THEORETICAL PERSPECTIVES ON
ENVIRONMENTAL COMPLIANCE
Final Draft
October 1987
Prepared by:
Barry Boyer, Errol Meidinger, and John Thomas
State University of New York at Buffalo
and
. Jasbinder Singh
Policy Planning & Evaluation, Inc.
Under Contract No. 68-01-7252
Submitted to:
Regulatory Innovations Staff
Office of Policy, Planning & Evaluation
Environmental Protection Agency
Washington, D.C.
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Die information and opinions in this paper reflect those of the
authors or cited references and not those of the U.S. Environmental
Protection Agency or any other government entity.
ff*fH Itfl JTfYJUFTNr m
The authors gratefully acknowledge the many helpful Garments of
the academic experts who discussed an earlier draft of this paper:
Professors Colin Diver, Patricia Ewick, Barbara Gray, Keith Hawkins,
Marc Roberts, and.,John Scholz. Any problems, of course, are the
responsibility of the authors.
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OF
mggit
Paoe No.
i. nnHODUcrioN ........................ . ................ 1-1
A. PURPOSE AND SOOFE OF STUDY ...................... 1-1
B. ORGANIZATION OF THE PAPER ....................... 1-1
C. DETERRENCE THEORY AND ITS LIMITATIONS ........... 1-2
n. .INTERNAL CORPORATE BEHAVIOR ......................... n-i
A. UNDERSTANDING CORPORATE CULTURE ................. II-l
.1. The Concept of Culture . . .................... II-l
2 . Management Ideology ......................... II-2
3 . Decision-making Routines .................... II-4
B. CHANGING CORPORATE CULTURE ...................... II-6
1. The Role of Environmental Management ........ II-6
2. The Role of Top Management .................. II-7
3. The Role of Line Management .. ................ II-8
4. Performance Criteria and Rewards ............. II-9
III. EXTERNAL INFIIJENCES ON CORPORATE BEHAVIOR ........... III-l
A. INTRODUCTION .................................... III-l
B. SOCIAL NETWORKS ................................. III-2
C. SOCIAL EXPECTATIONS AND LAEELING ................ III-4
D. CULTURAL EXPECTATIONS OF REGULATORY
PEASONABLENESS .................................. HI-7
1. Nature of the Harm ........................... III-7
2. Nature of the Violator ...................... III-8
3. Nature of the Enforcers ..................... III-9
4. Nature of Enforcement Procedures ............ 111-10
IV. CONCEUSION .......................................... IV-1
V. REFERENCES .......................................... V-l
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I.
A. PURPOSE AND SCOPE OF
Deterrence theory has provided the primary framework for
analyzing compliance behavior for many years. The purpose of this
paper is to identify how corporate (rather than individual)
compliance behavior can be affected by farters apart from deterrence
Umuiy factors (that is, "Other than size of penalty and probability
of detection) , describe how those factors are likely to operate in
the environmental context, and relate them to current policy issues
in order to contribute to a broader understanding of environmental
compliance behavior, and help expand the policy options available to
EPA to encourage greater corporate compliance with environmental
requirements.
The paper examines major assumptions and findings of many
analytical perspectives (including organizational theory, network
analysis, cultural analysis, labeling theory, and legitimacy theory)
and their possible applications to environmental compliance policy.
Although these perspectives have been extensively applied to other
areas, they have rarely been applied to environmental compliance.
Therefore, the discussion below often extrapolates from other areas
of behavior to environmental compliance behavior.
B. ORGANIZATION OF THE PAPER
After a brief discussion in this section of the limitations of
the traditional deterrence theory, this paper is divided into three
chapters. Chapter II examines factors internal to corporations that
appear to have an important effect on compliance behavior. The
fundamental premise of Chapter II is that corporate culture, as
expressed in both management ideology and decision routines, plays a
major role in determining how organizations interpret and respond to
regulatory requirements.
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Chapter III focuses on compliance factors external to regulated
corporations. These include imderstandings negotiated with
regulatory agencies and interest groups, as well as networks of
relationships that might be used to pressure regulated firms into
improved compliance. The chapter also dismisses how the
expectations of the regulatory agency can facilitate or frustrate
compliance efforts. The chapter also considers how the perceived
reasonability of regulations can enhance f*ry>i j anr» , Finally,
2V ZeOEODEndS BOOB Strategies for Tiv*»^rnwHnj -th-is
knowledge into EPA cxsipliance/enrorcenent policies.
C. lib'1'.tiKkbMGE THEORY MID ITS UMITftil'lOHB
The central assumption of deterrence theory is that compliance is
promoted when the probability of detecting a violation, multiplied by
the penalty imposed, exceeds the violator's benefits from
nonocopliance (G. Becker, 1968:169). The goal of an enforcement
agency, therefore, is to set the probable costs of non-compliance
just above those of compliance. The agency's ability to achieve this
goal flpppinds on overcoming several significant limitations.
The first limitation is that deterrence theory does not indicate
whether it would be most appropriate to adjust the penalty or the
probability of detection. In principle, for example, a violation
netting the violator $100 T^il^ be deterred by allocating sufficient
enforcement resources to assure certain detection (that is, 100%
probability of detection) and setting the penalty at $101.
Alternatively, a regulatory agency could deter the violation by
allocating enough resources to create a one percent probability of
detection and setting the fine at $10,001. The alternatives appear
equivalent in theory but they are not equivalent in practice.
Because enforcement is itself costly, compliance would ordinarily be
achieved, at lowest total cost, by the second option — a low
probability of detection (and therefore minimal enforcement costs)
combined with whopping fines. That option, however, would probably
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be inequitable: those with less wealth would have more incentive to
comply than those with more wealth. Moreover, such inequities, or
simply the perception of a gross disproportion between violation and
punishment, might result in reduced legitimacy or political backlash.
A second limitation is that regulated entities might have
different attitudes toward risk. Some might prefer risk, others
might avoid it. At risk-preferring companies, compliance can best be
im»rmflj(i by increasing the probability of detection. On the other
hand, at risk averse OIUHMIPS compliance can best be improved by
increasing penalties.
A third limitation is that regulatees may not act in an
economically rational way. The deterrence perspective assumes that
regulatees are rational calculators, who systematically choose
options most likely to maximize income in given enforcement
environments. This assumption has several serious flaws. In
practice, it is often very difficult for regulatees to ascertain the
actual probability of detection or the magnitude of punishment.
Regulated firms often have great difficulty obtaining and analyzing
information on enforcement policies; doing so may be beyond their
capacity. It may also be difficult for them to know if they are in
compliance. The definition of compliance is often technically
complex and subject to considerable negotiations. Furthermore firms
will not search for and implement solutions involving costs and
benefits over the long run (Russell, et. al 1986). In a given
situation, the relatively small number of alternatives considered
will ordinarily be limited by the basic assumptions and operating
procedures guiding the organization. Therefore, not all cost-
effective options are likely to receive serious consideration.
Finally, a large and very important part of compliance behavior seems
to be based on a commitment to law-abiding behavior in general,
rather than to a fear of detection and punishment in particular
(DiMento 1986). Therefore, the agency's strategies to improve
compliance levels may depend on programs other than those based on
deterrence theory.
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II. DfiJSKrIMi COKSOfKTE mamVIOR
1. The Concept of Culture
Understanding the complex idea of "corporate culture11 can
provide a significant insight into compliance behavior. It tells us
why sane firms seem to comply positively, others ineptly, and still
others engage in overt resistance. Culture can be defined as a "set
of shared understandings which makes it possible for a group of
people to act in concert with each other." (See e.g. Becker,
1982:513-27; Van Maanen and Barley, 1985; and Meidinger, 1987; for
more extended discussions). An organization's culture is based on a
set of values and norms that evolve because they seem to work, and
reveal the "way things should be done." (Van de Ven and Astley, 1981:
449). Corporate culture spans a wide range of issues that reflect
the organization's approach to a variety of situations or problems.
It is important to note that organization members (i.e. employees)
may be unaware of the corporate culture of which they are a part.
Procedures that reflect cultural norms become routinized, informal,
and implicit.
Corporate culture embodies procedures which influence the
issues that are placed on the firm's decision agenda (Arrow, 1974)
and define how observations about problems are collected. (Pfeffer,
1982: 228). Ihus, corporate culture can significantly affect the way
the firm processes information about compliance problems. The culture
of an organization can be changed, but it is not easy to change
culture because it is the sum of established norms and
expectations. As applied to environmental management, corporate
culture affects the way a firm interprets regulations as part of an
overall business strategy. This interpretation, in turn, has a
direct impact on the firm's perception of the legitimacy of
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environmental concerns and the attention these concerns receive. If
a corporation's governing culture is that of an "amoral calculator,"
that is, one which will use any means to reduce costs and increase
profits, that attitude will have to be changed to improve compliance
performance (Stone, 1986). In another example, if management tries
to comply with environmental obligations, but the organization has an
entrenched culture that denigrates all but direct production work,
that culture will also have to be changed. Varied situations require
different" rMimdiag to i
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voluntary ocnplianoe. One study, for example, has concluded that
"... such of the information in organizations is subject to strategic
misrepresentation. It is collected and used in a context that makes
the innocence of information problematic11 (Feldman and March,
1981:182). Thus, information about environmental problems can be
gathered for reasons that are more symbolic than indicative of the
need for real action or a commitment to compliance. The same type of
issue applies to the legitimacy of information provided by the
envircuHuuLal A^m immrf of the firm. InfViniin1"inn' nhfiit" , ttae future
financial impact of regulations may not be taken seriously, or an
information management system developed by the department may not be
fully integrated with line management decision-making. Therefore,
compliance action plans may lack information that is directly
relevant to decision-making.
Another aspect of ideology relates to the legitimacy of a
particular organizational structure for delegating authority. The
prevailing ideology may be that management will be individually
responsible or liable for mistakes. This set of norms, however, will
conflict with a formal structure that attempts to delegate authority
to corporate personnel who have the knowledge to take corrective
action. As the authors of an analysis of antitrust compliance have
observed: "The conflict between protecting top management and
imposing effective, efficient compliance programs is a real
created by a view of enforcement bogged down by an overly simple
model of corporate decision-making." (Beckenstein and Gabel,
1980:14). The same kind of disparity can exist between the formal
corporate structure and corporate ideology about responsibility for
environmental compliance.
Management ideology may be more concerned with creating a
proper corporate image than with complying with regulations
substantively. In a recent empirical study of the effects of
compliance, it was found that an ideology of strict conformity to
legal rules was no guarantee that a firm would comply with
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the intent of environmental regulations. As the authors concluded
"... managers should be aware of the possible consequence of blind
conformity to legal dictates and ... regulators should take heed of
companies that strictly obey the law" (Marcus and Goodman,
1986:179). Thus, this aspect of ideology does not necessarily
translate directly into better environmental results. Rules
governing environmental compliance may be viewed as little more than
symbols of what is required to appear legitimate. The firm may be
interested in projecting an image of frmpMannp, yet be incapable of
to
3. Decision"**"*^ *w
It is well known that firms develop decision-making routines
or "programs" which control the way information is obtained,
transmitted, analyzed, and used (March, 1981) . These routines govern
(often without a great deal of awareness on the part of decision-
makers) major decisions about capital expenditures, maintenance and
operation of environmental control equipments, and the selection of
technology. Indeed, it can be said that the ideological factors
discussed above are institutionalized as decision routines. Beliefs
and values of the management and the plant-level personnel are
reflected in informal procedures of decision-making. They:
• define the rules-of --thumb that managers use to make
routine/structured decisions,
• affect the way decisions are made in unstructured
situations,
• limit the search for alternatives, and
• establish the criteria for evaluating those
alternatives.
These informal decision-making procedures strongly influence
the way a firm perceives and responds to regulatory initiatives by
the agency and carries out its environmental compliance
obligations. Coping with the complexity of regulatory issues
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requires a set of stable decision-making routines that determine,
first, the priority attached to compliance, and second, the
propensity of the firm to neglect, actively resist, or voluntarily
comply (Scholz, 1984:208). Thus, existing decision-making routines
can undermine agency efforts to use the threat of sanctions to build
a cooperative approach to compliance.
A rather cannon decision routine is the "solution-driven"
nrtrpl -iztrw strategy. In *•*"« "I^^Mm t**** coarrfi fry Solutions to
problems depends less on a sense of 'the - ,1 m< h Lomrf of those problems
and more on whether or not they accomplish the short-term objective
or fit a pre-existing solution or procedure. In theoretical terms,
this phenomenon is defined as a situation where: "... the level of
discovery through search depends not only on the activity of problems
but also on solutions looking for problems. This can be very
important when the technological linkage between a specific solution
and specific problem is ambiguous" (March, 1981: 213). The solution
driven strategy is not conducive to either the development of
appropriate management systems or the firm's capacity to respond
flexibly to the regulatory enforcement process. For example, in one
case of negotiation over compliance, a firm resisted a settlement
because doing so would have meant an admission that a senior official
had imposed his own solution with little analysis of its relevance to
the problem at hand (Boyer and Meidinger, 1986: 892).
Deterrence theory presumes that the firm will obtain and
analyze information in order to make objective decisions about the
costs and benefits of compliance and non-compliance. This
presumption may not be accurate if the firm has implicitly adopted
decision-making routines whose real goal is to convey a sense of
legitimacy for its actions. In this case, information is used
superficially and may have no direct bearing on actual compliance
problems. The firm may, for example, monitor performance, but have no
intention of using this data to make a decision about needed
changes. This standard operating procedure has been defined in terms
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of its impact on the use of information. "Organizational
participants seem to find value in information that has no great
decision relevance. They gather information and do not use it. They
ask for reports and do not read them. They act first and receive
requested information later." (Feldman and March, 1981: 182).
B. CHMCTNS OQRKikaiii CPIataus
Although •£*» concept of 'corporate culture is complex, there are
various 'approaches :to 'changing culture - that ~~shbuld -'be '. considered.
These approaches reflect the idea that culture is embedded in the
values of line management and the basic mission of the firm. Thus,
culture may be transformed by changing key personnel, through
training and education directed at managerial values and beliefs, and
through changes in an organization's structure which affect patterns
of interaction among functional areas.
1. The Role of Environmental Management
A corporation wishing to change its culture might focus on
organizational structure of environmental management. It might, for
example, create a new department of environmental compliance, with
staff in each plant who report to top management. Conversely, the
environmental staff might be required to report directly 'to plant
managers, who would then be responsible for -both production .and
compliance performance. Many other types of structural changes are
possible. A new formal structure by itself, however, will not
guarantee improved compliance. To be effective, the change must be
based on a detailed knowledge of existing personnel, their
responsibilities and decision-making procedures. Moreover, it should
be based upon a careful assessment of the organizational role assumed
by corporate environmental staff.
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The roles of corporate officers responsible for interpreting
environmental regulations and interacting with line managers and
regulatory officials are crucial determinants of compliance (Hawkins,
1984). The type and extent of authority delegated to environmental
staff and other departments, such as: legal, public affairs,
production, finance, and marketing, play a major role in how
regulations are interpreted, capital expenditures allocated, control
technologies selected, and how short and long term compliance goals
are net (Roberts and Bluhm, 1981). Brvironmental compliance staff
must be able to influence the major business decisions that affect
environmental compliance on a routine basis, and they must be able to
mediate the demands of regulatory officials and the economic goals
and condition of the firm. This role of the staff will depend less
on a particular structural arrangement and more on the legitimacy
accorded to environmental management by all parts of the
organization. The legitimacy in turn may depend on the culture of
the company. Thus, voluntary compliance depends upon the extent to
which the environmental functions become part of the overall business
strategy of the firm.
2. The Role of Top
Significant changes in compliance ideologies and procedures
will not occur without the active participation and commitment of the
top management of the firm (Roberts and Bluhm, 1981; Stone, 1985).
This group is ultimately responsible for legitimating the mediating
role of environmental managers and for institutionalizing a strategy
of "positive responsiveness" (to environmental obligations).
However, in order to institute necessary changes, the top management
must be convinced that it is in its best interest to comply with
environmental regulations. The management incentives to comply
include: greater profit over the long run, corporate social
responsibility, enhanced corporate image, greater personal prestige,
and greater business opportunities.
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In certain instances the top management can change corporate
culture by restating the basic mission of the firm and implementing
the associated changes. When high level managers of the Tennessee.
Valley Authority decided to improve its performance in air pollution
control, they were able to redefine what had become its central
mission as an economic development agency. Ultimately, a new mission
prevailed which incorporated the agency's long standing commitment to
resource conservation. Air quality was defined as one of the key
resources in need of conservatun, And .an
the corporate culture to reflect this mission ensued (Roberts and
Bluhm, 1981) . This example reinforces the significance of the values
of top management in defining a corporate culture. Top management
must find ways to incorporate the goals of environmental compliance
into a clear mission statement. This requires an effort to convince
various constituents, such as shareholders and customers, that the
objectives of the firm will be furthered by a focus on environmental
concerns.
3. Tho Role of
Corporate culture can be changed by changing the people in
the corporation. The most familiar means to accomplish the cultural
change is to change the top management, to bring in a "new team" with
new attitudes and new methods, similarly, an organisation can stress
hiring certain types of individuals over others regardless of
level. For example, when the U.S. Forest Service, once the exclusive
domain of foresters, hired large numbers of biologists, landscape
architects, and social scientists, its pattern of resource management
decisions changed perceptibly (Shannon, 1985) . Finally, the firm can
be encouraged to develop training programs that focus on ideologies
relevant to compliance. In this way, managers can be encouraged to
increase their level of identification with professional values that
reflect environmental compliance.
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4. Performance Criteria and Rewards
Perhaps the most critical aspect of changing culture involves
developing a reward and incentive system that clearly accords
legitimacy to environmental compliance. Without such a system the
firm is likely to follow a path of least resistance, one which at
best creates only an image of compliance. Without a deep commitment
to rewarding efforts at compliance throughout the hierarchy, the
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follows a strategy of "giving the agency something" and fails to
develop a real strategy of voluntary compliance.
An incentive system can reveal the importance the firm
attaches to compliance goals. Significant problems or resistance to
change may cause the firm to fire or demote key managers (Trice and
Beyer, 1985) . The firing of a manager does more than remove an
executive from .the organization. It can signify that there were
problems with the established way of doing things, that management
made a decision to change the process, and that resistance to the
change may be sanctioned. Indeed, these messages can be manufactured
and communicated even when it is not clear that the individual who
was punished was responsible for the digrnnpriit-Pri practices (Pfeffer,
1981) . Similarly, promotions and other rewards can be used to
encourage nprtain practices as solutions to corporate problems. How
people and their actions are treated -can, therefore, indicate the
importance of certain values and ideas in organizational- culture.
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III.
A. Pfi'MJuUCTION
Sane external forces carpel caipliance by changing the economic
conditions of the firm. Fines and penalties, private suits for
"toxic torts" or nuisance, rising insurance .rates,, and the cost and
ration associated with increasing, •government
activities can create powerful incentives to comply in two related
ways. Mast obviously, they affect rational "bottom line"
calculation: as the estimated cost of violations rises, compliance
becomes economically more attractive. Equally important, these
external incentives can alter the culture of the firm, by changing
norms or authority relationships. The environmental manager, for
example, may be given review authority over capital budgeting
decisions, or new training programs may be instituted to make workers
aware of the costs of noncompliance. Over time, these changes may
became part of the firm's standard operating procedures, and
internalized in its culture and ideology. They may became "...the
way we do business."
External economic incentives are, however, a relatively crude
tool for changing the culture of the firm. If they are set too low,
they may simply, be ignored: the firm's culture will not change
because external conditions have not really changed. On the other
hand, if penalties are set too high they may incite the firm's
leadership to adopt a strategy of f ight-to-the-last-breath resistance
to regulation — the opposite of the intended effect. And even if
the penalties are set at an appropriate level, responsible people
within the firm may regard them as arbitrary or irrational, because
they do not understand or accept the basis for the regulations. In
these situations, corporate culture is not likely to shift toward
greater compliance.
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Three premising frameworks for attaining a more compliant
corporate culture are social networks, expectation and labeling
theory, and the cultural norms defining reasonable behavior among
organizations.
B.
Everyone involved in determining environmental compliance —
and managers within the fl*™, regulators, political
officials, environmental and community organizations, and interested
private citizens — operates within a variety of personal and
organizational networks. These networks serve as arenas where values
are created and reinforced, where various kinds of rewards and
punishments are dispensed, and where the meaning of events is
socially negotiated (Burt, 1982; Lauman, et al., 1977:594-631). In
short, they constitute cultures, and these social networks can be as
influential in determining compliance behavior as is the internal
culture of the firm.
Three kinds of social networks are especially relevant to the
issue of environmental compliance: Community elites, corporate
elites, and regulatory networks. Community elites may place a high
value on certain types of public-spirited activities, and managers
living in the community may engage in those activities in order to
gain recognition, esteem, and status among the elite. In studies of
corporate charitable giving, for example, it has been found that some
communities generate extraordinarily high levels of corporate
contributions because local business leaders have embraced
philanthropy as a major value of their network, and have made it
clear through a variety of methods that those who do not give
generously "will always be on the outside looking in" (Galaskiewicz,
1985:74). Because corporate managers are generally ambitious and
want to be regarded as leaders in their communities, membership in
the elite network can be a powerful inducement.
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A second elite network that can influence conpliance behavior is
the corporate elite. Corporate elites can be confined to a
particular region, but they nay also be national or even
international in scope. They nay be part of a formal organization
like a trade association, or they nay simply have informal contacts
with one another. And they nay be organized around professional or
disciplinary lines (for example, engineers or environmental managers)
or industry groups (for example, the chanical industry or steel
Regardless of the form they take, these corporate networks often
have a distinct hierarchy and a distinct set of values and
incentives. Frequently, certain firms and individuals are looked up
to as leaders in the field, and those of lower status seek to emulate
them and gain their approval. leaders, in turn, try to recruit other
members of the network to share their vision of the group's
enlightened self-interest, and to work toward achievement of those
goals. Within these corporate networks, a variety of values and
agendas can be established, including some issues relevant to
environmental compliance. In the field of hazardous waste
management, for example, the Clean Sites organization was created and
funded from corporate contributions because executives of a number of
major corporations became convinced that they needed to develop an
alternative to the slow, legalistic processes of the Superfund
program.
A third set of relationships that nay be relevant to compliance
behavior are regulatory networks. Relationships arise around a
particular field of regulation (such as air quality or municipal
sewage treatment) in several different ways. Common occupational
interests often lead to social interaction, and the various actors —
regulators, regulatees, interest group representatives — nay come to
know each other through meetings, conferences, keeping up with the
literature, or mutual friends. Many of them will have regular
dealings as part of the enforcement process, as well, and thus
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develop ongoing relationships. Finally, many of the long-time
members of these networks will have played different occupational
roles at different points in their careers. A technical specialist
in environmental compliance, for example, may move from a position
with the enforcement agency to a consulting firm, and from there to a
trade association or a position as an environmental manager in a
regulated firm. Through these moves, the person develops friends and
contacts, and helps create shared understandings of the underlying
environmental problems in t&ich they are all interested.
There are several characteristics of regulatory issues that are
likely to make these social networks influential in determining
compliance behavior. In many areas, the underlying environmental
problems are highly uncertain with respect to basic facts such as the
nature and magnitude of risks presented, the preferred alternatives
for reducing those risks, and the costs of compliance. Few, if any,
individuals have the full range of technical skills needed to
interpret and evaluate all of the relevant data. The motivations of
other actors and the capacities of other organizations may remain
obscure. As a result, there is ample occasion for negotiation and
debate over the nature. of the underlying problems, and the interests
that different parties may have in resolving them. To a considerable
extent, the reality of regulatory enforcement is socially
constructed. If the agency can influence this process of socially
constructing reality, it may be able to increase significantly the
likelihood of compliance.
C. SOCIAL MXHJC?i!ATIOMS AND
Inasmuch as regulatory compliance and enforcement activities
often involve high levels of uncertainty, social science research on
labeling or expectancy theory may have some relevance. The central
concept of expectancy and labeling theory is the notion of the self-
fulfilling prophecy. We all tend to interpret other people's
behavior in terms of our expectations. Thus, if a teacher is told
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that tests indicate a particular child is a "slow learner" or a "late
blocmer," she will tend to evaluate the child's performance to fit
that label. Moreover, in tine the child will also begin to act in
ways that fit the label: he will respond to the teacher's unthinking
ccnnamication of what is expected by performing up (or down) to those
expectations (see generally Rosenthal and Jacobson, 1968; Jones,
1986:41-46).
results have been, reported .with respect, to. ..criminal
deviance. .If a person is- labeled a "delinquent11 or a "criminal
type," he nay become socialized to that identity and act accordingly
(H. Becker, 1963) . As soon as these labels become attached to a
person, they are extremely difficult to change because of the
inherent subjectivity of social interaction. It is difficult to
"prove" that a particular interpretive framework we are using is
wrong. Even if it is possible to show that a particular label is
misleading, it may be costly to one or more of the parties to the
relationship to admit that they have been acting on erroneous
assumptions (Miller and Trumbull, 1986:233-256). Moreover, we are
often unaware that we are engaging in an act of interpretation when
we use labels; we sirtply assume that the child actually is a slow
learner, or a deviant, or whatever other label has been attached to
him.
These studies of .individual character formation are not directly
relevant to the interactions that take place in a field like
environmental enforcement, but there is some underlying similarity.
Like teachers or administrators of the criminal justice system,
regulatory enforcers need to have a manageable framework for
categorizing those within their jurisdiction and for interpreting
their actions. In practice, moreover, many enforcement officials do
divide the firms that they regulate into "good citizens," "bad
actors," "incompetents," and similar categories. These labels are
communicated within the bureaucracy — most regional office staff
could probably produce highly similar lists of the bad actors in
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their area — and perhaps across bureaucracies as well (from a state
to a federal environmental agency, for example). It is probable that
these labels affect the choice of enforcement response when the
agency encounters evidence of noncompliance.
In the regulatory arena there is also a reciprocal aspect of
labeling. Different agencies, different offices within agencies, and
even different agency personnel are labeled by the regulated
cdmunity with r**mnai^t- to . .characteristics such as technical
competence, reasonableness, diligence, and responsiveness. These
labels, too, may affect the firms' response to agency demands for
compliance, and they may prove equally difficult to live down. In
general, labeling and expectancy theory have both a negative and a
positive implication for regulatory compliance. On the negative
side, erroneous labels may produce improper responses on both sides
— a kind of "noise in the system" that prevents the parties in the
enforcement transaction from understanding what their counterparts
are actually doing. As a result, labels can greatly increase the
costs of compliance and enforcement, for both regulator and
regulated. If regulatory labels are as difficult to change as the
labels we apply to individuals, these costly errors can persist over
long periods of time.
"Targeting" systems, in which enforcement priorities are set on
the basis of some clear standard lite lost workday injuries or
"significant noncompliance", can be viewed as a siaple and explicit
form of labeling, insofar as the firms labeled as significant
noncompliers are targeted for aggressive enforcement. Efforts to
reward exemplary voluntary compliance, as in OSHA's STAR, TRY, AND
PRAISE programs, may also be viewed as a kind of labeling activity.
On the whole, however, labeling theory has neither been studied nor
used extensively in the administrative process.
III-6
-------
Because regulatory agencies exercise the coercive powers of
government, they are subject to special cultural, legal, and
political constraints. Their actions must appear to be reasonable
and legitimate, both with respect to their goals and the means they
are using to achieve them. Like other aspects of the enforcement
transaction, "the definitions of 'reasonable' and 'unreasonable' are
-Socially nprFP|*"'a'*'ff1H •(Prp'*"i"j -ion?* so).
To establish their reasonableness and legitimacy in securing
compliance; agencies must try to accommodate two potentially
conflicting goals. First, they must observe the Rule of Law ideal
that lite cases should be treated alike, favoritism should be
avoided, and violators who are equally deserving of punishment should
receive similar sanctions (Davis, 1969; Stewart, 1975). At the same
time, however, they must avoid becoming so mechanical or legalistic
in enforcement that they ignore differences in the blameworthiness of
different violators, or in the cost and effectiveness of compliance
for particular firms (Bardach and Kagan, 1982; DiMento, 1986; see
also Hawkins, 1984; Kagan and Scholz, 1984). To avoid either extreme
in their dealings with the regulated, agencies need to focus on the
nature of the harm, the nature of the violator, and the status and
competence of the enforcer. They should . also., consider the
reasonableness of the process by which enforcement 'decisions are
made.
1. MatniT^B Of the
In the early days of environmental enforcement, sanctions
usually were directed at substantial, obvious harms: fish kills,
choking smog, or raw sewage dumped into streams and lakes. As the
law and technology of pollution control have developed, however, the
focus has shifted in several ways: from well-known conventional
pollutants to poorly understood toxic chemicals; from high levels to
III-7
-------
low levels of exposure; and from immediate, acute threats to life or
property to more long term, chronic risks. As a result of this
shift, the reasons behind a particular set of regulatory requirements
may be obscure, or they nay be the subject of hot debate among
experts. In this situation, where the benefits of regulatory
enforcement are not always clear, the reasonableness of enforcement
activity may be more open to question, and the legitimacy of
government coercion joore subject to challenge.
The costs of compliance may also be increasing as regulations
and permits mandate lower and lower levels of a wider range of more
exotic substances. Regardless of any actual changes in the costs of
compliance, however, legal and political developments during the
1980s have made it clear that there are social limits on the
acceptability of those costs. Claims that enforcement is
unreasonable and that it is causing competitive harm, are taken more
seriously today than they were a decade ago (Dimento 1986). In this
economic and political climate, agencies naturally feel greater
pressure to demonstrate that their compliance and enforcement
activities are cost-justified because compliance will prevent real
social harms.
2. Nature of the Violator
Some enforcers, such as consumer protection agencies, usually
direct their efforts toward deviant or marginal firms — those which
operate at the fringes of the market, and intentionally violate
accepted norms of business conduct. Because environmental laws often
try to change accepted practices across an entire industry or sector
of the economy, EPA's enforcement personnel may encounter substantial
number of relatively large and influential firms that are not in
compliance with regulatory requirements. Often it will be difficult
to determine whether this non-compliance is a result of calculated
decisions to maximize profits by evading regulatory requirements, or
as a result of some technical difficulty that is beyond the firm's
III-8
-------
capacity to correct (Kagan and Scholz 1984 and Hawkins 1984). Thus,
nonccrpliers nay be in a strong position to challenge the legitimacy
of enforcement in both legal and political forums.
A distinct set of problems arises when a violator is a public
entity rather than a profit-seeking firm. It may be politically
difficult for the Federal government to compel action by state or
local officials when compliance entails significant taxing and
spending, as in the «"s»s*> of |nir>ir^p^j uagff> water treatment
requirements. In other situations, such a regulation of water
authorities under the Safe Drinking Hater Act punitive enforcement
may be resisted because it would undermine the regulators' status as
protector of public health. Whenever it is difficult for the agency
to establish that the violator is a deviant who deserves punishment,
the legitimacy of enforcement may be undermined.
3. Nature of the Enforcers
Finally, the enforcement officials themselves may have to
overcome questionable legitimacy. Regulatory enforcers may be viewed
as meddling, incompetent bureaucrats because of the American popular
culture's strong distrust of bureaucracy. The technical competence
and professional ism of field personnel like inspectors who have
frequent contacts with regulated firms may be particularly important
in countering this negative assumption.
Enforcement personnel may also have to operate "in a
fishbcwl" as a result of legal structures designed to assure their
accountability, such as public information laws and judicial
review. Public constituencies may also try to increase the
visibility of the enforcement process in pursuit of their own
objectives. At love Canal, for example, the local residents relied
heavily on media pressure to force the government to respond to their
plight (Levine, 1984), and other organizations seem to be copying
their use of publicity as a way to mobilize government enforcement
activity.
-------
Intensive public scrutiny of a particular regulatory program
or controversy nay increase the pressure for inspectors to "go by the
book" and mechanically cite all violations, rather than trying to
distinguish the significant violations from trivial ones. Leniency
nay prove more difficult to defend in public than harshness (Clune,
1983). The result nay be inappropriate or unreasonable penalties,
and this also can contribute to the perception that enforcement
personnel neither know nor care about the reasons for noncompliance,
nor about what can be done to improve performance, some of this
pressure nay be deflected by having rules and practices in place to
deal with enforcement controversies, rather than simply responding to
them on an ad hoc basis.
4. Nature of Enforcement Procedures
An important part of the perceived reasonableness of
enforcement activities is the procedure used to impose sanctions.
Regulatory enforcement has traditionally relied on judicial
procedures similar to criminal trials to impose sanctions (Beyer,
1983a). In recent years, however, judicialization has been
criticized not only for being too slow and costly (Beyer, 1983b), but
also for exacerbating the adversarial relationships among regulators
and regulated. Alternative dispute resolution (AER) procedures like
environmental mediation offer some promise of avoiding the
unreasonable features of formal legal proceedings (Bingnam, 1986;
USEPA, 1987).
The nonjudicialized forms of ADR, such as environmental
mediation, have two general advantages over trial-like procedures.
First, mediation creates a structure in which the participants are
not so narrowly confined to the law and facts surrounding a
particular violation. Instead, they can explore all relevant
factors, including the subtle social factors that nay really explain
why noncoipliance has occurred. Second, AER can help expand the
range of remedies used to correct and avoid violations. If there are
111-10
-------
keys to altering corporate culture, or to increasing the influence of
environmental managers, these measures should be easier to apply in
an informal, negotiated process like mediation.
However, informal processes like AER may have their .own
legitimacy problems. Procedures became formalized initially because
it was believed that judicialized procedures would make government
bureaucrats accountable, ttus it .is not surprising to see
for z&mnoi xo "PFDVICIB
balances on administration (Edwards, 1986:677; SussKind, 1981).
Others have argued that mediation can only succeed when it 'produces
solutions that are consistent with shared ideas about what is
substantively reasonable (Garth, 1982:198), or when it is based on
established ccnnunity structures and relationships (Merry, 1982) . If
these critics are correct, then AER may work best — or perhaps can
only work — in enforcement settings where the parties have already
established an ongoing relationship, and have similar understandings
of reasonable compliance practices.
III-ll
-------
iv. ooMcrffBioM; IMPT.TCRTIONB TOR OOMPT-TVICE AND
The cultural perfective may be novel theory in the field of
regulatory enforcement, but it has substantial roots in the current
practices of EPA and other agencies. Compliance promotion,
application of ADR to enforcement, refinement of penally policies,
and moving tO jnnpP^"''uo^>aco'^ rprpila-Unn i net-part of rr-wmnanrt—aqri—
control all fit very well into a cultural approach to regulatory
compliance. What is still needed, however, is a theoretical
framework that will permit EPA to develop these initiatives into more
coherent programs, to assess their efficacy more accurately, and to
generate ideas for refining and improving them. Ihe various branches
of the cultural perspective outlined in this paper could provide a
first step toward developing that theoretical framework.
A significant implication of the concept of corporate culture
concerns the mission of an organization which defines compliance
goals and procedures. It is important for the organization to
develop and implement a formal statement of the firm's goals and
policies about environmental regulation, compliance and
enforcement. Implementation of an environmental policy usually
involves creation of an appropriate environmental management unit,
assignment of environmental raspmg'ihi i it-i^g, development of
management systems (that help a company comply with regulations
voluntarily), and involvement of environmental managers in routine
business decisions (Roberts and Bluhm, 1981: 363). For these reasons
the EPA should promote the development and use of sound environmental
policies.
It has been argued in this paper, however, that the effective use
of such formal statements of policy and procedure depends upon the
organizational culture within which they are implemented. If that
culture does not emphasize and promote a shared set of values focused
IV-1
-------
on the goal of voluntary compliance, then such statements will not
become part of the basic incentive system of the firm. Hie EPA
should, therefore, develop ways to change internal culture by some of
the factors AiamaaeA in chapter II.
The aspects of the external corporate environment described in
Chapter III also have the following implications for the design of
agency programs*
l. 'In assessing the efficacy of past-penalties and orders, EPA
could focus not only on whether the sanction has produced compliance,
but also on how and why it has succeeded or failed. Cultural
analysis should be a useful way of organizing and interpreting such
data.
2. Environmental auditing provides an opportunity to examine the
ways in which structural and procedural changes within the firm
affect compliance behavior. To the extent feasible, environmental
auditing provisions should be designed and evaluated with regard to
their impact on the culture and values of the firm.
3. Compliance promotion activities could be expanded to
incorporate consideration of the role of social networks in
encouraging compliance, through the following kinds of activities.
• Regional office personnel could be encouraged to
consider the ways in which local elite networks can
be utilized to encourage compliance. This could
include identification of influential persons in the
local community, public information activities
designed to apprise them of the ways in which
environmental compliance can benefit the community,
and cooperation in designing programs to make
environmental issues visible and important to
managers of regulated firms operating within the
local community.
• EPA could attempt to identify and strengthen
compliance-reinforcing networks like private
standards and insurance organizations, trade and
IV-2
-------
professional associations, and specialized groups
for environmental professionals in industry and
other sectors.
• EPA could explore methods of giving recognition and
status to individuals and firms that have achieved
exemplary compliance records.
• EPA should seek to make greater use of regulatory
communities — groups of individuals and
organizational representatives who share a cannon
interest in a particular regulatory problem or field
of regulation — to develop, test, and publicize new
initiatives in compliance and enforcement policy.
4. To avoid initiating or perpetuating misleading labeling of
noncompliers, EPA could, to the extent feasible, develop policies and
guidelines that select enforcement targets and prescribe enforcement
responses on the basis of objective factors rather than on the
reputation of the violator.
5. Agency penalty policy could give priority to having a
flexible sanctioning process in each major program area, with wide
gradations of punishment and a clearly defined, publicly accessible
set of guidelines relating the sanctions to the severity of the
offense. In addition, compliance promotion and public information
programs could be designed to communicate not only what is required
by regulations but also why it is required, in order to support the
perception that the punishment is suited to the violation, and is
fairly applied.
6. Field inspectors and other agency employees who have frequent
contact with regulated firms can play an important role in spanning
the boundaries between regulators and regulated. If they are
perceived as competent, professional, reasonable, and interested in
helping find solutions to environmental problems, the legitimacy of
agency compliance and enforcement activities will be enhanced.
Recruitment, training, and promotion of field staff could be designed
with the objective of increasing their professionalism and
responsibility.
IV-3
-------
In one respect, the cultural perspective does require the agency
to make significant changes in its approach to conpliance and
enforcement. Traditional deterrence theory relegates the social
context of regulation to the background, and treats it aneodotally
when it considers it at all. The cultural theory, by contrast, puts
the relationships and understandings of the relevant actors at the
forefront of concern, making them a primary focus of the agency's
efforts to change the behavior of regulated firms. It also attempts
to '^ocfi'-itto and analyze T^»Hmrf>ip^ rigorously..and accurately, so
that over 'time a~~ body of '-reliable empirical Y knowledge- about'
regulatory relationships can be developed. Because much of this
theory is relatively new, or has not previously been applied to
administrative regulation, it is a challenging task to translate it
into workable programs. Meeting that challenge may, however, make it
possible to achieve real gains in compliance and enforcement.
IV-4
-------
V.
Arrow, (1974) "The Limits of Organization." New York: W.W. Norton
Press.
Bardach, Eugene & Robert Kagan (1982) Going by the Book; The Problem
Philadelphia; Temple University
Beckenstein, A. and Gabel H. (1980) "Organizational Ocnpliance
Processes and the Efficacy of Antitrust Enforcement", paper presented
at the meetings of the Law and Society Association.
Becker, Gary S. (1968) "Crane and Punishment: An Economic Approach",
Journal of Political Economy 76:169.
Becker, Howard S. (1963) Outsiders; Studies in the Sociology of
Deviance. New York: Free Press.
Becker, Howard S. (1982) "Culture: A Sociological View", the Yale
Review 71:513-27.
Bingham, Gail (1986) Resolving Environmental Disputes. New York:
Plenum Press.
Boyer, Barry and Errol Meidinger (1986) "Privatizing Regulatory
Enforcement: A Preliminary Assessment of Citizen Suites Under
Federal Environmental laws," 34 Buffalo Law Review 833 (1987) .
Boyer, Barry (1983a) "Fifty Years of Regulatory Reform in the United
States." (Paper presented at the Conference on Regulation in
Britain, Trinity College, Oxford, Sept. 12-14) .
Boyer, Barry (1983b) "Too Many lawyers, Not Enough Practical People,"
5 Taw & Policy Quarterly 9.
Burt, Ronald S. (1982) Toward a Structural Theory of Action: Network
Models of Social Structure. Perceptions and Action. New York:
Academic Press.
Clune, William H., Ill (1983) "Rationalistic and Political
Interpretations of Legalism: A Review Essay on Bardach & Kagan 's
Going By The Book" (Paper presented at law and Society Meetings,
April 22, 1983).
Davis, Kenneth Gulp (1969) Discreticnary Justice: A Preliminary
Inquiry. Urbana: University of Illinois Press.
DiMento, Joseph F. (1986) FJwi'nonment'.ai law and An^rican
Dilemmas of Compliance. New York: Plenum Press.
Drayton, (1980) "Economic law Enforcement.11 HaTvaTTJ Environmental
Law Review. Vol. 4:1-40.
V-l
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Edwards, Harry (1986) "Alternative Dispute Resolution: Panacea or
Anathema," 99 Harvard law Review. 668:677.
Feldman, M. and J. March (1981) "Information in Organizations as
Signal and Symbol", Afln^nistrative Science Qn^^^rly
Galaskiewicz , Joseph (1985) Social Organization of an Urban Grants
EULHKJHV; A Shirty .r\f ftiBiiv»s.Q ffiiianthropy and 'Nonprofit
Organizations. Orlando, FL: Academic Press.
Garth, Bryant (1982) 'The Movement Toward Procedural Informal ism in
North America and Western Europe: A Critical Survey," in R. Abel,
^-j Hie -Politics of Inforr^V JMft?^- VOL. .2, p. 183. -, New York:
Hawkins, Keith (1984) Environment and Enforcement; Regulation and
the Social Definition of Pollution. Oxford: Clarendon Press.
Jones, Edward E. (1986) "Interpreting Interpersonal Behavior: The
Effects of Expectancies", Science 234:41-46.
Kagan, Robert A. & John T. Scholz (1984) "The 'Criminology of the
Corporation' and Regulatory Enforcement Strategies," in K. Hawkins &
J. Thomas, eds., Enforcing Regulation. Boston: KLuwer Nijoff Pub.
Co.
Lauman, Edward 0., Peter V. Marsden, and Joseph Galaskiewicz (1977)
"Community Influence Structures: Replication and Extension of a
Network Approach". ATT*^'y"i<^*n .Tmrnal of Sociology 85:594—631.
Levine, (1984) Love Canal; Science. Politics and People. Lexington
Mass., Lexington Books.
March, James (1981) "Decision-Making Perspective", in A. Van de Ven
and W.F. Joyce, Perspectives on Organization Design and Behavior.
New York: John Wiley.
Marcus, A. and R.S. Goodman (1986) "Compliance and Performance:
Toward a Contingency Theory" in Research in Corporate Social
Performance and Policy 7:168-182.
Meidinger, Errol (1987) "Regulatory Culture: A Theoretical Outline",
Law and Policy 9:
Merry, Sally Engle (1982) "The Social Organization of Mediation in
Nonindustrial Societies: Implications for Informal Community Justice
in America," in R. A)**3!/ ed. , The Politico of Informal Justice. Vol.
2, p. 17. New York: Academic Press.
Miller, Dale T. and William Trumbull (1986) "Expectancies and Inter-
personal Processes", Annual Review of Psychology 37:233-256.
V-2
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Pfeffer, Jeffrey (1981) "Management as Symbolic Action: The Creation
and Maintenance of Organizational Paradigms", in L.L. Onnmings and
B.M. Staw, eds. , Bggoarcfa in Organizational Behavior. Greenwich,
Connecticut: JAI Press.
Pfeffer, Jeffrey (1982) Organizations and Organization Theory. Pitanan
Co. :228.
Roberts, Marc and J. Bluhm, (1981) Choices of Power. Cambridge, MA:
Harvard University Press.
Rosenthal, R. and L. Jacobean (1968) Pygmalion i^ i-ho riaegrryHi. New
York: Holt, Rinehart and Winston.
Russell, Harrington and Vaugnan (1986) Controlling Pollution.
Baltimore: John Hopkins University Press.
Scholz, John (1984) "Cooperation, Deterrence, and the Ecology of
Regulatory Enforcement," Law and Society Review 18 (2): 179-223.
Shannon, Margaret A. (1985) Assessing the Communication Effectiveness
of Forest Plans and EIS Documents. Report to the Director, land
Management Planning, U.S. Forest Service. Washington, D.C.
Snider, Laureen (1987) "Towards a Political Economy of Reform,
Regulation, and Corporate Crime," 9 Law & Policy 37:50.
Stewart, Richard B. (1975) "The Reformation of American
Administrative law," 88 Harvard Law Review 1667.
Stone, Christopher D. (1986) "Corporate Social Responsibility: What
it Might Mean, If It Were Really to Matter." Iowa law Review 71:557-
575.
Susskind, Lawrence (1981) "Environmental Mediation and the Account-
ability Problem," 6 Vermont Tavr RPVIPHJ i.
Trice, Harrison M. and Janice M. Beyer (1985) "Using Six
Organizational Rites to Change Culture", in Kilmann, et al.. eds.,
Gaining Control of the Corporate Culture. San Francisco: Jossey
Bass.
USEPA (1987) "Guidance on the Use of Alternative Dispute Resolution
in EPA Enforcement Cases," In Sourcebook: Federal Agency Use of
Alternative Means of Dispute Resolution (Administrative Conference of
the U.S., Office of the Chairman, 1987).
Van de Ven, and Joyce Astley, (1981) Perspectives on Organizational
Design and Behavior. John Wiley, N.Y.:449
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V-3
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Attachment E
MODEL ENVIRONMENTAL COMPLIANCE AND MANAGEMENT AUDIT PROVISION
FOR CONSENT DECREES AND AGREEMENTS
C.I. Defendant/Respondent shall conduct environmental
audits of its facility(ies) [of appropriate frequency and
duration] in accordance with the Audit Workplan attached hereto
as Exhibit B [company specific; not included]. The first such
audit shall commence on or about three months from the effective
date of this Decree/Agreement. Each of the audits shall be
completed in accordance with the schedule set forth in the
.Audit Workplan.
2. The performance standard of each such audit is to
complete a detailed and professional investigation as set forth
in the Audit Workplan of the facility's recordkeeping practices
and environmental management operations during the [applicable
period]. In accordance with the Audit Workplan, the following
audit reports shall be prepared and submitted, with copies of
supporting documentation, to EPA within thirty days following
the initiation of each such audit:
a. A report on all [pollutants] whose locations (as
reported in the facility records) differ from their observed
physical location or whose physical locations cannot be corrob-
orated by existing records kept at the facility.
b. A report of all quantity variations (of 10% or more
by volume or weight, or any variation in piece count) between
[pollutants] received and [pollutants] disposed of at the
facility.
c. A report on Defendant's/Respondent's activities at
the facility in terms of whether or not they comply with the
procedures required under the [Pollutant] Analysis Plan for
[pollutant] acceptance. Defendant/Respondent shall include
with this report the results of a minimum of three laboratory
(including Defendant's/Respondent's laboratory) analyses of
blind standards (i.e., pre-analyzed samples whose concentrations
are unknown to the laboratories participating in the audit) to
be provided by the audit team to evaluate Defendant's/Respondent's
ability to quantify representative hazardous constituents in
various media.
d. A report of any observed deviations from Defendant's/
Respondent's written operating procedures, including documentation
on any untimely response to the repair and/or replacement of
deteriorating or malfunctioning [pollutant] containers, structures,
or equipment.
-------
-2-
e. Recommendations as to potential significant improve-
ments and/or modifications which should be made to Defendant's/
Respondent's operating procedures to achieve compliance with
[applicable statutory and regulatory] requirements.
3. Nothing in this Decree/Agreement shall preclude EPA
from instituting enforcement actions against Defendant/Respondent
for any violations of [applicable statutory and regulatory]
requirements which are not cited within the Complaint giving
rise to this Decree/Agreement.
-------
Attachment F
MODEL ENVIRONMENTAL COMPLIANCE AND MANAGEMENT AUDIT PROVISION
FOR CONSENT DECREES AND AGREEMENTS*
TABLE OF CONTENTS
Page
I. PRELIMINARY STATEMENT
Purposes of Consent Decree/Agreement 1
II. DEFINITIONS 1
III. GENERAL AUDIT PROCEDURES
Preliminary Matters
Scope of Work 6
Establishment of Trust 6
Selection of Audit Firm 7
Audit Seminar 7
Observation of EPA Protocols 7
Review of Work Plan 7
Facilities to be Audited 8
IV. FACILITY COMPLIANCE AUDITS
Records to be Examined 9
Records Relevant to Compliance
with RCRA 9
Records Relevant- to Compliance
with TSCA 9
Records to be Examined by the
Audit Firm 9
!>
Access to Documents 10
* This provision is only appropriate for a party with an exten-
sive history of noncompliance. It requires a high level of
Agency oversight. As an internally developed document that
has not been subjected to the negotiation process, the provi-
sion is more susceptible than other model provisions to the
give and take of negotiation. While the provision only
addresses requirements under RCRA and TSCA, audit provisions
under other statutes may be crafted by usi-ng as a framework
the headings contained in this provision.
-------
TABLE OF CONTENTS (Continued)
Page
Tentative Observance of CBI Claims 11
Preservation of Records 11
Examination of Groundwater Monitoring
Information 11
Audit'ScheduTe/Agency"Access to
Defendant's Facilities 11
Facility Audit Reports 11
Correction of Violations/Submission of
Compliance Plans 12
V. PENALTIES AND CORRECTIVE ACTION
For Missed Audit Deadlines 12
For Violations of RCRA/TSCA
Payment of Penalties 12
Unlisted Violations 13
Uncorrected or New
Violations 13
VI. RESERVATION OF RIGHTS
Reservation of States' and Local Govern-
ments ' Right to Inspect 13
Reservation of Agency's Right
to Relief 14
VII. MANAGEMENT SYSTEMS AUDIT
Corporate Management Systems Report 14
Corporate Management Report and Plan 14
VIII. MISCELLANEOUS TERMS
Submission of Reports 14
Effective Date of Decree/Agreement 15
ii
-------
TABLE OF CONTENTS (Continued)
Page
Notice 15
Modification 15
Dispute Resolution 15
...Continuing Jurisdiction of .the District
Court/Administrat ive Law Judge.......... .1:5
Relation to RCRA Permitting Process 15
Violations Not Covered by RCRA or TSCA.... 16
Continuing Audit Requirement 16
DEFENDANT'S/RESPONDENT'S FACILITIES Appendix 1
PENALTY SCHEDULE Append ix 2
CORPORATE MANAGEMENT SYSTEMS REPORT
PROTOCOL Append ix 3
iii
-------
Attachment F
MODEL ENVIRONMENTAL COMPLIANCE AND MANAGEMENT AUDIT PROVISION
FOR CONSENT DECREES AND AGREEMENTS*
TABLE OF CONTENTS
Page
I. PRELIMINARY STATEMENT
Purposes of Consent Decree/Agreement 1
II. DEFINITIONS 1
III. GENERAL AUDIT PROCEDURES
Preliminary Matters
Scope of Work 6
Establishment of Trust 6
Selection of Audit Firm 7
Audit Seminar 7
Observation of EPA Protocols 7
Review of Work Plan 7
Facilities to be Audited 8
IV. FACILITY COMPLIANCE AUDITS
Records to be Examined 9
Records Relevant to Compliance
with RCRA 9
Records Relevant to Compliance
with TSCA 9
Records to be Examined by the
Audit Firm 9
Access to Documents 10
* This provision is only appropriate for a party with an exten-
sive history of noncompliance. It requires a high level of
Agency oversight. Based on a draft settlement document, the
provision reflects a pro-Agency bias and thus is more suscep-
tible than other model provisions to the give and take of
the negotiation process. While the provision only addresses
requirements under RCRA and TSCA, audit provisions under
other statutes may be crafted by using as a framework the
headings contained in this provision.
-------
TABLE OF CONTENTS (Continued)
Page
Public Access to Records 10
Assertion of Confidential Business
Information Claims 10
Tentative Observance of CBI Claims 11
Preservation"of Records 11
Examination of Groundwater Monitoring
Information 11
Audit Schedule/Agency Access to
Defendant's Facilities 11
Facility Audit Reports 11
Correction of Violations/Submission of
Compliance Plans 12
V. PENALTIES AND CORRECTIVE ACTION
For Missed Audit Deadlines 12
For Violations of RCRA/TSCA
Payment of Penalties 12
Unlisted Violations 13
Uncorrected or New
Violations 13
VI. RESERVATION OF RIGHTS
Reservation of States' and Local Govern-
merits' Right to Inspect..... ' 13
Reservation of Aoency's Right
to Relief '. 14
VII. MANAGEMENT SYSTEMS AUDIT
Corporate Management Systems Report 14
Corporate Management Report and Plan 14
ii
-------
TABLE OF CONTENTS (Continued)
Page
VIII. MISCELLANEOUS TERMS
Submission of Reports 14
Effective Date of Decree/Agreement 15
Notice 15
Modification 15
Dispute Resolution 15
Continuing Jurisdiction of the District
Court/Administrative Law Judge 15
Relation to RCRA Permitting Process 15
Violations Not Covered by RCRA or TSCA.... 16
Continuing Audit Requirement 16
DEFENDANT ' S/RESPONDENT ' S FACILITIES Appendix 1
PENALTY SCHEDULE Appendix 2
CORPORATE MANAGEMENT SYSTEMS REPORT
PROTOCOL Appendix 3
iii
-------
1. Purposes of Consent Decree/Agreement. In order to
achieve the mutual goal of ensuring full compliance with applicable
environmental laws, regulations, and permits by Defendant's/
Respondent's active facilities in an efficient and coordinated
manner, Defendant/Respondent and EPA hereby enter into a Consent
Decree/Agreement under which:
(1) independent auditors to be retained by EPA and
paid for by Defendant/Respondent shall, subject to EPA
oversight, audit each facility and report to both
parties on their assessment of Defendant's/Respondent's
compliance with RCRA and TSCA and their.implementing
permits, rules and regulations;
(2) the independent auditors shall perform an analysis
of Defendant's/Respondent's environmental management
systems, practices and policies, as they affect inter-
facility and intra-facility transactions (as defined
in Paragraphs 5(11) and 5(12) of this Decree/Agreement);
(3) Defendant/Respondent shall pay penalties for
violations of the aforementioned statutes, permits,
rules and regulations according to the Penalty Schedule
set forth as Appendix 2 to this Decree/Agreement; and
(4) EPA shall accept the penalties provided in Appendix
2 as full and complete settlement and satisfaction of
any of its civil claims for violations detected by
the audit firm (with certain exceptions as set forth
in Paragraphs 23, 24, and 25 of this Decree/Agreement).
TERMS OF SETTLEMENT
DEFINITIONS
5. Whenever the following terms are used in this Decree/
Agreement, the definitions specified herein shall apply:
(1) Compliance Report and Plan; A document to be
submitted by Defendant/Respondent to EPA, pursuant to
Paragraph 19 of this Decree/Agreement, which:
(a) describes in full detail every corrective
action taken in response to a Facility
Audit Report;
(b) in the case of violations which are not
corrected within 60 days of submittal of
the Facility Audit Report, describes every
action to be taken in response to any
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violations or findings in the Facility
Audit Report; and
(c) certifies under oath the accuracy of
information contained in the Compliance
Report and Plan.
(2) Confidential Business Information (CBI)
(a) .Information/Documents Determined Not to Be
Entitled to CBI Protection. It is agreed
between the. parties that .portions of-^docu-
ments containing the following information
shall not be eligible for CBI treatment: '
(i) The fact that any chemical waste was
disposed of at any Defendant/Respondent
facility.
(ii) The location of disposal of any chemical
waste at any Defendant/Respondent facility.
(iii) Any information contained or referred
to in any manifest for any chemical
waste disposed of at any Defendant/
Respondent facility.
(iv) The identity and quantity of any. chemical
waste disposed of at any Defendant/Respondent
facility.
(v) Any monitoring data or analysis of
monitoring data pertaining to disposal
activities at any Defendant/Respondent
facility, including'monitoring data
from any well, whether or not installed
pursuant to 40 C.F.R. Part 265, Subpart
F, or 40 C.F.R. Part 254, Subpart F
(RCRA Groundwater Monitoring Requirements).
(iv) Any permit applications submitted to
EPA or to any state pursuant to federal
or state statute or regulation.
(vii) Any information regarding planned im-
provements in the treatment, storage or
disposal of chemical wastes at any
Defendant/Respondent facility.
(viii) Any hydrogeologic or geologic data.
(ix) Any groundwater monitoring data.
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(x) Any contingency plans, closure plans,
or post-closure plans.
(xi) Any waste analysis plans.
(xii) Any training and/or inspection manuals
and schedules.
(xiii) Any point source discharge or receiving
water monitoring data.
(b) The status of information not listed in Section
(a) above shall be determined in accordance with
40 CFR Part 2, which provides for CBI treatment of
information where:
(i) Defendant/Respondent has taken reasonable
measures through the issuance and
observance of companywide policies and
procedures to protect the confidentiality
of the information, and that it intends -
to continue to take such measures;
(ii) The information is not, and has not been,
reasonably obtainable without Defendant's/
Respondent's consent by other persons
(other than governmental bodies which
are bound by and observing Defendant's/
Respondent's claims of CBI as to that
information) by use of legitimate means
(other than discovery based on a showing
of special need in a judicial or quasi-
judicial proceeding);
(iii) Disclosure of the information is likely
to cause substantial harm to Defendant's/
Respondent's competitive position.
(3) Corporate Management Report and Plan: A document
submitted by Defendant/Respondent to EPA, pursuant to
Paragraph 27 of this Decree/Agreement, describing in
full detail what actions Defendant/Respondent has
taken or will take to implement the findings of the
Corporate Management Systems Report.
(4) Corporate Management Systems Report; A fully
integrated separate report prepared pursuant to the
Corporate Management Systems Report Protocol set
forth in Appendix 3 of this Decree/Agreement and
submitted by Defendant/Respondent to EPA pursuant
to Paragraph 26 of this Decree/Agreement.
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(5) Corrective Action; Any action taken by Defendant/
Respondent in order to come into compliance with any
federal, state or local statutory or regulatory
requirement for the treatment, storage, or disposal
of any Hazardous Substance.
(6) Facility Audit Reports; Reports to be submitted
by the Audit Firm to EPA, pursuant to Paragraph 19
of this Decree/Agreement, which:
(a) describe in detail the procedures followed
in the facility audit, the facility itself,
the regulatory history of the facility,
and the facility's current compliance
status;
(b) describe in detail each violation detected
during the audit;
(c) provide any other information which, in
the judgment of the Audit Firm, merits
Agency review;
(d) for each violation reported, provide the
relevant statutory or regulatory section;
the particular area of the facility where
the violation was found (if appropriate);
the dates during which the violation
occurred or existed (if it can reasonably
be determined); and any other relevant or
appropriate information.
(7) Hazardous Substances; Those materials meeting
the definition contained in the Comprehensive
Environmental Response, Compensation, and Liability
Act ("CERCLA"), 42 U.S.C. §§9601 et se£., §9601(14).
(8) Hazardous Wastes; Those materials meeting the
definition contained in 42 U.S.C. §6903(5) and the
regulations promulgated at 40 C.F.R. Part 261.
(9) Independent Audit Firm ("Audit Firm"): A firm
selected by EPA, pursuant to Paragraph 6 of this
Decree/Agreement, for the purpose of performing the
Facility Compliance and Management Systems Audits
described herein. For the purpose of this Decree/
Agreement, the Independent Audit Firm must exercise
the same independent judgment that a Certified Public
Accounting firm would be expected to exercise in
auditing a publicly held corporation. In addition,
the Independent Audit Firm must:
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(a) not own stock in Defendant/Respondent
or any parent, subsidiary, or affiliated
corporation;
(b) have no history of participation in any
previous contractual agreement with
Defendant/Respondent or any parent, subsidiary,
or affiliated corporation; and
(c) have no other direct financial stake in
the outcome of the Facility Compliance or
Management Systems Audits outlined in
this Decree/Agreement.
(10) Inter-facility Transactions; Any letters,
contracts, memoranda, or other communications between
two or more offices or facilities owned or operated
by Defendant/Respondent.
(11) Intra-facility Transactions; Any letters,
contracts, memoranda, or other communications between
two or more locations or offices at a single Defendant/
Respondent Facility.
(12) Manifest; The shipping document EPA form
8700-22 and, if necessary, EPA form B700-22A (as
required by 40 C.F.R. Part 262) or equivalent.
(13) New Violation; Any statutory or regulatory
violation not reported in the Facility Inspection
Report.
(14) Plaintiff; The United States of America, for
the Administrator of the United States Environmental
Protection Agency (collectively, "the Agency" or
"EPA").
(15) Records; Any Defendant/Respondent or consultant
report, document, writing, photograph, tape recording
or other electronic means of data collection and
retention which bears upon Defendant's/Respondent's
compliance with EPA, state and local rules and regulations
(16) Facility; Any facility which treats, stores, or
disposes of hazardous waste as those terms are defined
at 42 U.S.C. §§6903(3), 6903(33), and 6903(34).
(17) Uncorrected Violation; Any violation reported
in a Facility Inspection Report which remains
uncorrected for 60 days or more after the completion
and submission of the Facility Inspection Report
pursuant to Paragraph 19 of this Decree/Agreement.
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GENERAL AUDIT PROCEDURES
6. Preliminary Matters
(1) Scope of Work
(a) Defendant/Respondent shall submit to the Agency
within thirty (30) days of the effective date of this
Decree/Agreement the Scope of Work for audits of the
Defendant/Respondent facilities listed in Appendix
1 for RCRA and TSCA violations. EPA shall have
thirty (30) days from the date of receipt of this
Scope of Work and proposed Audit Firm -to. submit "to
Defendant/Respondent in writing any proposed modifi-
cations in the scope of work.
(b) Defendant/Respondent shall have fifteen (15)
days from the date of receipt of EPA's proposed modifi-
cations within which to submit in writing its comments
upon those proposed modifications.
(b) Within ten (10) days of receipt of Defendant's/
Respondent's comments, the Agency shall issue its
final decision as to the Scope of Work, which shall
be binding upon Defendant/Respondent.
(2) Establishment of Trust
(a) Within thirty (30) days of the date of this
Decree/Agreement, Defendant/Respondent shall establish
an irrevocable trust fund ("Trust"), the form and
text of which shall be approved by EPA. If no fund
is approved by EPA within thirty (30) days of the
date of this Decree/Agreement, a form supplied by EPA
shall be used. The Trustee shall be a bank selected
by Defendant/Respondent, which must be approved by EPA.
(b) The Administrator of EPA shall have special
power of appointment (and the only power of appoint-
ment) over all income and all assets of the Trust.
That power may be exercised only to make appointments
of funds in accordance with this Decree/Agreement.
If, at the conclusion of all tasks set forth in this
Decree/Agreement, there remains trust income or
assets which have not been appointed by exercise of
such special power, then all such remaining unappointed
assets shall be delivered forthwith to Defendant/
Respondent. Defendant/Respondent shall fund the
Trust by placing $ in the hands of the
Trustee within forty-five (45) days after the date of
this Decree/Agreement.
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(3) Selection of Audit Firm
(a) Within forty-five (45) days after the date of
this Decree/Agreement, EPA shall notify Defendant/
Respondent of its selection of a proposed Audit Firm.
Defendant/Respondent shall have fifteen (15) days from
the date of receipt of EPA'a proposed Audit Firm to
accept, reject, or comment upon this selection.
Reasons for which Defendant/Respondent may reject the
proposed Audit Firm are limited to lack of sufficient
national reputation; inexperience in performing
environmental compliance and management audits;
inadequate staffing levels; and failure-to qualify as
an Independent Audit Firm as defined in Paragraph
5(10) of this Decree/Agreement.
(b) In the event EPA and Defendant/Respondent are
unable to agree on selection of an Audit Firm, the
parties shall submit to Dispute Resolution as set
forth in Paragraph 32 of this Decree/Agreement.
7. Audit Seminar. Before the Audit Firm begins the
audits, and within 60 days of the date EPA and Defendant/
Respondent agree upon the Scope of Work and Audit Firm as
described above, the Agency shall conduct a seminar for
employees of the Audit Firm who are to conduct the audits.
This seminar shall serve the purpose of assuring that the Audit
Firm employees who will be conducting the audits are familiar
with all protocols required by Agency policies and procedures
to be utilized in conducting compliance audits. The Agency
nay conduct the audit seminar at the National Enforcement
Investigations Center (NEIC) near Denver, Colorado or at the
Audit Firm's office. The Agency shall not be responsible for
transportation, lodging or other costs associated with attendance
by the audit firm employees at the seminar.
8. Observation of EPA Protocols. The Audit Firm shall
be required by contract with Defendant/Respondent to observe
the protocols presented at the audit seminar. Such protocols
include but are not limited to: (1) NEIC's Multi-Media Com-
pliance Audit Procedures; (2) the EPA Office of Administration's
Environmental Auditing Protocol; (3) the NEIC Policy and Procedure
Manual; and (4) the Corporate Management Systems Report Protocol
provided in Appendix 3 of this Decree/Agreement (See Paragraph
26 below).
9. Review of Work Plan.
(1) Within 30 days of the Audit Seminar, the Audit
Firm shall submit to Defendant/Respondent and EPA a
proposed Work Plan which shall specify the Audit
Firm's plan for implementing the Scope of Work. Said
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Work Plan shall include the auditing protocols to be
used by the Audit Firm; a schedule for conducting
facility audits and completion of all other tasks
set forth in the Scope of Work; and the names and
resumes of those Audit Firm employees who will be
primarily responsible for performance of the tasks
set forth in the Scope of Work. The proposed Work
Plan shall not specify the order of audits or otherwise
provide Defendant/Respondent with advance notice of
specific audits.
(2) EPA and Defendant/Respondent shall have 30 days
from the date of receipt of the proposed Work Plan to
submit in writing any proposed revisions to the proposed
Work Plan.
(3) The Audit Firm shall have fifteen (15) days from
the date of receipt of these revisions within which
to submit in writing its comments on these proposed
revisions.
(4) Within ten (10) days of receipt of the Audit
Firm's comments, EPA shall issue its final decision
as to the work plan, which shall be binding on both
Defendant/Respondent and the Audit Firm.
(5) The provisions of this Paragraph shall also be
set forth as provisions of the contract between
Defendant/Respondent and the Audit Firm for the
performance of the subject audits.
10. Facilities to be Audited. The Audit Firm shall,
subject to the provisions set forth herein, conduct comprehensive
RCRA/TSCA Compliance Audits (see Paragraphs 11 through 25) and
a Management Systems Audit (see Paragraphs 26 and 27) of the
facilities listed in Appendix 1 of this Decree/Agreement.
The designation of RCRA/TSCA as the primary areas of audits
shall not prohibit the Audit Firm from auditing and reporting
violations of any other environmental statutes or regulations
should those violations come to the attention of the Audit Firm
audit team during the inspections. Notice of individual
facility audits shall be provided to NEIC at least thirty (30)
days prior to scheduled visits. Advance notice of individual
facility inspections shall not be provided to Defendant/Respondent
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FACILITY COMPLIANCE AUDITS
Review of Records
11. Records to be Examined.
a. Records Relevant to Compliance with RCRA.
Facility audits may include a review of any facility
record of Defendant/Respondent or its predecessors
from November 1980. Other records pre-dating
November 1980 which bear on the facility's compliance
after November 1980 may also be examined, but
only to the extent that they are necessary to
render judgment regarding any event occurring
after November 1980.
b. Records Relevant to Compliance with TSCA.
Facility audits may include a review of any facility
record of Defendant/Respondent or its predecessors
from April 1978 which is relevant to compliance
with TSCA and its implementing regulations.
Other records pre-dating April 1978 which bear on
the facility's compliance after April 1978 may
also be examined, but only to the extent that they
are necessary to render judgment regarding any
event occurring after April 1978.
c. Records to be Examined by the Audit Firm. Records
to be examined include but are not limited to:
(1) all records required by federal, state or
local law to be maintained by Defendant/Respondent.
(2) facility operating records, including but not
limited to waste profile sheets, containing waste
pre-acceptance data, receiving logs, analytical
verification data, waste tracking data for intra-
facility movement of received wastes or wastes
generated on-site, waste storage data, waste
treatment data, and data reflecting the disposition
of received wastes.
(3) corporate and facility guidelines, policies
and internal operating rules pertaining to facility
operations, inspections, personnel training, and
recordkeeping procedures.
(4) corporate guidelines, policies and internal
operating rules pertaining to emergency response,
site closure, and postclosure activities.
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(5) applications, licenses, permits and approvals
(including state permits and approvals), RCRA opera-
tion plans, or other regulatory documents pertaining
to on-site activities at the facility.
(6) environmental monitoring plans for the facility.
(7) waste treatability studies.
(8) PCB operations plans, letters of approval,
pumping logs/ and records pertaining to the processing
or handling of transformers, capacitors, and/or
any other PCB articles, itens and containers.
(9) manifests for wastes entering or leaving any
Defendant/Respondent facility.
(10) records of use, maintenance and decommissioning
of vehicles used on-site and/or off-site for the
transportation of RCRA/TSCA wastes to, from, and
within any Defendant/Respondent facility.
(11) vehicle washing records.
(12) any effluent data, including data on any direct
discharge to surface water or any discharge to a
publicly owned treatment facility, which Defendant/
Respondent is required to keep pursuant to any
federal, state, or local permit or regulation.
12. Access to Documents. The Audit Firm and representatives
of the Agency, including contractors, shall have full, unfettered
access to all documents bearing upon compliance with RCRA or TSCA
kept at each facility or at Defendant's/Respondent's corporate
headquarters, regardless of whether these records are deemed
by Defendant/Respondent to constitute CBI or deemed by the
Audit Firm to indicate or support a violation. The Defendant/
Respondent shall retain and make available to EPA copies of
any Defendant/Respondent document(s) examined by the Audit Firm
which indicate or support any violation detected during the
audit program. The Audit Firm shall prepare and provide to EPA
a full and complete index of all documents that it examines to
ensure that the Defendant/Respondent retains these records for
subsequent EPA inspection.
13. Public Access to Records. Each document submitted
by Defendant/Respondent to the Audit Firm or EPA pursuant to
this Decree/Agreement shall be subject to public inspection
unless it is determined by EPA (following a claim made by Defendant^
Respondent) to be CBI in accordance with Paragraphs 5(2) and
14 of this Decree/Agreement.
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14. Assertion of Confidential Business Information Claims.
a. Defendant/Respondent recognizes that EPA will
treat as TSCA CBI only that information claimed confidential
which EPA uses for purposes related to TSCA.
b. Claims that information is CBI shall be made on
or before the date on which such information is provided to
the Audit Firm or EPA.
15. Tentative Observance of CBI Claims. Any information
claimed by Defendant/Respondent and asserted to meet the criteria
set forth in Paragraph 5(2) will be treated by EPA as confidential
in accordance with 40 C.F.R. §§2.201 through 2.215 and any
relevant special confidentiality regulations at 40 C.F.R. §§2.301
et seq. pending any final determination that the information is
not CBI.
16. Preservation of Records. Defendant/Respondent shall
preserve all Records exanined by the Audit Firm for three years
after submission of its Corporate Management Report and Plan to
EPA (See Paragraph 27 below). Mothing in this provision shall
authorize destruction of any document required by law or regula-
tion to be preserved for any period of time in excess of three
years.
17. Examination of Groundwater Monitoring Information.
The Audit Pirn shall be required to exanine and submit to EPA
croundwater monitoring plans and data for each Defer.'Lint/Respon-
dent facility listed in Appendix 1 of this Decree/Agreenent.
18. Audit Schedule/Agency Access to Defendant's/
Respondent's FacilitieTIAll audits by the Audit Firm of the
sites listed in Appendix 1 of this Decree/Agreement shall be
completed within 180 days of EPA approval of the Work Plan as
described in Paragraph 9 above. Representatives of the Agency,
including contractors, may accompany audit teams from the
Audit Firm on site audits performed by the Audit Firm and
oversee the performance of the audits by the audit teams for
the purpose of ensuring that the audit procedures and protocols
required by the contract are followed.
19. Facility Audit Reports. As each separate facility
audit is completed, the Audit Firm shall, no later than 30
days thereafter, simultaneously submit to Defendant/Respondent
and the Agency a copy of a Facility Audit Report as defined in
Paragraph 5(7). The failure of the Facility Audit Report to
include all of the required information for any violation
specified in the report shall not be grounds for avoidance of
any penalty which is payable under the Penalty Schedule set
forth in Appendix 2. The Agency shall not be bound by any
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determination of the Audit Firm indicating that Defendant/
Respondent is in compliance with any applicable statutory or
regulatory requirement.
20. Correction of Violations/Submission of Compliance Plans.
In addition to paying the penalties set forth in the Penalty
Schedule below, Defendant/Respondent shall:
(1) correct any violation indicated within a Facility
Audit Report as soon as is physically possible.
(2) No .later than 60.days after it has received an
individual Facility Audit Report, submit to the Agency
a Compliance Report and Plan.
The Agency shall not be bound by any Defendant/Respondent
determination that it has achieved compliance, that the compliance
was physically impossible to achieve, or that the times for correc-
tive actions proposed by Defendant/Respondent to achieve compliance
are reasonable. All corrective actions mandated by this Decree/
Agreement shall be undertaken in accordance with applicable
federal, state and local law.
PENALTIES AND CORRECTIVE ACTION
21. For Missed Audit Deadlines. Defendant/Respondent shall
pay the following stipulated penalties for any failure by Defenda
Respondent to comply with any time requirement set forth in this
Decree/Agreement:
Period of Failure to Comply Penalty per Day of Delay
1st day through 14th day $ 5,000.00
15th day through 44th day $10,000.00
45th day and beyond $15,000.00
For Violations of RCRA/TSCA
22. Payment of Penalties. For every violation of RCRA
or TSCA reported in each Facility Audit Report, Defendant/
Respondent shall pay a penalty based on the Penalty Schedule
provided as Appendix 2 of this Decree/Agreement. The listing
of the violation in a Facility Audit Report shall be conclusive
and binding on Defendant/Respondent, and the amount set forth in
the Penalty Schedule shall be due and payable by certified check
to the "Treasurer of the United States." The check shall be
remitted to:
[appropriate EPA lockbox address]
within 30 days of receipt of the applicable Facility Inspection
Report. Penalties shall accrue from the date the violation is
determined to have begun to the date such violation is corrected
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or abated. Subject to the rights reserved in Paragraph 25
below, EPA will not take further enforcement action on those
violations for which penalties are paid and corrective action
taken in compliance with this Decree/Agreement.
23. Unlisted Violations. In the event that the audit
firm reports statutory or regulatory violations other than those
listed in Appendix 2, Defendant/Respondent shall correct such
violations as soon as is physically possible. In addition, the
parties will, for a period of 60 days following receipt of the
Facility Audit Report in which such unlisted violations are
contained, attempt to settle by negotiation the appropriate
remedy and penalties Defendant/Respondent shall pay for such
unlisted violations. In such negotiations, the parties will
compare each unlisted violation to the most similar listed
violation, if possible. In the event of failure of the parties
to achieve settlement of unlisted violations within 60 days,
EPA shall be free to take any enforcement measure authorized
by law.
24. Uncorrected or New Violations. Beginning on the date
EPA receives a Facility Audit Report, Defendant/Respondent
shall have sixty (60) days to correct violations cited therein.
For any previously reported violation discovered to be uncorrected
at the end of such sixty (60)-day-period, Defendant/Respondent
shall pay a civil penalty of $25,000 per day for each day of
continued noncompliance unless, within sixty (60) days,
Defendant/Respondent has notified the Agency in accordance
with Paragraph 20 that compliance is physically impossible and
has obtained a final decision from the Agency verifying such
physical impossibility. If, during the audit period or during
the first post-audit inspection, the Agency discovers violations
which were not reported to the Agency by the Audit Firm, for
such violations Defendant/Respondent shall pay a civil penalty
as set forth in the Penalty Schedule (Appendix 2). In addition,
the Agency reserves the right to initiate civil or criminal
action (or both) with regard to any previously reported and
uncorrected violation and any violation not previously reported.
25. Reservation of Rights.
a. Reservation of States' and Local Governments'
Right to Inspect Defendant's/Respondent's Facilities
Nothing in this Decree/Agreement shall limit the
authority of EPA or any state or local government
to enter and inspect any Defendant/Respondent
facility.
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b. Reservation of Agency's Right to Seek Relief.
Except as provided in Sections 21 through
24 above, nothing in this Decree/Agreement shall
be construed to limit the ability of the United
States to take any enforcement action authorized
by law.
MANAGEMENT SYSTEMS AUDIT
26. Corporate Management System Report. Uo later than
60 days after the last Facility Audit Report is submitted to
Defendant/Respondent and EPA, the Audit Firm shall submit to
Defendant/Respondent and EPA a Corporate Management Systems
Report as defined in Paragraph 5(4) of this Decree/Agreement.
27. Corporate Management Report and Plan. No later than
90 days after it has received the Corporate Management Systems
Report, Defendant/Respondent shall submit to the Agency its own
Corporate Management Report and Plan describing in full detail
what actions it has taken or will take to implement the findings
of the Corporate Management Systems Report.
MISCELLANEOUS TERMS
28. Submission of Reports. Any reports produced by the
Audit Firm"including Facility Audit Reports and the Corporate
Management Systems Report, shall be submitted simultaneously
to EPA and Defendant/Respondent. The Audit Firm shall not
share draft copies of such reports with Defendant/Respondent
unless such drafts are simultaneously submitted to EPA. The
requirements of this Paragraph shall be set forth as a requirement
in the contract between Defendant/Respondent and the Audit Firm
for the performance of the audits described herein.
29. Effective Date of Decree/Agreement. This Decree/
Agreement shall be considered binding and in full effect upon
approval by the Federal district court judge/administrative
law judge to whom this matter has been assigned.
30. Notice. All submissions and notices required by this
Order shall be sent to the following address(es):
[insert address(es) of EPA office(s) overseeing Decree/Agreement]
31. Modification. This Decree/Agreement may be modified
upon written approval of all parties hereto, and concurrence of
the Federal District Court Judge/administrative law judge
assigned to this matter.
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32. Dispute Resolution.
(1) The parties recognize that a dispute may arise
between Defendant/Respondent and EPA regarding plans,
proposals or implementation schedules required to be
submitted, regarding tasks required to be performed
by Defendant/Respondent pursuant to the terms and
provisions of this Decree/Agreement, or regarding
whether Defendant/Respondent has incurred liability
to pay stipulated penalties under Paragraphs 19
through 24. If such a dispute arises, the parties
will endeavor to settle it by good faith negotiations
among themselves. If the parties cannot resolve the
issue within a reasonable time, not to exceed thirty
(30) calendar days, the position of EPA shall prevail
unless Defendant/Respondent files a petition with the
court/administrative law judge setting forth the
matter in dispute. The filing of a petition asking
the court/administrative law judge to resolve a
dispute shall not extend or postpone Defendant's/
Respondent's obligations under this Decree/Agreement
with respect to the disputed issue.
(2) In presenting any matter in dispute to the court/
administrative law judge, Defendant/Respondent shall
have the burden of proving that EPA's interpretation
of the requirements of this Decree/Agreement are arbi-
trary, capricious, or otherwise not in accordance with
the law.
33. Continuing Jurisdiction of the District Court/Adminis-
trative Law Judge.The district court/administrative forum in
which this Decree/Agreement is entered shall retain jurisdiction
•until all obligations set forth herein are satisfied.
34. Relation to RCRA Permitting Process. Notwithstanding
any other provision of this Decree/Agreement, EPA hereby reserves
all of its rights, powers and authorities pursuant to the
provisions of 42 U.S.C. §56901 e_t seq. (RCRA) governing permits
for facilities, and the regulations promulgated thereunder.
35. Violations Not Covered by RCRA or TSCA. No stipulated
penalty or other remedy agreed to shall cover or apply to
non-RCRA, non-TSCA violations. The parties shall be left to
their respective rights, liabilities and defenses with regard
to these matters.
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36. Continuing Audit Requirement. For the five-year-period)
beginning on the date that Defendant/Respondent submits to the
Agency the .Corporate Management Report and Plan required by
Paragraph VII. 27. of this Decree/Agreement, Defendant/Respondent
shall conduct comprehensive audits not less often than annually
of the compliance of its facilities with [applicable statutory
and regulatory requirements]. After the initial audit by a
third party consultant (as required by this Decree/Agreement),
such audits may be conducted by such a consultant or by an
independent audit staff of the company not responsible to.
product ion •management. Reports of the results .of such audits
shall be furnished to the [appropriate Corporate, environmental
of ficial ~ahd plant manager]., .Within thirty (30)-days after
completion of each final annual audit report, Defendant/Respondent
shall submit to EPA a report of incidents of noncompliance
identified by the audit and steps that will be taken to correct
any continuing noncompliance and prevent future incidents of
noncompliance.
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Appendix 1
DEFENDANT'S/RESPONDENT'S FACILITIES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
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Appendix 2
PENALTY SCHEDULE
RCRA Violation
I. Groundwater Monitoring
40, C.'F.R. SS 264.91 and
265.91
II. Unsaturated Zone Monitoring
40-C.F.*. SS 264.97 through
2€4..100.and 265-92 through
265.94
III. Waste Analysis Plans:
Content and Implementation
40 C.F.R. §§ 264.13(a) and (b),
and 265.13(d) and (b)
IV. Bulk Liauids in Landfill
40 C.F.R. §§ 264.314U)
and 265.314(a)
V. Containerized Liquids
Disposal in Landfill
40 C.F.R. §§ 264.314(b)
and 265.314(5)
VI. Waste Tracking within
TSD facility
40 C.F.R. 5 264.222
VII. Maintenance of Minimum
Freeboard level for
Surface Impoundment
40 C.F.P. § 264.226(C)
VIII. .Ignitable/Reactive
Disposal in Landfill
40 C.F.R. §§ 264.312
and 265.312
IX. Land Disposal (direct
application to unlined
surface soils) of non-
biodegradeable wastes
40 C.F.R. §§ 264.272(a)
and 265.272(a)
Penalty
$22,500.00
per missed sampling event
$22,500.00
per missed sampling event
$25,000.00
$22,500
per day of occurrence
$22,500.00
per day of occurrence
$25,500.00
$6,500.00
per freeboard violation
$9,500.00
per cell, per day
$22,500.00
per day
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RCRA Violation
X. Trial test of waste
compatibility prior
to discharge into
surface impoundment
40 C.F.R. § 265.225
XI. Trial test of waste
solidification process
prior to-landfill
40 C.F.R. §265.402
XII. Failure to control wind
dispersal of land treatment
waste disposal zones
40 C.F.R. §§ 264.272(e)
and 265.273(f)
XIII. Incompatible wastes placed
into surface impoundment
40 C.F.R. §§ 264.230
and 265.230
XIV. Unauthorized expansion of
TSD facility during
Interim status
40 C.F.R. §270.72
XV. Closure of Units w/o
demonstration of
compliance with facility
.closure plan
40 C.F.R. §§ 264.113
and 265.113
XVI. Inadequate closure/
post-closure inspec-
tion/maintenance plans
40 C.F.R. §§ 264.112
and 265.112
XVII. Absence of post-closure
groundwater monitoring
program
40 C.F.R. §§ 264.117(a)(1)
and §265.117(a)(2)
Penalty
$22,500.00
per day of event
$22,500,00
per day
$22,500.00
per unit
$22,500.00
per day
$20,000.00
per day or as
needed to recapture
all profits gained
$25,000.00
per unit
$15,000.00 per unit
$22,500.00 per day
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RCRA Violation
XVIII. Failure to update closure/
post closure plan cost
estimates
40 C.F.R. §§ 264.144(c)
and 265.114{c)
XIX. No schedule included
for closure activities
40 C.F.R. S§ 264.112(8)
and 265.112(a)
XX. Inadequate Part A
Applications, absence
of identified operating
units
40 C.F.R. §270.13
XXI. Inadequate Part B
Application
40 C.F.R. §270.14
XXII. Absence of complete
facility Inspection
Plan, units omitted
40 C.F.R. §§ 264.15(b)
and 265.15(b)
XXIII. Failure to record
on facility inspections
reports repairs or
remedial measures taken
40 C.F.R. §§ 264.15(b)
and 265.15(d)
XXIV. Failure to inspect
freeboard levels
of surface impoundments
40 C.F.R. §§ 264.226(b),
(c) and 265.226U)
XXV. Operating Record
Omissions failure
complete grid maps
of landfilled lifts
of waste
40 C.F.R. §§ 264.309
and 265.309
Penalty
$3,000.00 per day
$6,500.00 per plan
milestone omitted
$9,500.00 per unit
not properly identified
$9,500.00 per unit
not properly identified
$2,250.00
per unit emitted,
per day
$2,250.00
per omission
$2,250.00
per occurrence
$2,250.00
per omission
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RCRA Violation
XXVI. Failure to record on-site
generated hazardous wastes
i.e. truck washing facility
40 C.F.R. § 262.4Kb)
XXVII. No training provided
to employee assigned to
do-waste analyses-
40 C.F.R. SS 2,64.16
and 265.16
XXVIII. No analyses performed
on materials added to
on-site waste piles
40 C.F.R. § 265.252
XXIX. Records not provided
to Agency
within 48 hours of request.
40 C.F.R. §§ 264.74
and 265.74
XXX. Penes not installed
around all operating
areas of TSD facility
40 C.F.R. §§ 264.14
and 265.14
XXXI. Emergency Contingency
Plan Inadequacies
40 C.F.R. §§ 264.52
and 265.52
XXXII. Failure to Meet
Financial Responsibility
Requirements
40 C.F.R. Part 264, Subpt. H
and Part 265, Subpt. H
Penalty
$9,500.00
per unrecorded event
$3,000.00
per untrained
employee
$22,500.00
per event
$6,500.00 per day
of delay
$1,000.00
$2,225.00
per component
deficiency
$25,000.00
per day of delay
TSCA Violation
Penalty
XXXIII. Improper Disposal of PCBs
40 C.F.R. SS 761.60 (a)-(d).
—1,100 or more gallons
or 750 or more cubic
feet of PCB contaminated
material.
$25,000.00 per day,
per violation
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TSCA Violation
—220-1,000 gallons or
150-750 cubic E^et of
PCS contaminated
material
—less than 220 gallons or
150. cubic feet of PCB
contaminated material
XXXIV. .Failure to Dispose .of ECBs
by Jan. 1, 1984.
40 C.F.R. § 761.65U)
—1,100 or more gallons
or -750 or more cubic
feet of PCB contaminated
material.
—220-1,100 gallons or
150-750 cubic feet of
PCB contaminated
material.
Penalty
317,000.00 per day,
per violation
$5,000.00 per day,
per violation
$25,000.00 per day,
per viola.tion
$17,000.00 per day,
per violation
—less than 220 gallons or
150 cubic feet of PCB
contaminated material.
XXXV. Failure to Dispose of PCBs
within one year of removal
from service.
40 C.F.R. § 761.65(a)
—:1,100 or more gallons
or 750 or more cubic
feet of PCB contaminated
material.
—220-1,100 gallons or
150-750 cubic feet of
PCB contaminated
material.
—less than 220 gallons or
150 cubic feet of PCB
contaminated material.
XXXVI. Improper Processing of PCBs
40 C.F.R. § 761.20(a)
$5,000.00 per day,
per violation
525,000.00 per 'day,
per violation
$17,000.00 per day,
per violation
$5,000.00 per day,
per violation
$20,000.00 per day,
per violation
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TSCA Violation
XXXVII. Improper Distribution of
PCBs (sale) in commerce.
40 C.F.R. S 761.20(a)
XXXVIII. Improper treatment and
testing of waste oils.-
40 C.F.R. S§ 7€1.60(g)(2)
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Attacnment.
MODEL EMERGENCY ENVIRONMENTAL MANAGEMENT REORGANIZATION PROVISION
FOR CONSENT DECREES OR AGREEMENTS
E.I. The objective of this provision is to provide a manage-
ment structure at the corporate headquarters level that will
ensure that comprehensive environmental policies and procedures
are developed by top management and fully implemented company-wide
at all facilities.
2. Defendant/Respondent shall propose to EPA's [name of
EPA office overseeing compliance with Decree/Agreement] by
written submittal to {name of Agency contact] within thirty
(30)'days of the effective date of this Decree/Agreement, a
plan for reorganization of the corporate management structure
with respect to environmental affairs. This reorganization
proposal shall be agreed upon by EPA and Defendant/Respondent
in writing, prior to implementation of the reorganization.
a. The management plan shall provide for the creation of
a new position of Director, Environmental Affairs lor other
appropriate title] to exercise the responsibilities set forth
herein. The Director, Environmental Affairs shall report
directly to [a corporate Vice President or other appropriate
top management official not directly responsible for manufacturing/
production activities]. The position shall at all times be
filled by an experienced executive with a background in [approp-
riate industrial field] and in environmental management and
compliance.
b. It shall be the responsibility of the Director,
Environmental Affairs to develop appropriate corporate environ-
mental policies and procedures and to oversee their implementation
at all company facilities to ensure compliance with applicable
Federal, State and local environmental statutes and regulations.
In the development of such policies and procedures, the recom-
mendations of the environmental audit conducted at the [facility]
by an outside consultant as described herein shall be given
full consideration.
c. Defendant/Respondent shall also establish such addi-
tional technical and support positions reporting directly to
the Director, Environmental Affairs as are necessary to meet
the objective of this provision. Neither the Director nor
staff shall be assigned additional responsibilities not related
to environmental compliance. Defendant/Respondent shall provide
adeauate budgetary support to the environmental staff.
3. Within ninety (90) days of EPA's approval of the environ-
mental management plan, the company shall appoint the Director,
Environmental Affairs and appropriately qualified staff.
4. Within two hundred seventy (270) days of EPA's approval of
the environmental management plan, the Director, Environmental
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Affairs shall complete development and begin the implementation
of appropriate corporate environmental policies and procedures
to meet the objective of this provision.
r^
5. Within eighteen (18) months of the effective date of
this Decree/Agreement/ Defendant/Respondent shall fully implement
the corporate environmental policies and procedures at all
company facilities. This shall include any necessary organiza-
tional or personnel changes at the individual facility level.
6. Recognizing -the corporate responsibility to maintain
compliance with all applicable environmental ..statutes and
regulations-, ^Defendant/Respondent* agrees" to -.maintain -a.- permanent
corporate environmental management staff. The organization,
makeup and functions of this staff may be modified from time
to time as dictated by changes in corporate facilities or
operations or the requirements of environmental statutes and
regulations.
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Appendix .*
CORPORATE MANAGEMENT SYSTEMS REPORT PROTOCOL
The Corporate Management Systems Report shall:
(1) Identify and describe the existing facility waste manage-
ment operations and the Environmental Management Department's
systems, policies and prevailing practices as they affect
Defendant's/Respondent's corporate compliance with RCRA and
TSCA.
(2) Evaluate such operations, systems, practices, and policies
and identify and describe fully the perceived weaknesses in
such operations, systems, practices, and policies by comparing
them, to the extent practicable, to the existing practices,
programs and policies of other RCRA and TSCA waste management
corporations operating within the continental United States and
co generally accepted corporate management practices.
(3) Based on the evaluation required in paragraphs (1) and (2)
above, the consultant shall identify and describe fully with
supporting rationales the perceived areas, if any, where Defen-
dant's/Respondent's inter- and intra-facility waste management
operations and corporate to operating level environmental
management systems, practices and policies may be improved.
The Corporate Management Systems Report shall list specific
options for improvements in the following areas:
(a) Corporate data management practices pertaining
to the following items:
i. compliance budgets;
ii. staffing;
iii. training;
iv. auditing;
v. incident reporting, including but not limited to
manifest exception reports and any unpermitted
disposal, release, or discharge;
vi. quality assurance test reporting;
vii. quality control reporting;
viii. generator waste profile reports, facility pre-
acceptance reports, and acceptance analysis as
these items compare to each facility's stated
basis for accepting or rejecting individual
waste loads; and
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ix. facility mass balance records reflecting the
internal disposition of all wastes received
for final disposal.
(b) Corporate data evaluation practices, capabilities
and policies pertaining to reports to and from compliance
officers, internal and external environmental audits, regulatory
agency notices of violation and all other compliance data
documents which when evaluated may .lead to changes in TSD
operating procedures or-directives by corporate management to
modify any individual or. multirrfacility-.TSD. facility operating
procedures.
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