal under 119(g)  (as in effect prior to August 7, 1977);
a delayed compliance order issued to a source converting to coal under
113(d)(5); a nonferrous  smelter order undei Section 113; certain
requirements relating to monitoring under Section 114; a require-
ment imposed in a delayed compliance order under Section 113(d);
and attempts to construct or modify a major stationary source
in any area for which the Administrator has found, under          |
Section 113(a)(5), that  the state is not acting  in compliance with
applicable requirements  for issuance of permits  to construct or
modify sources in nonattainment areas.

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                             -5-


     This policy applies to past and future violations of the
above-mentioned requirements of the Clean Air and Water Acts
where the violation results from the source's failure to make
capital or operation and maintenance expenditures necessary to
bring itself into initial compliance with the requirements (e.g.,
failure to install equipment, buy and use complying fuel, carry
out a process change, etc.).

     The policy does not apply to violations following initial
compliance or to violations of an intermittent or transient kind,
such as spills, violations of emission or discharge limits through
accidents or when attributable solely to the failure to adequately
operate or maintain pollution control equipment.  Civil penalties
are probably desirable in most actions against such violations, but
the appropriate amount of such penalties is not set by this policy.

     This policy does not apply, of course, to penalties for
criminal violations, nor for violations of court decrees.  In
most cases that are settled, it will be desirable to include
stipulated contempt penalty amounts in the consent decree.  Such
amounts are not subject to the civil penalty statutory limits and
are not covered by this policy.

     While'this policy has been limited at this time to circum-
stances where its application is clearly appropriate, experience
will undoubtedly indicate other circumstances to which it should
be extended.  Such situations will be considered on a case-by-case
basis.. Penalties appropriate for other violations under the Clean
Air and Water Acts, and under other Acts, will be the subject of
future guidance.

IV.  Use of the Penalty Policy in Enforcement Actions

     This civil penalty policy is intended to be used by
federal and state enforcement officials and, in appropriate
cases., by local officials  (e.g., local air pollution control
agencies operating under authority of state air pollution
laws).  It is to be used in civil actions in state and
federal courts, and in state and local administrative
proceedings.

     Enforcement actions must seek both expeditious compliance
and adequate civil penalties.  The penalties to be sought in
accordance with this policy are in no way a substitute for
compliance nor do they preclude injunctive relief or other
non-dupl'icative remedies.

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                               -6-


     The goal  of  an enforcement action where  this  policy  applies
 is both compliance  (including  interim controls)  and  appropriate
 penalties.   Compliance and penalties  should not  be in  any way
 traded off  against  each other.   Compliance with  the  law is
 mandatory,  and whereas details  of  technology  or  schedules may
 differ, enforcement officials  should  not bargain for compliance
 (or  interim controls)  by offering  any reduction  in penalties.

     Even in the  period before  the statutory  deadlines, the
 Clean Water and Air Acts required  compliance  immediately  or
 as expeditiously  as practicable.   After the deadline has
 passed, it  is  even  more urgent that violators be brought
 quickly into compliance.

     The penalty  policy,  moreover, already is structured
 to provide  a. strong economic  incentive for rapid compliance,
 for  the more rapid  the compliance  the lower the  penalties
 under this  policy.   Such an effect is automatically  built into
 the  method  of  calculating the  economic benefit of  delayed
 compliance, for 'one of the major factors-of the  formula is
 the  length  of  the period of noncompliance.  The  penalty factors
 of harm to  the environment and recalcitrance  of  the  violator
.may. also lead  to  penalty reductions as the speed of  compliance
 increases.   In the  case of major source violators  of the  Air Act,
 moreover, the  requirement of mandatory, administratively  assessed
 noncompliance  penalties adds  additional economic incentive  for
 rapid compliance.

     Additionally,  it must be  kept in mind that  penalties are
 authorized  and intended to deter violations and  encourage
 compliance. Penalties are not effluent or discharge fees.
 Payment of  penalties does not  give any right  or  privilege
 to continue operation in violation of law or  to  slow down
 compliance.

     When civil  enforcement actions are brought  in courts,  the
 question of penalties will arise in three contexts—filing  the
 civil complaint,  determining  the minimum amount  acceptable  in
 settlement, and  presentinq argument to the court (and  possibly
 affidavits  or  testimony, as well)  for its consideration in  setting
 penalties at trial.

     The Agency  is  prepared to settle enforcement  actions brought
 under this  policy.   Where settlement  is not possible,  the Agency
 is obviously free to claim penalty amounts up to the statutory
 svaxisiusi, vhich will generally be the  amount claimed  in the
 complaint.-

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                              -7-


     The methodology of this penalty policy will be used to'
determine a "minimum civil penalty" which would typically be
presented to the court as an appropriate penalty to be imposed.

     In addition, the methodology will be used to determine a
lower "minimum civil penalty acceptable for settlement" (set out
in Part VI)  to be used for settlement negotiations.

    This policy will allow enforcement officials to arrive
at fair, consistent and rationally based penalty sums while
providing a lower minimum figure as an encouragement to settlement
if enforcement officials believe that settlement is desirable.

     By providing them with a minimum settlement figure, this
policy gives the enforcement officials responsible for the action
a range in which to exercise their discretion to settle or .not to
settle  (i.e., between the statutory maximum and the minimum sum
acceptable in settlement as determined by this policy).

     Where the state or local administrative bodies are taking
enforcement 'actions artd have authority to administratively impose
civil penalties, the minimum penalty figure determined for settle-
ment purposes in civil actions should also serve as the minimum to be
imposed in the administrative action.  The administrative body,
however, will want to consider its statutory maximum penalty
authority and the minimum civil penalty and will probably want
to impose penalties above the settlement amount.  This is
particularly the case since the administrative*body will
probably have already decided the case regarding the violation,
and reductions for settlement will no longer be relevant.

V.  Determining the Amount of the Statutory Maximum
    Penalty and of the Minimum Civil Penalty


     The minimum civil penalty should be determined by the factors
and method set out below.  The civil penalty so determined will,
in most cases, be lower than the statutory maximum sum.  Where
the civil penalty sum so determined is higher, this information
may be used in settlement negotiations or litigation but the
statutory maximum is, of course, all that may be requested by
the government or imposed by the court.

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                             -8-
     The amount of the minimum civil penalty should be determined
as follows:

     Step 1 - Factors Comprising Penalty

          Determine and add together the appropriate
          sums for each of the four factors or elements
          of this policy, namely:

               the sum appropriate to redress
               the harm or risk of harm to
               public health or the environment,

               the sum appropriate to remove the
               economic benefit gained or to be
               gained from delayed compliance,

               the sum appropriate as a penalty
               for the violator's degree of recalci-
               trance, defiance,'or indifference to
               requirements of the law, and

               the sum appropriate to recover unusual
               or extraordinary enforcement costs
               thrust upon the public.

     Step 2 - Reductions for Mitigating Factors


          Determine and add together sums appropriate
          as reductions for mitigating factors, of
          which the most typical are the following:

               the sum, if any, appropriate to
               reflect any part of the noncompliance
               attributable to the government itself,

               the sum appropriate to reflect any
               part of the noncompliance caused by
               factors completely beyond the violator's
               control  (floods, fires, etc*).

     Step 3 - Summing of Penalty Factors and Mitigating
              Reductions

          Subtract the total reductions of Step 2 from
          the total pen^i-t-y <">f step 1.  The result is
          the minimum civil penalty.  If no settlement
          can be reached with the defendant:, this sum
          would typically be presented to the court as
          an appropriate penalty to be imposed.

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                             -9-


     In some unusual cases, the penalty amount determined in
this manner may be larger than the violator can reasonably
be expected to pay while bringing itself expeditiously into
compliance and continuing to do business.  In such cases,
enforcement officials may recommend that the penalty be post-
poned or forgiven in part or in total.

VI.  Determining the Minimum Penalty Acceptable for Settlement

     Many cases may, of course, be settled prior to trial and
result in consent decrees or orders, rather than being litigated
to conclusion.  The objectives of the enforcement action are still
the same, however — full and expeditious compliance (including
interim controls), and penalties.  In cases in which enforcement
officials think settlement is appropriate, they may, as an
encouragement to settlement, reduce the penalty below the lesser
of the statutory maximum and the sum determined to be the
minimum civil penalty.  This reduction, however, may not be
greater than the percentage which reflects the likelihood of
being unable to establish the violation or violations.
                                          »
Example;

     Assume statutory maximum penalty = $5,000,000

      (200 days of violation @ $25,000/day)

     Assume minimum civil penalty = $2,000,000

     Assume estimate of government's chance of proving
     violation at trial = 80%  (or, chance of being
     unable to prove violation = 20%)

     The maximum reduction permitted for settlement
     is, therefore, $400,000 (20% X $2,000,000)

     The minimum civil penalty acceptable for settlement
     is, therefore, $1,600,000  (80% X $2,000,000 or
     $2,000,000 - $400,000) (i.e., range for settlement
     negotiation = $5,000,000 to $1,600,000)

     It is assumed that enforcement actions will not be taken
unless the evidence of violation is strong; therefore, in most
cases, the percentage of. reduction should not be large—probably
not more than 25%.  Unusual circumstances may, however, exist
where larger reductions are appropriate.

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                          -10-


     It is not required, of course, that enforcement officials
handling an enforcement action reduce the penalty for settlement,
or that they reduce it in any given amount.  Defendants who
settle quickly will undoubtedly stand better chances of receiving
such reductions than those who do not.

     It should be noted, moreover, that the reduction relates
only to the degree of uncertainty of proving that the violation
or violations resulted from the source's failure to make capital
or operation and maintenance expenditures necessary to bring
itself into initial compliance.  It does not relate to uncertainty
as to the court's decision on compliance schedules and penalties.
Enforcement officials should carefully and thoroughly prepare
the facts and reasoning supporting their penalty request, and
should not be reluctant to present these arguments to the court.
Judges are accustomed to deciding such matters, and will
make better decisons after receiving well-reasoned recommendations
based on fair principles consistently applied.

     There may be extraordinary instances where the minimum
settlement penalty amount is more than the violator is.able to
pay.  In such cases, it may be appropriate to agree to a post-
ponement of the penalty or payment over time, or, in an extreme
case, to a further reduction of the penalty.  Further guidance
on handling .these extraordinary instances is set out below.

VII.  Explanation of Factors Considered in Determining
      Minimum Amount of Civil Penalty

     A.  Harm or. Risk of Harm to Health or the Environment

         The extent that the violation harms or poses risks
of harm to public health or the environment must be carefully
considered in setting the appropriate penalty, for violations
which involve such harm or risk are certainly very serious.
For example, a violation involving discharges of toxic chemicals
into waters which enter or threaten to enter public drinking
water supplies certainly causes or threatens serious harm to
public health.  It may also destroy or threaten valuable
fishing or recreational resources.

         Similarly, a violating air pollution source in an area
which has not attained the primary (i.e., health protective)
ambient air standard is contributing to a health hazard or is
actually causing harm to residents of the area.

         All pollutants introduced into the environment create
some narm or risk, of course, and it will oe difficult in many
cases to precisely quantify the harm or risk caused by the
violation in question.  The penalty amount attributable to
such public harm or risk will have to be determined on the facts
of each specific case.

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                              -11-
         Estimated costs of environmental restoration may be
useful in quantifying harm to the public, and traditional
personal injury .damage concepts may be helpful in quantifying
injuries to public health.  It may also be possible to use
the recreational values developed by various public agencies
to assist in quantifying environmental harm.

     B.  Economic Benefit of Delayed Compliance

          Violations which are the subject of this policy
usually consist of a failure to install and operate required
pollution control equipment within time limits set by law,
or a failure to utilize fuels o'r raw materials with lower
pollutant content.

          Delaying the purchase and operation of pollution
control equipment results in economic savings or gains to
the owner or operator of a facility.  These savings or gains
arise from two distinct sources:

               the opportunity to invest the capital'
               funds not spent to purchase and install
               pollution control equipment during the
               period of noncompliance, and

               the avoidance of the operation and main-
               tenance expenses associated with the
               pollution control equipment during the
               period of delayed compliance (labor,
               materials, energy, etc.).  These costs
               avoided represent a permanent savings
               to the owner or operator; they may, of
               course, also be invested in income-producing
               ways.

          The economic benefits attributable to delaying capital
expenditures and avoiding operation and maintenance expenses have
been combined in a single formula.  Because these benefits occur
over a period of time, both past and future in some cases, the
formula reduces these benefits to a present dollar value by
standard accounting methods, and also takes into account tax
effects, and other appropriate economic factors.  .The formula
is further described in a technical support document dated
September 27, 1978, subject:  Computation of-Economic Benefit
of Delayed Compliance under Civil Penalty Policy.  The formula
described in that memorandum should be utilized in calculating
economic benefit for the purpose -of arriving at appropriate
penalty amounts.  It is recognized, however, that there may be
unusual circumstances in which a different method of measuring
economic benefit may be appropriate.  The acceptability of any
such method will have to be determined on a case-by-case basis.

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                              -12-


     C.  Violator's Recalcitrance, Defiance, or Indifference
         to the Requirements of the Law

          Good faith efforts to obey the law are expected of
all subject to its jurisdiction.  Except as provided below
in Sections E and F (pp. 13 and 14)  assertions of "good
faith" should not be considered as a basis for reducing the
otherwise appropriate penalty.  Courts traditionally consider
the degree of the violator's recalcitrance, defiance,
purposeful delay or indifference to its legal obligations
in setting penalties.  Enforcement officials should do so also,
and should not hesitate> to include a sum in the civil penalty
to reflect such factors'where they exist.

          Care should be exercised, however, not to seek to
add such an element of penalty on a person, firm, or entity
for exercising, without purpose of delay, its lawful rights
to challenge agency determinations in administrative or
court proceedings.  A violator which has complied with all
requirements that were not disputed while challenging the
rest has not been, on these grounds alone, recalcitrant,
defiant or indifferent.  Such a violator is on a different
footing from one which used a challenge of one aspect of its
compliance requirement to delay all compliance, or which
made frivolous challenges for purposes of delay.  This latter
mode of behavior may indeed constitute recalcitrance, defiance,
or indifference so'as to justify adding an element of penalty.

          If a violator, in good faith, did challenge agency
determinations without purpose of delay, but did not prevail,
and by virtue of the litigation has missed a deadline, or other-
wise failed to comply, it.is nevertheless in violation, and
subject to the civil penalty factors other than the one related
to the recalcitrance, defiance, or indifference of the violator —
i.e., harm or risk to public health or the environment, economic
benefit of delayed compliance, and extraordinary enforcement
costs.  When a source decides to challenge an agency requirement,
it assumes the risks of not prevailing in its challenge.  Violators
"litigate on their own time."  U.S. Steel v. Train, 556 2d 822,
(7th Cir. 1977) .

     D.  Extraordinary Costs of Enforcement Action

          Although attorney's fees•and court costs cannot be
recovered by the federal government in civil enforcement actions,
there are situations when it is appropriate to consider unusual
expenses incurred in detecting the violation, defining its
extent, and in bringing the enforcement action.

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                              -13-
          Where, for example, a source has disregarded its
obligation to identify its own pollutant discharges and apply
for a permit, and the government, as a result, must undertake
such work, the government's costs in identifying the discharges
may be included in the amount sought.  Or, for example, where
the violator's sampling and analytical procedures are so
deficient that the government must conduct significant sampling
on its own to confirm discharge levels, the expense of such
sampling may be added to the sum of civil penalties sought.
Those costs which are routinely incurred by state and federal
enforcement officials need not, however, be sought as part of
a civil penalty.

     E.  Mitigation for Noncompliance Caused by the
         Government Itself

          When failure to comply or compliance delay was caused
by, requested by, or attributable to the government, civil
penalties are not appropriate.  When the failure to delay
was partially caused by the government, the penalties may
be reduced in proportion to the relative share of government
responsibility or in proportion to the period of delay caused
by the government.  It is expected that mitigation on this
basis will only be permitted when the government was clearly
responsible for the delay, as, for example, it may have been
in a small number of cases under the Water Act.  In these-
instances, a discharger challenged conditions of an NPDES
permit, requested an adjudicatory hearing, prosecuted its
request expeditiously and in good faith, and may have been
delayed by the Agency's lack of resources to provide prompt
hearings for all those who challenged their permits.

          States and the federal government are not bound by
the acts of the other, but they will, of course, want to be
informed of and consider carefully the acts of the other in
connection with penalty decisions.

     F.  Mitigation for Impossibility

          Where delayed compliance was, in fact, attributable
to causes absolutely beyond the control of the violator (such as
floods, fires, and other acts of nature) and was not due to
fault or negligence, a civil penalty is not required—even in
instances where as a result of the impossibility the violator •
has enjoyed an economic benefit.  If only a portion of the
period of delayed compliance is attributable to such factors
beyond the violator's control, a civil penalty should be
sought only for that period of noncompliance that was not
attributable to such factors.

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                              -14-


     G.  Other Bases for Mitigation

          There may also be other unforeseeable mitigation
circumstances because of which all or a part of the otherwise
appropriate civil penalty should not be sought, as, for example,
when it was not technically possible to comply.  Acceptability
of such a situation as a mitigating circumstance will have to be
considered on a case-by-case basis, keeping in mind also the
"technology forcing" aspects of the laws.  Another instance
in which all or part of an otherwise appropriate civil penalty
might not be sought 'would be where emergency needs require that
sources be operated even though they fail to comply with discharge
or emission limitations.  Obviously, situations involving unusual
mitigating circumstances must be looked at individually since the
full range of such circumstances cannot be predicted.

          Since the Water Act and the Air Act impose absolute
duties of compliance, requiring sources to take whatever measures
are possible to come into compliance by the legally established
dates, the burden is clearly upon the violator to establish a
compelling reason why a civil penalty should be mitigated.  This
burden should only be considered satisfied where urgent efforts
are made to comply but actual impossibility or government conduct
alone precluded compliance, or where a similar mitigating circumstance
caused the delay.  Only in'these instances have violators really
made what should be considered a "good faith" effort that excuses
noncompliance.  All dischargers must be held to a standard that
requires careful and diligent planning and an urgent, serious
effort to come into compliance in a timely manner.

     H.  Specified Clean Air Act Factors

          The civil penalty policy factors.described above
include consideration of the three factors specified in Section 113
of the Clean Air Act.  The "size of the business" is reflected
in the economic benefit of delayed compliance since less expensive
control equipment is typically required for smaller businesses
and the benefit of delaying installation of such equipment is
correspondingly less.  The "economic impact of the penalty on
the business" is considered by the penalty deferral or reduction
that is allowable where violators lack the ability to immediately
pay the full amount.of the penalty  (see section IX below).  The
third factor, the "seriousness of the violation," is taken into
account by looking at the harm done to public health and the
environment  (violations may, though, be cpnsidered as serious,
even though they do no measurable or quantifiable harm to the
environment) and the violator's recalcitrance, defiance or
indifference to the requirroeuLs of the lav:.

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                              -15-
VIII.  Approved Environmentally Beneficial Expenditures
       In Lieu of Payment of Penalty Sum to State or
       Federal Treasury (i.e., "Credits Against Penalty")

     A.  Use of Credit to Satisfy or Offset Penalty

          Occasions have arisen in enforcement actions where
violators have offered to make expenditures for environmentally
beneficial purposes above and beyond expenditures made to comply
with all existing legal requirements, in lieu of paying penalties
to the treasury of the enforcing government.  Courts have
sometimes accepted such payments, and in some circumstances
such arrangements are acceptable under this penalty policy.
For ease of reference (but without characterizing them for
any other legal purposes—e.g., tax deductibility) such
alternative ways for a violator to satisfy the penalty instead
of paying the penalty sum to the federal, state, or local
treasury are referred to herein as "credits" against the
penalty.
might be:
          Examples of possible credits against a penalty
          (1)  construction and operation of approved
          pollution control equipment in addition to that
          required for compliance with existing requirements
          which will achieve a significant further increment
          of environmental benefit above all present require-
          ments of federal, state or local law.

          (2)  financial contributions to a private or
          governmental body or agency for environmentally
          approved uses—e.g., restoring fish and wildlife
          resources, carrying out environmental studies or
          research of a high priority need, improving the
          ability of citizen or public interest groups
          to monitor and assist in enforcing the law.
          Credits, however, will not be given for expen-
          ditures that would properly be required as part of
          equitable relief being sought for the violations,
          such as cleaning up the pollution, restoring the
          areas affected, or reimbursing the government's
          costs of doing so, unless.these costs have been
          included in the penalty sum.  In all events, the
          financial contributions must be acceptable to the
          enforcing agency.  Credits for high priority research
          are desirable, but the research must be closely
          scrutinized to insure it is beneficial from the
          point of view of the enforcing agency, not merely
          from the point of view of the violator.

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                             -16-


     B.   Criteria for Acceptable Credits

          In determining whether a proposed expenditure is
creditable against the penalty, the following criteria must
be satisfied:

          (1)  The penalty sum itself will generally be
          stated in the order, decree or judgment as
          determined, before any credits are allowed, and
          this amount should be clearly identified as a
          penalty.

          (2)  The expenditure proposed for credit must
          be approved by enforcement officials in advance
          of the entry of the decree, order, or judgment
          in the case, must be clearly delineated therein, and
          must be enforceable along with other elements of
          the decree, e.g., subject to stipulated contempt
          penalties or to the court's continued contempt authority
          for the full length of time over which expenditures
          are to be made.

          (3)  The.item to be acquired by additional expendi-
          ture for which credit is given must be described
          with sufficient precision to bind the violator
          to the agreed expenditure level.  Where the
          credit is for the construction and operation of
          additional pollution control equipment that
          will bring about a greater degree of control than
          that required by law  (and a considerably reduced
          discharge or emission level) an agreement should
          be obtained from the violator that it will treat
          the reduced discharge or emission, in all respects,
          as a requirement of law for the period that it has
          agreed to operate such equipment.

          (4)  The proposed expenditure must be clearly
          for environmental benefits above and beyond
          the requirements of law.  Interim controls and
          expeditious compliance are required by law (not
          jusi-c waiting for ths ls.st day before the
          statutory deadline) and are not appropriate for credit.

          (5)  Environmental, laws require compliance at all
          times.  Good engineering practice, therefore,
          includes design of pollution control systems
          with sufficient capacity and reliability to provide
          a margin of safety to ensure such continuous com-
          pliance.  Expenditures for this margin of safety
          are to assure compliance with the requirements of •
          law and are not eligible for credits.

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                             -17-


          (6)   If in accomplishing the required level of
          pollution control,  the violator necessarily
          will accomplish a higher level of control,  there
          can be no credit for such incidental benefit.
          (e.g., to accomplish 80% removal of a pollutant,
          the violator must necessarily purchase and  operate
          equipment which removes 85% of the pollutant.)

          (7)   Studies or research and development which are
          necessary parts of compliance with legal require-
          ments are not eligible for credits (e.g., studies
          assessing the feasibility and costs of alternative
          methods of compliance or prototype research and
          development).  Research and development work
          eligible for credit should be work from which
          the public in general can benefit.  To insure this,
          the following measures should be required:

                (a)  the enforcing agency should insure
               that adequate reporting procedures are
               required.  These procedures should include
               an initial research and development plan,
               periodic progress reports, and a comprehensive
               final report that documents startup and the
               first year of operations if a facility was
               involved;

                (b) _the.enforcement agency or its contractors
               should.be given the right to obtain first hand
               information about the work by inspecting all
               documents associated with it and by making
               on-site inspections; and

                (c)  the source should agree that all  domestic
               patents, design rights and trade secrets that
               result from the work, will be placed in the
               public domain.

          In most instances the research and development should
be related to the violation, but other instances can be considered
on a case-by-case basis.  As stated above, credits for research
or studies will be closely scrutinized.

          (9)   Expenditures accepted for credit may only
          be expenditures that the violator agrees it may
          not later use (or sell to anyone else to be
          used) as a credit against any other existing
          provisions of environmental law  (such as emis-
          sion offset to allow the construction or modifica-
          tion of a major stationary source in an area where
          national air quality standards are not being
          satisfied) and the decree must so provide.

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                              -18-


     C.   Constraint's on Federal Enforcement. Officials
          With Respect 'to Payment of Penalties and Use
          of Credits In Lieu of Penalties

          The Air and Water Acts both authorize civil penalties
which are payable only to the United- States Treasury.  State
statutes may differ, but most provide for payment of the penalties
to the State Treasury.

          Civil enforcement actions to enforce the Air or
Water Acts whether settled or litigated to conclusion will
end in orders, decrees, or judgments of a court.  In such
actions there are limitations governing the positions to be
taken by federal enforcement officials.  In settling cases,
federal enforcement officials may accept proposals for
expenditures as credits against penalties and recite them,
as well as the penalty sum, in the proposed consent decree,
but it must be kept in mind that such provisions as well as
the entire decree are subject to approval by the court.

          With respect to credit for proposed contributions
to third parties, federal enforcement officials may not
agree with defendants as to such payments in lieu of paying
the penalty to the United States Treasury, for that prefers
a third party as recipient of the payment over the United
States, and prefers one third party potential recipient over
another.

          State and local enforcement officials may or may
not be as constrained with respect to proposing contributions
to third parties.  Accordingly, the appropriateness of state
or local government officials proposing credits for contributions
to third parties must be governed by their own policies.

     D.  Discretionary Nature of Credit

          Acceptance of a proposed credit is purely discretionary
with federal, state, and local enforcement officials.  Enforcement
officials may, of course, insist on payment of the penalty into
the treasury.  The statutes provide  for penalties.  Violators
have no "rights" to credits against these penalties.

     E.  Consideration of After-Tax Effects of Credit
         Expenditures

         The amount of the credit to be given £or proposed
expenditures is governed by the rule that it must have the
same after-tax effect on the violator as payment of the penalty
sum would have.  Since the penalty sum is immediately payable upon
entry of the order, decree or judgment, any proposed credit which
includes other than immediate payment of the full sum must be

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                             -19-


reduced to an equivalent present value by standard accounting
methods.  Where the expenditure proposed for credit is construction
and operation of additional pollution control equipment, the formula
for computing economic benefit of delayed compliance (see paragraph
VII.E. above) should be used to compute the present value of the
credit.  It should be noted that this formula assumes that the
expenditures will receive normal tax treatment (deductibility or
credit against tax) and accounts for that.  The present value resulting
from use of this formula may, therefore, be used dollar-for-dollar
as credit against the penalty.

IX.  Penalty Postponement or Forgiveness Based Upon Inability
     To Pay

     In some instances, the indicated appropriate civil penalty
may be so severely disproportionate to the resources of the
owner or operator of the violating facility that its imposition
would cause the owner or 'operator very serious economic hardship.
In such unusual cases, enforcement officials may recommend to
the court that it postpone or forgive the otherwise appropriate
penalty, in part or in total as circumstances may indicate.

     While the appropriate civil penalty amount may be post-
poned or reduced in such circumstances, no such concession
may be made with respect to the cost of coming into com-
pliance.  Except .as the Air and Water Acts may themselves
provide, compliance is required in every case, regardless of
cost and regardless of the violator's financial situation.

     Clearly the burden is on the violator to establish its
inability to pay.  This burden can only be satisfied when
the violator has produced adequate evidence to establish
its financial condition and when the enforcement officials
involved have obtained a competent review of the violator's
financial condition.  Mere statements of inability to pay
are not enough, and a violator making such a claim must be
willing to make full disclosure of its financial affairs to
enforcement officials and the court under circumstances that
assure such disclosure is accurate and complete.

     If review by persons competent to assess the violator's
financial condition and prospects indicates that the violator's
resources would-not permit it to finance its compliance, and
also pay the penalty, then, if adequate interest can Be arranged,
the penalty may be paid over time.

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                            -20-
     If even payment over time is not possible, then the
penalty may be reduced to an amount commensurate with the
resources of the violator (taking into account the cost of
compliance).

     In making a determination of the violator's ability to
pay, it is important to insure that the economic condition
of the violator has not been distorted by transactions with
parent companies or shareholders or by unusual or uncon-
ventional accounting practices.  Where such distortion has
taken place, parent company and shareholder or other owners'
resources should be considered in determining whether or not
the violator is able to pay the civil penalty.  In all cases,
review of financial information by persons competent in
financial affairs should be obtained.

X.  Time Period for Application of Civil Penalty Policy

     In general, this civil penalty policy would appropriately
apply to violations of the kinds covered which have occurred
since enactment of the Air Act in 1970 and the Water Act in 1972.
In determining the penalty sum, both with respect to the
statutory maximum and the minimum civil penalty, the period of
violation should begin with the earliest provable date of
violation and continue until the violator has installed and
operated the required equipment, made the required process change,
or converted to the complying fuel and thus brought itself into
compliance.

     Under the Water Act, this general rule will be applied
in this civil penalty -policy, since authority for civil penalties
has existed since 1972.  Consequently, the period covered and
the noncompliance period commence on the date when the schedule
requirements of a National Pollutant Discharge Elimination System
(NPDES) permit were violated or on July 1, 1977, (the statutory
deadline for best practicable control technology or secondary
treatment), whichever is earlier.  The period of noncompliance
ends when the violator has brought itself into full compliance
with statutory  (including permit) requirements.

     Under the Air Act, there are other considerations which,
as a matter of policy, lead to application of a different rule
regarding the time period for application of this civil penalty
policy.  The Air Act has had authority for criminal or civil
injunctive relief since 1970, but general authority for civil
penalties was not added until the amendments of 1977, which
 -.-..-.i- effect August 7. 1977.  Whether, as a matter of law, civil

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                           -21-


penalties are authorized in civil enforcement actions commenced
or amended after August 7, 1977, for violations occurring before
August 7, 1977, may be debated, but regardless of that, and
without conceding any issue of law, as a decision of policy, this
civil penalty policy will be applied by federal enforcement
officials only to those violations of the Air Act occurring
after August 7, 1977.

     Accordingly, under the .Air Act, for purposes of computing
the statutory maximum penalty, the period of noncompliance will
commence with August 7, 1977, or the date of earliest provable
violation, whichever is later.  For purposes of computing
the minimum civil penalty, the period of noncompliance used will
also be as stated in the previous sentence, except that when
considering the sum to be included for the violator's recalcitrance,
defiance, or indifference to its legal obligations, the entire
record of the violator should be considered.

     When determining a civil penalty under "the Air Act a
special consideration also applies concerning the end date of
the period of noncompliance, but only with respect to the
element of the penalty based on removing the economic benefit
of delayed compliance.

     As indicated earlier, Section 120 of the Air Act requires
EPA to assess and collect noncompliance penalties against certain
categories of stationary sources.  The purpose of these admin-
istratively imposed penalties is to recapture the economic value
which a delay in compliance may have to the source owner or operator.
EPA will not issue any notices of noncompliance or assess and'
collect any noncompliance penalties prior to January 1, 1981.
While the authority to collect noncompliance penalties (Section 120)
is independent of and additional to the authority to seek civil
penalties (Section 113), federal enforcement officials will not
seek double recovery of any portion of the economic value attributable
to-.delayed compliance.  Accordingly, when the period of noncompliance
will extend beyond January 1, J.981, the economic benefit element of
the civil penalty should be based only upon the noncompliance that
will have occurred prior to that date.

     Sources subject to judicial orders or that have negotiated
consent decrees with EPA, will not have their civil penalties
recalculated.  Additionally, even if a consent decree has not
been approved by the court., the amount of the penalty need not be
recomputed if it is clear that agreement has been reached on all
material terms, including the penalty amount, and among all parties,
including EPA where it is a party.  -In all other settlements, the
economic benefit components of the civil penalty will be based

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                              -22-

upon noncompliance which will occur up to January 1, 1981, or the
date for final compliance specified in the consent decree,
whichever is earlier.  In this way the policy will provide an
incentive for expeditious and fair settlements, while honoring
the Agency's commitment not to seek double recovery of any
portion of the economic benefit element attributable to delayed
compliance.

     In all other respects, however, in Air Act cases, both when
computing the statutory maximum penalty and when determining
the minimum civil penalty (or the minimum acceptable for
settlement), the period of noncompliance continues until the
violator has brought itself into full compliance with the
requirements of the law.

     Where state or local government civil penalty authority
existed prior to August 7, 1977, then that additional authority
might, of course, be used by the state to extend the period of
noncompliance.

XI.  Application of Civil Penalty Policy to Different Types of
     Sources - Private, Public, Regulated Utilities, etc.

     Congress, in enacting the civil penalty provisions of the Air
and Water Acts, and in the Air Act's (Section 120) administratively
imposed noncompliance penalties, made no exemptions or distinctions
for classes or types of violators on the basis of ownership or
form.of organization.  This civil penalty policy seeks to- carry out
Congress' fair, evenhanded, consistent approach, but recognizes
obstacles in a few situations.

     A.   Privately-Owned or Operated Sources  (other than
          Regulated Utilities)

          This penalty policy, as described above, applies in
full in civil enforcement actions against privately-owned and
operated sources other than regulated^ utilities.  Extraordinary
situations, if any, can be handled on a case-by-case basis.

     B.   Publicly-Owned Utilities and Investor-Owned,
          Regulated Utilities

          Publicly-owned utilities and investor-owned, regulated
utilities 'are to be treated equally.

          Penalties will be sought from utilities whose violations
come within the scope of this policy.  The focus of these penalties
will be on deterrence.  That is,- penalties should be in sufficient
amounts to deter future violations.  Penalties should include
appropriate amounts for environmental harm or risk of harm caused
by the source's violations and recalcitrance or indifference of the
source to its legal obligations as well as any extraordinary
enforcement costs which the government has been forced to pay-

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                              -23-


     C.   State and Municipal Facilities

          In enforcement actions against state or municipal
facilities, including publicly-owned treatment works, this civil
penalty policy applies, except with respect to the penalty element
for economic benefit of delayed compliance.

          Because state and municipal budgeting and financial
decisions are generally concerned with the allocation of tax
derived public funds to provision of public services, rather than
the sale of goods or services for profit, recovering the economic
benefit of delayed compliance is somewhat less applicable.  In all
such cases, the economic benefit of delayed compliance should be
calculated and considered as a guide, but in determining the
minimum civil penalty and the minimum civil penalty acceptable for
settlement, enforcement officials may recommend that this factor
be discounted or eliminated in cases where they think it is
appropriate.  Because the other elements (harm or risk; recalci-
trance; extraordinary enforcement expense)  are not always susceptible
to precise quantification, the appropriate minimum civil penalty
or the minimum civil penalty acceptable in settlement for such
facilities can only be determined on a case-by-case basis.

          The only further guidance with respect to penalties
in such cases is as follows:

          \.  Enforcement officials should not excuse all
          civil penalties except in extraordinary situations,
          for that would create a double standard of more
          lenient treatment for public agencies than private
          individuals or firms.

          2.  Civil penalties for violations by state or
          municipal facilities should be in sufficient amounts
          to deter future violations, considering the elements
          of this penalty policy, size of the facility, and the
          duration of the violation, and in a municipal case, the
          size and the resources of the municipality.  To
          achieve a deterrent effect, civil penalties for
          violations by state or municipal facilities should
          .bear some relationship to the population served by
          the violating facility and upon which the burden
          of the penalty will fall.

     D.   Federal Facilities (Other than Utilities)

          Because of recent amendments to the Air Act a'nd
the Water Act and the federal mechanism that exists for the
payment of penalties, federal facilities present a significantly
different problem from other violating sources.  Accordingly,
guidance as to them will be provided elsewhere.

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                              -24-


XII.  Federal-State Cooperation in Implementing this Policy

     As part of their efforts to enforce air and water pollution
laws, many federal, state, and local enforcement officials will
be using this penalty policy.  To assist in achieving consistency
in its application, a method of consultation among federal, state
and/or local enforcement officials has been devised to insure
that appropriate penalties will be sought in specific cases.

XIII.  Effective Date of this Civil Penalty Policy

     Many of the factors comprising this penalty policy have
been used by federal and state enforcement officials for years.
EPA's civil penalty policy has been more fully articulated over
the last year.

     On June 3, 1977, guidance was provided to EPA regional
offices by the Office of Enforcement regarding criteria for
settlement of civil penalty aspects of enforcement cases under
the Water Act.  This guidance included most of the factors now
more fully 'explained in this document, including, for example,
recovery of the economic benefit of delayed compliance, harm
to the public/ and recalcitrance of the violator.  EPA's intention
to take enforcement action against major source violators of
the Water Act and to seek civil penalties, including sums to take
away the economic benefit of delayed compliance, was announced
at a press conference on June 21, 1977, by Assistant Administrator
Thomas C. Jorling.•

     Further elaboration of this Water Act civil penalty policy
was provided by an Office of Enforcement memorandum to EPA
regional offices dated June 28, 1977.

     The Air Act Amendments became effective on August 7, 1977,
including authority for civil penalties, and regions were
advised on September 2, 1977 that civil penalties should only
be sought for violations occurring or continuing after
August 7, 1977.

     The first comprehensive version of this consolidated Air
and water Act civil penalty policy was distributed to federal
and state enforcement officials on November 23, 1977, and took
effect on that'date.

     In addition to these general communications, this civil
penalty policy was explained at meetings and workshops of
federal, state, and local officials, at press conferences
and other gatherinys at Washington, D.C= .- and in all regions
of the country in  the last half of 1977 and early 1978.  This
policy has had the benefit of comments, discussion and analysis
over many months.

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                              -25-

     The civil penalty policy (including its predecessors as
explained above)  covers all Air and Water Act cases within
its scope, as follows:

               all Water Act cases not concluded prior
               to June 2, 1977, and

               all Air Act cases not concluded prior to
               August 1, 1977.

     The application to Water Act cases concluded after
June 3, 1977 and Air Act cases concluded after August 7, 1977-,
but prior to the date of this memorandum, is governed by
the guidance extant and in effect at the time the case was
concluded, including any case-by-case guidance given.

     For purposes of this policy, a case was concluded if it
is clear that agreement had been reached on all material terms,
including penalties, and among all the parties, including EPA
where it was a party.  Where the agreement had been reduced to
writing so as to memorialize its terms, it was clearly concluded.
Other situations will have to be individually considered.

     Enforcement officials aware of civil enforcement actions
which they believe should not be included within the coverage
of this policy or its predecessors should present the facts
or circumstances for consideration.

XIV.  Previous Civil Penalty Policy Superseded

     This civil penalty policy supersedes all previous Air Act
stationary source and Water Act civil penalty policy, including
the following, but only to the extent that such previous policy
was inconsistent herewith:

          (1)  U.S. Environmental Protection Agency, Office
          of Enforcement guidance letter entitled "Settlement
          of Section 309(d) Enforcement Cases for Monetary Amounts"
          dated June 3, 1977, signed by Stanley W. Legro, Assistant
          Administrator for Enforcement.

          (2)  U.S. Environmental Protection Agency, Office
          of Enforcement guidance letter entitled "Settlement
          of Section 309(d) Enforcement Cases for Monetary
          Amounts—Policy Background" dated June 28, 1977
          signed by Stanley W. Legro, Assistant Administrator
          for Enforcement.

-------
                    -26-
(3)  U.S. Environmental Protection Agency, Office
of Enforcement guidance letter entitled "Civil
Penalties under Section 113(b) of the Clean Air
Act Amendments of 1977," dated September 2, 1977,
signed by Richard D. Wilson, Acting Assistant
Administrator for Enforcement.
                        Jeffrey G. Miller
          Acting Assistant Administrator for Enforcement
               U.S. Environmental Protection Agency

-------
"** - \       UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

      §                     WASHINGTON. D.C.  20460
                                                     OFFICE OF ENFORCEMENT
    MEMORANDUM

    SUBJECT:   Neutral Inspection Plan
    FROM:      Edward A.  Kurent
              Director,  Enforcemen^D-i

    TO:    '    Regional Enforcement Division Directors
              Regional S&A Division Directors
              Director,  NEIC


         Attached is the final Neutral Inspection Plan which was
    developed for the NPDES Compliance Inspection Program.  This plan
    fulfills the requirements for performing neutral compliance  inspec-
    tions  based on the Marshall v Barlow's, Inc. ruling.  The Neutral
    Inspection Plan must be used to target all  inspections which are
    not  based on some type of probable cause.   Copies of  this plan were
    distributed to each Region last year for comments.

         The selection of candidates for neutral inspections each year
    will be based on only two factors; the length of time since  the
    last inspection and geographic grouping (to minimize-the use of
    resources).  The initial selection process  will be done by computer
    using  the Permit Compliance System (PCS).   Selecting  specific per-
    mittees for inspections will then be based  on common  geographic
    areas.   For example, a permittee with a low priority  for inspection
    may  be chosen if it is in close physical proximity to a permittee
    with a very high priority for inspection.

         This plan will not be used to target all NPDES compliance
    inspections, only those based on administrative factors.  We expect
    that the portion of inspections which are not based on some  form of
    civil probable cause (DMR data, citizen, complaints) will be  very
    small.   Indeed, some Regions plan all their inspections based on
    probable cause for violations.  In these cases, no Neutral Inspec-
    tion Plan would be needed.  Similarly, some Regions  (along with the
    States) are able to inspect each major permittee once a year.  Since
    this Neutral Inspection Plan is based on annual planning, it would
    not  be needed in these cases.

-------
     Several Regions commented that the significance of the
discharger should be a factor.  Since this plan will be applied
only to major permittees, we believe this issue is basically
addressed.  In addition, when the new major/minor designation sys-
tem is complete, PCS will be able to use potential for a permittee
to discharge toxics as a factor in the neutral inspection process.
Without this information in PCS, it would be necessary to perform
a review of every major permittee to determine the toxics discharge
potential.  This would place an unreasonable burden on Regional
enforcement programs.

     If you have any questions or comments on this plan, please
contact me or Brian Maas of the Enforcement Division staff at
755-0994.
Attachment

-------
               CRITERIA FOR NEUTRAL SELECTION OF
            NPDES COMPLIANCE INSPECTION CANDIDATES

-------
                                2



     inspections based on administrative factors; and 2) those



     inspections based on specific evidence of an existing •



     'violation, e.g. civil probable cause.
        •c


          Inspection's based on the second category are not



     neutral since they are based on prior knowledge of apparent



     or probable permit violations.  Factors which constitute



     specific evidence include: 1) violations reported on recent



     DMR's; 2Y citizen complaints; 3) response to emergency



     situations, such as threats to public health or safety;



     4) follow-up to previous inspections which  indicated



     violations; and 5) specific enforcement case support.



          For targeting inspections which rely strictly on



     administrative factors, the Agency has developed the



     following neutral inspection plan.







B.   UNIVERSE OF NPDES INSPECTION CANDIDATES



          The EPA., upon the presentation of credentials, has  the



     authority to enter and inspect all NPDES permitted  facilities



     at any time regardless .of other factors such as "major"  or



     "minor" designations.  Because of limited resources, not all



     facilities are targeted for  inspections each year.  The



     frequency with which compliance inspections are performed



     is based on the discharger's environmental  significance,



     available resources, the types and mix of inspections being



     employed, climatic and geographical  influences en  ir.spection



     logistics, and other factors  influencing compliance monitor-



     • ing such as the ability to follow up on inspection  findings.

-------
                                3


C.   BASIC SELECTION CRITERIA


          When targeting permittees of neutral compliance


     inspections, the time that has passed since the last  inspec-


     tion and the geographical grouping of the permittees  are  the


     only factors which may be considered.  Other information,  such

                X\ ^^ ' ••*' ""
     as data from DMR's which indicated apparent violations, would


     not be used since this would constitute probable cause under


     the civil standard.  However, the existence of such data  would


     not preclude the facility from being considered for a neutral


     inspection if this neutral plan is followed during the


     selection process.


          The only permittees who would not be considered  when


     targeting neutral compliance inspections are permittees who


     are in current litigation with EPA.  This does not apply  to


     state litigation. ''                                   -       .





D.   NEUTRAL COMPLIANCE INSPECTIONS


          To target inspections based on  a neutral  inspection  plan,


    -Regions will first determine the length of time that  has


     passed since the last EPA or state inspection  for all major


     permittees.  This.can be done easily using the capabilities


     of the Permit Compliance System (PCS) available in each EPA


     Regional Office.  A PCS report can be generated which .will


     print out each major permittee in order by the date of  the


     last inspection.  Appendix A contains a sample list which


     the PCS System can generate.  A. separate report should be

-------
                            4


generated for each state in the Region.  In some cases,  it


may be appropriate to use subdistricts (by county) of  a  state


depending on the organizational structure in a  specific  state


or Region.  The permittees which are highest on the  list


(greatest time since last inspection) will have the  highest


priority for neutral inspections.


     In order to minimize use of Agency resources, inspection


targeting should be based on both the priority  list  and


geographical grouping.  For example, any permittee on  the list


may be targeted for an inspection if it is in close  physical


proximity to a facility which is very high o.n the list.  This


is extremely important as it allows  the most .efficient use of


the limited inspection resources.  The PCS System can  give the


names and most recent -inspection dates for all  permittees'


which are in the same county as a permittee which is selected


for an inspection.


     The priority list will identify only those facilities


which are possible targets for-.compliance inspections  during

                                                           %
the current fiscal year.  The exact  timing of these  inspec-


tions during the fiscal year will be at the discretion of


the Regional Office, based on logistics and specific Regional


needs.                                               • .


     The list of permittees targeted for  inspections may be


amended at any time during the fiscal year.  Similarly,  before


the start of a new fiscal year,- Regional Offices  should

-------
                            5


 reassess all permittees regardless of whether all previously


 targeted inspections have been completed for the current


 fiscal .year.


 INSTRUCTIONS FOR TARGETING INSPECTIONS BASED ON THE POINT'


 ASSESSMENT SYSTEM


      To use the neutral inspection plan, Regional Offices will


 first determine the percentage of inspection resources that


 will be devoted to neutral administrative inspections.  This


 will depend, to a large extent, on the ongoing enforcement


 case load and the percentage of major permittees which have


 probable violations of effluent limitations and compliance


 schedules.  For example, a Region may allocate the following


 resources for neutral inspection activities:


      a)  10% of the Compliance Sampling Inspection resources;


      b)  25% of the Performance Audit Inspection re-sources;


          and


      c)  50% of the Compliance Evaluation Inspection


          resources.
              ••                                     *

      The remaining Regional inspection resources would be


 reserved for inspections based on probable cause and  specific


 enforcement case support.


      The Region should next determine the approximate number


of neutral inspections that can be completed using the


resources allocated for each inspection type (CSI, CEI, PAI).


This number will be flexible depending on the type and/or  the


number of outfalls and size of  the permitted facility.

-------
                           6
     For each state, starting with 'the permittees highest on
the list, proceed down the priority list until about one third
of the neutral inspection resources for that state have been
allocated.  For.example, if the allocated inspection resources
for neutral inspections in a particular state are enough for
30 inspections, approximately the first 10 permittees on the
priority list would be targeted.  The Region should then use
the remaining 20 inspections for permittees which are grouped
with the already targeted candidates based on common geographi
cal and/or special technical considerations.  For example, a
Region may target a sampling inspection at a facility with a
high point rating, and then target several more  sampling-
inspections, CEI's or PAI's in  the same geographic area.  This
would allow all these inspections to be done on  one inspection
trip.
     Regions may target inspections to single facilites at
times, such as when the facility is in close proximity  to
Regional Offices or Field Offices.
     A specific percentage of inspection resources are  set
aside each fiscal year for enforcement case  support activi-
ties and emergency response.  By the last quarter of the
fiscal year, Regions should know to what extent  these
set-aside resources will be available for routine inspections.
To the extent  that these resources become available, they
should be utilized to inspect the remaining  permittees  on the
priority list,

-------
                            Appendix A








     The following two pages are sample printouts from the Permit



Compliance System (PCS) for the State of New Jersey.  Printout 1



gives a partial listing of major NPDES facilities in order by the



date of the last inspection.  Permittees with no date listed for



inspections have not had an inspection which was noted in PCS.



These permittees will have the highest priority for neutral



inspections.








     Printout 2 is a list of permittees and inspection dates by



county (for New Jersey).  This Printout is used to identify per-



mittees which may be in close physical proximity to facilities



which were chosen for inspections from Printout 1.

-------
    NAME   .

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    ROYCE CNEHICAL CO
    MAPCAL PAPER MILLS INC
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    MO, ARLINGTON LYNOMUnST JNT MTO
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           THE PERMIT CO^VANCE SYSTEM

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-------
Printout 1
                                ALL
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-------
          UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                        VACHtMCTOM. OC JtfeMO
                            DCT 17 PF3   :'             orric«or
                          ! •    ' * * *'"*  '.          CMrOttCKMKWT CO
MEMORANDUM

SUBJECT:  Direct Referral

FROM:     Richard H. Mays
          Senior Enforceme

TO:       Associate Enforcement Counsel*
      Attached is a letter of agreement between the Deputy
Administrator, on behalf of EPA, 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 vould 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

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         UNITED STATES £UV1RDT/;,,          *'":""
Land and natural Resources Division  -   ,;ir .>:  ,;.        V"  "
U.S. Department of Justice     -     :.   '•  " * *.'        "~
Washington, D.C.  20530         .    /-    ^'''•.':".'
~-1.
" t'-
Dear Bank:        .            ;    ;-;ii:>                  = .*.~  *£r  ir?"
                  -'.         ...... ..>.r~;".''   • •                *"y *•   v   -Jj
                              "    - '                        .   eir  r?-rr
     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 vaive for  a period of one year the requirement
     of the Assistant Administrator's prior concurrence for referral
     to the Department  of Justice for the following classes of
     judicial enforcement 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 »inor industrial dischargers;
          (ill)  cases Involving failure to vonifor or. report by
                 industrial  dischargers;

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                                -2-


          (iv)   referrals to collect stipulated penalties from
                 industrials under consent decrees;

          (•v)    referrals to collect administrative spill penalties
                 under Section 311(j) of the CKA;
                          i •  f            r
     (c)  All cases under the Clean Air ftrt except the following:

          (i)    cases Involving the steel Industry;
      .*           -           »              ^

          (ii)   cases involving non-ferrous smelters;
   *••" '.-' •                            '  •  .  -
          (iii)  cases involving National Emissions Standards for
                 Hazardous Air Pollutants;

          (iv)   cases involving the post-1982 enforcement policy*

2.   Cases described in Section lr above, shall be referred
     directly from the Regional Administrator to the Land and
     Natural Resources Division of OOJ in the following sianner:
                                                          i •
     (a)  The referral package shall be forwarded to the Assistant
          Attorney General for Land and Natural Resources, U.S.
          Department of Justice (DOJ), vith copies of the package
          being simultaneously forwarded to the U.S. Attorney
          -(USA) for the appropriate judicial district in which
          the proposed case is to be filed (marked "advance copy-
          no action required at this time'), and the Assistant
          Administrator for Enforcement and Compliance Monitoring
          (DECK) at EPA Headquarters.  OECM shall have the following
          functions vith regard to said referral package:
                            :
          (i)    OECM 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 nay observe in the package.  DOJ may, of course,
                 continue to consult with OECM on such referrals.
                 Otherwise.- OECM shall be responsible only for
     • ,          routine oversight of the progress ani sar.agewent.
                 of the case consistent with applicable present
                 and future guidance.  OECM shall* however, retain
                 final authority to approve settlements on behalf
                 of EPA for these cases* as in other cases.
                    • - *'              -*           "
          (ii)   The t«ferrsl p»rk»gc shall be In the format and
                 contain information provided by guidance seTnorsrid*
                 as may be promulgated from time to time by OECM ir
                 consultation with DOJ and Regional representative;

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                                -3-
           (iii)  DOJ shall, vithin 30 days from receipt of  the
                 referral package, determine (1) whether the .Lands
                 Division of DOJ will have lead responsibility  lor
                 the case; or (2) whether the DSA will have lead
                 responsibility for the case.
                 While it is agreed that to the extent feasible,
                 cases in wfoich the OSA will have the lead till be
                 transmitted to the DSA 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 matter
                 to the USA, the case may be returned to the
                 Regional Office, or may be retained at the Lands
                 Division of DOJ for further development, including
                 requesting additional information from the Regional
                 Office.  In any event, DOJ will notify the Regional
                 Office, DECK and the DSA of its determination of
                 the lead role within the above-mentioned 30-day
                 period.

          (iv)   Regardless of whether DOJ or the DSA is determined
                 to have lead responsibility for management of
                 the case, the procedures and time limitations Bet
                 forth in the KOU and 28 CFR 50.65 et seq., shall
                 remain in effect and shall run concurrently with
                 the management determinations made pursuant to
                 this agreement.

3.   (a)  All other cases not specifically described in paragraph
          1, above, which the Regional Offices propose for judicial
          enforcement shall first be forwarded to DECK and the
          appropriate Headquarters program office for review.
          A copy of the referral package shall be forwarded simul-
          taneously by the Regional Office to the Lands Division of
          DOJ and to the OSA for the appropriate judicial district,
          the USA's copy being marked "advance copy-no action require
          at this time.*
                          i

     (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, vithin 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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     e transmitted by appropriate lette
          or memorandum signed by the AA for DECK (or her designe ^
          within the aforementioned twenty-one day period.  Should"
          OECM concur in the proposed referral of the case to DOJ*
          tbe actual referral shall be by letter from the AA for
          DECK (or her designee) signed within fourteen days of
          the termination of the aforementioned twenty-one day
          review period.  Copies of the letters referred to herein
          shall be sent to the Assistant Attorney General for the
          Lands Division of DOJ.            .

     
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Municipal and
Pretreatment
Enforcement

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Municipal and
Pretreatment
Enforcement

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    F   UNITED STATES ENVIRONMENTAL PROTECTION AGENCY'
                                GTON. D.C.  :

                                > r. ;,i   — .-.—*-
                                '•"V".  O 1^77
                                                ^
V/ASHI.NGTON. D.C.  20460
                                                                  OFFICE OP THE
                                                                  ADMINISTRATOR
 MEMORANDUM        '            .

 TO i        Regional Administrators

 FROM: .    'Deputy Administrator  /-/ 
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                                   - 2 -
     Municipalities' are responsible and accountable for achieving the
effluent limitations required in their NPDES permits whether or not they
have the in-house capability to deal with the problem underlying the
violation..  It is the municipality' s responsibility to seek and secure
whatever technical  assistance or training is-necessary to solve that
problem.  EPA must  insist that municipalities accept and carry out that
responsibility and  must take enforcement action against those that are
unwilling to do so.                        _             '          •  •

     Although it is recognized that EPA and the States are currently
providing limited technical and training assistance, most of such
assistance and training must be provided by the private sector.  "While
the private sector  can undoubtedly develop the capability to provide
such services when  a sufficient demand is made on it for those services,
to date that demand has not been strongly made.  Consequently, many
consultants, equipment manufacturers and systems vendors have not yet
developed a significant capability to render technical assistance or
training.  EPA and.the States must expand their present efforts to
'encourage and stimulate development of private sector capability and
expertise to meet these needs.  Aggressive enforcement of municipal
permits and an insistence that municipalities seek needed technical, and
training services should provide an incentive for the private sector to
develop the needed  capability.•

     In those few cases where a municipality has recognized the need of
outside assistance  to meet permit effluent limitations and has unsuccess-
fully sought that assistance, formal enforcement might be a futile response.
EPA or State assistance might be appropriate in such a situation.  Since
it is the municipality's responsibility to seek that assistance,, it should
be given normally'at the municipality's request rather than on the initia-
tive of EPA or the  State.  And since a demand must be placed on the private
sector if it is to  develop the capability of providing such assistance,
EPA should not normally provide the assistance unless the municipality has
unsuccessfully sought it elsewhere.  Consequently, EPA and State technical
and training capabilities will be helpful in the short term to fill gaps in
local- and private sector capabilities to resolve POT!'? compliance problems.
To the extent that  EPA capabilities in this regard exist at the present
time, however, they should not be expanded, but should be reduced as
private sector capabilities mature.

     Any technical  or training assistance provided by EPA must be provided
in a manner compatible with our primary role as regulators.  It should be
regarded as but one option available to the regulator in a-particular case
and not as the sole option or the* option-of choice in all cases.  The
inability to provide technical assistance in a given case or the failure
to achieve the required effluent limitations after the. provision of such

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 assistance should never preclude"the use of more demanding regulatory.
 options.  Where technical assistance is provided, it uust be done in ci       •
 manner-that will not prejudice the Agency's case in a subsequent enforce-.   . .
pant action if the effluent limitations are not achieved after assistance
 has been provided.

   .  I recognize that many people, both within and outside the Agency,
 believe.that.EPA should conduct a strong program of technical assistance
 to individual communities in addition to its enforcement role.  In the
 abstract, this proposition may appear attractive. • As a practical matter,   •  •
 however, an active assistance role confuses and undercuts the predominantly
 regulatory role .that the F.-7PCA has fashioned for the Agency. . I-Ioreover,
 limitations on existing and foreseeable resources sake it wholly unrealistic
 to think that we have or could develop the capacity to provide technical
 assistance in any significant number of cases as part of our' national •
progran.  Thus we have no choice but to accept our role as being predominantly
 regulatory.  Within this context, we can and should conduct an active role
 in manpower training, technology 'transfer and the dissemination of technical
 assistance on a general basis rather, than an individual case basis.

     I also specifically do not intend to restrict by this means any
 activities we may be able to undertake in the neglected .field of manpower
 training.•                    •       _           . •        ...

     In summary, let me make clear that our philosophy toward operating
POTWs is regulatory and that the responsibility for meeting applicable
permit requirements rests squarely on the POTWs.  To date the compliance
> assurance program has been successful in securing compliance.from industry.
 It is our responsibility to make sure that it is equally effective in
 securing compliance from municipalities.

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          UNITED STATES ENVIRONMENTAL PROTECTION .^AGENCY
                            WASHINGTON. D.C. 20460


                                KOV 2 9 1978


MEMORANDUM
TO:       Regional Administrators w/o attachments
          Regional Water Division Directors
          Regional Enforcement Division Directors

FROM:     Deputy Assistant Administrator for Water Programs Operations
          (WH-546)

          Deputy Assistant Administrator for Water Enforcement (EN-335)

SUBJECT:  Coordination Between Regional Enforcement and Weter Programs
          Personnel  in Implementing the National Pretreatment Program


    .. the  general pretreatment regulation (40 CFR Part.403) promulgated
_cn. June 26,  1978,  requires that certain publicly owned treatment works
'(POTWs) develop pretreatment programs to control the introduction of
industrial wastes  into POTVs.  The-successful implementation of these
pretreatment programs requires a  careful integration of Regional
Enforcement  Division-efforts in overviewing the creation of such
programs  and Construction  Grants  efforts in providing funding for the
development  of these programs.  The purpose of this memorandum is to
outline the  respective roles of these two  groups with regard to the
initial stages of  POTW p-etreatment program development.   The recom-
mendations  in this memorandum  reflect the  proposals for coordinating
Enforcement  and Construction Grants activities found  in the Interim
National  Municipal Policy  and  Strategy, October, 1978, and the latter
document  should be read  in concert with this memorandum.

Identification of  POTWs  Required  to Develop a Program

      The  pretreatment regulation  specifies that  two  groups of POTWs
should be required to develop  a pretreatment program  (see  section
403.8).   First, all  POTWs  with an average  design flow greater than
5 million gallons  per day  (mgd) and  receiving .industrial wastes which
1) pass  through the  POTW untreated,  2)  interfere w\th the  operation  of'
the POTW  or, 3) are  otherwise  subject  to  pretreatment standards
developed under  section  307  of the  Clean  Water  Act are required  to
develop a program.  In  addition,  the  Regional Administrator  or  Director
of the State NPDES program may require  that POTWs  with an  average
 design flow of  5  mgd or  less develop  a  pretreatment program  if  their
 industrial  influent  meets  any  of  the  three criteria listed above.

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     A computer print-out of all POTWs in each Region broken down  by
majors and minors is attached to this memorandum.  The Regional
Enforcement Division should take ±he lead in developing from the
attached computer print-out: 1) a list of those POTWs (both above  and
below 5 mgd) in non-NPDES States which should develop a pYetreatment
program and, 2) a list of those POTWs above 5 mgd in NPDES States  which
must be required to develop a program.  The Regional Water Division
must assist .in this effort and provide such necessary information  as
is available in the Water Division files.  Attachment A suggests means
by which the Regional office can identify these POTWs.

     In compiling the non-MPDES State list, the Regional office should
check the appropriate boxes next to the POTW name on the computer
print-out.  Copies of this print-out should then be forwarded to the
Permits and Municipal Construction Divisions at Headquarters.-  A copy
of this print-out should also be maintained by both the Enforcement and
Water Divisions in the Regional office and both Divisions should be
consulted on any changes to the list.

     The NPDES State list should be sent to NPDES States to assist them
in identifying appropriate POTWs.  NPDES States will be responsible for
adding to the Regional list those POTWs with flows of  5 mgd and less
which wil-1 be subject to the program development requirement.  Once the
NPDES State has developed a list of all POTWs within its jurisdiction
which will be required to implement pretreatment programs, it should
forward this list to the Grants and Enforcement personnel in the Regional
office who will, in turn, send  this information on to  Headquarters.

     Lists of those POTWs .in both NPDES and non-NPDES  States which will
be required to develop a program should be sent to  the Headquarters
Permits and Municipal Construction Divisions no later  than January 15,
1979.  The cover memorandum  transmitting the completed lists should be
signed jointly by the Directors of the Regional Water  and Enforcement
Divisions.- These lists will  eventually be incorporated into the  Permit
Compliance System (PCS) which will provide a convenient mechanism for
tracking  and updating progress in  developing POTW pretreatment  programs.

Application for Construction Grants  Amendment

     Cr.Cc  the HatS  Cf  PCTWS required  "tu develop  a  yrctrealjnent program
have been  compiled,- the- Construction Grants  staff should notify the
appropriate POTWs .in  NPDES  and non-NPDES States  of the need to  apply for
an amendment to their  existing Step  1,  2  or  3  grant 1n order to acquire
funding for the development of a  pretreatment  program (see  Construction
Grants  regulation  40 CFR 35.907).   Concurrent  notice of POTWs  which
should  apply for  grant amendments should be  sent to Grant personnel  in
NPDES and non-NPDES States so that the States  may plan future  funding
requirements.   Existing  construction grants  should be amended  no  later
than  June 30,  1979,  to provide pretreatment program funding.

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     As individual  POTWs apply for and are  awarded  an  amendment  to
their construction  grant for pretreatment program .implementation,
this information should be conveyed to Regional  Enforcement personnel.
As will. be seen in  the subsequent discussion,  timing of the construc-
tion grants award can have an impact on the development of  the
pretreatment compliance schedule incorporated  into  the POTW's NPDES
permit.              '.

Reissuance of Permits to Include Pretreatment  Requirements

     The pretreatment regulation requires that NPDES permits for POTWs
which are required to develop a POTW pretreatment program incorporate a
compliance schedule for the development of  such a program [see  40 CFR
403.8(d)].  This compliance schedule should be incorporated into the
POTW's permit upon reissuance at the end of the existing permit term or
at the time the permit is modified or reissued to grant a section
301(i)(l) time extension or a section 301(h) modification of secondary
treatment requirements.  In addition, a POTW's NPDES permit may be
modified in mid-term to incorporate a schedule for the development of a
POTW pretreatment program where, the operation of a POTW without a
pretreatment program poses significant public health,  environmental  or
related concerns, or where a pretreatment program compliance schedule
must be developed to coordinate with construction grant awards.  A
detailed explanation of the development and application of pretreatment
compliance schedules will be found in Attachment B along with a model
compliance schedule.                      '                     .

     The pretreatment strategy  envisions the type of close-coordination
between Enforcement  and Construction Grants staffs outlined in the
Interim National Municipal Policy and Strategy for developing these
compliance schedules.   Both the Construction Grants regulation (40 CFR
35.907, 35.920-3) and the pretreatment regulation (40 CFR  403.8) impose
time limitations on  the various activities to be undertaken in the
pretreatment compliance schedule.  The pretreatment compliance  schedule
incorporated into a  POTW's  NPDES permit  should contain milestones
derived from the grants process.  As  the discussion in Attachment B
indicates, in  order  to  develop  a compliance schedule which meets both
the  pretreatment and Construction  Grants regulatory requirements, the
Enforcement  staff must  coordinate with Construction Grants staff in
determining  the  current grant  status  of  the permittee  and  the schedule
for  receipt  of future grant funding.

Enforcement  of POTW  Pretreatment  Programs

     Tne preceding  discussion of coordination  between  Construction
Grants and Enforcement  in developing  POTW  pretreatment programs should
not  be understood  to imply  that availablity of funding  is  a prerequisite
to  the development of a pretreatment program.  'The requirement  to
develop a  pretreatnent  program should be enforced  and not  dependent on

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Federal funds.  The development of pretreatment programs is critical;
it is the main tool to address toxic discharges from POTW's.  The costs
of developing such programs are not capital costs and they, can be
recovered from users of the municipal system in most cases'.  In
balancing these considerations, the Agency's policy is to enforce
requirements for municipalities to develop pretreatr.ent programs
without dependence on Federal funding.

     This policy applies equally to funding the operation of municipal
pre treatment programs once they are developed and running.  They are
expected to be self-supporting.  A user  charge system may be used for
this purpose.

     If you have any questions on the implementation of this coordination
effort or its relation to the Interim National Municipal Policy and
Strategy, please feel free to contact Nancy Hutzel or Shanna Hal pern
18-755-0730) in the Permits Division or  Ron DeCesare (8-426-8945)
in the Municipal Construction Division.
Attachments
cc:   Regional  S&A Division Directors
      KEIC-

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                            ATTACHMENT A
     Procedures to Identify PDTWs Which Kill be Required to Develop
                     POTW Pretreatment Programs
                                                         i

The  permit-issuance authority  (Regional office or NPDES State) must
have the ability to determine  which of its municipal permittees will
be required to  develop  a POTW  pretreatment program.  As section 403.8(a)
of. the  pretreatment regulation explains, POTWs required to develop a
program will  include those POTWs with a design flow over 5 mgd receiving'
from industrial users wastes which:

o  pass through the POTW untreated

o  interfere  with  the  operation  of  the treatment works

o  are  subject  to  pretreatment standards developed  under the  authority
   of  section 307(b) or (c)  of the  CWA.

In determining  which POTWs  are above  5 mgd,  the permit-issuance authority
should  look  at  average  design  flow.   In addition,  if  one permittee
controls  several treatment  works,  the cumulative  flow of the  treatment
works  should  be considered  in  calculating  average  design flow.  For
example,  one  Regional  Authority  controlling  3  treatment works with
average design  flows  of 3,2 and'1.5  mgd respectively would be  viewed,
for  the purposes  of  the pretreatment.regulation,  as a single  operation
with an average design flow greater than 5 mga.

A  recommended first  step in determining which  POTWs over 5 mgd  fall
within  the 3  categories listed above  would be  to  determine which  POTWs
 receive wastes  from  one or more industries within tne 21 industrial
 categories listed  in the NRDC Consent Decree (for reprinting  of Consent
Decree  see The  Environmental Reporter-Cases, 8 ERC 2120).   EPA  antici-
pates  that categorical  pretreatment  standards under section  307(b)
 and  (c) will  be developed for almost all  industrial subcategories
within the 21 industrial categories listed in the NRDC Consent Decree.
A  possible approach  to detecting these sources would be to examine
. industrial inventories such as the Dun and Bradstreet Market Identifiers,
 the  Directory of Chemical  Producers,  published Dy tne Stanford Research-
 Institute, and the State inaustrial directories to determine which of .
 the  listed sources are within the State or Region and discharging into
 POTWs.             .           '                                     '-. .

 A second step  in identifying  POTWs required to develop a POTW pretreat-
ment program might be  to look at those POTtfs which are not meeting their
 NPDES permi't conditions.  Such permittees would be likely candidates
 for a pretreatment program aimed at controlling pollutants which
 interfere with the operation  of or pass-through the  POTW.

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                                                             IDENTIFYING
                                                             POTWs
Section 403.8(a) of the pretreatment regulation also gives the permit-
issuance authority the ability to require the development of a pre-
trestment program by POTWs with average design flows of 5 mgd or less.
It is recommended that the permit-issuance authority require the
development of a program wherever the POTV meets one of the 3 criteria
outlined earlier.  The permit-issuance authority is strongly urged to
exercise its option to extend the requirement to develop a pretreatment
program as broadly as possible.

     The burden of proof for demonstrating that a program is not needed
should rest on the POTW.  Where there is some doubt that a certain POTW
has industrial influent subject to  pretreatment requirements, the POTW
can be allowed to show that it need not develop a program.  In such
cases, a clause should be inserted  in the municipal permit along with
the compliance schedule for the development of a pretreatment program.
This clause would state that if the industrial waste inventory required
by the compliance schedule demonstrates that the POTW has no contribution
of industrial wastes which would be subject to pretreatroent requirements,
the POTW would not be required to continue development of the program.

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                              ATTACHMENT B


              GUIDANCE ON PREPARING COMPLIANCE SCHEDULES FOR
                                                         *

                   DEVELOPING POTW PRETREATMEMT PROGRAMS-
GENERAL COMMENTS:

     Section  403.8(d)  of the general pretreatment regulation (40 CFR
part 403)  requires  that NPDES permits for'POTWs which are required to
develop a  POTW  pretreatment program incorporate a compliance schedule
for the development of such a program.  In some cases, this compliance
schedule will be  incorporated into affected POTW permit upon reissuance
at the end of its existing term.

     In many  cases, however, the compliance schedule will be .incorporated.
into the POTW permit in mid-term through a permit modification.  It is
anticipated that  in many instances this pretreatment compliance schedule
'will be inserted  into the  NPDES permit for applicable POTWs when the
permit is  modified  or reissued in mid-term in  connection with a 301(1 HI)
determination (i.e., the determination as to whether or not the schedule
for development of  secondary treatment should  be extended under the
provisions of section 301 (i HI) of the Act, see 40 CFR 124.104).
Similarly, a  POTW which  is  required to develop a pretreatment program
will have  a pretreatment compliance schedule inserted in its NPDES
permit if  that  permit is modified  or  reissued  in..order to grant
a waiver  of secondary treatment requirements under the provisions of
section  301(h)  of the Act.   (See proposed 40 CFR Part 233.)  In addition,
a POTW permit will  be modified  in  mid-term to  incorporate a schedule
for the  development of a POTW pretreatment program, where the operation
of  a POTW  without a pretreatment program poses significant public
health,  environmental or related concerns, or  where a pretreatjnent
program  compliance schedule must be  developed  to coordinate with
construction  grant awards.

     The  compliance schedule  will  require  that the  permittee  develop
the  authorities,"procedures and  resources,  as  defined by  40 CFR 403.8
 and 403.12, which comprise an approvable  POTW  pretreatment  program.
The  activities listed in the  attached model  compliance  schedule summarize
 the more detailed  requirements  found in  sections  403.8  and  403.12 of
 the  pretreatment regulation.   It is recommended  that the permit-issuance
 authority review the more detailed requirements  set forth in  the         %
 reoulatfon before  developing  the pretreatment compliance schedule,  and
 insert additional schedule activities where appropriate.

      There are several time limitations'imposed by the  pretreatment
 regulation and the  construction grant regulation (40 CFR part 35)
 which should be considered in establishing compliance schedule dates.
 The pretreatment regulation provides that the compliance schedule will
 require the  development and approval of a POP*' pretreatment program as
 soon as reasonable  and within 3 years .after the schedule is incorporated

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                                                    COMPLIANCE SCHEDULE
                                                    GUIDANCE
into a POTW's permit but in no case later than July 1, 1983 (see §403.8),
Since up to 6 months must be allowed for the program approval  process
according to section 403.11 of the pretreatment regulation, the compli-
ance schedule date for submission of a pretreatment program for approval
(activity 8 of the compliance schedule) should be 2-1/2 years  from the
incorporation of a compliance schedule or January 1, 1983, whichever is
sooner.
     Provisions of the  construction grants regulations impose what may
be in some cases  stricter  time constraints on the development of an
approvable program.  For example, section 35.920-3 of the construc-
tion grants regulation  provides that no grantee may receive a Step 3
grant after December 31, 1980, until it has developed an approvable
pretreatment program.   Thus, a permittee which is scheduled to receive
a' Step 3 construction grant  in January 1981 will be required to develop
an approvable program at the outside by January 1981.  However, if that
same permittee  received a  compliance schedule for the development of a
pretreatment program in December 1978 it would be allowed, by the
pretreatment regulation, an  outside date of June 1981 (i.e., 2-1/2
years from the  incorporation of the compliance schedule) to develop an
approvable program.  In this case, the more stringent time limitation,
i.e., that posed  by the construction grant regulation, would apply.

     As the example above  indicates, in developing the schedule date
for the submission of an approvable pretreatment program, the permit-
issuance authority must use  that date prescribed by either the pretreat-
ment regulation or the  construction grants regulation which provides the
shortest time for the development of the program.  In addition, the
permit-issuance authority  may  impose reasonable time limitations which
are more restrictive.

DEVELOPMENT OF  THE PRETREATMENT COMPLIANCE SCHEDULE

     It is apparent  from  the general discussion above that several
different regulatory  provisions  influence  the  development of the
schedule date for submitting a POTW pretreatjnent program for approval
(compliance schedule  activity  8).  Regulatory  limitations on the  time
frame for developing  a  program can  be  summarized as  follows:

         o  approval within  3  years from the  incorporation of  a
            pretreatment  compliance schedule  in the  municipal  permit
             (application  for approval  within  2-1/2 years).   See 40 CFR
            403.8.

         o  approval  by July 1,  1983  (application  for  approval  by
            January  1,  19S3).   See  40  CFR  403.a.

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                                                    COMPLIANCE SCHEDULE
                                                    GUIDANCE
         o  approval  prior to payment of grants beyond 90* of the Step 3
            funding (application for approval  6 months before'this date).
            See 40 CFR 35.935-19.

         o  development of an approvable pretreatment program by the
            end of the Step 2 grant for certain permittees.  See 40
            CFR 35.920-3.

         o  approval  by whatever more stringent time limit is imposed
            by the permit-issuance authority.

     In addition, the construction grant regulation imposes  an  interim
time limitation on the development of compliance schedule activities
1-3.  According to this regulation, grantees with amended Step  1 grants   .
must have completed activities 1-3 by the time of application for  the
Step 2 grant if the Step 2 is to be awarded after Oune 30, 1980.

     Facilities reauired to develop a POTW pretreatment program can
generally be divided into 4 groups depending upon the applicablity of
the time limitations discussed above.  See attached Chart A.

GROUP 1  Facilities which will have received Step 1 and 2 construction
         grants or amendments before June 30,  1980, and a Step  3
         construction grant before December 31, 1980. .

     If a grantee is scheduled to receive its  Step 2 and 3  construction
grants before June 30, 1980 and  December 31, 1980, respectively, the
construction grant regulation (40 CFR 35.935-19) requires that, in most
cases, the  grantee have  an approved POTW pretreatment program before it
receives the last 10% of its Step 3 grant funding.  This means  that the
grantee would be required  to apply for  POTW pretreatment program
approval at least 6 months before it is  scheduled  to  receive payment
beyond 90%  of its Step 3 funding.*

     The pretreatment regulation (40 CFR 403.8(d))  provides that such a
grantee should  request approval  of the  POTW pretreatment program within
2-1/2 years from the  incorporation of  a pretreatment  compliance schedule
into its NPDES•permit or by  January  1,  1983,  whichever is sooner.

     In developing the compliance  schedule  for permittees in this
group, the  perait-issuance authority  should determine which of the
above  dates provides  for the  earliest  development  of  a POTW pretreatment
program.  This  date  should then be  used as  the pretreatment compliance
schedule  deadline  for  activity  8.
 *As  a 6 months period is needed to approve a POTW pretreatment  program,
  in  order to receive approval  of a.program by the date  upon  which  the
  grantee is scheduled to receive payment beyond 90% of  its Step 3
  funding, the application for approval  must be submitted 6 months
  earlier.

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                                                    COMPLIANCE  SCHEDULE
                                                    GUIDANCE
     Dates for the remaining compliance schedule activities are
negotiable with the permittee.  Generally, however, the .deadlines
for completing activities 1-3 should not exceed 15 months  from the
initiation of the compliance schedule.

     Facilities receiving their Step 3 grant before June%30,  1980,
shall be subject to the same time limitations described  above.

GROUP 2  Facilities which will have received Step 1 and  2  construction
         grants before June 30, 1980, and a Step 3 construction  grant
         after December 31, 1980.                                  •

     The construction grant regulation provides that a grantee which is
scheduled to receive a Step 3 grant after December 31, 1980,  must  have
completed compliance schedule activities 1-7 before it can receive  its
Step 3.funding.  Therefore, in developing the compliance schedule,  the
permit-issuance authority should use as an outside compliance date  for
activities 1-7 the date for completion of the Step 2 grant as determined
by the construction grants compliance schedule as long as  this  data would
not be later than 2-1/2 years from the initiation of the pretreatment
compliance schedule or Janurary 1, 1983, whichever is sooner.

     The compliance date for  pretreatment compliance schedule activity
8  (request for program approval) should not exceed 2-1/2 years  from the
initiation of the compliance  schedule, January 1, 1983,  or 6 months
before the permittee  is scheduled to receive payment beyond 90% of its
Step 3 funding, whichever is  sooner.

     Again, the interim pretreatment compliance  schedule dates are
negotiable.   It is recommended that the completion date for activities
1-3 not exceed 15 months from the initiation of  the compliance schedule.

GROLP 3  Facilities which will receive a  Step  2  construction grant after
         June 30, 1980, and  a Step 3 construction  grant before December 31,
         1980.

     Under to the construction grant  regulation,  in order  to receive a
Step 2 grant  after June  30,  1980, a grantee must first have completed
activities 1-3 of the  pretreatment compliance  schedule.  The permit-
issuance authority  should  therefore ensure that  the compliance schedule.
dates  for the completion  of  activities 1-3 do  not exceed the scheduled
date for the  completion  of  the i>tep 1  grant  activities.  The permit-
issuance authority may at  its discretion  impose  a more stringent time
limitation for the'compl etion of  these  activities.   It is  recommended
that the completion  date  for activities -1-3  not  exceed 15  months from
the  initiation of  the compliance  schedule.

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                                                    COMPLIANCE SCHEDULE
                                                    GUIDANCE
     The construction grant regulation provides.that grantees which
will receive a Step 3 grant before December 31, 1980,"must have  an
approved pretreatment program in order to receive the final  10%  of the
Step 3 grant funds.  The final compliance date for activity 8 of the
pretreatment compliance schedule therefore should be no -later than
6 months* before the date upon which the grantee is scheduled to
receive payment beyond 90« of the Step 3 grant funding unless this date
exceeds 2-1/2 years from the initiation of the compliance schedule, or
January 1, 1983, in which case the final date for activity 8 should be
no later than January 1, 1983, or 2-1/2 years from the initiation of
the compliance schedule, whichever is sooner.

     The interim dates for activities 4-7 are negotiable with  the
permittee.

GROUP 4  Facilities which will receive a Step 2 construction'grant
         after June 30, 1980, and a Step 3 construction grant after
         December  31, 1980.

     The construction grant  regulation provides that in order to
receive a Step 2 grant after June 30, 1980, a grantee must first have
completed -activities 1-3 of  the pretreatment compliance schedule.  The
permit issuance authority  should therefore ensure that the compliance
schedule dates for the completion of  activities 1-3  do not'exceed the
schedule date for  the Step 2 grant application.  The permit-issuance
authority may impose a more  stringent time limitation for the completion
of.these activities.  It is-recommended  that  the completion date for
activities 1-3. not exceed  15 months from the  initiation of the compliance
schedule.

      In order to  receive a Step  3 grant  after  December  31, 1980, a
facility in  this category "must  also have completed  compliance schedule
activities 4-7.  The final compliance dates  for  activities 4-7  should
therefore  be no later than the  completion  date for  the  facilities
Step  2  grant as determined by the construction grants  schedule.  If the
scheduled  completion date  for the Step  2 construction  grant activities
is  later than  2-1/2 years  from  the  initation  of  the compliance  schedule
or  January 1,  1983,  then the final  compliance date  for  activities 4-7
should  not exceed  January  1, 1983,  or 2-1/2  years  from  the  initiation
of  the  compliance  schedule,  whichever is sooner.

      In  establishing  the pretreatment compliance schedule dates for
activities'4-7,  sufficient time must  be allowed for the grantee to
accomplish  activity  8  (application  for  program approval)  by January 1,
1983,  2-1/2  years  from  the initiation of the pretreatment compliance
 schedule,  or 6  months  before the permittee is scheduled to receive
 payment-beyond  905. of  its  Step  3 funding*, whichever is sooner.
 * See footnote, page 3

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            MODEL PRETREATMENT COMPLIANCE SCHEDULE LANGUAGE


     Under the authority of section 307(b) and 402(b)(8) of--the Clean
Water Act, and implementing regulations (40 CFR 403), the permittee is
required to develop a pretreatment program.  This program shall enable
the permittee to detect and enforce against violations of categorical
pretreatment standards promulgated under section 307(b) and (c) of the
Clean Water Act and prohibitive discharge standards as set forth in
40 CFR 403.5.                       . •   .        .

     The schedule of compliance for the development of this pretrea'tment
program is as follows.  The permittee shall:

ACTIVITY
   NO.                           ACTIVITY                          DATE
              Submit  the  results of an industrial user sur-
              vey as  required by 40 CFR 403.8(f)(2)(i-iii),
              including identification of industrial users
              and the character and volume of pollutants
              contributed to the POTW by the industrial
              users.  '
               Submit an  evaluation of the legal authorities
               to  be  used by  the'permittee to. apply  and
               enforce the requirements  of sections  307(b)
               and (c) and 402(b)(8)  of  the  Clean  Water  Act,
               including  those  requirements  outlined in
               40  CFR 403.8(f)(l).

               Submit a determination of technical  informa-
               tion (including  specific  requirements to
               specify violations  of  the discharge prohi-
               bitions in 403.5) necessary to develop an
               industrial waste ordinance or other means of
               enforcing  pretreatment standards.

               Submit an evaluation of the financial
               proerams and revenue sources, as required by
               40  CFR 403.8(f)(3),  which will be employed
               to  implement the pretreatment program.

               Submit design of a  monitoring program which
               will implement the  requirements of 40 CFR
               403.8 and 4U3.12, and in particular those
               requirements referenced in 40 CFR
               403.8(f)(l)(iv-v),  403.8(f)(2)(iv-vi) and
               403.12(h-o),{1-n).

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                                                      CHAR'-

       OUTSIDE  PRETREATMENT COMPLIANCE DATES BASED ON CONSTRUCTION GRANT AWARDS AND PRETREATMENT REQUIREMENTS*
                    JUNE 30, 1980
DECEMBER 31, 1980
2-1/2 YEARS FROM INITIATION OF
COMPLIANCE SCHEDULE, JANUARY 31,
1983, OR 6 MONTH!. BEFORE THE
FINAL 10* OF STEP 3 GRANT
WHICHEVER IS SOONER
Group
1 Step 1 Step 2
Awarded Awarded
2 Step 1 Step 2
Awarded Awarded1
3 Step 1
Awarded
t\ Step 1
Awarded
Step 3
Awarded

Step 2 /Activities 1-3 ^ Step 3
Awarded I. due by appllca- JAwarded
\ tlon for Step 2/
Step 2 /Activities 1-3 \
Awarded! due by appllca- I
[ tlon for Step 2/
Actlvl
Step 3 /Activities 1-7 \
Awarded! due by appllca- 1 Actlvl
\ tlon for Step 3/
Actlvi
Step 3 /Activities 4-7 \
Awarded 1 due by appllca- ] Actlvl
\ tlon for Step 3/
les 1-8 Due
y 8 Due
les 4-8 Due
y 8 Due
^Interim dates are negotiable and are established by the permit-Issuance authority

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   6          Submit list of monitoring equipment required     	
              by the POTW to implement the pretreatment   .  ''
              program and a description of municipal
              facilities to be constructed for monitoring
              or analysis of industrial wastes.

   7          Submit specific POTW effluent limitations        	
              for prohibited pollutants (as defined by 40
              CFR 403.5) contributed to the POTW by
              industrial users.

   8          Submit a request for pretreatment program        	
              approval (and removal credit approval, if
              desired) as required by 40 CFR 403.9.

     The terms and conditions of the POTW pretreatment program, when
approved, shall be enforceable automatically through the permittee's
NPDES permit.

Quarterly Reporting

     The permittee shall report to the permit-issuance authority on a
quarterly basis the status of work completed on the POTW pretreatment
program.  Reporting periods shall end  on the last day .of the months of
March, June, September and December.  The report shall be submitted to
the permit-issuance authority no later than the 28th day of the month
following each reporting period.

Removal Allowances

     Any application for authority to  revise categorical pretreatment
standards to reflect POTW removal of pollutants in  accordance with the
requirements of 40 CFR 403.7 must be submitted to the permit-issuance
authority at the time of application for POTW  pretreatment program
approval or at the time of permit expiration and reissuance thereafter.

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                            DOCUMENT C

          Explanation of Procedural/Funding Requirements
                  for State Pretreatment Programs


Procedures/Funding to Identify POTWs Which Will be Required to
Develop POTW Pretreatanent Programs

The State must have the ability to determine which of its municipal
permittees will be required to develop a POTW pretreatznent program.
As section 403.8(a) of the pretreatment regulation explains, POTWs
required to develop a program will include those POTWs with a
design flow over 5 mgd receiving from industrial users wastes
which:                                                      '

o  pass through the POTW untreated

o  interfere with the operation of the treatment works

o  are subject to pretreatsient standards developed under  the
  . authority of section 307(b) or  (c) of the CWA.

In determining-which POTWs are above 5 mgd, the State should look.
at average design flow.  In addition, if one permittee controls
several treatment works, the cumulative flow of the  treatment works
should be considered in calculating average design flow.  For
example,  one Regional Authority controlling 3  treatment works with
average design flows of 3, 2 and 2 mgd respectively  would -be
viewed, for  the purposes of the pretreatnent regulation,  as a
single operation with an average design flow greater than 5 mgd.

A recommended  first step in determining which  POTrfs  over  5 mgd
should be  required  to develop  a pretreatnent program would be  to
determine which  POTWs receive  wastes  from  one  or more industries
within the 21  industrial categories listed in  the  NRDC Consent
Decree  (for  reprinting  of  Consent  Decree  see The Environmental
Reporter-Cases.  8  ERC 2120).   EPA  anticipates  that categorical  pretreatment
stanaaras  under  section  307(b)  and (c) will  be developed  for  almost
all  industrial  subcategories within  the 21  industrial  categories
listed  in the  NRDC  Consent Decree.   A possible approach  to  detecting
these sources  would be  to  examine  industrial  inventories  such
as  the Dunn  and  Bradstreet Market Indicator and  the  Directory  of   .
Chemical  Producers,  puDiished  by  the  Stanford  Research  institute,
to  aetermine wnich  of. the  listed  sources  are within  the  State  and
.discharging  into  POTWs.

A  second  step  in identifying  POTrts required to develop  a  POTW
pretreatment program might be  to  look at  those POTWs which  are not
meeting  their permit conditions.   Such permittees  would  be  likely
candidates for a pretreatment  program aimed at controlling  pollutants
which interfere with the operation of the POTtf.

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    Section 403.8(a)  of the pretreatment regulations also gives  the
    State  authority to require the development of a pretreatment
    program by POTWs  with average design flows of 5 mgd or less.  It is
    recommended that the State require the development of a program
  " wherever the POTW receives industrial  wastes from sources  in one
    or more of the 21 industrial  categories listed in the NRDC Consent
    Decree, is not meeting its permit conditions or where municipal
    sludge is not meeting applicable requirements.  The State  is
    strongly urged to exercise its option to' extend the requirement  to
    develop pretreatment program as broadly as possible.  The  burden of
    proof  for demonstrating that a program is not needed should  rest on
    the POTW.  Where  there is some doubt that a certain POTW has
    industrial influent subject to pretreatanent requirements,  the POTW
    can be allowed to show that it need not develop a program.  In such
    cases, a clause can be inserted in the municipal permit along with
    the compliance schedule for the development of a pretreataent
    program.  This clause would state that if the industrial waste
    inventory required by the compliance schedule demonstrates that the
    POTW has no significant contribution of industrial wastes  which
    would  be subject to pretreatment requirements, the POTW would not
    be required to continue development of the program.

    In brief narrative form, the State should explain those procedures
    it has currently developed for identifying POTWs above and below 5
    mgd required to develop a pretreatment program.  The narrative
    should be accompanied by a statement of the resources currently
   • devoted to this undertaking.  If a program to identify appropriate
    POTWs is planned for the future, the State should indicate what
    approaches to identifying POTWS will be used and what criteria will
    be applied in identifying the pollutants and industries subject to
    pretreatment requirements.  The State should also describe briefly
    its planned procedures for providing technical  and legal assistance
    to POTWs where help is needed in developing a POTW pretreatment
    program.

£»  Procedures/Funding to Notify POTWs of Pretreatment Requirements

    The State should indicate those procedures it has developed to
    notify POTWs of  applicable pretrea"&nent requirements  as set forth
    in 40 CFR 403.8(2)(iii-).  This may consist of a mailing system  for
    distributing information  such as copies'of the  pretreatsnent regula-
    tion and any guidance on  developing a POTW pretrea-dnent program
    prepared by the  State or  EPA.  Any such distribution  system should
  .  be coordinated with similar  information networks  employed by  State"
    personnel in charge of £PA construction grants.

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3.  Procedures/Funding to Incorporate Pretreatment Requirements in Municipal
    Permits

    Where States currently have the authority to revoke and reissue or
    modify municipal permits to incorporate an approved pretreatoent
    program or a compliance schedule for developing such a program,
    (see Attorney General's Pretreatment statement section 2) they will be required
    to exercise this authority.  Otherwise, a State must include a
    modification clause in appropriate POTV permits which calls for the
    incorporation of pretreatment requirements at a Tatar date.  The
    State should indicate to EPA the priorities it will use for incorporat-
    ing pretreatment requirements into POTV permits and an estimate
    of the additional resources, if any, which will be required to
    carry out this task.  For example, the State should indicate to the
    best of its ability:

    o  the number'of municipal permits which will incorporate pretreatment
       requirements at the same time as they are revoked and reissued
       or modified for the purpose of meeting the provisions of 301 (i)
       or 301 (h) of the Clean Water Act;

    o "the number of expiring municipal permits not receiving 301(i) or
       301 (h) modifications which wi-.Tl incorporate pretreatment conditions
       upon reissuance

    o  the number of municipal permits to  be revoked  and reissued  or
       modified  to include an approved pretreatoent  program or a
       compliance schedule  for developing  such  a program

    Procedures/Funding to Hake Determinations on Requests for POTV
    Pretreatment  Program Approval  and  Removal Allowances

    The  State  must  have  the procedures and funding to receive and  make
    determinations  on  requests for POTV pretreatment  program and
    removal  allowance  approval.   In  general  this  responsibility will
    require  that  the  State  have  procedures and  funding to:

    o   comply  with  the public notice provisions of section  4Q3.11(b)(l)
        of  the  regulation which requires  the State  to:

        1.  mail  notices  of the request for approval  to adjoining
           States whose  waters may be  affected;

        2.  mail  notices  of the  request to  appropriate area-wide  planning
           •agencies (Section  208 of the  CWA)  and other persons  or organiza-
           tions  with an interest in the  request for program approval  or
           removal  allowance;

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       3.   publish a notice of the request in the largest daily newspapers
           of the municipality in which the POTW requesting program
           or removal allowance approval  is located.  These notices
           shall indicate that a comment  period will be provided for
           interested parties to express  their views on the request for
           program approval or removal allowance.

    o  Provide a public hearing if requested by any affected of interested
       party as provided for in section 403.1Kb)(2).  Notice of such a
       hearing will be published in the same newspapers where the
       original notice of request for program or removal credit approval
       appeared.

    o  Make a final determination on the  request if EPA has not objected
       in writing to the approval of the  request during the comment ,
       period*.  In making the final determination, the State should
       take into consideration views expressed by interested parties
       during the comment period and hearing, if held.

    o  Issue a public notice of the final determination on the request.
       This notice shall be sent to all persons who submitted comments
       and/or-participated in the public  hearing.  In addition, the
       notice will be published in the same newspapers as the original
       notice of request for approval was" published.

    The State shoul d-indicate to EPA by October 10, its current ability
    to carry out these responsibilities,  focusing primarily on staffing
    and funding avail ability.  This assessment should be based on  an
    estimate of the number of POTrts which will be scheduled to receive
    POTW pretreatment program and removal allowance approval during the
    remainder of the State's" budget year.  The State should then
    indicate the projected resource levels for POTW pretreatroent
    program and removal allowance approval in each of the budget years
    19.79-1983 based on the estimated number of POTVs requesting, program             I
    and removal allowance approval during each of these years.  Finally,            '
    the State should explain how it can  insure, to the best of its                 !
    ability, that the funding required to carry out this activity  will
    be available each year.

5.  Procedures/Fund": nc for Identifying and Noti tying Industrial
    Users Suoject to P re treatment Reoin rements

    The prstreatment regulations provide  that where a POTW is  not
    required to develop a POTW  pretreatment  program, the State will
    assume responsibility for identifying industrial users of  the  POTw
    which mignt be subject to ore-treatment  stsr.dsrds.  Tue Seals may

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   devise  its own methods  for  obtaining this  information, including
   requiring -the POTW to  identify  the  industrial users  in question.
   Reference to the Dunn  and Bradstreet and Directory of Chemical
   Producers listings,  as  mentioned  earlier,  may provide a convenient
   first step.  In many cases  this Information may  already have been
   provided by the POTW through  part 4 of  the municipal permit applica-
   tion form.  Through  whatever  means  it chooses, the State  should
   .insure  that all industrial  users  which  fall within one or more of
   the 21  industrial categories  listed in  the KRDC  Consent Decree are
   identified.  In addition, the State should identify  as subject to
   pretreatment standards all  industrial users which contribute
   pollutants which interfere  with the operation of the treatment
   works or pass through  the POTW  untreated.


   Once  the app'ropriate industrial users  have been  identified, the
   State must ensure  that they are notified of  all  applicable existing
   pretreatment standards and  of applicable pretreataient  standards
   which might be  forthcoming.  Acceptable procedures would  include
   a  mailing  list  for  industrial users or  an arrangement  with the POTW
   requiring  it to provide the requisite  notice.

   The  State  should  indicate  by October  10, whether it  has  presently
   in operation effective procedures for  identifying  and  notifying
   industrial  users currently  or potentially subject  to pretreatment
   standards.   If  such procedures are not currently on  line, if
   for  example,  information supplied by  part 4  of  the municipal
  . application 'form  is not sufficiently  detailed  to -provide  the
   required information,  the  State should indicate  how  it plans  to
   develop the  ability to identify and notify appropriate industrial
   users.   The  description of  these  procedures  should be  accompanied
    by an assessment  of resources needed  to implement them,  the  current
    availability  of resources  to meet this need  and  plans  for obtaining
   additional  resources if required.

6.  Procedures/Funding  for Identifying the Character and Volume  of
    Pollutants Contributed by  Industrial  Users to  POTWs

    Section 403.10{f)(2)(i) of the pretreatment regulation provides
    that where a POTW is not required to  develop a POTW pretreatment
    program, the State will be required to carry out those procedures
    which would otherwise  have been  the responsiblity of the POTW.  One
    of these responsiblities is  the  identification of the character
    and volume of pollutants, being contributed to the POTW by sources
    subject to pretreatment requirements (see 403.8(f)(2)(ii)).
    Industrial users subject to  pretreatment  requirements include those
    which  are subject to pretreatment  standards promulgated  under
    section 307(b) and  (c) and/or, contribute pollutants which interfere
    with the operation  of  the  POTW or  which pass through the POiW
    untreated.  This responsibility  is complicated by the fact that

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analytical and monitoring  techniques  are not yet available to
provide a quantitative  analysis of  the presence of many of the
pollutants in question.   In  recognition of  this problem, EPA
recommends that States  follow  the procedures outlined below in
developing their  inventory of  industrial waste contribution.

o  The first step  in  the  waste inventory should be a qualitative
   analysis of pollutants  being contributed by all industrial
   sources within  the system.  The  individual industrial users
   should be asked to provide  information on the type and approximate
   quantity of pollutants  discharged  by the facility.  This information
   should be derived  entirely  from  knowledge of the facility's
   process and.should not require any sampling at the source.

o  Second, the State  should  review  this qualitative information on
   the pollutants  being discharged  into the system and remove from
   further consideration  those pollutants which are not within the
   129 pollutants  to  be regulated with national pretreawient
   standards and/or which are  known not to  interfere with the operation
   of the POTW or pass through the  POTV untreated.

o  Third, the State (or POTW if the State so directs) will then
   sample the  influent to the  POTW  to determine which of the
   pollutants remaining after  step  two appear in significant
   concentrations in  the  influent  to  the POT*'.  In carrying out
   this sampling,  the State  should  use those sampling and analytical
   techniques set forth in 40  CFR  part.136. If a pollutant
 •  appears at  such a  low concentration that it is .highly unlikely
   that it would  have an  adverse  effect on  the operation of the
   POTW,  pass  through untreated,  or if the  pollutant  does not
   appear at all  in the influent  to the POTW, it should be excluded
   from further consideration.

o  Fourth, the analysis in preceeding steps has resulted in a list
   of those pollutants contributed to the  system which may affect
   the operation  of the POTW or pass  through the POTV untreated.
   The next step  is to determine  which industrial users have such
   pollutants  in  their effluent.

o  Fifth, those  industrial users  identified in  step  four will be'
   required to  do sampling and analysis to  quantify  the amounts  of
   those  pollutants being discharged  oy tnat source  into  the POTW.
   If necessary,  the  Stats may then impose  upon  that industrial
   user an effluent limitation which  will  ensure  that such  pollutants
   are discharged at levels which will not  interfere  witn  the
   operation  of  the treatment works or pass through  in  unacceptable
   amounts.

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o  Finally, as Federal pretreatment standards for industrial
   subcategories are promulgated, the State will require that
   industrial users belonging to those subcategories sample
   and analyze their effluent to quantify the amount of pollutants
   regulated by the standard being discharged by that industrial
   user.

The above procedures can be characterized as a 2-part program.
Initially, prior to the development of sampling and analytical
techniques for many of the complex pollutants regulated within the
21 industrial categories (and approximately 400 industrial subcate-
gories) set forth in the NRDC Consent Decree, the State will focus
on identifying and quantifying only those pollutants which interfere
with the operation of the treatment worts.  Then, as Federal
pretreatment standards for the 129 pollutants in the 21 industrial
categories energe, along with recommended sampling and analytical
techniques for such pollutants, the State will be required 'to
elicit specific quantitative information on the character and
volume of pollutants discharged by indstrial users regulated by
Federal standards.

POTWs which are required to develop a POTW pretreatment program  are
responsible for carrying out the industrial waste inventory in lieu
of the State (see 403.8(f)(ii) and step 2 of the municipal pretreat-
ment compliance schedule).  The State should recommend that this
2-step program be used by such POTWs.

The State  should indicate to EPA by October 10  its current  ability
to carry out the industrial waste characterization program  described
above.  Particular  attention should be paid to  the availability  of
resources  to implement trris survey, the technical ability of  the
State  to sample influent to POTWs as  required by step  3 above,  and
the State's  technical ability  to develop effluent limitations  for
industrial users where necessary to control'the  introduction  of
pollutants which interfere with'the operation of the  POTW.  The
State  should discuss  those resources  and technical abilities  which
it will need to acquire to fully implement  the  components of  the
industrial waste  inventory described  above.

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                                   8

>.  Procedures/Funding to Make Determinations on Requests for Fundamentally
    Different Factor Variances

    Section 403.13 of the pretreatment regulation provides that States
    will.be responsible for considering requests for fundamentally
    different factors variances.  Any interested person believing that
    factors relating to an industrial user are fundamentally different
    from the factors considered during the development of a categorial
    pretreatoent standard applicable to that user may apply for a
    fundamentally different factors variance allowing a modification of
    the discharge limit specified in that standard.

    The State must have procedures to review such requests, and make a
    determination to deny the request or recommend to EPA that'the
    request be approved.  In making this determination, the State must
    consider the factors outlined in 403.13(c) and (d).  The State
    should submit to EPA by October 10, 1978, a discussion of its current
    ability to consider requests for fundamentally different factor
    variances.  Emphasis should be placed on current funding avail ability
    and projected funding needs.  In addition, the State should
    identify the existing or required technical expertise it will need
    to evaluate the various factors listed in 403.13(c) and (d).

8.  Procedures/Funding to Ensure Compliance with Pretreatment Standards
    and Permit Conditions
         i a POTW  is  not  required  to  develop  a  POTW  pretreatment program,
         State will be  required  to ensure  that  industrial  users of that
Where
the S-   _       _ _   _n_ .     ..   ______    		   _____
POT* subject to  pretreatment standards comply with those standards.
In order to do so, the State must develop procedures which include
the following:
    o Where  State  law  provides  adequate  authority,  the  State  should
      have the  technical  ability  to  review the  technology which  the
      industry  proposes  to  install  in  order to  meet State or  Federally
      imposed pretreatment  standards.

    o Once the  compliance date  for  a pretreatment standard  has passed,
      the State must have procedures to  receive and analyze the  report
      submitted by the industry,  in  compliance  with the requirements
      of  4Q3.12U), indicating  whether or not the industry  has complied
      with applicable  effluent  limitations.

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o The State must develop the administrative and technical ability
  to receive and analyze the periodic reports submitted by industrial
  users indicating continued compliance with pretreatzient standards
  {see 4Q3.12(e)).

o The Stats must ensure that it has adequate resources and technical
  expertise to determine, independent of reports submitted by
  the industrial user, that the user is in compliance with.applicable
  pretreatment standards.  For example,  the State should have
  procedures for scheduling periodic checks on industrial users
  to spot-check compliance, sampling the effluent at the industrial
  sources and analyzing this effluent to ensure compliance. with
  applicable limitations.

Where"a POTW pretreatment program  has been developed and the POTW
has been granted a removal allowance for certain pollutants, the
State must have procedures.to:

o receive and analyze  periodic  reports  from the POTW indicating
•  continued  removal  at the rate  allowed by the POTW's permit and
  continued  compliance with  sludge requirements;

o sample and analyze the  influent  to  and  effluent  from  the  POTW  to
  determine, independent  of  reports submitted  by the POTW,  that  the
  POTW  is maintaining  the  approved level  of  removal  and is  in
  compliance with  all  applicable sludge requirements.

It  is  recognized  that the  sampling and  analytical  requirements
explained  in this  section may  impose  a  substantial  resource burden
on  the  State.   While it is  preferred  that the  State  develop its  own
technical  expertise, an acceptable alternative would be for the
State  to contract with private consultants,  universities or other
groups  with  sufficient technical  expertise to  carry  out the sampling
and analytical  requirements  described in this  section.

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                 PRETREATMENT COMPLIANCE STRATEGY






Note;  This policy contains the "Short Term Pretreatment Compliance



Strategy."  The long term policy is under development and will be



subsequently added to the Compendium.

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             UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                         WASHINGTON, D.C. 20460



                            OCT 2 8  1983
                                                         OFFICE OF
                                                          WATER
MEMORANDUM .

SUBJECT:'  Pretreatment Compliance Strategy

FROM:     Bruce R. Barrett, Director
                                     _
          Office of Water Enf orcement~and Permits  (EN-335)
TO.:       Water Management Division Directors
          Regions I-X


     .Attached is the Pretreatment Compliance Strategy  developed  by
the Pretreatment Compliance Strategy Task Force which  I  established
in May, 1983.  The task force  is comprised of  representatives  from
all ten Regions, OWPO, OWRS and the States of  North  Carolina  and
Illinois.  The Office of Enforcement and Compliance  Monitoring has
also provided comments throughout the development of the strategy.

    The strategy, as attached, includes both a short term ( FY 1984-
1985) and a proposed long term ( FY- 1985 and beyond)  phase.  The
short term strategy, being final, should be implemented  as  soon  as
possible.  The short term strategy describes EPA' s compliance
response to those POTWs which  did not complete approvable pretreat-
ment program development by September 30, 1983 and those industries
which viol-ate schedules or effluent limits associated  with  specific
categorical standards.  Of specific concern will be  those categorical
standards, electroplating and  metal finishing, which have compliance
deadlines in FY 84.  Regions should be prepared to address  any
compliance problems associated with these industries in  FY  84.  An
estimated 720 POTWs located in non-approved States are in non-
compliance with the pretreatment program development requirements
as of October 1, 1983.

     The long term strategy describes the pretreatment compliance
goals for FY 1985 and beyond.  This is the implementation phase  of
the pretreatment compliance program.  This phase deals w'ith compliance
monitoring of POTWs and categorical industries, response to non-
compliance by these entities and EPA'-s overview of States that are
approval authorities.

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                PRETREATMENT COMPLIANCE STRATEGY








I.  INTRODUCTION



    The U.S. Environmental Protection Agency's (EPA) pretreatment



program, established pursuant to Clean Water Act sections 307, 308,



and 402 as implemented by regulations set forth at 40 C.F.R. §403,



is designed to protect receiving waters and Publicly Owned Treatment



Works (POTWs) from industrial pollutants discharged into POTW



collection systems.  These pollutants may interfere with treatment



processes, contaminate sludges so as to inhibit effective sludge



management, or pass through treatment processes and pollute



receiving waters.



     EPA's pretreatment regulations establish three major elements



of the pretreatment program:



     0 General discharge prohibitions that apply to all contributing



       industries;



    .° Administrative mechanisms to ensure that general discharge



   ;-   --prohibitions, categorical standards, and local limitations



       are applied and enforced; and



    .° Reporting requirements for contributing industries and



       POTWs.



     POTWs that receive substantial quantities of industrial waste



flows are required by the regulation to develop pretreatment programs



to ensure that their contributing industries comply with general



prohibitions, categorical standards, and other requirements.



These POTW pretreatment programs will control the introduction




of industrial pollutants through the establishment of limitations




on industrial facilities contributing pollutants to POTWs.  EPA



envisions that POTWs will act as the primary controlling authority

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                               -2-






over industrial dischargers to POTW collection systems.  However,



EPA and many States have concurrent authority to enforce pretreat-



ment requirements and will do so, if necessary.



     The pretreatment program uses the terms "control authority"



and "approval authority".  "Control authority" is that entity



(POTW, State or EPA) responsible for achieving and maintaining



compliance with the pretreatment program requirements.  If a



POTW has an approved pretreatment program, it is the "control




authority"; if not, either the State or EPA is the control authority



depending on whether EPA has approved State administration of



the pretreatment program.



     The "approval authority" is that entity (State or EPA) respon-



sible for overviewing the control authority's implementation of



an approved pretreatment program.






II.  SHORT TERM STRATEGY - FY 84 and 85






     A.  Objective



     The objective of the short term strategy is to see that



all POTWs required to develop and implement pretreatment programs



do so in the shortest possible time.  This is necessary to (1)



ensure that POTWs have maximum control over, and responsibility



for the integrity of their treatment systems and (2) facilitate



compliance with categorical standards by indirect dischargers.



     B.  Compliance Follow-Up



     Pretreatment regulations (40 C.F.R. §403.8(b)), established



July 1, 1983, as the deadline for approval of POTW pretreatment



programs.  Adequate notice and time for development of pretreatment



programs has been provided for POTWs which are required, by their



permits, to develop pretreatment programs.

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                               -3-


     A substantial number of POTW pretreatment programs, as of

July 1, 1983, were not approved and, therefore, the POTWs are

in violation of their NPDES permits.  EPA intends to address

these violations in the following manner:

     1.  For POTWs who were unable or unwilling to submit

         an approvable program,1 on or before September 30,

         1983, compliance schedules will be established through

         administrative orders, judicial orders or other appropriate

         mechanisms for establishing enforceable schedules.

     2.  Compliance schedules in enforcement actions will require

         that all submissions of prepared POTW pretreatment

         programs be received as soon as possible, but no later

         than September 30, 1984.2  It is expected that approval

        .of all required POTW programs will be completed no

         later than March 31, 1985.
    approvable POTW pretreatment program contains:  legal authority
 to apply and to enforce the requirements of Sections 307(b) and
 (c), and 402(b)(8) of the CWA and any regulations implementing
 those sections (403(f )(!)); procedures to ensure compliance with
 the requirements of the POTW pretreatment program (403(f)(2));
 and sufficient funding and qualified personnel to carry out the
 program authorities and procedures (403(f)(3)).
    is anticipated that, most compliance schedules will require the
 POTW to submit a pretreatment program prior to September 30, 1984
 and in only rare instances will this deadline be extended.

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     Judicial enforcement should be initiated in appropriate cases

against POTWs that violate pretreatment administrative orders,

exhibit continued recalcitrance, or substantially violate other

pretreatment requirements.

     EPA will also enforce categorical standards.  In non-approved

cities in non-approved States, EPA will enforce standards directly

against indirect dischargers.  This may include conducting compliance

inspections at indirect dischargers when needed.  In approved

cities that are not enforcing categorical standards, EPA will

use appropriate enforcement mechanisms against both the POTW and

the indirect dischargers.  EPA's enforcement response in these

situations wi«ll be consistent with the enforcement responses set

forth in the policies governing the enforcement of the NPDES

program.

         [The following long term strategy is still in the
          developmental stage and is being circulated for
          review and comment.  When finalized, the long term
          strategy will be the second phase of the Pretreatment
          Compliance Strategy.]


III. LONG TERM PROGRAM STRATEGY  (DRAFT)

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3832
Federal Register / Vol. 49. No. 20 / Monday. January 30, 1984 / Notices
 ENVIRONMENTAL PROTECTION
 AGENCY

lwH-FRL2515-€]

 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
  rastewater 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 16,1983.
 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. Zeller, Ph. D., U.S.
 Environmental Protection Agency, EN-
 338, 401 M Street. SW., Washington,
 D.C., 20460 (202) 475-8304.
  Dated: January 23.1984.
 William D. RuckeUhaus.
 Administrator.
 Statement of Policy
  'When the Clean Water Act (CWA)
 was passed in 1972, Congress gave
 municipalities until J977 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 a 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.
 1988 compliance date, the permitting
 authority will work with the affected
 municipality to establish a  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, 1904 / 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 Doc. 84-2433 Filed 1-27-84:8:45 am|
BILJJNG CODE 6S6O-50-M

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                   MUNICIPAL MANAGEMENT SYSTEM






Note;   The Municipal Management System was based on the National



Municipal Policy of October, 1979, which was superseded by the new



National Municipal Policy of January 30, 1984.  Appendix E of the



Municipal Management System remains the only effective section of



the document.

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EPA
             United Slates
             Environmental Protection
             Agency
                Office of
                Water Program Operations
                Washington DC 20460
                                Office of Water Enforcement •'
             Water
Municipal
Management
System

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                             Appendix E

                    NONCOMPLIANCE RESPONSE GUIDE


     .This  is  a  guide  for Construction Grant and Enforcement offi-
cials  in the  exercise of their enforcement discretion.  It serves
three  main purposes.   First,' it establishes enforcement responses
that are appropriate, both in terms of their severity and the
availability  of Agency resources for different types of permit or
grant  violations.   Secondly, given the resource constraints in the
various Grants  and  Enforcement units, it assures a relatively
uniform application of enforcement responses to comparable levels
and  types  of  violations around the country.  Finally, it acts as a
standard against which any MMS program can be evaluated.

     It should  be emphasized that this guide is to be used when
considering the most  appropriate response to a permit or grant
violation.   Thus,  the suggested responses or alternatives may not
be  the only ones appropriate in achieving compliance.  The guide
should not be woodenly applied in any particular case.  Each
violation  of  an NPDES permit or grant schedule is a violation of
"the  Federal Water Pollution Control Act for which the full array
of  enforcement  responses provided in the Act is available.
Determining the most  appropriate response (or set of responses)
requires consideration of 1) the severity of violation in terms of
the  degree of variance from the permit/grant condition, 2) . the
impact on  the environment and the integrity of the NPDES program,
3)  the enforcement  history of the permittee in terms of past
violations and  good faith, 4) the impact on. other dischargers, 5)
the  availability of enforcement resources within the enforcement
unit,  the  prosecutorial branch of government, and the judiciary,
6)  the importance of  the violation in comparison with other
violations that must  be dealt with by limited resources, and 7)
considerations  of fairness and equity.

     In any particular case these factors may lead to an enforcement
response different  from that suggested in the guide.  In most cases,
it  is  anticipated that responses to violations will be made within
i the  framework of responses outlined in the guide.

     The following  table displays most of the standard responses
which  may  be  made to noncompliance with construction grant and/or
NPDES  permit  requirements.  Some of the responses have very broad
applications.  The  table gives users an idea of the scope or range
of  options which may  be considered when responding to permit or
grant  violations.  Since there is to be no unilateral response  (on
the  part of only one  program) to a grant-related permit violation,
the  following examples serve to indicate the flexibility that may

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                                 E2

be desirable,  in bringing a permittee  back  into  compliance.  Any
sequence of grant  responses  or  enforcement actions  should  not  de-
viate from the  levels outlined  in Table  2  such  that  the  response
is not appropriate  to the  severity  of the  violation.   For  example,
"documented phone  calls" or  "letters"  (Bl, 2) may be  used  to
gather information .or to alert  a permittee in the early  stages of
almost any type of  violation or apparent violation.   Other
responses have  a much more limited  application.  For  example,  to
"withhold up  to 10% of grant payment"  (A4) would be  effective  only
near the completion of a grant  project in  Step  1, 2,  or  3,  and
would be most effective at the  tine of close-out of  a Step  3
grant.  Similarly,  "sewer  bans/restrictions"  (B5(b),  CIO) would be
most effective where a community is undergoing  significant  growth
and where the violation is so clear and  serious as  to offset  the
political outcry certain to  be  triggered by imposition of a ban or
restriction.

     In general, the responses  escalate  in impact as  one moves
down the list within each  category, i.e. A7 ("stop  payment")  is
much more serious  a grant  management  action than A2  ("impose
grant conditions").  Likewise,  B4  ("Show Cause  hearing") is much
more serious  an enforcement  action  than  Bl ("documented  phone
call").

     However, responses ranked  close  to  one another  within  a  given
category may  in some cases differ more with respect  to the  circum-
stances in which they are  usable than with respect  to the  overall
impact.  For  example, A3 ("withdraw authorization to  advertise for
bids" ) would  be effective  where a grantee  was delaying initiation
of facility construction to  press ahead  with  sewer  construction to
accommodate new development, while  A4  ("withhold up  to 10%) would
be most effective  near closeout of  a  Step  3 grant.   Neither is
more serious  than  the other  in  terms  of  impact.

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                                E3

           SAMPLE RESPONSES TO MUNICIPAL NONCOMPLIANCE


A.  Grant Management Actions (EPA/State)

    1.  Deny/defer award
    2.  Improve grant conditions  (to assure "catch-up")
    3.  Withdraw authority to advertise for bids
    •4.  Withhold up to 10% of grant payment
    5.  Disallow costs related to noncompliance
    6.  Suspend work (conditional, unconditional)
    7.  Stop payment
    8.  Terminate grant
    9.  Recover funds
   10.  Annul grant (partial, total)
   11.  Suspend grant eligibility

B.  Enforcement Actions (EPA/State)

    1.  Make documented phone call
    2.  Send letter:
        a.  informal inquiry
        b.  instructional
        c.  Section 308
        d.  warning, "no action"
        e.  warning, time-controlled
        'f.  "Show Cause"
    3.  Issue NOV to State or 309 Administrative Order
    4.  Hold "Show Cause" hearing
    5.  Refer to Justice, possibly-request:
        a.  court-appointed master
        b.  402(h) connection ban/restriction
        c.  adjustment of grantee on project priority list

C.  State Actions

    1.  Decertify plant operator  (temporarily/permanently)
    2.  File a complaint vs. engineer's license
    3.  Establish prequalification procedures  for consulting
          engineers
    4.  Publish list of "eligible" consulting  engineers,
          contractors
    5.  Publish list of plants with design problems and  the
          responsible consulting  engineers
    6.  Withhold 'approval of trust report  required for  funding of
          local share
    7.  Hold "Show Cause" hearings
    8.  Impose administrative fines
    9.  Take over operation of plant and bill  the community
   10.  Sewer bans/restrictions
   11.  Issue State order
   12.  Refer to State Attorney General

D.  General' Sanctions (EPA)

    1.  Withhold approval of Corps of  Engineers Section  404
          (dredging) permits
    2.  Deny certificate of adequacy for actions by other  Federal
          agencies

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               NATIONAL ENFORCEMENT RESPONSE GUIDANCE - ALL  WiJOR  PERMITTEES

                                  HEPORTING VIOLATIONS
    TYPE VIOLATION
1.  Failure to report.
2.  Failure to report.
2.  Failure to report.
4.  Failure to report.
5.  Failure to report.
6.  Failure to report.
7.  Failure to report.
                                 CIRCUMSTANCES

                          Routine permit requirement.
                          Isolated instance.  Also,  any
                          special, one-time report.
                          Failure to respond to initial
                          call by submitting report or
                          refusing to acknowledge re-
                          quirement.
                          Failure to respond to NNC or
                          repeated attempts to contact
                          by phone.  Documented lack of
                          cooperation.
                          Long-tern disregard of re-
                          quirements,  violation of AO,
                          documented lack of cooperation,
                          and coincident effluent or
                          schedule violations.
                          Failed to report effluent
                          violation(s)  within 5 days
                          of occurence.  Not fully
                          aware of problems.
                          Knowingly failed to submit
                          report within 5 days of
                          effluent violation (s) .
8.
    Reporting False
      information.
9.
Reporting false
  information.
                          Failure to report effluent
                          violation(s) within 5 days
                          of occurence and serious
                          environmental damage takes
                          place or public health
                          endangered.
                         Permittee satisfactorily
                           explains how error made.
Permittee's culpability
unmistakable. 'Intent1
can be established.
       BASIC APPROACH

Industrial: Phone call follow-
  up. Request immediate sub-
  mittal by specified date.
Municipal: Contact Grants.
  Initiate phone follow-up.

Industrial: Issue notice
  (letter) of noncompliance
  (NNC)-1
Municipal: Contact Grants.
  If no legitimate delays,
  issue NNC. Otherwise, set
  new deadline.

Industrial: Proceed with AO.
  Continue to document case.
Municipal: Contact Grants.
  Take Grant Management actions
  as appropriate. Document case.

Industrial: Proceed with re-
  ferral. Continue to contact
  and document case.
Municipal: Coordinate with
  Grants. Take Grant Management
  actions. If ineffective,
  escalate and/or initiate
  referral.

Industrial: Phone follow-up
  to request immediate sub-
  mi ttal.  Issue NNC.
Municipal: Contact Grants.
  Initiate phone follow-up.
  Issue NNC.

Industrial: Issue NNC. Cite
  legal liability for con-
  tinued reporting violations.
  If violation continues, pro-
  ceed as in 3 above.
Municipal: Contact Grants.
  Same as industrial.

Industrial: Proceed with AO
  or referral depending on
  impact of violation and
  'intent' to avoid responsi-
  bility.
Municipal: Contact Grants.
  Take Grant Management actions.
  If ineffective, escalate as
  in industrial.

Industrial: Issue NNC. Cite •
  severe  legal  liability  for
  false reporting.
Municipal: Contact Grants.
  Issue NNC citing  severity
  of violation.

Industrial: Proceed with
  criminal referral.
Municipal: Proceed  with
  criminal referral.
1  A NMC  should  cite the facts about the violation (including dates), identify the permit
   requirement(s)  violated,  refer to the legal liability which may be incurred, and require
   an  explanation  (by date  certain), not only of the incident, but also of the steps taken
   to  return  to  compliance.

2  This guidance does not attempt to draw the line between 'minor' or 'insignificant'
   unreportod data and that information which is critical in making a compliance determination
   «-  <>«?».•.•»;*.:.»*•  .*<»,-•; c;~n  ill -roe:-.^r,o«.e cVinnlA en(~<->iiraoo n rhanoe in  rcoortind  behavior.

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        VIOLATION

1.  Failure to meet  interim
      requirement.
                         GRANT/COMPLIANCE SCHEDULE EVENTS

                                  CIRCUMSTANCES

                             Will not result in violation
                             of final requirement or other
                             interim dates.
2.
Failure to meet interim
  requirement.
3.
4.
5.
6.
    Failure to meet interim
      requirement.
Failure to meet final
  requirement.
Failure to meet final
  requirement.
Failure to meet final
  requirement.
7.
Failure to meet final
  requirement.
8.
Failure to install
  aor.itoring equipment.
                                 Will result  in violation of
                                 other interim or final dates.
                                 Legitimate delays. Acting in
                                 good faith.
Will result in violation of
other interim or final dates.
No legitimate delays. Not
acknowledging permit respon-
sibilities.

Compliance likely within 90
days. Demonstrated commit-
ment to permit responsibili-
ties.

Delay for legitimate reason:
strike, act of God, economy.
90 days or more overdue. No
legitimate delays. Not ac-
knowledging permit retsponsi-
bilities. Failure to respond
to Agency communications.
Same as above and failure to
respond to NNC or violation
of AO.  Requirement is a
major step, resulting in a
serious environmental or
public health situation.
No legitimate delays.
     BASIC APPROACH

Industrial: Phone follow-up.
  Secure date by which event
  should occur. If appropriate,
  issue NNC.
Municipal: Same as above.
  Identify Grant management
  actions which may be taken.

Industrial: Issue NNC. Follow-
  up to secure commitment to
  compliance. Set new dead-
  lines. Track closely.
Municipal: Same as industrial;
  identify Grant management
  actions which may be taken.

Industrial: Proceed with AO.
  Issue NNC. Document case.
Municipal: Issue NNC.  Dis-
  allow costs associated
  with noncompliance.

Industrial: Issue NNC.
  Monitor closely to verify
  status.
Municipal: Sane as industrial.

Industrial: Issue NNC. Secure
  commitment to complete
  requirement.
Municipal: Same as industrial.

Industrial: Issue NNC. Proceed
'  with AO. Document case-
Municipal: Issue -NNC. Withhold
  up to 10% of grant; recover
  funds; suspend eligibility
  for other projects; terminate
  or annul grant.

Industrial: Proceed with
  referral. Document case.
Municipal: Proceed with AO
  or take Grants Management
  actions as in 6 above. If
  actions ineffective,
  proceed with referral.

Industrial: If NNC ineffective,
  proceed with AO to begin
  monitoring  (with contractor
  support if neeessarv)
  .immediately. Set new dead-
  line.
Municipal: Issue NNC. Take
  grant Management actions.
  If ineffective,  proceed
  with AO.

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           VIOLATION
 1.  Exceeding interim limits
 2.  Exceeding interim limits
 3.  Exceeding interim limits
 4.  Exceeding interim limits
 5.  Exceeding interim limits
 6.  Exceeding interim limits
 7.  Exceeding final limits
 8.  Exceeding interim or
       final limits.
EFFLUENT VIOLATIONS

     CIRCUMSTANCES

Isolated discharge under
permittee's control. No
harmful effects.
Isolated discharge under
permittee's control.
Jeopardizes water quality.
Isolated discharge under
permittee's control.
Results in serious environ-
mental damage or public
health concerns.
Isolated discharge under
permittee's control.
Relatively minor infraction
occurring routinely  (more
than once in four quarters).

Isolated discharge not
under permittee control.
No harmful effects.

Isolated discharge not
under permittee control.
Serious environmental
damage or public health
concerns.

Isolated instance. Com-
pliance record generally
good. No harmful effects.
Notification to Agency not
made within five days as
required by permit.
      BASIC APPROACH

Industrial: Telephone follow-
  up. If response unsatis-
  factory, issue NNC.
Municipal: Same as Industrial.

Industrial: Issue NMC. If
  response inadequate, proceed
  with AO.
Municipal: Contact Grants. •
  Proceed as with Industrial.

Industrial: Issue KMC.  If
  immediate steps not taken,
  proceed with AO or referral.
Municipal: Contact Grants.
  Consider Grant Management
  actions and proceed as with
  Industrial.

Industrial: If second KKC in-
  effective, proceed with AO.
Municipal: Contact Grants.
  Proceed as with Industrial.
Industrial: Issue NNC.
Municipal: Same as Industrial.


Industrial: Same as 3 above.
Municipal: Same as .Industrial.
Industrial: Telephone follow-
  up. If corrective steps
  taken, monitor closely. If
  not, issue NNC.  Document
  instance.
Municipal: Same as Industrial.

Industrial: Issue NKC. If re-
  peated proceed with AO.
Municipal: Contact Grants. Pro-
  ceed as with Industrial.
 9.  Exceeding interim or
       final limits
10.  Exceeding final limits
Excursion within Technical
Review Criteria but consti-
tutes routine violation.
Violation continues after
issuance of NNC. Demonstra-
ted lack of commitment to
permit responsibilities.
Industrial: Telephone follow-up.
  If response unsatisfactory,
  issue NNC.
Municipal: Same as industrial.

Industrial: Proceed with AO.
  If AO violated, initiate
  referral,
Municipal: Contact Grants, Con-
  sider Grant Management actions
  and proceed with AO or
  referral.

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            UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

                        WASHINGTON. D C.  20460
                            APR 13 1984
                                                          OF FICE OF

                                                       THE ADM IN 1ST W A TO H
MEMORANDUM
• . .— ii •• .....            t
                   J               " '          "

SUBJECT:  FY 1984 P'retreatment Enforcement Activities
FROM:     Alvin L. Aim
          Deputy Administrator

TO:       Regional Administrators


     As stated in the Operating Year Guidance for FY  1985-86,
EPA's principal emphasis will be to deal effectively  with
control of toxic and hazardous substances.  One of. the  important
programs necessary for accomplishing this objective is  the
pretreatment program.  I' think the approval of State  and 'local
pretreatment programs and ensuring compliance with categorical
standards are critical to the success of controls on  discharges
containing toxic pollutants.

     The Operating Year Guidance discusses a strategy for
implementing the pretreatment program during FY 1985-86, but
I believe we cannot wait until then to initiate a strong
enforcement effort in this area.  To date, compliance by POTWs
with pretreatment requirements has lagged and we anticipate
widespread noncompliance by the electroplaters with the upcoming
April and June 1984 deadlines for compliance with categorical
standards.  Therefore, we must start immediately to improve on
POTW program approval rates and begin to ensure compliance with
the categorical standards.
                                                   *
     The short-term Pretreatment. Compliance Strategy, issued on
October 28, 1983, by the Office of Water Enforcement  and Permits
provides that:

     1.  Administrative orders, judicial orders or other
         appropriate mechanisms be used for establishing
         enforceable schedules requiring submittal of all
         POTW pretreatment programs by no later than'  the end
         of FY 1984; and

     2.  EPA will enforce categorical standards in both non-
         approved cities in non-approved States and in  approved
         cities that are not enforcing categorical standards.

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                              -2-
Action Required

     It is absolutely  essential that  the Regions  exert  every
effort to get approvable  local POTW pretreatment  programs, and
implement the short-term  strategy cited above.  In  the  Strategic
Planning and Management System, you have committed  to a target
of 114 Administrative  Orders for this purpose.  I expect all
Regions to comply with the  strategy by issuing  as many  orders
as necessary to POTWs  which have failed to submit approvable
pretreatment progra'ms, to achieve the September 30  goal, and to
do this as quickly as  possible.

     Each Region should also immediately begin  to examine
priority cases for referrals based on the attached  targeting
factors.  I would expect  that each Region has at  least  one
POTW and one industrial user that are priority  candidates for
referrals.  Those Regions with more pretreatment  activity
should have a targer number of candidates.

     The Regions should submit no. later than April  30,  to the
Associate Enforcement  Counsel for Water, Office of  Enforcement
and Compliance Monitoring (OECM), a one page description for
each potential referral candidate which includes  the following
information:

     -  Name of candidate and basic information (location, size,
        control authority status and NPDES permit status, if
        appropriate);

     -  Summary of enforcement actions to date;

        Assessment of  appropriate targeting factors; and

     -  Identification of any problems or unresolved issues
        such as those  listed in the targeting factors.

     The Office of Water  and OECM will consult  with the Regions
on each of these candidate  referrals before a decision  is made
to proceed.  The Regions  will manage the cases  in coordination
with Headquarters.  Regions should submit their case referrals
to Headquarters for concurrence by July 1, 1984,  for POTWs and
non-integrated electroplating facilities and by August  1, 1984,
for integrated electroplating facilites.  OKCM  will iirjr.edlately
canvass the Regions, to ascertain the need for model pleadings.
If requested, OECM will develop the model pleadings by  June 1
with input from OW and the  Regions.

     In addition to the above actions, Regions  should begin to
issue Administrative Orders to industrial users violating cate-
     ^l standards this fiscal ysar.  Regions should be  able to

-------
                              -3-


issue at least 20 Administrative Orders nationwide to noncomplying
industrial users during the last two quarters of FY 1984.

     During FY 1984, EPA enforcement actions should be focused
in areas where EPA is the control authority in order to establish
an immediate,  visible enforcement presence and to compel selected
members of the regulated community to achieve compliance.  Obvi-
ously, to have a fully credible enforcement program, EPA must
ensure these efforts are expanded in FY 1985 and beyond to cover
all unapproved local and State programs, a la-rger number of cate-
gorical standard nohcompliers, and oversight of approved POTW
and State programs.  OW and OECM are currently developing a long-
term strategy  to address these and -other issues.

     I look forward to seeing the results of your immediate
enforcement efforts.

Attachment

-------
                          ATTACHMENT 1


        FACTORS FOR IDENTIFYING POTW AND INDUSTRIAL USER

                     PRETREATMENT REFERRALS


     The following .factors should be used in identifying potential
referrals.of POTW and industrial users (IDs) violating pretreat-
ment program requirements.  These factors are intended to estab-
lish broad categories from which initial cases should be selected.
There may be some cases appropriate for referral that may not
fit these factors.  Such cases, of course, should be considered
but final determination should be coordinated as discussed in the
memorandum.

     It should be noted that in developing enforcement cases,
violations by POTWs for failure to submit required pretreatment
programs will be relatively easy to document.  This 'may not be
the case for documentation of IU categorical standard violations.
In many cases, the standards are complex and determinations of
noncompliance may be difficult and resource intensive.  However,
since a limited number of IU referrals are envisioned in the short
term, extensive sampling inspections should not be necessary.
Regions already have adequate information on some noncompliers.
Such information can be obtained from POTWs, BMRs where available,
citizen complaints, contractors assisting in pretreatment program
implementation, and past inspections.

     Where possible, pretreatment enforcement actions should be
coordinated with ongoing NPDES permit enforcement actions.  Where
a Region is referring a case for NPDES permit violations under
the National Municipal Policy, a pretreatment count should be
added where appropriate.  In the case of an IU, a categorical
standard violation^ which causes or contributes to a NPDES permit
violation by a POTW would make, all other things being equal, a
particularly telling case.  Since the latter situation will be
rare and may be very difficult to identify, the merging of
enforcement actions is not essential.  It is only suggested as
a way to make stronger enforcement cases and/or-to reduce
resource burden.
                  . t
POTW Referral Factors

1.  POTW should be in violation of an AO requiring program sub-
    mittal or have demonstrated a recalcitrant attitude in
    failing to develop the required pretreatment program.  In
    the latter case, referrals may be warranted even if an AO
    has not been issued.  Violations of AOs should be priority
    candidates for referrals.

-------
                              -2-
2.  POTW should be  rn  States  where  EPA  has program responsibility. '
    In order to maximize  the  deterrent  effect of enforcement
    actions, the POTW  should  be  relatively large and should have
    a significant number  of industrial  users subject to categorical
    standards.

Industrial User Referral  Factors
                    i              •           "    •
1.  IU violating categorical  standards  should be in a State that
    does not have pretreatment program  authority, should be a
    facility that is significant .in., terms of size and/or wasteflow,
    and that has demonstrated a  recalcitrant attitude.  Priority
    for an IU case  should be  based  on the extent of noncompliance
    with the categorical  standards.  It is preferable that the
    IU be in an area where the POTW does not have an approved
    pretreatment program, is  not likely to obtain approval in
    the near future, and/or is taking little or no action on
    its own to enforce the categorical  standards or comparable
    State or local  standards.  It is not necessary for an AO to
    be issued - before a referral.

2.  Potential cases raising unresolved  issues such as removal
    credits or unresolved category  determination requests should
    be assessed on  a case-by-case basis in close consultation
    with Headquarters.  In addition, it is highly desirable that
    there be some documentation of  how  the categorical standard
    applies to a given IU prior  to  the  initiation of enforcement
    action.

3.  Referrals should not  be initiated solely because the IU did
    not submit required baseline monitoring reports (unless such
    failure is a violation of a previously issued AO) .  However,
    non-s.ubmittal of these reports  may  be one of several reasons
    for initiating  a referral.  BMRs that have been submitted
    should be ,reviewed in preparing a referral that is initiated
    for noncompliance with categorical  standards.  Additionally,
    referrals involving nonsubmittal of BMRs should be considered
    so that noncompliance with reporting requirements does not
    exclude the IU  from enforcement.

4.  Candidates for  AOs are lUs that did not submit baseline moni-
    toring reports  or are >sut of coT.pliar.ce with the categorical
    standards.  Good faith/bad faith and time needed for compliance
    should be taken into  account when deciding whether or not to  •
    issue an AO or  initiate a referral. .

-------
Section 311
Enforcement

-------
Section 311
Enforcement

-------
   'j   UNITED STATES ENVIRONMENTAL "PROTECTION AGENCY-.--.
   *'.   *                WASHINGTON. D.C. 20460

         •••".'  '     '   •"  .  JAN 8- 1374    -  -••   '.        !
                                                             QFF1CS 0?.^ •
                                                   EHFORf^-IENT AMO GENERAL C=U.NS£T_
                                                              -.
   ;  _• ',..-.  '. Regional Enforceoent Directors        • .
 •  .• -.-•.• Lf- -Surveillance .and Analysis .Directors         -    • *  '•
 -••.---.". 'Regional 'Qil and Hazardous Materials- Coordinators
      .VI .    "^                _  • •                   -  •         •
      "'••-^  •••"/*  •- • "•--• •** '•'" "  ."•* '•'•".''•'        '.'  .".'•   .•-.--'  •
     j  >.•''• Assistant Aomiiiistrator  for  Enforcement and General
                                 '              '
                                                            .  .
 SUfeJSCTi- . Oil Spill Safer cement.'   .  ••  •  '   •'•   """•'-   •'•'.'' •"••~-
    •          '  * •* •              _••     "    -..
       --.-•_.      .  .. •     .' .-.   -.-• .  .  *  - .   .     . - ..     . .- • .
    •"  -". '-.-A-      •  ••••-: .""•.'f-  --'•:-;^''" - •  •     . -  '•"•"«•--.  -. .."
     *         "            »•*•**      •
      Attached is a status"repprt on  S?A Oil 'and Hazardous Materials .
 spill enforcsnent actions  covering the period January 1 to  October 1,
 1373.   It shows a great improvement  over last 'year's record,  '
 althq-agh scze Hagions should  apparently b.e r.ore active.  Some Regions
 vi^h' few ' actions reported  nay- be relying on  strong Coast Guard- " enforce—
 sent programs.   '• -All Regions should send ce the Coast Guard records .
 that would indicate the nussher  of  enforcement actions taken and the
 results, to date.  This may present a more complete pictures  of the
 status of spill enforcement activities.  .

      I realize that lack of sanpjower and resources may result in  the
 inability., to. follow up oil spill referrals,  particularly • in light of
 the present 'priority being rightly accorded  to  perait 'Issuance and
 follcw-up..  IThat'is needed/ I believe, is a  core efficient  use of
 those Enforcement and Surveillance and Analysis personnel already
 working en, oil spill prcbless.  It is  particularly is-.pbrtant that
 Surveillance' and Analysis  personnel  work closely with Enforcement
 staffs -to roaxinvize the mirier of investigations that can be completed
 and cases that can' be prepared, in addition  to  the vital job of oil
 s-nill clean-up.  Wherever  reported spills cannot be investigated  by
 the .Zavironr.ental Protection  Agency  cr the -a. 3- Coast Guard, a
 Section 3Q3 information .request should ba sent  to -the discharger.
 Regional A-±r4nistrators were  delegated the authority to administer
•Section. 303 in the Fart 125 — MPDES regulations,  prcrrulgitad May 22,.
 1-973 (33 Federal Register  13531) .  You should also encourage State
 •a
-------
      Scrae Rsgions have already been successfully using Section 303
 letters in their oil enforescent programs.  For these who have not,
 a suggested'format is attached which should be helpful, which was  ''
 prepared by Henry Stetir.a.  Regional ccmr.ants on this fomat should
 be forwarded to Rick Johnson, with a copy to Henry Statins.   •

      The following guidelines should apply when a Section.308
.letter 'is sent to a discharger:

          1.  Section 303 letters should be used when s. violator
 reports a spill which EPA.is unable'to -investigate on scene.

\          2. • Section 3*08 letters may also be used occasionally to
 supplement EPA or State investigations.'         .  •    .••«••..••.••'.'-.'.•

          3.  Section 303 information requests should"" not be utilized
 to investigate.situations which may culminate in criminal prosecution.

        '• <- ' Section 308 letters must be posted by "Registered rlail '
 — Eatum Receipt Requested."            .    .-.."•   • '•"..._.-'

          5. • Zach Region nust carefully maintain a log.indicating
 for' each letter the date mailed, the date received and the date a
 respp.nse is due.             .             •                 '

        •  6.  When a Section 308 letter is used, the Einforcement
 Division should plan to exercise '.Section 309 sanctions if the
• violator fails to respond or if the response contains false state-
 ments — the falsity, of which can be established.

          7.  If the complete information submitted in response to ths
 letter indicates that a violation did occur, that evidence should be
 referred to the Coast Guard as  basis for-a Section 311(b)(6) civil
 penalty.        .                                  .           .

      A copy of ths discharger's response should be automatically
 sent to the Emergency Response  Branch in your Region.              "

      To improve oil spill enforcement procedures within Regions, and
 to share  successful Regional techniques among Regional staffs, we are
 planning  a meeting for a representative of each Oil Enforcement staff
 and' their counterpart in the Zsargency Response Branch on February 20
 and '21, 1373,  in Atlanta, to be conducted in cooperation with the Oil
 and Hazardous Materials Division. -Any suggestions for possible topics

-------
 to be included in the agenda should be sent to Patricia O'Ccnnell,
 Headquarters.  This will be a. working lavsl meeting which will  focus
 on legal and investigative %orcbls=s.  Coast Guard and Justice Dacarr-
 nant participation is planned.  We also plan to discuss tha new
 spill prevention regulaticr.3,-and their i==lej=eststis.i.
 Enclosures             '                    *         .

 Cc: '• CGC Chron          .          •__          ''-./'•
   '   '    Reading                '  ••          •  '
       *    *   .      .                '     .    .•'.--.

;      Rich Johnson   .    •          • '     •    • :. .    •.-.  '
      Henry Stetina          .       .          .. -•';".
      Patricia C-iCcnnell               '      •    •-•--•
     Assistant Adainistrator for Air  S Water Programs - •.

 S*Johason:dwk:12/2S/73  -         ......    -    •.

-------


;






t:
o
•H
51
nj
I
II


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IV

V .
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.
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•
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. •' • . . - •
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• 19

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• i
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: . . 1
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.
SPILL KN"1-Of.a:?li:Wf:
• l_ 1 '- • *-
• •-'..•'
jua it .1973 « . . •
S •:.
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M S, l»
. ci i.» i:
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ci M r:
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o f. o o; / o t:
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.9 29
1 8


1 55
71

30 SO

3 1?

4 • ' 69



- - ' 23
- - 10
, .
-.-- ': • AO
•
40 . : 337 .
• *
" '. •' *




•

-------
       letter fqr Regional  Administrators'  signature
 Gentlemen:       •                   .               .

     'The Environmental  Protection Agency has  received a report
 'that your company was involved in the discharge of a hanr.ful
 quantity of oil, estimated to be     gallons  into waters of the
 United States, to-wit:   (nar.e of waterway)   near  (city),< (state)
 on or about  (time, date)  frc:>i a   "(truck,  pipeline or facility)
 which you own (or operate). •

      The 1972 Amendments to the Federal  Water Pollution Control
 Act (hereinafter, the "Act") prohibits" the  discharge of oil or
 a hazardous substance into or upon the waters of the United States
 in harmful quantities [33 U'.S.C', 1321(b)(3)].  Any owner or
 operator of a ves.sel or facility from which  oil or a hazardous
 substance is discharaed shall be assessed a  civil penalty by
 the Coast Guard of not more than $5,000 [33  U.S.C. 1321(b)T&)].  .
 The definition of harmful quantities of oil  appears in Title 40, •
 Code of Federal Regulations, Section 110.3.

      In order for this  Agency to carry out  its responsibilities
 under the Act, you are required under authority of Section 303
 of the Act (33 U.S.C. §1318) to submit a--letter of explanation.
••including the specific information listed in  Attachment A..

      The letter of explanation must be submitted to:  (Enforce-  .
 ment Director, Region address) within fourteen.(14) days of
 receipt of this letter.  It must be signed  by a duly authorized
 official of the-corporation or company.   The  information sub-
 mitted will be considered in evaluating whether the oil spill
.violated Section 311.  (Please note that your reply in no way
 constitutes immediate notification of a spill to the appropriate
•federal agency, as required by Section 3l'l(b)(5).)' Section-303
 of the Act (33 U...S.C. §1319) provides civil  and criminal penalties
 .for failure to submit information required  under Section 303  .  .
 and criminal penalties  for knowingly making  a false statement
 in any submission under Section 308.

  '""'. If you have any questions please contact (name), Attorney
 Legal  Branch*, Enforcement Division, at (phone number).

                                   Sincerely yours,

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                                                    Attachment A

                             ITU TED -STATES
                    ENVIROtt-OTAL PROTECTION AGENCY
            Report of  Oil or Hazardous Material Discharge


  The  following  information  is  submitted concerning a discharge of
  oil  or  hazardous material:           •           •

  1.   Time and date of  discharge.

  2.   Location of discharge, including:

      a.  name of municipality  and state;

 '• .'  b. ' name and-address of industry or commercial, establishment
         at which the  discharge occurred, if applicable;

-   ._  c.." distance from receiving waterway.'

.3.  Type of material  discharged.

"4.   Quantity.discharged.               '             -'

  5.'  Quantity of material which eventually reached the" receiving
      waterway,  and date and time'it was discovered.    •  •    '  .

.5.   Type of vessel or facility (ship, barge, storage  tank,  tank
      truck, etc.) in which  the oil was originally contained.

'  7.   Describe in detail  what actually caused the discharge.

_  8..  Name and address  of owner of  facility  causing the discharge.

  9.''  Name.and address-of operator of facility causing  the  discharge.

•10,   Describe damage to the environment.

IT.   Describe steps the above  named owner or operator  took- to
.  ,  .  clean up the'spilled oil  and dates; and times steps were taken.

12.  -Actions by company to mitigate damage to the environment.

 13..  Measures taken by youV'company to prevent  future  spills.

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:.: ]4.   List the federal  and stata  agencies,  if any,  to which-tlrs
i'i-"'   owner or operator named in  8 and 9 above reported this dre-
h:...-.    charge.   Show the agency,  its location, the date and tine
 .•••.-    of the notification, and the. official  contacted.

_T'15.   List the names and addresses of persons you believe have
       knowledge of the  facts  surrounding this incident.

' 16.   Name and address  of person  completing  this  .report.

 17.   Your relationship, if any,  to owner or cpsrstar.

 •18.   List other information  which you "wish  to bring_to the attention
 ... .  of EPA.   For example, number employed  by the  firm.


• -..The  above  answers  are true  to the best of  my knowledge  and belvaf.
                                    Signature  of  person completing
                                   - this  report.
  Date of"Signature:

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     •UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                       WASHINGTON. O C.  20-100
                                                         r;r AND GLisru/.c C-UNSCL
To:       Regional Enforcement Directors

From:     Director, Enforcement Division

Subject:  Civil Penalties Collected for Violations  of 40 CFR Part 112 -
          Transmittal to USCG Districts for Deposit in Revolving Fund
          Account
     Civil penalties collected f?r violations of  the  subsections  of
section 211 and regulations issued pursuant  to  section  311  of the
are being .deposited in the revolving  fund  established by section  311(k)
of the FWPCA which reads as follows:

          "(k) There is hereby authorized  to be appropriated to
     a revolving fund to be established in the Treasury not to
     exceed 335,000,000 to carry out  the provisions of  subsections
     (c), (d), (i), and (1) of this section.  Any other funds
     received by the United States under this section shall also  ,
     be deposited .in said fund for such purposes.  All  r;ums appro-
     priated to,  or deposited in, said fund  shall remain available
     until expended.

     In compliance with the foregoing, civil penalties  collected  for
violations of EPA''s Oil Pollution Prevention Regulations, 40 CFR  Part  112,
are to be forwarded, by the EPA regional offices,  to  che main .office of
the U.S. Coast Guard District within  which the violation occurred,  for
inclusion in the Coast Guard's.revolving fund account established pursuant
to section 311(k) of the FWPCA.  The  following procedures should  be followed:

          (1)  Checks in payment of the civil penalty should be m-r.de
     payable to the "United States of America."   Checks nnde payable
     to "EPA," "Treasurer of the U.S.," etc. 'are  acceptable so long
     as the amount of the check is the same as the civil penalty.
     Do not endorse any such checks.
            *
          (2)  The checks should be forwarded to  the  U.S. Coast Guard
     District with a cover letter setting out the foiicv/ing:

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              (a)   Legal name and aiidress of owner/operator
         charged  with the violation.
              (b)   Dat'.c and nature ->l" violation, incl 'i-i i nu a
         citation of the relevant statutory and reyuMt;ory
         provisions.  (i.e., failure to have SPCC Plan  in
         vioiaticr. of 40 CFR Part 112.3).
              (c)   EPA Regional Office Enforcement fill? number.
    .,         (ci)   Date; of check, name of bunk, amotuir. of check.
   £'• \         (e)   A statement that the check is beinq  forv/nrdori
   ''•J ';    for  deposit in the U.S. Coast Guard's revolving fund, and
'.*''• i
"  .  '.'     (3)   At  times the EPA Part 112 violation will have as its
  ;• genesis  facts establishing other law violations. • '.-.'here the Part  112
 f. violation resulted from facts establishing another Federal law  vio-
   lation,  including but not limited to the F'-JPCA' s section  311
   previsions relating to oil spills or failure to notify, identi-
   fication  data on the other Federal law violation, for the purpose
   of avoiding possible conflicts, should be included  in the transmiftal
..' to the USCG.

     .•   (4)   Where the violation, for which the' check was submitted,
   is also  the basis for a referral to a U."S. Attorney, the  U.S.
   Attorney  should be informed of the disposition of the EPA civil
   penalty proceeding.

                                                         r    ^
                                       J. Brian Mollov

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         UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                           WASHINGTON. '; C. 2C
                               AFri 2. u  \2iS
MEMORANDUM

To:       All Regional Administrators

From:     Acting Deputy Assistant Administrator for Water  nnfcrcsmon
          Director for Oil and Hazardous Materials Control Division

Subject:  Spill Prevention Control and Ccuntsrmeasure  (SPCC)
          Plan Program
     This memorandum covers a nur.ber of SrCC proyram  issues
raised at the March 27-28 joint meeting of Environmental
Emergency Branch and Enforcement Division representatives
in San Francisco.

v.'arninc Letto.5 to Violators

     Several Regions arc considering thv= transmission of warn ing
letters-as a means of giving notice to violations of"  SPCC  require-
ments and obtaining compliance without going through  the civil
penalty assessment procedures.  The warning letter device  was
discussed vigorously at the San Francisco meeting with strong
arguments made both for and 'against warning letters.  After
careful consideration we have decided that warning letters are
unnecessary and should not be used.  The preferred procedure,
upon detection of a violation, is to issue a notice of violation
with a proposed civil penalty.  The notice of violation will get
the attention and compliance response from the owner or operator
faster than a warning letter.  As appropriate, the penalty can
be compromised down to a much smaller figure or waived ? 1.>.soother.
The notice of violation, when uced in this manner, has th-;
advantages of a •••••a.rning letter but provides mere clout with no
loss of time.

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t.'ature  n-d Conduct  c C  Civil  Penalty  Hf.-.-.ir: i:-.::'

     It is important that  everyone connected  with the civil
penalty hearings provided  for  in  40  C.IT.R.  Part  114  under-
stand that these hearings  are  to  be  infernal.  They  can
be held in an office or  conference room  with  the crisualnusr;
of a routine meeting.  No  formal  record  is  necessary,  f-'e
undue attention need be  given  to  the materiality or  relevance
of statements or evidence  offered by participants.   The
rules of evidence employed in  courtrooms and  formal  hearings
are not appropriate  for  Part 114  civil penalty hearings.   Ho
cross examination is required." The  time and  resources of
Regional attorneys  involved  with  these hearings  should be
kept to a minimum.

     It should be noted  that the  Presiding  Officer at a  civil
penalty hearing can raise  as well-as lower  a  proposed civil
penalty.

Selection of Hearing Officers

     Section 114.6  of  the  civil penalty  regulations  provide-s
that the Presiding  Officer may be any attorney in EFA who  ha*
no prior connection with the case.   To maintain  an atmosphere
of fairness and impartiality,  Regional Administrators  should  not
appoint Enforcement Division Directors or other  Enforcement
Division supervisory personnel.   Similarly, it is desirable to
avoid appointing water enforcement attorneys.  Because of  tiv»
informality of the hsaring and the relatively simple  rescon-ibilit
of the Presiding Officer,  Agency  Administrative  Lav;  Judgen should
not be asked to conduct  these  hearings.  The most desirablo
candidates for Presiding Officers are attorneys  in the Hccricnai
Counsel's Office.  Also  acceptable,  although with some losy of
tiie appearance of impartiality, are  Enforcement  Division attorneys
working in non-water programs  such as air and pesticides.

Criteria for Civil Fenaltv Levels
     The desirability of establishing national criteria fcr uniform
assessment of civil penalties was discussed at the San Krancinco
meeting, but no conclusion was reached.  We have decided  to rloirm  a
Headquarters-r.egional work group to determine whether :juc;i: criteria
would be desircible and, if so, to set up a matri:: or some other
system for uniform civil penalty assessment.

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                          Stats >  and reCL.-i.-iil ~-ici litics
      Doubt as to whether federal, state, or local facilities
 are subject to S?CC requirements has been raised because  the
 definition of "person" in section 311 does not explicitly
 include federal, state, and local entities.  Our interpretation
•of section 311 and the S?CC regulations is that local", state,
 and federal entities are subject to SFCC plan preparation
 and, implementation requirements.  A General Counsel's legal
 memorandum -o this effect will be distributed shortly.        . ;

 Inclusion of Animal and Vegetable Oils in Section 311 L-efir.ition
 of ".Oil" .

      Attached are four letters discussing the inclusion of
 animal and vegetable oils in the section 311 definition of
 "oil."  EPA and the U.S. Coast Guard have always treated
 spills of -non-petroleum based oils as subject to the civil
 penalty and cleanup provisions of section 311.  However,  the
 national Broiler Council and similar- organizations have questioned
 this  interpretation, and, as a result, many users of animal
 and vegetable oils are not in compliance with the SPCC regulations
 and have not- submitted requests for extensions of time for
 compliance.  In his January 9, 1975, . letter Alan Kirk. i?3di» clear
 SPA's position that non-petroleum oils are included in the
 section 311 'definition of "oil" and that ar.irtal and
 oil users are subject to the S?CC plan preparatio'n and i:nnler::f.::ita-
 tion requirements of Part 112 .

      You will note in Mr. Kirk's January 9 letter and Hick j'chr.son ' s
 February 3 letter _that ,  in view of the good faith efforts of  the
 animal and vegetable oil users to determine whether their facilities
 are subject to the SPCC regulations, we will consider requests  for
 extensions of time for compliance received from users of. non-petroleum
 based oils.  Such .requests should be approved in cases where
 the requestor can demonstrate his reasonable belief that he
 was not subject to the 'SPCC program and his firm commitment
 to comply fully with SFCC requirements.  Civil penalties for
 failure to request extensions of time, in accordance with U'C
 timetable se- out in Part 112, should not be imposed in these
 situations.  Part 112 will be amended to clarify that the
 Regional Administrators have the authority to "grant such
 extensions for appropriate reasons in addition to those listed
 in §112. 3 (f).  Any grant of additional time should provide for

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 • -": •» * .',~. —} ~. * T r • • -I i -.
 . J -^ .l^/' .Ji••) I..U <

 To:          ''otj."i cr.al  l!;ifovcei-icr.t;  l>irectors

 Frcrr.:       Acting  "icputy Assistant A-."a:iir.ir; tra••-••; r  fior
             T-:'a tor Enforcum-jn t

 Sub-jcct:   ."..•-'ctio.ii H31 Jurisdiction  cvor Lt.-cnl,  'i.atc.'
             cind rucl
                  . fjla:::-' r ::-  nnf r^y jci'.i-;;  ^r/ril j",  IV,  ,
rt-io:nor;:::aun vin-tiili:^  "Spill  rrrr-'r^tior: Control  -r. •
C..:-.untcrj~cr.-urr:  (SPCC)  P].,^;!  ?x-cc;r.-\:;:, ;:  I  i-rcr-.i :•:•:: c:  to
cist::il>ut5 thc^  General  Counsel':; o^inic^n ^n  tn -.-^oLii-
bho '"^tf irx L•^^.cr^  of  "oor^cn"  in coci:ion 211  incluO ;•::;
!:<• :rl c:~-"! 1 ,  -t'ltc,  r.r.'"  local c-ntit:'. ::::,.   ,:\ ttr.c; :- .-:•.!  i .: :*uc:
-;:  o-'inior: .. uat=?.::1  r-r-r\l 23,  137:'=,  Urc;:!  i'.r-y  "=c '".vi-.r. 7
         •:;   -.^i      -.:.v.in :".:.;   is     .i;.M    iic   .». : Z  •..-•-l  '\.
O;ii.'ivjr:'.-  =-:c;  of f :'; i .. -.' r _• fncilitic:;,  iiicl:.'c" Ln=j  V'L.V . .•  <_••.'•.•
or oporot;:J  hv' ic'cal, nt^te ,  r.:id  frid^r?.! 'VMiici;^:  ----
sv.i:-j:. ri:  to cncticn 311 cjid  tiio  CTc'-C  PJ.on r ^qul. :•.:::;. 0:1..; .
f!0 cm ?nr-::  112.   T'iOi;o  'iV.-cjions viiirj!:  aro ^ot  ;-:.-.j;id
coirc,-  r-o  .'..".oulci  r-iijuro that  all  local/ r. L „•. :. i ,  a •;..'.
f-~v'.lvr-~'. 1  ;:ecili ti-:iG s.r-::- in coir.-;l;.?.rlc-'j \'iti> .t;r-r,'_ Plan
;.'r:- pa ration  and  Ji:i./lc-:r.:u;Hiatio;i  ro:iui::-vr:V-:Tit:- .
bcc:   .T. ^rian ''olloy, LG-335
        :.'^-"?2  .r>-r!r.d•:-••:   D.I.^'ons)       bcc:   Ken  2i;j"ieine
                                     '

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Section 404
Enforcement

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Section 404
Enforcement

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                                                 5  SEP 1979
lionorable Clifford L. Alexander,  Jr.
Secretary cf the Army
V.'d shine; tor.,, D.C.   20310

My dear r'r . Secretory:

    I r.ir. responding  to your  letter  of  March 29,' 1979,
requesting my opinion on  tv/c  questions arising under 5 404 of
the Federal Water  Pollution  Control  Act,  as amended, 33 'J.S.C.
£ 1344.  You asked whether  the  Act  gives  the ultimate
administrative  authority  to  determine  the reach of the term
"navigable waters" for purposes of  c  404  to you, acting
through the Chief  of  Engineers, or  to  the Administrator cf  the
Environmental Protection  Agency;  and  similarly you ask whether
the Act gives the  ultimate  administrative authority  to
determine the meaning of  5  
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                              -  2  -
 lUimination System  (NPDES)  program  established  by  §  402;  the
 Secretary of  the Army  issues  permits  for  the  discharge  of
 dredged or fill material  under  5  404.  !_/

    • During consideration  cf the legislative proposals  that
 resulted in the Federal Water Pollution Control Act  Amendment
 of 1972, the  question  whether the Secretary should piny any
 role, through the "Chief of  Engineers,  in  issuing permits  was
 hotly debated.  The  bill  introduced in the Senate, S.  27.70,
 gave the Administrator  the  authority  to issue permits  and
 treated discharges  of  dredged or  fill  material  no  differently
 frcm discharges of  any other  pollutant.   Curing consideration
 of the bill both by  the Senate  Public  i-?orks Committee  2/ and
 on the Senate floor, _3/ amendments  were proposed to  give the
 authority to  issue  permits  for  discharges of  dredged or fill
 material to the Secretary of  the  Army. These amendments were
 offered in recognition of the Secretary's traditional
 responsibility under  the  Rivers and Harbors Appropriations Ac
 of 1839, 33 U.S.C.  5  4C1  et seo., to  protect  navigation,
 including the responsibility  to regulate  discharges  into the
 naviaable waters of  the United  States. Concerned  that the
 _!/   A  point  source is defined in the Act cs "any discernible,
 confined  and  discrete conveyance, including but not limited to
 r,ny  pipe,  ditch,. channel,  tunnel, conduit, veil, -discrete
 fissure,  container,  rolling stock,  concentrated animal feeding
 oceration,  or vessel or other floating craft .  ..."  33
 U.S.C.  §  1362(14).

      Dredged  and  fill material .are nc.t defined in the .^ct,  but
 arc  defined  in regulations prcmulgatec by the Corps of
\ Engineers:   Dredged  material is "material that  is excavated or
 dredged frcm. waters  of the United! States," while fill material
: is  "any material used for  the orima_£y_purp_q'3e of replacing an
; ncuatic area with dry land or of chancing the bottom elevation
 of  a water body." 33 C.F.K. § 323.2(k), (IT.).

 2/   Senate Ccmm. on  Public ttcrks, S3rd Cong., 1st Sess., A_
 Legislative  History  of the vrater Pollution Control Act
 /\rrend:ver.ts of 1972  (1973), at 1509  (hereafter "Legislative
 History").

 3/   I£. at 1386.

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                            - 3 -
Secretary would have insufficient expertise  tcr evaluate the
environmental ir.pact cf a proposed  dredge  or  fill  operation,
Senator .Muskis, the author of S. 2770,  opposed those
arrendirents. _4_/  lie proposed instead  that  the  Secretary certify
the need for any perrit for discharge  of  dredged material to
the Administrator, who would .retain  permit issuing authcrity.
The Senate adopted Senator Muskie's  proposal.  J3/

    The.House of Representatives bill,  H.R.  11C'96, on the
other hand, cave the Secretary  con-.plete responsibility over
issuing permits for the discharge cf dredged  or fill  material.
Although the House bill required the Secretary to  consult -v.'ith
the EPA on the environmental aspects of permit applications,
the Secretary had the authority  to  -ake the  final  decision on
permit  issuance. S/

    The Conference Ccrrittee substitute,  passed by the
Congress as § 404 of the Federal Water Pollution  Control Act
Amendments of 1972, represented  a cci^proi?ir,e between  the
Senate  and House positions.  It  established'a separate perr.it
procedure for discharges of dredged or fill  r.aterio.1  to be
administered by the. Secretary,  acting through the  Chief cf
Engineers.  The Administrator,  however, retained  substcrti?.!
responsibility over administration  and enforcement cf 5 404.
The EPA responsibilities were perhaps best curr.arized by
Senator Muskie during the Senate's  consideration  of the
Conference Report:

             • First,' the Administrate^ has both
         responsibility and authority for failure to
         obtain a Section 404 perr.it or co-ply with
         the condition  thereon.  Section 309
         authority  is available because discharge of
         the "pollutant" dredge spoil without a
         perr.it or  in violation of  a cerrr.it would
         violate Section 30l(a).

              Second,  the Environmental Protection
         Agency irust determine  whether or not a site
         to be used  for  the discosal of ccecced sccil
±/   Id.  at  1387-88

5/   J[d.   at 13S3.

G/   Id.   at 815.

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                            -  4 -
         is acceptable when judged against.the
         criteria established  for fresh  and  oc'ean
         voters similar  to that v/nich  is required
         under Section 403.

             Third, prior to  the  issuance  of any
         peciT.it to-dispose ot"  spoil,  the Acrr.ini-
         nistratcc rr.ust  determine that the material
         to be Disposed  of will not  adversely affect
         municipal water supplies, shellfish beds  and
         fishery areas (including spcvp.ing ar.d
         breeding areas), wildlife or  recreations!
         areas in the specified site.   Should the
         Administrator so determine,  no  permit  nay
         issue. 7/

    Subsequent amendment of §  404 by the Clean  Water Act of
1977, 91 Stat. 1566, altered  the .relationship between the
Secretary and the Administrator in only  limited fashion.  -The
amendments gave the Administrator authority comparable to the
authority conferred on him by the §  4C2  NPDES program to
approve one to monitor State  progrr.ms  for the discharge- of
dredged or fill material.  33~U.S.C.  5 1344 (cj)-(l) .  Ksw
subsection (s) gave the  Secretary of the Army explicit
authority under the Act  to take action to enforce  those 5 40?
permits which he had issued.  'New subsection (n) cautioned
that the amendments should not be considered to detract from
the Administrator's enforcement authority under £  30S of the
Act, 33 U.S.C..-? 1319. .8/
7/  Id. at  177.   This  statement,  which is often quoted  in
explanation  of  the  relative responsibilities of the Corps  and
EPA under §  404,  is included in the_ Congressional Record'as  ?
supplement  to Senator  l-'uskie's oral remarks.

"7  Sc.ctior.  300  empowers the-
                    penalties with respect to such perrr.:
Importantly, _?_s_the above-quoted history .of__5..404	indicates,
the  s e c ti p n _ a .1 so ' W i v e s .the "Administra tor_the_.a,u tho.r ity._to
bj:j.ng enforcement'act ions .to stop discharges-.uitbaut_.a
required _permit,  since such discharges violate the  basic
prchibiti'on""set  out in § 301 of the Act.  33 U.S.C.  £  131S.

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                            - 5 -
    With that background, I turn to your  specific  questions.
First, you asked whether the .Secretary or  the Administrator
has the authority under S 404  to resolve  administrative
disputes over interpretation of the jurisdicticnal term
"navigable waters."  That question is an  important one, since
the authority to construe that term amounts  to  the authority
to determine the scope of the  § 404 permit program.
    The term "navigable waters,"'moreover,  is  n  linchpin of
the Act in other respects.   It  is critical  not only tc the
coverage of § 404, but also  to  the coverage  of the other
pollution control mechanisms  established  under the Act,
including the 5 402 permit program for  point source
discharges, B/  the regulation of discharges  of oil and
hazardous substances  in § 311,  32 U.S.C.  S  1321, and the
regulation of discharges of  vessel sewage in f> 312, 33 U;S.C.
5 1322.  Its definition is not  specific to  5 404, 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  whether—and to what
extent—:any particular water  body comes within the juris-
dicticnal reach of the federal  government'c'pollution control
authority.  v:e  find no support  either  in  the statute or its  .
legislative history, for a conclusion that a water body would
have one set of boundaries for  purposes of  dredged and fill
permits under S 404 and a different  set for purposes of the-
other pollution control measures  in  the Act.  On this point  I
believe there can  be  no serious disagreement.   Rather,
u.n_cer_Gtand_ir,g .truit_Jln.av.icab.le ..wa.ter s'L-.csn ..have ..only ..one.
interpretation .under  the Act, the cuestion ..is .whether Ccr.gres
iriten"c"ed" ul timately 'for the  Administrator or  the Secretary" to
describe "its car?.ir.eters. •
    The  question  is.explicitly resolved neither in S  404
 itself nor  in  its  legislative history.  My conclusion  that  the
_9/  The  Act,  as  stated above,  contains a general prohibition
against  the  "discharge of any  pollutant" except in compliance
with  particular  standards and  permit procedures.  5.301(a).,  33
U.S.C. 5  1311(a).   The- definition of the phrase "discharge
                                                            of
pollutants" includes
"navigable waters."
a discharge from
5 502(12), 33 U.:
                                       a point source  into
5
                                             1362(12).
_1_0/  "Mnvigable  waters" is defined under the Act
"the  waters  of  the United States, including the
seas."   S  502(7),  33 U.S.C. 5 1362(7).
                                                 ar> meaning
                                                 territorial

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                             - 6 -
Act  leaves  this authority in the hands of the Administrator
thus necessarily draws upon the structure of the Act as a
•v;hole.   First,  it is  the Administrator who has the overall
responsibility  for administering the Act's provisions, except
ins .otherwise  expressly provided.  5 101 (d), 33 U.S.C. 5
1251 (d).   It  is the Administrator cs well who interprets the
ter— "nr.vigsble v;aters" in carrying out pollution control
responsibilities under sections of the Act apart from £ 4C4.

     Additionally, while the Act charges the Secretary with  the
duty of  issuing and assuring compliance with the torr.s of £
<04  permits,  it does  not expressly charge hirr. with respon-
sibility for  deciding when a discharge of dredged or fill
material into the navigable waters takes place so that the" 5 •
404  permit  requirement is brought into play.  Enforcement
authority over  perraitless discharges of dredged and  fill •
material is charged,  moreover, to the Administrator, ll/

     Finally,  any argument in favor of the Secretary's
authority to  interpret the reach -of the tor- "navigable
waters"  .for purposes  of 5 404 is substantially undercut by  the
fact that he" shares his duties under the section with the
Administrator .   As outlined above, 5 404 authorizes  the
Administrator to develop guidelines with respect  to  selection -
cf disposal sites, 'to approve and oversee St^te programs for
the  discharge( of dredged or fill material, and  to veto en    '(
environmental' grounds any pern it the Secretary proposes  to
issue.

     I therefore conclude that the structure  and  intent cf  the
Act  oupport an  interpretation of 5  404  thc-.t  gives the
Administrator the  final administrative  resccn'sitility  for
construing the  term "navigable waters."
     ^r second cuestion is whether  the  Secretary  or  the
 Adm-i'nistrator has the final authority 'to construe  5  404 (£)  of
 the. Act.  33 U.S.C. § 1344 (f).'  That subsection  exempts
 o/ jJ u..u    iJ-i-J-/ J.j'*<*in.   ine
 enforcement authority with 'respect  to  permitless  dischnryes
 into navigable waters under  the  Pivers anO  Farbors
 Appropriations Act of 1899,  33 U.S.C.  Gf?  407,  413.   Navigable
 water? for purposes  cf  that  Act  have  a more restrictive
 meaning, however, than  navigable waters under  the Federal
 V?ater Pollution Control  Act.  £•£• /  NatJop.r.l resource? L'efer:r,e
 Council v. Callawayy 392 ?.  Supp.  605  (C.C.C.  JS-7L;).

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                            - 7 -
certain activities from regulation under 55 404, 301 (a.),  and
'102.  The Corps of Engineers has argued that the responsi-
bility for interpretation of the subsection insofar  es  it
relates to the issuance of the Corps' ? 404 permits  is  vested
in the Secretary.  For reasons similar to those discussed in
connection with your first cu.estion,  I disagree.   It is the
Administrator v/ho has General administrative responsibility
under the Act, 33 U.S.C. § 1251(d),  and who•has general
authority to prescribe regulations,  33 U.S.C. § 1361(a).   In
reviewing the statute and its legislative history,  I find no
indication that Congress intended  that the Secretary have
final authority to construe  that subsection for purposes  of
his S 404 program.  Absent such an indication,  I believe  that
the Act would be strained by a construction allowing the  ~*
Secretary to give a different contsnc to 5  404(f)  than  the
•Administrator, gives that subsection  as it relates  to pollution
control provisions apart from 5 404.  ' I therefore  conclude
that final authority under the Act to construe  5  4C4(f) is
also vested in the Administrator.

                      Yours  sincerely,
                     Benjamin  R.  Crviletti
                       Attorney General  •

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u£.cratary o£  t£«  A ray
itaahiryten, D.C.   20 3 ID
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                              axia.n, Civilctti

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         UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
        •  ••  •••-•  •  ••••-'•' ' WASHINGTON. D.C. 20460   •••  .
   .....           ...                             OFFICE OF ENFORCEMENT

MEMORANDUM            .            '                AUG  ; g  \S80.
SUBJECT:  Solid Waste Discharges under, Consolidated  Permit
          Regulations:  Procedures^ Pending" Corps of  Engineers
          Agreement with Changed De~f iniTTon of Fill  Material

FROM:     Director, Enforcement Division  (EN-338)

TO:       Regional Enforcement Division Directors ,

Background

     On May 19, 1980, EPA. issued its Consolidated Permit
Regulations, 40 CFR Parts 122, 123, 124 and 125; 45  F.R.  33287,
which incorporated a change in the definition of fill  material
which affects sections 402 and 404 of the Clean Water  Act.  The
new regulations specify,

          Fill material (404) means any "pollutant"  which
     replaces portions of the "waters of the United  States" with
     dry land or which changes the bottom elevation  of a  water
   •  body for any purpose.  40 CFR §122.3; 45 F.R. 33419.
                      m
As the preamble to the new regulations notes,

          The  [earlier definition]  defined fill material  as
     material discharged for the primary purpose of  replacing  an
     aquatic area with dry land or of changing the bottom
     elevation of a water body, reserving to the NPDES program
     discharges with the same effect which are primarily  for  the
     purpose of disposing of waste.-  45 F.R. 33299.

All discharges of pollutants which meet the new definition of  fill
material, including solid waste discharges, require  a  section 404
permit issued by the Corps of Engineers.  The Corps, however, has
not changed its own regulations to coincide with the change
adopted -by -EPA.  J_/  Resolution of this inconsistency  is  currently
the subject of discussions between EPA and the Corp.s.   Until  this
issue is resolved, 'the • following .procedures should be  observed.
1/  The Corps.1 regulations define fill material as any material
used for the primary purpose of replacing an aquatic area with dry
land or of changing the bottom elevation of a water body.   33 CFR
§ 323.2(m).

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Inquiries and Permit Applications
     If Regional offices receive inquiries concerning permit
requirements for discharges of solid wastes, they should advise
the inquirer tha-t unpermitted "discharges 'into waters of the United
States are prohibited by section 301(a) of the Clean Water Act, 32
U.S.C. §1311.  In addition, Regions should inform inquirers that
they should 'apply to the Corps of Engineers for a section 404
permit pursuant to EPA's Consolidated Permit Regulations.

     In the unlikely event that a Regional office ^receives an
NPDES application for solid waste discharge, the Region should
accept the application and notify Joan Ferretti of my staff at ?TS
755-2370.  The application should be held pending specific
guidance from this office regarding the status of our ongoing
discussions with the Corps.

     If you have further questions, please contact Joan Ferretti
of my staff.
                                J'. Brian Mollov
ccs  Regional Section 404 Coordinators

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  Vv 85340-: Federal Register/ Vol.  45,  No. 249 / Wednesday. December 24, 1980 / Rules and  Regulations
    alternative need hot be considered to-  ••;,--.
         "less adverse^.impact-.
- /v; .'..Several commenters questioned the.   :.'
; >. ::legal basis for requiring the permitting
.'; .-".authority to select the least damaging
'.  . ' alternative; (The use- of the term "select" ..
-;  may have been misleading- Strictly
   . speaking, the permitting authority does
    not select anything: he- denies the permit
    if the guidelines requirements have not
   'been complied with.}. As- mentioned
..:': above, the statute leaves-to EPA's  •   .
;  .discretion the exact implementation of  ..
 :-^v the alternative requirement in section- • .:
 ;v:'.:.403 of the Act. In large- part tha •.:.:. .  .:.':
*:': /approach. taken by theseTegulations is>-.,-
i;;; ;:yery similar to that taken: by: the recent.  .
 ^section 403(c) regulations (45 FR.'65942^ ','
 ;:i^- .'October?,' 1980); There is. one- .difference;;
 •^>:the Guidelines- always prohibits- ' -""•:;-••-..
 £-? discharges. where there, is- a practicable;. .-••
 ^-.less damaging- alternative^while the- .'• ; ..'•;
 .-^section 403(cj regulations only apply this
 Ji: "-prohibition in- some cases;. This-.: :oV.:-.-_:
  ^.difference reflects-, the wide-range of. -. -.-:.-
  •-•;•:. water systems-subject to 404 and the-   •'.-•
  ^extreme sensitivity of many of them to  .
  i: •: 'physical destruction; These waters form  ,
  ;'.:':.& priceless mosaic:- Thus..if destruction .
  •^.'of an 'area of waters of the United States
  ::'->may reasonably- be avoided, it should be-
  .V: avoided. Of course, wherea category of
   •'; 404 discharges is; so- minimaJ in its
  '-'" effects- that it has been placed under a
  ;-. general permit there- is no need to
  •••perform a case-by-case alternatives ^
   : analysis. This feature corresponds, in a
    sense, to the category of discharges
   : under sec'tion403 for which no '  •„
   ^alternatives analysis is required.
   •.;-. '..Third, some commenters werfr
   -•concerned that the alternative
  • '.consideration- was unduly focused on •'•"
 •'\ water quality, and that a better ' .      •
 ':'/ alternative from a water quality •
 "'standpoint might be less desirable from,
   .rsay,,an air quality point of view. This-
   ..concern overlooks, the- explicit provision
  .-..that- the existence, of an alternative.
   which is less damaging to the- aquatic ' .
   ecosystem does notdisqualifya. •. -..'.-:•
   discharge if that alternative has.other
   . significant adverse: environmental.
   consequences. This last provision gives
   the permitting authority an opportunity
    to take into' account evidence of damage--
   to other ecosystems iadeciding whether
   there is a "better" alternative.
     Fourth, a number of commenters were
   concerned that the Guidelines ensure   •
   coordination with planning processes
   under the Coastal Zone Management
   Act § 208 of the CWA, and. other
   programs. We agree that where an
   ' adequate alternatives analysis has
   already been developed, itwould be   :
   wasteful not to incorporate it into the
   404 process. New § 230.10(a)(5) makes it
 clear that where alternatives have, been
 reviewed under another process, the
 permitting authority shall consider such
 analysis. However, if the prior analysis
 is not as complete as the alternatives
 analysis required under the Guidelines,.
 he must supplement it as needed to
 determine whether the proposed
 discharge complies with the Guidelines.
 Section 230.10(a)(4) recognizes.that the
 range of alternatives considered in
. NEPA documents will be sufficient for
 section 404 purposes» where the Corps is
. the permitting authority, (However, a
 greater level of detail may be needed in
 particular cases to be adequate for the
 404(b)(l)  Guidelines analysis.} This-
 distinction between the Corps and State
 permitting authorities-is- based on. the
.fact that it is the-Corps'policy, in
 carrying out its- own NEPA,    •  ••;.  •  •;
 responsibilities, to supplement (or
. require a supplement to) a lead agency's.
. environmental assessment or impact.
 statement where such  document.does
.not contain sufficient information. State
 permitting agencies, on the other hand,
 are not subject to NEPA in this manner..
   We have moved proposed
 § 230.10(a)(l) (iii). concerning "other
 particular-volumes and concentrations
 of pollutants at other specific rates",
 from the list of alternatives in. § 230.10 to
 Subpart H, Minimizing Adverse Effects,.
 because it more properly belongs there.

 Definitions (§ 230.3)               •'
   A number of the terms defined in
 §"230.3 are also defined in  the Corps'
 regulations at 33 CFR 323.2, applicable
 to the Corps' regulatory program. The
 Corps has recently proposed some
 revisions to those regulations and     V
 expects to receive comments on the
 definitions. To ensure coordination of
 these two sets of regulations, we have
 decided to reserve the definitions of
 "discharge of dredged  material"
 "discharge of Gil material." "dredged
 material," and "fill material," which
 otherwise would have appeared at
 § 230.3 (f), (g). (j), and (1).
   Although the term "waters of the
 United States" also appears in the
 Corps' regulations, we have retaihed a
 definition here, in view of the
 importance of this key jurisdictional
 term and  the numerous comment.?
 received. The definition and i.he
 comments are explained below.
   Until new definitions are published,
 directly or by reference to  the  Corps'
 revised regulations, users  of these
 Guidelines should refer to  the
 definitions in 33 CFR 323.2 (except in the
 case of state 404 programs, to which the
 definitions in 40 CFR § 122.3 apply.)
   Waters of the United States; A.
 number of commenters objected to the
 definition of "waters of the United   '-.
 States" because it was allegedly outsi,-
 the scope of the Clean Water Act or oi
 the Constitution or because it was nof
 identical to the  Corps' definition. We
 have retained the proposed definition.
 with a few minor changes for clarity ft
 several reasons. First, a number of   :-
 courts have held that this basic   -*'.'.•';
 definition of waters of the United State
 reasonably implements section 502f"! c
 the Clean Water Act and that it is  . Vy
.constitutional (e.g.. United States v.:•'.'•?'*
 Byrd, 609 F^d 1204. 7th dr. 1979; Lcslh
 Salt Company v. Froehlkef 578 F.2d 741
 9th Cir. 1978). Second, we agree that iti
 preferable to have a uniform definition•
 forwaters of the United States, and for.
 all regulations and programs under the-
 CWA. We have decided to use the  v ^
 wording in the recent Consolidated.';-:;:?;
 Permit Regulations; 45 Fed. Reg. 332SOJ;
 Mayl9,1980ras the standard.*   ^ ;:.;-?^
   Some commenters suggested that.'the;
 reference in the definition to waters:. V-
 frora which fish are taken.to be soldinVf
 interstate commerce be-expanded to V ^
 include areas where such fish spawn.'-;^
 While we have not made this change ,';i
 because we wish to maintain    -"v ~'°£
 consistency with the wording of the ;.:••"•?
 Consolidated Permit regulations, we do''
 not intend to suggest that a. spawning" {
 area may not have significance for    •'':.
 commerce. The portion of the definition-
 al issue lists major examples, not all the
 ways which  commerce may be involved
   Some reviewers questioned the••'••''.:-':.:
 statement in proposed § 230.72(c) (now ••
 § 230.11(h)) that activities on fast land -
 created by a discharge of dredged or fill'
 material are considered to be in waters-r
 of the United States for purposes of---.'is-
 these Guidelines. The proposed-  •;; i-'-.J
 language was misleading and we havr-'v
 changed it to more accurately reflect our
 intent. When a portion of the Waters or-
 the United States has been legally  '••'£:%
 converted-to fast land by a discharge of"
 dredged or fill material, it does not ?.~Hv
 remain waters of the United States'-'f'J^J.
 subject to section 301(a). The discharge;"
 may be legal because it was authorized^
 by a permit or because'rt was made ;._-:•>
 before there was a permit requirement.--*
 In the case of an-illegal discharge, the' ."•"
 fast land.may remain subject to the-.-^f
 jurisdiction of the Act until the  " ..•'•:Vr;^
 government determines not to seek-.."'if!;;
 restoration. However, in authorizic&a ^
  • The Consolidated Permit Regulations exclude •-.
certain wasle treatment systems from waters of tit;
United Slates. The exact terms of this exclusion ere;
undergoing technical revision* and are expected 13 -
change shortly..For this reason, these CuidclioM as-;
published do not contain the exclusion aa originally-
worded in the Consolidated Permit Regulations.
When published, the corrected exclusion will appry'"
to the Guidelines as well aa the Con.solidHted Pern»t
Regulations,   •           .         . .j^xiii

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  ••"•"-v-^r'^^-^-'- -"
    •;%~::: Federal Register /  Vol. 4.5.  No. 249 / Wednesday.  December 24, 1980 /  Rules and Regulations  85341
    ^^^•^•"••'^•'••••'•••^•'•"'•'•™^—•"'•••"'"••—~^*'""—*'""''-^^—"*""""°-^p^™^'—*^~**^~""^™^~"            **~™^"*^™~~"*       »^—•»
            which will create fast-lands.
     e permitting authority should consider.
    Addition to the direct effects of the fill
    joselC, the effects on the aquatic
    environment of any reasonably
    foreseeable-activities to be conducted
    on that fast land.
    -.Section 230.54 (proposed 230.41] deals
    with impacts on parks, national and
    historical monuments, national sea
    shores, v/ilderness areas, research sites.
    and similar preserves. Some readers
    were concerned that we intended the
    Guidelines to apply to activities in such
 '  .preserves whether ornot ihe activities
    Ipok'place in--waters of the United
 •   Stales-"Weintended, and we thuik^lhe
 "   'context makes it clear, that ihe   .
    Guidelines apply only to the
   : specification of discharge-sites in the
    waters of the "United States, as denned
 ;•  in f.230.3. We have .included .this section
 -  -because the fact that a water of the
   : United States may be located in one of
    ihese preserves is significant in
   .evaluating the impacts of a discharge
 .  jmlo that water.                     -\
   ^'' Wetlands:.Many wetlands are waters
   -of the United Stales .under the Clean
   ;Water Act. Wetlands are also the
   Jrabject of Federal Executive Order No.
   -11990, and various Federal and State
  daws and regulations. A number .of these
 .-vjither programs and laws nave
   .'developed slightly different wetlands
  "definitions, in_part to accommodate or
 f.emphasize specialized needs. Some of
 "these definitions include, not only
 rwetlands as these "Guidelines define
 jlhen, but also mud flats and vegetated
 •'and unvegetated shallows. Under the
   ^Guidelines .some of these other-areas are
 ^grouped with wetlands -as "Special
 'Aquatic Sites" (SubpartE) and as .such
 -~lheir values are .given special
 -"recognition. (See .discussion of Water
 ^Dependency above.) We.agree ivjth the
 '"comment that -the National Inventory -of
 ^.-Wetlands prepared by the.U.S. Fish and
 £{VViIdlife Service, while not necessarily
 ^exactly coinciding with the .scope of
 .^waters of the United States under the
 aClean Water Act or wetlands under
 ,'.;.th&oc icgulaiioas, tnay help avoid    :
 ••;.construction in wetlands, and be a-
 "tjuseful Jong-term planning tooL
 ^•^t'Various commenters objected to the
 .:  definition of wetlands in the Guidelines
 jj^as too broad or too vague. This
 •^proposed definition has been upheld by
 'rithe courts as reasonable and -consistent
 -.v~With the Clean JAAaJpr Art onH ie being
 '^retained in the final regulation.
 "^However. s.ve do agree that vegetative
 ..•-guides and other background material
 -;-nnay be helpful in applying the definition
*£in the field, EPA and the Corps are
•-^pledged to. work en joint research io aid
in jurisdictional determinations. As we
develop such materials, we will make
them available to the public.
   Other commenters suggested that we .
expand the list of examples in the
second sentence of the wetland
definition. While their suggested
additions could legally be added, we
have not done so. The list, is one of
examples only, and does.not serve as a
limitation on the basic definition. We
are reluctant to start expanding the list,
since there are many kinds -of wetlands
which could be included, and the list
could become very unwieldy.
   In addition, we wish to avoid the
confusion -which could result from listing '
as examples, not only areas which
generally fit the wetland definitions, but
also areas which may or not meet the
definition depending on the particular
circumstances of a given site. In -sum, if
an area meets the definition, it is a
wetland for purposes of the Clean Water
Act, whether or not it falls into one of
the listed examples. Of course, more
often .than not, it will be one of the listed
examples.
   A few commenters cited alleged
inconsistencies between the definition
of wetlands in § 230.3 and § 230.42.
While we see no inconsistency, we have
shortened the latter section as part of
our effort to eliminate unnecessary
comments.
   Unvegetated Shallows: One of the
special aquatic areas listed in the
proposal was "unvegetated shallows"
(§ 230.44). Since special aquatic areas
are subject to the presumptions in
§ 230.10(a)(3), it is important that they
'be clearly defined so that the permitting
authority may readily know when to
apply the presumptions. We-were
unable to develop, at this time, a"   .  .   '
definition for unvegetated shallows
which "was. both easy to apply and not
too inclusive or exclusive. Therefore, we
have-decided the "wiser course is to
delete xrnvegetated shallows from the
special aquatic area classification. Of
course, as waters of the United States,   '.
they are still subject r"ii^o
..UIW  ww^!J.H,.Jt.A*lll£ VV *t**5 1,1 l^J~lhJ
program -discharges -with the same effect
which are primarily for the purpose of
disposing of waste. Both proposals
solicited comments on this -distinction,
referred to as the primary purpose test.
On iviay 19,1980, acting under a court-
 imposed deadline, EPA issued final
 Consolidated Permit Regulations while
 the 404(b)(lJ Guidelines rulemaking was
 still pending. These Consolidated Permit
 Regulations contained a new definition
 of fill material which eliminated the
 primary purpose test and included as fill
 material all pollutants which have the
 effect of fill, that is, which replace part
 of-the waters of the United States with
 dryland or which change the bottom
 elevation of a water body for any
 purpose. This new definition is similar
 to the -one used before 1377.   .  .   -
   During the section 404(b)(l)     ...
 rulemaking, -the Corps has raised certain
 questions about the implementation of
 such a definition. Because of the  .• ,-•;- -;. -•.
 importance of making the Final  •  - --••
 Guidelines available without further
 delay, and because of our desire to  "'  -
 cooperate-with the Corps in resolving
 their concerns about fill material, we  "
 have decided to temporarily reserve
 § 230.3(1J pending further discussion.
 This action does not affect the
 effectiveness of the Consolidated Permit
 Regulations. Consequently, there is a
 discrepency between those regulations
 and the Corps' regulations, -which still
 contain the old definition.
   Therefore, to avoid any uncertainty
 from this situation, EPA wishes to make
 clear its enforcement policy for .  • ..
 unpermitted discharges of solid waste.
 EPA has authority under section 309 of  .
 the CWA to issue administrative orders
 against violations of .section 301.     -•.•:-"
 Unpermitted discharges of solid waste  >
 into waters of the United States violate
 section3CrL       .    -      - '   • --•••
   Under the present circumstances, EPA
 plans to issue solid waste administative •
 orders  with two basic elements. First. .  .
 the orders will require the violator to   '.'•'.
 apply to the Corps  of Engineers fora
 section404 .permit within a specified
 period of time. (The Corps has agreed to
 accept  these applications and -to hold
 them until it resolves its "position on the .
 definition of fill material.)  • .- ••:'•':••'.'.••••:
 . • Second, the order will constrain '-'4- :-
 further discharges by the violator, in- ••. •'."•
 extreme cases, an order may TPnnirw -
 that discharges cease immediately. ':';.:.
 However, because -we recognize that' ':••' .-
. there will be a lapse of time before  -• -. .-
 decisions are made on this kind of •• •••
 permit application, these orders may' .  .
 expressly allow unpermitted discharges
 to continue subject to specific conditions
 set forth by EPA in the order. These  -  -
     ».. .      Mil    1  '    1 .      . .
 I.UIHJIUUUS wiu ue-ucaigueu 10 avoid
 further environmental damage.  .••.-"•.-
   Of course, these  orders vwil not  . '•?;'-.;  .
 influence-the-ultimate issuance or non- •'
 issuance of a permit-or determine the
 conditions lhat may be specified in -such
. a permit." Nor will such orders limit the

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           UNITED STATES -ENVIRONMENTAL PROTECTION AGENCY
                         WASHINGTON. D.C. 20460
t OBCC4
                                                   OFFICE Or ENFORCEMENT

  MEMORANDUM

  SUBJECT:  Enforcement  of  Section 404  of the Clean  Water Act

  FROM:     Acting  Director/  Enforcement  Division  (EN-338)

  TO:       Regional  Enforcement  Division Directors


  Background

       As you  may recall,  in  March 1980,  the Enforcement  Division
  initiated discussion with the Corps of  Engineers for the  purpose
  of updating  and revising  the existing June 1,  1976 Enforcement
  Agreement which had been  signed by EPA,  the Corps,  and  the  Depart-
  ment of Justice.  The  proposed  new agreement was circulated to  all
  regions for  review, and  comments were received.  Although initial
  discussions  were  held  with  the  Corps  and DOJ,  no progress was made
  on resolving  this matter.   However,  in  October 1980,  the  Corps
  approached EPA with the  proposition  that it lacked authority to
  enforce against persons  discharging dredged or fill materials into
  waters of the United States without  section 404 permits.   Although
  EPA has not  drawn any  conclusions regarding the Corps'  authority
  or lack of it, the  Enforcement  Division has agreed to endorse the
  attached document,  dated  7  November  1980,  as an interim approach
  to enforcement of section 404.

  EPA's Role in Enforcement of Section  404

       Pursuant to  sections 301,  309 and  404(n), EPA has  authority
  and responsibility  for enforcement of violations of section 301(a)
  which occur  by virtue  of  discharges  of  dredged or  fill  materials
  into waters  of the  United States without a permit,  or in  violation
  of the terms  and  conditions of  section  404 permits.  Pursuant to
  section 404(s), the Corps of Engineers  enforces .discharges  which
  violate the  terms' and  conditions of  permits it has issued.
  Therefore, -it is  reasonable that as  a matter of practice, EPA's
  enforcement  effort  for violations of  section 404 has focused
  largely on unpermitted discharges.  Even in this capacity,
  however, a number of Regions have persisted in viewing  EPA's
  enforcement  role  as simply  one  of support for the  Corps'  efforts,
  rather than  as a  complementary  one with independent authority
  flowing from section 309.

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     Certain recent developments have underscored the need for EPA
to take a more positive approach to enforcement of section 404.
The need has arisen most particularly in cases of solid waste dis-
charges requiring section 404 permits pursuant to the Consolidated
Permit Regulations, 40 CFR §§122.3 and 122.51(c)(2)(ii), _!/  and
in cases where EPA asserts jurisdiction over waters of the United
States, but the Corps disagrees.  In such cases, the Corps has
been and will continue to be reluctant or unwilling to take en-
forcement action.  Therefore, it is incumbent on EPA to exercise
its authority under section 309.

Procedures for Enforcing Dredge or Fill Violations

     Section 309 authority may take the form of administrative
orders or judicial actions, civil or criminal.  The procedures for
enforcing section 404 requirements are the same as those for any
other violation of section 301(a).  Administrative orders may be
issued by the Regional Administrator's delegatee,  with courtesy
copies sent to the Office of Water Enforcement, Attention:
Drinking Water and Special Enforcement Branch.  Civil actions
should be prepared in standard civil litigation report format,
and forwarded to the Office of Water Enforcement (Attention:
Drinking Water and Special Enforcement Branch) for review and
referral to the Department of Justice.  Criminal referrals may be
made directly to the appropriate United States Attorney's office.
Courtesy copies should be sent simultaneously to the Office of
Water Enforcement, Attention:  Drinking Water and Special
Enforcement Branch.

     In all cases, EPA should notify the appropriate Corps
district of a planned or proposed enforcement action.  This
notification is designed to achieve two results.  First, it will
insure that the Corps does not take an inconsistent action which
would jeopardize the efficacy of EPA's enforcement action.
Second, it will afford the Corps an opportunity to join with EPA
in the action.

     If you have any questions, please contact Joan Ferretti or
Betty Cox of my staff at FTS 755-2870.
J_/ For a fuller discussion of the appropriate enforcement action
   for such discharges, see Memorandum from R. Sarah Compton,
   Deputy Assistant Administrator for Water Enforcement, to
   Enforcement Division Directors, and Section 404 Coordinators,
   September 11, 1980.

-------
                                                                   - 7
Attachment

cc:  General E. R. Heiberg,  III
     Regional §404 Coordinators
     George Ciampa, Region I
     Richard Weinstein,  Region II
     Elo-Kai Ojama, Region III
     Susan Schub, Region IV
     Jerry Frumm, Region V
     Tony Anthony, Region VI
     Bill Ward, Region VII
     Lee Marabel, Region VIII
     Ann Nutt, Region IX
     John Hammill, Region X

-------
   • TO
ATTENTION Or-.
DAEN-CWO-N
                         DEPARTMENT OF THE ARMY
                         OFFICE OF THC CHIEF OF trNCI>-4£ERS
                              WASHINGTON. O.C. 203M
                                                                7 KG'/ 1300
SUBJECT:  Enforcement Authority for Violations of Section 404 of Clean
          Water Act
Division Engineer, Lower Mississippi Valley
1.   Reference:

      a.  Letter, DAEN-CWZ-B, 26 May 1980,  to Division Engineers,  subject:   Legal
Authority Under Section 404 of the Clean Water Act of 1977  to  Enter  Private
Property.

      b.  Letter, L.MVOC, 25 September 1980, to DAEN-CWZ-B,  citing  agreement
to elevate Section 40-1 permitless enforcement authority  problem  to KPA/COE
Headquarters for resolution.

2.   This letter provides clarification to  the guidance set  forth in  the
reference la above.  It shall be implemented ori  an interim  basis pending
revision or change of the June 1976 EPA/Corps/Justicc enforcement  memorandum
currently being discussed between OCE and  LTA.

3.   The Corps should continue to carry out  a strong  enforcement  program includ-
 ing UK- issuance of cease and desist orders against  unauthorized activities.
l.ii the past there was clear justification  for this position based  on the
 inherent authorities vested in the Chief of FCng i.nccrs.   This residual, power
was considered to be associated with l.hc .implied authority  as  permitting
ajier.t to manage the Section 404 permit pro»rnni.  However, the  Civilctt.i Attorney
Gcr,;-:-aJ Opinion of September 5, 1979, undercut  that  rationale.  Nonetheless,
in order t.o serve the public interest and  pi-event confusion, we  should
continue our enforcement program ns  in the  past  unJess precluded by future
judicial decisions.  Accordingly, the district engineers shall proceed in
the following manner:

      a.  If the site of the discharge is  a "water of the United States."
as interpreted by the district engineer, the procedures  set forth  at
33 CFK 326 slia.ll be followed and, as appropriate, a  permit  shall be  required
am.i an application accepted (no change to  presnil practice).

      b.  If the site is in a previously designated  "special case" pursuant
to the Corps/EPA jurisdiction, MOU (Federal Register, Volume 45, No. 12'J,
.inly 2, iy«0, p.JTS0*8). EPA will be responsible for the enforcement action.

-------
UAEN-CWO-N
SUBJECT:  Enforcement Authority for Violations of Section 404 of Clean
          Water Act

If the Corps learns of discharge activities  in such special cases  it. will
notify EPA immediately.   If a pei-mit  is subsequently required, an  application
will be accepted and processed by  the district engineer consistent with
current" regulations.
                                   *    -•
                                         t
      c.  If lands under  a and b above"are involved in the same case, EPA will
normally be responsible for eo-forcemcnt actions; however, by mutual agreement,
the district engineer may assume the  responsibility.

4.  Paragraph 6 of the Corps/EPA Jurisdiction MOU states  that any  jurisdictional
determination made by EPA as a result of an  enforcement action wj11 be used.
by the district engineer  as the basis for all subsequent  404 actions
of that case.  Therefore, if EPA (or  the Department of Justice on  its behalf)
brings an enforcement action against  the discharger, the  district  engineer  shall,
consistent with 33 CFR 326, accept an application for an  after-thc-fact  or
subsequent permit application consistent with the assertions made  by  the EPA
in that action.  If it is at all unclear from KPA's enforcement action whether
ail phases of the discharger's activities are taking place in "waters of the.:
United States," the district engineer shall  forward the case to EPA for  a
formal jurisdictional delineation  before processing any permit.  Informal verbal
or written communications (actions other than enforcement actions  signed by
r.hc regional administrator or his  designee)  will not in themselves establish
jurisdiction.  In such case where  EPA brings an enforcement action and  in casesj
3b and 3c above, any public notice will clearly state that the jurisdictional
determination has been made by EPA.

5.  Pursuant to Section 404(s) of  the Clean  Water Act, each district  engineer
shall conscientiously, implement enforcement  actions against permit condition
violations.  This applies regardless  of the  location of the dis.charge.

fi.  This letter docs not  alter our full authority and responsibility  to  take
enforcemcnt action against all violations of the River and Harbor  Act. of
KSP9  in t r:iu i t i onal ly navigable waters of the United SUitCE.

l-'OH TIIK UIIKF OF KNG.LN'KKKS:
                                                  -.< .*i  v
                                     E.  H.  IIEIHKRG  III     '
                                     Major  General, USA
                                     Director  of  Civil  Works

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NPDES Permitting

-------
IMPDES Permitting

-------
                   PERMITS DIVISION POLICY BOOK








Note;  The Contents of the Permits Division Policy Book  is  included




for the reader's reference and may be obtained in the Permits




Division (EN-336, 755-2545).

-------
                                      rn'U i cC i iUl\ AL.C.NCY
                       WASHINGTON, D.C. 20460
                           2 3 1332                      OFFICE OF
                                                        WATER
 MEMORANDUM                        .  •


^SUBJECT:   Permits Division Policy Book Update

 FROM:      Martha G.  Prothro, Director
           Permits Division (EN-336)

'TO:        Regional Water Management Division Directors
           Regional Permit Branch Chiefs
           NPDES State Directors     '        .


      In  1981  we'distributed a Permits Division Policy Book:
 which  provided a compilation of current policies and guidance
 pater'ial  for  your reference.  We have reviewed and updated the
 contents  of the Policy Book.  Several outdated NPDES items should
 be  deleted and nine more recent issuances should be included.
 Also,  we  are  no longer including RCRA materials in this
 compilation.

      Attachments 1 and'2 show additions and deletions by their
 subject  headings.  We will maintain a historical file of the'
 'deleted  policy guidance materials.  For your convenience I am
 also  providing copies of the nine additions and new chronological
 and subject indices.

      We  will  continue to provide periodic updates to the Permits
 Division  Policy Book.  Your comments and suggestions for improving
 the usefulness of this book are welcome.
 Attachments

-------
                                   Additions
     Administrative Guidance

     A.   Forms
          Application Forms 1 and 2 c
                                          12/10/80
n-80-18
IV.  Legal Interpretation and Information -Memos
          NPDES Permit Issuance for Iron and
            Steel Industry                            5/15/81
          Use of "Draft Supplement to Develop-
            ment Document for Effluent'Limitations
            Guidelines and New Source Performance
            Standa'rds for the Phosphorous Derived
            Chemicals Segment of the Phosphate
            Manufacturing Point Source Category"
            (October 1977) in Writing NPDES Permits   1/18/82
          BCT Permitting                 .             11/2/81
          NPDES Permit Issuance for Pulp and Paper
            Facilities with BCT Limitations to
            Other Facilities    *                      5/15/81
          Status of the Major NPDES Industrial
            Permits List                     •         12/10/81
                                                            n-81-3
                                                            n-82-1
                                                            n-81-4
                                                            n-81-5

                                                            n-81-6
V.   Second Round Permits:
          Policy for the Second Round Issuance
               NPDES Industrial Permits
of
VI.  Technical Guidance:
          Outer Continental Shelf Coordination
            Committee
          Application of the NPDES General
            Permit Program to Offshore Oil
            and Gas Facilities
                                           6/02/82
                                          6/6/80


                                          7/30/81
n-82-2
n-80-19


n-81-7

-------
                                       Deletions
           Tiile

     Regulation Procedures

     A.   ECSLs:-

          Procedures for Issuance of
            ECSLs
          Enforcement Actions Against
            Funded Municipal Dischargers
          Enforcement Actions where an
            Industrial  Discharger Fails to
            Meet 7/1/77 Deadline
          Questions re:  ECSLs
          Additional Questions re:  ECSLs
          Use of ECSLs  Past 7/1/77
          Enforcement Policy and Use of-
            ECSLs for POTWs
Date
Permit Program
    Code
6/03/76

6/03/76
6/03/76
12/10/76
4/01/77
5/11/77

6/22/77
  • n-76-2

   n-76-3
   n-75-4
   n-76-13
   n-77-3
   n-77-9

   h-77-11
          Clean Water Act Extensions and
          Modifications:

          Municipal  Permit Extensions under
            Section 301(i)
4/19/78
   n-78-3
III. Federal/State Relationships
     D.    Resource Conservation and Recovery Act:

          Establishment of RCRA "Program
            Implementation Guidance System
            (PIGs)"                                   10/03/30
          Interim Authorization of Programs
            Based on Emergency State
            Regulations                         '      10/03/80
          Requirement that State-Permitted
            Hazardous Waste Facilities have
            "Interim Status"                          10/03/80
          Short-Term Financial Assistance for
            State Expected to Receive
            Authorization before 1/1/81                10/03/80
          The Use of State Permitting Systems
            During Phase I Interim Authorization
            which are not Based on Explicit
           • Regulatory Standards                      10/17/80
                         PIG-80-1


                         PIG-80-2


                         PIG-80-3


                         PIG-80-4



                         PIG-SI-1

-------
                                                                                p.
                     Title   -

          Federal Register Notice of Public
            Hearing and Comment Period on •
            State Applications for Interim
            Authorization
          Effect of RCRA Regulations Changes
            on Phase I  Interim Authorization
            Approval
          Deli sting of  Wastes by Authorized
            States
          Used Oil Recycling Act of 1980
          State Regulation of Federal Agencies
            For purposes of Interim
            Authorization
          Final Determinations on State
            Applications for Interim
            Authorization:  Action Memoran-
            dum & Federal Register Notice
          Program Implementation Guidance
            on Issuance of Provisional
            EPA Identification Numbers
          Effect of EPA's Memorandum of
            Understanding With the Dept.
            of Transportation on Activities
            in States with Cooperative
            Arrangements
          Transfer of Modification and Permit
            Application•Information to States
          Involvement of States without. Phase
            II Interim  Authorization in RCRA
            Permitting
                                                  Date
Permit Program
     Code
                                                 10/30/80
                                                 10/30/80

                                                 10/31/80
                                                 11/14/80
                                                 11/14/80



                                                 12/1/80


                                                 11/26/80
                                                 12/10/30

                                                  3/24/81


                                                  2/12/81
    PIG-81-2
    PIG.-81-3

    PIG-81-4
    PIG-81-5
    PIG-81-6



    PIG-81-7


    PIG-81-8
    PIG-fcj

    PIG-81-10


    PIG-81-11
V.   Second Round Permits:
          Reissuing NPDES  Permits to  Sources
            Affected  by -the  NRDC Consent Decree
          Policies for Reissuing Industrial
            NPDES Permits
          Writing NPDES BAT  Permits in the
            Absence" of Promulgated Effluent
            Guidelines
          Revised NPDES Second  Round  Permits
            Policy
                                                 5/16/78

                                                 7/12/78


                                                 6/25/80

                                                 8/29/80
    n-78-5

    n-78-9*


    n-80-7

    n-80-10
V T
Ai
RCRA:
          RCRA Permit  Priorities  Guidance
          RCRA Emergency  Permit Guidance
                                                 10/03/80
                                                 10/20/80
    r-80-1
    r-80-2*

-------
Establishment of RCRA "Program
  Implementation Guidance System
  (PIGs)"          .  .                :       10/03/80
Interim Authorization of Programs
- Based on Emergency State
  Regulations    •                           10/03/80
Requirement that State Permitted
  Hazardous Waste Facilities have
  "Interim Status"                          10/03/80
Short-Term Financial Assistance for
  States Expected to Receive
  Authorization Before 1/1/81                10/03/80
The Use of State Permitting Systems
  During Phase I Interim Authorization
  Which are not Based on Explicit.
 • Permit Guidance                           10/17/80
RCRA Emergency Permit Guidance              10/20/80
Federal Register Notice of Public
  Hearing and Comment Period on
  State Applications for Interim
  Authorization            .          '       10/23/80
Effect of RCRA Regulations Changes
  on Phase I Interim Authorization
  Approval                 .      '           tt)/30/80
Deli sting" of Wastes by Authorized
  States                                    10/31/80
r-80-1


PIG-80-2


PIG-80-3


PIG-80-4
PIG-81-1
r-80-2*
PIG-81-2


PIG-81-3

PIG-81-4

-------
                  ' Permits Division Policy Book

     This book contains policies and guidance under the NPDES
Permit Program.  The materials are arranged and numbered in
chronological sequence.  NPDES policies are prefixed by an "n".
Following the prefix, the first number is the year of issuance
and the second is the chronological sequence for that year.
In addition to the chronol og'ci al '1 i sti ng a subject index is
provided to assist in locating policies.

    Documents which are too lengthy to be included are indicated
by an asterisk.  Copies of these documents may be obtained by
contacting:
     Mr. Timothy Dwyer
     Permits Division (E.N-336)
     U.S. EPA
     401 M Street, S.W.
     Washington, D.C.  20460
     (202) 426-4793
   •                                                       .
Please u-se th'e policy number when  requesting a document..

-------
Title
    Date
                                                                  Permit .
                                                                  Program
                                                                   Code
1S73
1974
     Policy on Storage & Releases for Water Quality
       Control in Reservoirs Planned by Federal
       Agenci es
     Permit Form
     Intermittent Streams
     Alternative in Permit Language
     Additional Guidance for Petroleum Marketing
       Terminals & Oil Production Facilities
     Feedlot Permit Format
     Application of Electroplating Guidelines
     Disposal of Supply Water Treatment Sludges
1975
1976
     Use of Closed Cycle Cooling Systems to Meet the
       Requirements of Section 316(b)
N'PDES Permit Authorization to Discharge  •
(Deleted)
(Deleted)
(Deleted) '
Coordination Between NPDES Program and'Water
  Quality Management
Attachment - Coordination
Municipal Wastewater Treatment Ponds
American Petroleum Institute v. EPA -
  information Memo
Binding Effect of 303(e) Basin Plans
Impact of Phase I Basin Plans
Phase II Iron and Steel Guidelines - Mahoning
  River Val ley
Asbestos Limits
Use of Low Flow Augmentation to Meet Water
  Quality Standards
(Deleted)
Comments on Region VIIl's Approach to Writing
  Effluent Limits for Confined Animal Feeding
  Operations
1977  •
     Clarification of 03C Opinion No. 40 (State
       Review Authority)
     Fecal Coliform Bacteria Limits
     (Deleted)
     Water Treatment Plant Limitations
  1/16/73
  9/18/73
  9/28/73
 12/27/73
  7/18/74
  7/29/74
  8/28/74
  9/13/74
  2/26/75
                                                         4/28/76
                                                         7/07/76
                                                          and
                                                         4/02/76
                                                         8/12/76

                                                         8/24/76
                                                         8/24/76
                                                         9/01/76

                                                        10/04/76
                                                        10/15/76

                                                        11/08/76
                                                        12/15/76
2/04/77
2/14/77

4/13/77
                                                                  n-73-1
                                                                  n-73-2
                                                                  n-73-3
                                                                  n-73-4
                                                                  n-74-1
                                                                  n-74-2
                                                                  n-74-3
                                                                  n-74-4
                                                                  n-75-1
                n-75-1
                n-75-2
                n-76-3
                n-76-4
                n-76-5

                n-76-5
                n-76-6

                n-76-7
                n-76-8
                n-76-9

                n-76-10
                n-76-11

                n-76-12
                n-76-13
                n-75-14
                                                                n-77-1
                                                                n-77-2
                                                                n-77-3
                                                                n-77-4

-------
                         Title

     Request for Policy Regarding Possible Use
       of NPDES Permits to Promote Better Sludge
       Management
     316(a) & (b) Technical Guidance Documents
     Use of In-Stream Mechanical Aerators to Meet
       Water Quality Standards
     NPDES Permits and Requirements of State- Law
     (Deleted)
     Implementation of Promulgated Section 307(a)
       Toxic Standards
     (Deleted)
     NPDES Permits in Wetlands Areas
     Implementation of Section 403
     Policy Regarding Procedures, for Fundamentally
       Different Factors BPT Variances
     Policy Regarding the  Inclusion in Permits of
       More Stringent Effluent Parameters
1978
     State Regulation of Federal Facilities
     Confidentiality of NPDES Permit Applications .
     (Deleted)
     Certification and Permitt.ing of Dischargers
       in Boundary Waters
     (Deleted)
     Coal'Min'ing Under the Surface Mining Control
       and Reclamation Act of 1977.
     Opinions on Variances in Second Round-and
       Other Issues      .  -
     Ex Parte Contacts in Adjudicatory Hearings
     (Deleted)
     Ex Parte Contacts in EPA Rulemaking
     Suspenaed Solids Limits for POTW Ponds
     .Innovative Technology Extensions
     Guidance to States re Pretreatment Program
     Variance Applications
     Applicability of 301 (h) &  (i) to Federal
       Facilities
     Transfer- of Authority over Federal Facilities
       to NPDES States
     Coordination between Regional Enforcement and
       Water Programs re Pretreatment Program
     Request for Legal Opinion - Inclusion of
       Compliance Schedules in Second Round and
       New Permits
1979
Use of Biornon.itoring in the NPDES
  Permits Program
State ? ret re at mer.t Programs
  Date
 4/13/77
 5/01/77

 5/02/77
 5/04/77
 6/01/77

 7/12/77
 7/20/77

 8/18/77

10/13/77
 5/25/78.

 6/13/78
 6/16/78

 8/04/77
 9/01/78
 9/06/78
 9/08/78
 9/12/78

 9/12/78

11/28/78

11/29/78


12/26/78
                                                                 •Permit
                                                                  Program
                                                                   Code
                                                                n-77-5
                                                                n-77-6*

                                                                n-77-7
                                                                n-77-8
                                                                n-77-9

                                                                n-77-10
                                                                n-77-11
                                                                n-77-12
                                                                n-77-13

                                                                n-77-14

                                                                n-77-15
3/10/78
4/06/78
4/19/78
n-78-1
n-78-2
n-78-3
" n-78-4
• n-7S-5
                                                                n-78-6

                                                                n-7S-7
                                                                n-78-8
                                                                n-78-9*
                                                                n-78-10
                                                                n-78-11
                                                                n-78-12
                                                                n-78-13*
                                                                n-78-14

                                                                n-78-15

                                                                n-78-16

                                                                n-78-17


                                                                n-78-18.
                                                       1/11/79
                                                       4/12/79
               n-79-1
               n-79-2

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                         Title
  Date
  Program
   Code
     EPA Procedures for Review & Approval  of State
       Pretrefitment Program Submissions
     Separate Storm Sewers
     National Municipal Policy & Strategy
     Guidance on Setting BCT Permit Limits for
       Breweries under Section 402(a)(l) of CWA
1980
  .  Regional  Review of State-Issued NPDES Permits
  .  Applicability of Revised NPDES Regulations
       to Permits Currently Being Processed
  .  Incorporation of Pretreatment Program
       Development Compliance Schedules into
       POTW NPDES Permits
  .  OGC Memo-Use of BODS Carbonaceous Test Results
  .  Pretreatment Compliance Schedule
  .  "Statement By Agency Personnel Purporting To
       Sanction Source Actions Which Are Inconsistent
       With Statutory Requirements
  .  (Deleted)
  .  Major Municipal Permitting in FY 81
  .  Suspension of Portion of Definition
       of "Waters of the US" in Consolidated
       Permit Regulations             • .;.
  ,  (Deleted) .
  .  NPDES Permit Issuance for Iron & Steel
       Facilities
  .'  Suspension .of Provisions in Consolidated
       Permit Regulations Establishing Criteria
       for NPDES New Source Determinations and
       Proposed Revision of the Regulations
  .  Treatability Manual
  .  BCT Cost Test Guidance
     NPDES Evidentiary Hearing Management Program
  .  Review of State NPDES Permits Written Prior
      to State Program Revision
  .  Procedures for Processing Plans of Approved
      NPDES States to Implement NPDES General
      Permit Programs
  .  Application Forms 1 and 2c
  .  Outer Continental Shelf Coordination
      Committee .

1981

(number not used)

  .  Determining Whether Revisions to State NPDES
      Programs Made to Authorize the Issuance
      of General Permits are Substantial  •
  .  NPDES Permit Issuance for Iron and Steel
      Industry
 4/30/79
 9/11/79
   10/79

10/18/79
 1/18/80

 1/18/80
 1/28/80
 4/18/80
 5/28/80

 7/10/80
 7/15/80
 9/15/80

 .9/25/80
 9/25/80
 9/30/80
 10/3/80
12/24/80

12/31/80
12/10/80
 6/06/80
n-79-3
n-79-4
n-79-5*

n-79-6
n-80-1

n-80-2
n-80-3
n-80-4
n-80-5
n-80-6
n-80-7
n-80-8
n-80-9
n-80-10
n-80-11

n-80-12
n-80-13*
n-80-14*
n-80-15
n-80-15

n-80-17
n-80-18
n-80-19
 2/12/81

 5/15/81
n-81-1



n-Sl-2

n-81-3

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                         Title
     BCT Permit*ing
     NPDES Permit Issuance for Pulp and Paper
      Facilities with BCT Limitations to
      Other Facilities
                                                           Permit-
                                                           Program
                                                            Code
                                                           n-81-4    {


                                                           n-81-5
     Status of the Major NPDES Industrial
      Permits List
     Application of the NPDES General
      Permit Program to Offshore Oil
      and Gas Facilities
1982
     Use of "Draft Supplement to Develop-
      ment Document for Effluent Limitations'
      Guidelines and New Source Performance
      Standards for the Phosphorous Derived
      Chemicals Segment of the Phosphate
      Manufacturing Point Source Category"
      (October 1977) in Writing NPDES Permits
     Policy for the Second Round Issuance
      of
NPDES Industrial  Permits
                                             12/10/81
                                              7/30/81
1/18/82

6/02/82
              n-81-6
              n-81-7
n-82-1

n-82-2

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                     LIST OF CURRENT POLICIES BY SUBJECT
                 Title

I.   Administrative Guidance

     A.  Forms:

         Permit Form
         Alternative in Permit Language
         Feedlot Permit Format
         Application Forms 1 and 2c
  Date
 9/18/73
12/27/73
 7/29/74
12/10/80
•Permit
 Program
  Code
 n-73-2
 n-73-4.
 n-74-2
 n-80-18
    B.   Procedures:

         Applicability of Revised NPDES Regs.
           to Permits Currently Being Processed
 1/18/80
n-80-2
I!.  Regulatory Procedures
     B.  Industrial:

     C.  Municipal:

     D.  Tie- .in:
                     •

     F.  Consolidated:

         Suspension of Portion- of Definition
              "
               Waters of the US" in Consolidated
           Permit Regulations

         Suspension of Provisions in
           Consolidated Permit Regulations
           Establishing Criteria for NPDES
           New Source Determinations & Proposed
           Revision of the Regulations

III.  Federal/State Relationships

     A.   NPDES States:

         Clarification of OGC Opini-on
           No. 40 (State Review Authority)
         •State Regulation of Federal Facilities
 7/15/80
 9/25/80
 2/04/77
 3/10/78
n-80-9.
n-80-12
n-77-1
n-78-1

-------
        Title     .                                  Date

    Transfer of Authority over Federal
      Facilities to NPDES States                  11/28/78
    Review of State NPDES Permits Written
      Prior to State Program Revision             12/24/30
    Procedures for Processing Plans of
      Approved NPDES States To Implement .
      NPDES General Permit Programs      .         12/31./80
    Determining Whether Revisions to State
      NPDES Programs Made to Authorize the
      Issuance of General Permits are'
      Substantial                                  2/12/81

 B.    Non-NPDES States:

 C.    Water Quality Management Plans:

      Coordination Between NPDES Program           7/07/76
        and Wa-ter Quality Management      •           and
      Attachment - Coordination                    4/02/76
     ' Binding Effect of 303(e) Basin Plans      .   8/24/76
      Impact of Phase I Basin Plans                9/01/76
      NPDES Permit and Requirements of
        State Law                                  5/04/77

£. Safe Drinking Water Act:
                                         •
   Legal Interpretations and Information Memos:

   Intermittent Streams  ..                         9/28/73
   Disposal of Supply Water Treatment Sludges      9/13/74
   NPDES Permit Authorization to Discharge         4/28/76
   American Petroleum Institute v. EPA -
     Information Memo                              8/24/76
   Phase II Iron & Steel Guidelines -
     Mahoning River Valley                     .   10/4/76
   Request for Policy re Possible.Use of
     NPDES Permits to Promote Better Sludge
     Management                                    4/13/77
   NPDES Permit in Wetlands Areas                  7/12/77
   Implementation of Section 403                   7/20/77
   Policy Regarding the Inclusion in Permits
     of More Stringent Effluent Parameters        10/13/77
   Confidentiality of NPDES Permit
     Applications   •                         '      4/05/78
   Coal  Mining Under the Surface Mining
     Control and Reclamation Act of 1S77           5/25/78
   Certification and Permitting of Dischargers
     in Boundary Waters                            4/19/78
   Opinions on Variances in Second Round
     and Other Issues                              6/13/78
 Permit
 Program
. Code-
 n-78-15

 n-80-.16.


 n-80-17



 n-81-2
n-76-5

n-76-5
n-76-8
.n-.76-9

n-77-8
n-73-3
n-74-3
n-76-1

n-76-7.

n-76-10


n-77-5
n-77-12
n-77-13

n-77-15

n-78-2

II— I W~ W

n-7S-4

n-78-7

-------
for Pulp and Paper
Limitations to
   Title

Ex Parte Contacts in Adjudicatory Hearings
£x Parte Contacts in EPA Rulemaking
Innovative Technology Extensions
Applicability of 301(h) and (i) to Federal
  Facilities
Request for Legal Opinion - Inclusion of
  Compliance Schedules in Second Round
  and New Permits
Separate Storm Sewers
Regional Review of State-Issued NPDES
  Permits
OGC Memo-Use of Carbonaceous Test Results
Statement By Agency Personnel Purporting
  to Sanctional Actions Which are In-
  consistent w/ Statutory Requirements
NPDES Permit Issuance for Iron & Steel
  Facilities
BCT Cost Test Guidance
NPDES Evidentiary Hearing Management
  Programs
NPDES Permit rssuance for Iron and
  Steel Industry
BCT Permitting
NPDES Permit Issuance
  Facilities with BCT
  Other Facilities
Status of the Major NPDES Industrial
  Permits List
Use of "Draft Supplement to Development
  Document for Effluent Limitations
  Guidelines and New Source Performance
  Standards for the Phosphorous Derived
  Chemicals Segment of the Phosphate
  Manufacturing Point Source Category"
  (October 1977) in writing NPDES Permits

Second Round Permits:

Policy for the Second Round Issuance
  of NPDES Industrial Permits

Technical Guidance:
                               •
Policy on Storage & Release for Water '
  Quality Control in Reservoirs Planned
  by Federal Agencies
Additional Guidance for Petroleum Marketing
  Terminals & Oil Production Facilities
Application of Electroplating Guidelines
Use of Closed Cycle Cooling Systems to
  Meet the Requirements of Section 216(b).
Municipal Wastewater Treatment Ponds
Asbestos Limits
                           Date

                          6/16/78
                          8/04/77
                          9/06/78

                          9/12/78
                         12/26/78
                          9/11/79

                          1/18/80
                          4/18/80
                          5/28/80

                          9/15/80
                          9/30/80

                         10/03/80

                          5/15/81
                         11/02/81
                          5/15/81

                         12/10/81
                          1/18/82
                          6/02/82
                          1/16/73

                          7/18/74
                          8/28/74

                          2/26/75
                          8/12/76
                         10/15/75
   in i u
Program
 Code

n-78-8
n-73-10
n-78-12

n-78-15
n-78-18
n-79-4

n-80-1
n-80-4
n-80-5

n-80-11
n-80-14*

n-80-15

n-81-3
n-81-4
n-81-5

n-81-6
n-82-1
n-82-2
n-73-1

n-74-1
n-74-3

n-75-1
n-75-6
n-76-11

-------
    Title

 Lrse of  Low Flow Augmentation to Meet
   Water Quality Standards
 Comments  on Region VIII1s Approach to
   Writing Effluent Limits for Confined
   Animal  Feeding Operations
 Fecal Col i form Bacteria Limits
 Water Treatment Plant Limitations
 Use of  In-Stream Mechanical Aerators
 '  to Meet Water Quality Standards
.Implementation of Promulgated Section
   307(a)  Toxic Standards
 Suspended Solids Effluent Limitations for
   Publicly Owned Wastewater Treatment Ponds
 Guidance  on Setting BCT Permit Limits for
   Breweries under Section 402(a)(l)  of
   the CWA
 Treat ability Manual
 Outer Continental  Shelf Coordination
   Committee
 Application of the NPDtS General  Permit
   Program to Offshore Oil and Gas  Facilities

 Variances:

 Policy  re Procedures for Fundamentally
   Different"Factors BPT Variances
 Variance  Applications
 316(a)  &  (b) Technical  Guidance Documents

-Coordinated Municipal Strategy

 National  Municipal Policy & Strategy
 Coordination between Regional Enforcement
   and Water Programs re Pretreatment
   Program
 Major Municipal Permitting in FY 81

 Pretreatment:
          to
                    re r red council*.
   Program (see also Feb. 1979 publication-
   Guidance for NPDES States on
   Implementaion of the General
   Pretreatment Regulations -
   40  CFR  Part  403)
 State Pretreatment Programs
 EPA Procedures for Review and
   Approval  of  State Pretreatment
   Prooram Submissions
  Date


11/08/76


12/15/76
 2/14/77
 4/13/77

 5/02/77

 6/01/77

 9/01/78


10/18/79
 9/25/80

 6/06/80

 7/30/81
 8/18/77
 9/12/78
 5/01/77
  10/79
11/29/78
 7/10/80
 n to/TO
 a f w/ / w
 4/12/79


 4/30/79
Permit
Program
 Code
n-76-12


n-76-14
n-77-2
n-77-4

n-77-7

n-77-10

n-78-11


n-79-6
n-80-13*

n-80-19

n-81-7
n-77-14
n-78-14
n-77-6*
n-79-5*
n-78-17
n-80-8
                                                                   "3*
n-79-2


n-79-3

-------
                                                           ..... Permit
                                                          •  "  Program
    Title                          :             -   Date      ' . Code

  Incorporation  of  Pretreatment  Program          •  •
   Development  Compliance  Schedules into
"'I'PGTW  NPDES Permits    .. .       .            "  "'1/28/80      'n-80-3
 .Pretreatment Compliance^.Schedule-.                             n-80-5

.pBiomonitoring:

  OGC Memo  "Use  of  Biomom'toring in the
   NPDES-Permit-Program"..,,..                 ;  -1/11/79   . • n-79-1

-------
        UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                        WASHINGTON. D.C.  20460


                               APR 2 5 1976
                                                       OFFICE OF ENFORCEMENT

                                                                  ^ * ^
MEMORANDUM                '                                              .

Subject:  NPDES Permit Authorization to Discharge

From:     Deputy Assistant Administrator for Water Enforcement

To:       Regional Enforcement Director, Region V

     •This is in response to your March 17 memorandum requesting
Headquarters' policy on the following issue:

          "[W] nether an' NPDES permit constitutes an authorization
to discharge only specific parameters limited or monitored  in the
permit or a general authorization to discharge all parameters subject
only to the limitations contained in the permit."
     Headquarters policy, as well as the clear language contained in
the standard permit form  [EPA Form 3320-4  (10-73) ] , provides for a
general authorization to discharge subject only to the conditions
and limitations contained in the permit.

Discussion

     Every standard permit issued by EPA provides  that the named discharger
is "authorized to discharge from a [named] facility ... to  [named]
receiving waters ... in accordance with effluent limitations, monitoring
requirements and other conditions set forth in Parts I, II, III hereof."
In addition to effluent limitations -specified in Part I and any special
requirements set forth in Part III each general authorization  to discharge
is subject to the general conditions set forth in  Part II.  Those
general conditions which tend to restrict the general authorization to dis-
carge are the following:

     A.I. Change in Discharge - requires notice of facility expansions,
production increases or process modifications resulting in any different
or increased discharges of pollutants even if such changes do  not violate
the permit effluent limitations.

     A. 3. Facility Operation - requires the permittee to maintain his
treatment facilities or systems in good working order and operate them
as efficiently as possible.

-------
     A. 5. Bypassing  all bypassing is prohibited except under certain
circumstances.

     It is believed that the above general conditions, along with the
installation and proper operation of treatment systems designed to
achieve compliance with effluent limitations based upon. BPT and water
quality standards requirements should adequately limit the general
authorization to discharge.  Should information which suggests otherwise
subsequently become available  (e.g., discovery of the presence of toxic
substances such as PCBs in the discharge) , the permit may be modified
for cause in accordance with general condition B.4. ("Permit Modification")

     The few permits issued under the NPDES's predecessor permit program,
the Refuse Act Permit Program, authorized only those parameters identified
in the permit.  This approach was rejected by EPA during the early
development phases of the NPDES because it is impossible to identify and
rationally limit every chemical or compound present in a discharge of
pollutants.  Compliance with such a permit would be impossible and
anybody seeking to harass a permittee need only analyze that permittee's
discharge until determining the presence of a substance not identified
in the permit.  The permittee then would be in technical violation of
his permit.           ^

     Because we believe the approach adopted in the NPDES Permit Form
3320 is valid we recommend against inserting in permits the language
identified by Walter A. Romanek in his January 22, 1976, memorandum
(attached).  Although it may be appropriate in special cases to employ
narrative language in addition to the Part II general conditions in
order to further restrict the general authorization to discharge, as a
routine matter such practices should be avoided.

     I believe the above statement of policy is consistent with that
provided to your staff by Dick Browne and Barry Shanoff.  If you have
any further questions please contact-Dick BrownefHBpb ^mett, Brian
Molloy, or me.
                      "   .          Jeffrey G/ Mfller

Enclosure

cc:  Roy Harsch,  Enforcement Division,  Region V

-------
     UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                    WASHINGTON, D.C.  20460                   TAB A
                                              Or?1C£ 0- SNFORCSWSK7
ME.MORANDUM
TO:       Regional  Administrators
          Directors of the Approved NPDES Programs

FROM:     Assistant Administrator for Enforcement (EN-329)

          General  Counsel (A-130)

SUBJECT:  State  Regulation of Federal Facilities Under the
          Federal  Water Pollution Control Act Amendments of
          1977  ''(Clean Water Act) — POLICY GUIDANCE HEMC?J.KDUM

Introduction
      The  recent amendments to. the FWPCA have significantly
changed  the  "regulatory relaz.icr.ship cf States to Federal
facilities  under the FWPCA.  First, section 212 of  the FV7PCA
was'substantially amended to provide that Federal facilities
~usr  cor.ply  with substantive and procedural requirements of
State lav regarding the control of water pollution  including
Scate permits.   Second, Federal permits to Federal  agencies
now  require  Stat.e certification under  section 401.

S~atr Issuance of PerTT,its tc Federal Facilities

      Under  the 1977 amendments, States are authorized -to
issue water  pollution  control permits  to Federal  facilities.
Prior to these amendments, the  Supreme Court  had  held  that
States  could not require-  federally owned cr  operated facili-
ties to obtain State discharge  permits.I/
 _! /  SPA v.  California  Regional  water  Resources Control
     Board 426 U.S.  20C (1976).

-------
     Section  313  was amended  to  require  that  Federal
facilities:

     .  .  .  shall  be subject  to  and  comply with
     all  .  .  .  State, interstate,  and local
     requirements,  administrative  authority,
     and  process  and sanctions  respecting the
     control  and  abatement  of water pollution
     in the  same  manner,  and  to  the same extent
     as any  nongovernmental  entity .  .  ..  The
     preceding, sentence shall apply (A)  to any
     requirement  whether  substantive or  procedural
      (including any recordkeeping  or reporting
     requirement, any requirement  respecting
     permits  and  any other  requirement,  whatso-
     ever) ,  (B) to the exercise  of any . . .
     State  or local administrative authority  ....
      (Emphasis added.)

State  and NPDSS Permits

     States are authorized  to issue water pollution control
permits  to  Federal facilities.   The section 313  amendments
do  not restrict this authority  to State or NPDES permits,
•therefore States may issue  both.  Obviously,  only approved
'NPDES  States can issue section  402 permits.  Where a non-
approved  State issues a' State permit to a Federal facility,
the Regions should continue to  issue an EPA permit in the
same manner as anv other NPDES  permit.  To the extent
possible, issua-nce by-a Region of an NPDES permit in these
circumstances  should be coordinr.ted with  the State to avoid
 inconsistencies  and  procedural  delays.

      The effect  that  the 1977 Amendments  will have on the
NPDES  permit program as it relates to State  regulation of
Federal facilities  is discussed below.   The  issuance of
 State  permits  to Federal dredge and  fill  activities, and
 Sta.te  administration of the  section  404  program  is not
 covered by this  memorandum.  These  issues will be discussed
 later.

 State  NPDES Programs

      Section 402(c)(l) of the Clean'Water Act provides that
 upon approving a State program, "the Administrator  shall

-------
       suspend the issuance of permits under subsection (a)  of
       this section as to those navigable waters subject to such
       program .  . .."  Except for Federal facilities, it has
       always been EPA's position that section 402(c)(l) requires
       States to have authority to issue permits to all point
       sources.  Prior to the enactment of the Clean Water Act of
       1977, EPA withheld approval of State NPDES authority over'
       Federal facilities because Federal law precluded States from
       issuing permits to Federal agencies.  The Supreme Court
       adopted EPA's position in EPA v. California Regional Water
       Resources Control Board, supra n. 1.

            However, in  its decision, the Court made  it clear that
       Congress intended "that the States be given maximum responsi-
       bility for the permit system  . ..."  Id. at n.  39.  Moreover,
       the Court approved withholding SPA approval of State programs
       to the extent that they applied to Federal facilities  only
       because EPA "may  not  .  .  . approve a state plan  which  the
       State has no authority to  issue because  it conflicts with
       federal law."  Id. at 226.  Now that Congress  has  amended
       the Clean Water Act specifically  to  include Federal facili-
       ties within the class of dischargers subject to  State
       permits, it seems clear that  States may  no longer  exclude
(       Federal facilities from regulation,  just as they may not
       exclude steel- -mills or  power  plants, or  other  sources  over
       which  they may assert jurisdiction.

              Accordingly, all  NPDES  programs  approved before  the
       1S77 Amendments  should  be  modified,  including  the  Memoranda
       of Agreement,  to  reflect  the  States' new authority to  issue
       Federal facilities permits.^/ fts part  of this modification,
        2_/  Modification is required because many States are prevented
           by  State lew from issuing permits to Federal facilities.
           Moreover,  all States which" administer the NPDES program
           hav.e  entered into a Memorandum of Agreement which includes
          - a provision that prevents the State from issuing permits
           to" Federal facilities.   For example, the State of Missouri
          .Agreement provides that:

                      This agreement does not cover the issu-
                 ance of KPDES permits to Federal facilities
                 within the State of Missouri.  It is under-
                 stood by both parties that  it  is the intent •
                 of EPA to expressly retain  the permit  issu-
                 ance authority for Federal  facilities  .  .  .'.

-------
the State shall submit a statement from 'its attorney general
that the laws of the State provide adequate authority for
issuance of permits to Federal  facilities and to carry out
the reporting, monitoring, inspection and entry authorities
set out below.  The Office of Enforcement will develop
regulations to require these programs to be modified within
one year of promulgation unless  a State must amend or enact
a law in, order to make the necessary modification.  In that
case the modification must be made within two years of the
date of regulation promulgation.  Programs may be modified
before these  regulations, are issued.  Program modifications
should be subject to public notice and opportunity for
comment.  Modifications  to the  Memorandum of Agreement must
be approved by the Administrator.

     It is possible that for some programs only the Memorandum
cf Agreement  need be modified  to authorize State takeover of
Federal facility permits.  In  such cases the Regions may
relinquish their permit  issuing authority to the State
solely by modifying the  Memorandum of Agreement.   Following
whatever program modification  is necessary,  the States
become the permit  issuing  authority  for Federal facilities.

     Permits_issued or  in  the  process of  issuance  by EPA  to
Federal facilities  located  in  approved KPDES States  should
be transferred  to  the  State  in the same way -other  permits
were transferred  following  initial State  takeover  of the
program.   In  certain  cases,  however,  the  Regions may,  as
an interim neasure, issue  a  Federal  facility permit  in  an
approved State  before  completion of  the 'necessary  program
modifications if  it is apparent that awaiting  such modifi-
cations will  cause  an  inordinate delay  in  permit  issuance.

     Finally, all  State programs approved  after  e'nactment of
the  1977 Amendments (December  27,  1S77)  must provide for
State  issuance  of  permits  to Federal facilities.   Existing
regulations  are  being  changed  to reflect  this  requirement.

Reporting,  Monitoring, Inspection anc Entry Requirements

     .The  section 313  amendments also explicitly require that
Federal  facilities comply with  any State "recordkeepin? or
reporting  requirement."  The Senate Report indicates that
this includes any reporting or  monitoring requirements.
Senate  Reoort at 67.

-------
     States must have the right to enter and inspect Federal
facilities if their reporting and monitoring authorities are
to be meaningful.  Moreover, it is clear from the language
of section 313 that Congress intended States to have such a
right of entry.  The President is authorized to grant a
"paramount interest" exemption covering  "any weaponry,
equipment, aircraft, vessels, vehicles,  or other classes or
categories'of property, and access to such property  . . .."
[section 313 (a)]  (emphasis added).  Clearly, unless  the
President exempts a Federal facility, a  State must be
allowed "access" to the facility.3_/

     Initial State contact with a Federal facility for the
purpose of entry and inspection; should be closely coordinated
with the facility and the Region  particularly where  access
to the facility  is restricted.

State Certification Under Section 401,

     The new amendments eliminated section  401  (a)  (6) ,
which provided  an exception for Federal  agencies from
State certification.  Accordingly, NPDES permits issued by
EPA to Federal  facilities require certification by the State
that the discharge  is in compliance with all  of the  appli-
cable provisions  of sections  301, 302,  303,  306 and  307 of
the FWPCA.

     Please  refer  any further  questions  to  Jeffrey G.
Miller, Deouty  Assistant Administrator  for  Water Enforcement
 (8/755-044C) .       ,
     Marvin  B.  Durninc
_3/   Section  308 (c)  authorizes States to exercise entry
     authority under programs approved by EPA, but such entry
     authority does not extend to -Federal facilities.  This
     section,  which was not revised by the 1S77 Clean Water
     Act,  cannot be read to weaken or render ineffective the
     clear  authority provided States by the amendments tc
     section  313.

-------
            MODI." ;CAT!ON TO  NATlOl&L POLLUTANT DJSCHAR2 ELIMINATION SYSTEM

         M£'.'iORAWDU-'. OF AGREEMENT BETWEEN T>£ INDIAN STREW POLLUTION CONTROL

         BOARD AKD THE UNITED STATES ENVIRONMENTAL PROTECTION AEJCY REGION Y



     Ths Mierorsno LTT. of Agreement approved July 22,  197", by the  Aer.ini strator of

~e  Lh itei Stitss Env irorwierjTal rroTection Agency betveer, tne  Intfiane Stre»i Pol-

•.•t ic-  Control =o^^{;  (hsre insf-rer , the "State")  zno the  United  States Env irorraentsl

rotection ^oency  (hereinafter, "USErA") Reo ion  Y is hereby nod i fied  as  -follows:

     Tns State will  scr.'mister ths KrDES psr^^it  prcgrar, xi-h  respect  TO  receral

sell ities ar-.c has  sho^rj thgt  it  has the auchcrity  to  er.ter  ana inspect

re=i=rs;  facilities.   Tr.e Stcte  is responsible  for - ne  issuance, nosi f iCEt ion,

•£ : ss-jsr.ce , c&T.p; iar.ce monitorinc and  enforcement CT 5! ! NrvES perir.its in

iniicr.c,  inciui'ir.c penr.its  applicable  to Federal T&cilJties.

     A!!  references in the  (-'e.T,crsnixn!  cf AgreaT.erit which have the effecT of retsinino

-  '  „-s i; i i i t y TO UEE FA Region Y o\-er  reoersi  facilities ha^s  no  force or effect

sftcr  the  effective i cte  of this too if i catior;.  hbthinc  in this Hoc if i cation  shell

:; ccr. r~~-jec to '  i-it t^e suthority r~  USE PA  to ^?.ke  action  pi^si'^nt to  Sections  305,..

305,  311,  402,  3O4, or  other Sections of the  Act.
 INDIAN-. STRIA.:-1;  POLLUTION CONTROL
              50A3D
U.S.  ENYlROiWEkTAL PROTECTION
             REGION  Y


-------
        _ ^   _                      Region V
D*TE:    0 C i  2 7 1978                                            .    TAB c

   ..  'Transfer of K'PDES Federal Facilities Program Authority
      Under Section 313 of  the Clean Water Act to the State
      of Hichigan - Action  Memorandum.
 p-jgg.  John McGuire
      Reoional. Administrator
 • TO:
Marvin B. Durning, Assistant Administrator
  for Enforcement (EN-329)
       Issue

       Shall  National  Pollutant Discharge  Elimination  System  (NPDES) program
       authority for Federal  facilities  be transferred to the State  of Michigan?

       Discussion

       The 1977.Amendments to the Clean  Water Act authorize  states to  assume
       NPDES  authority over Federal  facilities.   On June 21,  1978, Michigan
       requested this authority and  provided an  Attorney General's opinion that
       the Michigan Department of Natural  Resources has all  of the necessary
       authority to adm.in.i-ster the NPDES permit program for  Federal  facilities
       (See Tab  A).  Our Regional Counsel  has reviewed the Attorney  General
       Statement and concurs (See Tab B).

       Assumption of KPDES authority, except for agencies and instrumentalities
       of the Federal Government, was transferred by the Administrator to Michigan
       on. October 17, 1973 (See Tab C).   The Memorandum of Agreement (MOA),  which
       .was signed as part of the approval  of Michigan's NPDES-program (See Tab  D),
       contains  no disallowance of Michigan's jurisdiction over Federal  facilities,
       Therefore, the MOA does not need to be modified to allow Michigan to take
       i.I'DES juri sciction over Federal facilities.

       Recommendation
       ihe request from Michigan to assume HPDES authority over Federal facilities.
       pursuant tc Sectior. 212 of the Clean Water Act, has been reviewed and is
       consistent with the March 1C, 1978, Policy Guidance Memorandum from the
       Assistant Administrator for Enforcement  and General Counsel covering
       transfer of authority.  Therefore.  ! recormend that the request from the
       State of Michigan tc  assume f.'PDES  authority over  Federal facilities be
       approved.  A suggested letter to the Governor of  Michigan  approving
       •Michigan's assumption of  authority is  enclosed (See-Tab E).

-------
   0 CT 2 7 1S78
                                   2
Decision  of Regional  Administrator
That the  request from the State of Michigan to assume NPDES authority over
Federal facilities, pursuant to Section 313 of the Clean Water Act, be
approved.
                                       Approve:
                                       Disapprove:
                                       Date:
 Disposition
 A letter to the Governor of Michigan with a copy to the Executive Secretary,
 Michigan Water Resources Coraission has  been prepared for signature of the
 Administrator (See  Tab E).
 Concurrence
 Deputy Assistant Administrator
 for Enforcement                        Concur:
                                        nonconcur:
                                        Date:
 Enclosures:  Tabs A - E
 Decision of Assistant ACT.inistrator for Enforcemsnl
                                        Approve: 	
                                        Disapprove:
                                        Date:

-------
     UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                      WASHINGTON. D.C.  20460
                                                     GmCi Or SKTORCEM.SKT

Honorable Otis R. Bowen, K.D.
Governor of Indiana
Indianapolis, Indiana  46204

Dear Governor Bowen:  •

     On January  1,  1S75,  Indiana received authority to administer
the National .Pollutant Discharge Eli mi net ion System (NPDES) within
its borders.  EPA's  approval  letter indicated  that ws would retain
authority to  issue  permits  for  Federal  facilities within the State.
The reservation  of  authority  over Federal facilities was necessary
because the Federal  Water Pollution Cor-trcl Act  (FWPCA) precluded State
regulation of these facilities.

     The 1577 amendments  to the FWPCA specifically  authorize the
States  to administer the  NPDES  permit program  for  Federal  facilities.
Accordingly,  I  have today approved  the State  of  Indiana's  request  to'
assume  this  responsibility.  1  have today  also approved  a  modification
to  the  Memorandum of Agreement  between EPA  and the State  allowing  this
transfer  (copy  enclosed).  This approval  overrides any  contrary  language
.in  EPA's January 1. 1575, letter approving  the State's  K'PDES  program.

      We are  clad to transfer the administration of the  K'PDES  permit
program for  Federal facilities  to the State of Indian;.   Region  V will
be  wcr/i-'nc nitr, the Indiana Stream PoVufi or. Control  soarii to faciliT.at£
this  transfer in a timely manner.

                                    Si ncerely yours,
                                    Karvin E.  Durning
                                 Assistant Administrator
                                     for  Enforcement
 Enclosure

 cc:  Mr. Oral H.  Hert
      Technical  Secretary
      Indiana  Stream Pollution Control  Board

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             UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                               REGION tx
                           21 5 Fremont Stree:
                         San Francisco. Ca. SO 05
                 PU3LIC  NOTICE OF PROPOSED ACTION

                              by the

               U.S.  Environmental Protection Agency •
                            Kegior. IX
                        215 Fremor.t Street
                     San Francisco, Ca.   94105

                           (415) 556-3450
                           June 23, IS73


     On  September IS, 1975, the Administrator  cf the Environ-
mental Protection Agency  cave  approval to  a request  froirv the
State of  Nevada for authorization  to adir.inis-er the  National
rcllutant Discharge Eliudnation System. (K?DZI£)  penrJ.t prograr.
for discharges v;ithin the jurisdiction of  the  State.  This •
authorization was made pursuant to Section 4C2(b) of the Fed-
eral Water Pollution Control  Act  .-jr.enevents of 1972.  The
authorization excluded discharges from facilities which are
agencies or instrumentalities cf  the Federal government.

     The 1577 .-_-e.-dr:ents  -~c  the Federal Kater Pollution Control
Act  (23  U.S.C. 1251,et req.    )  provics, in Sectior. 313. authority
for  states to regulate; discharges from agencies  or  instrumentali-
ties of  the Federal  c:-vernment.   The Administrator  of the  En-
vironmental Protection Agency proposes to expand the  State cf.
Nevada's KPDF.S  authorisation to include- Federal  facilities.

     All comments  or objections received within  30  days of the
date of  this  notice  will be  considered by Z?.-.  before  taking
final  action.   If sufficient public interest is" expressed E  public-he'aring
 rr,£y be held.

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                                                  6 APR-
HEHORAHDUH                                       •        ' °


70:        Regional Administrators
    '   .    State KPDES Directors

FROM:      Deputy Assistant Administrator for Water Enforcement (EH-335)

.SUBJECT.:   Confidentiality of KPDES Permit Applications
     Attached is a copy of a recent decision issued by the Office
of General Counsel *hich requires -that all information 1a HPDES
penrit applications and peraits be cade public.  Please advise
your staff of this change so that icplesentation can be uniform.
                                 Jeffrey 6. Killer

Attachment

cc:  Regional Enforcesant Division Directors
     Regional Persits Branch Chiefs
 JShaffer:nflits:PD:EN-336:3109 WSH:5-0750

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                           WASHINGTON. D.C.
                                                  22 1278
                                                     *"•" °
SUBJECT:  Confidentiality of KPDES Persic Applications

ISDii:     Joan Z,
          General

TO:       Thomas C. Jorling  ''
          Assistant Administrator for
          Water and Hazardous Materials 0
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     I  think it is  also  inportant that this be reflected in the
regulations, in the application forns, and in any informational
materials used by EPA to explain the NPDES progran.

     Proa what I have been  able to determine, this decision nay bt 4
change  frca  past practice in  the treatsent of iaforaarion in NPDES
pemit  applications.   I  believe that in the past section 402 G") was
overlooked,  and most  offices  treated information in KPDES perait
applications the saae as section 308 information.  Accordingly, it
take time to bring  everybody  up to speed on this change.
     If you have  questions about hov your offices should inplesent
Class Determination  or other related matters > contact Janes Kelson at
755-0794.              .       .

Attachment

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   •c /                                   CLASS DETERMINATION 1-78

   /  •
. _            CONFIDENTIALITY Or .INFORMATION IN NATIONAL POLLUTION DISCHARGE
*               ELIMINATION SYSTEM PERMITS AND PERMIT APPLICATIONS UNDER SECTION
                402 (j) °* THE FEDERAL WATER POLLUTION CONTROL ACT


                     Under the Federal Water Pollution Control Act (FWPCA) , as amended

                (33 U.S.C. 466 et sea.), the Environmental Protection Agency (EPA)

                or counterpart State agencies issue'National Pollution Discharge

                Elimination System (NPDES) permits to individual sources of vater

                pollution.  This program is administered primarily in EPA's Regional

                offices.  Those offices have asked for a Class Determination concern-

                ing the confidentiality of information contained in KPDES permits and

                permit- applications in/light of section 402(j) of the FWPCA.  Under

                40 CFR. 2.207, I have authority to issue Class Determinations concerning

              -  the confidentiality^of classes of Information obtained by EPA.

                     In the case of information contained in NPDES permit applications

                and KPDES permits, I have found:

                     1.  EPA possesses and vill continue to acquire infcreation in

                NPDES permits and permit applications.    .    .

                     2.  The information contained in NPDES permits and penait applica-

                tions is of the same character.  It is proper to treat «T3- of the

                information as in the same class.

                     3.  A Class Determination vould serve a useful purpose in clarify:

               ' the status of potentially confidential information contained in NPDES

                permits and permit applications as restricted by section 402(j) °£ ~*?c

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                                     2  .      .                        V
     .1 have  determined that information  contained in NPDES permits'

and NPDZS  permit applications  is  not entitled to confidential treat-

Bent because section 402 (j) of the FwPCA mandates disclosure of this  •

information  to the public notwithstanding the fact that it night be

trade secrets or commercial or financial, information.

     Section 402(j) of FWPCA states "[aj  copy of pach permit applica-

tion and each permit issued under this section ghaTj te available  to

the public.   Such permit application or  permit,, or portion thereof >

shall further be available upon requese  for the purpose of reproduction."  . \

This language is different from that in  section 308 of the FWPCA...          \

Section 308  is the basic indorsation gathering authority of the FWPCA.

Paragraph  (b) of section 308 states "[a]ny records, reports,, or infor-
                                                   x
nation obtained tinder this section.. .shall be available to the public,. .

except upon  a showing satisfactory to the Administrator by any person

that records,  reports,  or information, or particular parr thereof  (other

than effluent data),  to vhich  the Administrator has access under this

section, if  made public vould  divulge methods or processes entitled to

protection as trade secrets of such person, the Administrator shall

consider such record,  report,  or  information, or particular portion

thereof confidential in accordance vith  the purposes of section 1905  of

title IS o'f  the United  States  Code	"         ..  '  .           .
                     ^
     The inconsistency  between the language of section 402(j> and  that

of section 308 vas brought to  the attention of the House Committee on

Public Works  in a letter dated December 13, 1971,. from William Ruckelshav

Administrator of EPA.  -Congress chose to treat the information covered

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                                   3

by section 402 (j) differently  from the  information obtained, under "
                                                      »   •
section 308.  In all versions  of  the bill that becaae the 1972

• amendments to FWPCA, the sane  basic approach of requiring public

disclosure-of NPDES permits .and permit  applications was followed.

The only amendments to section 402(j) vere to eliminate a specific

.enumeration of  the offices in  which copies would have to be kept.

In Senate Report 92-414, October  28, 1971, at page 72, the' Senate

Committee on Public Works made the following commencsr

     An essential element in any  control program involving the

     nation's waters is public participation.  The public
                 »
    . must have  a genuine opportunity to speak on the issue

     of protection of its waters.  The  Committee has therefore'
                                                  /
     established requirements  to  provide opportunity for public

     hearing by the Jederal Government, or if State participa-

     tion is approved by the Administrator, the State,, .and other

     provisions to make available to the public all relevant

     information surrounding a discharge source and the control

     requirements placed on it.   This includes the deposit of

     any permit, and the conditions thereto, in a place of ready

     .public access.  The scrutiny of the public and the exercise

     of authority under this section is extremely important to
                     ^
     insuring expeditious implementation of the authority and a

     high level of performance by all levels of government and

     discharge  sources.

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       Is is clear froa the language of section 402(j)  and the

  legislative history of that provision that  Congress Intended sectiOo

•  402(j)  to be a disclosure caudate in contrast to the  basic approach.

  of section 308 vhich provides protection for trade secret information..

  Accordingly, EPA is required to nake public NPDES permits and KPDES

  persit  applications.

       The NPDES permit application is-a standard form,  specified by EPA.

  It asks the applicant to supply certain specific information.   la

  some  cases, there is insufficient space for the applicant to supply

  ail of  the requested information.  la those eases the applicant attaches

  additional sheets vith the further information.  For  purposes  of section.

  402 (j). the NFDES permit application required to be nade public is the

  application form itself and any attachments  that are  csed to supply

  information requested by the application form.  Any information - '

  obtained' by EPA that goes beyond 'that asked  for in the application,.

 vhether submitted by the applicant or obtained by EPA under authority

  such  as 40 CFR 1Z5.13, is not considered part of the  pemit application.

  as contemplated by section 4-02(j).   This additional information will

  be treated in accordance vith the procedures  of 40 CFS 2.302.

       If-an applicant has .daisied"'as""confidential any  information

-  contained  .in the NPDES 'percit application or  the KPDES persit,  confi-
                       ••
  dential treatment vill be denied in accordance with this  Determination

  and notice given to. the applicant in accordance vith  40  CFR. 2.205(f).


                                                           '   •
                                                          / -^ rx
                                                          / 7 r
             .  oernstein                              Date
      General  Counsel  (A-130)

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                                                                    =-'6
 5SB
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
              WASHINGTON. D.C. 20460
                          APR 1 9 197B
                                                       OFFICE OF
                                                    GENERAL COUNSEL.
MEMORANDUM
                                                   n-
TO:
FROM:
SUBJECT:
Assistant Administrator for
  Enforcement

Regional Enforcement Directors

NPDES State Directors

Joan Z. Bernstein
General Counsel   (

Certification and Permitting of Dischargers Located
on Waters Forming Boundries Between States
                     QUESTIONS PRESENTED

     When a facility is located within one State, but the end
of the discharge pipe is located within the waters of another
State, which State has certification rights pursuant to
Section 401 of the Clean Water Act ("The Act")?  If the Section
402 NPDES permitting authority has been transferred by the
Administrator to the States, which State has the 402 permitting
authority?

                            FACTS

     On February 16, 1978, the Atomic Safety and Licensing
Appeal Board of the Nuclear Regulatory Commission issued a
decision which interpreted Section 401 of the Act.  The
Board determined that the proper State to issue a certifica-
tion is the State which has jurisdiction over the navigable
waters in which the discharge originates rather than the State
in which the facility is located.  The Board noted that:

          "we are prepared to give substantial weight
          to the interpretation given a statute by the
          agency Congress entrusted with its administra-
          tion.  In this case, we acknowledge that EPA
          is that Agency with respect to the Water Act.
          But EPA has not specified how Section 401
          controls the outcome of the issue

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          before us.  We are, therefore, left to do
          so ourselves."   (PUBLIC SERVICE COMPANY OF
          INDIANA, INC., Docket Nos. STN 50546,
          STN 50-547, slip op. at 20-21, footnotes
          omitted).

     On February 28, we received a letter from the attorneys
for the Public Service Company of Indiana requesting that we
address the legal  issue which is before the NRC.  In addition,
we had informal communications with representatives from the
NRC staff and the  Commonwealth of Kentucky similarly request-
ing that we address the issue.  On March 20, we wrote the
Secretary of the NRC and notified him that we would prepare
a legal opinion on the 401 certification question.

     The proposed  Marble Hill Nuclear Generating Station will
be located in Indiana.  Its discharge will enter the Ohio
River, which forms the border between Kentucky and Indiana.
Apparently, the precise border is located at the low water
mark on the Indiana side of the river.I/

     The legal question raised is of significance to
this Agency because there  are 29 rivers in the United States
that are boundaries between two States.  While the boundary
line between the States is usually the midline or thread of
the channel of the stream, this is no't always the case.  For
some rivers the boundary line is the high-water mark or low-
water mark on one  side of  the river.
         *
     The boundary  line creates questions not only in regard
to certification under Section 401 of the Act but also in
regard to the question of  which State has the permitting
authority under Section 402 of the Act. In this opinion
we shall address both issues.

                           ANSWER

     The State in  whose waters the discharge originates is the
certifying authority pursuant to Section 401 of the Act.
Section 4Gl(a)(l)  provides that whenever the construction or
operation of a facility "may result in any discharge into the
navigable waters", the certifying State shall be the one
I/  There  is  a  factual question as to whether the discharge
originates in Kentucky or  Indiana waters.  As noted in our
March  20 letter,  we  shall  not address this factual cuestion.

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'•in which the discharge originates or will originate."   While
it might be argued that a discharge of pollutants actually
"originates" where the manufacturing or  industrial  facility
is located, rather than at the end of the discharge pipe,
the entire structure of the Clean Water  Act,  its legislative
history, and intent clearly establish that the State whose
waters are affected by the .discharge is  the proper  certifying
State.

     Similarly, the State in whose waters the discharge  or-
iginates is the Section 402 permitting authority.   Section
402(b) provides that a permitting State  shall "administer
its own permit program for discharges into navigable waters
within its jurisdiction."

     The State in which the facility is  located has rights
pursuant to Section 401(a){2) and Section 402(b)(5) only
to'the extent that the quality of its waters  is affected
by the discharge.

                         DISCUSSION

     The Clean Water Act is a comprehensive statute designed
to reduce and ultimately to eliminate the discharge of pollu-
tants into the nation's waters.  Tne Act provides for a  deli-
cate partnership between the Federal government and the
States in achieving this result.  A major responsibility
of the Federal government under tne Act  is the development
and promulgation of uniform national technology-based stand-
ards for categories and classes of industrial dischargers.
At the same time, the States are granted the  authority  (with
Federal support and in some cases oversight)  to institute
a range of more stringent, more comprehensive requirements
to assure protection of the navigable waters  within each
State.

     Pursuant to Section 510 of the Act, the  States are
empowered to develop more stringent water pollution control
requirements than those developed by EPA.  Section  510(2)
also explicitly retains the authority of each State to 'control
the waters within its jurisdiction.

     In addition to these general powers, the Act provides
that States shall have a series"of rights and responsibilities
based upon the State's jurisdiction and  control over waters

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of the United States.  Section 208(a)(2)  of  the Act  requires
a State or its designated areawide agency to develop compre-
hensive pollution control plans for areas of the  State  which
have "substantial water quality control problems."   Clearly
the State whose waters are affected must  take  the lead  role
in devising a plan to protect its waters.

     Under Section 303 of the Act each State is required  to
develop water quality standards for all waters within its
jurisdiction.  Such standards consist of  a designated use/uses
of the stream (e.g. "protection and propagation of fish and
wildlife") and criteria necessary to support the  use,  (e.g.
"not less than 5 mg/1 of dissolved oxygen").   Prior  to  the
passage of the 1972 Amendments, such water quality standards
were the major water pollution control mechanism  under  the
Federal law.  See State Water Control Board  v. EPA,  426 U.S.
200, (1976).  While the role of water quality  standards was
somewhat diminished by the 1972 Amendments,  the standards
form a major basis for numerous State and Federal programs.
The difference between the designated standards and  the actual
ambient water quality may provide the basis  for Section
208 planning.  Under Section 303(d) of the Act, States  must
identify those streams where the federal  technology-based
standards are insufficient to meet the designated water
quality standards.  The States are required  to develop  maximum
daily loads for such streams and to develop  more  -stringent
effluent limitations which will achieve the  standards as
part of the continuing planning process under  Section 303(e),2_/

     These State plans, laws, regulations, and other require-
ments are translated into limitations applicable  to  individual
point source dischargers through the NPDES permit program
pursuant to Section 402 of the Act.  And  under Section  208(e)
of the Act, no permit can be issued which is in conflict
with an approved 208 plan.  Under Section 301(b ) (1) (C), a
discharger must achieve by July 1, 1977,  any more stringent
limitation necessary to meet the requirements  of  State  law,
2/  In addition, Section 305(b)  requires  each  State  to
submit biannually a report describing  the water  quality
of. all navigable waters within the  State  and  the steps
which will be taken to improve water quality.

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including water quality standards.  The 402 permitting authority
is required to assure that permits are consistent with
Sections 208(e) and 301(b)(1)(C),  and thus consistent with
the requirements of State law including State water quality
standards and limitations developed pursuant to such standards.

     Section 401 of the Act provides another mechanism to insure
that NPDES permits  (as well as other Federal licenses and
permits) meet the requirements of state law, particularly
State water quality standards.  Section 401 has its origins
in Section 21(b) of the Water  Quality Improvement Act of
1970, April 3, 1970, P.L. 91-224,  84 Stat. 91.  This provision
required that any applicant for a federal license or permit
which 'might result in a discharge into navigable waters must
provide the permitting authority with a certificate from the
State in which the discharge originates or will originate
that:

          "There is reasonable assurance, as determined
          by the State or interstate agency that such
          activity will be conducted in a manner which
          will not violate applicable water quality
          standards."

     Section 21(b)(l) also provided that if.the standards had
been promulgated by the Secretary of the Interior, the certifica-
tion should be from the Secretary.  Section 21(b(9) further pro-
vided that if there were no applicable water quality standards,
no certification should-be required.  Section 21(b) therefore re-
cognized that the appropriate certifying authority is that which
has developed and implemented water quality standards for the water
body into which the discharge originates, since only the authority
that develops and implements the standards could provide the "rea-
sonable assurance" that the standards won't be violated.

     The substance of Section 21(b) became Section 401 of the
1972 Federal Water Pollution Control Act Amendments.  The
State was no longer required to directly certify that its
water quality standards would be met by the permit, but
was instead required to certify that the discharge would
•comply with "the applicable provisions of Sections 301,

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302, 306 and 307 of  this  Act."3_/  It is clear  from the
legislative history  of  the  1972  Amendments that the major
purpose of Section 401  was  to  allow a State to assure  that
its water quality standards would  be met.

     As noted in the Senate Report:
                HI
                'The purpose  of  the  certification mech-
          anism provided  in  this  law is to assure
          that Federal  licensing  or permitting  agencies
          cannot override State water  quality require-
          ments. "

A Legislative History of  the Water  Pollution Control  Act
Amendments of 1972, Senate Committee on Public  Works,  Com-
mittee Print, 93rd Cong.  1st. Sess., 1973  ("Leg. Hist.")
at 1487.

     In his  statement on  the Conference Bill, Senator  Huskie
further explicated this concern:

               "If a State establishes more  stringent
          limitations and/or time schedules  pursuant
          to Section 303, they  should  be set forth in
          a  certification u.nder Section '401."  Leg,
          Hist, at 171.
3_/  Section  401  was  amended  by  the  Clean Water  Act of  1977
to include Section 303  in  the  list  of enumerated sections.
As stated in  the Conference  Report:

               The inserting of Section 303 into the
          series of  sections listed  in Section  401 is
          intended to mean that a  federally licensed or
          permitted  activity,  including discharge permits
          under  Section 402, must  be certified  to comply
          with State water quality  standards adopted under
          Section 303.   The  inclusion of Section 303 is
          intended to.clarify  the  requirements  of Section
          401.   It is understood that Section 303 is re-
          quired by  the provisions  of Section 301 .  .  .
          Sscticn 303 is alvsys included hy reference
          where  Section 301  is  listed.  (House  of Repre-
          sentatives, Report No. 95-830, 95th Cong.  1st
          Sess.  December,  1977  at  96)

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              "Secondly,  the Conferees  agreed that  a
          State may attach to any Federally issued
          license or permit such conditions as may  be
          necessary to assure compliance with water
          quality standards in that State."  Leg. Hist.
       .   at 176.

The legislative history of Section 401  thus shows that  Congress
intended that the certifying State be the State with jurisdic-
tion over the navigable waters at the point of discharge.

     The language of Section 401 itself further supports the
same conclusion.  First,  Section 401(a)(l) grants certifi-
cation to the State "in which the discharge originates  or
will originate."  Under Section 502(12)  the discharge of
the pollutant is defined as "any addition of any pollutant
to navigable waters from any point source."  Thus,  there
is no discharge until the pollutants enter navigable waters.
For the purposes of Section 401, at least, the discharge
thus originates -at the point at which it enters the navigable
waters.4_/

     Secondly, when an interstate water pollution control
agency "has jurisdiction over the navigable waters  at the
point where the discharge originates or will originate" .
it, rather than any State has the certifying authority.
This is further indication that the certifying authority
derives from jurisdiction over the navigable waters, not over
the land where the facility is located.

     Section 401(a)(3) provides further support for this con-
clusion.  Pursuant to Section 401(a)(3), a certification with
respect to the construction of any facility also  is binding
upon any subsequent operating licenses  for such a facility,
except that the certification may be withdrawn because  of
changes in four circumstances:
4/  In his discussion of Section 401,  Senator Muskie says
that the certification should come'"from the State in which
the discharge occurs."  (Leg. Hist.  at 1388, emphasis added)
While there may be some question as to where a discharge
originates, there can be no question that the discharge
occurs in navigable waters.

     It may be that the Congress used the word originates
to distinguish between the State in whose waters the discharge
initially enters from a downstream State whose waters are
also affected by the discharge.  See footnote 5, infra.

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              (A) The construction or operation of the
          facility, (B) the characteristics of the
          receiving waters into which such discharge
          is made,  (C) the water quality standards
          applicable to such waters,  or (D) applicable
          effluent limitations or other requirements."

     A concern for the receiving waters and the criteria
applicable to such waters is primarily a concern of the
State which has jurisdiction over the receiving waters.
A State in which the facility is located may have a variety
of concerns about the facility but does not have any direct
concern or jurisdiction over the waters affected by the
discharge .,5/

     Our interpretation of Section 401 is further buttressed
by a reading of Section 402 of the Act.  Under this section,
permits are issued to point source dischargers.  Although
permits, are initially issued by EPA,  the Act provides that
the permitting authority may be transferred to a State  which
has an adequate program.  Section 402(a)(5) provides for
a temporary transfer, while Section 402(b) provides for
a more permanent transfer.  Both sections provide that
the State has the power to issue permits for all discharges
into its navigable waters:

               "The Administrator shall authorize a
          State, which he determines has the capa-
          bility of administering a permit program
          which will carry out the objective of this
          Act, to  issue permits for discharges into
          navigable waters within the jurisdiction
          of such  State."  Section 402(a)(5) (emphasis
          added) .
_5/  Section 401 does provide protection for any other State
whose water quality may be affected by the discharge.  Section
401(a)(2).  Such State may object to the issuance of a permit
and request a public hearing.  The permitting agency is then
required to hold a public hearing and to "condition such
license or permit in such manner as may be necessary to in-
sure compliance with applicable water quality requirements."

     States whose waters may be affected by the issuance of
an NPDES permit by another State also have rights to assure
protection of their vaster quality.  See Section? 402(b}(5)
and 402(d)(2)(A).

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               H •
                'At any time after the promulgation of
          the guidelines required by subsection (h)(2)
          of Section 304 of this Act, the Governor of
          each State desiring to administer its own
          permit program for discharges into navigable
          waters within its jurisdiction may submit to
          the Administrator a full and complete descrip-
          tion of the program it proposes to establish
          and administer under State law or under an
          interstate compact."  Section 402(b) (emphasis
          added ).

Thus, the explicit statutory language of Section 402 autho-
rizes a State to issue permits for all discharges into
navigable waters within its jurisdiction.6/

     In its letter requesting our opinion on this issue, the
Public Service Company of Indiana suggested that the oppo-
site answer would be preferable administratively since it would
avoid the necessity of making a factual/legal determination
in each case as to who owned the waters at the point of dis-
charge.  We recognize that in some circumstances such a deter-
mination may demand the resources of the permitting agency,
but we believe that these considerations are insufficient to
override the clear language of the Act, its legislative history,
and its goals.

     It has also been suggested that in issuing permits to
facilities located in another State, the permit granting
State may encounter difficulties in providing for inspection
and monitoring of the facility, and in the enforcement of
the permit.  We do not regard these difficulties as insuper-
able, since we assume that all permits would include provisions
allowing the issuing State to monitor and inspect the facility.
In enforcing these provisions, or other provisions of a
_6/  The House Report clearly states that a permitting State
does not have jurisdiction to issue permits for discharges
into navigable waters outside of State's jurisdiction:

     Subsection  (a)(5) further provides that the Administrator
may authorize a  State, which he determines has the capability
of administering a permit program, to issue permits for the
•discharges into  the navigable waters within the jurisdiction
of such State (but not in the contiguous zone or the ocean).
Leg. Hist, at 813. (emphasis added).

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                             10


permit, the issuing State could bring an action in its State
courts and should be able to establish that the defendant
had sufficient contacts necessary to support the State's
long-arm jurisdiction.

     The questions answered in this opinion have not pre-
viously been formally addressed by this Agency.  It is our
understanding that this opinion is consistent with the
actual "real world" permitting and certifying activities
in most regions.  A number of regions, however, have evident-
ly allowed States to certify and to issue permits to facilities
located in such States which discharge into the navigable
waters of another State.

     A permit issued by a State which does not have the
authority under the Clean Water Act to issue such a permit  is
jurisdictionally defective, and would not therefore provide a
discharger with the protection provided by Section 402(k) of
the Act.  I urge the Assistant Administrator for Enforce-
ment to take whatever steps are necessary to expedite the
re-issuing of such permits.

     On the other hand, a Federal permit issued despite the
lack of certification from the proper State remains valid.
The Federal agency which issued such permit had the jurisdiction
to take such action.  To the extent that the permit is incomplete
or illegal because of lack of proper certification, any injured
party could seek judicial review of such permit under the appro-
priate provisions of Federal law.  Any State which failed to as-
sert its certification rights within the prescribed statutory  and
regulatory time period may be deemed to have waived such rights
pursuant to Section 401(a)(l) of the Act.

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      §   UNITED STATES ENVIRONMENTAL PROTECTION'AGENCY

          .     .           WASHINGTON, D.C. '20450   . -
                         JAN'11 1979  .,.
                                                         GENERAL COUNSEL.  • V" '—.
 MEMORANDUM


 TO " .
         ..'.!,: Deputy Ass is tan t\ Admin isj^-a tor
         ,  -• ;; for Water Enforcement
                                          -335)
 •:"•>•-''•--:-.v,:: '•••''v ;^85S£
-\ I--"''  •" '  '-'  '-••'''..-'••i;'«C^.-T^i-
  I..    ' •.  • .  -  - . ~ "TZi^.-,-** v:.--i«.V ••
FROM
          : ; Associate General. 'Counse
          C:- Water  and Solid  Waste Division  (A-
 SUBJECT:"T-bse of  Biomonitoring"' in ;thte \NPDES.:
                                               „ •  ••-•••».. /-V^.* ••'•" • '- -.  i-'?=!»v5?£»»^5?»..jS«Si-
                                             DES: Permit; Program .;.- :'..S^2^*vi:-:i'-i->"
                                                4  .    .  -      .  .-•*-•"• •"••-•=>*;'•-« •.;i*":rTr-.i':*r1^
                                              •'v'.'-'3^-. '>'•••'•' •.-•-. /.v-:•'>•'• " •^•x'?v^j:<\;--;!'r^V'./- .'
   .  .:'Your memorandum of  August 31V".19?8,'! requests 'the "Of f ice vrf^v.—V^ p
 of General Counsel to address two  questions  as to  the legal .^^.rf;'^/C-iM
 authority of EPA to impose toxicity test requirements in   ^ ^'i4:^':^--'!
 second  round permits.  Our conclusions are discussed  bel<

 Question" 1-c j^,.''L.
  .^-::r^Dbes
.effluent^
'carcinogens
^ability studies and toxicity reduction plans?;. ,
.; /^^EPA's':;;
 '•is-."a"_
 amended,  is Tat least  as broad .as -:the -authori ty conferred  by'
 Section ;308."of-the Act.   Section ' 402 ( b) (2 ), see, Decision  of  -  .y'--^.^::-^
 the  General- Counsel No.  39, Issue. I(b).   Section. 308 calls   ;.'\:';VjvTU;"V.i
 for''point. sources to  conduct, certain.-, types of. information .' '-''• .-~^:^:^-:^
 gathering ^'activities  as necessary for  specif ied :porposes. •' \'-j'--'-:-.-^:(^"J.^:;-.^


 * ..This memorandum supersedes. an  OGC memorandum 'of November 3, •';,;•''':'..,i'.-.~.l
 1978,  on this'subject             '.....j-.-i-   •      • r--..-•••  :-  • .   . • -....-:;',:v:r'jl ''i-Kl

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'Thus;)  if.' ncc'busury ,  thb Adui in ictr.. ':'or -must  require  the
 or  oocratoc. o£ a  point source to ," Install ,  use ,  and ma intein
 such" monitor ing equipment or . methods ( includ incj  where ap- .• .
 propriate, .biological  monitoring methods),"  Section 308 .•'.;.
 \a)'(A) ( ii i-) / and  "provide such other information as he may. >
.reasonably require." .Section 300 (a ) (A) (v ) .  This author ity"'-
                                                            eu'^V^/^f
                                                                _
         exercised  "whenever required to carry  out the .-objec-.:'.
         this Act," .including ( 1 ) "developing or  assisting in ^
                     any effluent limitation  .•'••.  .  , . ( 2)
                     person is. in violation 6C any  such
                     or ( 3 ) .carrying out sections  . . v;-102.
                     308 (a)... The General Couns-el  has  stated
                     308(a) it is' only necessary ,  to suppqct
 a permit data-gather ing ..requirement ,v;to find that the infor
 mation.is reasonably requ
 the Act an'd_Jis. not unreasonable
 Counsel No . ;27 ,. Issue V
must be
tive of
the .development of
mining , whether, .any
limitation  .  . -•. ,
and. 504."--  Section
that; under  Section
 monitoring  is  consistent with the ..section ' s criteria. in
 the requirement .can provide, infocroation related to^ the
 tocation  and .maintenance, of . the  biological, integrity of
 the nation ' s "waters; can be" useful
                                                           that
effluent -limitations 'f or'.-the..sane
permit r, -or may... possibly  b
5P4. emergency provisions
 •unreasonable -to require  the discharger'
 •"information .--showing whetherr and  how .the
;/controlled .-V.The added  information.;may
''to .restore  and maintain  the waters7;?.involved,
' Section ,101 (a) V :..to .develop ef fluent;, 1 imitation s
                                                    ry_
                                   ,;.:..'in -,-orde r^-to ,ach ieve • the* • : ^'l-k£^f ;'•?:
                                   rge".; of Atoxic, pollutant's'- in ••?;'; :-!*j?h'^?'':^
                                      '~  '          '
 That ;sect i6"n--:cstabl ish'e's •
 Act1 s ;- object i've, that.-,." the'j.5 ischarge
 toxic 'amounts.-..be proh ibited.." ::..Tox ic'ity..reduction plans
 would  .be; squarely  in "accord  witii that; policy. •, .The I L  c3u
 mon
•-::•• .i •• ^^•^•^^r^ • '• • -'^


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        'i'li is" cjuo^t ion  in  j;iinilar to  l:he  question  addressee! by  '-" '•;'••-.
 Decision of  the  General Councel Ho.  39,  Issue  I(b).   There,  ;.
 the  permittee  was required to conduct  treatment and  control    :-;-:
 studies, including economic analyses of  various alternatives,
 to determine  the  technical and economic  feasibility  of at-
 taining EATEA  as  then estimated by  £PA.   No guidelines had   .  .-'.'•
 been-promulgated  Cor the category  of point sources .in. quest ion". .]
 • The  General.  Counsel ' s decision upheld  the permit terms under. .-••-."::.'t
 •Sections 402  and  300, stating,.'" it-just  cannot  be seriously. '•'-..'•'•':•
 contended  that information directly relevant  to establish-  .... X
 ment of e_ffluent  limitations  reflecting  BATEA for the very   '"'.•;.•',,.
 'permittee'  from whom  the information is obtained ..is not in-..-. "::>';;::J;
 'formation  'required  to  carry  out  the. object ive  of the Act './.;•..-;... ^
 and  neither .to be used  for developing  effluent
 or  relevant^to carrying out Section .402."  ..  •;.
 •   . .     .,:-..--•••  .      . •   -v--.. .<••.•:.:.-. - ......   ..•.--     , .•• . •.. -...----
        Here ;"';it. is not'  clear", that '-.the . treatabil ity studies  ;.\ >,''"'.;v.£l'^:-
 and- toxicity. reduction plans.to be  supplied would be .-employed !;l.*'"
           permittee or  to implement water quality	  ^ .t-:,-
  See discussion of question II,  below.   ::.........  ...   • :.-.-,  • r-^ ^:;£••£•• v-s
 '•'  ''•   ••..,',.•        '- •  ••-..•••.•  .'-.:.v . : ":':-!--." '•'••• ;'';!''"'-'^/-; '"'': "^:-^^S:C^.
    .  -  It--isv'therefore  conclude'd. that biomonitoring,'•'•treat-
  ability studies, and
 ;as terms.of a NPDCS pei
'.of course  be reasonable.- _The reasonableness  of. any
 ,.ment .would. have, to be  deterrained . in each case.
 conciuaea. c-nat o lomonitat ing ,  uieau— • ••-.•^o-v/v'i- > L~"-.'.
toxicity  reduction  plans may  be included i^v^v"^^;-
ermit. . the..specif ic  requirements  must ..^Ji^'^v"^^-
le.-  The  reasonableness of. any  recuire-"-V'y..'1*-".'----".'-*--'
 'non-guidelines based  toxicity .'limits in NPDES permits,  and
'. • if
 .. ' ••'.'•'. •"  "•.'••'--'••'••.•,'• '    !  ••':   v     •-'' .  •'*''• : ." '' •'• '  .'•'     . • ".-'•:•'•'•".'.•.'•.•' •'•'•:''; "'• '-'.Vi--i '•' t .'.-'••'..• •
           '    - .''.•* '-  ..;  •  •,-.'.  ;.'  ." '• .  ...-.•'  • •  :. ....•-   "'..--.- .'•'. *•••'•  '••'.'-•.„"-"'-.; •''"••••.'"-.?

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.".".'  ''.""••"   •'•'"'"'••••''/!'• '  ' '" '  ./:-.r";"-hV : .^'""••/";' 'l^:'"""':' '•-'•'•^'•7"?/'::;J:?:^^^f@^?|S-

•Hi ."> en:".:-, ion    .  •            _-• -. • •;:; .   ". '  :  • -;:  '•.'"  s  ;    ..- "'• .  ' :'^':~l;'~^^^^^-::^^

 Sect ion  402(a) (1)    ."   "•  "'"._ ;'. "J  /;..,./>';  '••-".•'' •'••'•••"' •'! ^ ''-^iR'fe^r.

       Section 402 ( a )(1 )-.author izes ' the  Administrator  to  'in- • :'^£VT"-:"
 elude, in . pcvmits,  prior  to  the" implementing  actions  relat ingi ;:/''T.'':' -"'../:v'--'
 to  Sections 301, 302,  306.,  307,  300, and  403,  such  cond i t ions':;:;^^;;^:?^
 as  he determines are  necessary to carry out  the provisions  ;..>••;j^'^'r^"-^-;
 of  the Act..: Where applicable  effluent  limitation guidcl ines V^Vt^:^:^:
 and .standards have not.  been, promulgated , .Sect  ion 402(a) • • • v;c:':~^^"**-^*^^
"outhoci7.cs  the. Adm in istrator  to  include _in permit::-effluent^.
 limitations based  on  best  engineer ing . judgment.  Decision..
 of  the General .Counsel  No.;  1,..Issue I.  .The  States' .-author
 is  comparable..  .40 CFR.,§124.42(6).
 "'''. _.'•:•: ••; Promulgation  of. effluent/:]
 for.-'ci  category oC  sources does
 tor from using Section -402(a)(
 parameters • not'"" included. in._those guidelines".  . .Dec is ion; of.
 General  Counsel  Mo.; 54 ,i"Issue .I...'\.Thc--_omittedl:_par;
 are considered to  be outside 'the'-scope  of.thevregu!
 In addition, -in  the case of  "a pollutant listed as
 pollutant under.Section  307(a),  the  402(a)(1) action could
 be justified as  being action prior to  implementing  actions
 under  Section 307(a).  -Id. y  see  also Decision of  the General j^^
 Counsel  No.  2, Issue 3.   ..-•   •/ •->.-._;.    . .- = .-•,. ..-.-..... -C.r.:-.----^f^v^'-^^-

        A. determination under:' Sec t ion ^40 2 (a-) (1) -is 'an
                      o£:na  un
vclass  or,
 •is  a .membe:
"ERC-lOO;
 sumably
 limitations ;and  should
 Section 304 (b) ('2 ) or^ 3
..:-   •!- ,.-.  -'•-•.•:.-'-">->:.-wli.-i.
 .'•••' ?'i'-;:; It has", been :'prdposed.:;.tHat - tox'icity^l'
 •-Cr'6m"'biomon itor ing could- be-.sta'tied.in/either of  two  ways',
 (T) ..Limitations  could.^be;'; estabJJ..sh,ed_J5n__sp_e_c{/_i"c__vvaste DC      ^	„_ ,,.
•.'meters reflecting the : levels..of j>pl-lu*tion ach ievable - after- •t^i^7%£^p'ji
- completion .
 -"I invitation;.c<
 .''af te'r',_a .tox"1

'•£/ *:'',!;"TheV£
 on  spe
 .practice.
-•V." v.:-;. ......N^'iv^i}:.-.'^.' ••-

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-.i:: loin)  ;i:;  I.In: nuiiii/r r :*. .'.it:*- jur. t: i l.i ••*! by  L-.-c:liii i c.i I ;  w.'iL'»/r-
 ijiuilLUy  oc  3u7(a)  Uu:Loi:il ~ '   ".•;''.•...'.'-'"•';"
 on the d isicharyoi: ':;  own trcDtabiliLy studies und pollutant   ..  /    ,.•••••-
 reduction  plan, tM'A'mny, nftor- review of  the ntudifji* ii.mi.    .    ".   ; . v":';.
 plnn, be  rible to  find  that the  renults;  conr,titut-.c on  in-'         '   '"-..!/•"
 dividuolly  determined  15AT Tor  the  nource.  The permit  r;houlcl .    V  .  '.""^
 then bo  able to withstand challenge and  thuu eL'L'octively            '•'. ;'..r
 limit, the  parameters covered.      ..;. .    ._       ... -. ..    ..  .-.:.  '>.>.;---. ;:'-V;^'

   •-•'.•••' OC  course,'  the specific  constituent  approach, has. the '".'. '''••~\?'s.^:^.~3**l_
 practical  drawback of  requiring identification and 1 imitation -v.;"^'.;,';' '^£
.-of.each  constituent  to be regulated.  It fails to take ad-.  .'•-•','•;:;•. •-.'..•; ^Ji.
 vantage  o'f  the capability of''biolog ical. monitor ing and'general-  	"
 limitations .to 'control unidentified .pol!
'•could be accomplished by  the  use or:_an
.-if authorized by  lav/.    J. , .-.-.•... •'*>.;£.'{•...-.
 .'.   .'•/.  Tv/o possible approaches
 have;been identified.  A  stra:
 established .;:....; Alter natively,
 '"lethal unit's", per gallon .of ^discharge/"-using : the. "lethal.
 unit"  concept.be ing developed  -in .draft  biomonitoring  protocol
 guidance-. _,:. .^..     ..  ...  .   ;:..,.-;;_: 'i-.v/;r .. "•-.•.-....'  ...-•>„•.;•:  L ..>•• ~: •••'-••-r

    .-'"•'  An initial  question "in determining'whether.'such con-;•' -
 ditions could be  upheld under  Seation  402(a)(1),is whether "...
 a  lethal unit'or  LC50 limitation is  ah  effluent'limitation  ..;.
. within.the meaning of Section' 502 (11).   .T-hat. section .defines ",
 .'the .term . "effluent 1 imitation" , as ;" ... .-'•'". 'any- restriction •..  ..•
•'••'on .quantities ,  rates, and .concentrations of  chemical ,^ physical,
 .•'biological,--and other-"constituents, which 'fare  discharged
.-There  .is no^indication  in Section-.502(11) .that  the restr
• tions "-'contemplated must be numerical, or that  the: cbnstitueni
'must  be  individually identified.. ;:..A:,permit  restrict ion-phrased
- in .terms of .the biological results.-.of  the> d ischarge .of . any   . .,.r..v;l;::^T-^i.1
'. constituents,, is" comparable . to ,a  BOD...limitat ion, .which also.". • /' •.;.:^:.*";"r^:/';^fl
 -indicates the', effect, of  the overall.Vvdischarge rather .than'.:..

•• -effluent' s;.LC50 . or " lethal.; units ." "^-However ,  any,permit  con-
•; d it'ion mus t..-bc'vnu L" v. iciently -.clcarv-tiin t.-thc ,d iscliargor; cnn  ..; •;
 •yuiider.r. tnnt'i  whn't:;. I'.luv  permit irequ irec'V-onrt- who t. .woul »•!" c:ohnt i tut'c
  ci  v iola t ion . -  Tlio  jjiroblcni .o L' -vaquonesc or.. uncer ta inty...may .be
 • 'oC more  concern in .Getting .general -tox ic'..l im itat ions . than

                         - . '-" I-"'-./-*-. ,* " 'm. '  . "-•**•'.• "l-^t- *—*



-------
would be true 'in  the  case,  for example,  of BOD.   BOD is a
widely accepted measure  of  the-oxygen required by living
organisms  (bacteria)  to  decompose organic material under
aerobic conditions.   A standard  method for its analysis
exists.  See .40 C.F.R. §136.3...  The methodology recognizes
that BOD varies depending on a
specifies  constant  temperature
a controlled environment.. •. r-!r-
of
number
and other
                                           factors,
                                           cond
published .toxicity test pro
However , the Agency has
                       by
    .At this time,  EPA has not
 cedures under 40  C.F.R.  §136". .
 published  three methods manuals which are widely used
 industry and regulatory agencies in testing for acute
 toxicity..  .!/:"•• Acute toxicity methods also are included
 Standard Methods,  2/ which is . recognized as an author
 tive reference  for chemical and .biological methodology. ._3/

 _!/   (a)  IERL  -  RTF Procedures Manual,' Level I
 Assessment; Biological Tests/or Pilot Studies.
           -..-
      (b)  EPA-660/3-75-009,  Methods'for Acute" Toxiei'tv" Tests'
 with Fish, Macroinvertebrates, and Amah

 ';; "'~;v;(c)  EPA-6Q 6/4-7 8-92,'
 Toxicity of-Effluent to Aquatic Organisms
'-•2/ • .JAPKA-1975 •.""'' Standard 'Methods;'>

 _3/.. ••' Many" NPDES^s ta tes and * reg ions /.' re f erehc'ing
 standard 'methods,  are including acute..and.in some cases
^toxicity;test, requirements in permits^for^industries si
....of...discharging .toxic substances. ^These..requirementsvare
'generally  used ;'only for ..monitoring/ but-California and
'•Washington also use-'acute toxiciCy*
 effluent .limitations . .California '.uses ..the :Tox icity
"Rate  (TER").as>an effluent limitation. --..The-.TER is
                           ...
 -of _the  effl'uent toxicity ( acute) .concentration ..and the
 .-flow  expressed  as Mgd.  The State .-of _ Washington . limits acute
 'toxicity  in .permits as a function;of ..'percent survival, of .
 . test. organisms ..in a percent concentration of effluenty i • e. '••
 80 p'ercent. survival in 65 .percent, treated effluent.,_.,


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                                   -7-VV-'^v

      While test  procedures for.acute toxicity  may have "reached  •'•'.". .  ^
a level of confidence adequate  to support specific effluent          "';.'w
limitations, it  appears that  testing methods  to determine    •/"••"        jr-
chronic toxicity are not so well  established.   Where proce-    " "  '.    ^
dures have not been refined to  the point that  results are   .. '   ..  .   -T"
fairly predictable  and consistent, effluent requirements  %"„..'•••.-'V:';"''•'••:'!'
based on the results of the procedures might  be challenged  .";-.;.•:;;.-,--.^ TCi'-i?
 as .uncertain'Or  vague. •.   -'.     ..--...         ... tt...;v;:^;:^^^^>C5an-:
                           ' • •""   -••'"•.;.*    .•     •   *—••-,.•... A. k ^« .**r.,*-^3? •••vr V ~--." 5"
    .     -    "    "       "   ' '" * .    •   •••*."'   *''•''•".    '  ' "     '.*••".*'••' "*! •'••.^•t-•—••»."T-»^ .Z3t V."« C •"•:
   \'.  Where .the  testing method  is generally .recognized, . lethal'-V"- •/':/>•'•".:->;£
.unit or LC50 effluent limitations based on  a  source's  treat- :T;'•£"'-ijf;
 ability studies  and pollutant  reduction plan  may be upheld ^.-^^v-,-
 as  a 402(a)(l) best. engineering  judgment  as to BAT.  The . •:":--'-r:^$&-?i
 source's studies,  if properly  designed  and  conducted, .couid":.:•'~~?*^~
 be  considered  as supplying the necessary  engineering .'and  ,. .~'^*?:/'-C.''.'
 other information for the Administrator to. consider in '..,.;'•'.: ^'J/v;£f^ _.
 keeping with Section 304(b)(2).   ........ -=.-   :V_.    .„•  ,£  ..•^^•••'^:'^-^.^'

-'c::.-,^it must-.'be ^emphasized ' that. any'-402(a) (1) '.best engineering '''.^-'J
 judgment limitation must in  fact be,based on an evaluation....... •^..:;
'of  the technology available'to achieve  that limitation. .......'.^  -O..';;.-
 If  a discharger's study is to  be employed to provide  the  -.-'.'••. iv'f-'v.
 engineering data,  the permit writer cannot depart from the ",''."..:.".'>J ".
 results of the study to impose requirements more stringent ;:^..."-;;t7-;j:-;.
 than those indicated by the  study unless  other" defensible •:-' rC:-7:>r\:;
.technical studies support  the. alternative^ requirements.   •'..;' •••/:;.*•;•]• >•>•"•
 This is true  irrespective of .the permit .writer' s views of ''.-_'•..,>^. .V-^i'VV':
 .the discharger's studies. .Whether.-a  given discharger's  •_•
 studies correctly identify:the best.available technology r
 .for, reducing  its toxic effluents may  be a practical issue,?'•':. .;'•?•"..:--'-.,;;V-1
"but inadequacies of the study, whether.done in' good faith"'-"  '-:"'"t;.r'j:X';'i
 or otherwise,  will not justify ;wri ting  a  402(a)(l) permit'' "'•"::. ^^v^T"-^:?^ i
•that goes beyond, the available engineering 'data. .  " =•.-.-...... , ^'''-ff.ri^P^-rVi^Vri

 •Tr;;':.' '--'^.Section-S307 ( a) -,-focusses on individual 'pollutants .'"^ ?• ^^vi-^-^H^Ci^":
-Itjwould be  inappropriate  to base  a ..402 ( a) (1) ^lethal, unit./. ^r^^f^^^J
 or"'LC50 condition on  a 307(a)  rationale.'  .If .the conditions'...Tfvr'V^Tv'.
 can be.justified as individual-source-BAT-r
 fication would be necessary

 Via t'er":';Quali'ty  S t'andards' •'
     ""*•-*"'•'."•  • *• w »..      •'.*•'  '•? '
 • •: .;:; State water quality 'Standards ' have".'for-.years "included
 general .narrative criteria to limit, certain.'water  quality..
                                                               ,t;r? s^.3^*.----.s.i
                                                               :;*iS5Sri«i»-^-?'-=S'*
                                                               --.v:-^?^.^-—-

-------
                                 .-8-' ''.
 characteristics;resulting from other than  natural causesi   ".''••
 These criteria  include variously phrased criteria prohibiting  .-
 the  discharge of  toxic substances in toxic amounts. $J  '    .  -..

      Previous decisions of 'the General  Counsel have estab- ':.:'-.;
 lished that narrative criteria in State water,.quality standards
 may  be used . in  imposing conditions in NPDES permits.  Thus,. .
 Decision of..the  General Counsel No. 13, Issue 1, upholds
 imposition of numerical limits on the total .residual chlorine
 discharged., based  on State toxic water quality, standards .
 consisting of. .a  general narrative and a median .tolerance
 limit numerical.-standard.  .The decision;indicates that, the
 appropriate .numerical chlorine ;limitation  would be a question
'of fact..   '•••-.. ....     •  -••' .*. ..... ..£ s.. ;  •   ,.;:.l	•'•' . •; '•:....,
                             'effluent' limitations
                             "criteria  do  not have
   '•• Further i"'. the permit's
from  the State's narrative
pressed  .in quantitative .terms..  See
Counsel  No. 65,.upholding a limitation
no discharge.of visible  foam or floating
derived
to be ex-
                                       Decision, of. the .Generai\:.^/4;L-'^ii:;>;»^iir;
                                      ion  that "there shall .be'^j^^^*;^"-
                                      at-inn  solids in O't-h«ar "   $•-';••'•£'•*>"•:•-*•'-•"'.'' *
                                                                    . ;.?.•'• r- •
 than trace amounts,"  based on the State's narrative standard
 to  that effect.      '  ...-,-.,'1-..,-.- - • >.. • .. .',*T. ^ .....  ,.  ...

    \  It follows .from  these'decisions that "the  Act "would not".
 bar the Administrator from issuing permits.that include
 LC50 or "lethal unit".effluent limitations based on a narra-
tive -criterion  included  in . a duty adopted State water: quality"'.
 standard.   Indeed, where  a'water quality. s'tandard for... toxicity ".^•:-,:'i'
 exists.. and"-a_ source ' s biomonitoring indicates  that its
 charge : i
 establ:
 State
._4/ :Many State .standards~"were "modeled
 Criteria ' (1968)  ("Green Book" ),.r.ecommenda'_    _
 Book recommended , •-. p. 3 , '^-that "s"tandar"d's"~sh*b'u'rd provide
 all ..waters
 -elides^
 or.which
 human, f ish ,• and-"other animal .life .and plants.". .Similarly,
 Quality  Criteria for Water (1976 ) ,-.. p. .„ 6 /v recommends  that
        ailOU.LlJ
                   1. I. ^l_- J. t VJIU
                                            — -• u .. i— wi.  »- _  j .• _
                                          UI.J.AWUWC1W^C  «-W  >*t ±ii
                                                                   .' --/..:./*^ ••-."•'
 charges  that, "injure or are ..toxic or. produce adverse,phy-
 siological  responses in humans,  animals,..or plants.".-... ..--,.
                           .__.,. .;1-..-v.;.v:  -.-:-.--- ..


                            '''            ";"  :;'


-------
                          '.'. ^ :>'-9-V'.;-'•:
Counsel No.' 13,  Issue I; Decision of the General Counsel  '            .  __
•No,  54, Issue  IV,  and Decision  of the General  Counsel No.  58, •;.';• :'.;.-': .-••:,;•
Issue I.  _S/  In  that case,  the  Administrator's choices would .be'.' V  ."   ' £-"
to  compel analysis and identification of the  individual con- \ _••/''":•'\, ~~r--.:
stituents'accounting for the  toxicity or to  impose a general • •,;.-.:'\ -.'•'.."..\~
toxic limitation.   Particularly since technical feasibility .-.:-- .•,-•:}.•-~-:'J-k
of  complicance  is  not an issue.in the case of  water quality.-
standards compliance, the latter response  is  reasonable.
                                                       ..         ."*-•« -...T- •*•». *>~^.1 ••.—.
                                                    . • However ,• j^;;^'-.*"--*--.^'-';••'••;.:/
                                                    eceiving  • _:^v:^^~v^''.!"^'
                                                    ffluent  j/l-v^N^vijV---^.-?^,?^
      It might  be argued  that imposition  of .a.general  control-
 on the effluent in order to  implement a  water quality
.-criterion which is non-numerical, with compliance measured
 :through relatively new and uncertain techniques, contains
 too many uncertainties to .form a part of a regulatory pro-
 .gram —the. same vagueness/uncertainty concerns raised in
 connection  with the Section  402(a)(1) discussion.
 the translation of effluent.characteristics to .receiving
 water..quality.and determination of appropriate effluent
 limitations to assure compliance with water quality standards j;.^:.'.^-^ ;C; ^
 is generally imprecise.   Where the toxicity criterion is  .k. ...^JV;.""-.- '-.'1 i"
 a State water  quality standard, Section  301(b)(l)(C)  requires'.:;::'-/:..  "  "^
 that it be  met.  Although, the standard is phrased in  narra-  •:-.'.'".^*'-.V  " p.
 tive terms,  its intent is clear, and there is an obvious  .. ^"":; f.V;::---:-v.
 close relationship between the water quality criterion and ,•"/'.'• 5;...:J.";.. .•
 .-the effluent limitation.  The permit process'may provide  .."".•'."•'; J;-V\^'•-_,••''
 .a forum for translating  the  imprecise standard into more \.~  \V.:~Vx-^V> -
 precise 'effluent limitations.  .It .is concluded .that effluent •"^ v;:-.-"';;-'j.V
 limitations .reasonably designed to' .result in achievement of _.-'•'='•:-;x/;7',:'^v"v
 the duly—adopted narrative wst-Pr- cm^l i t-v st-andsrd shrmld h^ .. t'^^'---:^ •' •••'v'-"'t
 •defensible. .
                      rative  water quality  standard should be^v-y-v:;y-_.'^'i£"-L
                                           ** -                    . *• •" ^"J —.- • _ ' '*-b,. "• *,'


                      •quality standard  is  ''completely  narrative, ''•"•'•: J-'.-; ''••'• '•'•'•]'••
                                                   (Compare,
    '"'•Where  the "water quality
 the measure of:compliance becomes judgmental.
 e. g. , ...the  Illinois standard considered
 General  Counsel No. 13,.Issue.I,. which
•1/10. of :-the.. 48-hour TLM ."-for %-native  fish or--essential. f ish
' food organisms,  with the" more general prohibitions ^modelled .'
-after
jyillCll l_aj-.   \ v.uuif O.L c ,   •1r..^Yi:"V..r-..;- :v*iV":T"Hi
sd in Decision of the .. ?^--:^VjPrN^.|
:h "defined  toxicity as :^?-i"^--^^V?:S'E;
ish or--essential fish  '••'= ?&^*-£^:^*~£.
 __   A State's 401 certification,'..failure • to 'certify, "or    : -'..f •."-:-'rb'Cx'
 certification'of . a less  stringent limitation would  not •       •'K\-''"^:.
.alter the  Administrator's  independent  responsibility..  Decision _;;''J.'. J--'/;
"of the General Counsel No. .13, .Issue I, .and Decision of the   ;: .IT ."••'£c'-'-^
 General Counsel No.  58,  Issue .1. ....-;.-'•',   ••-'.  . •:". .-.   ..:-.-.  •*,.-.•'. • ..=...-.'^^A-v^iii.i

                                             " ...    _. .  .

                                              -'i .'•  '  ••'.:' .-*.. ••-.'••} • - • "•' »/'-..>-i.-'r»i'5i. i
                                             ',-.-• "•...-.-.  •  •   •  - •• •—.-" • .•• •*••'.'?. : ' .

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                                 -10-
It  is cautioned that where EPA is operating the  permit program""/
and  the State standards are. silent as  to the measure of  toxi-
city, the Administrator may  be forced  to determine acceptable  '
concentrations, thus issuing  "interpretations" of State  lav     :
and  regulations in  an important area of  emerging  policies.  6/.. '  '-

Conclusion   "       .  •'••'.'.•=•;..•• .•;.  - ... • .' -.'  .• '= ;•. •••'.   ••   ..-'••.-•  '.:." :O' '"'•=" •(r~'- -'•'' '-  -.£.
-  -          . .'     .; .' • •  • -. .   ' ' ••'.••. • .  •   • •  '• - .  •.••••;••::-.. •;-:"''.-«~ ".*• ---- . *7
                       -...-.-•   •..••....-  ••.'  ....... ; .  .  ..-•.;••:;: - •• T ..; . .. ; -.•• •' .- .ij
     •There  are over  12, 000" suspected- toxic chemical compounds '."• '." .. : ..!:•
in  commercial use.   It is, if not impossible, at least enor- 4 s.. ;;  .' . ""^
mously expensive  to  ' identify- and establish appropriate pro- •'~[..r^-'- ,:..:'. ^"^
hibitions or . limitations on  every substance . which , if dis-.^,"^.^-.-'/..-'.-^^
charged to  the navigable waters, may in  some concentration, ' '.•^-.^••^\. ;\~'^
singly or in combination with other substances,  injure or .be ^Cf-^^V^r
:toxic to humans or. aquatic biota. ..Creative and  at times .  ;; ^-^7^ :.-..:•.::>:
"'technology-forcing "solutions are needed. . It is  believed '-'• ' .;: vfr^y "rp -:'' ,,""". >=
that the efforts  discussed  in_this memorandum can be supported /J. :,-..../-. ",;~
under the. Clean Water Act. i;.'. :.^.- . .... ^...r ..  • , : _-._»• .._ ^ _ ..-'..:••-. .•••^.?,T-; ••.•^ivJ^lfti^'^K"^

  • '":.*. At • the " same  time , V the "imperfections o f the se ' approaches ' " :'-\7  '.•.',•:.;• '.- ;:
are  clear.  .-Continuing work  on identification and more pre- ::.   '. •  ".    l
cise definition of  the acute and long-term  lethal and  sub-  .."' ; "^-  -V _•": r
lethal . effects of toxic constituents will be an  important   •."; >.''"/.•'.  .'',":'- '.-'.-.[
complement  to.  the biomonitoring. and general toxicity limita- ' -V -';.'.'.'.  '.;'
. tion approach.
•j5/.~ Of  course,  the State  may' participate' in  the permit deter-"'""."
 minations,. and  if the  State objects  to an EPA .interpretation ':.;;";;.'•":;.-r.
 of its'  narrative toxicity standard,-"the State may suggest  .; .:.•/,-...-  ::..- ..';.
 an ..effluent • limitation or ,adopt, a  standard .reflet tiny  the /•:'••;•>•.•"'"'• '• \i ' •'"'"•.
 State's preferences.  . ' • ov.-..-- .-•.'"  ••  . i-,  •.£.--::-.•-. •  -.    : . . ..•.!;.^.^'4;''*:!:: r-^i
•  . .... •:...•!; .^ .«•.  .'     ;. n^ffvv^r•'?:.-:;• •::- ;-• \.-'.^v-^fr-?v^v.:';...^.:-~;--f :<^^v'i^rv^>i^
                                                          .-.-.. " T-JS,^^ *'"**J.fT(V-- '"•'• •*' • *"* . "

                                                            • ' '-..  '.'»'".*'"* 's'. .''•• ' "
                                                           •'• j.  , .  ..^"-.'.X; ." * *••" ' •"..-• • '•
                                                              '*- "• ' *"fV~:/%V^*':***" ">-"" ~ "•'

                                                          ":     '  ::• -f'^Tj "•'"'''"";
             ;,r" *.
             -.^;.. •:

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     -
    UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

      .   '•            WASHINGTON. D.C.  20460'
                               1 9 1979
                                                    OFFICE OF ENFORCEMENT
MEMORANDUM


TO:          Regional Enforcement Division Directors
             Director, NEIC
             NPDES State Directors

FROM:        Deputy Assistant Administrator for Water Enforcement  (EN- 335)

SUBJECT:     Office of General Counsel  (OGC) Memorandum

     Attached is a copy of a legal opinion prepared by OGC  in response
to questions concerning the inclusion of compliance schedules in Second
Round and new permits.  The Permits Division is including this  document
in its Policy Book as 78-21- IV-.  If you have any questions  or comments
about this opinion please contact Scott Slesinqer  (EN-336),  202-755-0750.
                                       Jef ff-ey ^. Miller
Attachment

cc:  Regional Permits  Branch  Chiefs

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                UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                               WASHINGTON. D.C. 20450
7
                                                              OFFICE Of
                                                           SENEMAL. COUNSEL
       MEMORANDUM
       TO
FROM
SUBJECT:
          Deputy Assistant Administrator  for
            Water Enforcement  (EN-335)    "
                 Associate General Counsel
                 Water and Solid Waste  Divi
                 Request for a Legal  Opinion  f—  Inclusion of Com-
                 pliance Schedules  in Second  Round  Permits and
                 Newly Issued Permits  — Yo^ry Memo  of November 2,
                 1978 .
                                             ion
       QUESTION

            You have asked  a  series  of  questions  regarding the require-
       ments of best practicable  control  technology currently available
       ("BPT") anJ water  quality  standards  ("WQS")  in permits issued
       after July 1, 1977.  Your  first  questions  concern reissuance of
       a permit to a source which had  already  been  subject to BPT re-
       quirements in an expiring  permit.   If  BPT  or WQS have become more
       stringent since issuance  of the  first  permit and additional con-
       struction would be necessary  for the source  to meet the changed
       requirements, you  ask  whether the  permit must require the source
       to meet the new BPT  or WQS requirements and, if so, whether the
       permit may include a schedule for  achieving  the new requirements.
       In addition you ask, in the case of  a  new  permit, whether the
       p.ermit may ignore  BPT  and  WQS requirements and place the source
       on a direct schedule- to BAT/BCT.  In both  cases, you ask whether
       a schedule of compliance,  if  allowable, may  provide a time period
       during which no construction  is  required,  to allow the permit
       writer and the discharger  to  determine  what  construction will be
       required by BAT/BCT  where  those  requirements cannot be clearly
       determined when the  permit is issued.

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ANSWER

     If a source, other  than  a  publicly-owned  treatment
works, has never received  an  NPDES  permit  setting  forth
any applicable BPT and WQS based  effluent  limitations, a
permit issued to such source  must require  immediate  com-
pliance with the applicable requirements of BPT  or WQS as
those requirements are in  effect  at  the  time the permit  is
issued.  If a non-POTW source has achieved its  first-round
effluent control requirements,  a  new or  reissued permit  to
that source should assure  that  the  source  will  continue  to
achieve those effluent reductions.   In addition, revised
BPT and WQS must be  applied to  the  source.  Since  the Act
provides no fixed schedule for  compliance  with  these re-
quirements, EPA should adopt  a  reasonable  scheme for at-
taining compliance expeditiously, consistent with  orderly
application of the Act's 1984 requirements.

DISCUSSION

     Section 301(b)(l)(A)  of  the  Clean Water Act requires
all sources of pollutants, other  than publicly-owned treat-
ment works, to achieve BPT by July  1, 1977, and  Section
301(b)(l)(C) re.quires all  sources to comply with WQS by
that date.  Section  301(b)(2) establishes  a second  set of
more stringent technological  requirements  to be  achieved
by non-POTW's by 1984 (or  three years after the  date the
requirements are established, up  to 1987).  Thus,  the Act
establishes a two-phase  structure  for achieving  specified
effluent limitations.

     The questions raised  by  your memorandum  arise  because
(1) some sources did not achieve  compliance with the Phase  I
requirements by July 1,  1977, and (2) in some  instances
the definitions of BPT,  or the  requirements of WQS,  have
been revised, and current  levels  of treatment,  previously
in compliance with BPT or  WQS,  as defined  in  an  NPDES  per-
mit, are not adequate to meet the revised  BPT  or WQS.   The
thesecond.

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     Congress made it clear, in Section 301(b)(l),  that  ini-
tial compliance with BPT and WQS was to be achieved  by July 1,
1977.   In the 1977 amendments to the Act Congress  recognized
that some sources had not met those requirements,  sometimes
for justifiable reasons.  Nonetheless, it refused  to waive or
extend the deadline for such sources.  See H.R.  3199,  95th Cong
Isc Sess., Section 13, eliminated in conference;  see also,
Cong.  Rec. S 13538, Aug. 4, 1977, explaining  that  the 1977
amendments do not extend the deadlines of Section  301 but -
allow the Administrator certain Section 309 enforcement  op-
tions .

     Since Congress expressly 'determined not  to  waive Phase I
compliance requirements or  allow permits to extend the  com-
pliance deadlines of Section 301(b)(l), EPA cannot claim im-
plied authority to do so.   Instead, if. a permit  must be  issued
or reissued to a source which has never achieved compliance
with applicable BPT or WQS  requirements, the  permit must re-
quire immediate compliance  with those requirements as they are
currently in effect when -the permit is issued,  and if relief
is to be provided, Sect ion  309(a)(5) orders must be employed.

                             II

     A source which had complied with BPT before the deter-
mination of BPT changed is  in a different position from the
source which never complied.  This  source has already achieved
the Act's Phase I requirement as administratively interpreted
and applied to it and is in a position to proceed with the
second phase.  Therefore,  it would  be inappropriate to impose
an immediate requirement that revised BPT be  achieved.

     The requirement  that  BPT be achieved remains in the Act
even after the 1977 deadline has passed.  However, the Act
does not set a specific deadline for  attaining revised BPT
requirements, and some reasonable  scheme  should be adopted
to ensure that such requirements be achieved  as expeditiously
as practicable, consistent  with orderly  imposition of Phase  II-
(BAT and BCT) requirements. Thus,  for example, if compliance
with revised BPT is a logical step  towards  attainment of BAT
or BCT limitations, such compliance could be  included as a
reasonable interim element  of the  source's  permit responsibili-
ties.  Certainly any  applicable BPT requirements would have to

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be met not  later  than  the date  on which  compliance  with.BCT
and BAT  is  required.   However,  where  a compliance  date  prior
to that  time  would  require construction  or modification in
addition  to  previously defined  BPT,  and  where  that  construc-
tion would  not  constitute a logical  step toward BAT,  im-
posing the  interim  BPT requirement might well  undermine the
Act's orderly progression from  the 1977  to the 1984 require-
ment s .

                               Ill

     The  issue  of compliance dates for ongoing WQ5  compliance
is less  clear.  The Act establishes  the  end date for the first
stage of  VQS  compliance,  but for subsequent levels  of possibly
more stringent  WQS , the Act defers to" State planning determina-
tions.   See  Section 303(e)(3)(A), Section 303(e ) (3)(F), Sec-
tion 208(b)(2)(B) ,  Section 208(e), and Section 303Ce ) (3)(B).
If a' state  has  revised its WQS  and established a schedule of
compliance  at least as stringent as  any federal requirement,
th.e NPDES permit  would have to  impose the state-established
limitation.   However,  if the State plans do not contain specific
•compliance  schedules,  the EPA permit  writer must establish the
source's  Phase  II WQS  compliance schedule.

     The  Act  su'pplies  no express guidance as to what the EPA-
determined,  post-1977  WQS compliance  schedule  should be.  In
general,  Congress intended compliance with the Act's require-
ments to  occur  at the  earliest  practicable time.*  One option,
therefore,  might  be for EPA simply to establish the policy
that post-1977  compliance must  be achieved by  the earliest
practicable  time.

     Alternatively, the Section 301(b)(2) pattern is to re-
quire second  round  municipal compliance in 1983 and second
round industrial  compliance in 1984.   It is reasonable to
 *   The  Section 301 requirements are all to be met "no Istsr
 than"  the  statutory deadli-nes.  See, e.g. , Leg . Hist. -163. .In
 the  1977  amendments, Congress confirmed its interest in securing
 the  earliest possible compliance.  See Sections 309(a)(5) and
 309(a)(6),  added by the amendments.

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establish WQS compliance schedules in harmony with the Act's
general regulatory structure.  Thus, EPA may infer that  the
Section 301(b)(2) dates should be applied to WQS, in the  ab-
sence of any more stringent state schedules.

     Which of these approaches (or what combination of them)
is to be selected is a policy judgment.  Since  the Act does
not express compliance schedule requirements for  post-1977
WQS compliance, EPA may wish to supply guidance by regula-
tion.  This would provide a reasonable, permanent method  for
establishing WQS compliance schedules where none  are avail-
able from the states.

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         UNITED STATES. ENVIRONMENTAL PROTECTION AGENCY
                     .  'WASHINGTON, D.C.  20460
                                                  OFFICE Or ENFORCEMENT

MEMORANDUM                                            n ' § 0 * 3


TO:        Regional Enforcement Division Directors
           Regional Permits Branch Chiefs

FROM:      Acting Deputy Assistant Administrator
           for Water Enforcement (EN-335)

SUBJECT:   Incorporation of Pretreatment Program Development
           Compliance Schedules Into POTW NPDES Permits

      The  General Pretreatment Regulation (40 CFR Part 403)
requires  that certain publicly owned treatment works.  (POTWs)
develop programs to ensure compliance with pretreatment discharge
standards by nondomestic sources discharging into the POTW.  A
necessary first step in developing these programs is  the insertion
of a compliance schedule for program development in the POTWs
NPDES permit.  The purpose of this memorandum is to re-emphasize
.the importance of incorporating pretreatment compliance schedules
 into all  appropriate permits at the earliest possible time.
                ••
BACKGROUND

      It is the intention of the Clean Water Act and the National
Pretreatment Strategy that the primary  responsibility for enfor-
 cing pretreatment stc.ndards be delegated to local POTWs'.  This  is
 to be accomplished by EPA and NPDES States overseeing the develop-
ment of POTW pretreatment programs meeting the .requirements  of
 the General Pretreatment Regulation.  Section 403.8(d)  of that
 regulation requires that,                                     • •'

      If the POTW* does not have an approved Pretreatment Program
      at the tine  the POTWs1 existing Permit is reissued or
      modified, the reissued or modified Permit will  contain  the
      shortest reasonable compliance schedule, not to  exceed  three
    •  years or July 1, 1983, whichever is sooner, for  the.develop-
      ment of the  legal authority, procedures  and funding required
      by paragraph  (f) of this  section.  Where the POTW  is located
      in an NPDSS  State currently without authority  to require a
      POTw Pretreatment Program, the Permit shall incorporate a
     . modification or termination clause as provided  for in
     •section 403.10(d) and the compliance schedule  shall be
      incorporated when the Permit is modified or reissued pursuant
      to such clause.

    As defined by  section  403.8(a)

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The insertion of these compliance schedules is .a critical element
in launching the.development of many POTW pretreatment programs.
Compliance schedules also serve as a means for EPA and NPDES
States to track program development.

    • Those POTWs required to develop a pretreatment program
have been identified by States and Regional offices.  Preliminary
information on these POTWs was forwarded to Headquarters at the
start of 1979.  Since, that time, the Regions and-States should .
have developed a firmer list of exactly which POTWs will need  ..
pretreatment programs.  For those POTWs so identified, the
task of incorporating compliance schedules should be well underway.

CURRENT STATUS AND NECESSARY ACTIONS

     Despite the importance of compliance schedules to program
development and the need-for their swift incorporation if
regulatory deadlines are  to be met, there have been indications
that schedules have not been inserted  in all appropriate permits.
While some Regions and States have moved forward strongly in this
area, others have not.  If the pretreatment program is to be
successful and the- momentum for local  program development that
has been generated is to  be maintained, it is essential that this
activity is given appropriate priority.

    - In order to meet both the July 1,  1983 program approval
deadline and allow POTWs  adequate  time for program development,
compliance schedules should be established as soon as possible.
By  inserting schedules  in permits  as  they expire or are modified,
the disruption and waste  of resources  created by reopening
permits solely to incorporate pretreatment compliance schedules
will be avoided.  Although  it  is  desirable to avoid opening
permits just to  insert pretreatment  schedules,•this step may
become necessary as  the  1983 deadline  approaches.  As first round
permits expire in FY  80,  the  insertion of compliance  schedules
will be a priority activity  in  this  fiscal year.  Less than
complete attention to  this  activity  will  create  a backlog with
potentially disastrous program  consequences.

     I understand that  the  timely insertion  of  compliance
schedules has been made  more  difficult by  the  delay  in  approval
of  State pretreatment  programs.   However,  in many  cases,  this   •
delay need not affect  the development of  POTW  compliance  schedules.
The General Pretreatment Regulation and the  National  Pretreatment
Strategy make  it clear that those States  which  currently  have  the
authority  to  reissue,  modify or reopen POTW permits  to  incorporate
prerreatment  requirements should exercise that authority  and  put
compliance schedules into expiring permits  or  those being modified
for some  other  reason.   This should be the  case with the  majority  \
of  NPBES  States.   Those few States which at this time lack the    '
necessarv  authoritv  to incorporate corneliance schedules

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should continue to put modification clauses in permits.  These
modification clauses should require that such permits be promptly
reissued or modified after State pretreatment program approval to
incorporate an approved POTW program or a compliance schedule for
the development of a pretreatment program.  To alleviate future
delays, all States should move quickly to receive State program
approval.

     The incorporation of compliance schedules into permits
should not be a major resource burden on either Regional offices
or States.  Individual schedules should not vary a great deal  '
from the model provided in guidance material.  A model compliance
schedule accompanied by a detailed explanation of how to develop
such a schedule was included  in the November 29, 1978 memorandum
from the Deputy Assistant Administrator for Water Enforcement and
the Deputy Assistant Administrator for Water Programs Operations
which  is attached for your assistance.  This information was
expanded upon in the Pretreatment Guidance Document for NPDES
States that was distributed  in February, 1979.  Additional' copies
of this Document are available from Headquarters Permits Division.
If these models are followed,  it should require a minimal  amount
of resources to carry out this critical function.  The investment
of resources in this effort  now will yield a long term resource
saving for EPA and States.   Pretreatment programs developed as. a
result of these compliance "schedules will  shift most.program
responsibilities to POTWs.

CONCLUSION

     To allow us to evaluate the progress  of this program,
and to help us plan where we can best  utilize  our contract
collars, we ask" that you provide us with  the. following  information
on compliance schedule activities:

       o  Your current count of  the number of  POTWs  or POTW
          Authorities which  are  required  to  develop  pretreat-
          ment programs.

       o  Of those  POTWs  or  POTW Authorities required  to develop
          programs, how many have  pretreatment compliance  schedules?
          Kow many  have modification  clauses?            	  .

       o  How many  POTWs  or  POTW  Authorities/  required to~d"evelop	
          pretreatment programs,  do  not yet  have  either a compliance
          schedule  or  a  modification  clause?

       o  How do  you  plan to deal  with those POTWs  or POTW
          Authorities  with neither a  compliance schedule nor a
          r.odificaticn  clause, in a  -.anner that will allow them
          sufficient  time to develop a program prior to the July
          1,  1S53  deadline?

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Fcr purposes of  answering  the  first  three questions, ve have
attached a form  that  can be  filled  in  for each State in your
Region.  Because of the need to  finalize our  contract planning
process, we need this information as soon'-as  possible and would
like to have it  within four  weeks of your receipt of this memorandum,
Please  send the  completed  forms  to Michael Kerner, Permits
Division,  (EN-.336)," US EPA,  401  M Street SW,  Washington, D.C.
20460.  If you-have any questions on this or  .any other aspect of
the Kational Pretreaunent  Program you  can call Michael Kerner at
(202) 755-0750 (FTS).

     By diligently pursuing  this compliance  schedule activity,
we should  be able to  prevent any further program slippage and
encourage  the rapid and successful  development of this important
pollution  control program.
                                  Leonard A.  Miller
             i

Attachments

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                                                                 A
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            UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                        WASHINGTON, D.C. 20460
JUN  2 1982                                              OFF.CEOF
OW"                 ;                               .      WATER
                    j                           —


MEMORANDUM
SUBJECT:  Policy for the Second Round  Issuance  of  NPDES
          Industrial Permits

TO:       Regional Administrators
FROM:     Frederic A. Eidsness, Jr.
          Assistant Administratdtxf'o'i^Water (WH-556)

     The final  "second round" policy  for  re-issuing  NPDES  indus-
trial permits is attached.  The policy  reflects Regional comments
in response to  previous drafts sent to  you  and discussions with
the Water Management Division Directors.  This policy applies
only to EPA-issued permits, although  States may choose to  adopt
the principles  outlined.   I am sending  the  policy to both  the
NPDES and non-NPDES States under  separate cover to solicit their
comments and advice on the applicability  of the policy to  their
programs.  In addition to  the priorities  set here for reissuance
of NPDES industrial permits, the  issuance of new source or new
discharge permits remains  the highest priority to assure no
undue delay in  the construction or modification of such sources.

     This policy reflects  the Administrator's conviction that,
to the. extent possible, permit requirements should be based
either on promulgated national wastewater treatment  standards
or requirements necessary  to achieve  the  designated  water  uses
specified in water quality standards.   It also reflects the
principles that permit effluent limitations should be developed
using good scientific information and that, to the extent
practicable, permits of a  lasting value should be developed.
Such permits assure protection of the environment while estab-
lishing wastewater treatment requirements that will  not be
subject to frequent change.
         •
     The policy establishes five  priorities for permit issuance
and describes the basis for assigning permit priorities and'
developing limitations. ' Based on this  policy, Regions are to
develop and submit by June 30, 1982,  a  list of priority permits •
which the Region expects to  issue before  the end of  FY 1983.
The  initial list is to be  submitted  to  Headquarters  and should

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                             - 2 -


contain key information such as the facility name, owner/operator,
location, receiving water  (STORET Reach Number),  the  issuance
priority category  (see attachment to  the policy), pollutants of
concern, and the anticipated schedule of issuance.  Headquarters
will use this information  to report to the Congress and others on
EPA's plans for and s,tatus of the permit program  — .what our
priorities are and where our resources are going".  Regional
performance against established plans will be assessed as part of
the Office of Water's guidance/evaluation process.

    Regions should also work cooperatively with the NPDES States
to develop similar priority permit information on permits to be
issued by the States.  This is important to assuring  a truly
national effort and can be done as a  part of routine  cooperative
program planning.processes, such as the development of 106 plans.
In this way we can determine how EPA  can most usefully assist the
States in their permitting efforts.   Establishing State priority
permit-lists will  also serve to assist in determining the most
appropriate Sta;te-issued permits to be reviewed by the Region.

     EPA headquarters will be providing guidance  and  assistance
to help carry out  this policy.  Questions concerning  the policy
should be directed to Bruce Barrett,  Director, Office of Water
Enforcement and Permits (FTS/Area Code 202-755-0440).

Attachment

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           UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

                       WASHINGTON, D.C. 20460
                                                       OFFICE OF
                                                        WATER
       Policy for the Second Round Issuance of National

        Pollutant Discharge Elimination System (NPDES)

                Permits for Industrial Sources
STATEMENT OF POLICY

EPA-.issued industrial NPDES permits will" be  issued according to
the following priorities.  (A detailed explanation of  the
policy is contained in the attachment to the  "Implementation".
section of this policy.)  First priority shall be given  to
facilities discharging to waters where use  impairment  problems
have been identified and where there is  adequate  information to
develop either a water quality-based permit  or, in the exceptional
case detailed in the attachment, a BAT/BCT  permit relying on best
professional judgment.  The second priority  is to permit facilities
for which, applicable BAT effluent limitations guidelines have
been promulgated.  The third'priority covers  facilities  suspected
of contributing- to the impairment of a designated water  use but
where insufficient information exists to confirm  the extent of
the use impairment. .The fourth priority addresses facilities for
which effluent limitations guidelines are not scheduled  for
promulgation and the existing permit limitations  do not  reflect
sufficient treatment.  The lowest priority  is extension  or
reissuance of permits to facilities for which effluent limita-
tions guidelines are not scheduled and the  existing permit   ^
requires sufficient treatment.  In all permitting actions, EPA
will work cooperatively with States and permittees and adhere to
procedures established by applicable statutes and regulations.
This policy also establishes a mechanism for  developing  priority
permit lists with the first list due by June  30,  1982  (see  "Other
Considerations" in the Attachment).


EXPIRATION DATE

This policy will remain  in effect until  September 30,  1983.
                                                     June 2,  1982

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                            -2-
BACKGROUND

EPA and authorized States  issue NPDES permits for periods not
to exceed five years.  Permit  limits are based either on the
application of available technology or on the protection of
water quality, whichever is more stringent.  The Clean Water
Act (CWA) establishes  £wp  levels of technology standards and
deadlines for industrial' compliance:  best practicable control
technology currently available  (BPT) by July 1, 1977 and best
available technology economically achievable/best conventional
technology (BAT/BCT) by July 1, 1984.

The majority of  the "first round" permits, reflecting BPT or more
stringent water  quality-based  limitations, were issued between
1974 and 1976.   Most of these were based on technology using
"best professional" judgment" (BPJ) because effluent guidelines
were unavailable  (relying  on section 402(a)(l) of the CWA).  In
1978, as these permits began to expire, EPA instituted a policy
of reissuing short-term (2 to  3 year) permits in order to await
promulgation of  BAT/BCT effluent guidelines.  Most of these
'short-term permits have now expired.  Thus there are now more
than 35,000 expired permits.   For the most part, these expired
permits continue  in effect under the federal Administrative
Procedure Act or  similar State statutes.

In the past, EPA and many  States focused almost exclusively on
the technology-based effluent  limitations approach. • While EPA
will continue this technology-based" approach using BAT/BCT
effluent limitations guidelines, EPA will also look beyond
technology-based requirements  and issue permits based on scien-
tifically determined requirements for assuring environmental
protection.  The  development of requirements based on protection
of water quality  has often been hampered by lack of data.  This
policy makes clear that the burden of data collection is shared
by EPA, the State, and the discharger.  Further, the implementa-
tion of this policy should assure the most effective use of
resources by carefully scheduling permit activities, waiting
for national treatment standards where practicable, making
better use of existing data, and initiating cooperative efforts
with States and  permittees.

Thic approach is  supported by  initiatives •chat will strengthen
both technology-based  and  water quality-based effluent limitations,
It will produce  permits of lasting value that are not subject to
frequent change.  EPA  is moving ahead to promulgate national  ,
effluent limitations guidelines on a schedule which will provide
guidelines for 24 primary  industry categories before the end of
FY 1983.  Promulgated  effluent  limitations guidelines, in
conjunction with their development documents, expert assistance,
and permit writer training, will assure the application of good
science and produce well founded permit limitations,  'individual
permit limitations developed in this way will significantly
reduce conflicts  and avoid protracted appeals.
                                                     June  2,  1982

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                            -3-


A sound technical and legal basis for permit limits is also
provided by State water quality standards.  All States have
standards for each designated water use which include both
numeric criteria for specific pollutants and general conditions.
Expanding the scope of these standards and improving their
scientific basis is a continuing process which is-now being given
additional attention by EPA, the States, and throughout the
scientific community.  EPA is encouraging States  to review and
revise their standards to reflect site-specific factors.  The
technological basis for implementing these standards using Total
Maximum Daily Load/Wasteload Allocations is being significantly
advanced.  These factors and site-specific biological and chemical
analysis will provide the needed scientific basis for water
quality-based effluent limitations in permits.


APPLICATION

This policy applies only to EPA-issued industrial NPDBS' permits
although States may choose to adopt the principles outlined.


IMPLEMENTATION

This policy is implemented by establishing permit issuance
priorities and developing priority permit lists and schedules.
This approach is designed, to assure the best use  of available
resources and produce results where they are most needed.  The
details of this approach are explained in the attachment.
   Date                         Frederar-
                                Assistant\Administrator
                                for Water
.SH^

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                                      Second Round Industria,
                                              (EPA-Issued P
                                      nit ting Policy
                                      Only)
Attachment
Permitting Priorities
                        Discussion/Implementation
First Priority
Issue permits to
facilities where water
use impairment problems
have been identified
Second Priority
Issue permits based on
promulgated BAT guidelines
where BAT guidelines
are scheduled
o States, with EPA assistance, identify water bodies where It is known that the water use
  is impaired or other major water quality problems exist.  This may be based on factors
  such as drinking water supply contamination, exceedences of applicable water quality
  standards, and bioaccumulation of toxic pollutants.  In coordination with the State, the
  available scientific information should be reviewed to identify significant contributors
  and determine whether there la adequate scientific Information to develop water quality-
  based limits for those dischargers.                   '

o For those dischargers identified as  contributing to a use impairment or other major water
  quality problem, and for which there are sufficient information and data, permit limits
  should be developed based on section 303(d) total maximum daily load/wasteload alloc-
  tions (TMDL/WLA's) and relevant portions of section 208 plans.  Where sufficient data
  exist, EPA may develop water quality-based limits in the absence of 303(d) TMDL/ULA's,
  using scientifically acceptable methods, including the use of bioassays.  However,  such
  effluent limits are subject to public, administrative, and judicial review as part  of
  the permit process and any other permittees contributing to the water quality problem
  will have an opportunity to participate after notice of proposed effluent limits.   All
  water quality-based permits with expiration dates beyond July 1, 1984, also must meet
  the statutory definition of DAT and  BCT.                        .

o In those exceptional cases where major water quality problems are identified but there
  is insufficient information to develop limitations based on water quality, and effluent
  guidelines will not be available in  the near term, the permit should be based on good
  scientific information with the limits reflecting BAT/BCT.  In making determinations of
  BAT/BCT, the permit writer will rely on best professional judgment.  Such permits will
  be issued with five year terms.  More stringent limits required by nat'ional technology-
  based guidelines issued during the term of the permit will be included in subsequent
  permits.  In addition, the organic chemicals and plastics/synthetics Industry categories
  will likely present a number of cases which, because of the identified use impairment or
  other major water quality problems,  justify the use of this approach.  EPA headquarters
  will provide assistance to permit writers through teams of industry experts for these
  Industrial categories.


o Where BAT effluent guidelines have been promulgated, permits will be Issued reflecting
  guidelines and any other necessary BAT/BCT or water-quality based limits.  If BAT guide-
  lines are scheduled but have not been promulgated and no major water quality problems  are
  involved, the first round BPT permit should be extended under the Administrative Procedure
  Act (APA) while waiting for BAT guidelines.
                                                                                                         June 2,  1982

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Permitting Priorities
                                      Second Round Industrial Permitting Policy
                                              (EPA-Issued Permits Only)
                        Discussion/Implementation
                                                                          Attachment
                                                                                                       Page  2
Third Priority
Issue permitu to
facilitleo where
water use impairment
problems are suspected
Fourth Priority
Issue permits where
upgrading is needed and
DAT guidelines are not
scheduled
Fifth Priority
Issue permits for all
others as the last
priority            v
o For those dischargers suspected of contributing to major water use impairment or other
  major water quality problems, but where insufficient confirming data exist,  a specific
  short-term program of data collection should be initiated.   The data collection program
  should include requirements for blomonitoring,  chemical analysis,  or field surveys
  necessary to obtain information to determine the magnitude  and. extent of the water use
  impairment.  In setting up the data collection  program, particular attention should be
  paid to potential contamination of public drinking water supplies.  EPA Headquarters
  will provide further guidance on both the procedural mechanisms for implementing this
  data collection program as well as substantive  guidance on  the type of blomonitoring
  or chemical analysis requirements that could be used to collect data.

o If sufficient information is obtained that shows the discharger is contributing to water
  use impairment problems, a new five year permit or modification of existing permit limits
  should be developed as appropriate.
                                                               i

o Where no further BAT guidelines development is  planned and  the first round permit does
  not reflect sufficient treatment to comply with BAT/BCT, subsequently promulgated BPT
  guidelines or water quality standards, upgrade  the permits  limits  and/or other necessary
  conditions and issue a five-year permit.  Limits on .conventional pollutants reflecting
  BCT may be developed using the BCT methodology  when it becomes available, and limits on
  priority pollutants reflecting BAT should be developed using BPJ.   Normally, significant
  discharges  of priority pollutants are not expected where BAT guidelines are not
  scheduled for development.


o Where no further guidelines development Is .planned but the  first round permit requires
  sufficient treatment (i.e., would meet what are likely to be considered BAT/BCT limits and
  no water quality problems are suspected), the existing permit may  be extended under APA
  provisions or reissued only as the last priority.
                                                                                                      June.,
                                                                                    ^982

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                                         Second Round Permitt^^ Policy
                                          (EPA-Issued Permits Only)
                                              Other Considerations
                                                                    Attachment
                                                                                                    Page 3
1.  Priority Permits
2.  General Permits
3.  Compliance Deadline
 EPA  Regional Offices  will  Identify  facilities which  are  probable  contributors  to water
 use  Impairment  or  other  major water  quality  problems.  The  305(b)  reports  and  303(d)
 priority  segments  will be  considered In  Identifying  these priority facilities•
 Using  this  and  other  Information, the Regional Offices will develop a  listing  of permits
.which  are expected to be Issued  before October 1,  1983 consistent  with the  priorities
 established by  this policy*  The listing will Include permit  issuance  schedules which
 will provide a  reasonable  estimate  of expected issuance.  The initial  list  of  priority
 permits and schedules are  to be  transmitted  to Headquarters by June 30,  1982.  This list
 should be updated  periodically  to reflect  current  plans  and priorities.  Encouraging
 States to establish similar priority lists is also essential  to the national program.

 In addition to  the points  described  above, we are  encouraging the  use  of general permits
 to cover  many facilities with the same or  substantially  similar types  of operations and
 the  same  types  of  wastestream discharges.  This should help significantly  in reducing
 the  backlog of  expired NPDES permits. The Office  of Water  will analyze  the opportunities
 for  general permits for  industry categories, including some primary industry categories,
 where  the facilities' operations and discharges are very similar.   Multi-State coverage
 will also be considered.   We will keep you informed  of progress in this  area.  In  the
 meantime, permitting  authorities should  consider issuing general'permits in their  own
 jurisdictions where appropriate.

 All  permits extending past July  1,  1984  must contain final  limitations that are deemed
 equivalent  to BAT/BCT regardless of  whether  the limits are  based on wa'ter  quality,
 effluent  guidelines,  or  BPJ.	
                                                                                                       June 2,  1982

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        UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                       WASHINGTON. D.C. 20460
                                                      OFFICE OF
                                                       WATER
                           JAN 16 1984
 MEMORANDUM

 SUBJECT:   Continuance of NPDES General Permit^ Under the APA
                                   i
 FROM:   '' Bruce- R.  Barrett, Director 	
           Office of Water Enforcement and Permits (EN-335)

 TO:        Regional  Water Management Division Directors
           Regional  Counsels

     We have received a number o?- inquiries as to whether
 continuation of expired general permits  is allowed under the
 Administrative Procedure Act (APA)  and the NPDES regulations.'.
 \ recent  Office of  General Counsel  (OGC)  opinion (attached)
   kdicates that such continuance is  legally permissible.   However,
   ere  are important reasons for .EPA not  to rely on APA continu-
 ance except in extreme cases where  permit reissuance is  delayed
 for unexpected or unavoidable reasons.  This memorandum  addresses
 the general permit  reissuance process in  light of OGC's  recent
 review of the continuance.issue.

 SUMMARY

     NPDES general  permits may be continued under the APA " •
.where  the Agency has failed to reissue the permit prior  to
 expiration.  Although continuance is legally permissible,.
 permits should be continued only as a last resort and continuance
 should be avoided by timely reissuance of general permits
 wherever  possible.

  -   Because of the geographic scope of  general permits  and. the
 number of facilities covered, continuance could raise questions
 as to  whether EPA has • adequately considered long-term cumulati-ve
 environmental impacts,  exacerbate the permit issuance backlog,
 and create new issues or workload problems associated with new
 facility  permits since  new facilities cannot be covered  by a
 Continued permit.  Continuance is generally avoidable given
   cuate  planning.   Where continuance is  unavoidable, it should
   for the shortest possible time.   Upon  determining,that a
 general permit will not be reissued prior to expiration, the

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Regional Water  Management Division Director  should  inform  the
Permits Division  Director and provide  a  specific  schedule  for
completing  reissuance.

IMPLEMENTATION

     The following  requirements govern the continuance  of
general permits:

     o.  Only  those  facilities authorized to  discharge under' •
        the expiring  general  permit are  covered by  the
        continued permit.         <
                              •  • »

     o '-Where the notification requirements  of a  general
        permit  provide  permit coverage prior to the  actual
        commencement  of operations at  a  site (e.g.,  mobile
        seafood processors and oil and gas drilling  vessels)
        facilities  providing  such "notice prior to expiration
        are covered by  the continued permit.

     o  At  least  six  months prior to the expiration  date.of a
        general permit,  the Regional Water Management Division
        Director  should submit a draft general permit and a'•
        schedule  for  permit issuance or  reissuance  to the
       • Permits Division Director.  If .a draft general  permit
       ' is  not  ready  at that  time, an  explanation of the reasons
        for delay and a schedule for permit  development and
        reissuance, should be submitted  instead.  The Permits
        Division  Director will expedite  permit issuance and
        reissuance  processes  at headquarters as much as possible
        and will  inform upper management in  the Office  of
        Water of  any  significant delays.

DISCUSSION    . .          .        .                  .        '

     As'with  individual NPDES permits, it may become necessary
to administratively continue  a general NPDES permit  when,, re-
issuance of the permit  or issuance of  a  new  permit  is impossible
before permit- expiration, • The Ai"A allows for continuance of a
Federal license or  permit when a permittee has made  a timely
and complete  application for  a new permit.   Until OGC's recent
review of the issue,  OWEP had advised  the Regional  Offices
that general  permits  could not' be continued  under the APA
because the NPDES regulations do not require applications for
general oermits.  DWF:?  requested that  OGC review  onu provide a
written opinion on  this issue since a  number of parties had
questioned  our  legal  position.  On November  17, 1983, OGC  informed
OWE? that general permits can legally  be continued  under the
APA. .

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      There  are a number of strong policy and program reasons to
   sure  timely reissuance rather than relying on APA continuance.
      general permits cover several dozens or even hundreds of
      dual  facilities.   The large number of facilities covered
 and  the broad geographic coverage tend to focus industry and
 public  attention on Agency inaction when the permit is allowed
 to expire,  especially in the early stages of "implementation of
 the  general permit program.

      Many general permits are controversial at the time of
 initial permit issuance.  Similar controversies can be antici-.
 pated during reissuance.  EPA cannqt allow the public to  • '
 perceive that we are avoiding these issues through administrative
 continuance of expired permits.  For example, cumulative en-
 vironmental impact assessments hinge on the nuirtber and volume
 of discharges.  Information gathered during the term of. the
 original permit may justify new permit limitations, terms and
 conditions  at the time of reissuance.   For marine dischargers,
 determinations pursuant to §403(cj of the Clean Water Act are
 usually dependent on the estimates of the number of facilities
 that will discharge during the term of the permit.  Delay in
 updating these determinations raises questions about potential
 environmental impacts and the efficacy of permit conditions.
 Similar issues arise where there  have been new standards or
   fluent limitation guidelines promulgated during.the course
   the  permit or changes in the CWA or applicable requirements
     r other applicable statutes (e.g;, Coastal Zone Management
 Act,"Endangered Species Act).

      Finally, a major goal of the general permit program is to
 reduce  the  Agency's NPDES. permit issuance backlog.  Allowing
 general permits to expire aggravates the backlog problems.  In
 addition, new dischargers would not be covered until EPA re-
 issued  the  general permit.  Since these facilities would be
 liable  for  .di-scharge without a permit, they would likely request
 an individual permit and be required t8 submit a full application
 and  do  appropriate testing.  This creates a permit issuance
 workload demand that would be avoided by timely reissuance of
 the  general permit, as well as putting burdens on permit appli-
 cants that  would be .removed by reissuance of the general, permit.  .

   :   Given  the drawbacks and problems, administrative continuance
 of general  permits should be the  exception rather than the rule.
 Adequate planning and timely permit preparation will allow us
 to avoid the necessity to use administrative continuance except
 as a stop gap, short term measure.  Th-e Office of Water Enforce-
 ment and Permits will work with the Regions to avoid continuance
/•^•erever possible.

 ^^  Coiburn T. Cheraey, OGC

 Attachment

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NPDES Hearings

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NPDES Hearings

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    .     UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
    °                   WASHINGTON. D.C.  20460

                             JUN i 6 1976
                                                      THE ADMINISTRATOR

                                                      n-?? -.?
MEMORANDUM

TO     :   Assistant Administrator for Enforcement (EN-329)
          Deputy Assistant Administrator for
            Water Enforcement (EN-335)
          Regional Administrators
          Regional Counsels
          Regional Enforcement Directors

SUBJECT:   Ex Parte Contacts in NPDES Adjudicatory Hearing
          Decisions
     This -memorandum sets forth limitations on contacts among
those EPA employees who are involved in preparing and issuing
initial and final NPDES decisions of the Regional Administrator
or the Administrator, and other Agency staff and persons out-
side EPA.  Effective immediately, these requirements apply to
all EPA employees involved in NPDES proceedings.

     Several courts have now held that the hearing required
by Section 402(a) of the Clean Water Act must be "on the re-
cord," triggering the formal adjudication requirements of the
Administrative Procedure Act.  Seacoast Anti-Pollution League
v. Costle, No. 77-1284 (1st Cir. Feb-. 15, 1978); United States
Steel Corp. v. Train, 556 F.2d 822 (7th Cir. 1977); Marathon
Oil Co. v. EPA, 564 F.2d 1253 (9th Cir. 1977).  Among these
requirements is that embodied in the Government in the Sunshine
Act, Pub. L. 94-409, 90 Stat. 1241 (Sept. 13, 1976), prohibiting
EPA decision-makers in formal APA hearings from engaging in ex
parte discussions of the merits with "interested persons out-
side the agency."  5 U.S-.C. §557 (d.)..  The APA also requires that
no one involved in "investigative or pro'secuting functions" may
"participate or advise in the decision, recommended decision,
or agency review . . .."  5 U.S.C. §554(d).

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     It is not clear that Agency enforcement staff involved
in NPDES adjudicatory hearings are performing "investigative
or prosecuting functions."  However, EPA should adopt a
policy that not only complies with the law, but avoids even
the appearance of unfairness.  Accordingly, I am setting out
the following requirements.

When these Requirements Apply

     Consistent with the Sunshine Act, all the requirements
in this memorandum are applicable from the date public notice
of an evidentiary hearing is published under 40 C.F.R. §125.
36(c)(4), until the date of final Agency action on the permit
application.

Requirements Applicable to Regional Administrators and their
Assistants

     Regional Administrators and staff members selected to
assist them in writing an NPDES decision will refrain from ex
parte discussions of the merits of the proceeding with any in-
terested person outside the Agency.  They should also refr_ain
from any such discussions with the Assistant Administrator for
Enforcement or his staff, and the Regional Enforcement Director
and his staff.

     The term "interested person outside the agency" appears
in the Sunshine Act, and refers generally to anyone who has a
stake in the outcome of the proceedings greater than a member
of the general public.  The term includes, for instance, all
parties to the hearing and their competitors, public officials
(including elected representatives such as mayors, Senators,
and Congressmen), environmental and other interest groups, and
companies, organizations or associations with some special in-
terest in the issues (for example, the Chamber of Commerce or
industry trade associations).

     The Water Quality Division of the Office of General Counsel
has been assigned to be available to assist me, the Deputy Ad-
ministrator, or any judicial officer in preparing final de-r
cisions in MFDES proceedings.  Accordingly, the Regional Admin-
istrator and his staff, and Regional enforcement staff, may not
discuss the merits of the case with.an attorney in that Division.

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However, to avoid total isolation of the Regional  Administra-
tor and his staff from assistance,' one or  two  attorneys  in the
Water Quality Division will be designated  by the Associate
General Counsel for Water to serve as Special  Counsel  to ad-
vise them in preparing decisions.  Such attorneys  may  not ad-
vise me or my staff in NPDES decisions.  Currently,  Barry
Walter  (FTS 755-0760) and Nancy Othmer (FTS 755-0433)  are
serving in that capacity.

Administrator and his Staff

     The Administrator (and the Deputy Administrator,  when she
is Acting Administrator for the purpose of making  a  final de-
cision  on an NPDES appeal), and any judicial officer assigned
to assist us' in preparing an NPDES decision, will, like-Regional
Administrators, refrain from ex parte discussions  of the merits
of the  proceeding with all "interested persons outside the Agency,"
and Enforcement staff.  We will, where necessary,  call upon other
Agency  personnel, including the General Counsel and  her  staff,
excluding any attorneys designated as Special  Counsel  to assist
Regional Administrators.

Procedures in case of Departure from these Requirements

     Occasionally these requirements may be abrogated  through
inadvertence.  Or, if a Congressman or Senator requests  a
briefing on a pending matter  (see 5 D.S.C. §557(d)(2))f  dis-
cussions otherwise proscribed  by this memorandum may be  unavoid-
able.   In any case where  such  a discussion occurs, the substance
of the  discussion must be promptly reduced to  writing, 'and a
copy served upon all. parties to the proceeding.   '  .

     I  have asked the Assistant Administrator  for  Enforcement
and the General Counsel to review applicable NPDES regulations
to see  to what extent incorporation^ of these procedures  would be
appropriate.
                               Douglas  M.  Costle

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         UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                       WASHINGTON, D.C. 20460
                                 90U              OFFICE OF ENFORCEMENT


MEMORANDUM


SUBJECT:  NPDES Evidentiary Hearing Management  Program

TO:       Regional Enforcement Division  Directors

FROM:     R. Sarah Compton
          Deputy Assistant Administrator
             for Water Enforcement  (EN-335)


     On March  7, 1979f responsibility for  managing  the NPDES
evidentiary  (formerly adjudicatory) hearing  program was trans-
ferred from  the Enforcement Division  to  the  Permits Division.
With the evidentiary hearing  program  the Permits Division gained
responsibility for:


     o  developing 'a strategy for resolving  evidentiary hearings

     o  providing guidance on granting and denying  evidentiary
        hearings

     o  providing specific case  support —

     o  maintaining an evidentiary  hearing tracking system

     o  processing proposed  stipulations settling evidentiary
        hearings


     Until  now,  no written procedures for  carrying  out these
activities  have  been directed to the  Regions.  Discussion
of  these procedures  is outlined  in  the following paragraphs. .

     However,  before discussing  hearing program policy, I
wish to emphasize  the  importan.ee of processing pending cases
as  expeditiously as possible.  It is  essential that you  •
^J Legal case support was reestablished on September 10, 1980,
    as an Enforcement Division responsibility.

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                           -2 -


aggressively resolve the existing backlog of cases so that
permittees will complete, at the earliest possible date, all
measures necessary to achieve BPT.  The backlog must be eliminated
in anticipation of another series of hearing requests which we
expect as second round permits are  issued.  Pending hearings, and
the issues which they have raised,  will not necessarily become
moot upon the  filing of a hearing request for review of second
round BCT or BAT permits.  We should push for attaining BPT and
then be prepared to handle the second  round of hearing requests
as they are filed.

Strategy for Resolving Evidentiary  Hearings

     Several attempts have been made to develop a strategy for
resolving pending evidentiary hearings.  However, with permits
expiring and emphasis being placed  on  enforcement case resolution,
developing this strategy for resolution of evidentiary hearings
was never completed.  However, we are  still considering the
following actions for resolving the large number of upcoming
hearing requests:


     1.  Narrow the scope of, or aeny  as many unfounded requests
         as can be justified.  Guidance for granting and denying
         evidentiary hearings is now being prepared by Robin
         Conrad in the Permits Division.  The initial draft
         guidance document is expected shortly.

     2.  Categorize the  issues raised, code these issues and
:         incorporate these codes  into  the Evidentiary Hearing
         Tracking System.  Automation  of these  issues  (through
         use of codes) could allow  us  to keep a running tally of
         issues and allow categorizing such issues  and ultimately
         aid in providing uniform response to requests and
         uniform resolution to issues  adjudicated.

     3.  After categorizing and summarizing the issues, a
         centralized evidentiary hearing team, made  up of
         technical and legal staff  (and economists), could
         be established  to address  these common issues.


Specific Case  Support

     Even though management. o£  Luc  e
was transferred to the Permits Division,  specific  legal case
support has been reestablished as  a responsibility  of  the  Legal
Branch, Water  Enforcement Division.

Evidentiary Hearing System Report  (formerly  "Adjudicatory"  Hearing
System Report)

     Recently  we have  discussed  improvements  to the computerized
Evidentiary Hearing System Report  (EHSR),  which has not  been
updated since  June  1978;  and we  are considering three  approaches
to providing a current hearing  status:

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                               - 3 -


         o  Use the present  system and format  and periodically
            update the  report.

         o  Eliminate data elements of little  benefit  and
            replace them with more useful ones before  updating
            the report.

         o  Develop a completely new  tracking  system that  is
            more efficient and flexible.


     Several  aspects of the  Headquarters NPDES evidentiary
hearing  program, as well as  regional  hearing programs,  will
have to  be  considered before a decision  is made on  which route  to
follow.  In the meantime, we still would like  to track evidentiary
hearings. In  the summer of 1978, Bridget Crawford of the Industrial
Permits  Branch requested  (by phone) the  number of pending  hearings
in  each  region, their SIC codes, and  related issues.   From this
information,  she developed a status report on  all pending  NPDES
evidentiary hearings.   Once  again we  want to request this  type  of
information to enable the "Crawford"  report to be updated.  For
your convenience,  attached is  a questionnaire  that, when completed
by  your  office, covers  all areas necessary for updating the
report.

Stipulations  Review Procedures

     Even though the  final Consolidated  Regulations are silent  on
Deputy Assistant Administrator  (DAA)  approval  of stipulations
settling NPDES evidentiary hearings,  the review and approval of
stipulations  for major  dischargers  only  will continue  at Headquar-
ters.  This review procedure is  a  continuation of existing policy
except that stipulations  for minor  dischargers no longer require
Headquarters' approval.  Stipulations will continue to be  signed
by  the Chief, Industrial  Permits Branch  (until we reorganize).
Since  settling evidentiary hearings for  majors is of primary
•concern, it is  important  that  the  review and  approval  of  stipula-
tions  to such hearings  be well managed.  Also, we anticipate- an
increasing  flow of stipulations  for Headquarters approval  because
of  the many new hearing requests  that are  expected  in  the  coming
months.  We do not anticipate  any  delays in  Headquarters.

     Stipulations  submitted  for  Headquarters  approval  will
still  be examined'for their  legal  and technical accuracy and
ability  to  meet  certain compliance standards.   This re'view
process  has proven to be  an  effective method of screening
stipulations  for possible errors due to oversights, lack of
coordination, and  misjudgment.  Generally,  once Headquarters has
received a  stipulation  package,  the proposed stipulation can be
reviewed and  returned to the Region within fifteen working
days.   However,  in certain cases additional  time is needed.

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                            - 4 -


     So that stipulations can be reviewed and returned to the
Regions with minimal delay, these procedures should be followed:


        1. Forward the proposed stipulation package to:

              Bridget C. Crawford (EN-336)
              Evidentiary Hearing Clerk
              Permits Division, Industrial Permits Branch
              Environmental Protection Agency
              401 M Street, S.W.
              Washington, D. C.  20460

        2. The stipulation package should contain:

              a. A cover memorandum to the Chief, Industrial
                 Permits Branch that explains the proposed
                 changes to the permit, reasons for those
                 changes, and includes the name and phone
                 number of the regional contact who is familiar
                 with the stipulation.

              b. A copy of the permit  (and the revised permit
                 if part of the stipulation).

              c. The original copy of  the proposed stipulation
                 signed by appropriate regional officials.
                                        r
              d. A copy of the evidentiary hearing request.

              e. Any background data that would have bearing on
                 the review and approval of the stipulation.


     If all reviewers concur with the  proposed stipulation,  it  is
returned to the Chief, Industrial Permits Branch, for  final
review and signature and then returned to the Region for  further
processing.  In cases where .an issue is raised with regard to
provisions of a stipulation, the Headquarter1s staff member
raising the issue will telephone the appropriate  regional contact
and attempt a verbal resolution.  If agreement cannot  be  reached,
the Industrial Permits Branch Chief will review the issues in
question and determine whether the stipulation should  be  returned
to the Region for revision.  If this determination is  made,  the
Regional Enforcement Division Director will be requested  to
resubmit the stipulation to Headquarters with suggested changes.
However, if the stipulation is resubmitted to Headquarters
without suggested changes, and still does not meet with the
approval of the Industrial Permits Branch Chief,'a review by the
Deputy Assistant Administrator for Water Enforcement will be
requested.  If the DAA for Water Enforcement concurs with the
decision of the Industrial Permits Branch Chief,  the .stipulation
will be returned to the Region unsigned and accompanied by a
formal nonapproval memorandum.

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                            - 5 -


     I hope that this memorandum will provide sufficient guidance
for getting stipulations processed in an organized and timely
manner.  As the program moves ahead, you will receive further
guidance or information on managing the evidentiary hearing
process, revising the Evidentiary Hearing Tracking System,
how specific case support will be provided, the grounds for
granting and denying evidentiary hearing requests, the development
of policy for resolving hearings, and training with regard to
evidentiary and non-adversary panal hearing procedures.

     Please provide us with your comments.  Call me (FTS 755-0440)
or Bill Jordan, Chief Industrial Permits Branch (FTS 426-7010)  if
there are any questions.
Attachment

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Drinking Water
 Enforcement

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Drinking Water
 Enforcement

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                                                        WSG-29
     UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

                   WASHINGTON. D.C. 20460
                                             OFFICE OF ENFORCEMENT
MEMORANDUM                                   Q£Q £ g ^75 .

Subject:  Regional Guidance
          Emergency Action on Water Supply Hazards

From:     Deputy Assistant Administrator  for Water
          Enforcement  (EN-335)
          Deputy Assistant Administrator  for Water
          Supply  (WH-550)

To:       See Below
     A draft guidance memorandum on  the  above  subject
was sent to you on May  17,  1976,  for your  review and
comments.  All the comments that you submitted have
been reviewed and evaluated in  the preparation of the
attached final version  of the Guidance Memorandum.
You may now use this guidance in exercising  the
authority granted by section 1431 of the Public
Health Service Act, as  amended  by the Safe Drinking
Water Act.

     At this time, we wish  to emphasize  that these
Emergency Powers should be  used "to  deal promptly and
effectively with emergency  situations which  jeopardize
the health of persons"  and  only as a last  resort when
all other remedies available to EPA  have been  exhausted.

     This memowAdum should be  filed as  Water  Supply
Guidance No. 2^unifier the heading "Emergency Powers."
                                      I/, fy^r*
        G./Miller              Victor dj.  Kimm    :

Addressees:
Regional Administrators
Regional Counsel
Regional Enforcement Directors .
Regional Water  Program Directors
Regional Surveillance &  Analysis Directors
Regional Water  Supply Chiefs
                          *
Attachment

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                                                          V&G-23
The -whole point of water vending machines is to sell water so that
condition (c) is not met.  Most'machines treat the water in some way
so condition (a) is not met.

H any one ol (a) (b) or (c) is not met the public water system is covered
by the regulations.

Conclusion

Water vending machines which either treat water in some way or sell
water are covered by the NIPDWR as a non-community, public water
supply.
                                                                1-5

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                                             WSG-29

                 REGIONAL GUIDANCE

     EMERGENCY ACTION ON WATER SUPPLY HAZARDS
     Section 1431 of the Public Health Service Act,
as amended by the Safe Drinking Water Act, provides
that the Administrator may take emergency action to
protect public health when he receives information
that a contaminant which is present in or is likely
to enter a public water system may present an imminent
and substantial endangerment to health.  The text of
section 1431 and the accompanying explanation in the
House Report (H.R. No. 93-1185) are attached as Tab A.

     Evaluation of a given situation to which section
1431 might apply must include the following considerations

          A.   Who may take emergency action.  A
decision to act under section 1431 must be made by
the Administrator.  To date there has been no delegation
of this authority.

         'B.   Discretionary nature of section 1431.
Action under section 1431 is discretionary.  The
statute provides that the Administrator "may" take
action.  Upon .evaluation of the available information,
the Administrator may determine that the evidence of
an imminent hazard is inadequate or that the problem
should be dealt with by State or local government or
under EPA authority provided elsewhere in the Act.
Emergency authority under this section is not to be
used in cases where the risk is speculative in nature,
or trifling in degree.

          C.   Purpose of 1431 action.  Any section
1431 action should be directed toward:

               1.   Preventing an impending hazardous
condition from materializing/

               2.   Reducing or eliminating a hazardous
situation once it has arisen, and

               3.   Providing an alternate safe water
supply source.

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                                                        WSG-2?
          D.   Effect of State and local action.
Action can be taken under section 1431 only if the
Administrator has information indicating that appropriate
State and local authorities have not 'acted to protect
the public health.  Moreover, to the extent considered
practical in light of the urgency of the situation,
the Administrator must consult with State and local
authorities to confirm the information indicating
that there is an imminent hazard and to determine
what action the State and local governments are
taking or will take.  This requirement implements
legislative intent expressed in House Report 93-1185
to "direct the Administrator to refrain from precipitous
preemption of effective State or local emergency
abatement efforts."  Section 1431 is not meant to be
a vehicle for dealing with problems which can be
handled effectively by State and local governments in
a timely fashion.

          E.   Other SDWA requirements do not limit
1431 action.  Action under section 1431 can be taken
without regard to requirements of the primary drinking
water regulations or State underground injection
control programs.  Thus, action can be taken to deal
with a contaminant not covered by the primary 'drinking
water regulations or to act against an underground
injection control program.  Orders may be issued and
enforced and -suits may be brought notwithstanding the
existence of any exemption, variance, permit, license,
regulation, order or other requirement.  During the
initial stages of implementation of the emergency
powers authorized under section 1431, appropriate .
actions will have to be.taken on a case-by-case
basis.  However, as experience is accumulated and
certain problems are found to recur in a geographical
area or on a nationwide basis, it would be best to
deal with such similar cases on a Regional or national
basis by modifying the national requirements  (such as
revision of MCLs) instead of t_lie tepeated use of
emergency powers under section 1431.

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                                                      WSG-29
          F.    Standard  of  imminent endangerment  to
health.  The Administrator  has been given broad dis-
cretion to  determine whether  a hazard  is "imminent."
Because of  the  paramount importance given to  the
objective of protecton of the public health,  implementation
.of  this authority must occur  early enough to  prevent
the potential hazard from materializing or becoming
worse.  "Imminence" thus means that the Administrator
is  required to  have proof of  a substantial danger to
health, but he  is not required to have uncontroverted
proof, that  injury will in fact occur.  The risk of
harm must be "imminent," not  the harm  itself.  Thus,
for example, the Administrator may invoke this section
to  prevent  an imminent introduction of contaminants
into drinking water even though the adverse health
effects will be experienced by the users of the
system only after a long period of latency.   The
Administrator may consider  the time it may take to
prepare orders, to commence and complete litigation,
and to implement and enforce  administrative or judicial
orders to protect the public  health.   Thus, the
hazard may  also be "imminent" even if  the contaminants
will not enter  the water supply for several days, if
time is needed  to implement corrective action under
section 1431.

          G.    Standard  of  substantial endangerment
to  health.  The Administrator also has been given
broad discretion to determine whether  a-hazard is
"substantial."  Certainly,  the presence or potential
presence of any life threatening substances is a
"substantial" hazard, but a "substantial" hazard  may
also include the presence or  potential presence of
any substances  capable of causing  adverse health
effects, such as carcinogens, as well  as a substantial
statistical probability  that  disease will result  from
the presence of contaminants  in drinking waters.
Additionally, a "substantial" endangerment may also
exist when  the  danger is one  of a  lesser degree of
risk but a  substantial number of people are involved.

          H.    Degree of proof required.  As  noted above,
the Administrator does not  have to have uncontroverted
"proof" that persons will in  fact  be  injured  before  taking
action under section 1431.  Undue  efforts  to  document
the available information or  proof should be  avoided,
particularly where the delay  in obtaining  such  information
or  proof could  impair attempts to  prevent or  roduce
the hazardous situation.

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                                                        WSG-29
          I.   Scope of remedial action.  Once the
Administrator determines that action under section
1431 is needed, a broad range of options is available.
The statute provides that he may take such actions as
may be necessary to protect the health of persons who
are or may be users of the public water system involved/
and that he may issue an order or bring a suit for
appropriate relief, including a restraining order or
a temporary or permanent injunction.  An order or a
suit can be directed against an owner or operator of
a public water system/ a Federal Government agency, a
State or local government unit, State or local officials,
owners or operators of underground injection wells,
area or point source polluters, or any other person
whose action or inaction requires prompt regulation
to protect the public health.

          J.   No citizen suits under section 1431.
Section 1431 does not authorize suits by anyone other
than EPA.  Citizens' civil actions are authorized by
section 1449 of the Public Health Service Act to
force compliance with drinking water requirements,
but section 1449 does not grant general authority for
suits in emergency situations.

          K.   Orientation towards sources of contaminants.
Any action under section 1431 should be oriented
toward the abatement of the source of contamination.
Such action may include amendment of the terms of an
NPDES permit.  Public water systems/ where they are
not the source of contamination, should not be forced
to bear the burden of ameliorating an emergency
situation unless the danger is such that exposure
must be minimized immediately and it is not feasible
to abate the source of pollution within the available
time period.

          L.   Procedures for implementation of section 14.31
Implementation of section 1431 shall generally proceed
in the sequence outlined below:

               1.   The Regional Office documents the
problem.  The degree of documentation necessary will
depend on the difficulty and urgency of the problem.
Section 1431 authorizes the Administrator to obtain
from any person relevant information necessary to
evaluate the source and the danger of a potentially
hazardous contaminant.  If possible, the Region
should cooperate with State and local officials in
this effort. . Pending the acquisition and evaluation
of such information, the Regional Office should
promptly notify one person in Headquarters using the
following order of priority:

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                                                       WSG-29
Division.
                    a.   DAA for Water Supply.

                    b.   Associate DAA.

                    c.   Director, State Programs
                    d.   Chief, Drinking Water Regulations
Implementations Branch.

The Office of Water Supply will promptly notify the
DAA for Water Enforcement.

               2.   The Regional Office transmits the
information to the DAAs for Water Supply and Water
Enforcement for coordination of the risk assessment
and identification of possible remedial measures.

               3.   The Regional Office shall consult
with the State and local officials to confirm the
correctnes's of the information developed in Step 1.

               4.   The Regional Office determines
whether State and local officials are or are not
taking appropriate action to protect the health of
persons.

               5.   If it is determined that State
and local officials are not  (or cannot) taking appropriate
action, the Regional Office and the Offices of Water
Supply and Enforcement shall prepare an action package
in accordance with EPA Order 1320.2 for the Administrator.
The degree of detail and amount of backup for the
Action Memorandum will vary with the degree of urgency
involved.  When the hazard is due to area or point
source pollution, proposed actions should include
identification of the pollution sources and plans for
their abatement.

               6.   The Administrator determines the
action(s) to be "taken and transmits his decision to
the Regional Administrator by telephone or mail, as
appropriate.

               7.   The Regional Office implements
the action(s) of the Administrator.  These guidelines
should be followed until sufficient case-by-case
experience is accumulated to allow their revision„

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                                                             WSG-29

                         IAEA

               "Part D - Emergency Powers

. 42 USC 3001.

"See. 1431. (a) Notwithstanding any other provision of this title,

the Administrator, upon receipt of information that a contaminant

which is present in or is likely to enter a public water system may

present an Imminent and substantial endangerment to the health of

persons, and that appropriate State and local authorities have not

acted to protect the health of such persons, may take such actions
                                                     »
as he may deem necessary in order to protect the health of such

persons.  To the extent he determines it to be practicable in light

of such imminent endangerment, he shall consult with the State

and local authorities in order to confirm the correctness of the

information on which action  proposed to be taken under this sub-

section is based and to ascertain the action which such authorities

are or will be taking.  The action which the Administrator may

take may include (but shall not be limited to) (1) issuing such

orders as may be necessary to protect the health of persons who

are or may be users of such system (including travelers), and

(2) commencing a civil  action for appropriate relief, including a

restraining order or permanent or temporary injunction.

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                                                              WSG-29
                            2

M(b) Any person who willfully violates or fails or refuses to

comply with any order issued by the Administrator under sub-

section (a) (1) may,  in an action brought in the appropriate United

States district court to enforce such order be fined not more

than $5,000 for each day in which such violation occurs or failure

to comply continues.'1

House Report No. 93-1185, pages 35 and 36   :

             "Part D - General Provisions

            Section 1431.  Emergency Powers

Section 1431 reflects the Committee's determination to confer com-

pletely adequate authority to deal promptly and effectively with

emergency situations which jeopardize the health of persons.

   The authority conferred by this section is intended to override any

limitations upon the Administrator's authority found elsewhere in

the_bill, Thus,  the section authorizes the Administrator to issue such

orders as may be necessary (including reporting,  monitoring,  entry and

inspection orders) to protect the health of persons, as well as to com-

mence civil actions for injunctive relief for the same purpose.

   The authority to take emergency action is intended to be applicable

not only to potential hazards presented by contaminants which are

subject to primary drinking water regulations, but_also_to those pre-

sented by unregulated contaminants.

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                                                              WSG-29
   The authority conferred hereby is intended to be broad enough to
permit the Administrator to issue orders to owners or operators of
public water systems, to State or local governmental units, to State
or local officials,  owners or operators of underground injection wells,
to area or point source polluters, and to any other person whose action
or inaction requires prompt regulation to protect the  public health.
Such orders may be issued and enforced notwithstanding the existence
of any exemption,  variance, permit, license, regulation, order or oth.^
requirement.  Such orders may be issued to obtain relevant information
about impending or actual emergencies,  to require the issuance of notic
so as to alert the public  to a hazard, to prevent a hazardous condition
from materializing, to treat or reduce hazardous situations once they —
have'arisen, or to provide alternative safe water supply sources in tht
event any drinking water source which is relied upon becomes hazard-
ous or unuseable.
   Willful violation of the Administrator's order is made punishable
by a fine  of up to $5,000 per day  of violation.
   In using the words "that appropriate State or local authorities have
not acted to protect the health of persons," the Committee intends to
direct the Administrator to refrain from precipitous  preemption of
effective  State or  local emergency abatement efforts. However, if Stat
or local efforts are not forthcoming in timely fashion or are not effec-
tive to prevent or treat the hazardous condition, this provision should

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                                                            KSG-29

not bar prompt enforcement by the Administrator.



   In using the words "imminent and substantial endangerment to it



health of persons," the Committee intends that this broad administr^^



tive authority not be used when the system of regulatory authorities



provided elsewhere in the bill could be used adequately to protect the



public health. Nor is the emergency authority to be used in cases wher



the risk of harm is remote in time, completely speculative in nature,  o



de xninimis in degree. However, as in the case of U.S.v. United States



Steel,  Civ. Act. No.  71-1041 (N. D. Ala. 1971), under the Clean Air A



the Committee intends that this language be construed by the courts



and the Administrator so as to give paramount importance to the ob-



jective of protection of the public health. Administrative and judicial
         s


implementation of this authority must occur early enough to prever,



the potential hazard from materializing. -This means that "imminence



must be considered in light of the time it may take to prepare admin-



istrative orders or moving papers, to  commence and complete litiga-



tion, and to permit issuance, notification, implementation, and enforce



ment of administrative or court orders to protect the public health.



    Furthermore, while the risk of harm must be "imminent" for the



Administrator to act, the harm itself need not be.  Thus, fcr sxainple,



the Administrator may invoke this section when there is an imminent



likelihood of the introduction into drinking water of contaminants



that may cause health damage after a period of latency.
                                                              1-15

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                                                             WSG-29



   Among those situations in which the endangerment may be regarde



as "substantial" are the following:  (1) a substantial likelihood that



contaminants capable of causing adverse health effects will be ingested



by consumers if preventive  action is not taken; (2) a substantial sta-



tistical probability that disease will result from the presence of con-



taminants in drinking water; or (3) the threat of substantial or seri-



ous harm (such as exposure to carcinogenic agents or other hazardous



contaminants)."

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      \
      °    UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                         WASHINGTON. DC 20460
                           NOV  17 1983

MEMORANDUM

SUBJECT:  Safe Drinking Water Act Public Water System
          Settlements - Interim Guidance
    OFFICE OF
ENFORCEMENT COUNSEL
FROM:     Courtney M. Price  	_
          Assistant Administrator, o££ice of
          Enforcement and Compliance Monitoring

TO:       All Regional Administrators
          All Regional Counsels


Introduction

     Since 1979 EPA has referred 30 Safe Drinking Water Act (SDWA)
cases against public water suppliers to the Department of Justice.
Sixteen of these cases have been filed by Justice during 1983
alone.  With this increase in litigation, three different settle-
ment patterns have developed among the three Regions referring SDWA
cases (see attached charts).  This document establishes criteria "
that will promote a coherent national enforcement policy governing
SDWA settlements in cases against public water suppliers.  Proposed
Regional settlements not consistent with these criteria will not
be concurred in by this office and will not be recommended to the
Department of Justice.

     Due to negotiations currently underway in a number of SDWA
cases, this guidance is being issued for immediate use in interim
form at this time.  This guidance shall remain in effect until
further notice.  Comments are invited on the policies set forth
herein.

     The Office of Drinking Water has been consulted on this- policy

Injunctive or Administrative Relief

     Except for extraordinary cases in which it is physically -
impossible for a public water supplier to comply with a maximum
contaminant level (MCL) or other appropriate health standard, all
settlements must remove all health hazards or risks associated.
with the public water supplier's SDWA violations.  Violations of
MCLs shall be abated as soon as possible, whether through the

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provision of alternate water supplies, installation of treatment
equipment, or other means.  If settlement in such circumstances is
not immediately available, Regional Administrators should issue an
administrative order under §1431 of the SDWA where warranted, or
seek a preliminary injunction ordering appropriate relief.

Monitoring, Reporting, and Notification Duties

     Because public exposure to health risks is. also increased by
a public water supplier's failure to comply with the SDWA regula-
tions governing monitoring, reporting, and public notification
duties, all settlements must require full compliance with SDWA
regulations governing monitoring, reporting, and public notification
duties.  In cases in which the defendant has failed to monitor for
any contaminant during the most recent monitoring period, all
settlements should require appropriate monitoring to be conducted
within 30 days of the entry of the settlement with the court.

Civil Penalties

     Civil penalties have two components: the recovery of
economic benefits accruing from noncompliance, and the imposition
of a penalty to deter further violations.  All settlements should
recover the economic benefits that have accrued to the defendant
through his noncompliance.  Proposed settlements which do not
recover economic benefits should explain why they do not.  A
deterrence component must also be included in each settlement,
although its amount may vary according to the factors discussed
below.

    Calculations of benefits should include applicable amounts
saved through the avoidance of sampling, mailing, public notice,
laboratory, and capital equipment costs.^  Labor costs to conduct
sampling and other tests may be included at Regional discretion.
As a rule, inferred costs for volunteer labor for small public
water suppliers need not be included in the government's final
settlement offer, although costs for paid employees of larger
systems should be included in settlement.  This distinction is
based on financial differences among defendants and their effect
on achieving settlements.

     The deterrence component presents a more complex calculation.
The primary factors to consider in determining the Agency's final
1 Economic savings of capital costs may be calculated by the
imputation of finance costs. (The 1980 Civil Penalty Policy pro-
vides an example of a detailed method to estimate *»ronomic savings
enjoyed by deferral of capital expenditures.)  In all SDWA cases
brought to date, economic savings to the violator for failures to
monitor, report, or notify have been slight.  Very few cases have
required construction or equipment installation costs.

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settlement offer are those enumerated in the Safe Drinking Water
Act itself - "the seriousness of the violation, the population at
risk, and other appropriate factors."  SDWA §1414(b), 42 U.S.C.
§300g-3.  All settlements reached should specifically attempt to
deter the violator from further noncompliance.  Deterrent penalty
amounts should reflect the severity of the defendant's violations.
Most serious are MCL violations associated with outbreaks of water-
borne illness among the defendant's consumers, followed in order
by MCL violations of bacteriological, nitrate, or turbidity .limits,
other MCL violations, failures to notify the public or EPA of
violations, monitoring violations, and reporting violations.  The
Region should also consider the willfulness or recalcitrance of
the defendant, its financial resources, the length of time over
which the violations have occurred, and the general deterrent
effect of the settlement on similarly situated violators in the
same area.

     Unless there are extraordinary circumstances, no settlement
may include a deterrent component of less than $1,000.  All settle-
ments shall include a deterrent component.

     If a settlement that includes an appropriate civil pe/ialty
cannot be achieved, the case should be litigated through trial.2

Conclusion

     Adherence to this settlement policy will affect certain
pending cases.  Cases which a Region determines are significant
enough to refer merit application of the minimal settlement
requirements set forth above to promote effective enforcement
responses.  The potential for adverse affects on human health by
violation of the SDWA compels rigorous enforcement of the Act to
achieve remedies for existing violations and  to deter future
violations.
Attachment

cc:  Rebecca Hanmer
     F. Henry Habicht
2 see Memorandum dated September 7, 1982,  titled  "Case Referrals
for Civil Litigation" from Acting Enforcement Counsel to Regional
Counsels: "[R]eferrals to Headquarters  and DOJ  for  the purpose  of
applying pressure on a party  to settle  should not be made  unless
the Regional  office is willing to carry the case  through a suit."

-------
SAFE DRINKING WATER ACT  CASES
  CIVIL ENFORCEMENT DIVISION
          REGION III
Name of Defendant/
Facility Location

Cherry Tree Bor Muni,
Cherry Tree, Pa.
Monument Water Assn. ,
Centre County, Pa.
Orviston Water Assn. ,
Orviston, Pa.
Oval-Oriole Water,
Lycoming County, Pa.
Perkiomen Valley Pre-
servation Society,
Green Lane, Pa.
Salemville Water Assn. ,
Bedford County, Pa.
Tenney, Wm. B., et al.
Hamden Twp. , Pa.
West Carroll, Twp. of
West Carroll Tw. , Pa.
Whiskey Run Water,
Farrandsville , Pa.

.
Date
Filed

4/7/83
2/3/83
2/21/83
4/25/83
9/30/83
9/29/80
6/23/80
4/7/83
8/16/83


Status

active
active
active
CD
CD
lodged
CD
Trial
concluded
active
active


Penalty/
Special Relief.

-
-
-
$500
$8,000 &
broad injunc-
tive relief
$100 &
required to
discontinue
use of surface
water source
$25,000
-
-

i

-------
SAFE DRINKING WATER ACT CASES
  CIVIL ENFORCEMENT DIVISION
         REGION  VIII

Name of Defendant/
Facility Location

Avelino Gutierrez ,d/b/a
A & K Trailer Court,
Rock Springs, Wy.
Alcova Acres Invest,
Alcova, Wy.
Alpine Water and Sewer
District, Alpine, Wy.
Alta Commun Pipeline,
Alta, Wy.
Grover Domestic Water
Works, Grover, Wy.
Happy Valley Pipe!. ,
Afton, Wy.
McGuire Trailer Ct. ,
Rock Springs, Wy.
North Alton Pipeline/
Afton, Wy.
Osmond Pipeline Co. ,
Afton, Wy.
Rainbow Pipeline Co. ,
Afton, Wy.
Rio Vista Homesites,
Green River, Wy.
Date
Filed

3/22/83
8/13/82
9/6/83
3/22/83
8/15/83
8/13/82
3/22/83
8/13/82
3/22/83
10/14/80
10/14/80
Status

CD lodged
CD
active
CD
lodged
active
CD
active
Default
J 'ment
active
CD
Default
J 'ment.
Penalty/
Special Relief

$1,000
$1,000 & re-
quired to pro-
vide bottled
water until
PWS complies
-
$1,000
•™»
$0 - required
to install
$2,000
chlorinator
-
Penalty
question still
open
- '
$0 - Judge
rejected
penalty in CD
$0 - system
turned- over to
new supplier

-------
SAFE DRINKING  WATER ACT CASES
  CIVIL ENFORCEMENT DIVISION
            REGION X
Name of Defendant/ .
Facility Location

Alder Creek Water Co.,
Portland, Or.
Glen Villa Trl. Park,
Glendale, Or.
London Water Coop,
Cottage Grove, Or.
Midland Water Assn. ,
Clatskanie, Or.
Mitchell Water Assn.,
Bend, Or.
Mt. View Motel & Trail,
Chemult, Or.
Neskowin Enterprises,
Neskowin, Or.
Partney Mobile Home
Park
Pilot Rock, Or.
Tivoli Mobile II. Park,
Junction City, Or.
Westgate Mobile Home
Park,
Ontario, Or.

Date
Filed

9/19/79
11/12/82
1/25/83
1/7/83
11/12/82
11/12/82
4/4/79
To DOJ :
10/21/83
11/12/82
5/9/83

Status

active
CD
active
active
active
Default
J 'ment
($50/day)
Summ.
J ' me n t
active
CD
Default
J 'ment
($50/day)

Penalty/
Special Relief

Court placed
company in
receivership
for 2 1/2 yrs
$2,500
-
-
-
$6,800
$26,400
-
$2,000
$35,400


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        PUBLIC WATER SYSTEMS



         COMPLIANCE POLICY










          Office of Water



U.S. Environmental Protection Agency



         November 18, 1983

-------
                           Preface

     The Safe Drinking Water Act of 1974 established a
national goal of safe drinking water for all Americans.  To
carry out this mandate, the Environmental Protection Agency
(EPA) promulgated National Interim Primary Drinking Water
Regulations (NIPDWR) which establish permissible concentration
levels for contaminants commonly found in drinking water and
require water systems to monitor for and report on the presence
of these contaminants.
     A great deal has been accomplished since 1977, the date
the NIPDWR went into effect.  Available data indicate a steady
improvement in compliance with the regulations over the years.
More, however, remains to be done.  In 1982, water provided by
1.3% of the monitored systems persistently exceeded the allow-
able level of microorganisms.  Also in 1982, there were 40
documented outbreaks of waterborne disease causing 3,456
cases of illness.  The problem is greatest among small systems
which tend to have a higher violation rate than large systems. .
     The purpose of this Policy is to foster compliance with
the NIPDWR.  It provides guidance to the States and Regions
responsible for implementing Public Water System Supervision
programs by suggesting priorities for selecting compliance
problems to address and outlining the available actions for
bringing water systems into compliance.
     Some of the material incorporated here, for.example,
strategies for improving compliance by noncommunity and small

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                             -2-
systems, has been published previously.  The issuance of



this overall Public Water System Compliance Policy is intended



to signal the Agency's goal of achieving full compliance



with the NIPDWR by 1988.

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                      Table of Contents


                                                         Page
Public Water Systems Compliance Policy


     I     Statement of Policy                            1

     II    Background                                     5

     III   Implementation                                 8

     IV  .  Effective Date                                10


  Attachment A:   National Compliance Trends

     Number of Community Water Systems in Violation
     and Total Number of Violations—FY 19.82              1

     Percentage of Community Water Systems
     in Violation with the Microbiological
     and Turbidity Standards—FY 80-82                    2

  Attachment B:   Guide to the Development of
                  State Strategies

     Introduction                                         1

     Developing a Strategy                               "1

     Enforcement Action                                   9

     Remedies and Penalties                              15
  Attachment C:   Guide to Bringing Formal Enforcement
                  Action Under the Safe Drinking Water
                  Act (Legal Interpretation of Section
                  1431)

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                      PUBLIC WATER SYSTEMS
                       COMPLIANCE POLICY
I.   STATEMENT OF POLICY


     The Environmental Protection Agency (EPA) and states

which have assumed primary enforcement responsibilities

(primacy states) will protect public health by ensuring

that all public water systems (PWS) are in compliance with

the National Interim Primary Drinking Water Regulations

(NIPDWR).  While the Safe Drinking Water Act requires that

all systems be in compliance by January 1, 1984 (1986 for

regionalized systems), the Agency realizes some systems will

not be in compliance by this date.  Therefore,. EPA's interim

goal is to eliminate all persistent violations^ by 1986,

to reduce to a. minimum all violations of the microbiological

and turbidity maximum contaminant levels and monitoring and

reporting requirements by PWS's and to put all noncomplying
                           »

systems on a formal compliance schedule.  To achieve this

goal, compliance must improve substantially between now and

1986.  By 1988, all PWS's should be in full compliance with

the NIPDWR.

     Each state2 is asked to undertake appropriate measures

including the development and implementation of a PWS compliance

strategy to ensure annual compliance improvements that will

meet the 1986 interim goal and the 1988 goal of full compliance.


1 In a fiscal year,4 or more months in violation or more than
  one quarter in violation.

2 Agent which assumes primary enforcement responsibility

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                             -2-




While EPA acknowledges that a few PWS's will always drop out of


compliance temporarily because of such factors as operator


turnover, variability of analytical results, equipment failures,


and human error, the Agency believes that a goal of full


compliance is valid given a small turnover of temporarily


noncompliant systems.


     While implementing this Policy the following principles


will guide the Agency's efforts:


1. Improved compliance with the NIPDWR will increase public

   health protection.


   The measurement of compliance with the NIPDWR, is the


   best indicator the Agency has concerning how well the public


   is protected from the traditional contaminants in drinking


   water.  Since the standards established by the NIPDWR are


   based on protection of public health to the maximum extent
                                   »

   feasible, compliance improvements will result in improved


   protection of public health.   This Policy will focus EPA


   and state resources on those  violations which represent


   the greatest threats to health.




2. States have a primary responsibility for compliance.




   When states assume responsibility to enforce the NIPDWR,


   they also assume a primary role in achieving national


   compliance improvements.  Though EPA has established


   national compliance goals, the Agency recognizes that


   there are differences among the states in implementing


   the PWS program- establishing priorities, and creating

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                            -3-


   enforcement strategies.   However EPA believes that although

   states may legitimately  differ in their management styles

   or in their perceptions  concerning the degree of threat

   to public health that a  given violation represents,

   state enforcement priorities should first address those

   violations which present the greatest public health

   threats.   EPA also expects each state to negotiate yearly

   compliance targets with  EPA and to develop a strategy to

   achieve agreed upon compliance improvements.  EPA will

   provide states programmatic and funding assistance to

   ensure state enforcement efforts result in the agreed

   upon compliance improvements.


3.  EPA and states will cooperate to set reasonable
   compliance targets.


   EPA will  assist state efforts to bring systems into compliance,

   Each year, EPA will set  national compliance targets bas'ed

   upon the  compliance rates in the Federal Reporting Data

   System (FRDS).  EPA regions will negotiate individual state

   compliance targets with  each State.  EPA recognizes that

   because states and EPA Regions begin with varying compliance

   levels, compliance targets may differ.  However, EPA expects

   annual compliance improvements in each state will serve

   to meet the .annual compliance targets.

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                             -4-


4. States will develop strategies to bring noncomplying
   systems into compliance.


   EPA will encourage each State to develop a strategy to

   identify high priority violating systems and to

   systematically bring each into compliance voluntarily

   through corrective action, a negotiated compliance schedule

   or through a formal enforcement action.  States should

   consider the following factors in establishing compliance

   priorities: the type of violation, e.g., a maximum con-

   taminant level or monitoring/reporting failure; the degree

   of hazard, e.g., deviation from the standard or whether

   the-violation represents an acute or chronic health risk;

   the size of the population affected; the degree of system

   recalcitrance; and the deterrent effect which enforcement

   actions will have on other potential violators.  Each

   strategy should ensure that all persistent violators are

   in complia'nce or on a compliance schedule by 1986.


5. EPA and states will enforce against all noncomplying
   systems.


   EPA and the states will take appropriate enforcement action

   against all noncomplying systems giving first priority to

   systems whose violations threaten public health, recalcitrant

   systems, and persistent violators.  EPA will cooperate

   with states when enforcing against noncomplying systems

   to ensure that the objectives of this policy are successfully

   ?»ch isvcd.

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                           •  -5-


6.  Each year EPA will review progress toward targets
   and goals.


   Each year Headquarters will review with each region the

   progress toward the achievement of the compliance goal

   and the development of state compliance strategies.  EPA

   will review each state strategy and compliance record to

   determine the need for further guidance, assistance, and

   mid-course corrections to report progress to the Administrator

   and to Congress, to revise State targets for the next

   year, and to take corrective action where State primacy

   requirements are not met.


II.  BACKGROUND



     The Safe Drinking Water Act  (P.L. 93-523) enacted on
                      t-
December 16, 1974 gives- EPA the responsibility to establish

standards ensuring the safety of drinking water while encouraging

the states to accept primary enforcement responsibility for

implementing these programs.  If a state does not elect to

assume primacy, EPA must implement a program in that state.

Presently 51 states and territories have assumed primary

enforcement responsibility for the drinking water program.

The water supply programs in Pennsylvania, Indiana, Wyoming,

South Dakota, Oregon, District of Columbia, and on Indian

lands are implemented by EPA regional offices.


     The states  (and the EPA regions for non-primacy states)

have the primary responsibility for ensuring compliance by

public water systems.  EPA regions provide overview and

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                             -6-





technical assistance to primacy states.  EPA Headquarters has



national oversight responsibility for all programs under the



SDWA.





     In 1975 EPA promulgated regulations (effective June 24,



1977) for five classes of contaminants including microbiological,



turbidity, organic, inorganic, and radionuclides.  These regulat-



ions established maximum contaminant levels, monitoring and



reporting requirements, and administratve procedures each public



water system must follow.  In 1979 additional standards were



promulgated for total trihalomethanes (TTHMs) and applied to



systems which disinfect and serve 10,000 or more people





     Each year States report compliance information to EPA.



EPA analyzes that data, reports national compliance trends,



and provides the Administration and Congress reports on



progress under the SDWA.





     As EPA began analyzing the compliance rates of various



segments of the public water systems, it found that rates of



compliance varied depending upon system size, and type of



system (community vs. non-community).  To address these



specific problems, EPA in 1979 issued a non-community strategy



which suggested that regions and states establish followup



and enforcement priorities using such factors as the population



at risk, the type of contaminant level exceeded, the source



of the water supply, the degree of treatment, and the type



of nch-co-uTiunity facility served (hospital, food establishment,



rest area, etc.).

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                             -7-





     Continuing analysis of community compliance data revealed



that noncompliance was disproportinately concentrated in the



small and very small water systems (systems serving less



than 3,300 persons).  In response to this data, the Office



of Drinking Water proposed a small systems strategy in June



1980 which suggested an approach through which states could



rank enforcement actions.  In fiscal years 1982 and 1983,



the Office of Water through national program guidance, en-



couraged states to use the state compliance strategy technique



to rank followup and enforcement actions when addressing



instances of noncompliance.





     Current compliance rates based upon an analysis of FRDS



data indicates that though compliance with the microbiological



and turbidity MCL and M/R requirements has improved each



year, 30.1% and 16.3% of the PWS's were not in compliance with



the microbiological and turbidity standards respectively.  This



includes 9.8% and 11.6% of the PWS's respectively classified as



persistent microbiological and turbidity violators.





     The Public Water System Program is a mature program



with many of the initial tasks such as developing an inventory,



informing PWS of NIPDWR requirements, and delegation of



primary enforcement authority now completed.  As such, EPA



recognizes that many of the systems which remain out of



compliance are either recalcitrant or clearly lack the ability



to comply.  To ensure that these systems are targeted for



compliance requires a systematic approach combining programmatic,

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                             -8-





financial, and enforcement actions.  This Policy is designed to



further this systematic approach and ensure that the cooperation



which exists between states and EPA results in compliance



improvements.





III. IMPLEMENTATION



     In order to ensure the success of this Policy, EPA suggests



that the States at a minimum address the following implementation



activities:





1. Monitor Compliance Data



   Monitoring of compliance data is essential to determine



   the progress of each state in improving compliance.  Each



   state should compile its compliance data and analyze it to



   determine which classes of PWS's need improvement.  EPA



   will compile national compliance data for use in determining



   future national compliance goals.  Those goals will be established



   based upon discussions between EPA and the states as part of



   the annual program planning cycle.  Once national goals are set,



   EPA will negotiate annual compliance targets with each state.





2. On an annual basis/ commit to compliance targets.





   National compliance objectives will be established annually.



   Yearly objectives will be contained in the Office of Water's



   Accountability System.  Regions will negotiate with each of



   the primacy states appropriate state specific objectives.



   (Headquarters will negotiate with Regions that operate



   the PWS program within the non-prisnacy states).   Depending

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                             -9-

   on state compliance levels,  some states will be above the

   national objectives and others will be below.   Though

   variability in individual state targets and goals is

   expected, all agreements which are negotiated,  should

   incorporate compliance improvements, to the extent feasible,

   over the previous year.



3. Develop state strategies.



   One of the goals of this Policy is to encourage each State

   to develop a compliance strategy which ranks compliance

   violations and develop appropriate enforcement responses

   to noncomplying systems.  The initial step for a primacy

   agency to take in developing a compliance plan is to list

   and rank, on a priority basis, noncomplying systems.  Develop-

   ing a priority list requires consideration of several factors

   including: the type of violation; the degree of hazard; size

   of the affected population;  degree of recalcitrance; and


   the the deterrent effect.  (Attachment B gives guidance

   concerning the establishment of priorities and developing a

   decision making model.)



4. Take appropriate compliance  enforcement actions.



   After establishing a priority ranking, primacy agents should
             »          .
  •consider a number of possible enforcement responses including

   taking emergency action; requiring public notification;

   providing informal notification  (phone call, warning letter,

   site visit); granting a variance or exemption and place on

   a compliance schedule; issuing a notice of violation or

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                              -10-



   administrative  order; or  initiating civil suit or criminal



   action.  EPA will  cooperate with the states to ensure coordinated



   financial and enforcement assistance.  For example, systems



   may be referred to FmHA or other agencies for loans or



   grants when financing is  needed for system improvements.



   EPA will also cooperate with the states to ensure that EPA



   programmatic resources are used to improve PWS compliance.





5. Conduct Data Verification





   Because the development of compliance objectives depends



   upon the accurate  measurement of compliance, EPA and the



   states will institute a quality control program to ensure



   that the compliance data  reflects the actual water quality.



   On a regular basis, the states and EPA will ensure the



   integrity of compliance data through data audits.  To support



   this effort, EPA will provide training and guidance concerning



   data verification  and audit techniques.
                        »




IV. EFFECTIVE DATE





   This policy is  effective  immediately.  It will be reviewed



annually.  The review will evaluate compliance objectives and



will incorporate any  policy  changes into the Office of Water's



Accountability Systern.

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                                                Attachment A
                  NATIONAL COMPLIANCE TRENDS
             NUMBER OF COMMUNITY WATER SYSTEMS IN
           VIOLATION AND TOTAL NUMBER OF VIOLATIONS
                            (FY82)
Requirement

Microbiological

  MCL

  Monitoring
       Number of               Total
Systems with Violations      Number of
Persistent^  Intermittent   Violations
     764

   4,463
5,050

9,878
11,500

67,000
Turbidity

  MCL

  Monitoring

Fluorides1

  MCL

All Others

  MCL
     153

   1,137



   1,350



     950


   8,817
  249

  390
                                    15,567
 1,000

 7,500



 1,350


   950



89,300
^Monitoring is nearly 100 percent for inorganic, organic and
 radionuclide contaminants.

2persistant violations reflect systems in violation more than
 three months or more than one quarter.  Any inorganic,
 organic or radionuclide contamination is. considered persistent,

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                      PERCENTAGE OF COMMUNITY WATER SYSTEMS IN VIOLATION

                       WITH THE MICROBIOLOGICAL AND TURBIDITY STANDARDS

                                        FY's 1980-1982
Requirement
   National Total
FY 80  FY 81  FY 82
   *
Microbiological

            MCL    11.0    8.5   9.9
Persistent Violators1   Intermittent Violator2
FY 80   FY 81  FY 82     FY 80   FY 81  FY 82
                            1.0
          .9     1.3
10.0     7.6    8.6
            M/R    30.1   24.6  24.4
          TOTAL    36.7   29.8  30.1
                           12.4     8.3     7.6      17.7    16.3   16.8
                           14.3    10.0     9.8
                          22.4    19.8   20.3
                                                                                                         hJ
                                                                                                         I
Turbidity
           MCL
  6.6    4.9   3.6
 2.8     1.8     1.4
 3.8     3.1    2.2
           M/R     11.8.  10.2  13.7
                            6.8     5.3    10.2
                           5.0     4.9    3.5
         TOTAL     16.8   13.9  16.3
                            9.5     7.0    11.6
                           7.3     6.9    4.7
        ^Persistent;    In a fiscal year—more than 3 months or 1 quarter in violation

        ^Intermittent;  In a fiscal year—less than or equal to 3 months or 1 quarter
                        in violation

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                                                       Attachment B


         Guide to the Development of State Strategies

INTRODUCTION

State compliance strategies should ensure that all systems
which provide water comply with the National Interim Primary
Drinking Water Regulations .(NIPDWR) as mandated by the Safe
Drinking Water Act (SDWA).  The approach outlined here should
result in an orderly process that improves compliance.  This
document establishes both a procedure to develop enforcement
priorities and a strategy to achieve compliance by all public
water systems within each EPA Region and primacy State.

Strategy implementation will require close cooperation between
Federal, State and local governments, reflecting a common
commitment to improving drinking water quality.

     Priorities

Listing and ranking noncompliant systems is central to systematic
decision-making.  This process should be continuous.  As systems
come into compliance and removed from the priority listing of
violators, new ones may be added due to changes in source water,
deterioration of equipment, or the quality of operation.  This
ranking process will aid the ability of the primacy agency in
deciding when to act and what action to take.

DEVELOPING A STRATEGY

Each state will undoubtedly have a" different approach to the
development of a Drinking Water Compliance Strategy.  There
will be a number of common elements, principal among them
the development of.criteria which can be used to rank non-
complying systems on a priority basis.  Such a listing and
ranking of noncomplying systems is central to systematic
decision-making and should be continuously updated with
systems which some into compliance being dropped and systems
going out of compliance being added.  This'ranking will provide
the primacy agency a priority list of systems with those which
are the most important to address listed first and those with
ma'rginal problems last.

     Criteria for Action

Developing a priority list of violators is a complex
determination requiring consideration of .several factors,
including:

          Type of violation - The primacy agent should clarify.
          the type of violation, for example, microbiological
          MCL vs. inorganic chemical MCL or monitoring
          frequency vs. reporting.

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                              -2-


      0    Degree  of  hazard  -  Both  the extent of  the  contamination
          and  the  potential harm resulting  from  the  non-
          compliance  should be  considered,  (e.g.,  immediate
          illness  vs.  long  term health effects;  and  the amount
          by which an MCL  is  exceeded).  Violations  posing
          minimal  public health hazard could receive a lower
          priority.

      0    Size  of  population  affected - Greatest emphasis
          should  be  placed on ensuring that medium and large
          systems  achieve  compliance as they serve a larger
          segment  of  the population and any health threat,
          .-therefore  affects a greater number of  people.

      0    Degree  of  recalcitrance  of the water supplier -
          This  is  difficult to  determine and will  require
          some  subjective  judgment on the part of  the primacy
          agency.  Factors  to consider include:

          00    falsification  of data, e.g., willful  incomplete
                reporting or fabrication of  data;

          00    attitude of  the  water supplier, e.g., generalized
                opposition  to  compliance with or  indifference
                to  the  law;

          00    type,  frequency  and magnitude of  violations
                (persistent  violations should receive higher
                priority ) ;                •

          00    efforts, if  any, by the water supplier to come
                into  compliance;

          00    response of  the  water supplier to informal
                compliance  actions  by the primacy agency;
                and/or

      0    The deterrent effect  that action  to gain compliance
          from  a  system, including enforcement  action, may
         - have  on  other potential  violators.

The most critical  factor in the above list  is the  degree of
hazard.  The primacy  agency should develop  a ranking of
violations taking  into arronr.t  tha extent of contamination
    potential harm resulting  -from  the noncompliance.
Table A is an example of how  these criteria can be  factored
into a single list against which each violator may  be rated.
Though Table A shows State regulation violations at the bottom
of the table they can be inserted elsewhere in the  priority
listing.  Many of these violations,  such 25 r.onc-Gmpiiance
v-?ith a State disinfection requirement have legitimate public
health implications and could be assigned a higher  priority.

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                             -3-                   Table A


               PRIORITY LISTING OF VIOLATIONS
   )
EMERGENCY ACTIONS**
SERIOUS VIOLATIONS
   ACUTE RISKS

          Microbiological MCL/Microbiological Public
          Notification Failure

          Nitrate MCL/Nitrate Public Notification Failure

          Turbidity MCL/Turbidity Public Notification Failure

          Microbiological Monitoring/Reporting

          Nitrate Monitoring/Reporting

          Turbidity Monitoring/Reporting

         . Radiological MCL*

          Inorganic Chemical MCL*

          Organic Chemical MCL*

          Radiological Public Notification Failure*

          Inorganic Chemical Public Notification Failure*

     CHRONIC RISKS

          Organic Chemical Public Notification Failure*

          Radiological Monitoring/Reporting

          Inorganic .Chemical Monitoring/Reporting

          Organic Chemical Monitoring/Reporting

          Radiological MCL I

          Inorganic Chemical MCL 1+

          Organic Chemical MCL f

          Radiological Public Notification Failure #

          inorganic Chemical Public Notification Failure t

          Organic Chemical Public Notification Failure I

          Public Notification for Failure to Monitor/Report

          Variance or Exemption Public Notification Failure

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                                           Table A cont
                             -4-
LESS SERIOUS VIOLATIONS

          Failure to Negotiate a Compliance Schedule

          Failure to Complete an Engineering/Economic
               Evaluation as Part of an Exemption Schedule

          Fluoride MCL *

          Failure to Meet Deadline Set as Part of an
               Exemption Schedule +

          Fluoride Exemption Schedule

          Incorrect Analytical Methods

          Laboratory Certification Violations

STATE REGULATION VIOLATIONS

          Disinfection Requirement

          No Certified Operator

          Facility/Operation Violations

          Inadequate Chlorinator Redundancy

          Others
          MCL LEVELS GREATER THAN THE EXEMPTION GUIDELINES
          EXCLUDES FLUORIDES
          LEVELS GREATER THAN MCL BUT LESS THAN EXEMPTION
          GUIDELINES
          It should be noted that there is EPA and State
          jurisdiction over emergencies where a significant
          health risk is posed even though no MCL violation
          has occurred.

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                             -5-

 It  is  important  to  note  that in the  list,  the  priority  given
 an  MCL violation must  take  into account  the  amount  by which
 the MCL is  exceeded.   Minimal violations which present  no
 immediate adverse public health hazard would receive a  lower
 priority than greater, more hazardous violations.   [See
 Guidance for the Issuance of Variances and Exemptions,  Section
 III,  (1979).]  Section III  of this Guidance  sets  forth  levels
 of  various  contaminants  which will not result  in  an unreasonable
 risk to the public's health.  A consistent enforcement  scheme
 would  not allow  MCL violations in excess of  these levels.

 Further, a  repeated violation may receive  higher  priority  than
 a violation which just occurs once or twice.  For example,  on-
 going  failure or refusal to monitor/report would  usually be
 assigned higher  priority than a single such  violation.  However,
 this does not mean  that  a single violation should be a  low priority.
 A single microbiological MCL violation,  for  example, could have
 very serious consequences and might  therefore  have  a high  priority.

      Emergency Actions

 A second important  part  of  each compliance strategy should be  an
 action plan for  addressing  emergencies.  These situations  are
•generated when there  is  an  imminent  and  substantial risk  to the
 public health.   These  actions may involve  industries or individuals
 that are contaminating the  water source  to the point  that  the
 supplier cannot  provide  water that meets  the standards,  and  there-
 fore,  the remedies  set up in the Act for suppliers  may  be  totally
 inappropriate.   Each compliance strategy should set out clearly
 what will be done when emergency actions are required or  anticipated

 Federal responses to emergencies which  threaten drinking  water are
 governed by Section 1431 of the SDWA.  This  Section provides  that
 the Administrator may  take  whatever  action is  necessary to protect
 the public  health when information  is received that a  contaminant
 which  is present  in or likely to enter  a public water  system  may
 present an  imminent and  substantial  endangerment to the health
 of  the public.   State  or local  inaction  is a prerequisite  to  EPA
 emergency action.   "Inaction" .is  interpeted  to mean either that
 State  or local authorities  have taken no action or that the Federal
 action seeks additional  relief.  For an  in-depth analysis  of  what
 constitutes an emergency action and  when such  an.action should be
 brought by  EPA,  see attachment C.
 Note:   Under the emergency action section of the SDWA,  Federal
 action may be taken in a primacy State either where State or
 local  authorities have taken no action or where the Federal
 action seeks additional relief.  Among the situations which
 may require Federal intervention are where an emergency
 involves more than one State,  at the request of the State, or
 where  the emergency involves more than one State, at the request
 of the State, or where the emergency is beyond the resources
 of the State, e.g., Three Mile Island.

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                             -6-
  t
Types of Federal action which may be taken under Section 1431
include, but are not limited to, issuance of administrative
orders, civil suits, and actions for injunctive relief.  Willful
violations of, or  failures to comply with, administrative orders
are subject to a fine of up to 55,000 per day.

In order to determine whether Federal emergency action is
appropriate:

     1.   First, determine whether an emergency exists.  This
          requires examination of the type and degree of harm
          posed to the public's health.  In essence, there
          must be  an "imminent and substantial endangerment"
          to the health of the public.  See attachment C for
          an in-depth analysis of this requirement.

     2.   Next, examine any State or local action which.has
          been taken to mitigate the situation.  Where an
          emergency exists and no State/local action has been
          taken, use of §1431 would be appropriate.  Where
          State/local action has been taken, §1431 may also
          be used  after their action has been carefully
          analyzed by EPA.  There is to be no "precipitous
          preemption of effective state or local emergency
          abatement efforts".  House Committee or Interstate
          and Foreign Commerce, H.R. Rep. No 93-1185, 93d
          Cong., 2d Sess. 35 (1974).  Section 1431 is inter-
          preted to mean not that State/local action is
          inadequate, but that additional avenues of public
          health protection need to be pursued.  Under this
          interpretation, Federal and State/local action are
          supplemental.  Thus, duplication of effort is
          eliminated, maximum allocation of resources is
          achieved, and the health of the public is protected
          to the maximum extent possible.

     3.   Finally, determinations should be made as to the
          method of regaining compliance from the pollution
          source or the offending system.  EPA may take any
          appropriate action to remedy the emergency.

Emergency actions should always be handled as expeditiously
as possible to mitigate/eliminate the public health risk.  In
the event of a Federal emergency action EPA, as appropriate,
should work with the State to coordinate an appropriate response.
Acute serious violations should be handled either to bring the
system, ir.to compliance and/or minimize the public health risk so
that the violation can be handled as a chronic serious violation
(where time is available to explore the possible remedies).  This
latter category is extremely important in that many of these
violations may not be subject to rapid correction.  Accordingly,
these violations will probably generate a work-load associated
with exemptions, variances, technical assistance, technical

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                             -7-

information hearings, and legal action and may be the pool from
which the recalcitrant systems can be identified.

It is also crucial that the serious chronic violations be given
ample ti-.ely attention.  A check-off system may be developed
so that this category of systems can be systematically moved
up the scale of compliance/enforcement actions.  A specific
time frame that fits the local situation and available resources
should be developed and adhered to.

     Routine Compliance Actions

The last category of violations that are essentially administrative
in nature,• should be addressed only after the other violations
have been addressed, except where resources allow for
simultaneous actions on all violations.  Additionally, legal
and/or judicial action should be reserved for this category
of system as a last alternative except where there is the
possibility that the administrative violation may mask a
more serious violation.

     Charting a Systematic Strategy

The flow chart (Table B) that follows outlines a systematic and
consistent process for using the priority ranking of violations
to evaluate noncompliance and to bring a system  into compliance.
It serves as a decision tree to aid the primacy  agency manager
to determine where in the ranking "each violator  should fall.
For example, if a community public water system  monitors  and
reports a nitrate MCL violation, the primacy agency will
determine, based on the priority ranking of violations,  that
such a violation is serious and presents a potential acute
health risk, the primacy agency should then act  to mitigate
the health risk.  .Such mitigation could take the form of
requiring public notification by the supplier and recommending
that the system supply bottled water meeting the drinking
water standards to all families with infants.  The next  step
is to evaluate what action is necessary to bring the system
into compliance.  Where the system is cooperative and can
adequately demonstrate that immediate compliance is not
possible, the primacy agency should develop a long term
solution.  The system should enter into a compliance schedule
with milestones for compliance.

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                   •PWS  VIOLATION  RESPONSE
TABLE   3
                                                                                  3 norths
                               KBLJC WOTR S*STO6
                                    Violations Requiring
                                            Centact uid
                                         Evaluate
                                        Ca^lionoe
                                         CPticns
                                     Pint Hi
                                            of
                                   Coneliance Schedules
                                          cannot
                                           -technical asaiatance
                                                    alternative*
                                           -infooMticn
                                           -training
                                                       altemati
                                           -inrpmtiv* traauent
1  Turbidity and/or bacteriological  _
   > 3 aontha or 1 quarter in violation

2  loqal Action My be  taken •arlier in the oaaplii	
   and enforoBoent procesa.  Per enable, a aycten vith
   a prior record of nonconpliance whioh complies for a
   period and then aoain  beeaet noncatpliant, ohould be
   	 to leoal action.
   Sow chronic haalth risk* aay nquire a tort fomal
Note:  Wtere Utere ia final  judoenent in a Icfl action,
oenerclly the aymtan vill  retain aio^ect to the court'i
jurisdiction
                                                                                24 eenuis

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                             -9-


ENFORCEMENT ACTION

Once a priority listing of violators and violations has been
created, the primacy agency should use the flow chart to aid
in deciding upon appropriate action.  Responses may be selected
from a wide range of compliance and enforcement choices.
Enforcement under the SDWA is not restricted to legal action.
In the exercise of enforcement discretion, choices 'range from
a phone call to criminal prosecution.  Several courses of
action can be pursued simultaneously.  In some situations,
particularly with recalcitrant systems, it may be appropriate
to pursue legal action immediately.  In others, a progression
of responses from informal notification through legal action
may be necessary.  In still other circumstances, effective
allocation of resources and lack of seriousness of a violation
may permit enforcement action to be deferred.

Choosing among the various enforcement responses does not
require starting with the least formal action, for example,
informal notification, then proceeding through the other
options.  Depending upon the facts and individual State or
Regional authorities, the initial enforcement response can be
chosen at any appropriate level.  However, in general, it is
appropriate that water suppliers be given an opportunity to
comply before taking more stringent action.

     Options for Compliance and Enforcement

0    Require Public Notification

As early as possible in dealing with a noncompliant public
water system, a primacy agency should require public notification
The SDWA requires public notification for all violations of
an MCL, failure to comply with an applicable testing procedure,
and when a variance or exemption is granted.  Wh'ere EPA has
primary enforcement responsibility, public notice is also
required for failure to comply with applicable testing procedures
and monitoring requirements.

In analyzing the public notification provision of the SDWA,
the Congressional intent is very clear.  Congress intended
that the primary vehicle for compliance would be the pressure
brought to bear by an .informed citizenry.

The primacy agency should document when a water supplier is
advised of the need for public notification.  This is necessary
for future case support.  Where a supplier is verbally notified
of a violation, documentation of the request for public
notification can be by a file memorandum.  The primacy agency
may devise a standard method to record the giving of oral
advice.  Such a system would be helpful to the office giving
the advice and would ensure a consistent record of when a
supplier is informed of the need for public notification.
Where written notice of the need for public notification is
sent to a supplier, a copy should be kept for the file.

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                              -10-


When public  notification  is  required of  a  system,  the supplier
should submit  to  the primacy agency proof  that public notifica-
tion was done.  Finally,  where  a  system  fails or refuses to
provide public  notification,  the  primacy agency may give notice
to  the public  on  behalf of the  system.1  Agency experience is
that Regions and  States have developed novel and inventive
ways of accomplishing  this responsibility.  Nothing in this
document should be  interpreted  to limit  or prohibit such inno-
vation, consistent  with the  requirements of the SDWA.

0   Informal  Notification

Informal notification  can take  a  number  of forms.  Methods for
notification include:  a phone call, an on-site visit/survey, a
note attached  to  sample bottles;  and/or  a warning  letters/form
letters..

One of the simplist methods  of  informal  notification  is a
phone call reminding the  purveyor that a violation has occurred
and that action is  required  on  his part.  Another  method is  to
schedule an  on-site visit or a  sanitary  survey from a repre-
sentative of the  primacy  agency to inform  the operator of the
problem and  to  ascertain  whether  the situation requires more
formal action.  The advantage of  -this method is that  it is
often quick  and very effective, thereby  eliminating the resource
commitment required for a more  formal  response.  Another method,
attaching a  note  to sample bottles which are sent  to  system
operators with  sampling requirements and instructions, has
also proven  to  be useful.  Several States have institutionalized
this process by a system  of  postcards  that are computer generated
and automatically sent to purveyors when monitoring and/or
•reporting is required.  Other innovative techniques and methods
are encouraged.

Warning letters can take  a variety of  forms and may be used
for all types of  violations.2   Initially,  in these letters,
the opportunity to  meet with the  primacy agency and discuss
compliance may  be available  to  the supplier.  If the  supplier
fails or refuses  to take  advantage of  this opportunity within
a reasonable period of time,  for  example thirty days, other
steps should be considered.   However,  even after litigation
commences, settlement  negotiations may continue.
  The reader is referred to the EPA publication,  "Handbook on
  Public Notification - June 1977'  (U.S. GPO:  1977-241-037/38)
  for specific nnj.dance or. details of public notification.

  For a more detailed discussion, see EPA  document,  "Regulatory
  Aspects of the Safe Drinking Water'Act - Workgroup Report" -
  dated November 1977.  This document can  be obtained  from
  EPA Regional and Headquarters offices.

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                             -11-


These letters should also advise suppliers of the potential
penalties which could be imposed under the Act.   Compliance
may be more easily obtained if attention is drawn to the
potential costs of continued noncorapliance.  Finally, these
letters should require a response from the water supplier
detailing any corrective action he has taken to achieve
compliance.  Several types of letters may be sent:

     0    advising the water supplier of the violation and
          the need for compliance;

     0    advising the water supplier to apply for a variance
          or exemption, if eligible;

     0 ."   ordering the water supplier to show cause why he
          should not be subject to prosecution and penalties
          for violation of the SDWA (these orders may be
          issued by primacy States having the legal authority
          to issue such orders); or,

     0    threatening legal action if efforts to comply are
          not immediately made.

The particular type of informal notification the primacy
agent uses should consider cost and effectiveness.  For
example, a phone call can be very expensive when dealing
with a small water system which only has one operator who
usually is not at the facility.  On-site visits could take
the better'part of a day and may. be resource intensive.
Perhaps the quickest and easiest method of informal notification
is the warning/form-letter.

0    Variance and Exemption Activities

Primacy agents.should evaluate systems which cannot comply due
to compelling factors or to the nature of the raw water source
and advised of their eligibility for a variance or exemption.
Variances and exemptions were included in the Act to lessen
the immediate impact of the regulations by giving certain
public water systems an opportunity to extend the date  for
compliance with MCL and treatment technique requirements.

A public water system can request one or more variances when
the characteristics of the reasonably available raw water are
such that the system cannot meet the maximum contaminant levels
of the regulations despite the application of the best
technology treatment techniques or other means found by th-e
Administrator of EPA to be generally available (taking  cost
into consideration).  Granting of a variance must not result

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                             -12-


in an unreasonable risk to health.  Within one year of granting
a variance, the primacy agency must prescribe a compliance
schedule which will bring the systems into compliance as
expeditiously as practicable.

The primacy agent may grant an exemption if a public water
system cannot meet an MCL or specified treatment technique
requirement of the regulations due to compelling factors.
These factors include, but are not limited to:  the high
cost of purchasing and constructing necessary equipment or
facilities or a service community of a small number of
consumers with low per capita income.  Where the cost of
treatment or other factors is excessive, an exemption from
the MCL's may be granted until January 1, 1984, or January 1,
1986 (if a systems has entered into an agreement to become
a part of a regional public water system).  However, any
public water system requesting an exemption must have been
in operation on the effective date of the particular MCL or
treatment technique requirement.  A system which was not in
operation by the date may be eligible for an exemption only
if no reasonable alternative source of drinking water is
available to the new system.

A request for a variance or exemption can be made upon deter-
mining that one or more MCL's are exceeded.  The request for
an exemption must be fully supported and documented in order
to demonstrate the compelling reasons for .granting the exemption.
Application for either a variance or an exemption must demonstrate
that there will be no unreasonable risk to health if the .
variance or exemption is issued.

Detailed information regarding the above provisions of the Act
is contained in th-e National Interim Primary Drinking Water
Regulations, the National Interim Primary Drinking Water
Regulations, Implementation Regulations and the document
entitled, "Guidance for the Issuance of Variances and Exemptions"
- U.S.   GPO: 1979.

0    Hearings

In most cases,  hearings are part of another enforcement/compliance
action, i.e., they are required as part of the administrative
prerequisites to the granting of a variance or exemption.
However, hearings should not be limited to these special
cases.   Ofter.,  when a violation occurs and the supplier is
reluctant to give public notice and/or the public notice is
inadequate/ a public hearing intended to gather technical
information can be useful in informing the affected customers
of the potential risks and appropriate costs.  The hearing
brings together the primacy agency, the water supplier
and any interested users and allows technical discussion? or.

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                             - im-


possible corrective actions which would achieve compliance.
Likewise, this extra step can be important in the preparation
of litigation if legal action ultimately becomes necessary.
It is critical that such hearings be held so that the
primacy agency develops appropriate case support.

0    Notice of Violation by EPA

EPA normally issues a formal notice of violation to a state
after the appropriate state official is informally advised
of the program deficiencies and has not taken timely action
to'correct the noted deficiencies.  EPA may issue a notice
of violation to a primacy State in two alternative instances.

First, EPA may issue a notice of violation where a primacy
State has committed an abuse of discretion in a substantial
number of cases by granting variances or exemptions or by
failing to prescribe a variance or exemption compliance
schedule.  This notice identifies the problem system, gives
reasons for the abuse of discretion finding and, as appropriate,
proposes revocation of the variance or exemption or revision
of the compliance schedule.  Additionally, the State should be
kept informed of the pending public administrative hearing on
the notice of violation.  Within 180 days of notice to the
State, the Administrator must either rescind the notice or
issue modifications to the variances or exemptions.  These
modifications are to become effective 90 days after notice
thereof to the State, unless the State takes adequate
corrective action within that time.

Secondly, primacy States and noncompliant public water systems
are subject to notices of violation for failure to comply with
any NIPDWR or with any compliance schedule issued as a condition
of a variance or exemption.  EPA is to offer the State and
system advice and technical assistance, as appropriate.  If,
within 30 days of notice of violation to the State of the non-
compliance, the system fails to comply or to initiate adequate
corrective action, public notice of the noncorapliance should
be made by EPA.  Within 15 days of this public notice, the
State must submit a report of the action taken to bring the
system into compliance and any reasons for the State's failure
to gain the system's compliance.  Based on this  report, the
Administrator is to determine whether the.State action is
adequate or whether the State has abused its discretion.  It

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is-an abuse of discretion where the State fails by the sixtieth
day from notice by EPA  to implement procedures to bring the
system into compliance  and to assure an alternative safe
drinking water source.

0    Administrative Orders

A  primacy State, with appropriate State authority, may issue
administrative orders mandating that an offending system
cease violation.  Alternatively, the states may, if State law
allows issue binding compliance orders and assess civil
penalties.

0    Civil Suit

The Administrator may bring a civil action against a supplier
who is in violation of  the NIPDWR or of a variance or exemption.
Civil suit may be brought against a system in four alternate
instances.  First, in a non-primacy State, a civil suit by EPA
would be appropriate where a system had violated the NIPDWR,
a  variance or exemption.  Second,' in either a primacy or a non-
primacy State, suit may be instituted upon the request of
either the chief executive officer of the State or the
appropriate State agency.  Third, in a primacy State, a
civil action would be appropriate where a system is still in
violation sixty days after notice to the State by EPA and
the State has failed to submit to EPA a timely report of the
steps being taken to bring the system into compliance.  Finally,
civil action may .be brought against a system in a primacy State
where the State has committed an abuse of discretion in carrying
out its primary enforcement responsibility.  There will be a per
s>e_ abuse of discretion where there has been "any failure by a
State to implement by the sixtieth day [from notification by
EPA]  adequate procedures to bring a system into compliance by
the earliest feasible time ..."  House Committee on Interstate
and Foreign Commerce, H.R. Rep.  No. 93-1185, 93d Cong. 2d Sess.
22 (1974).  (H.R. Rep.).  "Such a failure would constitute an
abuse of discretion whether it results from negligence, inatten-
tion, lack of adequate  technical and enforcement personnel, or
from any other cause."  H.R. Rep. at 23.  A State's failure to
carry out properly any  follow-up or enforcement procedures
necessary to achieve timely compliance would also be an abuse of
discretion.

Civil actions seeking penalties pursuant to §1414(b) SDWA may
be brought by EPA where there has been willful violation of a
variance or exemption,  or a Nipnuw Ky 5

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                             -15-


The degree of seriousness of the violation of the NIPDWR
should be taken into account in making the decision whether
or not to bring a civil suit.

0    Criminal Action

A criminal action may be brought where a system has willfully
failed to satisfy the public notification requirements.
Criminal actions may also be brought against a system for
failure or refusal to comply with the recordkeeping, monitoring,
or reporting requirements of the SDWA.

0    Defer Enforcement Action

Effective allocation of enforcement resources and lack of
seriousness of a violation may dictate that the primacy
agency exercise its enforcement discretion in deciding to
defer action.

REMEDIES AND PENALTIES

This .section of the guidance presents the judicially imposed
remedies which may be sought and the types of remedies which may
be required in negotiating settlements.  It is important that
enforcement actions seek both expeditious compliance and adequate
penalties.  The penalties and remedies sought under this
guidance neither substitute  for injuctive. relief or. other non-
duplicative remedies.

The current financial ability of the water supplier to achieve
immediate compliance or, within a reasonable time, to progress
toward compliance as expeditiously as practicable should be
determined.  This is a practical concern to be taken into
account along with the other health risk factors—provided
the existing noncompliance does not pose a significant threat
to consumers.  Factors to consider in analyzing a system's
financial situation include:

        0 type and cost of treatment presently used,
          e.g., addition of  a chemical to the water vs.
          devising of a construction or funding schedule;

        0 cost of relief sought;

        0 the community's ability to pay increased
          utility bills;

        0 possibility of regionalization or centralized
          management and associated costs; and/or

        0 possibility of use of other water sources.

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                             -16-

While State law may authorize penalties other than those
discussed in this document, this policy provides guidelines for
the selection and application of both SDWA penalties and any
additional primacy States penalties.  The penalty policy is
intended to provide a strong economic incentive for rapid
compliance.  In essence, the purpose of penalties is to deter
violations and encourage compliance.  Violators must recognize
that penalties are not violation fees.  Payment of penalties
by a system does not give any right or privilege to continue
to operate in violation of the law or to slow down compliance.

The statutory bases for penalties under the SDWA include:

     0    §1414(b) which imposes a $5,000 per day civil
          penalty for willful violation of a national primary
          drinking water regulation, a variance or exemption;

     0    §1414(c) which imposes up to a $5,000 criminal fine
          for willful violation of the public notification
          provisions; and

     0    §1445(c) which prohibits any violations of the
          inspection-reporting requirements and imposes up to
          a $5,000 per day criminal fine.

The minimum penalty may be determined on the basis of the factors
set forth below.  The penalty so determined may be lower than
the statutory maximum.  Where the penalty sum is higher, this
figure may be used in settlement negotiations or in litigation,
but the statutory maximum is all that may be requested by the
State/EPA or imposed by the court.

     Penalty factors:

     0    the sum appropriate to redress the harm or risk of
          harm to public health;

     0  •  the sum appropriate to remove the economic benefit
          gained or to be gained from delayed compliance;

     0    the sum appropriate as a penalty for the violator's
          recalcitrance, defiance of or indifference to
          requirements of the law; and

     0    the sum appropriate to recover unusual or extraordinary
          enforcement costs thrust upon the public..

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                             -17-


In calculating these factors it should be kept in mind that
civil penalties under §1414(b) of the SDWA and criminal fines
under §1445(c) of the SDWA are assessed on a daily basis.  We
recognize that State penalty amounts may differ from these
penalties.  Therefore, the sum arrived at as an appropriate
penalty under these two Sections must be keyed to this per
day assessment.  Section 1414(c) of the SDWA does not require
consideration of daily penalty amounts.

0    Harm or Risk of Harm:

The extent to which a violation harms or poses a risk of harm
to the public health the primacy agent should be carefully
considered by the primacy agency in setting the appropriate
penalty/ e.g., a serious microbiological MCL violation vs. a
minimal turbidity violation.  Of course, all violations
create some risk of harm and it may be difficult in some
cases to precisely quantify this risk or harm.  The penalty
amount attributable to such harm or risk will have to be
determined on the facts and circumstances of each case.

0    Economic Benefit from Delayed Compliance:

Delaying the implementation of treatment techniques or
installation of treatment equipment can result in economic
savings or gains for a water supplier.  These savings or
gains usually arise from:

     0    The opportunity to otherwise invest capital not
          spent on treatment (the monetary amount of this
          element may be calculated on the same basis as  is
          done und.er the Clean Water Act - P.L. 92-500) and/or

     0    the avoidance of operation and maintenance expenses
          (figures for calculating benefit from delayed use
          of treatment techniques or installation of equipment
          are readily available in the literature).

This factor should be used as a guide to determine the appropriate
penalty.  In some instances, often with very small systems,  there
will have been no economic benefit to noncompliance.  Thus,
although this factor should always be analyzed to determine  its
applicability, it is not a required element of a penalty.

0    Recalcitrance, Defiance of, or Indifference to the Law

Good faith efforts to obey the law are expected of all subject
to the Act and regulations.  Except as provided below under
"Mitigation", assertions of good faith should not be considered

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                             -18-

as  a  basis  for  reducing  a  penalty.  Courts traditionally
consider  the  degree  of  the violators  recalcitrance, defiance,
purposeful  delay  or  indifference to legal obligations  in
setting penalties.   It  is  important that, where appropriate,
these factors be  considered  in calculating penalties.

0     Extraordinary Costs

Unusual or  extraordinary enforcement  costs may be  taken into
account in  calculating a penalty, where appropriate.   Where,
for example,  a  water supplier fails to notify the  public and,
as  a  result,  the  primacy agency must  undertake such notification
to  protect  the  public's  health, then  the costs for this
notification  should  be considered.  Extraordinary  costs may be
sought pursuant to'both  the  penalty provisions of  the  SDWA
and the general equity powers of a court.

0     Mitigation

This  factor involves consideration of whether the  system is
demonstrating good faith by  entering  into and following a
compliance  schedule  designed to obtain compliance  as
expeditiously as  practicable.

The appropriate sum  for- each of the four penalty factors
should be determined and added together.  Thereafter,  the
appropriate sums  reflecting  the mitigation factor  should be
subtracted.  The  balance reflects the penalty amount which
should be sought, assuming the total  is less than  or equal to
the statutory maximum.

One additional  consideration is the collection of  penalties
where a system  may be unable to pay.  In such a case,  the
reasons for inability to pay must be  carefully scrutinized.
Depending on the  facts and circumstances of each case, the
following alternatives may be considered:

      0    seek  the. full  penalty; (a lien on the supplier's
          property may also  be sought so that a recorded
          judgment will  be had and recovery assured);  and/or

      0    recommend  that a time payment arrangement be made
          (a lien may also be sought  here); or

      0    recommend  that the penalty  be postponed  or forgiven
          in part or in  toto.

This  is particularly important with respect to small systems
where the calculated penalty may be disproportionate to the
resources of the  sstem.

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                                              Attachment C

          Guide  to  Bringing  Formal  Enforcement Action
              Under  the  Safe  Drinking Water Act
             (Legal Interpretation  of Section 1431)


      Emergency  actions under  Section 1431  of the SDWA  (Section
 1431)  are an important enforcement tool.   One of the primary
 goals  of  the SDWA  is prevention  of contamination of drinking
 water  supplies.  Another objective is elimination of con-
 tamination to the  extent possible  once  it  has occurred.
 Where  there is  an  emergency or potential emergency, this
 Section provides guidance on  the quickest, most effective
 method of achieving  these goals.  This  guidance is primarily
 a  legal  interpretation of Section  1431,  its  legislative
 history and recent case  law designed as  a  resource document
 for legal personnel. It describes the  circumstances under
 which  it  is appropriate  to  commence an  emergency action  and
 how to assemble the  necessary elements  of  proof.

      When there is an identifiable source  of contamination
 near a water supply, e.g. a hazardous waste  site or an
 industrial plant,  EPA has the responsibility and the means
 of preventing the  contamination.  Because  of the importance
 of protecting the  public health, and given the high costs of
 removing  contaminants,  the  most  economic method of handling
 these  problems,  both in  terms of monetary  cost to society
.and the  limited Agency  resources,  is to stop the contamination
 at its source before it  enters  the water supply.

      In  the past,  lack of information and  apparent institutional
 obstacles (e.g.  the  assumed need' to allege lack of protection of
 the public health  by the State)  have resulted  in the under  utili-
 zation of this  provision.  The  preparation by  the Agency and the
 States of hazardous  waste site  inventories and compilation  of
 other  useful facts has greatly  reduced  the information problems.
 As will  be described below, the  SDWA has never required that EPA
 allege that the State is failing to do  its duty before EPA  can
 use the emergency  provision.  In fact,  a greater use of this
 power  should lead  to greater  cooperation between the States and
 EPA.  Neither the  States nor  EPA alone  necessarily have sufficient
 resources to handle  emergency situations.   Section 1431  provides
 a  mechanism whereby  resources can  be applied jointly  to the most
 serious and immediate public  health problems.

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      In order to initiate a S1431  action  (either a civil
 action or an administrative order),  six major elements must
 be present:

      1.   The appropriate State and  local  authorities must
           not have already successfully obtained the same
           remedy EPA is seeking, and that  remedy is necessary
           to prevent an endangerment to the public health;

      2.   there must be a contaminant;

      3.   that contaminant Bust be present in or likely to
           enter a public water  system;                "

      4.   that contaminant must be a substance that may
           present an 'imminent  and' substantial endangerment
           to the health of persons";

      5.   there must be something  that can be done to remedy
           or ameliorate the situation,  (i.e. appropriate
           relief);  and,

      6.   there must be an appropriate defendant.


 1.    State and Local Authorities Have not Acted

      This  element is one of the most misunderstood requirements
 of  the  SDWA.   First,  there has  been  an overly literal inter-
 pretation  of  the meaning of the words used in the statute ("that
 the appropriate State and local authorities have not acted to
 protect the  health  of such persons.  ..."  S1431(a) SDWA, 42
 U.S.C.  5300(a).   Second,  the requirements must be understood
 within  the intricate State/Federal relationship established by
 the Act.  A  study of  the statute,  its legislative history, and
 the statutory  enforcement framework  leads to a reasonable
 interpretation that  the  Federal emergency action simply must
 not be  completely duplicative of a local or State action.

    'The plain meaning of  the language is that there must be no
actions already  taken by the State or local authorities,  or if
an action has  been taken,  the Federal action must be seeking
additional relief which  will protect the public from the
contamination  in  question.  Shaff, The Emergency Powers In The
Environmental  Protection  Statutes;   A Suggestion For A Unified
Emergency Provision,  3 Harv. Env. L. Rev. 298, 304  (1979).
 (Emergency Powers).   Under this interpretation EPA  need not
allege or prove  that  the State  is failing to do its duty,
i.e., protecting  the  public health (although clearly if that
is the case EPA may act).   Quite the contrary, the  legislative
                             - 2 -

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history unequivocally indicates that the provision was intended
only to prevent EPA from "precipitous[ly] preempt[ing] .  .  .
effective State or local emergency abatement efforts."  House
Committee on Interstate and Foreign Commerce,  H.R.  Rep.  No.
93-1185, 93d Cong., 2d Sess. 35 (1974).  (1974 House Report).
Where a State is not seeking the remedy sought by the United
States, no such preemption of ah abatement effort is possible.

     However, when the State or local authority does not take
action "in a timely fashion or  [even if actions are taken but
they] are not effective to prevent or treat the hazardous con-
dition, this provision should not bar enforcement by the Adminis-
trator."  id. at 35 (emphasis added).  The Congressional Reports
and floor debates support the view that Congress included this
language in S1431 (and added certain procedural prerequisites
before allowing Federal enforcement in a primacy State)  simply
to avoid duplication between Federal and State enforcement and
to preserve the primary responsibility for protecting the public
at the State and local level, id. at 22-23,35, Senate Committee
on Commerce, S. Rep. No 93-231, 93d Cong., 1st Sess. 9,  10 (1973)
(1973 Senate Report); 120 Cong. Rec.  H 10789, H 10793-94; (daily
ed. Nov. 19, 1974); 120 Cong. Rec. S20241-42  (daily ed.  Nov.  26,
1974).

     Not only does the Act not  require an adversarial relationship
between the State and EPA for EPA to bring an emergency  action,,
but 51431 mandates cooperation  and consultation to the extent
feasible.  Emergency Powers, supra, at 305.  Section 1431(a)
explicitly states that:

          [t]o-the extent  [the1-Administrator]
          determines it to be practicable in light
          of such imminent endangerment, he-shall
          consult with-the•State and local authori-
          ties in order to confirm the correctness
          of the information on which action
          proposed to be taken  under this sub-
          section is based and  to ascertain the
          action which such authorities are or
          will be taking."   (emphasis added).

     Additionally, the SDWA establishes a "joint Federal/State
system . . . protecting underground sources of drinking water."
1974 Bouse Report, supra,  at 1, 8; 120 Cong. Rec. H10794  (daily
ed. Nov. 19, 1974).  The House  Committee expressed the "hop[e]
that State and Federal cooperation will be the rule." 1974 House
Report, supra, at 21.  In reviewing the Act in 1979, the Senate
Committee described it as  requiring the "development  of an effec-
tive enforcement program in cooperation with State governments."
Senate Committee on Environment and Public Works, S. Rep. No.
96-161, 96th Cong., 1st Sess. 3  (1979)  (1979 Senate Report).
                              - 3 -

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      The Act's joint Federal/State  enforcement scheme is also
 expressed in 51414(a) which  permits EPA to enforce drinking water
 regulations, variances,  and  exemptions even in primacy States.
 Also, $1414(b) specifically  authorizes EPA to bring an enforcement
 action when requested to do  so by the Governor of a State or the
 State Agency which regulates drinking water.  The legislative
 history of that section  states that a lack of adequate technical
 and enforcement resources is sufficient to justify Federal action.
 1974 House Report, supra at  22-23.  The legislative history of
 51431 contains no similar statement, but clearly where there is
 an emergency situation and the State's resources are overburdened,
 it would be foolish  to withhold from EPA the power to remedy the
 problem.

      This is particularly true when the emergency action is
 directed against the source  of the contamination rather than
 against a water supplier,  since the other enforcement provision
 (S1414(b)} does not  cover sources of pollution and does not
 provide authority for States to bring an emergency action.  The
.House Committee inferentially  supported this interpretation by
 stating that it was  "conferling] completely adequate authority to
 deal promptly and effectively  with emergency situations which
 jeopardize the health of persons." id. at 35.

      In sum,  the emergency action Section provides another
 mechanism for cooperative Federal/State enforcement.  It allows
 the Federal government to assume some of the burden of bringing
 an enforcement action.

 2.    Contaminant

      The  terra contaminant is broadly defined in Section 1401(6),
 42  U.S.C.  5300f(b) as:

           any physical,  chemical, biologial or
         .  radiological substance or matter in water.

     The  breadth of  this definition is even greater because
 the protection  of  the  public health is a "fundamental personal
 interest  in life,  health and liberty . . . [which has] a special
 claim to  judicial  protection in comparison with the economic
 interests  .  .  .  ."   EOF  v. Ruckelshaus, 439 F.2d 585, 598 (D.C.
 Cir. 1971)  (in  reviewing an  administrative order concerning a
 pesticide); EDF  v.   EPA,  465 F.2d 528, 538 (D.C. Cir., 1972)
 (particularly when carcinogens  are involved); Certified Color
Mfgs. v. Matthews, 593 F.2d  284, 297-298 (D.C. Cir., 1976) (in
upholding FDA's  termination  of  a provisional listing of certain
 food  colorings).  See  generally, Virginia Petroleum Jobbers Ass'n
v. FPC, 259 F.2d  921,  925  (D.C. Cir. 1958); U.S. v. Nutrition
Service, Inc.,  234 F.Supp. 57b, 57y (W.D. Penn., 1964).  Since
 the emergency provision  is intended to cover "potential.hazards
presented by  ... unregulated  contaminants"  the term
 "contaminant" must be defined broadly.'  1974 House Report
 supra, at 35.

                               - 4 -

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    Congress enacted the SDWA in direct response to the  discovery
of organic compounds in drinking water.   Bauro,  Drinkina  Water
Chlorination and the Regulation of Organics,  3  Harv.   Env. L.Rev.
399, 400, 403 (1979).Among situations considered  by  Congress,  a
substantial endangerraent was the exposure to a  carcingenic agent.
id. at 36.  This view is underscored by the  many references  in the
legislative'history to the discovery of carcinogens and  potential
carcinogens in an ever-increasing number of  water supplies.   1974
House Rep./ supra, daily 6, 10-11, 35;  120 Cong. Rec.  H  10789,
H 10793-94, H10798-99, H 10801-02 (daily ed.  Nov. 19,  1974);  120
Cong. Rec. S20240 (daily ed. Nov. 26,  1974).  This  concern was
reiterated and strengthened 'in subsequent Congressional  reviews
of the SDWA program.  House Committee on Interstate and  Foreign
Commerce, H.R. Rep. No. 96-186 at 4-6,  (1979) (1979 House Report);
1979 Senate Rep., supra, at 3.

     Congress has thereby provided a clear mandate  to the Agency
to use this Act in dealing with a wide range of contaminants
including hazardous wastes.

3.   Contaminant In or Likely to Enter a Public Water Supply

     The language of the Act is plain on its face,  a contaminant
does not have to be present in a drinking water supply but  only
be 'likely to enter a public water system .  . . ."   This language
has been interpreted as .covering threatened  discharges.   Emergency
Powers, supra, at 302, n.26 and n.27.  The legislative history
strongly emphasizes the point by stating that:

     1.  the emergency administative "orders may be issued  to
obtain relevant information about impending . . . emergencies."
(emphasis added);

     2.  such orders may be issued "to prevent a hazardous
condition from materializing  .  .  . .*   (emphasis added);

     3.  the section should be used "early enough to prevent the
potential hazard from materializing .  .  . ."  (emphasis added);

    '4.  EPA may use the section when "there is.an imminent
likelihood of the introduction into drinking water of contam-
inants."   (emphasis added).   (All of the above quotes are from
1974 House Report, supra, at 35-36);

     5.   "the Act requires that EPA adopt a preventive health
posture in regulating contaminants.  With chemicals whose side
effects may not become manifest for a generation after  exposure,
this means regulations cannot be withheld until danger  is
conclusively proven  .  .  .  (particularly  for organic chemicals]
. . . .•  1979 Senate Rep., supra, at 3.
                              - 5 -

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 The above interpretation is  also  dictated by the practical
 necessities of the hydrology of groundwater, e.g.:

           In as much as  40 percent of the population
           derives drinking water  from groundwater
           sources, pollution is of significant
           concern, not only  from  a public health
           standpoint but also from an economic
           standpoint ....  Once an aquifer becomes
           polluted,  recovery from that pollution is
           usually slow,  because of the generally slow
           rate of groundwater movement through the
           aquifer.  Hence, groundwater pollution nay
           be considered  a serai permanent condition,
           perhaps lasting for years after the source
           has been located and the pollution stopped.
           United States  Water Resources Council.  The
           Nation's Water Resources - 1975 - 2000 at 64
           (emphasis added.); cited in 1979 House Rep.,
           supra,  at 5-6, see also, Tripp and Jaffe,
           Preventing Groundwater  Pollution; Towards
           a Coordinated  Strategy  to Protect Critical
           Discharge ZonelT3 Harv. Env. L.Rev.T~,
           3-9 (1979).

      The House Committee, citing  this report, the growing
 hazardous waste problems, and the established principles of
 hydrology directed the Agency to  protect underground sources of
 drinking water,  particularly from organic chemical contamination.
 1979 House Report, supra, at 5-6; see also 1979 Senate Report,
 supra,  at 3.  Specifically,  the Committee called for "full and
 vigorous implementation  of  its authorities under   its hazardous
'waste program of  ... the Safe Drinking Water Act  . .  .  ."  1979
 House Report, supra at 6; see also 1979 Senate    Report suora  at
•3.            '                 '           .                  '

      In sum, the uncontradicted purpose of the Act in general
 and  the emergency provision  in particular is to avoid allowing
 water supplies to become contaminated.

 4.   May Present an Imminent  and Substantial Endangerment

      This element of an  emergency action has several discrete
 subparts:

      A.    A contaminant  "may", not will, endanger;

      fc.    the endangerment must be imminent; and,

      c.    the endangerraent must be substantial-
                               -  6 -

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The meaning of the phrase, therefore can best be understood by
.analyzing its component parts.  Emergency Powers supra at 312.
These terms mus-t also be interpreted with the preventive nature
of the statutory scheme (see discussion above) and the strong
emphasis on the control of organic chemicals, especially
carcinogens, in mind.  (see, Contaminants,  above).  As Justice
Frankfurter directed, •[s]tatutes . . . are instruments of  '"
government, and in constructing them,  the general purpose is a
more important aid to the meaning than any rule which grammar or
formal logic nay lay down ....  This is so because the purpose
of an enactment is embedded in its words even though it is not
always pedantically expressed in words."  United States v.
Shirey, 359 U.S. 255, 260-61 (1958)'(emphasis added.).  Also,
the courts must understand that *{w]hen Congress undertakes to
act in areas fraught with medical and scientific uncertainties,
legislative options must be especially broad and courts should be
cautious not to rewrite legislation even assuming, arguendo, that
'judges with more direct exposure to the problem might make wiser
choices."  Marshall v. United States, 414 U.S. 917, 727 (1974)
(emphasis added).

     Even more than recent environmental and public health
statutes, Congress intended this Act to be "construed broadly
by the courts so as to give paramount importance to the objective
of protection of the public health.'  1974 House Report, supra,
at 35 (citing United States v. United States Steel, Civ. Act. No.
.71-1040  (N.D. Ala. 1*71) at 32; at 23 (in discussing §1414  (b));
at 120 Cong. Rec. H10794  (daily ed. Nov. 26, 1974).  Congress
specifically rejected the limited interpretation of when in-
junctive relief was available that the Eighth Circuit took  in
the Reserve Mining Co. v. U.S., 514 F.2d 518.  120 Cong. Rec. H
10793 (daily ed. section on Appropriate Remedies).  see page 10
this memorandum

A.  Contaminant May Endanger

     The original Senate version of the emergency provision  used
the phrase "a constituent . . . will 'result in a serious risk to
health . . . .'  56  (a) of S. 433 as reported in 1974 Senate
Report, supra, at 24.  In the final version, Congress chose  the
probabilistic word "may" rather than the deterministic term
"will."  The plain meaning of the language change is that EPA need
only prove that the contaminant may be an endangerment, not  that
it will be an endangerment.  In interpreting why the word "may"
instead of "will" was chosen the House Report states:

          The words used by the Committee were carefully
          chosen.  Because of the essential preventive
          purpose of the legislation, the vast number of
          contaminants which may r\eed to be regulated,
          and the limited amount of knowledge presently
                              - 7 -

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           available on the health effects  of various
          • contaminants in drinking water,  the committee
           did not intend to require conclusive proof
           that any contaminant  will cause  adverse health
           effects as a condition for regulation of a
           suspected contaminant.   Rather,  all that is
           required is that the  Administrator make a
           reasoned and plausible judgment  that a con-
           taminant may have such an effect.  1974 House
           Report supra,  at 10.   (emphasis  added).

      Although the House Report  was discussing the definition  of an
 MCL,  since Congress used the identical word in a similar  context,
 under general statutory interpretation rules, it is presumed
 that  the same meaning was intended.  Certainly, such ah
 interpretation is consistent with the purpose of the provision.V
 The House Report also specifically stated  that in determining
 whether there may be an adverse health effect, EPA could  use
 epidemiological, toxicological,  physiological, biochemical  or
Statistical studies or research (including studies on  the effects
 on animals).   id. at 10.  Even  extrapolations of such  research and
 studies or a  professional -judgment based on the known  behavior of
 analogous contaminants or the same contaminant in other media
 could be used.  id. at 10.

      Given this history and the explicit rejection of  the holding
 in the Reserve Mining case, it  is clear that Congress  intended
 that  the traditional (and, in modern scientific analysis, out-
 moded) concept of causation be  rejected.   See Kraus, Environmental
 Carcinoaenesis:  Reaulation on  the Frontiers of Science,  7  Env. L.
 B3, 104-11 (1976)(Kraus); Ethyl Corp. v.  EPA, 541 F.2d 1,  28
 (D.C. Cir. ) e_n bane,  cert, denied 426 U.S. 941  (1976); Emergency
 Powers,  supra, at 315;. 1979 House Rep., supra at 4.

      "Endangerraent" is composed of reciprocal elements of risk
 and harm,  or  probability and severity.  See Ethyl Corp. v.  EPA/
 541 F.2d., at 18 (in interpreting the language  "will endanger" in
 the Clean Air Act); Carolina Environmental Study Group v. United
 States,  510 F. 2d 796, 799 (D.C. Cir. 1975); Reserve Mining Co.
 v.  EPA, 514  F.2d at 519-529 (8th Cir., 1975)Tr~Emergency  Powers,
 supra,  at 313.  Public health may properly be considered  endan-
 gered both by a lesser risk of  a greater harm and by a greater
 risk  of lesser harm.   What constitutes an  endangerment will
 ultimately depend on the facts  of each case.  Ethyl Corp. v.  EPA,
 510 F.2d,  at  IB; Emergency Powers, supra,  at 315.
            legislative history of the Act uses  the term regulation
 and  regulatory  authority broadly.  See 1974  House  Report,  supra,
 at 35-36  which  states that an emergency action  is  used to  regulate
 a  source  ot contamination^
                               -.8 -

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     In Reserve Mining,  the Eighth Circuit interpreted  "endanger"
in the Clean Water Act's emergency provision as  not  requiring  a
showing of actual harm.   A showing of evidence of  potential  harm
w,as held to be sufficient.^/  See also,  United States v.  United
States Steel Corp., Civ. Act. No. 77-1041 (S.D.  Ala. Nov.  16,
1971) (discussed in Emergency Powers, supra,  at 313  n.  99);
ajid Kraus, supra, at 100-111.)  AS the Court stated  in  Reserve
Mining;

          Congress used the term "endangering" in
          a precautionary or preventive sense, and,
          therefore, evidence of potential harm as
          well as actual harm comes within the
          purview of that term.   We are fortified
          in this view by the flexible provisions
          for injunctive relief which permit a court
          to enter such judgment and orders
          enforcing such judgment as the public
          interest and the equities of the case may
          require.  Reserve Mining Co. v. U.S.,  514
          F.2d at 528 (emphasis added).\

     The court in the Ethyl case felt that requiring actual  harm
.to meet a standard of "endangerment" to persons would  frustrate
the preventive purposes of environmental legislation.   510 F.2d  at
28.  Clearly, "(w)ith chemicals whose side effects may  not beco-e
manifest for a generation after exposure, this means regulations
cannot be withheld until danger is conclusively proven."   1979
Senate Report, supra, at 3.  Therefore, the endangerment element
only requires proof of the risk of harm, not actual  harm.
Emergency .Powers, supra, at 315.

B.   ''Imminent

     The risk of harm-must be imminent not the harm itself for the
Agency to act.  1974 House Report, supr'a, at 36.  Thus, §1431 may
be used if there is an  "imminent" likelihood that contaminants
which may cause health damage even after a period  of latency are
          dicta without any discussion or analysis the Court also
stated that "the terra endangering. . . connotes a lesser risk of
harm . . . than the phrase imminent and substantial endangerment
to the health of persons as us'ed by Congress in the 1972 amend-
ments to the FWPCA.  33 U.S.C. S1364.-  514 F.2d at 528  (emphasis
added).  This judicial opinion was decided after the SDWA was
passed.  Therefore, Congress could not have incorporated this
interpretation into the SDWA.  In fact, Congress rejected the
Eighth Circuit's earlier opinions in this case.  120 Cong. Rec.
H10793 (daily cd. Nov. 19, 1974).  See discussion of Reserve
Mining, infra, under Appropriate Relief.'
                              - 9 -

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 introduced  into  drinking water, id. at 36.  This is a change fro-.
 the  common  law approach and is necessary to enable action before
 people  actually  get  sick or are otherwise harmed.

     In construing the term 'imminent' the Agency may also
 consider the  time it may take to prepare orders, commence and
 complete litigation, and to implement and enforce administrative
 or court orders, id. A hazard, therefore, may be 'imminent' even
 if the  contaminant will not enter the water supply for many years,
 if time is  needed to implement corrective action under 51431.
 id.  at  35-36.  See also, EDF v. Ruckelshaus, 439 F.2d 584, 597
 (D.C. Cir.  1971} (accepting a similar definition in a statute
 regulating  pesticides).

     The term 'imminent" is related to the probability that harm
 will be set into motion  (as opposed to already being manifest)
 within  a certain time frame.  The recognition by Congress that a
 risk of harm  may be  considered 'imminent', even though the harm
 itself  may  be latent, is a necessary element for enforcement under
 the  Safe Drinking Water Act, otherwise the Agency could never
 prevent carcinogens  from contaminating water supplies.

 C. Substantial Endanqerment

     •Substantial,'  for purposes of the SDWA, includes risks of
 harm which  are greater than de minimis.  1974 House Report supra,
 at 3.5;  Emergency Powers, supra, at 315.  What Congress meant to
 exclude by  the term  "substantial" are insignificant, negligible
 or speculative risks of injury or illness.  This interpretation
 is supported  elsewhere in legislative history of this and other
 statutes.   Administrative and judicial implementation of emergency
 authority must occur sufficiently early to prevent the potential
 hazard  from materializing, or the Agency's regulatory tasks
 becomes  meaningless.  1974 House Rep.'at 35, 36.

     •Substantial endangerment' specifically includes:  a) a sub-
 stantial  likelihood  that hazardous contaminants will be ingested
 by consumers  if preventive action is not taken; b) a substantial
 statistical probability that disease will result from the presence
 of contaminants in drinking water; or, c) the threat of substan-
 tial or  serious harm (such as exposure to carcinogenic agents or
 other hazardous contaminants). . 1974 House Report, supra at 36.

 5.   Appropriate Relief                *

     There  are two mechanisms for obtaining relief under the
emergency provision:  an administrative order issued by the Agency
 or a judicial order  issued by a court in a civil action.^/  These
     ^/ Under §1431, the Administrator may take such actions as he
may deem necessary  . .  .• and he is "not limited to . . . • admin-
istrative orders and civil actions.  Exactly what actions this
additional authority encompasses will not be discussed here.

                              - 10 -

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          The court's decision in Reserve Mining
          has prompted a third question,  whether it
          is proper to resolve all uncertanties in
          favor of public health where substantial
          economic costs would be imposed to meet
          standards of questionable necessity ...
          the court did not say that resolving
          uncertainties in favor of health protec-
          tion is impermissible.  Rather it said:

          *. . . the district court's determination
          to resolve all doubts in favor of health
          safety represents a legislative policy
          judgmenti not a judicial one." [498 F. 2d
          at 1084]

          Whatever Congress1 intent was in passing
          the Refuse Act I have no doubt that
          •subcommittee and the committee have made
          'just such a legislative policy judgment
          in the Safe Drinking Water Act. .. . Cost
          is not to be considered. . . in enforcing
          the [Act's] requirement. ...  We must
          recognize that there now exists very
          little evidence on the health effects
          of contaminants in drinking water.
          What there is is often inconclusive and
          inconsistent.  But in my view, we cannot
          afford to wait 20 years for health
          effects research to be completed ....
          If there are uncertainties, they must be
          resolved on the side of protection of
          health.  120 Cong. Rec. H107y3 (daily ed.
          Nov. 19, 1974).    (emphasis added).   (Mr.
          Rogers, Chairman- of the -Subcommittee
          reporting the bill and floor leader)

     Congress also specifically expressed its desire that a
different result occur in SDWA cases by using different, less
restrictive language than is used in the Clean Water Act's
emergency provision.  120 Cong. Rec. H 10794 (daily ed. Nov. 19,
1974).  The Administrator was directed to seek such injunctive
relief as may be necessary to protect the health of persons.
1974 House Rep., supra, at 35.  Congress underscored this position
by clearly stating that uncertainies should be resolved in the
favor of the protection of the public health.

     To argue that a court should wait until a contaminant is
actually detected in the water supply before issuing a mandatory
order to the source of contamination is not only contrary to the
plain language of the statute and the legislative history, but
implies that the only effective remedy is precluded.  In general,
                              - 12 -

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 orders may  be  issued  sequentially or  independently.  If an admin-
 istrative order  is  issued and willfully violated or there is a
•willful refusal  to  comply, EPA nay  initiate a civil action to
 enforce the order or  it may seek criminal penalties of up to
 55,000 per  day.  Section 1431(b), 42  U.S.C. S300i(b).

     Such orders can  require any "actions as  [EPA]. . . may
 deem necessary in order to protect  the health of such persons."
 Section I431(a), 42 U.S.C. 300i(a).   The legislative history
 specifically states that these orders may be issued:

          to obtain relevant information about
          impending or actual emergencies, to
          require the issuance of notice so as to
          alert  the public to a hazard, to prevent
          a hazardous condition from  materializing,
          to treat  or reduce a hazardous situation
          .once they have arisen, or to provide
          alternative notice safe water supply
          sources in  the event any drinking water
          source which is relied upon becomes
          hazardous or unuseable."  1974 House
          Report, supra, at 35; Emergency Powers,.
          supra at  320 n. 137 (emphasis added).

     The remedies available under this section are, therefore,
 extremely broad.  They fall into two  basic categories:  those
 directed at water suppliers and those directed at  the source of
 contamination.  Those actions directed at the contamination source
 are particularly important, since the purpose of the Act is to
 prevent health-problems.

     Generally, and particularly with regard to actions against
 the sources of.contamination, vigorous and preventive remedies -
 should always  be sought.  It should be noted that  despite the
precautionary and preventive definition of endangerment adopted by
 the Eighth  Circuit  in the Reserve Mining case the  Court in that
 case refused to uphold the district court's order  to shut down
Reserve Mining's, plant because the economic consequences of such
 a shut down (a loss of 31,000 jobs and millions of dollars to the
 local economy) outweighed the risk of harm from asbestos fibers in
the water.  Reserve Mining Co. v. EPA, 514 F. 2d at 536-537.  The
Court used  the traditional balancing  test, i.e. weighing the
unpredictable health  effects versus the social and economic
consequences of closing a plant,  id. at 536.  Nevertheless,
Congress, in passing  the SOWA, specifically discussed the holding
 ^ _ D >»»->« «-»•«> u**»«>*-» «—.J «*«»*i»*A»4 »• K a «• >*mn*>^e
case,  e.g.:                             .
                              - 11 -

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 courts  should  not  impute  to Congress a futility inconsistent with
 tne  great  design of this  legislation.  United States v. Republic
 Steel,.  362 U.S. 482,  492  (1960)  (in inferring that the Rivers and
 Harbors Act provided  a civil remedy); Wyandotte Transportation Co.
 v. United  States,  389 U.S. 191,  203 (1974)  (in interpreting Rivers
 and  Harbors Act as allowing recovery of removal costs).  In many
 SDWA emergency actions, particularly hazardous waste site cases,
 the  major  concerns of the Eighth Circuit in Reserve Mining,
 i.e.  the loss  of jobs from a plant closing, will not arise since
 either  a plant shutdown will not be necessary or a waste site is
 involved,  not  an industrial facility.

           For  the  above mentioned reasons, a preliminary
 injunction should  be  more easily obtainable under the SDWA.
 The  legislative history behind the Act specifically rejects
 the  traditional balancing tests  that the courts have adopted in
 preliminary injunction cases.  Congress has determined that the
 balance must be struck in favor  of minimizing the risk of harm to
 the  user of the water supply. Courts are directed to give "utmost

 of the  public  health."  1974 House Report, supra, at 23.

 6.   Potential  Defendants

      Obviously, 51431 covers the owners and operators of water
 supplies.   However, S1431 by its language  can be used against any
 person  who is  or potentially may contaminate a drinking water
 supply. The legislative  history explicitly includes within the
 reach of this  section, State or  local governments., State or local
 officials,  owners  or  operators of underground injection well,, area
 or point source, pollutants, and  "any other person whose action or
 inaction requires  prompt  regulation to protect the public health."
 1974  House Report, supra, at 35.  The floor debate in the House
 discussed  extensively the Reserve Mining case where a point source
 discharge  contaminated a  water supply with asbestos fibers and
.concluded  that the SDWA would apply in such a case.  120 Cong.
 Rec.  H  10793 (daily .ed. Nov. 19, 1974).  When recently reviewing
 the  SDWA both  the  Senate  and House Committee specifically directed
 EPA  to  use all its authorities under the SDWA to address the
 problems of hazardous waste sites.  1979 House Report, supra,
 at 6, and  1979 Senate Report, supra, at 3.

      In summary, this section of the Act may and should be used
 against any existing  or potential source of contamination.

 7.   Elements of Proof

     -The mainstay  of  legal proof in a S1431 preliminary injunction
 action  is  the  affidavit.  An affidavit is  a declaration in
 writing, under oath,  sworn to or affirmed  by the person making
 it before  some person who has authority to .administer an oath.
                               - 13  -

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e.g., a notary.  Affidavits are to be made by persons who know
the; facts from first hand experience and have the  legal  ability
to make an oath, i.e., they are over the legal age and are not
mentally disabled.  The affidavit presents to the  court  prima
facie evidence of an emergency condition that requires emergency
action under $1431.  The language of each affidavit must be
tightly written.  Within ten (10) days of filing its pleadings
and moving for a temporary restraining order (TRO),  EPA  must.be
prepared to present witnesses in support of each element of each
affidavit filed.  The affidavits can be from non-governmental
persons.     -

     Ordinarily, the person with overall responsibility in the
case will present affidavits describing the facts  of a violation
presenting an emergency.  Those subordinates with direct responsi-
bility for fact gathering and field analysis must  be prepared to
testify as witnesses in support of the affidavits  at any hearings
which will ensue.  Care must be taken to safeguard that evidence
is admissible at any hearings.  Affidavits should contain the
following elements:      -    ...

          1.  Identify the person giving the affidavit;  name,
position, experience/ credentials,  etc.;

          2.  Enumerate all facts,  scientific, technical, and
the source of these facts, e.g., "I observed that no chlorinator
was installed by the plant, or "lt]he ovner  (or employee) of the
water supply stated that there never has been" a chlorinator
installed", etc.

          3.  Enumerate all professional opinions and conclusions
pertinent to the emergency condition and within the expertise  of
that person.  The affidavit should relate the opinions to the
facts, (e.g., Since the benzene waste I observed was at the site
for several years according' to the workmen at the site and, given
the hydrology of the area, I conclude that benzene has probably
migrated within 400 feet of the well  (aquifer or reservoir).
From ray knowledge of the geology and hydrology of this area and,
given the normal migration process, I am of  the opinion that the
benzene will reach and contaminate the water supply within one
year if nothing is done).  Care should be taken that experts give
opinions only on matters within their expertise.

8.   Conclusion

     The purpose and legislative history of  the SDWA, the prior
case law, and practical considerations support 2 strong preventive
interpretation of Section 1431.  This interpretation emphasises
the paramount importance of protection of the public health.
Health' studies that raise a reasonable medical concern about a
chemical or are indicative that a chemical-is a carcinogen may
                              - 14 -

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be used to determine whether there is an "imminent and substantial
endangerroent."  All that is necessary as discussed above is the
risk of harm rather than actual medically proven harm (in the
traditional sense).  Of course, a detailed description of the
outer contours of what constitutes an "imminent and substantial
endangerraenf must await the development of an extensive case
law.
                                - 15 -

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       UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                     WASHINGTON. D.C. 20460
                        JA.'i ? I  :o-3/!
                        •»•. '•« w-r
                                                    OFFICE OF
MEMORANDUM                     ^                     WATER


SUBJECT:  wJ^eF Su^nay/guidance on Expired Exemptions

FROM:     Victor JA Kimm, Director
          Office jof Drinking Water

TO:       Regional Drinking Water Branch Chiefs
          Regions I - X

     This document should be filed in Chapter VI - Variance
and Exemption Guidance, Compendium of Water Supply Guidance
for the Public Water System Supervision Program.  It addresses
the expiration of exemptions under Section 1416 of the Safe
Drinking Water Act, as amended  (42 U.S.C. §300f et seq.)
and explains how to work with systems whose exemptions
expired on January 1, 1984.  This guidance is offered to
states with primary enforcement responsibility and EPA
Regional Offices that have issued exemptions where states do
not have primacy.  For the purpose of this document, Regional
Offices and states with primacy will be collectively referred
to'as the "primacy agent'."

    Section 1416 authorizes exemptions for public water
systems that are unable to comply with a maximum contaminant
level (MCL) or treatment technique requirement due to compelling
factors such as economic constraints.  Economic constraints
may include the cost of purchasing and constructing necessary
equipment and facilities and/or the low per capita income
and small number of residents in a community served by the
system.  An exemption may be granted only if it will not
result in an-unreasonable risk  to health.

     According to the Act, a compliance schedule must be
prescribed with every exemption to the National Primary
Drinking Water Regulations (NPDWR's).  Exemptions to the
Interim NPDWR'S must require compliance with MCL's or treatment
techniques no later than January 1, 1984.  If a system has
entered into an enforceable agreement to become part of  a
regional public water system, the schedule must require
compliance no later than January 1, 1986. In addition, exemptions
may not be issued after January 1, 1984, unless the system
has entered into an enforceable agreement to join a regional
system.
                                                            VI-26

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      Congress is now considering legislation  (H.R.  3200,~the
E ck art  B 111 k_;to --grant Tia^r-epcieise zto those-asy s tejtis:
exemptions h.a^e:rexpired- ^bu.t-i-feris^uncle.a.r; w.hgra
will  be granted..  Systems, that -are .^nqt ^•i^.r-corap
the MCL' s;.or. ^treatment techniques . and-~wh.oseJ,exem,ptiQn'S:-
expired are .. in-:v-iolation: of the.. Act:. . ~e.ur :latest-~rep©.rt ::(-see ~~
attached)  indicates that 393 exemptions:.)*©. thel£nfeec:yfc-N;PI>WR\-;5
remain  outstanding as of January 1, 1984..  Primacy  agents
should  take the following actions as  soon as  possible:

     (1)    If necessary to determine the compliance  status,
           survey the systems that have been granted exemptions
           to determine their compliance status  (e.g., whether
           the systems are becoming part of a  regional system) .
           Report to the US EPA Regional Office  on the compliance
           status of systems that had  been given exemptions
           and update that report with  quarterly reports  on
           changes in compliance status.  Regional reports on
           the compliance status should be forwarded to USEPA
           Office of Drinking Water by February  15,  1984,
           with updates submitted quarterly after the initial
           .report.

     (2)    Inform the systems that their exemptions  have
           expired, that they are in violation of the Act  and
           that they may ±>.e subject to  enforcement action;

     (3)    In addition, under section  1414 (c)  of the Act,
           notify the systems that they must notify  the persons
           they serve of any violation  of an MCL;

     (4)    .Encourage systems to «nter  into regional  ti.e-in
           agreements where feasible;
           each system which is not  in  compliance,  and
           consider judicial or administrative  actions as
           appropriate.                     "•"''.'.

      Primacy agents should follow their  respective compliance
 strategies to bring their systems into compliance.  The  fact
 that  the systems may be out of compliance  due  in part to  the
 expiration of an exemption allows the  exercise of  discretion
 and case-by-case evaluation of any  non-compliance.  Compliance
 strategies may dictate a variety of  responses  including
 enforcement action 'in some cases =   An  effective compliance
 strategy should place great importance on  the  magnitude  of
 the health 'risk arising from each violation  and the ability
jDf  the system to come into compliance.  Enforcement action
"against these, systems should be  carefully  weighed, against    vi-27

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                                -3-

other  enforcement  priorities.   We expect you to work with
each system to bring it into  compliance  as soon as  possible.

     We =ee"j(2'6grii'z'e"t:lia€:'"exp~ir-atfdn'-o5;~6'xSmp"tio'ns':h"as'-generated
unce~rta-£t*ty-f or-  some pablie twatetf-systems" arid =t heir customers,
By deveEopi'rrg compliance -pslans 'for- "each  system^-feach" "tjie
systems  and-tfte"i-r"?ussfs-• sBoSld-understand-how com'pli-art-ce -can-;
be^-cFChietr.ed'-inra^realisfic -ntanneri^  -We"will keep!"you-~'.i;nfonrtejd'
(5 f t<3o ng'r e*s s ^o n al - d e ve^l opffle n t s.:
                                                                    Vl-28

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Contamrnant



Turbidity



Arsenic-



Barium



Chromium



Fluoride



Nitrate



Seleni-um"



Gross Alpha



Combined Radium



.TOTAL .  .
E X-efap t i o n s
   Nuinber^.o..f.  Exemptions
            '~2~,



          . - ., 2



           393
                             VI-29

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''«<
       UNITED- STATES ENVIRONMENTAL PROTECTION AGENCY
                       WASHINGTON. D.C. 20450
                              -'1 -0 1984:

                                                          OFFICE OF
                                                        ENFORCEMENT AND
                                                      ..COMPLIANCE MONITORING
 MEMORANDUM
 SUBJECT:
 FROM:
          Draft Enforcement Guidance  Regarding Public Water
          Sys.te~ms--" in States Which  Have Primary Enforcement.-
            :spons jt'Sli 1 i &y
          '$;.<*. "7   v_V' cy<--zs.--t»-*'<*ri-v
          victor Timra, Director
          Officej/of prinking VT/ate/fj

          Louise^-tsl Jacobs  A^-^k^^'^
                    .....   I /     y
          Associate Enforcement  Qounsel
            for "W-ater              '  •
TO:     '  Regional Water Management
          Regional Counsels
          Regions I - X
                                      Division Directors.
 Background      . ,.     '

      Since September 1979, 30 Federal  enforcement  act.ions have
 been filed against public water systems  under  the  Safe Drinking
 Water Act.  They have all been filed  in  States which  have not
 received primary enforcement responsibility,  (Pennsylvania
 (9), Wyoming (11) and Ore.gon (10)), where  the  Agency  is not
 required to provide any notice to the  State prior  to  filing
 the action,.  All of these actions have been brought under the
 authority of 551414 (b) (1) and. 1414(a)(2) and other sections.

      Also, during this period, the Administrator has  issued .
 two administrative orders under the "imminent  and  substantial-
 endangerment" provision of the SDWA (51431):   Perkiomen Valley,
 Greenhouse, Pennsvlvania  (1983) and Grindstone Indian Rancheria,
 Orland, California (1984).  These actions  were brought in areas
 where EPA has primary .enforcement responsibilitv.

      However, we are receiving data which  reflect  significant
 levels of non-compliance  in a ^ew States which do  have primary
 enforcement responsibility., which, for the purpose of this
 draft guidance., we will caTl "primacy  States."  In an effort to
 reduce existing levels of -non-compliance,  and  consistent with
 guidelines for -improved Federal-State  relations, we believe it
 is important for the Agency to more closely examine PWS non-
 compliance in primacy States and to -more closely consider

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   di's
   th,e
                       '" to
   ('2)''"§a4if C,!?:)f|'  which  ii"B5:
   of-  a .:reque.s-.t; _by. the  State th.at  the
                '   '   • •      '~
   g  141--4 (b^ (--) ---^-T  "Reqes-t  fry '^

         There ...&re two
 ,  civil  ref;ert^.J.s.unde'r..|:.his section:   U )^ a  request fey a^specified
 s-""SLtate  of f i5lL:ai:l"r;'~%nd._ T^'^ a' b%^l'Bf by/tfie* .A^e^cy"'';'(%jU^p^t-ied  by.
•;•  eyidenqer".~t~b'a,t ."t'Kg^i^f^*"-""^ "h"'pt  in -co^npTL'ia'hce^.-. :'-:-Wev"s''h%u^ld-''co^:$;.i.der
           _.:"•'"" i1;' **. 5l * •* _r^_ ^*- " y  • ' jf^ " . ^*    JC    -   .,*i^: •"   -^i , •**%. • *•<••' J="- ^> :*v tv^iwv^vi  vii-tv. ^.11. ....-^ .ws_
          (3)  The  form of the --request:   in  ^-r-f*'
                                                                        14 I I il'.liJiU r
                                                                       cat a- "
                                                                             an
                                                                        rSe-^e-ndentl

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                                                                       .ivy


                                   '"-- 3 -
 Comj>:^an,ge...^.6.licy, "^ January' IS ,,..,l|84-. .:;"jvWhi le.. fcjre' -S'ta^e- request
 dpers--not:;. require/ the  Age.rn:cy. 't:o  re.spo;n.d. Sy. inii^a.ting^a.-'civil
 referral,.^ tb;.?.'t: rj'fer";rai^ under  %\$
^•>az)'j. 1) ,...*e-vten,,.,if ..a, .,B>t..a.-t.e,.,.h;as ...not ,.|feq'u;esl;!e,d' jsS.ch'^aclion.j.   The*-

 "finds"' thVt "a PW'S is "in nolTcbmpil'ahb'e ^^^r^pro'videB1'" notice'
                                                                        to

                                                                        ice
                                                irfa"n;be"' c.on t?. nu'es :' .| or
                                                                      '
                          j    the: aaiay-th
      "we 'should consider 'th  "^o'loWffrg'factfoJf-s  irt Connect-ion-
 with .such a r
 of,  n^n.
^S |.41il-en) (4:)-(.A >|,, :ife^-'^p|^a^fg;Jw£J-in"rvgrtcomgliarkc
,-speeif4.c^ief«a4^^^^^^i^^1?T5^iilwht?h .wefe-~viol^ted^ .-.the
 duration' of "tne' violatibft»-'au5.S ^Re- p^ten.fia;i-.-:Si-g.nif4can-c:e , of
  ,          .  . .              ; > .•*'** *:£  2^1?^." '..^"-r^aa ~c   • •  '•  •-=• -3
 the noncompliance;                                            .   -.^
    ; »i-<:2")  • "Tb^. type^-.o?  advipe''^n.^-:^^-B'ic-a.^ ajgAf J:^!?-0^-'  155
 requi-red  to' b.e. "•&£>' l^-a^yTKe^ ^Pp-^^?f^"?"® ''-t-°r^>.F '•"• ^f; r-n ® r sy s t dm i i n t o
 botnp-1 i-an-ce^.A. .by .t-hj^ ft-aiCb.i-^st-^'f:e'a.s.i/bjJ.6"'tiftie?j-H  Rowevert  this'-
 does- not..
 otherwi::
 •th.e •.prQv.i-sc-... .,_ _.  =-_--„-_^-„ ...^_._ ..   .   - . ^ ^   ...  ^- . .. .
 al-te-rn^ti-ve' ^..hp-r^.-^n^'lldjn^terrn- met:Ho-ds->;;bf55as.s>crihg-. compliance
 or pr>QV*ij4i"n^ ^^^'  ^jrv'< i"Txn -w'a-t''e"r:•'•'"'-•  • -.'-?'••••> - *..''•

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                                                             .tajne- .
    shortly "'-af-te'r ,  the-'/divita.^l5-:=no.t.-ic..eoiiQ? the; -St-a-te .-so -that J^a C^the
             "-•  '.'  — "f ' '  '  "* *• "  •* "f ' - >-* -I;--""   J" •*' ***•'•   -*•' -"^ -2" -•'   i   -;?' v" \"-  ' 3r^?Jir m'-vr
    'State can  ,us'e~ the ;a:sjs i'sjta>i£?e; ;ito &e$^ te&ipyg .tfsfie. .yS..ys^t>e/n .inj^a. .-com
    pliance, ah& _(^3f) ' -rt^ (S.'e^§^^ri^4v^S ^>| np&^™PQ^J^&.vi£..:^y?
    may  include nie-Rt-i on of this assistance':  .  < s  •'',&'"'''.'.'•' g*,* "£,''?'}

                                                             ?S! /^."V
                                                            J3|i->a;t;^e^: .J3..Q..
    days; .^fstVr? jthfe'5'  ;|ni:t ial S t,at^ |^t i.ee""^t"h^:><3ip.^is^EatJp^
        ru-i.reiTie'|n|l|s* .-cited
    should make such  a finding and "must  giv®.,jpytel.vgJ'n,o5i  ' i" •_••».: J- =.' .ij . i* * S# * V ? J ..
          noted
,, ,.-\secll4if";forf T$.£*$la£i6f sfief e^alvjo^a^ primary

 ** 6tHe3f^e'gisJi.?|i^|^il|'i ?l?r^  gseirsi^f.
gf>uM^C?w*ter
                     ^       _                ^  .        ? t
    'as,  'OE shortly  after,  the. public :nq,t:Tc'^r tfh®,   a..
    must request that the  State  repprt ,.  to EPA, w-itVarT" Is' day's
    -the  date .-of the  public, notice as to  the steps being t.ak'en to
    bring the.  PWS i info cornpiiaiiqe:  this  re.qu.es-t ne;,e,d not be in
    writing :: initially but  S:h"ou.,lc3  be
          ( 6 )   The evaluation of the. State  report :   after r e ce i p t
    of  the   State report, ' If '"fee?c^ve4' VithTn" Tor  close*  to)  15  days
    from the: public  notice,,  the Region  should ^va.lu.at-e^ t;he report
    to  determine whether  or> not the, State, hgts* a-hu,Steri its discretion,
          §1414 (a). (l)(BV(ii)
          The;  House  Report  on the  prop^qsjero^ Hou3=., ijjcyj 1 CL-J: A b i on.s  of- i*-neey-it: tp  cq^^e.nqe-. legal
    proceedings or  othe-r- "s^imilar- vague- de.clara.tions of  intPft would
    not be suf f iciest/ to"  qons^tlfeute ''the.-, req^ire.^ rep-ly  u,nrie-r this
    section."  Legl>:l'a.t4 Ve", 'HA'S:tqry pf_  the SDWA-,  at 554.; (r9»2)..

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                                  - "5 -
       (7)  The  final  assessment of  compliance:   the Acjency may
      iirte'% '"coWl re'f eVraC- f*-1;hfe- ^^nc^ c^cTude%^%hat { '( 1 ) the
           anc^^%ct?en.ds, be^oni:SfeySv &f te'r^th-ef i'fi'Lt i'aj." S't
 rvbti/ce r*and ' (~~2.f '( a" H thft* S^te^a^ls- $b-subrffitV' ih-).-^. ^i'^fe
 man'heV-
 otfcer- and (2 r "( a')- tfift4 S:t%tre••-^.ajAs-. '£o"-;-subrffit,  in->.-^; i.ilpe ly  ^.1
 an'n'eV, ''^V^r'tepvoVt req-\i?ir,fe!d; in' -Sl^i^^SS^r^J^BO^; o.r  I.bT the. . "
 ge'ncy co^rA?l\ide"s'';"t'h"a1:-  t'Vte S^Vtfe: ~-ab^Lt^di|its^idis&f'e^ibn,= (see:: •.
 1414(a) (1) (B) ( ii) ).  '^.^S'-'HH  i-i.^i  |\  VHi^^"*-"i"- -*' -   -:-
       The determination that  a system is  in serious enough
 rinelrip^ia'nce '1iw43^aafc!.t).A-in:i^iafe.ed  civii^&.^sajilfc'V^houi'd be made
                                           "               "
                           . i a ft d e. ~l*oil fey -/ *•' Sou re e s 6^; -^L nf-orina tji o n

 by -pu-b^Ii^c -*water ^gy'itemis :>.&&<$ .^tihle^  BfeVioii' s  m-i'd1-y|s'^j?sevelotion's'
^f* tl^efSta$e |E©g^^ms^i^l  vH'^  fe.-fe i^:?r-^    ^4^'^-s.\ ?• Vv -'i
 *r*cn %-S ?\7iff»> 43B»» S' i?.!^ v?^§ g^ri^f   ..  's ^s'li^. ' .'<^-. ;.," :  '
 act ioi? •»  r" a^'y©   r^
 brisnging  a system into compliance,  please  work with the" 'appro-
 priate'  Reg'ionai- pe^sonhei-^|S'ta$Sar§^tMafe ;f>rofe;'| .i.eigal  and
 technical *Kprpcediir«!s  are f ©llc-wsd i -?|'the Office jofi  EnforcfmenJ.
 .and"1* Compliance  Monitoring fea^^p^rfpaffdl-adciiifeiQ^li^rjf qr:m4-ftc?n
 •d'rt* formats' f o'r* motions'? ofdef s , ' e'tJc-^-V which •hss?be,ep d'i'sferfbjuted
'to^^out-^'fhe-iOf^i-fee^o-f Drinking Water ' I!iech|iicalia1fvic:| . isv of
 §otirse? iymilable- t^Sybul !as^is: thef r^k|.9w|sd^i.^C>f -;
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                            Appendix


     Sec. 1414. (a)(l)(A)  Whenever the Administrator finds
during a period during which a State has primary enforcement
responsibility for public water systems (within the meaning
of section 1413(a)) that any public water system "*-

        (i)  for which a variance under section 1415 or an
     exemption under section 1416 is not in effect, does not
     comply with any national primary drinking water regulation
     in effect under section 1412, or'

        (ii) f'or which a variance under section 1415 or an
     exemption under section 1416 is in effect, does not comply
     with any schedule or other requirement imposed pursuant
     thereto,

he shall so notify the State and and provide such advice and
technical assistance to such State and public water system as
may be appropriate to bring the system into compliance with
such regulation or requirement by the earliest feasible time.

     (B)  If the Administrator finds such failure to comply
extends beyond the thirtieth day after'the date of the notice
given pursuant to subparagraph (A), he shall give public notice
of such finding and request the State to report within fifteen
days from the date of such public notice as to the steps heirig
takem to bring the system into compliance (including reasons
for anticipated steps to be taken to bring the system into
compliance and for any failure to take steps to bring the system
into compliance).  If -

        (i)  such failure to comply extends beyond the sixtieth
     day after the date of the notice given pursuant t-o sub-
     paragraph (A): and

        (ii) (alpha)  the State fails to submit the report
     requested by the Administrator within the time period
     prescribed by the preceeding sentence; or

        (beta)  the State submits such report within such period
     but the Administrator, after considering the report,
     determines that the State abused  its discretion in carrying
     out primary enforcement responsibility for public water
     systems by both -                  -                        .

             (I)  failing to implement by such sixtieth day
        adequate procedures to bring the system into compliance
        by the earliest feasible time, and

             (II) failing to assure by such day the provision
        through alternative means of safe drinking water by  the
        earliest feasible time:

the Administrator may commence a civil action under subsection  (b)

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                               .- ;2
     Section 1.414(b)   The  Administrator: may b-ri-hg a 'civil - action
in the "appropriate United  States district  court"-to- require-' com-
liance "-.wi'ih a national primary -drinking water:,: regulation or
with any-schedule '.or  other-.'..requi;re-me-nt imposed, pursuant--to a
variance  or exemption grante.d under section 1415.,or 1416 if -

         (1)  authorized;..under p:a.-r.agraph  (1-) or (2) of subsection
     (a )-, ..or"  ~"

         (2~)  if-- requested .by-(A) the." chief exe-cutivei officer of
     the 'State'- in which is  io'c-ated/tiie public water-\s"ystem
     w-hix:h" is .not ,in  eomp-lia-nqe. with" such  ••regulation^or require-
     •ment,  pr  (B) t,he. agen.cy .of.? sych'-State- which has jurisdiction
     over  e&mpliahceNby.. public water, ^systems in the-..State with
     national 'primary. Drinking., water .regulations or- State drinking
     .water-regulations,,'

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