ADMINISTRATIVE
NATIONAL ENFORCEMENT TRAINING If&TfTtfTTE
EPA
REGION VH,
January; 12,
-------
INDEX
TOPIC TAB
AGENDA A
ADMINISTRATIVE LAW ENFORCEMENT AT EPA. B
TYPES OF ADMINISTRATIVE HEARINGS
CONDUCTED WITHIN EPA * C
PART 22 - CONSOLIDATED RULES OF
PRACTICE GOVERNING THE ADMINISTRATIVE
ASSESSMENT OF CIVIL PENALTIES AND THE
REVOCATION OR SUSPENSION OF PERMITS D
HEARINGS BEFORE AN EPA ADMINISTRATIVE
LAW JUDGE E
HIGH STAKES ON A FAST TRACK;
ADMINISTRATIVE ENFORCEMENT AT EPA .- - F
SETTLEMENT CONFERENCES - KEY
OPPORTUNITIES FOR SETTLEMENT G
IMPERIAL INC.
COMPLAINT'S PRE-HEARING EXCHANGE H
ENVIRONMENTAL AUDITING
REACHING THE BOTTOM LINE
IN COMPLIANCE I
A SHORT PRIMER ON MOTIONS FOR
ACCELERATED DECISION . J
EXAMPLE: INITIAL DECISION IN PIC AMERICAS. INC K
EXAMPLE: TRANSCRIPT TESTIMONY EXAMPLE
FROM PIC AMERICAS. INC. L
EXAMPLE: DEFAULT ORDER IN GUNLOCKE CO.. INC. M
EXAMPLE: ENVIRONMENTAL APPEALS BOARD FINAL DECISION AND ORDER:
BURLINGTON NORTHERN RAILROAD COMPANY. N
GENERIC WITNESS TIPS O
EVALUATION FORM , P
-------
-------
EPA ADMINISTRATIVE BEARINGS AND TRIALS
COURSE AGENDA
JANUARY 12, 1995
U.S. EPA
REGION VII - Kansas City/ KB
8:30 - 8:40 INTRODUCTION
8:40 - 9:00 Background of Administrative Hearings
Michael J. Walker
Enforcement Counsel, OE
- Constitutional Foundations
- Administrative Procedure Act
- They are not "our" Judges!
9:00 - 9:45 Basic Steps In All Administrative Hearings
David J. Janik
Assistant Regional Counsel
Region VIII
- Violation or Technical Decisions
- Complaint Constructed (including
penalty calculation); Filing; Service
- Answer Filed (or default)
- ALJ Assigned
- Document Exchange
- Motion Practice
- Hearing (a real trial)
- Draft/Submit Proposed Findings of
Fact, Conclusions of Law; with
Briefs
- Initial Decision
- Appeal Process
9:45 - 9:55 BREAK
9:55 - 11:00 Effective Prehearing Work
Michael J. Walker
- Order from ALJ
- Motion Practice
- Negotiations/Settlement Techniques
- "Discovery"
-------
-2-
11:00 - 12:00 Witness and Attorney Preparation/Tips
David J. Janik
12:00 -1:15 LUNCH (On your own)
1:15 - 2:15 Views from the Bench
Honorable Robert Patrick
Regional Presiding Officer
- Questions and Answers
2:15 - 2:30 BREAK
2:30 - 3:30 Views of the Appellate Bench
The EPA Environmental Appeals Board
- Questions and Answers
3:30 - 4:15 Trial Techniques and Hearing Procedures
David Janik
Rupert Thomas
Region VII
- Opening Statements
- Direct and Cross Examination
of Expert and Fact witnesses
- Presentation of the Penalty
- Evidence & Proof
4:15 - 4:30 Summary and Evaluations
-------
B
-------
C
UJ
NET!
NATIONAL ENFORCEMENT
ADMINISTRATIVE LAW ENFORCEMENT AT EPA
EFFICIENCY - VOLUME - COMPLIANCE
Michael J. Walker
Enforcement Counsel
Toxics Litigation Division
U.S. EPA
1. Administrative law enforcement is an important tool in federal
anvir"T>Tn**T>tal compliance efforts. The efficiency and
streamlined aspects of administrative enforcement make it an
attractive option to traditional district court activity.2
[Example: no equivalent in Canada....yet]
2. The roots o* "administrative" agencies are old...3
o Constitutional "separation of powers"
Checks & Balances
- Congress - writes the laws
- President - carries out the laws
- Courts - interpret the laws
o regulation of everyday commerce, new technology,
created pressure to faster and more informed
decision making and dispute resolution.
1 In addition to EPA, many federal agencies have
administrative law enforcement authorities. Some of these
include: the Occupational Safety & Health Administration,
(OSHA), Federal Aviation Administration, (FAA), Federal Trade
Commission, (FTC), Food & Drug Administration, (FDA) and
Department of Agriculture, (USDA).
2 See, for example: High Stakes on a Fast Track;
Administrative Enforcement at EPA; Federal Bar Journal.
3 For example, regulation of commercial ferry-boat traffic
and safety in the steam boat industry in the 1800's led to the
development of the United States Coast Guard and Federal Trade
Commission.
-------
EPA in 1992
- writes regulations & policies
- inspects/files administrative suits
- interprets the lavs: through the
Administrative Law Judges and the
Administrator of EPA
Is It A Fair System? YES
o Administrative Procedure Act creates
safeguards and separations of functions.
o Potential Court oversight to curb abuses
o Offers "specialized" and "knowledgeable"
interpretation of federal programs
- issues are adjudicated by a judge who
understands the program and vocabulary
3. Typical Steps in an Administrative Penalty Action
A. Identify Violation4
o civil only5
o legal tests: preponderance of the evidence: not
beyond a reasonable doubt; more likely than not.
4 EPA has administrative law enforcement authorities in the
majority of federal environmental statutes, including the Clean
Air Act, (CAA), Clean Water Act, (CWA), Resource Conservation
and Recovery Act, (RCRA), Emergency Planning & Community Right-
To-Know Act, (EPCRA), Comprehensive Emergency Response,
Compensation and Liability Act, (CERCLA), Toxic Substances
Control Act, (TSCA), Asbestos Hazard Emergency Response Act,
(AHERA), and the Federal Insecticide, Fungicide and Rodenticide
Act, (FIFRA).
5 Most actions can only seek civil penalties and a
commitment to achieve and maintain compliance. With the exception
of RCRA, for example, Administrative Law Judges lack the
authority to issue compliance orders in the majority of EPA
environmental statutes.
-------
B. Issue civil complaint6
o clearly state the violations7
o propose penalty ($1,000 to $15,700,000)
o EPA considers several factors:8
- extent, nature & circumstances of violation
- gravity of harm or potential harm
- size of business
- effect of penalty on business9
o offer opportunity for hearing
- "on the record"
- before an impartial Administrative Law Judge
More than 4,000 administrative enforcement actions are
issued annually.
7 Failure to state a violation with specific clarity may be
grounds for dismissal by the Administrative Law Judge
8 Each statute -has different, specific factors that must be
considered. To effectively implement an administrative penalty
program in ten regional offices, most EPA enforcement programs
develop statute-specific penalty policies or enforcement response
policies. This guidance is an attempt to endure that civil
penalties for the same or similar violation are the same
throughout the United States.
9 EPA has sought and collected civil penalties from state
and local units of government; school and universities;
hospitals; and non-profit entities. Consideration is given to the
specific financial condition of an individual entity.
-------
C. Offer to settle10
o The Consolidated Rules of Practice11 encourage
settlement.
o EPA must obtain compliance or an enforceable
schedule to achieve compliance12
o must collect a substantial portion of the proposed
penalty13
D. Opportunity for hearing
o Administrative Procedures Act of 1946
- "on the record"
- impartial Administrative Law Judge
- written decision on merits and law
E. May Appeal To Federal Courts1*
10 Historically, more than 96% of all filed cases settle.
This trend may shift as higher fines become more common place.
11 See: 40 CFR Part 22, et sea. Specifically, 40 CFR §
22.18(a), Settlement policy. The Agency encourages settlement of
a proceeding at any time if the settlement is consistent with the
provisions and objectives of the Act and applicable regulations.
The respondent may confer with the complainant concerning
settlement whether or not the respondent requests a hearing.
(Emphasis added in bold type-face)
12 Generally, administrative civil penalty actions are
quite successful in securing compliance or correcting violations.
In addition, penalty credits for environmental beneficial
projects give the Agency the opportunity to enhance the overall
compliance program at individual facilities and corporations.
13 In fiscal year, $31.9 million was collected in
administrative civil penalties. This represents 44% of all EPA
federal penalty dollars collected.
14 Generally, very few cases are ever appealed to federal
courts, (approximately 6-10 per year).
-------
4. General Advantages of Administrative Enforcement
A. Rapid deployment of resources and actions
- ability to tailor the right "size" violation to
the appropriate "type" of violation.
- low key actions avoid angry constituents
B. Technical issues are presented to a more "informed"
judiciary.
C. Very limited opportunities for delay
- abbreviated "discovery"
- expanded use of motion practice
D. Lower transaction costs
- for the government
- for the respondent
E. More flexibility in terms of settlement
F. Ability to effective use press to promote compliance
through deterrence.
-------
-------
TYPES OF ADMINISTRATIVE HEARINGS CONDUCTED WITHIN EPA
1. Personnel
a. Merit Systems Protection Board (MSPB)
(5 CFR §1201 et sea.)
b. Equal Employment Opportunity Commission
(EEOC) (29 CFR §1614)
2. Listing or Delisting (40 CFR Part 15)
(Clean Air and Water Quality Acts matters only)
(CA §306, 42 USC §7606) CAA §508, 33 USC §1368).
3. Hearings Conducted Under the Consolidated Rules of Practice
governing the Administrative Assessment of civil Penalties
and the Revocation or Suspension of Permits. 40 CFR 22.
a. FIFRA Section 14 (a) (7 USC §1361(a)
b. Clean air Act, Section 211 (42 USC §7545)
c. Marine Protection Research and Sanctuaries Act,
Section 105(a) and (f) (33) USC §1415(a))
d. Solid Waste Disposal Act as amended (RCRA),
Section 3008 (42 USC §6928)
e. TSCA, Section 16(a) (15 USC §2615(a)).
4. Debarment and Suspension Under EPA Assistance Programs (40 '
CFR Part 32)
5. Assessment and Collection of Noncompliance Penalties under
the Clean Air Act (Section 120 of CAA, 42 USC §7420; 40 CFR
Part 66 makes 40 CFR Part 22 applicable once a hearing is
granted)
6. Control of Air Pollution from Mobile Sources (40 CFR Part
85, motor vehicles).
7. Spill Prevention Control and Countermeasure (SPCC) Hearings
(40 CFR Part 114) (Under authority of Sections 311(j) and
501(a) of the CWA, 33 USC 1321(j), 1361(a).
8. Procedures for Decision Making Under the Clean Water Act as
amended (Water Quality Act of 1987), RCRA, SDWA (UIC) and
CAA (PSD permits).
a. Public hearings under 40 CFR §124.12, Part of
proceedings to veto state-issued NPDES permits.
b. Evidentiary Hearing for EPA-Issued NPDES Permits
(40 CFR §124 subpart E)
c. Non-Adversary Panel Procedures (40 CFR §124 subpart F,
applies to some NPDES permits, draft RCRA, or draft UIC
permits)
-------
9. Safe Drinking Water Act (SDWA) (42 USC §300F gt seg.)
a. Review of State-Issued Variances and
Exemptions (40 CFR §142 Subpart c)
b. Federal Enforcement (40 CFR §142 Subpart D)
c. Variances and Exemptions issued by EPA (40 CFR Subparts
E & F)
d. New Civil Administrative Penalty.Authorities
1. Underground Injection Control (UIC).
2. Public Water Supply (PWS)
10. FIFRA - Registration, Classification, Cancellation and Other
Procedures (in HQ)
11. Ocean Dumping Permits (40 CFR 220 et sea.)
12. SARA, Section 109 - no regulations issued as yet.
13. RCRA, Corrective Action Orders for Interim Status
Facilities; 40 CFR Part 24.
14. EPCRA ( Emergency Planning; Community Right to Know Act)
Toxic Chemical Release Inventory Actions; 40 CFR Part 22.
15. Equal Access to Justice Act; Procedures for Adjudication of
Claims for "prevailing parties" in cases where EPA's claim
was not "substantially justified". 40 CFR 17.
-------
-------
PART 22-CONSOUDATED RULES
OF PRACTICE GOVERNING THE
ADMINISTRATIVE ASSESSMENT OF
CIVIL PENALTIES AND THE REV-
OCATION OR SUSPENSION OF
PERMITS
Support A Central
Sec.
22.01 Scope of these rules.
22.02 Use of number and gender.
22.03 Definitions.
22.04 Powers and duties of the Environ-
mental Appeals Board, the Regional Ad-
ministrator, the Regional Judicial Offi-
cer, and the Presiding Officer; disquali-
fication.
22.05 Filing, service, and form of pleadings
and documents.
22.06 Filing and service of rulings, orders
and decisions.
22.07 Computation and extension of time.
22.08 Ex parte discussion of proceeding.
22.09 Examination of documents filed.
Subpart D-Heortng Procedure
22.21 Scheduling the hearing.
22.22 Evidence.
22.23 Objections and offers of proof.
22.24 Burden of presentation; burden of per-
suasion.
22.25 Filing the transcript.
8.28 Proposed findings, conclusions, and
order.
E~lnHlal DecWon and Motion to
Reopen a Hearing
8.27 Initial decision.
22.28 Motion to reopen a hearing.
Subport B—Parties and Appearance!
22.10 Appearances.
22.11 Intervention.
22.12 Consolidation and severance.
Subpart F—Appeals and Administrative
22.29 Appeal from or review of Interlocutory
orders or rulings.
22.30 Appeal from or review of initial deci-
sion.
Subpart C—Prehearing Procedures
22.13 Issuance of complaint.
22.14 Content and amendment of the com-
plaint.
22.15 Answer to the complaint.
22.16 Motions.
22.17 Default order.
22.18 Informal settlement; consent agree-
ment and order.
22.19 Prehearing conference.
22.20 Accelerated decision; decision to dis-
miss.
Subpart O Find Order on Appeal
22.31 Final order on appeal.
22.32 Motion to reconsider a final order.
40 CFR Part 22, et seq. [as published 7-1-93 Edition]
-------
Subpoit M^
Rutoi
22.33 Supplemental rules of practice go\
ing the administrative assessment
civil penalties under the Toxic Si
stances Control Act.
22.34 Supplemental rules of practice govern
Ing the administrative assessment oi
civil penalties under Title n of the Clean
Air Act.
22.35 Supplemental rules of practice govern-
ing the administrative assessment of
civil penalties under the Federal Insecti-
cide. Fungicide, and Rodenticide Act.
22.36 Supplemental rules of practice govern-
ing the administrative assessment of
civil penalties and the revocation or sus-
pension of permits under the Marine Pro-
tection. Research, and Sanctuaries Act.
22.37 Supplemental rules of practice govern-
ing the administrative assessment of
civil penalties under the Solid Waste Dis-
posal Act.
22.38 Supplemental rules of practice govern-
ing the administrative assessment of
Class n penalties under the Clean Water
Act.
22.38 Supplemental rules of practice govern-
ing the administrative assessment of ad-
ministrative penalties under sectioa 109
of the Comprehensive Environmental Re-
sponse. Compensation, and Liability Act
of 1980. as amended.
22.40 Supplemental rules of practice govern-
ing the administrative assessment of ad-
ministrative penalties under section 825
of the Emergency Planning and Commu-
nity Rlght-To-Know Act of 1986 (EPCRA).
22.41 Supplemental rules of practice govern-
ing the administrative assessment of
civil penalties under Title n of the Toxic
Substances Control-Act. enacted as sec-
tion 2 of the Asbestos Hazard Emergency
Response Act (AHERA).
22.42 Supplemental rules of practice govern-
ing -the administrative assessment of
civil penalties for violations of compli-
ance orders issued under Part B of the
Safe Drinking Water Act.
22.43 Supplemental rules of practice govern-
ing the administrative assessment of
civil penalties under section 113(dXl) of
the Clean Air Act.
APPENDIX to PART 22—ADDRESSES OF EPA
REGIONAL OFFICES
AUTHORITY: 15 U.S.C. 2615; 42 U.S.C. 74l3(d).
7524(0. 7545
-------
Subport A—General
822.01 Scope of these rules.
(a) These rules of practice govern all
adjudicatory proceedings for:
(7) The assessment of any adminis-
trative penalty under section 109 of the
Comprehensive Environmental Re-
sponse, Compensation, and Liability
Act of 1980, as amended (42 U.8.C. 9609):
(1) The assessment of any civil pen-
Fines <y conducted under section 14(a) of
the Federal Insecticide, Fungicide and
Rodenticide Act as amended (7 U.S.C.
(8) The assessment of any adminis-
trative penalty under section 325 of the
Emergency Planning and Community
Right-To-Know Act of 1986 (EPCRA) (42
U.S.C. 11045).
(2) The assessment of any adminis-
trative penalty under sections 113(d)(l).
205(c). 211(d) and 213(d) of the Clean Air
Act, as amended (CAA) (42 U.S.C.
7413(d)(l), 7524(c), 7545(d) and 7547(d)).
(9) The assessment of any civil pen-.
alty conducted under section
1414(gX3XB) of the Safe Drinking Water
Act as amended (42 U.S.C. 300g-
3(g)(3XB)).
(3) The assessment of any civil pen-
Permit alty or for tne revocation or suspension
c^ . of any permit conducted under section
ousaension 105 (a) ^4 (f) of the Marlne Protection,
Research, and Sanctuaries Act as
amended (33 U.S.C. 1415(a));
. (4) The issuance of a compliance
Compliance order or the issuance of a corrective ac-
Orders
Corrective
Action
Orders
tion order, the suspension or revoca-
tion of authority to operate pursuant
to section 3005(e) of the Solid Waste
Disposal Act. or the assessment of any
civil penalty under sections 3008, 9006
and 11005 of the Solid Waste Disposal
Act, as amended (42 U.S.C. 6928. 6991(e)
and 6992(d)), except as provided in 40
CFR parts 24 and 124.
(5) The assessment of any civil pen-
alty conducted under section 16Xa) of
the Toxic Substances Control Act (15
U.S.C. 2615(a)):
(6) The assessment of any Class II
penalty under section 309(g) of the
Clean Water Act (33 U.S.C. 1319(g));
NOTE: SUPPLEMENTAL RULES
(b) The Supplemental rules of prac-
tice set forth in subpart H establish
rules governing those aspects of the
proceeding In question which are not
covered in subparts A through 6, and
also specify procedures which super-
sede any conflicting procedures set
forth in those subparts.
(c) Questions arising at any stage of
the proceeding which are not addressed
in these rules or in the relevant supple-
mentary procedures shall be resolved
at the discretion of the Administrator.
Regional Administrator, or Presiding
Officer, as appropriate.
DISCRETION TO RESOLVE
PROCEDURAL DISPUTES
[45 FR 24363. Apr. 9. 1980, as amended at 52
FR 30673. Aug. 17. 1987; 63 FR 12263. Apr. 13.
1988; M FR 12371. Mar. 24. 1969; 64 FR 21176.
May 16, 1989; 66 FR 3787. Jan. 30, 1991: 57 FR
4318. Feb. 4,1992]
-3-
-------
§ 22.02 Use of number and gender.
As used in these rules of practice,
words in the singular also include the
plural and words in the masculine gen-
der also include the feminine and vice
versa, as the case may require.
§22X13 Definitions.
(a) The following definitions apply to
part 22:
Act means the particular statute au-
thorizing the institution of the pro-
ceeding at issue.
Administrative Law Judge means an
Administrative Law Judge appointed
under 5 U.S.C. 3105 (see also Pub. L. 95-
251. 92 Stat. 183).
Administrator means the Adminis-
trator of the U.S. Environmental Pro-
tection Agency or his delegate.
Agency means the United States En-
vironmental Protection Agency.
Complainant means any person au-
S?J?*? **•*• a c»»Plaint on behalf
ta S£ifS>DeV- Par80n8 aw«** to be
«tVl?*Von °Ltt« Act- Thebomplain-
ant shall not be a member of the Envi-
ronmental Appeals Board, the Regional
Judicial Officer, or any other person
who will participate or advise in the
decision.
Final Order means (a) an order issued
by the Administrator after an appeal of
an initial decision, accelerated deci-
sion, decision to dismiss, or default
order, disposing of a matter in con-
troversy between the parties, or (b) an
initial decision which becomes a final
order under J22.27(c).
Hearing means a nearlng on the
record open to the public and con-
ducted under these rules of practice.
Hearing Clerk means the Hearing
Clerk. A-110, U.S. Environmental Pro-
tection Agency. 401 M St. SW.. Wash-
ington. DC 20460.
Initial Decision means the decision is-
sued by the Presiding Officer based
upon the record of the proceedings out
of which it arises.
Party means any person that partici-
pates in a hearing as complainant, re-
spondent, or intervenor.
Complaint means a written commu-
nication,, alleging one or more viola-
tions of specific provisions of the Act.
or regulations or a permit promulgated
thereunder, issued by the complainant
to a person under H 22.13 and 22.14.
Consent Agreement means any written
document, signed by the parties, con-
taining stipulations or conclusions of
fact or law and a proposed penalty or
proposed revocation or suspension ac-
ceptable to both complainant and re-
spondent.
Environmental Appeals Board means
the Board within the Agency described
in §1.25 of this title, located at U.S. En-
vironmental Protection Agency, A-110,
401 M St. SW.. WashingtonTDC 204K)
Permit means a permit issued under
section 102 of the Marine Protection.
Research, and Sanctuaries Act.
Person includes any individual, part-
nership, association, corporation, and
• any trustee, assignee.-receiver or legal
successor thereof; any organized group
of persons whether incorporated or not:
and any officer, employee, agent, de-
partment, agency or instrumentality of
the Federal Government, of any State
or local unit of government, or of any
foreign government.
-4-
-------
Presiding Officer means the Adminis-
trative Law Judge designated by the
Chief Administrative LAW Judge to
serve as Presiding Officer, unless other-
wise specified by any supplemental
rules.
Regional Administrator means the Ad-
ministrator of any Regional Office of
the Agency or any officer or employee
thereof to whom his authority is duly
delegated. Where the Regional Admin-
istrator has authorized the Regional
Judicial Officer to act, the term Re-
gional Administrator shall include the
Regional Judicial Officer. In a case
where the complainant is the Assistant
Administrator for Enforcement or his
delegate, the term Regional Adminis-
trator as used in these rules shall mean
the Administrator.
Regional Hearing Clerk means an indi-
vidual duly authorised by the Regional
Administrator to serve as hearing
clerk for a given region. Correspond-
ence may be addressed to the Regional
Hearing Clerk, U.S. Environmental
Protection Agency (address of Regional
Office—see appendix). la a case where
the complainant is the Assistant Ad-
ministrator for Enforcement or his del-
egate, the term Regional Hearing Clerk
as used in these rules shall mean the
Hearing Clerk.
Regional Judicial Officer means a per-
son designated by the Regional Admin-
istrator under |32.M(t>) to serve as a
Regional Judicial Officer.
Respondent means any person pro-
ceeded against la the complaint.
(b) Terms defined In the Act and not
defined In these rules of practice are
used consistent with the meanings
given in the Act.
[45 PR 24363, Apr. 9. 1890. aa amended at 57
FRS323, Feb. 13.1992}
-5-
-------
122.04 Power* and duties of (he Envi-
ronmental Appeals Board, the Re-
gional Administrator, the Regional
Judicial Officer, and the Presiding
Officer; disqualification.
(a) Environmental Appeals Board. The
Administrator delegates authority
under the Act to the Environmental
Appeals Board to perform the functions
assigned to it in these rules of practice.
An appeal or motion under this part di-
rected to the Administrator, rather
i&an to the Environmental Appeals
Board, will not be considered. This del-
egation of authority to the Environ-
mental Appeals Board does not pre-
clude the Environmental Appeals
Board from referring any case or mo-
tion governed by this part to the Ad-
ministrator when the Environmental
Appeals Board, in its direction, deems
It appropriate to do so. When an appeal
or motion is referred to the Adminis-
trator, all parties shall be so notified
and the rules in this part referring to
the Environmental Appeals Board shall
be interpreted as referring to the Ad-
ministrator. If a case or motion is re-
ferred to the Administrator by the En-
vironmental Appeals Board, the Ad-
ministrator may consult with any EPA
employee concerning the matter, pro-
vided such consultation does not vio-
late the ex pane rules set forth in
§22.08.
gional Judicial Officer from referring
any motion or case to the Regional Ad-
ministrator. The Regional Judicial Of-
ficer shall exercise all powers and du-
ties prescribed or delegated under the
Act or these rules of practice.
(2) Qualifications of Regional Judicial
Officer. A Regional Judicial Officer
shall be an attorney who is a perma-
nent or temporary employee of the
Agency or some other Federal agency
and who may perform other duties
within the Agency. A Regional Judicial
Officer shall not be employed by the
Region's Enforcement Division or by
the Regional Division directly associ-
ated with the type of violation at issue
in the proceeding. A Regional Judicial
Officer shall not have performed pros-
ecutorial or investigative functions in
connection with any hearing in which
he serves as a Regional Judicial Officer
or with any factually related hearing.
(b) Regional Administrator. The Re-
gional Administrator shall exercise all
powers and duties as prescribed or dele-
gated under the Act and these rules of
practice.
(1) Delegation to Regional Judicial Offi-
cer. One or more Regional Judicial Offi-
cers may be designated by the Regional
Administrator to perform, within the
region of their designation, the func-
tions described below. The Regional
Administrator may delegate his or her
authority to a Regional Judicial Offi-
cer to act in a given proceeding. This
delegation will not prevent the Re-
-6-
-------
(c) Presiding Officer. The Presiding ui-
ficer shall conduct a fair and impartial
proceeding, assure that the facts are
fully elicited, adjudicate all issues, and
avoid delay. The Presiding Officer shall
have authority to:
DITTIES OF THE PRESIDING OFFICER
• Develop a written record
• Render a written decision
NOTE SCOPE OF DEFINITION
(1) Conduct administrative hearings
under these rules of practice;
CONDUCT HEARINGS.
(2) Rule upon motions, requests, and
offers of proof, dispose of procedural re-
quests, and issue all necessary orders;
I
RULE ON MOTIONS
I ISSUE ORDERS
(3) Administer oaths and affirmations
and take affidavits;
ADMINISTER OATHS
(4) Examine witnesses and receive
documentary or other evidence;
(5) For good cause, upon motion or
sua sponte, order a party, or an officer
or agent thereof, to produce testimony,
documents, or other nonprivlleged evi-
dence, and failing the production there-
of without good cause being shown.
draw adverse inferences against that
party;
EXAMINE WTTNESSES
RECEIVE EVIDENCE
ORDER PRODUCTION
OF TESTIMONY OR DOCUMENTS
(Draw Adverse Inferences)
(6) Admit or exclude evidence;
ADMIT/EXCLUDE EVIDENCE
(7) Hear and decide questions of facts.
law, or discretion;
(8) Require parties to attend con-
ferences for the settlement or sim-
plification of the issues, or the expedi-
tion of the proceedings;
Hear/DECIDE QUESTIONS OF
/ FACT / LAW / DISCRETION
REQUIRE ATTENDANCE
(9) Issue subpoenas authorized by the
Act; and
ISSUE SUBPOENAS
(10) Do all other acts and take all
measures necessary for the mainte-
nance of order and for the efficient, fair
. and impartial adjudication of issues
arising in proceedings governed by
these rules.
DO Tall other acts' NECESSARY
• to maintain order
• to promote efficiency
• to ensure fairness, impartiality
-7-
-------
(d) Disqualification: withdrawal. (1)
The Administrator, the Regional Ad-
ministrator, the members of the Envi-
ronmental Appeals Board, the Regional
Judicial Officer, or the Presiding Offi-
cer may not perform functions pro-
vided for in these rules of practice re-
garding any matter in which they (i)
have a financial interest or (ii) have
any relationship with a party or with
the subject matter which would make
it inappropriate for them to act. Any
party may at any time by motion made
to the Regional Administrator request
that the Regional Judicial Officer be
disqualified from the proceeding. Any
party may at any time by motion to
the Administrator request that-the Re-
gional Administrator, a member of the
Environmental Appeals Board, or the
Presiding Officer be disqualified or re-
quest that the Administrator dis-
qualify himself or herself from the pro-
ceeding. The Administrator, the Re-
gional Administrator, a member of the
Environmental Appeals Board, the Re-
gional Judicial Officer, or the Presid-
ing Officer may at any time withdraw
from any proceeding in which they
deem themselves disqualified or unable
to act for any reason.
another region to replace the Adminis-
trator. The Regional Administrator
shall assign a new Presiding Officer if
the original Presiding Officer was not
an Administrative Law Judge. The
Chief Administrative Law Judge shall
assign a new Presiding Officer from
among available Administrative Law
Judges if the original Presiding Officer
was an Administrative Law Judge.
(3) The Chief Administrative Law
Judge, at any stage in the proceeding.
may reassign the case to an Adminis-
trative Law Judge other than the one
originally assigned in the event of the
unavailability of the Administrative
Law Judge or .where reassignment will
result in efficiency in the scheduling of
hearings and would not prejudice the
parties.
[45 PR 24363. Apr. 9. 1980. as amended at 57
FR 5324. Feb. 13. 1992; 57 FR 60129. Dec. 18.
1992]
(2) If the Administrator, the Regional
Administrator, the Regional Judicial
Officer, or the Presiding Officer is dis-
qualified or withdraws from the pro-
ceeding, a qualified individual who has
none of the infirmities listed in para-
graph (d)(l) of this section shall be as-
signed to replace him. Assignment of a
replacement for Regional Adminis-
trator or for the Regional Judicial Offi-
cer shall be made by the Administrator
or the Regional Administrator, respec-
tively. The Administrator, should he or
she withdraw or disqualify himself or
herself, shall assign the Regional Ad-
ministrator from the Region where the
case originated to replace him or her.
If that Regional Administrator would
be disqualified, the Administrator shall
assign a Regional Administrator from
-8-
-------
ORIGINAL + 1 copy
Hearing Clerk
ft 22.06 Filing, Mi-vice, and form of
pleadings and document*.
(a) Filing of pleadings and documents.
(1) Except aa otherwise provided, the
original and one copy of the complaint,
and the original of the answer and of
all other documents served in the pro-
ceeding shall be filed with the Regional
Hearing Clerk.
CERTIFICATE OF SERVICE
ALWAYS REQUIRED
(2) A certificate of service shall ac-
company each document filed or
served. Except as otherwise provided, a
party filing documents with the Re-
gional Hearing Clerk, after the filing of
the answer, shall serve copies thereof
upon all other parties and the Presid-
ing Officer. The Presiding Officer shall
maintain a duplicate file during the
course of the proceeding.
(3) When the Presiding Officer cor-
responds directly with the parties, the
original of the correspondence shall be
sent to the Regional Hearing Clerk, a
copy shall be maintained by the Presid-
ing Officer in the duplicate file, and a
copy shall be sent to all parties. Par-
ties who correspond directly with the
Presiding Officer shall in addition to
serving all other parties send a copy of
all such correspondence to the Re-
gional Hearing Clerk. A certificate of
service shall accompany each docu-
ment served under this subsection.
(b) Service of pleadings and docu-
ments—(1) Service of complaint. (1) Serv-
ice of a copy of the signed original of
the complaint, together with a copy of
these rules of practice, may be made
personally or by certified mail, return
receipt requested, on the respondent
(or his representative).
COMPLIANT SERVICE
• personal service
• certified mail
(ii) Service upon a domestic or for-
eign corporation or upon a partnership
or other unincorporated association
which is subject to suit under a com-
mon name shall be made by personal
service or certified mail, as prescribed
by paragraph (b)(l)(l) of this section,
directed to an officer, partner, a man-
aging or general agent, or to any other
person authorized by appointment or
by Federal or State law to receive serv-
ice of process.
FEDERAL AGENCIES
(ill) Service upon an officer or agency
of the United States shall be made by
delivering a copy of the complaint to
the officer or agency, or in any manner
Prescribed for service by applicable
regulations. If the agency -is a corpora-
tion, the complaint shall be served as
prescribed in paragraph (bXIXii) of this
section.
STATE or LOCAL AGENCIES
(iv) Service upon a State or local
unit of government, or a State or local
officer, agency, department, corpora-
tion or other instrumentality shall be
made by serving a copy of the com-
plaint in the manner prescribed by the
law of the State for the service of proc-
ess on any such persons, or:
(A) If upon a State or local unit of
government, or a State or local depart-
ment, agency, corporation or other in-
strumentality, by delivering a copy of
the complaint to the chief executive of-
ficer thereof;
(B) If upon a State or local officer by
delivering a copy to such officer.
(v) Proof of service of the complaint
shall be made by affidavit of the person
making personal service, or by prop-
erly executed return receipt. Such
proof of service shall be filed with the
complaint immediately upon comple-
tion of service.
9-
-------
FIRST CLASS SERVICE
for all other pleadings
(2) Service of documents other than
complaint, rulings, orders, and decisions.
All documents other than the com-
plaint, rulings, orders, and decisions,
may be served personally or by cer-
tified or first class mail.
NOTE: FORM OF PLEADINGS
(c) Form of pleadings and documents.
(1) Except as provided herein, or by
order of the Presiding Officer or of the
Environmental Appeals Board, there
are no specific requirements as to the
form of documents.
(5) The Environmental Appeal*
Board, the Regional Administrator, the
Presiding Officer, or the Regional
Hearing Clerk may refuse to file any
document which does not comply with
this paragraph. Written notice of such
refusal, stating the reasons therefor,
shall be promptly given to the person
submitting the ..document. Such person
may amend and resubmit any docu-
ment refused for filing upon motion
granted by the Environmental Appeals
Board, the Regional Administrator, or
the Presiding Officer, as appropriate.
[45 PR 24363. Apr. 9. 1960. as amended af 57
FR S324. Feb. 13.1992]
(2) The first page of every pleading,
letter, or other document shall contain
a caption identifying the respondent
and the docket number which is exhib-
ited on the complaint.
(3) The original of any pleading, let-
ter or other document (other than ex-
hibits) shall be signed by the party fil-
ing or by his counsel or other rep-
resentative. The signature constitutes
a representation by the signer that he
has read the pleading, letter or other
document, that to the best of his
knowledge, information and belief, the
statements made therein are true, and
that it is not interposed for delay.
(4) The initial document filed by any
person shall contain his name, address
and telephone number. Any .changes in
this information shall be commu-
nicated promptly to the Regional Hear-
ing Clerk, Presiding Officer, and all
parties to the proceeding. A party who
fails to furnish such Information and
any changes thereto shall be deemed to
have waived his right to notice and
service under these rules.
-10-
-------
622.06 Filing and service of rulings,
orders, and decisions.
All rulings, orders, decisions, and
other documents issued by the Re-
gional Administrator, Regional Judi-
cial Officer, or Presiding Officer, as ap-
propriate, shall be filed with the Re-
gional Hearing Clerk. All such docu-
ments issued by the Environmental Ap-
peals Board shall be filed with the
Clerk of the Environmental Appeals
Board. Copies of such rulings, orders,
decisions, or other documents shall be
served personally, or by certified mail.
return receipt requested, upon all par-
ties by the Environmental Appeals
Board, the Regional Administrator, the
Regional Judicial Officer, or the Pre-
siding Officer, as appropriate.
(45 FR 24363. Apr. 9. 1980. as amended at 57
PR 5324. Feb. 13.1992]
motion. Such a motion by a party may
only be made after notice to all other
parties, unless the movant can show
good cause why serving notice is im-
practicable. The motion shall be filed
in advance of the date on which the
pleading, document or motion is due to
be filed, unless the failure of a party to
make timely motion for extension of
time was the result of excusable ne-
glect.
(c) Service by mail. Service of the com-
plaint is complete when the return re-
ceipt is signed. Service of all other
pleadings and documents is complete
upon mailing. Where a pleading or doc-
ument is served by mail, five (5) days
shall be added to the time allowed by
these rules for the filing of a responsive
pleading or document.
[45 FR 24363. Apr. 9. 1980. as amended at 57
FR 5324. Feb. 13,1992]
922.07 Computation and extension of
time.
(a) Computation. In computing any
period of time prescribed or allowed in
these rules of practice, except as other-
wise provided, the day of the event
from which the designated period be-
gins to run shall not be included. Sat-
urdays. Sundays, and Federal legal
holidays shall be included. When a
stated time expires on a Saturday,
Sunday or legal holiday, the stated
time period shall be extended to in-
clude the next business day.
(b) Extension of tine. The Environ-
mental Appeals Board, the Regional
Administrator, or the Presiding Offi-
cer, as appropriate, may grant an ex-
tension of time for the filing of any
pleading, document, or motion (1) upon
timely motion of a party to the pro-
ceeding, for good cause shown, and
after consideration of prejudice to
other parties, or (2) upon its or his own
•11 -
-------
( 22.08 Ex parte discussion of proceed*
ing.
At no time after the issuance of the
complaint shall the Administrator, the
members of the Environmental Appeals
Board, the Regional Administrator, the
Regional Judicial Officer, the Presid-
ing Officer, or any other person who is
likely to advise these officials in the
decision on the case, discuss ex parte
the merits of the proceeding with any
interested person outside the Agency.
with any Agency staff member who
performs a prosecutorial or investiga-
tive function in such proceeding or a
factually related proceeding, or with
any representative of such person. Any
ex parte memorandum or other com-
munication addressed to the Adminis-
trator, the Regional Administrator,
the Environmental Appeals Board, the
Regional Judicial Officer, or the Pre-
siding Officer during the pendency of
the proceeding and relating to the mer-
its thereof, by or on behalf of any party
shall be regarded as argument made in
the proceeding and shall be served upon
all other parties. The other parties
shall be given an opportunity to reply
to such memorandum or communica-
tion.
[45 PR 24363. Apr. 9. 1980. as amended at 57
FR5325. Feb. 13.1992]
822.09
filed.
PUBLIC INSPECTION OF
OFFICIAL RECORDS
of documents
(a) Subject to the provisions of law
restricting the public disclosure of con-
fidential Information, any person may.
during Agency business hours, inspect
and copy any document filed In any
proceeding. Such documents shall be
made available by the Regional Hear-
ing Clerk, the Hearing Clerk, or the
Environmental Appeals Board, as ap-
propriate.
(b) The cost of duplicating documents
filed in any proceeding shall be borne
by the person seeking copies of such
documents. The Agency may waive this
cost In appropriate cases.
[45 FR 24363. Apr. 9. I960, as amended at 57
FR5325. Feb. 13.1992]
-12-
-------
Subpart B—Parties and
Appearances
(22.10 Appearances.
Any party may appear in person or
by counsel or other representative. A
partner may appear on behalf of a part-
nership and an officer may appear on
behalf of a corporation. Persons who
Appear as counsel or other representa-
tive must conform to the standards of
conduct and ethics required of practi-
tioners before the courts of the United
States.
NOTE: STANDARD FOR INTERVENTION
ttt.ll InterrcBtkm.
(a) Motion. A motion for leave to in-
tervene in any proceeding conducted
under these rules of practice must set
forth the grounds for the proposed
intervention, the position and interest
of the movant and the likely impact
that intervention will have on the ex-
Peditious progress of the proceeding.
Any person already a party to the pro-
ceeding may file an answer to a motion
to intervene, making specific reference
to the factors set forth in the foregoing
"entence and paragraph (c) of this sec-
tion, within ten (10) days after service
of the motion for leave to intervene.
(c) Disposition. Leave to intervene
may be granted only if the movant
demonstrates that (1) his presence in
the proceeding would not unduly pro-
long or otherwise prejudice the adju-
dication of the rights of the original
parties; (2) the movant will be ad-
versely affected by a final order; and (3)
the interests of the movant are not
being adequately represented by the
original parties. The intervenor shall
become a full party to the proceeding
upon the granting of leave to inter-
vene.
PROVISION FOR AMICUS on motion onfy
(d) Amicus euriae. The motion shall
identify the interest of the applicant
and shall state the reasons why the
proposed amicus brief is desirable. If
the motion is granted, the Presiding
Officer or Administrator shall issue an
order setting the time for filing such
brief. If the motion is granted, the Pre-
siding Officer or the Environmental
Appeals Board shall issue an order set-
ting the time for filing such brief.
[45 FR 24363. Apr. 9. 1990. aa amended at 57
PR 5325. Feb. 13.1982]
(b) When /Itorf. A motion for leave to
intervene in,a proceeding must ordi-
narily be filed before the first prehear-
ing conference or. in the absence of a
prehearing conference, before the initi-
ation of correspondence under §22.19(e),
or if there is no such correspondence,
prior to the setting of a time and place
for a hearing. Any motion filed after
that time must include, in addition to
the information set forth in paragraph
(a) of this section, a statement of good
cause for the failure to file in a timely
manner. The intervenor shall be bound
by any agreements, arrangements and
other matters previously made in the
proceeding.
ft 22.12 ConsoiidatioB and
(a) Consolidation. The Presiding Offi-
cer may, by motion or sua sponte. con-
solidate any or all matters at issue in
two or more proceedings docketed
under these rules of practice where (1)
there exists common parties or com-
mon questions of fact or law. (2) con-
solidation would expedite and simplify
consideration of the issues, and (3) con-
solidation would not adversely affect
the rights of parties engaged in other-
wise separate proceedings.
(b) Severance. The Presiding Officer
may. by motion or sua sponte. for good
cause shown order any proceedings sev-
ered with respect to any or all parties
or Issues.
-13-
-------
Subport C—Preheoring
Procedures
§ 22.13 Issuance of complaint.
If the complainant has reason to be-
lieve that a person has violated any
provision of the Act, or regulations
promulgated or a permit issued under
the Act, he may institute a proceeding
for the assessment of a civil penalty by
issuing a complaint under the^Act and
these rules of practice. If the complain-
ant has reason to believe that
(a) A permittee violated any term or
condition of the permit, or
(b) A permittee misrepresented or in-
accurately described any material fact
in the permit application or failed to
disclose all relevant facts in the permit
application, or
(c) Other good cause exists for such
action, he may institute a proceeding
for the revocation or suspension of a
permit by Issuing a complaint under
the Act and these rules of practice. A
complaint may be for the suspension or
revocation of a permit in addition to
the-assessment of a civil penalty.
§22.14 Content and am
complaint.
it of the
(a) Complaint for the assessment of a
civil penalty. Each complaint for the as-
sessment of a civil penalty shall In-
clude:
(1) A statement reciting the
section(s) of the Act authorizing the Is-
suance of the complaint;
(2) Specific reference to each provi-
sion of the Act and implementing regu-
lations which respondent is alleged to
have violated:
(3) A concise statement of the factual
basis for alleging the violation;
(4) The amount of the civil penalt:
which is proposed to be assessed:
(5) A statement explaining the rea-
soning behind the proposed penalty:
(6) Notice of respondent's right to re-
quest a hearing on any material fact
contained in the complaint, or on the
appropriateness of the amount 01 tne
proposed penalty.
A copy of these rules of practice shall
accompany each complaint served.
CAREFW r-v THK RSSENTTAL
ELEMENTS FOR
-14-
-------
(b) Complaint for the revocation or sus-
pension of a permit. Each complaint for
the revocation or suspension of a per-
mit shall include:
(1) A statement reciting: the
section(s) of the Act, regulations, and/
or permit authorizing the issuance of
the complaint;
(c) Derivation of proposed civil penalty.
The dollar amount of the proposed civil
penalty shall be determined in accord-
ance with any criteria set forth in the
Act relating to the proper amount of a
civil penalty and with any civil penalty
guidelines issued under the Act.
(2) Specific reference to each term or
condition of the permit which the re-
spondent is alleged to have violated, to
each alleged inaccuracy or misrepre-
sentation in respondent's permit appli-
cation, to each fact which the respond-
ent allegedly failed to disclose in his
permit application, or to other reasons
which form the basis for the complaint;
(3) A concise statement of the factual
basis for such allegations;
(4) A request for an order to either
revoke or suspend the permit and a
statement of the terms and conditions
of any proposed partial suspension or
revocation;
(5) A statement indicating the basis
for recommending the revocation, rath-
er than the suspension, of the permit,
or vice versa, as the case may be;
(6) Notice of the responaent s right to
request a hearing on any material fact
contained In the complaint, or on the
appropriateness of the proposed revoca-
tion or suspension.
AMENDMENT ONCE BEFORE ANSWER
(d) Amendment oj tne complaint. The
.complainant may amend the complaint
once as a matter of right at any time
before the answer Is filed. Otherwise
the complainant may amend the com-
plaint only upon motion granted by the
Presiding Officer or Regional Adminis-
trator, as appropriate. Respondent
shall have twenty (20) additional days
from the date of service of the amended
complaint to file his answer.
WITHDRAWAL OF COMPLAINTS
(e) Withdravjal of the complaint. The
complainant may withdraw the com-
plaint, or any part thereof, without
prejudice one time before the answer
has been filed. After one withdrawal
before the filing of an answer, or after
the filing of an answer, the complain-
ant may withdraw the complaint, or
any part thereof, without prejudice.
only upon motion granted by the Pre-
siding Officer or Regional Adminis-
trator, as appropriate.
A copy of these rules of practice shall
accompany each complaint served.
-15-
-------
ft 22.15 Aniwer to the complaint.
(a) General. Where respondent (1)
Contests any material fact upon which
the complaint is based; (2) contends
that the amount of the penalty pro-
posed in the complaint or the proposed
revocation or suspension, as the case
may be, is inappropriate; or (3) con-
tends that he is entitled to judgment
as a matter of law, he shall file a writ-
ten answer to the complaint with the
Regional Hearing Clerk. Any such an-
swer to the complaint must be filed
with the Regional Hearing Clerk with-
in twenty (20) days after service of the
complaint.
Contests material facts
Contends fine/revocation is inappropriate
Contends entitlement to judgment
as a matter of law
(b) Contents of the answer. The answer
shall clearly and directly admit, deny
or explain each of the factual allega-
tions contained in the complaint with
regard to which respondent has any
knowledge. Where respondent has no
knowledge of a particular factual alle-
gation and so states, the allegation is
deemed denied. The answer shall also
state (1) the circumstances or argu-
ments which are alleged to constitute
the grounds of defense, (2) the facts
which respondent intends to place at
issue, and (3) whether a hearing is re-
quested.
CONTENTS OF ANSWER
shall clearly & directly:
• ADMIT, DENY or EXPLAIN
each of the factual allegations
to which respondent has knowledge
• STATE ANY DEFENSES
• STATE FACTS TO BE ARGUED
• WHETHER A HEARING IS
REQUESTED
(c) Request for hearing. A hearing
upon the issues raised by the complaint
and answer shall be held upon request
of respondent in the answer. In addi-
tion, a hearing may be held at the dis-
cretion of the Presiding Officer, sua
sponte. if issues appropriate for adju-
dication are raised in the answer.
(d) Failure to admit, deny, or explain.
Failure of respondent to admit, deny,
or explain any material factual allega-
tion contained in the complaint con-
stitutes an admission of the allegation.
FAILURE TO ADMIT, DENY or EXPLAIN:
CONSTITUTES AN ADMISSION
(e) Amendment of the answer. The re-
spondent may amend the answer to the
complaint upon motion granted by the
Presiding Officer.
-16-
-------
(22.16 Motions.
(a) General. All motions, except those
made orally on the record during a
hearing, shall (1) be in writing; (2) state
the grounds therefor with particular-
ity; (3) set forth the relief or order
sought: and (4) be accompanied by any
affidavit, certificate, other evidence, or
legal memorandum relied upon. Such
motions shall be served as provided by
J22.05(b)(2).
• STATE GROUNDS
• SET FORTH RELIEF REQUESTED
INCLUDE SUPPORTING BRIEF/DOCUMENTS
(b) Response to motion*. A party's re-
sponse to any written motion must be
filed within ten (10) days after service
of such motion, unless additional time
is allowed for such response. The re-
sponse shall be accompanied by any af-
fidavit. certificate, other evidence, or
legal memorandum relied upon. If no
response is filed within the designated
period, the parties may be deemed to
have waived any objection to the
granting of the motion. The Presiding
Officer, the Regional Administrator, or
the Environmental Appeals Board, as
appropriate, may set a shorter time for
response, or make such orders concern-
Ing the disposition of motions as they
deem appropriate.
(c) Decision. Except as provided in
§22.04(dXl) and |22.28(a). the Regional
Administrator shall rule on all motions
filed or made before an answer to the
complaint is filed. The Environmental
Appeals Board shall rule on all motions
filed or made after service of the Initial
decision upon the parties. The Admin-
istrator shall rule on all motions filed
or made after service of the Initial de-
cision upon the parties. The Presiding
Officer shall rule on all other motions.
Oral argument on motions will be per-
mitted where the Presiding Officer, the
Regional Administrator, or the Envi-
ronmental Appeals Board considers it
necessary or desirable.
[45 FR 24363. Apr. 9. I960, as amended at 57
PR 5325. Feb.. 13. 1992; 57 PR 60129. Dec. 18.
19921 -17-
-------
{22.17 Default order.
(a) Default. A party may be found to
be in default (1) after motion, upon
failure to file a timely answer to the
complaint; -. (2) after motion or sua
sponte. upon failure to comply with a
prehearing or hearing order of the Pre-
siding Officer; or (3) after motion or
sua sponte, upon failure to appear at a
conference or hearing without good
cause being shown. No finding of de-
fault on the basis of a failure to appear
at a hearing shall be made against the
respondent unless the complainant pre-
sents sufficient evidence to the Presid-
ing Officer to establish a prlma facie
case against the respondent. Any mo-
tion for a default order shall include a
proposed 'default order and shall be
served upon all parties. The alleged de-
faulting party shall have twenty (20)
days from service to reply to the mo-
tion. Default by respondent con-
stitutes, for purposes of the pending ac-
tion only, an admission of all facts al-
leged In the complaint and a waiver of
respondent's right to a hearing on such
factual allegations. If the complaint is
for the assessment of a civil penalty.
the penalty proposed in the complaint
shall become due and payable by re-
spondent without further proceedings
sixty (60) days after a final order issued
upon default. If the complaint is for
the revocation or suspension of a per-
mit, the conditions of revocation or
suspension proposed in the complaint
shall become effective without further
proceedings on the date designated by
the Administrator in his final order is-
sued upon default. Default by the com-
plainant shall result in the dlmnlHMl of
the complaint with prejudice.
(b) Procedure* upon default. When Re-
gional Administrator or Presiding Offi-
cer finds a default has occurred, he
shall issue a default order against the
defaulting party. This order shall con-
stitute the initial decision, and shall be
filed with the Regional .Hearing Clerk.
(c) Contents of a default order. A de-
fault order shall include findings of
fact showing the grounds for the order,
conclusions regarding all material is-
sues of law or discretion, and the pen-
alty which is recommended to be as-
sessed or the terms and conditions of
permit revocation or suspension, as ap-
propriate.
(d) For good cause shown the Re-
gional Administrator or the Presiding
Officer, as appropriate, may set aside a
default order.
-18-
-------
(22.18 Informal settlement; consent
agreement and order.
(a) Settlement policy. The Agency en-
courages settlement of a proceeding at
any time if the settlement is consist-
ent with the provisions and objectives
of the Act and applicable regulations.
The respondent may confer with com-
plainant concerning settlement wheth-
er or not the respondent requests a
hearing. Settlement conferences shall
not affect the respondent's obligation
to file a timely answer under 822.16.
(b) Consent agreement. The parties
shall forward a written consent agree-
ment and a proposed consent order to
the Regional Administrator whenever
settlement or compromise is proposed.
The consent agreement shall state
that, for the purpose of this proceed-
ing, respondent (1) admits the jurisdic-
tional allegations of the complaint; (2)
admits the facts stipulated in the con-
sent agreement or neither admits nor
denies specific factual allegations con-
tained in the complaint; and (3) con-
sents to the assessment of a stated
civil penalty or to the stated permit
revocation or suspension,, as the case
may be. The consent agreement shall
include any and all terms of the agree-
ment, and shall be signed by all parties
or their counsel or representatives.
CONTENTS OF CACO
1. Admit jurisdiction
2. Admit facts or
"neither admit/nor denf
3. Consent to fine
(c) Consent order. No settlement or
consent agreement shall dispose of any
proceeding under these rules of prac-
tice without a consent order from the
Regional Administrator. In preparing
such an order, the Regional Adminis-
trator may require that the parties to
the settlement appear before him to
answer inquiries relating to the con-
sent agreement or order.
-19
-------
§ 22.19 Prehearing conference.
(a) Purpose of prehearing conference.
Unless a conference appears unneces-
sary, the Presiding Officer, at any time
before the hearing begins, shall direct
the parties and their counsel or other
representatives to appear at a con-
ference before him to consider:
(1) The settlement of the case;
(2) The simplification of issues and
stipulation of facts not in dispute;
(3) The necessity or desirability of
amendments to pleadings;
(4) The exchange of exhibits, docu-
ments, prepared testimony, and admis-
sions or stipulations of fact which will
avoid unnecessary proof;
(6) The limitation of the number of
expert or other witnesses:
(6) Setting a time and place for the
hearing; and
(7) Any other matters which may ex-
pedite the disposition of the proceed-
ing.
(b) Exchange of witness lists and docu-
ments. Unless otherwise ordered by the
Presiding Officer, each party at the
prehearing conference shall make
available to all other parties (1) The
names of the expert and other wit-
nesses he intends to call, together with
a brief narrative summary of their ex-
pected testimony, and (2) copies of all
documents and exhibits which each
party intends to introduce Into evi-
dence. Documents and exhibits shall be
marked for identification as ordered by
the Presiding Officer. Documents that
have not been exchanged and witnesses
whose names have not been exchanged
shall not be introduced Into evidence
or allowed to testify without permis-
sion of the Presiding Officer. The Pre-
siding Officer shall allow the parties
reasonable opportunity to review new
evidence.
(c) Record of the prehearing conference.
No transcript of a prehearing con-
ference relating to settlement shall be
made. With respect to other prehearing
conferences, no transcript of any pre-
hearing conferences shall be made un-
less ordered by the Presiding Officer
upon motion of a party or sua sponte.
The Presiding Officer shall prepare and
file for the record a written summary
of the action taken at the conference.
The summary shall incorporate any
•written stipulations or agreements of
the parties and all rulings and appro-
priate orders containing directions to
the parties.
(d) Location of prehearing conference.
The prehearing conference shall be
held in the county where the respond-
ent resides or conducts the business
which the.hearing concerns, in the city
in which 'the relevant Environmental
Protection Agency Regional Office is
located, or in Washington. DC. unless
(1) the Presiding Officer determines
that there is good cause to hold it at
another location In a region or by tele-
phone, or (2) the Supplemental rules of
practice provide otherwise.
(e) Unavailability of a prehearing con-
ference. If a prehearing conference is
unnecessary or impracticable, the Pre-
siding Officer, on motion or sua sponte.
may direct the parties to correspond
with him to accomplish any of the ob-
jectives set forth in this section.
-20-
-------
LIMITED ADDITIONAL DISCOVERY PROVISIONS
(beyond the pre-hearing exchange)
(0 Other discovery. (1) uxcept as pro-
vided by paragraph (b) of this section,
further discovery, under this section,
shall be permitted only upon deter-
mination by the Presiding Officer:
NOTE THE STANDARDS
(1) That such discovery will not in
• can not delay proceedings any way unreasonably delay the pro-
ceeding;
• info is not otherwise
obtainable
• info has significant
probative value; no
fishing expeditions
(ii) That the information to be ob-
tained is not otherwise obtainable; and
(ill) That such information has sig-
nificant probative value.
(2) The Presiding Officer shall order
depositions upon oral questions only
upon a showing of good cause and upon
a finding that:
(i) The information sought cannot be
obtained by alternative methods; or
(11) There is a substantial reason to
believe that relevant and probative evi-
dence may otherwise not be preserved
for presentation by a witness at the
hearing.
(3) Any party to the proceeding desir-
ing an order of discovery shall make a
motion therefor. Such a motion shall
set forth;
(i) The circumstances warranting the
taking of the discovery;
(ii) The nature of the information ex-
pected to be discovered; and
(ill) The proposed time and place
where it will be taken. If the Presiding
Officer determines that the motion
should be granted, he shall issue an
order for the taking of such discovery
together with the conditions and terms
thereof.
(4) When the information sought to
be obtained is within the control of one
of the parties, failure to comply with
an order Issued pursuant to' this para-
graph may lead to (1) the inference that
the information to be discovered would
be adverse to the party from whom the
information was sought, or (11) the is-
suance of a default order under
§22.17(a).
•21 -
-------
622.20 Accelerated decision; decision
to dismiss.
(a) General. The Presiding Officer.
upon motion of any party or sua
sponte, may at any time render an ac-
celerated decision in favor of the com-
plainant or the respondent as to all or
any part of the proceeding, without
further hearing or upon such limited
additional evidence, such as affidavits.
as he may require, if no genuine issue
of material fact exists and a party is "ENT/TI FD
entitled to Judgment as a matter of
law, as to all or any part of the pro-
ceeding. In addition, the Presiding Offi-
cer, upon motion of the respondent.
may at any time dismiss an action
without further hearing or upon such
limited additional evidence as he re-
quires, on the basis of failure to estab-
lish a prima facie case or other grounds
which show no right to relief on the
part of the complainant.
,
MATTER OF LAW
no genuine issue of
material fact exists
IN "ALL OR IN PART
(b) Effect. (1) If an accelerated deci-
sion or a decision to dismiss is issued
as to all the issues and claims in the
proceeding, the decision constitutes an
initial decision of the Presiding Offi-
cer, and shall be filed with the Re-
gional Hearing Clerk.
(2) If an accelerated decision or a de-
cision to dismiss is rendered on less
than all issues or claims in the pro-
ceeding, the Presiding Officer shall de-
termine what material facts exist with-
out substantial controversy and what
material facts remain controverted in
good faith. He shall thereupon issue an
interlocutory order specifying the facts'
which appear substantially
uncontroverted. and the issues and
claims upon which the hearing will
proceed.
-22-
-------
Subpart D—Hearing Procedure
f22£l Scheduling the hearing.
(a) When an answer is filed, the Re-
gional Hearing Clerk shall forward the
complaint, the answer, and any other
documents filed thus far in the pro-
ceeding to the Chief Administrative
Law Judge who shall assign himself or
another Administrative Law Judge as
Presiding Officer, unless otherwise pro-
vided in the Supplemental rules of
practice. The Presiding Officer shall
then obtain the case file from the Chief
Administrative Law Judge and notify
the parties of his assignment.
(b) Notice of hearing. If the respondent
requests a hearing in his answer, or one
is ordered by the Presiding Officer
under §22.15(e), the Presiding Officer
shall serve upon the parties a notice of
hearing setting forth a time and place
for the hearing. The Presiding Officer
may issue the notice of hearing at any
appropriate time, but not later than
twenty (20) days prior to the date set
for the hearing.
Postponement of hearing. No re-
and for good cause shown
(d) Location of the
tion of the hearing shall be
in accordance with the method for •
SrmTning the location o a prehearing
conference under |22.19(d).
LOCATION:
• County where respondent
resides or conducts business
• in the relevant EPA regional
office
• In Washington, D.C.
-23-
-------
622.22 Evidence.
(a) General. The Presiding- Officer
shall admit all evidence which is not
irrelevant, immaterial, unduly repeti-
tious, or otherwise unreliable or of lit-
tle probative .value, except that evi-
dence, relating to settlement which
would be excluded in the federal courts
under Rule 408 of the Federal Rules of
Evidence is not admissible. In the pres-
entation, admission, disposition, and
use of evidence, the Presiding Officer
shall preserve the confidentiality of
trade secrets and other commercial and
financial information. The confidential
or trade secret status of any informa-
tion shall not, however, preclude Its
being introduced into evidence. The
Presiding Officer may make such or-
ders as may be necessary to consider
such evidence in camera, including the
preparation of a supplemental initial
decision to address questions of law,
fact, or discretion which arise but of
that portion of the evidence which is
confidential or which includes trade se-
crets.
(b) Examination of witnesses. Wit-
nesses shall be examined orally, under
oath or affirmation, except as other-
wise provided in these rules of practice
or by the Presiding Officer. Parties
shall have the right to cross-examine &
witness who appears at the hearing
provided that such cross-examination
is not unduly repetitious.
VERIFIED STATEMENTS
(c) Verifttd itntommt*. The Presiding
Officer may admit SB insert into the
record as evidence, la lieu of oral testi-
mony, statements of fact or opinion
prepared by a witness. The admlssibil-
ity of the evidence contained in the
statement shall be subject to the same
rules as if the testimony were produced
under oral examination. Before any
such statement is read or admitted
into evidence, the witness shall deliver
a copy of the statement to the Presid-
ing Officer, the reporter, and opposing
counsel. The witness presenting the
statement shall swear to or affirm the
statement and shall be subject to ap-
propriate oral cross-examination upon
the contents thereof.
"SHALL ADMIT ALL EVIDENCE"
WHICH IS NOT:
o irrelevant
o immaterial
o unduly repetitious
o otherwise unreliable
(e) feWWtt. Where practicable, an
original and one copy of each exhibit
BhaJlDefiled with the Presiding Officer
for the record and a copy shall be fur-
nished to each party. A true copy of
any exhibit may be substituted for the
original.
AFFIDAVITS
(d)
witness *s iino
o/
.
tiaote. The Presiding Of
w .
ficer may admit Into evidence affida-
vits ofwltaesses who are unavailable.
The term "unavailable" shaH *»*ethe
meaning accorded to it by Rule 8M(a)
of the Federal Rules of Evidence.
OFFICIAL NOTICE
rf) Official notice. Official notice may
be takenof any matter Judicially no-
ticed In the Federal courts and of other
facts within the specialized knowledge
and experience of the Agency. Opposing
n&rties shall be given adequate oppor-
tunity to show that such facts are erro-
neously noticed.
-24-
-------
{2123 Objections and offers of proof.
(a) Objection. Any objection concern-
ing the conduct of the hearing may be
stated orally or in writing during the
hearing. The party raising the objec-
tion must supply a short statement of
its grounds. The ruling by the Presid-
ing Officer on any objection and the
reasons given for it shall be part of the
record. An exception to each objection
overruled shall be automatic and is not
waived by further participation in the
hearing.
(b) Offer of proof. Whenever evidence
Is excluded from the record, the party
offering the evidence may make an
offer of proof, which shall be included
in the record. The offer of proof for ex-
cluded oral testimony shall consist of a
brief statement describing the nature
of the evidence excluded. The offer of
proof for excluded documents or exhib-
its shall consist of the insertion in the
record of the documents or exhibits ex-
cluded. Where the Environmental Ap-
peals £oard decides that the ruling of
the Presiding Officer in excluding the
evidence vas both erroneous and preju-
dicial, the >earing may be reopened to
permit the taking of such evidence.
(46 PR 24363, Apt ». 1980. as amended at 57
PR 532S. Feb. 13,1W«]
4XL24 Burden of]
of percussion,
The complainant has the burden of
going forward with and of proving that
the violation occurred as set forth in
the complaint and that the proposed
civil penalty, revocation, or suspen-
sion, as the case may be, is appro-
priate. Following the establishment of
a prima facie case, respondent shall
have the burden of presenting and of
going forward with any defense to the
allegations set forth in the complaint.
Each matter of controversy shall be de-
termined by the Presiding Officer upon
a preponderance of the evidence.
• BURDEN OF PRESENTATION
• BURDEN OF PERSUASION
-------
§2245 Filing the transcript
The hearing shall be transcribed ver-
batim. Promptly following the taking
of the last evidence, the reporter shall
transmit to the Regional Hearing Clerk
the original and as many copies of the
transcript of testimony as are called
for in the reporter's contract with the
Agency, and also shall transmit to the
Presiding Officer a copy of the tran-
script. A certificate of service shall ac-
company each copy of the transcript.
The Regional Hearing Clerk shall no-
tify all parties of the availability of
the transcript and shall furnish the
parties with a copy of the transcript
upon payment of the cost of reproduc-
tion, unless a party can show that the
cost is unduly burdensome. Any person
not a party to the proceeding may re-
ceive a copy of the transcript upon
payment of the reproduction fee, ex-
cept for those parts of the transcript
order to be kept confidential by the
Presiding Officer.
Proposed findings, conclusions,
and order.
Within twenty (20) days after the par-
ties are notified of the availability of
the transcript, or within such longer
time as may be fixed by the Presiding
Officer, any party may submit for the
consideration of the Presiding Officer,
proposed findings of fact, conclusions
of law, and a proposed order, together
with briefs in support thereof. The Pre-
siding Officer shall set a time by which
reply briefs must be submitted. All
submissions shall be in writing, shall
be served upon all parties, and shall
contain adequate references to the
record and authorities relied on.
•26-
-------
Subpart i-lnfttal Decision and
Motion To Reopen a Hearing
ft22J7 Initial decision.
(a) Filing and contents. The Presiding
Officer shall issue and file with the Re-
gional Hearing Clerk his initial deci-
sion as soon as practicable after the pe-
riod for filing reply briefs under §22.26
has expired. The Presiding Officer shall
retain a copy of the complaint in the
duplicate file. The initial decision shall
contain his findings of fact, conclu-
sions regarding all material issues of
law or discretion, as well as reasons
therefor, a recommended civil penalty
assessment, if appropriate, and a pro-
posed final order. Upon receipt of an
initial decision, the Regional Hearing
Clerk shall forward a copy to all par-
ties, and shall send the original, along
with the record of the proceeding, to
the Hearing Clerk. The Hearing Clerk
shall forward a copy of the initial deci-
sion to the Environmental Appeals
Board.
(b) Amount of civil penalty. If the Pre-
siding Officer determines that a viola-
tion has occurred, the Presiding Officer
shall determine the dollar amount of
the recommended civil penalty to be
assessed in the initial decision in ac-
cordance with any criteria set forth in
the Act relating to the proper amount
of a civil penalty, and must consider
any civil penalty guidelines issued
under the Act. If the Presiding Officer
decides to assess a penalty different in
amount from the penalty recommended
to be assessed in the complaint, the
Presiding Officer shall set forth in the
initial decision the specific reasons for
the increase or decrease. The Presiding
Officer shall not raise a penalty from
that recommended to be assessed in the
complaint if the respondent has de-
faulted.
"shall determine...the penalty...
....in accordance...with any criteria
set forth in the Act" and "must consider
any civil penalty guidelines issued
under the Act."
(c) Effect of initial decision. The initial
decision of the Presiding Officer shall
become the final order of the Environ-
mental Appeals Board within forty-five
(45) days after its service upon the par-
ties and without further proceedings
unless (1) an appeal to the Environ-
mental Appeals Board is taken from it
by a party to the proceedings, or (2) the
Environmental Appeals Board elects,
sua sponte. to review the initial deci-
sion.
[45 PR 24363. Apr.- 9. 1980. as amended at 57
FR 5325. Feb. 13.1992]
-27-
-------
&22L28 Motion to reopen • bearing.
(a) Filing and content. A motion to re-
open a hearing to take further evidence
must be made no later than twenty (20)
days after service of the initial deci-
sion on the parties and shall (1) state
the specific grounds upon which relief
is sought. (2) state briefly the nature
and purpose of the evidence to be ad-
duced, (3) show that such evidence is
not cumulative, and (4) show good
cause why such evidence was not ad-
duced at the hearing. The motion shall
be made to the Presiding Officer and
filed with the Regional Hearing Clerk.
(b) Disposition of motion to reopen a
hearing. Within ten (10) days following
the service of a motion to reopen a
hearing, any other party to the pro-
ceeding may file with the Regional
Hearing Clerk and serve on all other
parties an answer thereto. The Presid-
ing Officer shall announce his intent to
grant or deny such motion as soon as
practicable thereafter. The conduct of
any proceeding which may be required
as a result of the granting of any mo-
tion allowed in this section shall be
governed by the provisions of the appli-
cable sections of these rules. The filing
of a motion to reopen a hearing shall
automatically stay the running of all
time periods specified under these
Rules until such time as the motion is
denied or the reopened hearing is con-
cluded.
-28-
-------
Subport F—Appeals and
Administrative Review
Appeal from or review of Inter-
locutory order* or rulings.
(a) Request for interlocutory appeal.
Except as provided in this section, ap-
peals to the Environmental Appeals
Board shall obtain as a matter of right
only from a default order, an acceler-
ated decision or decision to dismiss is-
sued under §22.20(bXl). or an initial, de-
cision rendered after an evidentiary
hearing. Appeals from other orders or
rulings shall lie only if the Presiding
Officer or Regional Administrator, as
appropriate, upon motion of a party,
certifies such orders or rulings to the
Environmental Appeals Board on ap-
peal. Requests for such certification
shall be filed in writing within six (6)
days of notice of the ruling or service
of the order, and shall state briefly the
grounds to be relied upon on appeal.
(b) Availability of interlocutory appeal.
The Presiding Officer may certify any
ruling for appeal to the Environmental
Appeals Board when (1) the order or
ruling involves an important question
of law or policy concerning which there
is substantial grounds for difference of
opinion, and (2) either (i) an immediate
appeal from the order or ruling will
materially advance the ultimate termi-
nation of the proceeding, or (ii) review
after the final order is issued will be in-
adequate or ineffective.
(c) DecMon. If the Environmental Ap-
peals Board determines that certifi-
cation was improvidently granted, or if
the Environmental Appeals Board
takes no action within thirty (30) days
of the certification, the appeal is dis-
missed. When the Presiding Officer de-
clines to certify an order or ruling to
the Environmental Appeals Board on
interlocutory appeal, it may be re-
viewed by the Environmental Appeals
Board only upon appeal from the ini-
tial decision, except when the Environ-
mental Appeals Board determines.
upon motion of a party and in excep-
tional circumstances, that to delay re-
view would be contrary to the public
interest. Such motion shall be made
within six (6) days of service of an
order of the Presiding Officer refusing
to certify a ruling for interlocutory ap-
peal to the Environmental Appeals
Board. Ordinarily, the interlocutory
appeal will be decided on the basis of
the submissions made by the Presiding
Officer. The Environmental Appeals
Board may, however, allow further
briefs and oral argument.
(d) Stay of proceedings. The Presiding
Officer may stay the proceedings pend-
ing a decision by the Environmental
Appeals Board upon an order or ruling
certified by the Presiding Officer for an
interlocutory appeal. Proceedings will
not be stayed except in extraordinary
circumstances. Where the Presiding Of-
ficer grants a stay of more than thirty
(30) days, such stay must be separately
approved by the Environmental Ap-
peals Board.
[45 FE 24363. Apr. 9.. I960, as amended at 57
FR 5325. Feb. 13. 1992]
-29
-------
622JO Appeal from or review of initial
decision.
(a) Notice of appeal. (1) Any party
may appeal an advene ruling or order
of the Presiding Officer by filing a no-
tice of appeal and an accompanying ap-
pellate brief with the Environmental
Appeals Board and upon all other par-
ties and amicus curiae within twenty
(20) days after the initial decision is
served upon the parties. The notice of
appeal shall set forth alternative find-
ings of fact, alternative conclusions re-
garding issues of law or discretion, and
a proposed order together with rel-
evant references to the record and the
initial decision. The appellant's brief
shall contain a statement of the issues
presented for review, a statement of
the nature of the case and the facts rel-
evant to the issues presented for re-
view, argument on the issues pre-
sented, and a short conclusion stating
the precise relief sought, together with
appropriate references to the record.
(b) Sua sponte renew by the Environ-
mental Appeals Board. Whenever the En-
vironmental Appeals Board determines
sua sponte to review an initial deci-
sion, the Environmental Appeals Board
shall serve notice of such intention on
the parties within forty-five (45) days
after the initial decision is served upon
the parties. The notice shall include a
statement of issues to be briefed by the
parties and a time schedule for the
service and filing of briefs.
(2) Within fifteen (15) days of the
service of notices of appeal and briefs
under paragraph (a)(l) of this section.
any other party or amicus curiae may
file and serve with the Environmental
Appeals Board a reply brief responding
to argument raised by the appellant.
together with references to the rel-
evant portions of the record, initial de-
cision, or opposing brief. Reply briefs
shall be limited to the scope of the ap-
peal brief. Further briefs shall be filed
only with the permission of the Envi-
ronmental Appeals Board.
(c) Scope of appeal or review. If the En-
vironmental Appeals Board determines
that issues raised, but not appealed by
the parties, should be argued, it shall
give counsel for the parties reasonable
written notice of such determination
to permit preparation of adequate ar-
gument. Nothing herein shall prohibit
the Environmental Appeals Board from
remanding the case to the Presiding
Officer for further proceedings.
(d) Argument before the Environmental
Appeals Board. The Environmental Ap-
peals Board may, upon request of a
party or sua sponte. assign a time and
place for oral argument after giving
consideration to the convenience of the
parties.
[45 FR 24963. Apr. 9. 1980. as amended at 57
FR5325. Feb. 13.1992]
-30-
-------
Subport G—Find Order on Appeal
ft 2L31 Final order OB appeal.
(a) Contents of the final order. When
an appeal has been taken or the Envi-
ronmental Appeals Board Issues a no-
tice of intent to conduct a review sua
sponte, the Environmental Appeals
Board shall issue a final order as soon
as practicable after the filing of all ap-
pellate briefs or oral argument, which-
ever is later. The Environmental Ap-
peals Board shall adopt, modify, or set
aside the findings and conclusions con-
tained in the decision or order being re-
viewed and shall set forth in the final
order the reasons for its actions. The
Environmental Appeals Board may, in
its discretion. Increase or decrease the
assessed penalty from the amount rec-
ommended to be assessed in the deci-
sion or order being reviewed, except
that if the order being reviewed is a de-
fault order, the Environmental Appeals
Board may not increase the amount of
the penalty.
ftSL82 Motion to reconsider a final
order.
Motions to reconsider a final order
shall be filed within ten (10) days after
service of the final order. Every such
motion must set forth the matters
claimed to have been erroneously de-
cided and the nature of the alleged er-
rors. Motions, for reconsideration under
this provision shall be directed to, and
decided by, the Environmental Appeals
Board. Motions for reconsideration di-
rected to the Administrator, rather
than to the Environmental Appeals
Board, will not .be considered, except in
cases that the Environmental Appeals
Board has referred to the Adminis-
trator pursuant to |22.M(a) and in
which the Administrator has issued the
final order. A motion for reconsider-
ation shall not stay the effective date
of the final order unless specifically so
ordered by the Environmental Appeals
Board.
[57 FR 6326, Feb. 13,1992]
(b) Payment of a civil penalty. The re-
spondent shall pay the full amount of
the civil penalty assessed in the final
order within sixty (60) days after re-
ceipt of the final order unless other-
wise agreed by the parties. Payment
shall be made by forwarding to the Re-
gional Hearing Clerk a cashier's check
or certified check in the amount of the
penalty assessed in the final order,
payable to the Treasurer, United
States of America.
(45 FR 24363. Apr. 9. 1980. as amended at 57
FR 5326. Feb. 13.1992]
-31 -
-------
TSCA
Clean Air
Subpart H—Supplemental Rules
622.33 Supplemental rules of practice
governing the administrative as-
sessment of civil penalties under
the Toxic Substances Control Act
(a) Scope of these Supplemental rules.
These Supplemental rules of practice
shall govern, in conjunction with the
preceding consolidated rules of prac-
tice (40 CFR part 22). all formal adju-
dications for the assessment of any
civil penalty conducted under section
16(a) of the Toxic Substances Control
Act (15 U.S.C. 2615(a)). Where inconsist-
encies exist between these Supple-
mental rules and the Consolidated
rules. (§§22.01 through 22.32). these Sup-
plemental rules shall apply.
(b) Subpoenas. (1) The attendance of
witnesses or the production of docu-
.mentary evidence may be required by
subpoena. The Presiding Officer may
grant a request for a subpoena upon a
showing of (1) the grounds and neces-
sity therefor, and (11) the materiality
and relevancy of the evidence to be ad-
duced. Requests for the production of
documents shall describe the evidence
sought as specifically as practicable.
(2) Subpoenas shall be served in ac-
cordance with §22.05(bXD of the Con-
solidated Rules of Practice.
(3) Witnesses summoned before the
Presiding Officer shall be paid the
same fees and mileage that are paid
witnesses in the courts of the United
States. Fees shall be paid by the party
at whose instance the witness appears.
Where a witness appears pursuant to a
request initiated by the Presiding Offi-
cer, fees shall be paid by the agency.
§22£4 Supplemental rules of practice
governing the administrative as-
sessment of civil penalties under
title n of the Clean Air Act.
(a) Scope of these Supplemental rules.
These Supplemental rules shall govern.
in conjunction with the preceding Con-
solidated Rules of Practice (40 CFR
part 22). all proceedings to assess a
civil penalty conducted under sections
205(c), 211(d), and 213(d) of the Clean Air
Act. as amended (42 U.S.C. 7S24(c).
7545(d). and 7647(d)). Where inconsist-
encies exist between these Supple-
mental rules and the Consolidated
Rules (§{22.01 through 22.32), these Sup-
plemental rules shall apply.
(b) Issuance of notice. (1) Prior to the
issuance of an administrative penalty
order assessing a civil penalty, the per-
son to whom the order is to be issued
shall be given written notice of the
proposed issuance of the order. Such
notice shall be provided by the issu-
ance of a complaint pursuant to §22.13
of the Consolidated Rules of Practice.
(2) Notwithstanding §22.15(a). any an-
swer to the complaint must be filed
with the Hearing Clerk within thirty
(30) days after service of the complaint.
(c) Subpoenas. (1) The attendance of
witnesses or the production of docu-
mentary evidence may be required by
subpoena. The Presiding Officer may
grant a request for a subpoena upon a
showing of;
(i) The grounds and necessity there-
for, and
(ii) The materiality and relevancy of
the evidence to be adduced.
Requests for the production of docu-
ments shall describe with, specificity
the documents sought.
(2) Subpoenas shall be served in ac-
cordance with §22.05(bXl) of the Con-
solidated Rules of Practice.
(3) Witnesses summoned before the
Presiding Officer shall be paid the
same fees and mileage that are paid in
the courts of the United States. Fees
shall be paid by the party at whose in-
stance the witness appears. Where a
witness appears pursuant to a request
initiated by the Presiding Officer, fees
shall be paid by EPA.
. [57 PR 4318. Feb. 4.1992]
-32-
-------
422£5 Supplemental role* of practice
governing the administrative as-
sessment of civil penalties under
the Federal Insecticide, Fungicide,
and Rodenticide Act
(a) Scope of these Supplemental rules.
These Supplemental rules of practice
shall govern, In .conjunction with the
preceding Consolidated Rules of Prac-
tice (40 CFR part 22), all formal adju-
dications for the assessment of any
civil penalty conducted under section
14(a) of the Federal Insecticide, Fun-
gicide, and Rodenticide Act as amend-
ed (7 U.S.C. 1261(a)). Where Inconsist-
encies exist between these Supple-
mental rules and the Consolidated
rules, ({§22.01 through 22.32), these Sup-
plemental rules shall apply.
(b) Venue. The prehearlng conference
and the hearing shall be held In the
county, parish, or incorporated city of
the residence of the person charged.
unless otherwise agreed in writing by
all parties.
(c) Evaluation of proposed civil penalty.
In determining the dollar amount of
the recommended civil penalty as-
sessed In the initial decision, the Pre-
siding Officer shall consider, in addi-
tion to the criteria listed in section
14(a)(3) of the Act, (1) respondent's his-
tory of compliance with the Act or its
predecessor statute and (2) any evi-
dence of good faith or lack thereof. The
Presiding Officer must also consider
the guidelines for the Assessment of
Civil Penalties published in the FED-
ERAL REGISTER (39 FR 27711), and any
amendments or supplements thereto.
gover
rales of
the adminii
'of civil penalties and the
revocation or suspension of permits
under the Marine Protection, Re-
search, and Sanctuaries Act.
(a) Scope of these Supplemental rules.
These Supplemental rules shall govern.
in conjunction with the preceding Con-
solidated Rules of .Practice (40 CFR
part 22). all formal adjudications con-
ducted under section 105(a) or (f) of the
Marine Protection, Research, and
Sanctuaries Act as amended (33 U.S.C.
1415(a) and (0). Where inconsistencies
exist between these Supplemental rules
and the Consolidated Rules. (K 22.01.
through 22.32), these Supplemental
rules shall apply.
(b) Additional criterion for the issuance
of a complaint for the revocation or sus-
pension of a permit. In addition to the
three criteria listed in 40 CFR 22.13 for
issuing a complaint for the revocation
or suspension of a permit, complaints
may be issued on the basis of a person's
failure to keep records and notify ap-
propriate officials of dumping activi-
ties, as required by 40 CFR 224.1 and
223.2.
FIFRA
Marine Protection
Act
-33-
-------
622*37
ental roles of practice
the administrative a»-
•enment of civil penalties under
the Solid Wart* Disposal Act
(a) Scope of these Supplemental rules.
These Supplemental rules of practice
shall govern, in conjunction with the
preceding Consolidated Rules of Prac-
tice (40 CFR part 22), all proceedings to
assess a civil penalty conducted under
section 3006 of the Solid Waste Disposal
Act (42 U.S.C. 6928) (the "Act"). Where.
inconsistencies exist between these
Supplemental rules and the Consoli-
dated Rules, (K22.01 through 22.32).
these Supplemental rules shall apply.
(b) Issuance of notice. Whenever, on
the basis of any information, the Ad-
ministrator determines that any per-
son is in violation of (1) any require-
ment of subtitle C of the Act. (2) any
regulation promulgated pursuant to
subtitle C of the Act. or (3) a term or
condition of. a permit issued pursuant
to subtitle C of the Act. the Adminis-
trator shall issue notice to the alleged
violator of his failure to comply with
such requirement, regulation or per-
mit.
(c) Content of notice. Each notice of
violation shall include:
(1) A specific reference to each provi-
sion of the Act, regulation, or permit
term or condition which the alleged vi-
olator is alleged to have violated: and
(2) A concise statement of the factual
basis for alleging such violation.
(d) Service of notice. Service of notice
shall be made in accordance with
S22.05(b)(2) of the Consolidated Rules of
Practice.
(e) Issuance of the complaint. (1) Ex-
cept as provided In paragraph (e)(3) of
this section, the complainant may
issue a complaint whenever he has rea-
son to believe that any violation ex-
tends beyond the thirtieth day after
service of the notice of violation.
(2) The complaint shall include, in
addition to the elements stated in
{22.14 of the Consolidated Rules, an
order requiring compliance within a
specified time period. The complaint
shall be equivalent to the compliance
order referred to in section 3006 of the
Act.
(3) Whenever a violation is of a non-
continuous or Intermittent nature, the
Administrator may Issue a complaint,
without any prior notice to the viola-
tor, pursuant to 122.14 of the Consoli-
dated Rules of Practice which may also
require the violator to take any and all
measures necessary to offset ail ad-
vene effects to health and the environ-
ment created, directly or indirectly, as
a result of the violation.
(4) Notwithstanding |22.15(a), any an-
swer to the complaint must be filed
with the Regional Hearing Clerk with-
in thirty (30) days after the filing of
the complaint.
(f) Subpoenas. (1) The attendance or
witnesses or the production of docu-
mentary evidence may be required by
subpoena. The Presiding Officer may
grant a request for a subpoena upon a
showing of (I) the grounds and neces-
sity therefor, and (ii) the materiality
and relevancy of the evidence to be ad-
duced. Requests for the production of
documents shall describe with specific-
ity the documents sought.
(2) Subpoenas shall be served in ac-
cordance with §22.05(b)(l) of the Con-
solidated Rules of Practice.
(3) Witnesses summoned before the
Presiding Officer shall be. paid the
same fees and mileage that are paid
witnesses in the courts of the United
States. Fees shall be paid by the party
at whose instance the witness appears.
Where a witness appears pursuant to a
request Initiated by the Presiding Offi-
cer, fees shall be paid by the Agency.
(42 U.S.C. 6901. et teg.)
EFFECTIVE DATE NOTE: At 45 FR 79808. Dec.
2. I960, paragraphs (b). (c). (d). (e)(l) and (3) of
§22.37 were suspended until further notice.
effective Dec. 2. I960.
RCRA
-34-
-------
§22.38 Supplemental rule* of practice
governing the administrative as-
sessment of Class n penalties under
the Clean Water Act.
(a) Scope of these supplemental rules.
These supplemental rules of practice
shall govern, in conjunction with the
preceding Consolidated Rules of Prac-
tice (40 CFR part 22). administrative
proceedings for the assessment of any
Class n civil penalty under section
309(g) of the Clean Water Act (33 U.S.C.
(b) Consultation with states. The Ad-
ministrator will consult with the state
in which the alleged violation occurs
before issuing a final order assessing a
Class n civil penalty.
(c) Public notice. Before issuing a final
order assessing a Class n civil penalty,
the Administrator will provide public
notice of the complaint.
(d) Comment by a person who is not a
party. A person not a party to the Class
n proceeding who wishes to comment
upon a complaint must file written
comments with the Regional Hearing
Clerk within 30 days after public notice
of the complaint and serve a copy of
the comments upon each party. For
good cause shown the Administrator.
the Regional Administrator, or the
Presiding Officer, as appropriate, may
accept late comments. The Adminis-
trator will give any person who com-
ments on a complaint notice of any
bearing and notice of the final order
assessing a penalty. Although com-
menters may be heard and present evi-
dence at any hearing held under sec-
tion 309(g) of the Act. commenters
shall not be accorded party status with
right of cross examination unless they
formally move to intervene and are
granted party status under §22.11.
(e) Administrative procedure and judi-
cial review. Action of the Administrator
for which review could have been ob-
tained under section 509(b)(l) of the Act
shall not be subject to review in an ad-
ministrative proceeding for the assess-
ment of Class II civil penalty under
section 309(g).
(f) Petitions to set aside an order and to
provide a hearing. If no hearing on the
complaint is held before issuance of an
order assessing a Class n civil penalty,
any person who commented on the
complaint may petition the Adminis-
trator, within 30 days after issuance of
the order, to set aside the order and to
provide a hearing on the complaint. If
the evidence presented by the peti-
tioner in support of the petition is ma-
terial and was not considered in the is-
suance of the order, the Administrator
will immediately set aside the order
and provide a hearing in accordance
with the Consolidated Rules of Prac-
tice and these supplemental rules of
practice. If the Administrator denies a
hearing under section 309(g)(4)(C) of the
Act. the Administrator will provide to
the petitioner, and publish in the FED-
ERAL REGISTER, notice of and the rea-
sons for the denial.
[55 FR 23840. June 12.1880]
Clean Water Act
-35-
-------
$22.39 Supplemental rules of practice
governing the administrative as-
sessment of administrative pen-
alties under section 109 of the Com-
prehensive Environmental Re-
sponse, Compensation, and Liabil-
ity Act of 1!
as amended*
(a) Scope of these Supplemental rules.
These Supplemental rules of practice
shall govern, in conjunction with the
preceding Consolidated Rules of Prac-
tice (40 CFR part 22). administrative
proceedings for the assessment of any
civil penalty under section 109 of the
Comprehensive Environmental Re-
sponse, Compensation, and Liability
Act of 1960, as amended (42 U.S.C. 9609).
Where inconsistencies exist between
these Supplemental rules and the Con-
solidated Rules (H22.01 through 22.32).
these Supplemental rules shall apply.
(b) Subpoenas. (1) Hie attendance and
testimony of witnesses or the produc-
tion of relevant papers, books, and doc-
uments may be required by subpoena.
The Presiding Officer may grant a re-
quest for a subpoena upon a showing
of—
(i) The grounds and necessity there-
for, and
(11) The materiality and relevancy of
the evidence to be adduced.
Requests for the production of docu-
ments shall describe the evidence
sought as specifically as practicable.
(2) Subpoenas shall be served in ac-
cordance with |22.050>X1) of the Con-
solidated Rules of Practice.
(3) Witnesses summoned before the
Presiding Officer shall be paid the
same fees and mileage that are paid
witnesses in the courts of the United
States. Fees shall be paid by the party
at whose instance the witness appears.
Where a witness appears pursuant to a
request initiated by the Presiding Offi-
cer, fees shall be paid by the Agency.
(c) Judicial review. Any person who re-
quested a hearing with respect to a
Class n civil penalty under section 109
of CERCLA and who is the recipient of
a final order assessing a civil penalty
may file a petition for judicial review
of such order with the United States
Court of Appeals for the District of Co-
lumbia or for any other circuit in
CERCLA
which such person resides or transacts
business. Any person who requested a
hearing with respect to a Class I civil
penalty under section 109 of CERCLA
and who is the recipient of a final order
assessing the civil penalty may file a
petition for judicial review of such
order with the appropriate district
court of the United States. All peti-
tions must be filed within 30 days of
the date the order making the assess-
ment was issued.
(d) Payment of civil penalty assessed.
Payment of civil penalties finally as-
sessed by the Regional Administrator
shall be made by forwarding a cashier's
check, payable to the "EPA, Hazardous
Substances Superfund," in the amount
assessed, and noting the case title and
docket number, to the appropriate re-
gional Superfund Lockbox Depository.
Notice of payment must be sent by Re-
spondent to the Hearing Clerk for in-
clusion as part of the administrative
record for the proceeding in which the
civil penalty was assessed. Interest on
overdue payments shall be collected
pursuant to the Debt Collection Act. 37
U.S.C. 3717.
[54 FR 21176, May 16.1869]
-36-
-------
ft 22.40 Su
alties under section 886 of" the
i«M»iii»£ and CoBunn-
it-To-Know~ Act of I
(a) Scope of these Supplemental Rules.
These Supplemental rules of practice
shall govern, in conjunction with the
preceding Consolidated Rules of Prac-
tice (40 CFR part 22), administrative
proceedings for the assessment of any
civil penalty under section 825 for vio-
lations of the Emergency Planning and
Community Right-To-Know Act of 1986
(EPCRA). Where inconsistencies exist1
between these Supplemental rules and
the Consolidated Rules. (H 22.01
through 22.82) these Supplemental
rules shall apply.
(b) Subpoenas. (1) The attendance and
testimony of witnesses or the produc-
tion of relevant papers, books, and doc-
uments may be required by subpoena.
The Presiding Officer may grant a re-
quest for a subpoena upon a showing of
(i) the grounds and necessity therefore,
and (ii) the materiality and relevancy
of the evidence to be adduced. Requests
for the production of documents shall
describe the evidence sought as specifi-
cally as practicable.
(2) Subpoenas shall be served in ac-
cordance with §22.05(bXl) of the Con-
solidated Rules of Practice.
(3) Witnesses summoned before the
Presiding Officer shall be paid the
same fees and mileage that are paid
witnesses in the courts of the United
States. Fees shall be paid by the party
at whose instance the witness appears.
Where a witness appears pursuant to
request initiated by the Presiding Offi-
cer, fees shall be paid by the Agency.
(c) Judicial review. Any person against
whom a civil penalty is assessed may
seek judicial review in the appropriate
district court of the United States by
filing a notice of appeal and by simul-
taneously sending a copy of such notice
by certified mail to the Administrator.
The notice must be filed within 30 days
EPCRA
of the date the order making such as-
sessment was issued. The Adminis-
trator shall promptly file in such court
a certified copy of the record upon
which such violation was found or such
penalty imposed.
(d) Procedures for collection of civil
penalty. If any. person fails to pay an
assessment of a civil penalty after it
has become a final and unappealable
order or after the appropriate court has
entered final judgment in favor of the
United States, the Administrator may
request the Attorney General of the
United States to institute a civil ac-
tion in an appropriate district court of
the United States to collect the pen-
alty, and such court shall have juris-
diction to hear and decide any such ac-
tion. In hearing such action, the court
shall have authority to review the vio-
lation and the assessment of the civil
penalty OB the record. Interest on over-
due payments shall be collected pursu-
ant to the Debt Collection Act, 37
U.S.C. 3717.
[54 FR 21176. May 16.1989)
-37-
-------
Safe Drinking
Water Act
(22.41 Supplemental rule* of practice
governing the administrative as-
sessment of civil penalties under
Title D of the Toxic Substances
Control Act, enacted as section 2 of
the Asbestos Hazard Emergency Re-
sponse Act (AHERA).
(a) Scope of the Supplemental rules.
These Supplemental rules of practice
shall govern, in conjunction with the
preceding Consolidated Rules of Prac-
tice (40 CFR part 22), all proceedings to
assess a civil penalty conducted under
section 207 of the Toxic Substances
Control Act (the "Act") (15 U.S.C.
2647). Where inconsistencies exist be-
tween these. Supplemental rules and
the Consolidated rules (§§22.01 through
22-32), these Supplemental rules shall
apply.
(b) Collection of civil penalty. Any
civil penalty collected under section
207 of the Act shall be used by the local
educational agency for purposes of
complying with Title H of the Act. Any
Portion of a civil penalty remaining
ttnspent after a local educational agen-
cy achieves compliance shall be depos-
ited into the Asbestos Trust Fund es-
tablished under section 5 of AHERA!
[54 PR 24112. June 5.1988]
AHERA
122.42 Supplemental ml
governing the admi
rules of practice
iinistrative as-
at of civil penalties for viola-
tions of compliance orders issued
under Part B of the Safe Drinking
Water Act.
(a) Scope of these supplemental rules.
These supplemental rules of practice
shall govern, in conjunction with the
preceding Consolidated Rules of Prac-
tice (40 CFR part 22), all proceedings to
assess a civil penalty under section
1414(gX3XB). Where inconsistencies
exist between these supplemental rules
and the Consolidated rules, these sup-
plemental rules shall apply.
(b) Definition of "person." In addition
to the terms set forth in 40 CFR 22.03(a)
that define person, for purposes of this
section and proceedings under section
1414(g)(3XB) of the Safe Drinking Water
Act. the term person shall also include
any officer, employee, or agent, of any
corporation, company or association.
(c) Issuance of complaint. If the Ad-
ministrator determines that a person
has violated any provision of a compli-
ance order issued under section
1414(g)(l) of the Safe Drinking Water
Act, 42 U.S.C. 300g-3(gXl). he may in-
stitute a proceeding for the assessment
of a civil penalty by issuing a com-
plaint under the Act and this part.
(4) Content of the complaint. A com-
plaint for the assessment of civil pen-
alties under this part shall include spe-
cific reference to:
(1) Each provision of the compliance
order Issued under section 1414(g)(l) of
the Act, 42 U.S.C. 300g-3(g)(l), which is
alleged to have violated; and
(2) Each violation of a Safe Drinking
Water Act regulation, schedule, or
other requirement which served as the
basis for the compliance order which is
alleged to have been violated.
(e) Scope of hearing. Action of the Ad-
ministrator with respect to which judi-
cial review could have been obtained
under section 1448 of the Safe Drinking
Water Act, 42 U.S.C. 300J-7. shall not be
subject to review in an 'administrative
proceeding for the assessment of a civil,
penalty under section 1414(g)(3XB) of
the SDWA and this part.
[56 PR 3757. Jan. 30.1991]
-38-
-------
122.43 Supplemental role* of
governing the rnflimiliniiTt
•eetlon
Act.
it'of civil penalties under
of the Cle
118(d)(l)
Clean Air
(a) Scope of these Supplemental rules.
These Supplemental rules shall govern,
in conjunction with the preceding Con-
solidated Rules of Practice (40 CFR
part 22). all proceedings to assess a
civil penalty conducted under section
113(d)(l) of the Clean Air Act (42 U.3.C.
7413(dXD). Where inconsistencies exist
between these Supplemental rules and
the Consolidated Rules (H 22.01 through
22.32), these Supplemental rules shall
apply.
(b) Issuance of notice. (1) Prior to the
issuance of an administrative penalty
order assessing a civil penalty, the per-
son to whom the order is to be issued
shall be given written notice of the
proposed issuance of the order. Such
notice shall be provided by the issu-
ance of a complaint pursuant to f 22.13
of the Consolidated Rules of Practice.
(2) Notwithstanding |22.15(a). any an-
swer to the complaint must be filed
with the Regional Hearing Clerk with-
in thirty (30) days after service of the
complaint.
(c) Subpoenas. (1) The attendance of
witnesses or the production of docu-
mentary evidence may be required by
subpoena. The Presiding Officer may
grant a request for a subpoena upon a
showing of;
(i) The grounds and necessity there-
for, and
(il) The materiality and relevancy of
the evidence to. be adduced.
Requests for the production of docu-
ments shall describe with specificity
the documents sought.
(2) Subpoenas shall be served in ac-
cordance with §22.05(bXl) of the Con-
solidated Rules of Practice.
(3) Witnesses summoned before the
Presiding Officer shall be paid the
same fees and mileage that are paid in
the courts of the United States. Fees
shall be paid by the party at whose in-
stance the witness appears. Where a
witness appears pursuant to a request
Initiated by the Presiding Officer, fees
shall be paid by EPA.
[57 PR 4318. Feb. 4.1898]
APPENDIX TO PABT 22—ADDRESSES OP
EPA REGIONAL OFFICES
Region I—John P. Kennedy Federal Building.
Boston. MA 08808. ^
Kegon n-» Federal Plan. New York. NY
10007.
Region m—Cards Building. 6th and Walnut
Streets. Philadelphia. PA 19106.
Region IV-345 Courttand Street NE.. At-
laota. OA 80308.
Region V—880 South Dearborn Street. Chi-
cago. IL 60604.
Region VI—First International Building 1301
Elm Street. Dallas. TX. 76810.
Region vn—1786 Baltimore Street. Kansas
City. MO 64106.
Region Vm-1860 Lincoln Street. Denver. CO
Region tt—316 Fremont Street. San Fran-
cisco. CA 84105.
Region X—1800 6th Avenue. Seattle. WA 98101.
CAA
-39-
-------
-------
11-87
NEWS A ANALYSIS
17 ELR 10441
Hearings Before an EPA Administrative Law Judge
by Judge Gerald Harwood
Editors' Summary: Practice before administrative agencies, especially EPA,
has always been an important part of an environmental lawyer's job. Admin-
istrative practice is becoming increasingly important. Several statutes have
recently been amended to provide for the administrative assessment of civil
penalties by EPA. The first step after EPA proposes to assess a civil penalty
is generally a hearing before an EPA administrative law judge (ALJ). Judge
Harwood, EPA's Chief Administrative Law Judge, describes the role of the
ALJ within EPA and the statutes under which adjudicatory hearings most
frequently arise. Judge Harwood then outlines the procedures followed in hear-
ings before EPA ALJs, from the administrative complaint through the issuance
of an initial decision.
When the Environmental Protection Agency (EPA)
proposes to assess a civil penalty against a party
for violating the law or regulations or to deny, modify,
or revoke a license or permit, due process requires that it
first grant the party a hearing on the matter. In most in-
stances such hearings are held before an administrative law
judge.1 The administrative law judge is an employee of
EPA who by statute is made largely independent of super-
vision and control by EPA to ensure the judge's impar-
tiality in presiding over and deciding cases.'
The Office of Administrative Law Jndges
EPA's administrative law judges constitute a staff office
under the Administrator. A Chief Administrative Law
Judge has general charge of the office but also presides
over cases like the other judges.'
The Office is authorized to have seven judges, including
the Chief Judge. For reasons that are largely historical,
two of the judges are located outside of Washington, D.C.,
one judge having his office at the RegionTV headquarters
in Atlanta. Georgia, and the other judge at the Region VII
Judge Harwood is the Chief Administrative Law Judge for the United
States Environmental Protection Agency. This article was written by the
author in his private capacity. No official report or endorsement by the
United Slates Environmental Protection Agency is intended or should
be inferred.
1. Administrative law judges preside over hearings that are required
by statute "to be determined on the record after opportunity for an
agency hearing." Administrative Procedure Act (APA). 5 U.S.C.
5554(a). ELR STAT. ADMIN. Ptoc. 004. The statute may expressly
say that the hearing is to be "on the record." or this may be infer-
red from the nature of the bearing provided. Scacoast Anti-Pollution
League v. Costle. 572 F.2d 872. 8 ELR 20207 (1st Cir. 1978). etn.
denied. 439 U.S. 824 (1978). Administrative law judges may also
preside over other hearings if requested by EPA.
2. The pay of the administrative law judge is prescribed by the Office
of Personnel Management. 5 U.S.C. 55372. The judge can be remov-
ed only for good cause established and determined by the Merit
Systems Protection Board after a hearing, 5 U.S.C. 87521. and the
judge's performance cannot be rated by EPA. i U.S.C. 9(4302,4303.
The judge's impartiality is assured by a rigorous "separation of func-
tions" that insulates the judge from any supervision or direction by
agency employees who have participated in the investigation or pro-
secution of the case and that also prohibits any ex pane discussion
by the judge with any person on any fact in issue. APA, S U.S.C.
J5$4(d). ELR STAT. ADMIN. PROC. 004.
3. In addition to the judges, the staff'of the Office consists of the hearing
clerk, who has custody of the case Tiles, an assistant to the hearing
clerk, a legal staff assistant to assist the Chief Judge in the administra-
tion of the Office, secretaries, and one attorney advisor.
headquarters in Kansas City, Kansas. The remaining judges
are located at EPA headquarters in Washington, D.C.
Cases are assigned to the judges by the Chief Judge.
Assignments are made in rotation so far as practicable, ex-
cept that when the workload permits, the judges in Wash-
ington, D.C.. will be assigned cases that are heard in
Washington, D.C., and the judges in Atlanta and Kansas
City will be assigned cases that will be heard in their respec-
tive cities.
Another factor taken into account in assigning cases is
the availability of the judge because of commitments to
cases already assigned and the relative size of the judge's
workload. Although all judges theoretically start with the
same number of cases, for any number of reasons the per-
centage of cases that actually go to hearing may vary great-
ly between judges, and some cases will require considerably
more work than others. Finally, the Chief Judge may
depart from the rotational order to take a case that is. of
unusual difficulty.
Statutes Providing for Hearings
Hearings before an administrative law judge are provided
under numerous statutory provisions. Cases currently arise
most frequently under the following statutes:
Clean Air Act {720*—assessment of a civil penalty
against a stationary source that is not in compliance with
any applicable emission requirement.
Clean Air Act 5207^'—hearing on the recall of motor
vehicles that do not conform to emission standards.
Clean Water Act $402*—hearing on a challenge to a per-
mit regulating the discharge of pollutants into the water.
Resource Conservation and Recovery Act (RCRA)
§5005'—the assessment of a civil penalty and issuance of
a compliance order for failure to comply with requirements
relating to the generation, transportation, treatment,
storage, and disposal of hazardous waste.
Toxic Substances Control Act (TSCA) §75fW—the
assessment of a civil penalty for failure to comply with the
requirements relating to toxic substances.
Marine Protection, Research and Sanctuaries Act
4. 42 U.S.C. 17420. ELR STAT. 42226.
5. 42 U.S.C. |754l(c). ELR STAT. 42247.
6. 33 U.S.C. {1342.
7. 42 U.S.C. J6928. ELR STAT. RCRA 019.
8. IS U.S.C. <26l5(a).
-------
17 ELR 10442
ENVIRONMENTAL LAW REPORTER
11-87
§l05(a) and (f)*—the assessment of a civil penalty for viola-
tion of the restrictions on ocean dumping and the revoca-
tion or suspension of a permit for dumping materials into
the ocean..
Federal Insecticide, Fungicide and Rodenticide Act
(FIFRA) §3tc)(2)W—suspension of a registration
because of failure to secure additional data required to
maintain a registration of a pesticide.
FIFRA §5"—hearing on refusal to register a pesticide.
cancellation of a registration, suspension of a registration,
changes in the classification of a pesticide and applications
under FIFRA §§3 and 18 to modify a previous cancellation
or suspension order.
FIFRA §14(0}"—assessment of a civil penalty for viola-
tions of the Act.
Hearing Procedures
The procedures in a hearing before the administrative law
judge depend upon the statute under which the hearing is
brought. O'ne basic procedure, however, applies in all
cases. All decisions issued by the administrative law judge
are reviewed by the Administrator or his delegate., the
Judicial Of fleer." The review can be either discretionary
or mandatory, and this again depends upon the statute
under which the proceeding is brought.
Hearings Governed by Consolidated Rules
The largest number of cases currently being handled by
the administrative law judges are governed by the Consol-
idated Rules of Practice." These rules apply to proceedings '
under FIFRA §14(a). RCRA §3008, TSCA §16(a). and
Marine Protection. Research and Sanctuaries Act §105."
A recent amendment also applies these rules to the assess-
ment of Class II penalties under Clean Water Act §309(g)."
In addition to general rules applicable to proceedings under
each of these provisions, the consolidated rules -contain
supplemental rules specifically addressed to each provi-
sion."
Cases under the consolidated rules are instituted by the
issuance of a complaint setting out the acts and practices
being questioned." In the case of a complaint under RCRA
.§3008, the complaint must also contain a compliance
order." An administrative law judge is not assigned to the
9. 33 U.S.C. 5MI5U) and (0. ELR STAT. 4186S.
10. 1 U.S.C. §136a, ELR STAT. FIFRA 005.
11.7 U.S.C. {136d. ELR STAT. FIFRA 012.
12. 7 U.S.C. §I36/. ELR STAT. FIFRA 020.
13. Since in most instances review is by the Judicial Officer, reference
to the Judicial Officer hereafter will mean the Administrator when
the'Administrator elects to review a case.
14. 40 C.F.R. §22.
13. 40 C.F.R. §22.01. The consolidated rules also state that they apply
to civil penally cases under Clean Air Act §211. The Judicial Of-
ficer, however, has ruled thai §211 does not authorize the imposi-
tion of administrative penalties. See In Re Transportation, Inc.. No
CAA(2ll)-27 (Feb. 25. 1982).
16. 33 U.S.C..§l3l9(g). See 52 Fed. Reg. 30671 (Aug. 17. 1987). Cum
II penalties may reach SI23,000. SwLiebesman & Laws. The Water
Quality Act of 1987: A Major Step Ahead in Assuring the Quaint
of the Nation's Waitn, 17 ELR 10311, 10317 (Aug. 1987).
17. See. e.g., supplemental rules for civil penalties under RCRA §30U
40 C.F.R. §22.37.
18. 40 C.F.R. §§22.13 and 22.14.
19. 40 C.F.R. §22.37(e).
case until an answer is filed. Motions for an extension of
time to answer or for other relief Filed prior to the answe
must be made to the Judicial Officer if the complaint i.
issued out of Washington, D.C., or to the Regional
Administrator, if the complaint emanated from a Regional
Office.
Once the case has been'assigned to an administrative law
judge, the parties are usually'directed by the judge to
discuss settlement, if this has not already been done, and
to report on the status of settlement.10 If the case cannot
be settled, the parties will be directed to exchange their evi-
dence by supplying lists of proposed witnesses with a sum-
mary of their expected testimony and copies of documents
they intend to introduce into evidence." They may also
be directed to furnish such other information as the judge
considers relevant. This is almost always done by corres-
pondence, or if it cannot'be satisfactorily handled by
correspondence, then by a telephone conference. Very rare-
ly do the proceedings under the consolidated rules require
preheating conferences where the parties are personally
present. The matter is set down for a hearing* once it has
been determined that settlement is unlikely. At least twenty
days notice of hearing is required." The parties, of course,
may still continue with their efforts to settle, and can set-
tle any time up to the commencement of the hearing. Hear-
ings must be held either at the place where the respondent
is located or does business, in the city where EPA's
Regional Office is located (if the complaint has been issued
by a. Regional Office), or at EPA headquarters at Wash-
ington, D.C., unless there is some good reason for holding
jt elsewhere." The practice has been in most instances to
hold the hearing at the place where the respondent is
located or does business.
One special feature to be noted about practice under the
consolidated rules is that discovery is not as liberal as it
is under the Federal Rules of Civil Procedure where par-
ties are free to engage in discovery and the court gets in-
volved only if a party applies to it for some relief. There
is no discovery under the consolidated rules over and above
that obtained through the preheating exchange except to
the extent permitted by the judge upon application by a
party. In fact, this is generally true of all hearings before
EPA."
In proceedings under FIFRA §14(a), there is no authority
to issue subpoenas. While this limits the ability of a party
to obtain information from someone unwilling to furnish
it, |t does not leave the party totally without a remedy. In
such cases, if a party refuses to produce information in
its possession or control, the party requesting the infor-
mation can ask the judge to draw the inference that the
information would be adverse to the position of the party
refusing to produce the information." The inference,
however, has to flow logically from the nature of the
evidence being sought. For example, if a party claims that
it lacks the financial resources to pay a penalty but refuses
to produce statements of its financial condition, the in-
ference can be drawn that the party does have the means
to pay the penalty. It is unlikely, however, that any in-
» «o C.F.R.
I «OCF.R.
: 40CFR.
1 ttCFR
* 40f F R
§22.18.
§22.l9(b).
§22.2l(b).
§22.19(d).
§22.19(0.
W 40 C F.R. §22.04(c)(5).
-------
11-87
NEWS & ANALYSIS
17 ELR 10443
ference could be drawn from the refusal to produce finan-
cial statements as to who owns the corporation or whether
the stock is held by one individual or several individuals.
Under the consolidated rules, the judge renders an "in-
itial decision." Such a decision becomes the final decision
of the EPA unless an appeal is taken by a party or the
Judicial Officer elects to review the decision sua sponte
within the time allowed in the consolidated rules.1* The
rules also allow for the granting of an accelerated decision
(really summary judgment) when a party can demonstrate
that there is no dispute as to the material facts and the party
is entitled to judgment as a matter of law.17
The consolidated rules allow a party to file a motion to
reopen an initial decision within 20 days after the initial
decision is issued to adduce additional evidence if it is
shown that there is good cause why the evidence could not
be presented at the hearing." Outside of this limited ex-
ception.'the administrative law judge has no further juris-
diction over the matter once the initial decision is issued.
Requests for extensions of time to appeal or for other relief
must be made to the Judicial Officer.'* Regardless of
whether the complaint issued out of the headquarters in
Washington. D.C., or out of a Regional Office, all appeals
are taken to the Judicial Officer. While the agency has no
further appeal to the courts from a final order, the other
party may seek judicial review of an adverse order."
One final thing to be noted is that, in assessing a civil
penalty, the judge must consider any guidelines that the
agency has issued with respect to the assessment of civil
penalties under the Act involved. If the judge decides not
to follow the applicable guideline, the judge must give
reasons for not doing so." This requirement, however,
does not apply to the Judicial Officer."
Hearings Not Governed by the Consolidated Rules
The consolidated rules do not apply to all adjudicative
26. 40 C.F.R. (22.27(c).
27. 40 C.F.R. (22.20.
28. 40 C.F.R. {22.28.
29. 40 C.F.R. ({22.27(0. 22.29(c).
30. It depends upon the statute as to whether judicial review is in the
district court or in the court of appeals. Civil penalties assessed under
TSCA {16 and FIFRA (14 are by statute specifically made reviewable
in the court of appeals. See TSCA (I6UK3). 15 U.S.C. «26l5(aM3):
FIFRA (16{b). 7 U.S.C. (136n. ELR STAT. FIFRA 022. On the other
hand. RCRA has no comparable statutory provision for judicial
review of penalties assessed or compliance orders issued under RCRA
{3008. Review in such cases has been obtained in the district court.
See Chemical Waste Management v. United States-Environmental
Protection Agency. 649 F. Supp. 347.17 ELR 20321 (D.D.C. 1986).
31. 40 C.F.R. {22.27(b). For FIFRA civil penalty guidelines, see Guide-
lines for the Assessment of Civil Penalties under Section 14(a) of
the Federal Insecticide, Fungicide, and Rodenticide Act. as Amend-
ed. 39 Fed. Reg. 27711 (July 31. 1974); for RCRA guidelines, see
Final RCRA Civil Penalty Polio (May 8. 1984). ELR ADMIN.
MATERIALS 33089; for the TSCA guidelines, see Guidelines for the
Assessment of Civil Penalties under Section 16 of the Toxic Sub-
stances Control Act. 45 Fed. Reg. 59770 (Sept. 10. 1980). for the
general rules that have been supplemented by the following policy
statements: Policy for Violations of the Regulations dealing with Poly-
chlorinated Biphenyls, 45 Fed. Reg. 59776 (Sept. 10.1980); Record-
keeping and Reporting Rules, TSCA, Sections 8.12 and 13. Enforce-
ment Response Policy, (May 15. 1987); and Revised Enforcement
Response Policy for the Friable Asbsestos-Containing Materials in
Schools: Identification and Notification Regulation (June 22,1984).
For a recent decision by the Judicial Officer discussing the con-
sideration that the administrative law judge must give to the penalty
guidelines, see A.Y. McDonald Industries. RCRA(3008) Appeal No.
86-2 (July 23. 1987).
32. See A. Y. McDonald Industries. Inc.. supra note 31.
hearings conducted by EPA, presumably because the
nature of the hearing provided under some statutes makes
it desirable to have special rules of practice. A common
feature of these proceedings is that they are not instituted
by the usual complaint and answer..Instead, the hearing
is granted only after a party has demonstrated to EPA that
there are factual issues on which the party is entitled to
an evidentiary hearing. Like the consolidated rules, the pro-
cedures provide for prehearing conferences, limited
discovery over and above the prehearing exchange, accel-
erated decisions, motions, and the like. There are, however.
features peculiar to each that will be briefly mentioned.
D Clean Air Act §/20: Proceedings under §120 are
brought against a major stationary source (building, struc-
ture, or installation) that has 'not complied with the stan-
dards regulating the emission of pollutants into the at-
mosphere." The penalty assessed is the savings realized by
the source in not complying with the standard. The sav-
ings, or economic benefit, is computed according to a com-
plex formula, and EPA has developed a computer program
for its calculation.'4
The first step in §120 proceedings is an EPA notice in-
forming the source of the agency's finding of noncompli-
ance. At this point, the source has two options: calculate
the penalty following the agency's model, or petition for
reconsideration on the ground that the finding of noncom-
pliance is wrong or that the source is entitled to one or more
of the exemptions allowed under the statute." The statute
requires that EPA act on the petition and hear and deter-
mine the matter within 90 days."
EPA has provided for a hearing in two stages. If the
source contests the finding of noncompliance or asserts that
it is entitled to an exemption, a hearing is first held to deter-
mine the source's liability for a penalty, which must be
completed and an initial decision issiled within 90 days.'1
If found liable, the source must then calculate the penal-
ty. If EPA disagrees with the amount, it recalculates the
penalty. The source, if it objects to the recalculation; is
then given a hearing on its objections, which must also be
completed and decided within 90 days." The 90-day limita-
tion applies only to the decision of the administrative law
judge, and the time can be extended if both parties agree.
In both the hearing on liability and the hearing on the
amount of the penalty an appeal is allowed to the Judicial
Officer, who must decide the appeal within 30 days."
Q Clean Air Act $207(c): Another proceeding under the
Clean Air Act where an adjudicative hearing is provided
is where EPA requires an automobile manufacturer to
recall a class or category of motor vehicles when EPA has
found that a substantial number of vehicles do not con-
33. The procedures for hearing cases under Clean Air Act {120 are found
at 40 C.F.R. (66.
34. See 45 Fed. Reg. 50086 (July 28.1980). 50 Fed. Reg. 36732 (Sept.
9. 1985). For cases dealing with the assessment of penalties under
{120. see Duquesne Light Co. v. United States Environmental Pro-
tection Agency. 698 F.2d 456.13 ELR 20251 (D.C. Cir. .1983): Du-
quesne Light Co. v. United States Environmental Protection Agen-
cy. 791 F.2d 959.16 ELR 20790 (D.C. Cir. 1986): American Cyana-
mid Co. v. United States Environmental Protection Agency. 810 FJd
493. 17 ELR 20642 (5th Cir. 1987).
35. 40 C.F.R. {66.66.11-66.13.'
36. Clean Air Act {120OX5). 42 U.S.C. {7420(b)(S). ELR STAT. 42227.
37. 40 C.F.R. {(66.41-66.43 and 66.93.
38. 40 C.F.R. {66.51-66.54.
39. 40 C.F.R. (66.95.
-------
17 ELR 10444
ENVIRONMENTAL LAW REPORTER
11-87
form to the emission standards though properly maintained
or used.40
Again, EPA notifies the, party that it has been found
to be in noncompliance, in this case by sending it a notice
of nonconformity and directing it to submit a plan for
remedying the nonconformity within 45 days. It should be
evident that this may require the recall of thousands of
vehicles that have to be corrected in some fashion at the
manufacturer's expense in order to bring them into com-
pliance. If the manufacturer disagrees with the finding of
nonconformity, he may request a hearing on this issue."
This decision is final unless appealed to the Judicial Of-
ficer, or unless the Judicial Officer reviews it sua sponte."
CD FIFRA §5: In addition to proceedings for the assess-
ment of civil penalties under §14(a), FIFRA §6 provides
for adjudicative hearings on the cancellation or suspen-
sion of a registration of a pesticide, on a refusal to register
a pesticide, or on a change in the classification of a
pesticide (e.g., changing the classification from a general
use to restricted use pesticide).4'
There are two kinds of proceedings involving the
cancellation of a pesticide or change in classification. One
is where the Administrator issues a notice of intent to
cancel the'pesticide or change the classification. The other
is where the Administrator issues a notice of his intention
to hold a hearing to determine whether to cancel the regis-
tration or change the classification of a pesticide. In both
cases the registrants are sent a copy of the notice and the
notice is also published in the Federal Register. In the case
of a notice of intent to cancel the registration or change
the classification, an affected party must .request a hear-
ing within 30 days of the receipt of the notice or the date
of publication, whichever is later. This 30 day period is
jurisdictional. If the request for hearing is not received by
EPA within the 30 days, the registration is cancelled or
the classification is changed. The time for responding to
• the notice of intent to hold a hearing is set by the Ad-
ministrator in the notice.
Cancellation hearings are likely to involve complex issues
and numerous parties. The procedures themselves,
however, are 'not too dissimilar from those found in the
consolidated rules. One should note that the general prac-
tice has been to require the presentation of direct testimony
in the form of a written verified statement, with the witness
being available for cross-examination. Though EPA is
designated as the Respondent in a proceeding brought on
a notice of intent to cancel, it has the burden of going for-
ward to present sufficient evidence to make a prima facie
case for cancellation. The burden of proof, however, is
upon the party supporting the continued registration.44 The
procedures allow for an accelerated decision to be issued
in favor of EPA, but make no provision for issuing an ac-
celerated decision against EPA.41
40. The procedures governing hearing! under Clean Air Act $207(c) are
found at 40 C.F.R. {85.1807.
41. 40 C.F.R. $83.1807(0).
42. 40 C.F.R. $85.1807(1).
43. The procedures for hearings under FIFRA $6 an found at 40C.F.R..
$164.
44. See 40 C.F.R. $164.80. For a discussion of EPA's and the Regis-
tram's burden of proof, see Environmental Defense Fund. Inc. v.
United States Environmental Protection Agency, 548 F.2d 998.
1012-18. 7 ELR 20012 (D.C. Cir. 1976). cert, denied. 431 W.S. 925
(1977).
45 See 40 C.F.R $164.91.
The statute also authorizes EPA to suspend a registra-
tion during the cancellation hearing if necessary to pro-
tect the public against an unreasonable risk of harm.44 This
proceeding is in the nature of a preliminary injunction and
is held under an expedited, schedule, with 10 days being
allowed for the initial decision. An administrative law
judge is not required to preside at these hearings, but in
practice an administrative law judge has presided.
D FIFRA §3(c): A party is also given a hearing if a regis-
tration is suspended under §3(c)(2)(B)(iv) for failure to
supply data to support a registration following a directive
by EPA to furnish such data. Again, EPA notifies the
registrant of its intention to suspend and the registrant must
request a hearing.4' The issues in such a proceeding are
limited to determining whether the registrant has failed to
take the action that served as the basis for the notice of
intent to suspend and whether EPA's determination as to
the disposition of existing stock of the pesticide is consis-
tent with the Act.4' The hearing must be concluded and
the determination made within 75 days after receipt of the
request for a hearing.4'
D Clean Water Act $402: An adjudicative hearing is also
provided on the terms of final national pollutant discharge
elimination system (NPDES) permits issued under Clean
Water Act § 402." NPDES permits are issued after the af-
fected party and the public have been heard on the terms
of the permit (usually first issued as a draft permit). After
EPA has issued a final permit, an interested party can re-
quest a hearing on its terms." The grant of a hearing is
discretionary with EPA, and EPA may decide to deny the
hearing if there are no factual issues requiring a hearing."
If a hearing is granted, a party is usually limited to the
evidence presented and objections made in comments on .
the draft permit. The administrative record compiled dur-
ing the comment period must be received and admitted into
evidence, but a party can request that a sponsoring witness
be made available, and if none is, this can be considered
in evaluating the evidence."
D Other Statutes: Several statutes have been amended
recently to provide for adjudicator? hearings for assess-
ment of civil penalties. These include the assessment of civil
penalties of up to $5,000 against a public water system
under Safe Drinking Water Act §1414(g),'4 and the assess-
ment of civil penalties for violations of certain provisions
of the Comprehensive Environmental Response, Compen-
sation, and Liability Act." '
46. FIFRA $6(c). 7 U.S.C. $136d(c). ELR STAT. FIFRA 012.
47. FIFRA $3(cX2XBXiv). 7 U.S.C. $!36a(c)(2XBXiv). ELR STAT. FIFRA
t»s.
48. Id.
49. Id.
50. The procedures for hearings under Clean Water Act $402 are found
at 40 C.F.R. $124.71-124:91.
51. 40 C.F.R. $124.74.
52. 40 C.F.R. $124.75.
53. 40 C.F.R. $!24.85(dX2).
54. 42 U.S.C. $300g-3(g). ELR STAT. 41105; Mf Gray. The Soft Drink-
int Water Act Amendments of 1986: Nova Tougher Act to Folio*.
16 ELR 10338. 10342 (Nov. 1986).
55. CERCLA $109. 42 U.S.C. $9609. ELR STAT. 44031. Ste Atkeson
el al.. An Annotated History of the Superfund Amendment and
Jteauthorization Act of 1986 (SARA). 17 ELR 10360. 10403 (Dec.
1986).
-------
-------
High Stakes on a Fast Track: Administrative
Enforcement at EPA
Administrative enforcement action!
for the collection of civil penalties or the
imposition of compliance orders have
been a major component of the Environ-
mental Protection Agency's (EPA) com-
pliance -program for the Toxic Sub-
stances Control Act (TSCAK1 Federal
Insecticide, Fungicide and Rodenticide
Act (FIFRA)1 and Resource Conservation
and Recovery Acs (RCRA)* violations for
many yean. It is significant to note that
the mmluT of administrative actions is
•Michael J. Wilier, auiiunt enforcement
countei cuperviM* th« Toxic* Litigation Di-
vision. Office of Enforcement. US. Environ-
mescal Protection Agency (EPA), in Washing-
ton. D.C. A 1973 graduate of the Univcnity
of Wbeofuin, be earned hii defree in the
Biological Aspect! of Gorwervauon. He gracV
uaied ia 1977 from the University of Toledo
College at Law. Mr. Walker ien«d si atsod-
ait regional countei in the EPA Region V
Office for sewn yean before coming to
Washington. D.C, in 1985 As a member of
-------
... the number of administrative actions b
rapidly increasing, along with the size of
administrative penalties being proposed and
collected... .Increases in administrative
enforcement of TSCA and the Safe Drinking
Water Act have been particularly dramatic.
Administrative hearing* involving en-
forcement proceedings before EPA ad-
ministrative law judges are provided for
under a number of federal statutory pro-
visions, including:
• TSCA | /6Ya>—assessment of a civil
penalty for failure to comply with
any requirement relating to the man*
ufacture, use, distribution in com-
merce or disposal of toxic sub-
stances,-*
• GUon Air Act (CM) | 720-asses*-
mem of a civil penalty against a sta-
tionary source that is not in compli-
ance with permitted emission
requirements^
• F1FRA 1I4(a)— assessment of a civil
penalty for the manufacture, sale,
distribution or use of pesticides in
violation of the act;7
• CM | 207(c>—recall of motor vehi-
cles that do not conform to federal
emission standards*
• dean Water Aft (CWA) | 402—chal-
lenge to EPA-isiued permits concern-
ing the discharge of pollutants into
the waters of the United States; •
• RCRA | S008—assessment of civil
penalties and/or the issuance of
compliance orders for failure to
comply with requirements relating
to the generation, transportation,
treatment, storage and disposal of
hazardous waste;10 and
• Aformr Pntectton. Rotarch and Sonrti*-
ana Ad (MPRS) | 105(a) and 0—as-
sessment of a civil penalty for viola-
tion of reitrictioni on ocean
dumping or revocation or suspen-
sion of a permit for discharge into
the oceans."
EPA
In accordance with the Administrative
Procedure Act (APAX11 administrative
law judges (ALJs) preside over all EPA
hearings that are required by statute "to
be determined on the record after op-
portunity for an agency hearing." This is
the case where the applicable statute ex-
pressly states that the adjudkatory hear-
ing is to be "on the record," or when the
requirement for a presiding judge may
be inferred from the type of hearing to
be provided." In addition, by custom
and practice. EPA ALJs may also preside
over other types of adjudkatory hearings
if requested by the agency.
9mf»Aut»m Vary
EPA, like the other federal agencies
that conduct adjudicative hearings, has
unique and specific rules of practice and
procedure. A major disadvantage to a
non-agency practitioner representing a
respondent in an EPA administrative
proceed! ng may be the lack of familiarity
with the bask rules of practke or con-
trolling case law.
ALJ Palmer of the U5. Department of
Agriculture has noted that there are at
least 280 different sets of evidentiary
rules that apply us adjudkatory proceed-
ings conducted in federal agencies
atone. These rule sets typically are three
types:, they "fully incorporate" the Fed-
eral Rules of Evidence, they "merely
look" to the Federal Rules as a source of
guidance or they -tolerate or even
openly embrace, trial by ambush."14 EPA
rules of practice generally look to the
Federal Rules for guidance.
la an effort to eliminate confusion
over varying procedural requirements in-
volving EPA enforcement actions both
by the private practitioner and by the
EPA lawyer-EPA published in 1980 the
Cmiaiidatad Rula efPnetia Covmatf At
Administrative Auenun/ of Civil AnoUa
and tin Invocation and Sutpenaon tf Ar
•tit." The Consolidated Rules were de-
signed to accomplish two purposes. T
first purpose was the development <
common set of procedural rules for Sv
eral enforcement and adjudkatory pro-
grams that would reduce paperwork, in-
consistency and, ultimately, the burden
on people regulated. The second pur-
pose was the improvement of formal ad- *
ministrative adjudkatory procedure*
through substantive revisions. The Con-
solidated Rules replaced existing rules of
practice that had been previously
promulgated for FIFRA, CAA. RCRA,
TSCA and the Ocean Dumping Act.
Although the majority of EPA enforce-
ment actions follow the Consolidated
Rules, it should not be overlooked that
some EPA administrative proceedings
are not held under the Consolidated
Rules of Practice. For reasons thai are in
pan statutory and in pan historic to the
development of these programs, the
Consolidated Rules are inapplicable to
CAA | 120 and | 207(c) proceedings re-
garding stationary source compliance
and certain automotive emission stand-
ard recalls, suspension of FIFRA registra-
tion under } 3(c). FIFRA cancellation
proceedings under | 6 and CWA permit
hearings under the National Polluian*
Discharge Elimination System."
Federal Bar News It Journal
454
-------
Enforcement cases filed under the
Consolidated Rules begin with the filing
of a crnl complaint and notice of oppor-
tunity for hearing, which states with par-
ticularity the nature of the violation and
the proposed cWl penalty.1* The original
conpUint to filed with the appropriate
hearing clerk and a copy to sent to the
respondent by certified mail, return re-
ceipt requested along with a copy of the
Consolidated Rules of Practice.1' The re-
cipient of such a complaint has twenty
(JO) days from the date of service to file
aa Answer and Request for Hearing.1* h
to important IB note that under the Con-
solidated Rules. 40 OH Algol any
matter aot specifically denied nay be
duund to be admitted and used against
the respondent.
Following receipt of the Answer, the
case to referred by the Hearing Clerk to
the Chief ALJ. The Chief Judge will hear
the case or assign k to one of the tut
admintoouivc law Judges assigned a)
EPA,9 The function of ALJs under the
Consolidated Rules to two-fold. Fins.
they must develop aa accurate and com*
pkte record of the facts relevant to the
fair and equitable decisions oa the mer-
tos and record.
By kaer or written ordei the ALJ wfll
direct the parties to commence settle-
ment discussions and to report In writ-
ing before a set time as to the success or
failure of such discussions." If to to un-
likdy that the parties will achieve a settle-
ment the parties will be directed to pre-
pare a "prehearing exchange" of their
evidence, This typically consists of a list
of proposed witnesses with a summary
of their expected testimony and copies
of aD exhibits and documents that will be
•Deduced at vial as evidence." Since
pTcnearmg meetings between the Judge
and parties are rare, document ex-
change, motions and orders substitute
for a conference. The use of written pro-
hearing 6'mtmij and written or tele-
phone prehearing conferences, saves the
One important element of administra-
tive practice under the Consolidated
Rules to that discovery to tcry limited.
Under the Federal Rules of CM Proce-
dure, discovery through document re-
qucsa and definition* may continue for
eaooihs or yean adding considerable de>
fcty and cost to the proem. By consist.
under the Consolidated Rules, there la
BO discovery beyond that obtained
455
through the prehearing exchange unless
further discovery is specifically re-
queued by a party who must obtain aa
order from the ALJ."
As with the Federal Rula of CMl Pro-
cedure, panics may request summary
Judgment through the granting of aa
•accelerated decision."" Increasing num-
bers of motions for "partial" accelerated
dedsioas have been filed ia cases where
the Answer or portions of the Answer
admit or acknowledge that there are no
genuine disputes as to some or aO of the
material beta, leaving only the awe off
dvil penalty for hearing.
By this point tat the proceeding*, tat
vast majority of EPA administrative en-
forcement cases either have been'settled
or arc dose to settlement, for cases filed
under the Consolidated Rules, settle-
mena take the form of a written "Con-
sent Agreement and OrdesTm which the
respondent (1) admits the Jurisdictioiial
allegations of the complaint, 0) admits
the tacts stipulated la the Consent
Agreement or neither admits nor denies
the factual allegations contained m tat
Complaint or (S) consents to the assess
meat of the civil penalty, permit rcvoca*
lion, suspension or other terms of settle-
menu*' The Consent Agreement to
signed by the parties or counsel and to
forwarded to the Regional Administrator
or the Chief Judicial Officer as appropri-
For the 30 to SO cases each .
cannot be settled and on which hearinp
under the Consolidated Rules of Prac-
tice arc held, the ALJs render -recom-
mended1* or Initial Decisions. These de-
cisions may be appealed by either the
EPA or the respondent .withia twenty
00) days of their receipt." If neither
party elects to file an appeal the Initial
Decision becomes a Final Decision of
the Admintotnior as a matter of law, ua»
less the admintotna
oecbioB sue i
Ia assessing a dvfl penalty, die Judge
"must consider" any guidelines that EPA
has developed concerning tat statute
and violation at issue. Guidelines of tato
nature exist for the majority of adminis-
trative programs.11 Under Consolidated
Rules, ALJs are bound so impose the
penally calculated by EPA personnel b>
voNed ia bringing the action or a> pro*
vide specific justification for finding why
the calculation h inappropriate.1* Ad-
ministrative case tow for ch-il penalties
under EPA statutes and the Consolidated
Rules to aot «*U settled si this time, how-
ever; some ALJs have shown aa
big willingness to spply the sgency*s pen-
alty calculauSas.*1 Other Judges baW
Imposed penalty amounts different than
the amount sought ia the compUiat
without setting forth sufficient reasons
for the change. These cases represent the
largest category of cases spar by
EPA ta the judicial officer.
When aa appeal of aa initial detttion
has been filed by either party or when
the Administrator issues a notice of ta-
lent IB conduct review jus jftsmr. the ju-
dicial officer, oa behalf of the Admiakv
tratoc. issues a Final Order as soon aa
practicable after the filing of appellate
briefs or oral argument. The Final Order
may adopt, modify or set aside the find-
ings and conclusions contained fat dat
oectoioa or order being reviewed, la)
addition, the dvil penalty may be ta*
CRottco oc OKfCeUCQ IFDBI QIC uBOiiitt
recommended in the Initial Decision, ex-
cept that to may aot be bo-ased ia dte
mmm^ mf Amtmnntm AM|^^
S9se 01 oeiaun orocn»
With the exception of requests for re-
consideration. EPA enforcement officials
have BO further appeal to the courta
from a Final Order. Howevet depending
oa the applicable statute, the respon-
dents ra*ys«k judicial review of any ad-
Anal decision or <
Dealing with EPA; Practical
CoasJoerarioaa ia Assuring *
Penalty Demind Brvin* tf
arc advised to evaluate.
carefully any civil compUiat for a i
berofkeytosuec
I. Do the mcts ia the complaint
lately support the penalty demand ia the
i> Are you entitled to consideration of
a downward adjustment bsaed oa con-
siderations contained in the compUiat
or other Canon that might have been ua*
known SB EPA at the time the complaint
1 Check the mathematics. Do the pro-
posed penalty figures add up correctly?
At the first settlement meeting, EPA
wiO be prepared so discuss the penalty
demand la detail. If you have evidence
or factors that demonsmie that the pen-
alty was incorrectly calculated, raise it at
the first settlement conference. It to im-
portant to keep in mind, howevet that ia
the majority of EPA administrative en-
forcement programs. EPA seldom seeks
the sMiiHiBi penally allo«vd by law. pre-
ferring to use dvil penalty policies that
proposed penalties based oa
degree of harm a> the environmen
regulatory scheme that the violations k
IMSAbfum* SI No. 10
-------
rercrrved to pose. Unsubsantiated at-
cscks oa the penalty nay be counierpro-
farticipate fa • Senh&ett
Conference
EPA policy, practice and die Consoli-
dated Rules encourage •tofonnaT eeule-
nxnt conferences.** These conferences
are very useful, off-the-fecord opportuni-
ties 10 present settlement optioiu to the
government far considentien and for
the paniei to evaluate die relative
avengihs and weaknesses of dieir rape*
•)Aaea> fsaleaaiai
At the avtUemeni wetting. EPA wfl) be
tntereucd to a demonstration that
die fadlity or corporation has no history
of prior violations of die applicable em-
we Of appropriate) and in a candid dis-
cuuion of die nature and dmuniunccs
of die violation. The failure to demon-
•rate duu violations have not been ad-
drcued or correned may serve at a basis
to Increase a proposed penalty. Docu-
mented efToru to address compliance
problems, once they are known to die
respondent goes a long way toward teas*
curing EPA that die respondent is seri-
ous about correcting deficiencies and
duu die problems do not reflect an atti-
tude of knowing or willfull disregard for
icfulatory requirement*. Moreover, in-
ability to pay die penalty or die effect of
die penally on ability to continue to
business are boors to be raised in bvor
of a decreased penalty, bring copies of
signed federal tax returns and support-
ing schedules.
Frequently, counsel for respondents
seek to schedule settlement meetings
prior to die submission of dieir Answer
end Request for Hearing as a strategy to
gain possible insight into die guvuu-
, so thai die respondent's An-
will most accurately address any
icaknesses or defenses. Re-
spondents seeking to employ such a
course of action should be aware duu to
proceeding* brought under die Consoli-
dated Rules of Practice, die government
•ay as a matter of right amend die orif>
na) complaint once at any time before
die Answer is filed and will invariably do
so fat response to continued violations or
recalcitrance. Recalcitrance at die settle-
ment table .may result to an amended
compliant seeking additional penalties
for continuing violations or may reduce
or eliminate further consideration of
downward adjustment of die penalty
amount for •corporate attitude." "coop-
eration shown to die government" or
"other fscion at justice may require.'
Federal Ear News * Journal
The TSCA enforcement program has
been in die forefront of negotiating set-
tlements providing for compliance ac-
tivities required by taw. For example, set-
llements have been negotiated to which
environmental compliance audits were
undertaken to exchange for partial pen-
alty mitigation.** Other TSCA compli-
ance activities beyond diose required by
law duu have been used to reduce die
total amount of die dvil penally have in-
cluded domestic and international vain-
tog programs, early retirement of PCB
equipment (La, removal of PCB Bans-
formers) and additional ahe
Be Sure Year QieatL AppieUatea die
~ ' i Nature
Both the A
Applicable
of Practice
Ol UM BJOtt iTC^UCflt
menu to effective representation of a cli-
ent to an EPA enforcement proceeding b
failure to read and understand die statu-
tory or regulatory provisions diat die cli-
ent is charged with violating, as well as
die specific rules of practice dot govern
die proceeding. As has been referenced
earlier, although EPA has made signifi-
cant effort* to consolidate hi rules of
practice toto one specific section of die
Co* s/ AaVnV Jfagubfimi* many admin-
istrative enforcement programs have
unique procedural requnemenu. The
Consolidated Rules have supplemental
rules for TSCA." F1FRA." Tide II of the
CAA» RCRAM and MPRS*
Agency practitioners are at an advan-
age because dwy work widi die atatute
and rules of practice everyday; dius die
Infrequent administrative practitioner
need* to be careful about reviewing EPA
filing deadlines, service requirements or
C4her procedural elements relevant to
•ad in the Same Detail that'
Would for Scale or Dinrict Conn
The Consolidated Rules require die
Answer to state all arguments which are
alleged to constitute the grounds of de-
fense, including facts which die respon-
dent plans to place at issue. A careless or
Inadequately drafted response to what
might be perceived as an "informaT pro-
ceeding might provide die basil for an
Accelerated Decision, including imposi-
tion of the full penalty where "no genu-
ine issue of fact exist* and Complainant
Is entitled to Judgment as a matter of
While the typical or routine EPA ad-
•inisnuve action may involve a rela-
tively modest penalty demand (at knit to
terms of die gross daily revenue of your
client), and selection of an adminbera-
th* rather than district coun proceeding
nay suggest •foforaalityT h is critical
that your client approach die proceed-
ings widi die same care and degree of
concern dial one would face to* con-
fronted widi proceedingi initiated to dis-
Irici coun by the United States Attorney.
EPA's administrative programs are die
backbone of die agency's enforcement
pruenu nationwide and refusal » co-
operate to die leas formal administrative
proceeding may be grounds to escalate
die nutter to the Department of Justice.
Refusal to cooperate or remedy obvious
compliance problems may also senc to
•rigger more detailed examinations of
the facility oc. perhaps most significant.
create an image to die agency of recalci-
trance, obstinence or deliberate, willful
disregard for regulatory requirements.
Once a facility; corporation or even cer-
tain staff develops a poor reputation, it is
difficult to erase b from die Agency's
asenial notebook on die company.
Offer Settlement at the Initial
IfeetiDf, But Don't Inault EPA
Given the volume of actions that EPA
b handling these days. EPA will be ana-
feus to pursue seriously settlement dis-
cussions to detail at die first meeting.
This b good public policy for EPA and
reduces cosu incurred by die regulated
community, la addition » a tangible
demonstration of compliance, the
amount of die dvil penalt) will probably
be the major outstanding issue on she
table. The most unproductive approach
to penally discussions fa to offer a very
tow •counter-offer" to the EPA penalty.
With few exceptions, die proposed pen-
alty will have been calculated from a
published or publicly available mil pen-
alty policy and may already reflen sub-
stantial mitigation from die statutory per
day violation* maximum penahm Un-
less you have substantial evidence thai
die penally b grossly miscakvlasfd or
that you have (act* that m*> not be knew
to EPA. offering an unreasonably tow set--
dement figure might be pmenrd as bad
faith negotiating Approach EPA •t»u>
mem negotiation* with a recognition
that die agency b serious about the pen-
alty amounts.
-------
In writing about EPA'i administrative
udicaiion authorities, EPA's Chief
ge Harwood noted 'The Agency can
only be effective if the public has confi-
dence in the process, a confidence cre-
ated by the conviction that they have
been mated fairly and the outcome is
reasonable, even though they may be un-
happy about the ultimate judgment"41
Thai EPA prevails in 99.9 percent of the
cam it brings with fewer than one per-
cent appealed to the Adminittrator or to
dinner coun h evidence thai EPA files
solid cases with clear and obvious viola-
tions.
Thus EPA's administrative enforce-
ment program hai been an effective tool
to enforce our nation's environmental
statutes and regulations.
Consistent with the safeguards pro-
vided for in the United States Constitu-
tion and the APA. EPA'i administrative
practice rules provide opportunities (or
expedited settlement, litigation and ad-
judication.
The challenge to the agency the regu-
lated community and the private bar is
to muimiie opportunities to effectively
use—but not abuse—these expedited
proceedings to reduce delay and the cost
of enforcement' actions without impair-
ing the effectiveness of the administra-
tive enforcement program.
•15 UAC. M t60l 19 (Supp. 01984V
•7 USC* we
•42 U.S.C I 6901-911 (Supp. D1984).
•Administrative Orders Ir Civil Com-
plaints bsued by EPA:
FYBS FY9S FY87
Air—Stationary
Sounm in 129 191
Water—National
Polluiant Dis-
charge System Per-
mits 1,928 . 988 1.008
9 0 11*
927 2M 243
799 781 1.091
IM 9S7 960
2.609 2426 9.194
Aggregate Bumbcn of administrative
am filed during prior fncal vein arc: TV
1980. 901; rV 1981. 1.107: FY 1982. 864. FY
1983. IMS: TV 1984. 3.124. VS. EPA Office
of enforcement and Compliance Monitor-
T8CA
i«S» Harwood. H*rr*r*MmA* If* M
mManth»tM»Jn4f. 17LLR. 10441 (1987).
5v atu. 42 U5.C| 900 g-9(g). Sir gnmUj.
Cray. 7»f Soft 0rm*m« Via* M Amndmtnu
e/m6. Mv We Hot* A Tvstfbr *l ft ftlio*.
16 *«-•- 109 (Nov. 1986): and Uebeunm *
Law. TV Watir Quo/in Att of 1981: A Mm*
Sup AW jbr Ainmv Of fcto) tfU*N+
ing. Summary e/ E*fentmt*l
fual MBT 1987. April 1988.
•19 IttJC. | 261 Va) (Supp. U 1984). By
direct congretsional intent, or possibly over-
aighu TSCA does not give EPA the authority
to obtain civil penaliiet in federal district
court*. 19 U.S.C 2619UX2XA). Thus, al-
though the agency ha* referred more than
aony case* to the Depanmcnt of Justice in-
volving civil violations of the act or orders
biucd under the act. since 1978 the vast ma-
jority of enforcement action* brought to ad-
dreu TSCA violation* total* mot* than 4.000
•dminittraiive actions involving collected
civil penalties in ocess of 124 million,
•42U.S.C I 7470 (Supp. 111994V
*7 UJ.C 11961 (Supp. II1994V
•42 USC. | 7S4KO (Supp. I) 1994V
•33 US.C, 11942 (Supp. U 1984V
M42 U.S.C. 16928 (Supp. U 1984V
"39 U5£. I I417(a) and (I) (Supp. D
1984V
"9 UJi.C 1996 upon the apress order of the
Pmiding Officer if it meets a three-pan test:
0) that such discovery not unreasonably de-
lay the proceeding: (ii) that the information
•ought to be obtained is not otherwise ob-
tainable and (iii) that such information has
•ignificam probative value. Depositions
upon oral qumiora. 40 CJJL | M.I 9(0(2).
may only be taken on order from the Presid-
ing Officer and will only be allowed on a
shoving that the information sought cannot
be obtained by alternate methods or there is
aubwantial reason to believe thai "relevant
and probative evidence may not be pre-
ed for presentation by a witness at near-
Fed. Reg. 27711 fjuly. 91. 1974k for RCRA
guidelines, see Final RCRA Civil Penalty Pol-
icy (May 8. 1984): for the TSCA guidelines.
see Guidelines For the Assessment of Ciyil
Penalties under Section 16 of the Ibmic Sub-
stances Control Act. 45 fed. Reg. 99770
(Sept 10. 1980). for the general rule* have
been supplemented by the following policy
statements: Policy for Violations of the Refu-
tations Dealing •ith Polychlorinaied Bi-
phenyls. 45 fed. Reg. 99776 (Sept. 10. 1980fc
Recordkeeping and Reporting Rulei TSCA
Section 8. 12 and 13. Enforcement Response
Policy. (May 19. 1987): and Revised Enforce-
ment Response Policy for the F ruble Asbes-
tos Containing Materials in Schools: Identifi-
cation and Notification Registration Ami
«. 1984V
"40 CJJL 1 22 J7(b) (1987V
"Sir «*.. Landfill Service Corponuon.
RCRA Docket Number VU-86-H OOOi..isMMd
by Judge Marvin Jones en November J>. 1987.
where the full penally of $130.560 that was
proposed in the complaint for RCRA viosa-
lions was assessed by the judge after a bear-
ing on the record: and Cvhie* On »>•«»•.
Docket Number RCRAV-W8SR402 •here
Judge Frank Vanderheyden imposed the fuB
penalty of S98JM.
"40 CJJL I ttJI(a) (1987V
•40 CJJL 1 22.16(a) (1997V
M5w Danzig. Walker and Price.
•ft,
.J CJJL 122 JO (1987V
•Absent some major procedural or legal
defect. EPA will rarely "dismiss- or "with-
draw" a pending civil complaint as a condi-
tion of settlement. •
•The agency's Chief Judicial Officer b
Ronald L, McCallum. who. under 40 CJJL
22.04(b). has been designated by the Admin-
istrator of EPA to sign consent orders in en-
forcement proceedings, to MM ifumtr review
initial of recommended decisions of the Ad-
ministrative Law Judges and to hear and rule
on appeals from initial decision*.
"40 CJJL 122 J0(bl (1987V
•I*
•40 CJ1R. | 22.27(b) (1987). For F1FRA
civil penalty guideline*, see Guidelines for
the Assessment of Civil Penaliiet under Sec-
lion I4(a) of the Federal Insecticide. Fungi-
cide, and Badenucide Art as amended. 99
J. (National
1997)
ation of Attorney* General. January
(Describing settlement* invoKmg a v
of type* of environmental audit*). SJT oia* In
rr Sandoi Chemicals Corporation. TSCA*'
C-05 (Decembn; 1986) (a typical seiUeeaem
ofaTSCA Section 9 violation thai •** •«<«••
lariry disclosed to EPA. A* can be noted from
the settlement. Sandoi received a M percent
reduction of the civil penalty for the
-------
-------
WALKER'S TIME TESTED SETTLEMENT INDUCERS
SETTLEMENT CONFERENCES - KEY OPPORTUNITIES FOR SETTLEMENT
The conduct and timing of an "informal" settlement
conference can have substantial strategic and tactical impact on
the outcome of your case; for it is at the important first
meeting and subsequent discussions, that the Government will
inform your adversary of how serious EPA is about litigating the
case.
Many agency attorneys fail to adequately use the informal
settlement conference for its intended purpose - to settle the
case - and invite additional work and burdens by simply sending
the wrong message - that EPA will negotiate indefinitely.
Given the increasing demands of expanding case loads, it is
critical that the agency attorneys maximize their limited time
and under utilized skills as much as possible. Sending the
"right" signal at the informal settlement conference is the
important first step.
Agency policy on settlements of administrative actions is
set forth in the Consolidated Rules of Practice at 40 CFR §22.18,
which states that: "The Agency encourages settlement of a
proceeding anytime a settlement is consistent with the provision
and objectives of the Act and applicable regulations. The
Respondent may confer with the Complainant whether or not the
Respondent requests a hearing."
Too many Agency practitioners (and outside counsel, too)
fall into the trap of using the informal settlement conference
for the wrong purpose. It is not a "get acquainted" session
before beginning "serious" negotiations. The primary emphasis
should be on determining whether a settlement can be reached
within a specific time period.
STRATEGIC CONSIDERATIONS
1. Always Schedule After Answer is Received
2. Always Have Client or Technical Team Present
3. Set The Proper Tone For The Meeting
4. Be Prepared
5. Avoid Unnecessary Informality
6. Conduct Settlement Conferences Off the Record
7. Discuss The Administrative Process
8. Release of Inspection Report Is Your Option
9. Conduct a Count By Count Examination of the Complaint &
Answer
10. Describe How the Penalty Was Calculated
11. Discuss Penalty Mitigation Factors
12. Be Clear About What EPA Must Have To Settle The Case
13• Discuss Maximum "per day, per violations"
14. Make Them Prove Inability To Pay Claims
15. Use National Penalty Dockets To Distinguish Small
Penalties
16. Explain Why EPA Uses Civil Penalty Actions vs. District
Court
17. Present A Consent Agreement For Signature
18. MAKE IT EASIER TO SETTLE THAN LITIGATE
-------
1. Always Schedule After Answer is Received
Although some attorneys will disagree, it is generally a
good practice to wait until after the Answer has been filed
before scheduling a settlement conference. Many plausible
reasons have been advanced for agreeing to meet before the Answer
is filed, such as a belief that settlement discussions can be
encouraged by a less "adversarial" setting or where the
respondents claim they lack sufficient information to file a
proper Answer.
Keep in mind that since preparing Answers is costly, it
makes settlement more appealing; there is often no good reason to
warrant a departure from this general rule. With the exception
of an extremely unusual.Respondent, case or factual setting,
never meet or discuss the specific facts of the case until you
see and analyze the Answer.
Keep in mind that although the Consolidated Rules of
Practice do not prohibit settlement conferences before the
Answers are received, the mere fact that such a conference may be
requested, scheduled or even held before the 20 day time period
has run should not affect Respondent's obligation to file a
timely Answer in conformance 40 CFR 22.18. One can not
underscore too seriously the problems that postponing answer can
create for maintaining the enforcement momentum on the action.
If more time is legitimately required to prepare an Answer, make
the Respondent seek a brief formal extension of time to file the
Answer from the Presiding Officer.
2. Always Have Client or Technical Team Present.
A second strategic consideration for any settlement
conference is to have the technical or program representative
present for the settlement conference. Close coordination
between the lawyer and his or her technical counterparts can not
be overstated. Not only will you insure that any technical
aspects of identifying compliance problems or achieving
compliance will be addressed, having the program representatives
present serves to underscore the significant technical and
scientific nature of the action and remedy required.
3. Always Set the Proper Tone for Settlement Meeting.
Organization and professionalism are the.critical objectives
in planning for a settlement conference. As in preparing for any
meeting with outside counsel, be certain you have an adequate
meeting place so that your conference can proceed without
interference or interruptions. Adequate or even, suitable meeting
space is regrettably at a premium in most governmental offices.
Nevertheless, make every effort to obtain a suitable room for the
conference where you will feel'comfortable. Although local
-------
-2-
counsel may invite you to meet at his or her office, and there
are no procedural or policy reasons not to, from a strategic
standpoint, it is preferable to only conduct settlement
conferences within government offices. At a minimum be sure the
room is clean. A cluttered, unkempt room will present a
disorganized image of EPA and will detract from a strong.
bargaining posture.
4 Be Prepared
You should always prepare for the meeting by thoroughly
re-readina the inspection report, the Complaint, 'penalty
calculation and the Respondent's Answer. Careful preparation of
yourself (and program counterpart, as necessary) will insure that
you will have the full command of the facts and circumstances of
the cases. This is particularly true where many weeks may have
passed since you originally reviewed the inspector's report or
complaint.
When preparing for the meeting it is a good practice to mark
the Complaint margin with notations of "Admit" or "Deny", to
facilitate your use and understanding of the Respondent's Answer.
5. Avoid Unnecessary Informality
While cordial handshakes and introductions are nice ways to
"break" the ice", keep in mind that your are the representative
of the United States Government in an adversarial proceeding.
Excessive informality demeans our position as a government lawyer
and conveys a message the EPA may not be "really serious" about
the merits of the case, recovery of a substantial penalty or
negotiation of substantial relief.
Always stress the regulatory context of the settlement
conference at the outset, by stressing that agency (or regional
policy) is too encourage the settlement of the action, but that
EPA is prepared to litigate. Stress the fact that this policy is
clearly and directly stated in the Consolidated Rules of Practice
at 40 CFR 22.18, where the "Agency encourages settlement of a
proceeding at any time if the settlement is consistent with the
provisions and objectives of the Act and applicable regulations".
Emphasize that the Agency is interested in>hearing about the
Respondent's position, defenses or other claims or information
that may not have been evident when he Complaint was filed.
6. Conduct Settlement Conferences Off the Record
Emphasize at the outset that the discussion will be "off
the record" and that the sole purpose of the conference is to
arrive at a basis for settlement by discussing fully the factual
-------
-3-
allegations of the Complaint. Arguments or lectures on the
"constitutionality" of EPA, the "political process in America" or
legal "war" stories that may be raised by the Respondent should
be restricted or cut off at their outset. Keep the Respondent
and Counsel to the business of the Complaint. It is also useful
to state that the purpose of the conference is to arrive at a
possible basis for settlement, but that cases can not be settled
until the Respondent can stipulate in the CAFO that they are in
full compliance, or are on a schedule to achieve compliance.
When referencing the fact that any information presented
during the conference will be considered "off the record", cite
the basis for this position as 40 CFR 22.22(a), which recites
Rule 408 of the Federal Rules of Evidence.
Rule 408, reprinted here in its entirety states that:
Evidence of (1) furnishing or offering or promising to furnish, or, (2) accepting or offering or promising to
accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as
to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount.
Evidence of conduct or statement made in compromising negotiations is likewise not admissible'. This rule
does not require the exclusion of any evidence otherwise discoverable merely, because it is presented in the
course of compromise negotiations. This rule also does not require exclusion when the evidence is offered
for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay
or proving an effort to obstruct a criminal investigation.
7. Always Discuss the Administrative Process
No informal settlement conference should be complete without
a deliberate and carefully orchestrated discussion of the
administrative process that will be followed if the matter can
not be settled. Host Respondents and many attorneys will be
unfamiliar with the administrative process that EPA follows and
it will be up to you to carefully detail each and every aspect of
the proceeding to them. You may present this information in the
context of providing a "service" or "information" to the
Respondent or counsel - i.e., "I know you may be unfamiliar with
the procedures EPA will follow in processing this complaint, so
let me spend a few minutes describing the procedures that are
followed under the Consolidated Rules of Practice". You then.
proceed to give a detailed explanation of the entire
administrative process from assignment of the Administrative Law
Judge to the potential appeals to the U.S. Supreme Court. Give
the explanation in excruciatingly patient.detail. Let them know
that you are extremely familiar with the procedures and are
prepared to litigate the matter to the fullest extent necessary.
Repeatedly ask if Counsel or the Respondent has any questions.
A long discussion is particularly useful when the Respondent
or client is present. It is important to let them know that this
matter is not going to go away by itself and that procedurally,
it is very complex.
-------
-4-
A useful part of the repertoire of agency attorneys is the
development of a frank but lengthy discussion palled "The
Lecture". This Lecture should be the exposition of the
administrative process and is designed to be given in such great
detail to perform the twin goals of "education" and
"intimidation". Here is a sample outline of the script that can
be used. It is useful to include this list in the materials that
you take with you to your settlement conference, along with the
Consolidated Rules of Practice, relevant Statute and applicable
Regulations.
Always inform the Respondent that two courses of action may
proceed from the settlement conference. One which can move
quickly toward resolution of the case through entry of a Consent
Agreement and Final Order. The other course is a lengthy,
detailed (costly), and nevertheless direct course of litigation.
TWO COURSES OF ACTION
No Settlement Settlement
(1) Assignment of Judge (1) Stipulation/Achievement
by the Chief Judge of Compliance
(2) Issuance of Scheduling (2) Consent Agreement and
Letter Order
(3) Payment of Penalty
(3) Required submission of: (4) Case Closed
Prehearing Exchange
1. Witness List
2. Exhibits
3. Defenses
4. Statement of Testimony
5. Location of Hearing
(4) Response/Replies to Prehearing Exchange
(5) Prehearing Conference with ALJ
-------
-5-
(6) Hearing Procedure
(7) Transcript
(8) Proposed Findings of Fact,
Conclusions of Law and Orders
(9) Preparation of Briefs
(10) Preparation of Response Briefs
(11) Initial Decision is rendered
(12) Filing of Appeals (within 45 Days)
(13) Final Decision is rendered
(14) Potential for Appellate Review
NOTE: at each step in the process, emphasis can be made on the
potential for increasing costs of litigation and the potential
for amended complaints for continuing violations).
8. Release of Inspection Report is Your Option
The decision on whether or not to release the Inspection
Report is something that you must approach on a case by case
basis. Certainly, never release the report before the Answer is
received unless you expect the Respondent to tailor his Answer to
the deficiencies and short comings in your inspection report.
Release of the inspection report should be used to improve your
bargaining position, not detract from it.
Since the inspection report must be produced as part of the
prehearing exchange, many practitioners find it useful to present
a copy of the report to the Respondent at the first settlement
conference. By explaining that the Complainant is under no legal
obligation to provide the inspection report until the pre-hearing
exchange but is providing this information "in the spirit of
settlement" and cooperation, you may gain valuable good will on
the part of the Respondent or Counsel. Release of the report may
also stimulate more serious settlement discussions as you use the
Respondent's Answer with the Inspection Report to demonstrate
that the facts are virtually undisputed and the evidence of
violations are simple, direct and very.compelling.
Another strategy to consider is to circle or underline
specific items in a copy of the Inspection Report before
photocopying the Inspection Report for release to the Respondent.
Highlighting high levels of PCB concentration or other key
information adds further weight to the government's position.
-------
-6-
Remember to keep the original Inspection Report clean since it
will need to be filed with the Hearing Clerk as part of the pre-
hearing exchange.
It is also critical that the Respondent have initiated some
compliance or corrective action before coming in to meet with
EPA, if at all possible. Certainly preparing records,.marking
PCB equipment or servicing leaks from PCB transformers or
hydraulic systems should have been started at the time the
inspection was conducted and certainly by the time the complaint
was received. Do not entertain or allow any substantive
discussions or argument about the rationale or merits of the
regulations in question.
In arranging for a settlement conference, request that
tangible evidence be brought along to demonstrate that "good
faith" compliance with the regulations has been initiated.
Avoid letting the Respondent use the settlement conference
as a free seminar on how to achieve compliance. If he persists
in asking basic or obvious questions that demonstrate that he has
not taken the time to read the subject regulations, inform the
Respondent that EPA will be obligated to add a "tuition" fee to
the penally, a calculation increase that could be added for bad
faith or lack of cooperation, under the penalty policy.
9. Conduct a Count by Count Examination of Complaint and
Answer
Since the Respondent has asked for the settlement
conference, it is useful to ask them how they wish to proceed
sometimes they will prepare
the equivalent of "opening statements" that may be time consuming
and irrelevant but serve to give the client or Respondent the
feeling that they are getting their "day in court". Sometimes
the Respondent or counsel will prepare a detailed response to the
factual allegations to the complaint in addition to the general
denials in the Answer. By using the Complaint, with annotations
in the margin based upon your analysis of the Answer, you should
endeavor to steer the discussion to an identification of any
contested and non-contested issues. Limiting what needs to be
considered as part of the discussion will aid immeasurably in
narrowing the focus of your meeting. In trying to keep the
discussion limited to contested issues, indicate that the Agency
is willing to consider revising the size of the penalty. If
adequate and convincing evidence is forthcoming. This
willingness to revise the Complaint (if appropriate) should be
strongly emphasized as a way to gather additional data about
possible weaknesses in your case.
-------
-7-
10. Describe How the Civil Penalty was Calculated.
The proper presentation of the civil penalty calculation is
frequently overlooked at the settlement conference. By merely
indicating that the penalty was calculated in accordance with the
relevant civil penalty policy, you miss an important opportunity
to discuss the merits of the penalty policy. No Respondent is
interested in willingly accepting the logic or effect of a civil
penalty policy, since it is a "policy" and not "law". For
strategic reasons, it is well worth your time to prepare a
detailed description of the civil penalty and how it was
calculated. Always have a copy of the appropriate penalty policy
available to give the Respondent. It is also worthwhile to
prepare a short exhibit showing how the penalty was calculated,
using the circumstances of the violation, probability of damages
and range or nature of the violation. By stressing the fact that
the calculation of the penalty was one "by the book" for purposes
of "national consistency" and was based on the facts known to EPA
at the time of the inspection or violation, you can shift the
burden onto the Respondent to rationalize how a different
application of the same policy could result in a lower penalty
given the same set of facts.
All penalty policies, despite their intent to be objective,
contain numerous subjective factors. It will ultimately be your
job to convince the administrative Law Judge of the
reasonableness of the penalty, so you may as well practice by
"selling" the penalty to the Respondent. Emphasis on the care
with 'which the penalty was calculated is very important, because
it can aid in demonstrating how reasonable EPA was in filing the
action.
The penalty can be presented by either the attorney or
program representative. Since the penalty will require a
detailed explanation when it is presented at a hearing, try to
use the staff person who will be presenting the testimony to
present the penalty at the settlement conference.
Both TSCA and FIFRA have very detailed penalty policies and
schedules. Both contain substantial information that can be used
at a settlement conference. It is a good practice to maintain a
personal copy of the relevant penalty policy for use at
settlement conferences. Highlighted specific portions that you
will wish to refer to at the settlement conference,•such as the
statements in the introduction to the policies. The TSCA Civil
-------
-8-
Penalty System, for example, states very explicitly that:
The purpose of the general penalty system is to assure that
TSCA civil penalties be assessed in a fair, uniform and
consistent manner, that the penalties are appropriate for the
violation committed; that economic incentives for violating TSCA
are eliminated; and that persons will be deterred, from committing
T8CA violations.
Each of the elements of this paragraph provide a basis for a
discussion of the penalty with respect to the specific
Respondent.
11. Discuss Penalty Mitigation Factors
Always keep the issue of penalty mitigation open. Advising
the Respondent of the types of mitigation projects EPA would be
willing to consider will convince the Respondent that EPA will
settle the case if the terms are right. TSCA enforcement
guidance on innovative settlement conditions is contained within .
the TSCA Policy Compendium. Other factors that can be stressed
are the use of negotiated credits for compliance activities above
what is required by law, Environmental Management Audits or other
types of compliance or abatement.
In considering the ability to pay issue, .insist that the
Respondent submit signed personal or corporate tax returns
including all schedules. You will need to pay close attention to
various costs of doing business, internalized costs and other
items that would create useful information at a hearing. The
TSCA civil penalty policy allows the recovery of 4% of the gross
sales of the Respondent's operations.
One factor that is often stated is that the facility or
Respondent has never been in any trouble with EPA in the past and
accordingly should be given a mitigated penalty. While this may
be a legitimate issue, the proper response to this remark is to
focus attention on the length that the violations have been
ongoing. Five years without annual PCB records is very serious,
for example.
Some Respondent's will claim that they,lack the ability to
pay a civil penalty. This is particularly true of schools,
municipalities or other types of businesses that are under
capitalized. Always insist on being provided with financial
data, either in the form of tax returns or operating budgets, in
the case of schools or no profit entities. A good strategy to
use is to compare the costs of cleanup (or resulting employee or
citizen suits) from some chemical that is improperly will
judgment or a large cleanup project be funded.
-------
-9-
TSCA Section 16 requires EPA to address the Respondent's
ability to continue to do business when faced with the imposition
of a civil penalty. The precise language of 16(a) states that
the administrator "shall take into account" the effect on ability
to continue in business. It doesn't mean that a penalty can't be
a major impact on the operation. When appropriate, this issue
may be best left to the discretion of the Administrative Law
Judge following the taking of testimony.
12. Be Clear About What EPA Must Have to Settle The Case
At the conference, three critical items must be identified
and addressed; these are:
a. That the Respondent recognize that there is .a problem
(even if he. won't admit it in the CAFO).
b. That evidence of some corrective action has
already been initiated by Respondent, and
that tangible evidence in the form-of
photographs or affidavits be produced to
demonstrate good faith efforts to get into
compliance.
c. That the Respondent demonstrate a commitment
to maintain compliance into the future.
Recognition of violations is the first critical
consideration. Some Respondents will insist that no law or
regulation was "broken" (or that, at a minimum, it was not
"willfully or knowingly" done). Always respond with patience but
with firmness; those are elements of a criminal action that have
no inherent effect on the civil penalty action proceeding. This
is a very critical step in the negotiation process. This is
emphasized throughout the settlement discussion for two important
reasons. First, it will portray the Agency as being extremely
amenable to reducing the penalties, if warranted by the evidence
and it will also aid in developing a view that EPA is not
arbitrary and is willing to give the Respondent "every benefit of
the doubt" - consistent, of course with the quality of the
evidence and existing settlement policies. Secondly, this
approach will help you to discover any unknown flaws or defects
in your case. If the Respondent has 7 transformers and your
inspector mistakenly wrote down 77, you need to know that.
-------
-10-
13. Always Discuss the Maximum "per day, violation"
Section 16 of TSCA provides for civil and criminal penalties
for violations of the Act and regulations of up to $25,000 per
day, per violation. It is certainly no secret that EPA rarely
imposes the maximum fines allowed by the statute on a "per day,
per violation" basis, although it certainly is possible to do so.
Penalties have been proposed on a per day per violation basis in
several cases, as well as on a per month or per year basis, such
as where improper disposal constitutes an ongoing violation or
where the respondent may not have any annual PCB documents. In
those instances, it would be appropriate to assess a penalty for
each month that the illegal activity is taking place.
The TSCA Civil penalty policy does not prohibit the
assessment of penalties on a per day basis, see 45 Fed. Reg.
59776.. The section entitled Continuing Violations recognizes
that there is a potential for very large penalties to be assessed
in many situation, stating that large penalties will be
appropriate for continuing violations while for others, such as
late inventory reporting, assessing an additional penalty for
each day or violation could yield a penalty assessment for
greater than the violation merits. The PCB Penalty Policy at 45
ed. Reg. 59782 establishes specific guidelines for per day, per
violation changes by describing the Proportional Penalty
Calculation.
14. Evaluate Inability to Pav Claim
Section 16 of TSCA requires that a number of factors be
considered in assessing a civil penalty, specifically, the nature
circumstances, extent and gravity of the violation or violations
and respect to the violator, the ability to pay effect on ability
to continue to do business, and history of prior such violations,
the degree of capability and such other matters as justice may
require. No Respondent wants to pay a penalty, if it can avoid
it. Some Respondents will pay "part" of a penalty as part of the
cost of doing business, to avoid further publicity or additional
costs of litigation. Nearly all will cite "ability to pay" as a
factor in trying to reduce penalty liability.
-------
-11-
Given the fact that EPA has a very limited ability to obtain and
then interpret financial data, it is necessary to limit our focus
to several easy to use financial analysis systems. These are the
Lexis computer system and personal 'or Corporate tax returns.
The Lexis system can provide invaluable information,
particularly when used in preparation for a settlement
conference. Check the recent financial activity of your
Respondent by looking in the Lexis-Nexis library marked "all
wires" for any stories or news accounts of corporate financial
activity. Stories concerning mergers, acquisitions or stock
dividends can be printed out and held in reserve in the event the
Respondent starts to paint a financial picture that is too bleak.
The Lexis search may also reveal business or financial
relationships that may not seem obvious at first.
The program person should be knowledgeable about the
appropriate civil penalty and its application to the facts in the
case. Use them for a detailed discussion of the civil penalty.
Where at all possible, use a graphic display of the penalty
calculation worksheet, while the program expert walks the
Respondent through the details of the calculation.
15. Use of the National Penalty Docket; Distinguishing
Small Penalties.
The Respondents may come to a'settlement conference with
detailed "statistics" on civil penalties that have been complied
from the National Penalty Docket, which is maintained by the
Compliance Monitoring Staff, Office of Pesticides and Toxic
Substances or from various trade publication, such as.the
Environment Reporter. Chemical Regulation Reporter or other trade
publications. In some cases, Respondents may even have copies of
Consent Agreements from cases in your Region or other Regions.
In all cases, the sole goal of these "statistics" will be
to demonstrate that the penalty being sought in their action is
too large by comparison or that they are entitled to a low or
lower settlement penalty similar to those identified in the
statistics. Because the National Docket or other reporters only
state the actual settlement penalty amount, the myriad other
factors that enter into a settlement, such as risk of litigation,
environmental credits, etc. simply do not show up.
When confronted with this type of selective statistical
exhibit, it is critical that you place it to the side of the
negotiating table and to firmly refuse to deal with it. Stress
the fact that their "facts" are a gross over simplification of
the individual factors that go into each individual settlement.
Stress adherence to the civil penalty policy and the factors that
go into its settlement. Do not agree to evaluate the list or to
obtain copies of each and every settlement agreement for the
-------
-12-
Respondent. It is a* waste of your time and the Respondent is
free to seek the material under FOIA, where they will be charged
for search time and photocopying.
16. Explain Why EPA uses Civil Penalty Actions vs. District
' Court Action (factors to stress)
In discussing the imposition of the penalty it is useful to
emphasize the fact that an injunction action "could have" been
initiated, which would have cost a great deal more in terms of
legal fees, and so forth. Stressing how this administrative
action is really much cheaper can have a big impact on the
prospect of settlement.
17. Presentation of Draft CAFO
As time permits, it is a good practice to prepare a draft
Consent Agreement for presentation to the Respondent at the time
of the settlement conference. Use of a settlement draft may
substantially aid in facilitating a settlement.
-------
H
-------
SAMPLE OF ANNOTATED
"COMPLAINANT'S PRE.HEAHTNG EXCHANGE"
Pttniiote—»
your
Briefly.
Frplain
yoor
you have
solid data
to support
the action
BEFORE THE ADHTTIISTRATOR
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
Washington, O.C.
IN RE
IMPERIAL. INC.
Shenandoah. Zowa.
Respondent
Docket Not F1.FRA-86-H-08
COMPLAINANT'S
PRC-HEARINC
EXCHANGE
4-Befa
By Order of this Court, dated July 23, 1986, the partlea
to this action were directed to file certain reaponaoa and
documents by September 11, 1986 in the event this-natter could
not he settled. This matter has not been settled and accordingly
this is Complainant's response to the. Order of the Court.
I. WITNESSES TO BE CALLED
"JOHN J. NEYLAN, III Mr. Nevlan Is th« Director of the Compliance
Division, Office ot Compliance Monitor!no. Office of Pesticides and
Toxic SuMitances, U.S. EPA Washington, D.C. Mr. Neylan will testify
__that EPA initiated correspondence with the Respondent advising sane
tnat Cannon Laboratories of Reading, PA had declared bankruptcy and
tnat aoency records indicated that a study submitted by trie Respondent
in support of the registration ct Imperial Ready To Use Rat and Mouse
Killer, EPA Registration Number 407-288 had been prepared by Cannon.
Of specific concern to EPA was thit adeguate supporting documentation
exist in support of registered products. EPA reguested that certain
registrants of pesticides relyino of Cannon data notify EPA as to
the availability of all underlying raw data for testing conducted
by Cannon, referencing the specific reguiremvnt of 40 CPR 169.2(n)
__that all underlying raw data for teating conducted in support of
registration and/or tolerance petitions muat be maintained as lone;
as the registration ia valid and the producer is in business.
Mr. Neylan will testify that on December 12. 198S. Respondent
notified EPA that the underlying raw data, interpretations and
evaluations thereof were not available and could not be produced.
This Information reaulted in the laauance of this enforcement action.
Finally. Nr. Neylan will testify concerning the aignificance of
of Respondent's failure to maintain such data, ita gravity and impact
on EPA's duty and ability to insure that pesticides are properly
registered, manufactured and used within the United States.
Promote— »
r*
Li1
?OSE BURGESS Ms. Buroess is an Environmental Protection Specialist
n the Comnlianc* 01 v-.Hion, office ot Connlisnce Monitorino, Otticc.
-------
- 2 -
o* Pcstieidci and Toxic Suhstancts, Washington, o.C. HS. Burgess
will provide testimony that Respondent Is a 'producer* as defined
by FIFRA and how the penalty was calculated to ho assessed in full
contormar.e* with iPA's FIFRA civil penalty policy.
Complainant respectfully reserves the right to supplement the
list of witnesses upon adequate notice to Respondent.
ZZ. DOCUMENTS AND EXHIBITS
Respondent has included various documents with Its Answer.
Complainant intends to submit a copy of the test titled Eye
Zrritstion Study N.t. Albino Rabbits, which waa identlfieT"by
EPA as HRID NO. 68004, as soon as it is received from the Pesticides
Ptqlstration Diviaion. Since Respondent apparently haa a copy of
this tinal report* no prejudice will attach from tnis late suhmittal
HPA h«s no additional documents to ftuonlt at this time, however
Complainant respectfully reserves the rioht to auplement the list
of exhibits upon adequate notice to Respondent. "
ZXI. PLACE OF HEAPING
itir
•rtfnbe
Complainant prefer* that the hearif^ be held in Warfhinqton.
D.C., as provided for in 40 CFP. 22.19/4) and 22.21(d)XZn the
alternative. Complainant do^s not oh feet to conducting the hearing
«t A suitable location in the county where the Respondent resides-
or in Chicago, Illinois wnere the CPA Reoion V of/ice is. located.
er aD—*
oftheP-X
fiy the Jndee
IV. CONSOLIDATION OF HEARING
Connlainant does not oM«et to the consolidation of this cas«
with Zn the Matter UFA Oil Company, Docket.No. FIFRA-86-K-09
since tti? Respondents appear to Itave a clear corporate rrlations^ir,
the facts of each case appear to arise out of the sane operative
facts in that each action concerns the failure of the respondents
to maintain the underlying raw data for the identical studyi Eye
Irritation Study Ml Albino Rabbits. HRIO No. 68004, prepared under
contract by Cannon laboratoriea. Complainant requeats that the
consolidation be effectuated immediately In the interest of judicial
economy.
^^^B
V. RESPONDENT ZS A PRODUCE* AS DEFINED BT PZFRA
Complainant disputes Respondent's contention that it is not a
•pr'xlucer' an defined by FIFHA. Under FIFRA, "producer" means any
person, who produces a pesticide or a device subject to the Act.
Respondent holds a registration number for Imperial Ready To Use
Eat and H'ouse Killer. EPA Renistration Number 4U7-28B which it
procures, processes, markets and distributes In the commerce ot
-------
- 3 r
VI. RESPONDENT IS NOT ENTITLED TO A DISMISSAL OP THIS COMPLAINAT
The Court has rtcuestev! Complainant's position as to natters
stated in Respondent's answer, and. In particular* why the
Respondent woulrt not bo entitled to a dismissal of the Complaint if
the 'facts are as stated in Respondent's answer and attachments
thereto.
There does not appear to be any question that Respondent Is a
registrant of a toxic fumarin pesticide product that It sold and
distributed in commerce in the United States. There does not appear
to be any dispute that "Respondent contracted with Cannon Laboratories
to conduct an eye irritation study in support of the registration
of the subject product. Respondent claims the study was done for
the purpose of 're-registration' not registration. The requirements
of 40 CFR 169 et Beg, do not create any such distinction.
Finally, Resnondent asserts that it did not 'refuse' to
mainta'in the reouirtd data under .Section R(a) and that 'there is
son* question AS to the responsibility for retrieval of the data
since Union Cartide was empowered to act on our behalt,' presumably
in reference to a 'po**»r ot Attorney' statement issued by Imperial
to Union Cart.ide to go to the Reading Airport to retrieve the
reguisira raw riata from Cannon. While Respondent may be offended
by th* use of the statutory t«rm 'refuse' as required by the Act*
(intiratinn that it was really Cannon who was negligent* responsible
or culpaole tor the 'refusal') the facts are inescapable that
Respondent w«s unable to produce the underlying raw data upon the .
lawful reauest of the Complainant. Accordingly, the action should
not he dismissed.
VII. CALCULATION OF PROPOSED PENALTY
Section 14 of FIFRA authorises the imposition ot a civil.
penalty of up to $5000 for rnrhimLfersg. flniri? upon the facts
allege' in this Complaint, an4"Tnaccor'1anco^i'ith the guidelines
tor tre assessment of civil pLiuTKiie undor-flPRA, section 14(a).
39 Pe*1. R*g. 27711 (July 31. 1974), Conplainant proposed a penalty.
of $4,200 for failure to maintain books and records required under
Section 8(a) of PIFRA. In the absence of credible evidence to the
contrary, Respondent was placed in Category V which includes
businesses with annual gross sales of greater than $1,000,000.
Respectfully submitted.
4-Usethe
Policy
Catei:
Michael J.
Counsel .f
Special L'i
ker
plair.ant
ation Division
-------
c e .R T i FICATE or s e R v x c E
I her* by certify that the original document entitled:
COMPLAINANT'S FEE-HEARING EXCHANGE in this matter. Docket No.
rifRA-86-H-OB was cent by. post-paid United States Nail to the
Hearing Clerk and that true and corect copiea were cent by poat
paid United States Nail to the Court and Respondent all at the
Collovinq addresses i
Ns. Bessie Bamaiel —~'
Hearing Clerk (A-110)
U.S. EPA
401 n Street sw
Washington* O.C. 20460
Hon. Gerald Harwood
Chief Administrative Law Judae
U.S. EPA (A-110)
401 N Street SW
Washington D.C. 20460
to Certify
Mr. D.E.
Executive Vice President
Imperial, Inc.
P. 0. Box 98
W. Sixth Avenue
Shenandoah, Iowa
Dat«tdi
Sl^M-0098
/tCcJU
Michael J. Wai
-------
-------
National Environmental Enforcement Journal
Vol 2 No. 1
January 1987
ENVIRONMENTAL AUDITING:
REACHING THE BOTTOM LINE
INCOMPLIANCE
by
Allen J. Danzig,*
Michael J.Walker,"
and Courtney M. Price"*
I. Introduction
In developing compliance strategies under the
environmental statutes, the United States
Environmental Protection Agency (EPA) has
found that traditional administrative and judi-
cial enforcement efforts.are not always suffi-
cient to achieve a high level of compliance from
all regulated entities, including industry, muni-
cipalities, and federally-owned facilities. This
has become particularly apparent under the
environmental programs that regulate hazar-
dous wastes and toxic substances. To address
this issue, EPA has explored the concept of
environmental auditing as an innovative
approach to promote increased compliance by
the regulated community.
"Environmental auditing is a systematic, docu-
mented, periodic, and objective review by regu-
lated entities of facility operations and practices
related to meeting environmental require-
ments.** II Auditing has been more broadly
defined as "an independent appraisal of a
corporation's environmental control systems
and its environmental assets and liabilities to
enable management to make rational decisions
relating to environmental matters" 2/ Audits
can be used to "verify compliance with environ-
mental requirements; evaluate the effectiveness
of environmental management systems already
in place; or assess risks from regulated and
unregulated material and practices." 31
Many corporate auditing programs, which
began as checks on compliance status, have
evolved into more comprehensive audits of
environmental management control systems to
assess environmental risks. For example, in
reviewing a corporate management system for
polychlorinated biphenyls (PCBs), an audit may
analyze the system and procedures for han-
dling, storing, marking, cleaning up spills,
inspecting, record keeping, and annual invento-
rying. The audit could also look for risks not yet
identified.
Audits should not be confused with the compli-
ance monitoring activities required by environ-
mental laws, regulations, or permits. Audit pro-
grams do not replace the inspection programs
of regulatory agencies: they evaluate direct
compliance activities, such as obtaining permits,
installing controls, monitoring compliance,
reporting violations, and keeping records.
This article will describe EPA's efforts to
encourage environmental auditing by regulated
entities. First, it discusses the evolution of
government and corporate interest in environ-
mental auditing, including the benefits gained
by firms that have instituted auditing programs.
The article then discusses EPA's efforts to pro-
mote environmental auditing through policy
statements in this area. Finally, the article
discusses major settlement agreements that con-
tain environmental auditing provisions.
II. Evolution of Corporate Environmental
Auditing Programs
Environmental auditing . programs were
developed for sound business reasons, primarily
to assist regulated entities in evaluating compli-
ance and in managing existing and potential
pollution control problems, rather than merely
reacting to environmental crises. A highly toxic
cloud of methyl isocyanate released from the
Union Carbide plant in Bhopal, India, which
claimed about 2,000 lives, resulted in about
200,000 injuries, and led to damage claims of
billions of dollars, is the most dramatic example
of a situation that has caused some companies
to reassess their environmental and safety prob-
lems. Auditing programs also evolved,, in part,
from Securities and Exchange Commission
(SEC) enforcement case settlements that
required environmental auditing. 41 As a result
of these developments, several hundred major
corporations in the country have voluntarily
developed environmental audit programs.
The benefits of environmental auditing are tan-
gible and significant First, firms face potential
civil and criminal liability under state environ-
mental laws and environmental statutes admin-
istered by EPA, such as the Clean Air Act, 51
the Clean Water Act; 61 the Resource Conser-
vation and Recovery Act (RCRA), 7/ the
Superfund Amendments and Reauthorization
Act of 1986,81 and the Toxic Substances Con-
trol Act (TSCA). 91 Violators also face potential
environmental liability for violations of certain
-------
National Environmental Enforcement Journal
January 1987
SEC disclosure requirements 101 as well as
toxic tort liability.
Audits may be needed especially where a com-
pany wants to obtain pollution liability
insurance or to purchase, sell, lease, or modify
facilities. The company must be aware of any
real or potential liabilities associated with a
transaction to ensure that undisclosed liabilities
will not affect future operations. Thus, an
environmental audit provides corporate
management with assurance that potential
problems have been addressed before serious
accidents, government enforcement, or private
lawsuits occur.
Second, firms can save money by assessing
potential environmental violations and risks as
well as by making capital spending decisions to
correct violations, to reduce risks, and to main-
tain proper operation of treatment systems.
Third, an environmental auditing program can
result in an improved relationship between a
firm, regulatory agencies, and the public, par-
ticularly where audit-discovered violations are
identified and corrected within a relatively
short period. In developing an appropriate
enforcement response, EPA may give some con-
sideration to expeditious, good faith efforts to
achieve compliance. Ill
Finally, regulatory agencies such as EPA obtain
significant benefits from environmental audit-
ing programs. These benefits include better
assurances of compliance from regulated enti-
ties, more efficient use of government inspec-
tion and enforcement resources, improved
cooperation with companies, better compliance
information, and useful information about audit
systems.
Regulated entities have perceived some risks in
developing auditing programs. Audit reports
may generate information on violations of a
pollution control statute that may not be other-
wise discovered by e regulatory agency during
its normal compliance monitoring activities.
Such information could form the basis for an
EPA or state enforcement action or a citizen
suit brought by private citizens. An audit report
can also create potential criminal liability where
the government can establish that corporate
officials knew of violations. Of course, a well-
run audit program should expeditiously correct
identified violations and other potential liabili-
ties.
Audit reports may contain trade secrets about
the company's production process. Thus, firms
may attempt to limit governmental access to
such reports, particularly if they contain infor-
mation not required to be reported under one
of the environmental statutes
In developing an approach to encourage the
growth of environmental auditing, EPA has
sought to recognize the legitimate concerns of
regulated entities while preserving its enforce-
ment prerogatives.
III. Development of EPA Environmental
Auditing Policy
EPA's interest in environmental auditing
evolved from recognition of mutual gains to be
derived by the regulated community and the
federal government The Agency originally
considered mandatory auditing programs
requiring firms to hire external auditors to cer-
tify compliance with permits and other require-
ments, However, EPA .rejected this concept
Regulated entities have strongly objected to
using audits as an additional regulatory pro-
gram or requirement EPA subsequently con-
sidered less structured methods to encourage
achievement of auditing goals. EPA has
encouraged auditing through participation in
numerous auditing conferences, workshops, and
seminars sponsored by EPA, states, localities,
trade associations, and professional organiza-
tions. EPA's policy in this area is contained in
two documents, the Environmental Auditing
Policy Statement and the Policy on the Inclu-
sion of Environmental Auditing Provisions In
Enforcement Settlements (hereinafter the
"Policy on Environmental Auditing in Settle-
ments").
A. The Environmental Auditing Policy
Statement
I. Encouraging environmental auditing
The Environmental Auditing Policy Statement
initially provides that: "it is EPA policy to
encourage the use of environmental auditing
by regulated entities [including federal facilities]
to help achieve and maintain compliance with
environmental laws and regulations, as well as
to help identify and correct unregulated
. environmental hazards." 121 While state and
local regulatory agencies have independent jur-
isdiction .over regulated entities, EPA
encourages states to adopt the Environmental
-4-
-------
.National Environmental Enforcement Journal
January 1987
Auditing Policy Statement and approach audit-
ing in a consistent manner. EPA also
encourages regulated entities to adopt sound
environmental management practices that
improve environmental performance, including
programs that ensure the adequacy of internal
systems to achieve, maintain; and monitor com-
pliance.
The policy further states that EPA will not dic-
tate or interfere with the environmental prac-
tices of private or public organizations and will
not prescribe minimum requirements for audit
programs. Nonetheless, to provide some gui-
dance to regulated entities, the policy outlines
the common elements of effective audits:
(1) explicit management support for
environmental auditing and commit-
ment to follow up on audit findings;
(2) an environmental audit function
independent of audited activities;
(3) adequate team staffing and auditor
training;
(4) explicit audit program objectives,
including scope, resources, and fre-
quency;
(3) a process that collects, analyzes, and
interprets documents and information
on compliance and management effec-
tiveness sufficient to achieve audit
objectives;
(6) specific procedures to promptly
prepare candid, clear, and appropriate
written reports on audit findings;
corrective actions, and schedules for
implementation; and
(7) quality assurance procedures to
assure that the environmental audits are
accurate and thorough.
The policy emphasizes that ultimate responsibil-
ity for the environmental performance of the
facility lies with top management, and that
independent internal or third-party auditors
should conduct the audit Corporate officials
have agreed that top management support and
responsibility for environmental decisions are
critical to successful auditing programs. 131
2. Agency requests for audit reports
Second, the policy addresses the extent to which
EPA may make requests to obtain audit reports.
In addressing this issue, EPA has attempted to
balance the use of its broad authority to obtain
compliance-related information with the con-
cerns of regulated entities on the extent of
Agency qccess to and use of audit information.
EPA'can obtain audit-generated information in
several ways, the-major environmental statutes
authorize EPA to require extensive monitoring,
record keeping, and reporting schemes relating
to compliance with these laws. 14\ Pursuant to
this authority, EPA has promulgated regula-
tions on monitoring, record keeping, and
governmental access. 151 Thus, required report-
ing data, such as a Clean Water Act discharge
monitoring report, must be reported to EPA or
a state agency, although it does not have to be
reported as part of the audit The Agency can
obtain access to information that is relevant to
an authorized enforcement investigation,
including information used to, prepare audits
and the audit reports themselves, either admin-
istratively or through discovery in civil litiga-
tion.
Recognizing that routine Agency requests may
have some inhibiting effects on auditing pro-
grams, the policy statement provides that "EPA
will not routinely request environmental audit
reports." 161 At the same time, EPA maintains
its authority to request and receive information
In audit reports under the various environmen-
tal statutes. EPA may request such reports
where consent decrees contain audit provisions
with .reporting requirements, where a
company's management practices are raised as
a defense, or where state of mind is a relevant
element of inquiry. Importantly, the policy
recognizes that regulated entities have continu-
ing obligations to monitor, record, or report
information required under environmental sta-
tutes, regulations, or permits, and that EPA has
access to that information.
Industry commentors .on the Environmental
Auditing Policy Statement felt that access'to
audit reports should be limited to bad faith
efforts to conceal evidence of violations or
criminal investigations. However, such a lim-
ited set of circumstances could appear to offer a .
defense to those unwilling to provide required
or requested information and thus limit
-------
National Environmental Enforcement Journal
January 1937
circumstances wnere EPA would request audit
reports.
Nonetheless, while the Federal Rules of Civil
Procedure would generally favor disclosure of
audit information, 171 a company may attempt
to demonstrate that one of the exceptions to the
discovery rules applies These include the
attorney-client privilege, the work product doc-
trine, and the privilege for self-evaluative docu-
ments. However, it may not be practical to
bring the entire audit process within one of
these exceptions given the regulated entity's
interest in developing corporate-wide support
and technical expertise for an audit program.
3. EPA enforcement response to
environmental auditing
In addressing the impact of environmental
audit programs on EPA's enforcement
response; EPA examined the extent to which it
could reduce the potential disincentives for
auditing and still maintain a strong enforce-
ment program.
The environmental statutes and case law gen-
erally allow EPA flexibility in .'developing
enforcement responses to environmental viola-
tions. Several courts have held that the duty to
find a violation is not mandatory. 181 Where
EPA makes a finding that a violation exists,
EPA generally must take some type of formal
enforcement action (/.«., either administrative
or judicial) under the Clean Water Act, 19/
under the Clean Air Act, 20f or under RCRA.
211 All statutes authorize EPA to choose the
type of formal enforcement response and to
obtain substantial penalties.
The Environmental Auditing Policy Statement
provides that "EPA will not promise to forgo
inspections, reduce enforcement responses, or
offer other such incentives in exchange for
implementation of environmental auditing or
other sound environmental management prac-
tices." 221 While audits may complement
inspections, they do not provide a substitute for
regulatory oversight However, facilities with a
good compliance history may be subject to
fewer inspections. 231
Similarly, EPA states that it will not reduce its
enforcement responses or offer other incentives
in exchange for auditing. However, the Agency
explains that, in developing a particular
enforcement response to violations, "EPA
policy is to take into account, on a case-by-case
basis, the honest and genuine efforts of regu-
lated entities to avoid and promptly correct
environmental problems." 241 Reasonable
efforts to avoid noncompliance, expeditious
correction of environmental problems
discovered .through audits or other means, and
implementation of measures that will prevent
the recurrence of these problems may be con-
sidered by EPA as honest and genuine efforts to
assure compliance.
EPA has also provided additional guidance on
enforcement response in related policy state-
ments and has agreed to use some enforcement
discretion in negotiating consent decrees with
audit provisions.
The Agencywlde Compliance and Enforce-
ment Strategy directs EPA to select enforce-
ment responses on a case-by-case basis after
considering (1) the gravity of the violation in
terms of environmental, impact and effect on
EPA's ability to carry out its programs; (2) the
reasons why the violation occurred; and (3) the
nature of the violator, including its compliance
record and the economic benefit it gained as a
result of the. violation. 251 Many EPA
program-specific enforcement policies further
set enforcement priorities for certain categories
of violations. 261 Moreover, EPA policy sets
categories of violations for which cash .penalties
must be paid.
Although*it does not explicitly address auditing,
EPA's Policy on CM/ Penalties also provides
some guidance for calculating penalties in
administrative and judicial enforcement actions
where the violator agrees to perform an
activity, such as an audit, as part of a settlement
At a minimum, the penalty must remove the
economic benefit for failure to comply and
obtain an additional amount to reflect the seri-
ousness or gravity of the violation. The gravity
component of the penalty can be adjusted to
reflect the following factors: (1) degree of will-
fulness; (2) history of noncompliance; (3) ability
to pay; and (4) degree of cooperation. Statute-
specific penalty policies also discuss these
adjustment factors. 271 Expeditious correction
of past compliance problems may result in some
mitigation.
Thus, a company's willingness to set up an
environmental auditing program as. part of a
settlement as well as to expeditiously correct
-------
National Environmental Enforcement Journal
January 1987
new audit-discovered violations, could show
cooperation, potentially allowing partial miti-
gation of the penalty amount.
EPA consent decree guidance also recognizes
that defendants may agree to take certain
actions above and beyond those necessary to
meet statutory requirements in order to offset a
cash penalty as long as this type of agreement is
explicitly noted in the decree. 281 The TSCA
Settlement with Conditions Policy 291 appears
.to allow for some type of mitigation if the
remedy includes an audit This policy provides
that EPA may agree to remit a portion of the
proposed civil penalty where the violator agrees
to take extensive and specific remedial actions.
The remedial actions may be related not only to
the violations discovered' by the Agency but
also to other current violations that have not yet
been discovered, e.g., through an audit of other
company facilities where similar violations are
suspected.
B. Policy on Audit Provisions as
Remedies In EPA Enforcement Settle-
ments
In addition to encouraging voluntary develop-
ment of auditing programs, EPA has achieved
numerous settlements that require environmen-
tal audits. Audits can be an effective and effi-
cient use of enforcement resources in obtaining
compliance. EPA has broad authority to nego-
tiate an audit provision in a consent decree as
part of its authority to require self-monitoring
as a remedy for violators. 30/ EPA may obtain
remedies not expressly authorized by statute or
required under EPA regulations where the
decree's terms do not violate the statute's
express prohibitions.
Traditional EPA settlement agreements have
required correction of specific violations and
have assessed penalties. Settlements typically
include the following provisions (1) requiring
compliance with applicable statutes or regula-
tions and committing the defendants to a par-
ticular remedial course of action by a set date;
(2) scheduling a timetable for achieving compli-
ance that requires the greatest degree of reme-
dial action as quickly as possible, including
interim dates to allow for Agency monitoring
of defendant's progress; (3) monitoring, report-
ing, and sampling provisions; (4) requiring site
entry and access and document review, (5)
assessing civil penalties for statutory violations;
and (6) assessing stipulated penalties for violat-
ing the consent decree. 311 These settlements
may fail to address the lack of a company pol-
icy encouraging continuing compliance with
environmental laws and regulation's as well as
the absence of procedures that would effec-
tively implement such a policy. 32f
Under the Environmental Auditing Policy
Statement And the Policy on Environmental
Auditing In Settlements, EPA 'may propose
auditing provisions in consent decrees and in
other settlement negotiations where
• a pattern of violations can be attributed,
at least in part, to the absence or poor
functioning of an environmental
management system; or
• the type or nature of violations indicates
a likelihood that similar noncompliance
proBlems may exist or occur elsewhere
in the facility or at other facilities
operated by the regulated entity. 331
EPA generally has negotiated two types of
audits compliance audits and management
audits. Compliance audits involve an indepen-
dent assessment of the current status of a
party's compliance with applicable statutory
and regulatory requirements. 341 EPA has
negotiated compliance audits where it finds that
violations discovered at a facility may likely be
found elsewhere in a party's operation. In such
cases, the companies have agreed to review the
compliance status of all corporate facilities to
ensure that similar violations do not exist and to
certify to EPA that all facilities are in compli-
ance. Where a firm does not accurately certify
compliance, and EPA subsequently discovers
violations at the certified facilities. EPA can
proceed with a criminal enforcement action
based on knowing and willful falsification of
reports.
Management audits Involve an independent
evaluation of a party's environmental compli-
ance policies, practices, and controls. Such
evaluation may encompass the need for (I) a
formal corporate environmental compliance
policy and procedures for implementation of
that policy; (2) educational and training pro-
grams for employees; (3) equipment purchase,
operation, and maintenance programs; (4)
environmental compliance officer programs (or
other organizational structures relevant to com-
pliance); (5) budgeting and planning systems for
-------
National Environmental Enforcement Journal
January 1987
environmental compliance; (6) monitoring,
record keeping, and reporting systems; (7) in-
plant and community emergency plans; (8)
internal communications and control systems;
and (9) hazard identification and risk assess-
ment. 351
Management audits have been negotiated
where EPA believed that a pattern or violations
resulted In large part from a lack of, or poor
functioning of; corporate environmental
management or operational controls. 361 In
developing such controls, a company may be
required to go beyond a review of facility com-
pliance status and examine its entire environ-
mental management policies, procedures, and
organizational structure and programs affect-
ing all company employees and operations. 37f
The Policy on Environmental Auditing In Set-
tlements states that EPA will not dictate the
details of a party's internal management sys-
tem. However, EPA should generally withhold
approval of an audit plan for a defendant with
an extensive history of noncompliance unless
the plan requires the following:
• use of an independent third-party audi-
tor not affiliated with the audited entity;
• adherence to detailed audit protocols;
and
• more extensive Agency role in identify-
- ing corrective action. 381
The policy addresses several other issues that
come up in settlement It directs Agency nego-
tiators to reserve EPA's right to review audit-
related documents. Next, the policy notes that
reductions of penalty amounts cannot go below
those authorized by Agency penalty policy. In
no case will a party's agreement to audit result
in a penalty amount lower than the economic
benefit of noncompliance. However, "stipulated
penalties [should] only apply to those classes of
audit-discovered violations whose surrounding
circumstances may be reasonably anticipated."
391
The policy further states that audit provisions
will not affect Agency inspection plans Such
plans and liability for violations other than
those contained in the underlying enforcement
actions are unaffected by the settlement.
Finally, .regarding audit-generated data
claimed as confidential, EPA will treat such
information as it treats other confidential
business information,
CF.R.Part2.
in accordance with 40
IV. EPA Use of Auditing In Consent Decrees
EPA has recently negotiated environmental
audit provisions in numerous settlement agree-
ments. Most auditing provisions are contained
in administrative settlement agreements under
TSCA and RCRA.
In TSCA cases, EPA generally has negotiated
environmental audit provisions for polychlori-
nated biphenyl (PCB) violations where EPA
suspected similar violations at other company
facilities that were not the subject of the
immediate enforcement action. Under TSCA,
for facilities with PCBs, the regulated entities
generally have no affirmative duty to obtain
federal use permits, discharge permits, or waste
manifests, so a particular facility in a company
may have little contact with the regulatory
agency. Other company facilities also may not
be familiar with TSCA requirements and may
have TSCA violations. In RCRA cases, EPA has
negotiated audit provisions to address inade-
quate hazardous waste management practices.
including monitoring, reporting, and record
keeping requirements.
In re Owens-Corning Flbergias Corp. 401 and
In re Crompton A Knowles Corp. 41 f involved
TSCA administrative enforcement actions for
PCB violations that resulted in settlement
agreements involving compliance audit provi-
sions. In Crompton, EPA alleged that the com-
pany had failed to (I) affix the required PCB
warning label transformers; (2) inspect, record.
and report leaks to EPA; and (3) develop and
maintain records on the disposition of PCB and
PCB items at the facility.
The consent agreement and final order in
Crompton 421 assessed a civil penalty and
required the company to take the following
actions in a compliance audit (1) certify to
EPA that it had conducted an inventory of
PCBs, PCB items, heat transfer systems, and
hydraulic systems at each of its twenty-eight
facilities; (2) submit a written report for each
facility specifying the location and quantity of
PCBs, PCB items, heat transfer systems, and
hydraulic systems at each of its twenty-eight
facilities; (3) describe the audit at each facility;
and (4) within sixty days of the effective date of
the consent decree, certify by a responsible cor-
porate. official that each facility is in
-------
compliance with PCB regulations, including the
basis upon which it would certify compliance.
Owens-Corning involved a similar PCB compli-
ance audit for sixty-three facilities 431 while the
audit in In re Potlatch Corp. covered forty-
eight company facilities. 441 The compliance
audits in EPA v. Chem-Securlty Systems. Inc.
451 were limited to the facility at issue in the
administrative enforcement actions and
required Chem-Security to conduct four quar-
terly TSCA (PCB) and RCRA compliance
audits and to send the audit reports to EPA.
In In re Diamond Shamrock Chemical Corp.,
461 EPA alleged that the company failed to
notify EPA of its intention to manufacture a
chemical substance not on the TSCA inventory
and used for commercial purposes an illegally
manufactured substance. The consent agree-
ment and order required the company to per-
form a TSCA compliance audit of all of its
forty-three facilities, to evaluate the TSCA
compliance status facilities, and to report TSCA
violations discovered at those facilities. 471 In
addition to reviewing PCB compliance, the
audit required Diamond Shamrock to assess
compliance with several other TSCA record
keeping and reporting requirements and to
report all discovered TSCA violations to EPA.
In In re Union Carbide Corp., 481 EPA alleged
that Union Carbide manufactured and used for
a commercial purpose a chemical substance
without the required premanufacturing notice
and thus was not on the TSCA inventory in vio-
lation of sections 5 and'IS of TSCA. As part of
the settlement agreement, Union Carbide
agreed to prepare over the following year (1)
an educational program designed to reem-
phasize premanufacturing notice compliance
that will be presented to a broad company audi-
ence; and (2) subsequent to the completion of
such education program, implement a program
of not less than five test inputs to monitor
responses for TSCA compliance. 491 Such a
program will allow the corporation to assess the
compliance capability under actual business
conditions by responding to artificially created
violations.
EPA has negotiated management environmen-
tal audits in several administrative settlements
with Chemical Waste Management, Inc.
(CWM). In In re Chemical Waste Management
501 (Kettleman Hills facility), EPA alleged that
CWM committed numerous RCRA violations,
including failure to implement an adequate
groundwater monitoring system, failure to
implement an unsaturated zone 'monitoring
program, failure to develop an adequate closure
plan, failure to make substantial modifications
to the facility, as well as violations of section IS
of TSCA. CWM agreed to perform a compli-
ance and management audit covering all
RCRA and TSCA requirements at the facility.
The Kettleman Hills consent agreement and
final order 5// included an audit that provided
for an independent third-party auditor to sub-
mit a proposal for the scope of work to EPA to
audit waste operations and environmental
management systems at the facility and' in
CWM's corporate environmental management
department Within one year after obtaining a
written agreement on the scope of work for the
audit, the auditor was required to submit writ-
ten reports to EPA on RCRA and TSCA com-
pliance. These reports would
(1) identify and describe the facility's exist-
ing waste management operations,
•including management systems, policies,
and prevailing practices;
(2) evaluate such operations, systems, prac-
tices and policies, identifying strengths
and weaknesses; and
(3) identify and describe areas of waste
management operations and environ-
mental management systems that could
be significantly improved, including
personnel training, corporate manage-
ment and lines of authority, operations
and maintenance procedures, interim
stabilization, and quality control and
assurance.
Within -ninety days after CWM's receipt of
these reports, CWM was required to submit to
EPA the portion of the report containing find-
ings and recommendations of the auditor,
CWM's evaluation of each option, and specific
actions the company would take, as well as a
schedule for implementation.
The administrative consent agreements in In re
Chemical Waste Management 521 (Emelie
facility) and in In re Chemical Waste Manage-
ment 531 (Vickery facility) involved similar
management audit requirements to address
RCRA and TSCA violations. In In re BASF
-9-
-------
National Environmental Enforcement Journal
January 1987
Systems Corporation, where it appeared that
the foreign corporate parent of a violator con-
tributed in part to circumstances involving the
violation, EPA has required that auditors
include measures to insure that the foreign
parent is apprised of TSCA import and certifi-
cation requirements and that it implement
measures to ensure that TSCA requirements
are met. 54\
In proposing environmental audit provisions in
consent decrees, EPA has addressed concerns
on EPA access to audit-generated information
and the appropriate EPA response to violations
discovered by an audit Of course, where an
audit is conducted pursuant to a settlement
agreement, EPA has required greater access to
audit data than under a voluntary audit pro-
gram to ensure compliance with the settlement
EPA has generally reserved its right to inspect
defendant's facilities to determine the accuracy
of compliance verifications and other submit-
tals. 551 In addition, audits may identify and
document violations that may otherwise have
. gone unnoticed by a regulatory agency. In some
settlements, reporting of audit-discovered vio-
lations has been limited to that necessary to
ensure compliance with the terms of the settle-
ment or as otherwise authorized by regulation
or statute. 561 Some audits have required
reporting of all audit-generated violations to
EPA.J7/
An audit report may also include information
on matters other than the immediate environ-
mental issues, such as the production process,
that the company would wish to keep confiden-
tial. In some cases, defendants have been per-
mitted to assert a business confidentiality claim
with respect to information submitted in com-
pliance with the settlement 581 Another settle-
ment specifies that audit-reported information
would be treated as confidential by EPA to the
extent authorized by TSCA and RCRA.J9/
EPA has assessed penalties in all audit-related
settlements for past violations or those viola-
tions that were the subject of the original
enforcement action. 601 To encourage environ-
mental auditing in settlement agreements, EPA
has been willing to limit somewhat its use of
audit reports' in prospective enforcement
actions. In some settlements, EPA has reserved
all enforcement rights regarding prospective
violations. 611
Recognizing the significant benefits of con-
tinuous compliance at audited facilities, EPA
has agreed in certain settlements that the results
of an audit would not be used by EPA as direct
evidence of violations; however, EPA is not pre-
cluded from enforcing against violations
discovered independently of the audit 621 In In
re Chemical Waste Management (Kettleman
Hills facility) EPA allowed a six-month grace
period after completion of the audit to correct
audit-discovered violations with no stipulated
penalties, while EPA allowed a six-month grace
period after the settlement date to discover and
remedy violations in In re Diamond Shamrock
Chemical Corp. After this time period, EPA
could enforce against such violations. 631
However, grace periods will probably only be
considered where the government will achieve
significant compliance benefits from the settle-
ment A grace period does not preclude EPA
from bringing an. enforcement action to
enforce the consent agreement or to seek
injunctive relief to abate a condition that may
present an imminent and substantial endanger-
ment or an imminent hazard under TSCA. 641
For example, in a settlement with BASF Sys-
tems Corporation, EPA and BASF agreed that
BASF would pay the sum of ten thousand dol-
lars as a stipulated maximum penalty for each
chemical, discovered as the result of the audit
determined to be in violation of sections 5,8, or
13 of TSCA, on the condition that the chemical
does not represent a substantial risk to health or
to the environment 651 For chemicals that
represent a substantial risk, EPA reserved the
right to seek a penalty in accordance with its
published guidelines.
EPA may adjust its enforcement response where
a company provides more compliance informa-
tion on its facilities than the Agency would have
obtained through its compliance monitoring
programs and where subsequent violations are
quickly .correeled. This could apply, in particu-
lar, where audit-discovered violations involve
little or no economic benefit or savings to the
violator under agency penalty policy, such as
various TSCA reporting and record keeping
violations. However, where a new violation does
involve economic.savings, EPA will seek to
assess a penalty that reflects such savings,
although it may provide some adjustment for
the gravity aspect of the violation. To do other-
wise would not be fair to the numerous
-------
National Environmental Enforcement Journal
January 1987
companies within the same industrial'category
who have paid for the costs of pollution control
and would place complying facilities at a com-
petitive disadvantage.
V. Conclusion
Environmental auditing is playing a growing
role in the Nation's efforts to achieve continu-
ous compliance with environmental laws. EPA
has encouraged the use of environmental audit-
ing by regulated entities through its auditing
policies and through the use of audit provisions
in appropriate settlement agreements. Audit
programs serve regulated entities' interests in
long-term cost savings and improved coopera-
tion with regulatory agencies, while they com-
plement the compliance efforts of regulatory
agencies.
EPA recognizes the legitimate interests of regu-
lated entities in limiting disclosure of certain
audit-generated information and in taking
enforcement responses that recognize defen-
dants' genuine compliance efforts. However,
EPA will continue to seek environmental audit
provisions in consent decrees, particularly
where a pattern of multi-facility compliance
and environmental management problems
exists. Moreover, by maintaining a strong
enforcement program and penalty deterrent,
EPA will encourage new voluntary 'environ-
mental audit programs.
Footnotes
• Attorney, Office of Enforcement and Compli-
ance Monitoring, United States Environmental
Protection Agency.
•* Attorney, Office of Enforcement and Com-
pliance Monitoring, United States Environmen-
tal Protection Agency.
•*• Partner - Rivkin, Radler, Dunne, and Bayh,
Washington, D.C. Formerly Assistant Adminis-
trator for Enforcement and Compliance Moni-
toring, US. Environmental Protection Agency.
The views expressed in this article are the per-
sonal views of the authors. No official support
or endorsement by the United States Environ-
mental Protection Agency is intended or
implied. An earlier version of this article
appeared in the Loyola of Los Angeles Law
Review, Vol. 19: 1189 (1986), Environmental
Auditing:. Developing a "Preventive
Medicine" Approach to Environmental Com-
pliance by Courtney M. Price and Allen J.
Danzig.
II US. Environmental Protection Agency,
Environmental Auditing Policy State-
ment, 51 Fed. Reg. 2S004,25006 (July 9,
1986).
2/ Reed, Environmental Audits and Con-
fidentiality. Can What You Know Hurt
You as Much as What You Don't
Know?, 13 Envtl. L. Rep. (Envtl. L. InsL)
10,303 (Oct. 1983).
31 Environmental Auditing Policy State-
ment, supra note l.at 25006.
4{ See. e.g.. In re Occidental Petroleum
Corp. [1980 Transfer Binder] Fed. Sec.
L. Rep. (CCH) par. 82,622, 83,356 n.34
(1980).
51 42 USC §§ 7401-7642 (1982). For
example, the Clean Air Act § 113(b)
provides up to $25,000 civil penalties
per day of violation. CAA § 113(b). 42
US.C§ 7413(b). Section II3(c)provides
criminal penalties of $25,000 and jail
terms of up to one year for certain
knowing violations. Id. § 113(c), 42
US.C§ 7413(c).
61 33 US.C§§ 1251,1319(bXc)(1982).
71 42 US-C §§ 6901.6928 (1982).
8/ 42 US.C §§ 9601,9606-9607 (1986).
07 15 US.C §§ 2615 (a) and (b) (1976).
101 See Securities and Exchange Act of
1934, 15 US.C §§ 78a-78kk (1982).
SEC regulations require all publicly held
companies to disclose the effects of com-
pliance with, and legal proceedings
under, federal and state law through
public filings to the SEC Regulation S-
K. Item 10l(cXlXxii). 17 C.F.R. §
229.101 (cX I Xx*'X 1985); Instruction 5 to
Item 103,17 CF.R.§ 299.103 (1985).
/// See Environmental Protection Agency,
A Framework for Statute-Specific
-------
National Environmental Enforcement Journal
January 1987
Approaches to Penalty Assessments-
Implementing EPA's Policy on Civil
Penalties 19-20(1984)[hereinaftercited
as Implementing EPA's Policy on Civil
Penalties) .
121 Environmental Auditing Policy State-
ment, supra note l.at 25004.
131 See. e.g.. Freedman, Organizing and
Managing Effective Corporate
Environmental Protection Programs,
Envtl. Forum, May 1984, at 40-41.
141 See. e.g.. CWA § 308. 33 US.C § 1318
(1982); CAA § 114, 42 U-S-C § 7414
(1982).
151 See. e.g.. Clean Water Act-National
Pollutant Discharge Elimination System
(NPDES) regulations, 40 CF.R. § 122
(1985).
161 Environmental Auditing Policy State-
ment, supra note 1. at 25007.
171 Fed. R. Civ. P. 26(b)U) states: Parties
may obtain discovery regarding any
matter, not privileged, which Is relevant
to the subject matter involved in the
pending action, whether it relates to the
claim or defense of the party... It is not
ground for objection that the informa-
tion sought will be inadmissible at the
trial if the information sought appears
reasonably calculated to lead to the
discovery of admissible evidence.
181 Sierra Club v. Train, 557 F.2d 485 (Sth
Or. 1977); Ca Id well v. Gurley Ref. Co,
533 F. Supp. 252 (E.D. Ark. 1982). Con-
tra South Carolina Wildlife Fed'n. v.
Alexander, 457 F. Supp 118 (DS.C
1978).
191 See South Carolina Wildlife Fed'n v.
Alexander, 457 F. Supp. 118, 131 (D.
&C 1978); People ex ret. Scott v. Hoff-
man, 425 F.Supp. 71,77 (S.D.II1.1977).
But see Sierra Club v. Train, 557 F2d
485,490 (Sth Cir. 1977).
20f See Council of Commuter Orgs. v.
Metropolitan Transit Auth., 683 F.2d
663 (2d Cir. 1982); Luckic v. Gorsuch,
13 Envtl. L. Rep. (Envtl. L. Inst.) 20,400
(D. Ariz. 1983); Conoco. Inc. v. Gar-
debring, 503 F. Supp. 49, 51 (N.D. III
1980). Contra Kentucky ex rel. Han-
cock v. Ruckelshaus, 497 F-2d 1172,
1177 (6th Cir. 1974), aff'd on other
grounds sub nom.. Hancock v. Train,
426 US. 167 (1976); New England
Legal Found, v. Costle, 475 F. Supp. 425,
436 (D. Conn. 1979), aff'd In part.
rev'd In part. 632 F2d 936 (2d Cir.
1980).
21f See Luckie v. Gorsuch, 13 Envtl. L. Rep.
(EnvtLL. Inst) 20,400 (D. Ariz. 1983).
221 Environmental Auditing Policy State-
ment, supra note 1, at 25007.
231 Id.
241 Id.
251 Environmental Protection Agency,
Agencywide Compliance and Enforce-
ment Strategy and Strategy Framework
for EPA Compliance Programs (1984)
at 25.
261 For example, under the RCRA
Enforcement Response Policy\ p. 6-14
(1984), a primary enforcement priority
is all Class I groundwater violations.
Class I violations involve a release or
threatened release of hazardous wastes
to the. environment, failure to assure
groundwater protection, proper post-
closure care, or delivery of wastes to a
permitted interim status facility. Id. at
11.
271 See, e.g~> Environmental Protection
Agency. Final RCRA Civil Penalty Pol-
icy 16-21(1984).
281 Environmental Protection Agency, Gui-
dance for Drafting Judicial Consent
Decrees 18 (198 3).
291 TSCA Settlement with Conditions, in
TSCA Compliance/Enforcement Gui-
dance Manual app. A (1984).
-------
National Environmental Enforcement Journal
January 1987
30J See. e.g.* CWA § 308, 33 US.C § 1318
(1982); CAA g 114, 42 USC § 7414
(1982).
311 Guidance for Drafting Judicial Consent
Decrees, supra note 28, at 10-18,22-24.
321 See Mays, Environmental Audits: A
New Enforcement Tool, EPA Journal,
June 1985.
331 Policy on Environmental Auditing in
Settlements at 2.
34f 74. at 3.
351 Id.
361 Mays, supra note 32, at 27.
371 Mays, Environmental Audits:
Addressing Root Causes* Chem. Week,
May 29,1985, at 4.
381 Policy on Environmental Auditing in
Settlements,supra note 33, at 5.
391 W.at6.
401 Administrative Complaint, In re
Owens-Corning Fiberglas Corp, No.
TSCA-V-C-101 (EPA Reg. V Hied Feb.
14,1983).
411 Administrative Complaint. In . re*
Crompton & Knowles Corp, No.
TSCA-PCB-82-0108 (EPA Reg. II filed
July 29,1982).
421 In re Crompton & Knowles, No.
TSCA-PCB-82-0108, at app. B (EPA
Reg. II Sept 17,1985) (Consent Agree-
ment and Final Order).
431 In re Owens-Corning Fiberglas Corp,
No. TSCA-V-C-101. app. at 6-7 (EPA
Reg. V June 8, 1984) (Consent Agree-
ment and Final Order).
441 In re Potlaich Corp, No. TSCA-V-C-
137, at 4 (EPA Reg. V. Aug. 3. 1983)
(Consent Agreement and Final Order).
451 EPA v. Chem-Security Sys, Inc., No.
1085-07-42-2615P at 3-6 (EPA Reg. X
Dec. 26,1985) (Consent Agreement and
Final Order).
46f Administrative Complaint, In re Dia-
mond Shamrock Chem. Corp, No.
TSCA-85-H-03 (EPA Headquarters
filedMar.l8,I985>
471 In re-Diamond Shamrock Chem. Corp,
No. TSCA-85-H-03, Audit Agreement
(EPA Headquarters June 28, 1985)
(Consent Agreement and Final Order).
481 Administrative Complaint, In re Union
Carbide Corp, No. TSCA-85-H-06
(EPA Headquarters filed June 17,1985).
491 In re Union Carbide Corp, No. TSCA-
85-H-06, at 6-7 (EPA Headquarters Feb.
26, 1986) (Consent Agreement and
Order). Similar TSCA violations formed
the basis for an audit In In re BASF
Wyandotte Corp, No. TSCA-V-C-410
(EPA Reg. V filed Apr. 25,1986) (Con-
sent Agreement and Final Order). The
audit required BASF to review thirteen
facilities and certify that all chemicals
required to be listed on the TSCA
Chemical Substances Inventory were so
listed./!/, at 2-3.
501 See In re Chemical Waste Manage-
ment, Inc, No. RCRA-09-84-0037
(EPA Reg. IX July 3, 1984) (Determi-
nation of Violation, Compliance Order,
and Notice of Right to Request Hear-
ing); In re Chemical Waste Manage-
ment, Inc, No. RCRA-09-84-0037, at
5-26 (EPA Reg. IX June 6, 1985)
(Amended Determination of Violation,
Compliance Order, and Notice of Right
to Request a Hearing). In re Chemical
Waste Management, Inc, No. TSCA-
09-84-0009 (EPA Reg. IX filed June 6,
1985). (Administrative Complaint and
Notice of Hearing).
511 In re Chemical Waste Management,
Inc, Nos. RCRA-09-84-0037, TSCA-
09-84-0009 (EPA Reg. IX Nov. 7,1985)
(Consent Agreement and Final Order)
(Keltleman Hills facility).
-------
National Environmental Enforcement Journal
January 1987
521 In re Chemical Waste Management,
Inc. TSCA-84-H-03, at 16-20 (EPA
Reg. IV Dec. 19,1984) (Consent Agree-
ment and Final Order).
531 In re Chemical Waste Management,
Inc, Nos. TSCA-V-C-307, RCRA-V-
85R-019, at 5-9 (EPA Reg. V Apr. 5,
1985) (Consent Agreement and Final
Order).
541 In re BASF Systems Corporation, No.
TSCA-85-H-04, at 6 (EPA Headquar-
ters, May 28,1986) (Consent Agreement
and Final Order).
55j See. e.g.. In re Owens-Corning Fiberg-
las Corp, No. TSCA-V-C-101, app. at 6-
7 (EPA Reg. V June 8, 1984) (Consent
Agreement and Final Order).
561 See. e.g.. EPA v. Chem-Security Sys,
Inc, No. 1085-07-42-2615P (EPA Reg.
X Dec. 26, 198S) (Consent Agreement
and Final Order); In re Owens-Corning
Fiberglas Corp, No. TSCA-V-C-101
(EPA Reg. V June 8, 1984) (Consent
Agreement and Final Order).
57f See. e.g.. In re Diamond Shamrock
Chem. Corp, No. TSCA-85-H-03,
Audit Agreement, at 2-3 (EPA Head-
quarters June 28,1985) (Consent Agree-
ment and Final Order).
581 See. e.g.. In re Owens-Corning Fiberg-
las Corp, No. TSCA-V-C-101.at 7 (EPA
Reg. V June 8, 1984) (Consent Agree-
ment and Final Order).
59/ In re Chemical Waste Management.
Inc, Nos. RCRA-09-84-0037, TSCA-
09-84-0009 (EPA Reg. IX Nov. 7,1985)
(Consent Agreement and Final Order)
(Kettleman Hills facility).
60/ See. e.g.. In re Chem-Security Sys, Inc,
No. 1085-07-42-265IP, at 4 (EPA Reg.
X Dec. 26, 1985) (Consent Agreement
and Final Order).
••611 See. e.g.. In re BASF Wyandotte Corp,
No. TSCA-V-C-410, at 2, 4 (EPA Reg.
V filed Apr. 25, 1986) (Consent
Agreement and Final Order); In re
Chem-Security Sys, Inc, No. 1085-07-
42-2615P, at 5-6 (EPA Reg. X Dec. 26,
1985) (Consent Agreement and Final
Order).
621 In re Chemical Waste Management,
Inc, Nos. RCRA-09-84-0037, TSCA-
09-84-0009. at 7 (EPA Reg. IX Nov. 7,
1985) (Consent Agreement and Final
Order).
631 Id. See also In re Diamond Shamrock
Chem. Corp, No. TSCA-85-H-03,
Audit Agreement, at 8 (EPA Headquar-
ters June 28,1985) (Consent Agreement
and Final Order).
641 In re Diamond Shamrock Chem. Corp,
No. TSCA-85-H-03, Audit Agreement,
at 8 (EPA Headquarters June 28,1985)
(Consent Agreement and Final Order).
651 In re BASF. Systems Corporation, No.
TSCA-85-H-04, at 6 (EPA Headquar-
ters May 28,1986) (Consent Agreement
and Final Order).
-------
-------
NET!
£
UJ
NATIONAL ENF
A SHORT PRIMER ON MOTIONS FOR ACCELERATED DECISION
Michael J. Walker
Enforcement Counsel
o Successful administrative law enforcement involves botb
the knowledge of and effective use of the Consolidated Rules of
Practice (40 CFR Part 22, et seg.) and supporting administrative
precedent.1
o Supporting administrative precedent can be obtained
through the Enforcement Document Retrieval System (EDRS) and each
Regional Hearing Clerk.
o Aggressive litigation — through strategic motion
practice — is the key to effective and timely settlements on
terms favorable to the government.
o Motions to strike affirmative defenses can be effective
in keeping the record clear of frivolous issues and send a clear
signal that the agency is serious about litigating.
See: EPA Motion to Strike 52 Affirmative Defenses
Chemical Waste Management, Inc. Kettleman Hills, CA
facility; Docket No. RCRA-09-84-0037.
Judge Marvin Jones granted this motion 12 days after
it was filed, sending a clear signal to CWM that settlement was a
preferred option. This case settled for $2.1 million dollars.
NOTE: Motions to strike are governed by 40 CFR §22.16.
The "tests" for striking affirmative defenses are:
1. insufficiency as a matter of law;
2. immateriality;
3. redundancy or surplusage;
4. lack of jurisdiction
1 Note: the cases and material cited herein is meant to be
illustrative and not exhaustive. Many motions, orders and
accelerated decisions in TSCA, FIFRA, RCRA and EPCRA may be found
in the EDRS system.
-------
- 2 -
5. frivolous purpose or use for an improper
purpose, such as to delay the resolution
of the proceedings.
See how the CWM notion deals with each "defense" in the
chart on page two of the Memorandum of Authorities.
o Motions opposing discovery can also be effective in
keeping cases moving.
NOTE: Administrative "discovery" is provided for in the
Rules through the pre-hearing exchange, 40 CFR §22.19. Additional
discovery may be obtained only by authorization of the Court,
after informal efforts have been exhausted.' 40 CFR §22.19(f).
Citing Silver-man v. Commodity Futures Trading Commission. 549
F.2d 28, 33 (7th Cir. 1977), Judge Vanderheyden held that there
is no "basic constitutional right to pretrial discovery in
administrative hearings." See: Eastman Chemicals Division.
Eastman Kodak Company. Order of Judge Frank Vanderheyden, Docket
NO. TSCA-88-H-07.
o Motions for accelerated decisions can be very effective
in moving cases toward settlement.
o The Consolidated Rules of Practice at 40 CFR §22.20
provide that:
The presiding officer
(ALJ or Regional Presiding Officer)
upon motion2 of any party
or sua sponte3 (on their own motion)
2 Generally, 95% of all motions for Accelerated Decision are
filed by the Complainant.
3 Judge Yost has become aggressive about sua sponte
identifying situations appropriate for Accelerated Decisions as a
method to keep his docket moving. In one case, Pasadena Power.
Docket No. TSCA-09-89-0004, Judge Yost ordered Region 9 attorney
David Jones to draft a "written decision, consistent with" the
findings of liability and penalty. Submitting a draft
accelerated decision on diskette could help move more cases.
-------
may at any time4
render an accelerated decision5
in favor of the complainant or respondent
as to all6,7 or any part of the proceeding,8
4 Note that "any time" is not liberally construed. Some
motions for accelerated decision brought a few weeks before the
case was set for trial have been rejected where the respondent
did not have sufficient time to file a response as provided for
in the rules. Such motions are rarely, if ever, granted at trial
either.
5 See Rainbow Paint & Coatings attached to this Primer as a
representative example.
6 Many judges have been unwilling to grant accelerated
decisions on both liability and penalty. See Wofford College;
Docket No. TSCA-IV-86-0281, believing that the respondent should
have its day in court on the issue of penalty. Other Judges, such
as Vanderheyden in Rainbow Paints & Coatings. Docket No. EPCRA
VII-89-T-609; and Rohr Industries. Docket No. EPCRA-1089-04-08-
325; Judge. Yost in Potomac Chemicals; Docket No. FIFRA-III-342-
C; John Book; Docket No. IF&R VII-1081C-91P and Centre
Laboratories; Docket No. FIFRA-09-0645-C-89-10 have granted
motions for both liability and penalty. The Rohr case (in EDRS)
•is the leading example to be followed, since it relied on
admissions of the Respondent for establishing liability and an
extensive affidavit of the Case Development Officer regarding
penalty.
7 See Hosho Somerset Corporation; Docket No. I.F.& R. III-
345C. Accelerated decision on liability; Judge Greene sent the
parties to the settlement table, despite EPA's stipulation that
it would accept a mitigated penalty based on settlement
information on financial issues.
8 Note the majority of Accelerated Decisions will not deal
with both liability and penalty. See Airtacs Corporation; Docket
No. TSCA-III-472; Milford Academy; Docket No. AHERA-I-89-1104;
Environmental Abatement & Control; Docket No. VII-88-T-556A;
Dixie USA; Docket No. FIFRA 88-H-04; Honig Chemical; Docket No.
EPCRA-II-89-0104; Colonial Processing; Docket No. II EPCRA-89-
0114; Harmak Grain Co. Docket No. IF&R VIII-150C; Wego Chemical;
Docket No. II-TSCA-8(a)-88-0228; Shield Brite Corporation; Docket
No. FIFRA-90-H-02.
-------
- 4 -
without further hearing or upon such limited
additional information such as affidavits,9 as
he (or she) may require,
if no genuine issue of material fact exists
10
and a party is entitled to judgment
as a matter of law,11
as to all or part12 of the proceeding
9 See Rohr. Docket No. EPCRA 1089-04-08-325, supra, for the
leading example of an effective affidavit on the issue of
penalty.
10 Note: this is the key; through the statements or
admissions in the Answer or pre-hearing exchange, the movant must
demonstrate that he or she has met the test of "no genuine issue
of law or fact."
11 Because "summary judgement" is a significant
determination, the facts and issues must be carefully and
deliberately pled in a straightforward manner, to avoid any
appearance of over reaching.
12 Knowing that some judges (Nissen, Greene) rarely if ever
will grant a motion as to penalty based on legal and
philosophical reasons, you can save time by not briefing these
issues for such judges. Exceptional facts or circumstances may
warrant a different approach.
-------
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D. C. 20460
2.1
•
»*>:o
-o .-•»-»
•* 33
<£ ~2J
en -5
«• s
In the Matter of
DIC AMERICAS, INC.
Diet. No. TSCA-II-8 (a) -90-0109
Respondent
Toxio Substance* Control Act, 15 U.3.C. S 2601 et aeq. Section
8 (a), 15 D.S.C. § 2607; section 16, IS U.S.C. f 2615 (a); section
15 (3) (B), 15 U.S.C. S 2614 (3) (B); 40 C.P.R. 5 710. 33 (a): (1) The
appropriate civil penalty to b« assessed in this matter ia the
amount proposed by complainant, such proposal being in accord with
authority and no extenuating circumstances appearing. (2) in this
caee, because the failure to Cile reports deprived the inventory
data base of information respect log chemical substance imports, the
appropriate amount of the penalty oust be determined in accordance
with the potential for harm.
APPBARANCHS i
Katherine Yagerman, B*qulre. Office of Regional Counsel,
Environmental Protection Agency, Region II, 26 Federal
Plasa, New York, New York 20460; for
Vincent B. Gentile, if squire, Cohen, Shapiro, Polisher,
Shiekman and Cohen, Princeton Pike Corporate Center. 1009
Lenox Drive, Buildlug Pour, Lawrenceville, New Jersey
06649; for respondent.
BBPOREi j. p. Greene
Administrative Law Judge
Decidedt December 30, 1993
NET!
NATIONAL ENFORCCMCNT TMMMO MSTITUTC
UJ
-------
li'=52 2 GFC eg3
DECISION AND OHPRB
This natter arises under sections 8, IS, and 16 of the Toxic
Substances Control Act ("TSCA,« or "the Act0),, 15 U.S.C. §S 2607,
2615, and 2614, ae well as 40 C.F.R. 5 710.33 (a) of the
implementing regulations. The complaint charged respondent with
five violations of section 1.5 (MB), of the Act, for failure or
refusal to comply in a timely manner with 40 C.F.R. § 7l0.33(a),
which requires that persons who import for commercial purposes
10,000 or more pounds of a chemical substance listed in the "Master
inventory File" of chemical substances maintained by the U. S.
Environmental Protection Agenccy (BPA) pursuant to S 8(b) of the
Act submit a report to EPA.' The form for this report, the Partial
Updating of the Inventory Data Base Production and Site Report
("Form U") was required to be completed and. submitted for each
chemical substance so imported during the importer's latest
complete fiscal year prior to August 25, 1986, no later than
December 23, 1986. Complainant moved for partial "accelerated
decision" as to liability, asserting that no issue of material fact
remained and that complainant was entitled to judgment as a matter
of law. The motion was granted.2
The issue of appropriate penalty for the violations found
could not be resolved, and went to trial. Complainant seeks a
1 See 40 C.F.R. S 710.25.
3 Order Granting Motion for Partial "Accelerated Decision",
January 3, 1993, attached hereto.
-------
3
penalty of $85,000 for the violations found in the five counts of
the complaint.1
Complainant: argues forcefully and at length that the penalty
for failure • to file Form IT's must be severe enough to deter
noncconpllance and casual attitudes toward section a (a) filing
requirements, stating that anything less undermines both
Congressional Intent that chemical substances in commerce should'be
regulated, and the ability of BPA to carry out, its responsibilities
under the Act. Complainant urges, citing relevant authority, that
the seriousness of section 8(a) violations must be .determined at
the time the violation occurs, and must not be based upon
fortuitous circumstances in a given instance that no particular
harm may result because the chemicals in question were not
dangerous, or for some other reason. Complainant points out that
the data base which was deprived of information as a result of
respondent's failure to file Form U's is utilized extensively in
risk assessment and other regulatory determinations, is "dispersed
among many agency and governmental bodies, "* and is also used .by
state governments, at least one international agency,1 and, in a
different version, by the public. In other words, "(T)he relevant
' Complainant sought judgment as to the amount of the penalty,
but this motion was denied.
4 Complainant's brief at 11; see also TR 64-66, where
complainant's witness testified that about 18 federal government
agencies utilize the data.
5 The Organization for Economic Cooperation and Development,
TR 64.
-------
•305
4
inquiry in instances of nonreporting under TSCA is not actual harm
but rather the potential for harm caused by the absence of .data
'reasonably required by the Administrator'"
Finally, complainant asserts that: EPA guidance documents
(Guidance for the Assessment of Civil Penalties untjer Section 16 of
the Toxic Substances Control Act, 45 Federal Register 59770,
September 10, 19BO; and Recordkeeping and Reporting Rules in TSCA
Section 8, 12, and 13 Enforcement Response Policy)
have been followed in calculating the penalty proposed herein,
based upon the nature, circumstances, extent, and gravity of the
violation, after which a variety of "adjustment" factors were
considered. These factors include ability to.pay the calculated
amount and to continue to du business, history of prior violations.
vulpability, and "such other factors as justice may require."
Complainant's witness testified that the ability to pay and to
continue in business were not factors in the calculation because
respondent had not raised them and there was no reason to believe
that respondent could not pay the amount proposed. Further, there
was no history of prior violations of the Act, and no reason to
believe that culpability should be considered as a mitigating
factor because any good faith efforts to comply had been offset, in
the witness's opinion, by respondent'» failure to comply promptly
with the reporting requirement during the three months following
the issuance of the complaint.7 Accordingly, no further
6 Complainant's brief, at 14.
7 TR 181-182.
-------
5
adjustments in the penalty calculation were made by complainant
because no ether factors recognized by the guidance documents
seemed appropriate for consideration.
Respondent's position, to summarize, is that no actual harm
has been shown to have been caused by respondent's failure to file,
that significant improvements in respondent's compliance system
have been made, and that the penalty is excessive in these
circumstances.
Complainant's 'evidence and brief are persuasive as to the
importance of calculating the penalty based upon the probability of
harm where, as here, it is really not possible to determine whether
depriving the inventory data base of certain information has caused
harm in a particular instance. What is clear, however, is the
importance, in the statutory scheme here, of maintaining as
complete a data base as possible. Further, formal agency policy as
set forth in the guidance documents appears neither unfair nor
unreasonable in specifying that penalties for such violations
should be based upon the violations being regarded as
"significant.* The penalty proposed is appropriate here, where DO
circumstances out of respondent's control have been shown, and
where there was a three-month delay between issuance of the
complaint and compliance by respondent, and where lack of
compliance in the first instance may fairly be attributed to
insufficient vigiience on respondent's employees' part. Respondent
must be commended for instituting a new recordkeeping arrangement
and demonstrating that its system will now operate in a more
-------
337
6
efficient: manner, but the expense of doing this cannot be set off
against the properly calculated penalty. Respondent has ably
presented a sympathetic case, and careful effort has been made to
determine whether any showing which could form the basis of a
reduction in penalty has been made. However, none appears on the
facts of this case. Accordingly, it is found that 'the penalty
proposed by complainant ie appropriate and reasonable.
FINDINGS OF FACT AMD CONCLUSIONS OP LAN
1. Complainant correctly applied guidelines set forth in the
Guidlines and Enforcement Response Policy documents, wherein
failures to report of the type found here are to be treated as
"significant* with a high probability of harm resulting from the
violation. This guidance is neither unfair nor unreasonable in
the circumstances of failures to report information that will be
added to the inventory data base, when the result is that the data
base is deprived of information.
2. The penalty proposed conforms to SPA guidance documents,
is fair and reasonable in the circumstances here, and is properly
based upon the probability of harm at the time of the issuance of
the complaint where, as here, the actual harm ie absence of
complete information from respondent's facility in the inventory
data base.
3. Based upon the violations found previously in this matter,
respondent is liable for a civil penalty in the amount of $85,000.
-------
ORDER
Respondent is liable for a civil penalty in the amount of
$65,000, and shall pay such civil penalty in the form of a
cashier's or certified check payable .to the united states of
America, within 60 days from the date of this Order. The payment
shall be mailed to
Regional Hearing Clerk
EPA Region II
c/o Mellon Bank
Post Office Box 360I88M
Pittsburgh, Pennsylvania 15251
nistrative Law Judge
December 30, 1993
Washington, D. C.
-------
-------
FROM PIC AMERICAS. INC Transcript Testimony
1 Kover 48
2 the relationship of a particular chemical
3 structure, the kind of effects you see in either
4 test animals usually, and there's -- there can be
C .
5 some patterns discerned that would allow you to
6 estimate for chemicals for which you don't have
7 any testing information because there's a related
8 structure that has test data on it, and this is,
9 in particular, used in the New Chemicals Program
10 under Section 5, which is premanufactured
11 notification under TSCA.
12 Q Is TSCA regulatory activity limited to
13 chemical substances known to be toxic?
14 A No. We're responsible for trying to
15 assess possible risks from the entire -universe of
16 chemical substances that are subject to TSCA;
17 So, for example, with new chemicals, there's no
18 requirement of test data been developed. They
19 actually only have to provide information that
20 they have available to them. So we're looking at
21 new chemicals, and we don't know if they're
22 toxic, but we can review them and use, for
23 example, the structural activity relationship
24 estimates to guide further action under Section 5
25 on new chemicals.
-------
2
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Kover 49
Also, when we have inadequate -- when
3 there's inadequate data to assess risk, we can
try to collect it under Section 8, if it's
available, or we can use Section 4 to have it
developed in testing manner.
Q What concerns might EPA have then with
chemical substances not known to be toxic?
A We're responsible for -- under
Section 8(b) to establish an inventory and
maintain it of what the chemicals in commerce
are,.so the inventory under Section 8(b) is not a
list of toxic chemicals. It is a list of the
chemicals that are in commerce, and so it's our
responsibility to maintain an awareness of what
those chemicals are and maintain a vigilance
.about available information to assess the hazard
and exposure, because new information can be
obtained that would change assessment, and we're
constantly re-reviewing and reassessing chemicals
all the time based on new information that we
receive.
Q Could you explain what the master
inventory file is, and approximately how many
chemical substances would be included in that
- « ua~'»a-:-?1 C o- "
-------
1 Kover 60
2 in order to invite them to stakeholders
3 dialogues, we called them, to get their input to
4 our formulation of risk reduction strategies for
5 their chemicals.
6 Q Does the use of the IUR data within your
7 office always lead to formal rule-making
8 decisions?
9 A No, it does not. It allows us to make
10 decisions on other -- other than regulatory
11 activities, as well.
12 Q Could you explain again -- I think you
13 maybe touched on this previously -- what some of
14 those nonregulatory decisions might be?
15 A Kinds of nonregulatory decisions would
16 be to -- would be in the pollution prevention
17 arena, to either contact the company to discuss
18 our concerns or alert them to our concerns about
19 particular risks or pollution prevention
20 initiatives that we've become aware of that might
I
21 be successful with their particular chemicals.
22 Q Is the IUR data as to any one chemical
23 typically reviewed one time by your office,
24 several times, how often?
25 A We constantly reassess chemicals when we
-------
. Rover 61
2 obtain new information, either of hazard-type or
}3 something that would change the characterization
4 of the exposure to the chemical. Also, I'm aware
5 that other.offices that have an interest and use
6 the IUR information might also carry out
7 assessment for their own programmatic needs.
8 Q Could you explain the reason for a
9 10,000-pound reporting threshold under the
10 Inventory Update Rule?
11 A Basically, the threshold was created
12 mostly from a standpoint of balancing the
13 information reporting burden with the need for
14 the information and some consideration of the
15 amount of loss -.- information loss that we were
16. getting at .that level.
17 Q If a company reports 10,001 pounds of a
18 chemical, is that report meaningful?
19 A It certainly can be meaningful. Both
20 the nature of the chemical and its use and
21 applications can be significant at small scale.
22 For example, if a compound persists or
23 bioaccumulates -- by a persistence I mean within
24 the environment so that it is not rapidly decayed
25 or destroyed within the environment, small
-------
1 Kover 64
2 and they are usually quite interested in the
3 profile kind of documents that we do prepare.
4 Q Does anyone within EPA but outside of
5 tlVe TSCA'program offices have direct access to
6 the data?
7 A Anyone in the Federal Government can
8 attain access to the complete IUR data that would
9 in-clude the confidential portions of it.
10 Q Is there any use of the IUR data within
11 an international context?
12 A Yes.
13 The Organization for Economic
14 Cooperation and Development, OECD, has developed
15 a program which is aimed at high production
16 volume chemicals worldwide to identify those
17 which have the.most significant data gaps on
18 them, to develop a program to share the cost and
19 burden of doing testing worldwide, and in
20 establishing that grouping of high production
21 volume chemicals, the U.S., in its participation
22 in that particular activity, used the inventory
23 update information to input to that, and the
24 program is called the Screening Information Data
25 Set Programs, SIDS, and this has been a pretty
The Mechanic*! por--o* a »-*• T«- f •> i •> \ coc_ciin
-------
I Kovet-
2 A I'm aware that states have asked and
3 received information to help them in initiating
4 or implementing their own environmental programs.
5 Q Does the public have access tro this
6 information?
7 A Are there -- there is a sanitized
8 version that is without the confidential business
9 information in it. That is available to the
10 public.
11 Q Does your office have a policy with
12 respect to public availability?
13 A The Toxic Substance Control Act is a
'14 pretty broad and powerful information gathering
15 authority. It's always been a policy in the
16 implementation ,of TSCA to make information as
17 widely available as possible.
18 Q Are there other information systems like
19 CDS that can be relied on in its place?
20 A For the chemicals that we're looking at,
21 generally, the answer is no. This -- the IUR
22 information is generally regarded in the Federal
23 regulatory community that has to deal with
24 chemical risks as the most reliable and
25 authoritative source of this kind of information.
The Mechanical Sec'retarv. Inc. <7\1\ 695-6110
-------
Direct - Walker 105
Testing Corrifr.ittee is?
A Yes. The Interager.cy Testing Committee
is e committee created by Congress in 1976 under
Sertion 4(e) of the Toxic Substance Control Act.
.Q What federal agencies are named as
statutory members of ITC?
A There are several statutory members on
IT:. These include the Department of Commerce,
President's Counsel on Environmental Quality, U.S.
Environmental Protection Agency, National Cancer
Institute, National Institute for Environmental Hea lite
Sciences, and National Institute for Occupational
Safety and Health, and National Science -Foundation and
Occupation Safety and Health Administration.
Q Are there other federal agencies that are
presently --
A Yes. Before the committee had its
first meeting, February 5th, 1977, they recognized
there were other federal agencies that had expertise
in chemical testing, and before their first meeting,
they invited the Consumer Product Safety Commission,
the Food and Drug Administration, Department of
Defense and Department of. Interior/ to participate in '
tl-.e first meeting, and '79 and '80, they invited the
-------
1 Direct - Walker 107
2 ITC?
3 A The statutory functions of the ITC
4 include, first of all, to control the priorty testing
5 list under Section 43 of the Toxic 'Substances Control
6 Act. This is basically a list of chemicals that the
7 Committee considers, and then recommends for testing
S to the Administrator of the Environmental Protection
9 Agency.
10 The second function is a rather cost-
li effective function, to facilitate coordination of
12 chemical testing among the U.S. Government
12 organizations represented on the Committee, and to
14 enhance information exchange to promote cost-effective
15 use of the U.S. Government's chemical testing
16 resources.
17 Q What are the statutory factors the ITC
18 must use to select chemicals for the list?
19 A When Congress created the ITC, they
20 listed eight statutory factors the Committee must
21 cqnsidex. The first factor is the quantities of the
22 chemical that's.manufactured. The other factors
23 include the numbers of individuals exposed, duration
24 of exposure, extent of human exposure, the structural
25 relationship of the chemical to a known toxin, the
-------
i Direct - Walker 111
2 Environmental Protection Agency, which is directed by
3 Congress to implement the testing recommendations of
4 the Interagency Testing Committee.
5 Q How are the .data which are 'developed as a
6 result of ITC recommendations used?
7 A They have several uses. One of the most
8 important uses is by industry, in revising their
9 material testing data sheets, that'are data sheets
10. sent to customers and users, processors/ distributors,
11 to advise them of the health effects of the particular
12 chemical or the adverse ecological effects, or any
13 warnings that users and workers should be aware of
14 when handling the chemical. And this is one important
15 use of the data.
16 The other uses of the data are made by
17 the individual agencies that are participating on the
18 Committee, and these include regular current uses of
19 the data, for example, EPA using the data in their
20 water programs when they develop national pollutant
21 discharge elimination system permits.
22 Q Does the IUR or the CUS data base provide
23 any information necessary to satisfy any of the
24 statutory criteria? '
*^ A Yes, it provides information to satisfy
-------
1 Direr: - Walker . 112
I the first criteria that Congress listed, that is,
j quantities of chemicals manufacturered.
4 Q Are any cf the chemicals reviewed by ITC
': on other large well-kr.own lists of Chemicals?
£ A Yes, ar.c they are on there because --
they are on several large lists. These include
8 the Clean Air Act Amendments that were enacted in
r 1990, Agency for Toxic Substances and Disease
10 Registry List of Chemicals in Hazardous Waste Sites,
ll and Toxic Release Inventory, which is in Section 313
12 of the Emergency Planning, Community Right-To-Know
13 Act.
14 Just to give you some idea of the number
15 of chemicals- that are on those lists that have been
16 reviewed or recommended by the ITC, approximately 75
17 percent of the chemicals on the Clean Air Act have
IS been reviewed or recommended by ITC; approximately
19 70 percent of the chemicals on the DSDR list have
20 been recommended or reviewed by ITC; and approximately
21 73 percent of the chemicals on the Toxic Release.have
22 been reviewed or recommended by ITC.
23 Q You stated that you have testified before
24 Congress. Has Congress ever shown any interest in the
15 production-volume data, specifically?
-------
1 Direct - Walker 113
2 A Yes, they have In fact, one of the
3 questions we were repeatedly asked — and I was
4 repeatedly asked by Congress during testimony -- was
5 related to the development of the I^R, and the fact
6 that the original inventory was developed in 1977 and
7 it was made publicly available after that. The
£ Interagency Testing Committee had to rely on that
9 inventory for a number of years, and as the
10 Committee -- as time progressed and the Committee
11 relied on that information, it became more and more
12 obvious that that information was outdated and there
13 was a need to develop a more recent source of
14 production data.
15 This is one of the factors, I believe,
16 that influenced the EPA to revise the inventory
17 update, to develop the Inventory Update Rule, to
18 revise the information.
19 Q Do any other U.S. government agencies
20 other than the ITC use production-volume data?
21 A Yes. I would like to illustrate, giving
22 you a few examples of some of the agencies on the
23 Committee and how they use the information.
24 The National Toxicology Program believes
:= . that the information in the Inventory Update Rule
-------
1 Direct - Walker 117
2 production information on mixtures of chemicals,
3 polymers, different groups of chemicals that might be
4 excluded from the Inventory Update Rule report and the
: Interagency Testing Committee not o'nly looks at
6 discrete chemicals reported in the Inventory Update
Rule, but also reacting mixtures and other groups of
5 chemicals for which the International Trade Commission
9 has information.
10 And if there is ever a question of
11 validity of the information that's contained in the
12 U.S. International Trade Commission, the information
13 that is in the Inventory Update Rule is always used as
14 the standard.
15 Q How often is the information in the
16 Inventory Update Rule revised?
17 A Information is revised every four years,
18 currently, unless that changes.
19 Q And are there any other sources you could
20 use to get that information that's provided by the
21 IUR?
22 A Not for discrete organic chemicals,
23 because that's the only reliable source of not only
24 production information, but plant-site information, as
42 well.
-------
1 Direct - Walker 120
2 Q Could you explain how often the ITC or
3 individual members of the ITC might have reason to
4 look at the data on testing of chemical substances?
5 A I can tell you, from personal experience,
6 I look at the data base established by the Inventory
7 Update Rule two or three times a week/ and many times
& this is in response to a question from agencies that
9 are on the ITC; oftentimes it's in response to
10 examining chemical groups and .determining whether the
11 groups are commercially significant.
12 Q If a particular company did not submit a
13 Form U report as to Chemical A, and the ITC did some
14 screening and/or review of that chemical and had some
15 decision-making activity, would the ITC have any
16 interest, after that point of decision-making, in that
17 data that was not reported?
18 A Yes, in general, they would, and I think
19 it is important to understand the processes that the
20 Committee uses, in order to answer that particular
21 question. When chemicals are screened for ITC
22 consideration, we basically look at about 36,000
23 discrete organic chemicals produced in the United
States. This excludes polymers and reaction mixtures
*3 and oiher chemical groups more difficult to
-------
1 Direct - Walker 121
2 characterize and to test.
3 When we screen these chemicals, the
4 primary factor we use is production volume. Then,
5 for those chemicals that are passing that initial
6 screening, they are reviewed. The information that's
7 used there from the Inventory Update Rule is
8 plant-site information, numbers of plant sites, and
9 locations of plant sites. If the Committee then
10 decides that there is data needed for those particular
11 chemicals that are reviewed, they are then considered
12 further and programs recommended to the Administrator
13 of the U. S. Environmental Protection Agency for
14 chemical testing.
15 So, that's, in essence, how we use the
16 information, and yes, information would be important.
17 Q In general, then, could you summarize the
18 nature of the use of the IUR data by the ITC?
19 A Yes, I could. The Inventory Update Rule
20 data that is used by the ITC to provide a significant
21 source of production data, it is the only recent and
22 reliable source of production data that the
23 Interagency Testing Committee has available to it, and
24 it is, as Congress intended, one of the key, if not
25 the key factor used by the Interagency Testing
-------
M
-------
UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
IB the Matter of
, INC. (THE),
Respondent
Doek«t NO. IZ TSCA-PCB-t2-022i
Toxic Substances Control Act. Where respondent failed to
comply with two orders of the Administrative Lav. Judge requiring
respondent to (1) show cause why it had not provided complainant
with a counter offer and with information regarding proposed
supplemental environmental projects as alleged in the status report
and to (2) show cause why an order on default should not be taken
against it for failure to respond to the first order, respondent
was found to be in default pursuant to 40 C.P.R. f 22.17 to have
admitted the violations charged, and assessed the full amount of
penalty proposed in the complaint.
ORPBR QM DEFAULT
By: Prank W. vandarhoyden
Administrative Lav Judge
Dated: February 3, 1994
APPEARAJf CBS i
For Complainant:
Richard J. Weisberg, Esquire
Assistant Regional Counsel
U.S. Environmental Protection
Agency, Region II
26 Federal Plaza
New York, New York 10278
For Respondent:
NET!
Lynn* A. Monaco, Esquire
Nixon, Hargrave, Devans 6 Doyle
Clinton Square
P.O. Box 1051
Rochester, New York 14603
-------
2
INTRODUCTION
This proceeding was initiated under section 16(a) of the Toxic
Substances Control Act (TSCA), 15 U.S.C. § 2615(a), by issuance of
a complaint on December 20, 1991, charging respondent, The Gunlocke
Company, Inc. (respondent), with violations of TSCA and regulations
promulgated thereunder. An answer to the. complaint was served on
February 7, 1992. The answer, in paragraph 24, included a
purported motion to dismiss Count 2 of the complaint. The motion
to dismiss Count 2 was denied on March 19, 1992. Complainant and
respondent each served a prehearing exchange on August 3, 1992.
Respondent's answer and prehearing exchange contested the
amount of penalty sought and requested a hearing. The answer
admitted in paragraph 12 that respondent had transformers at its
facility during 1978-1988 that may have contained PCBs. The answer
also admitted in paragraph 15 that respondent cannot locate records
of inspection for its transformers for the time period of April
1983 through September 1984. The answer otherwise specifically
denied many of the allegations in the complaint.
Count 1 of the complaint charged respondent with failure to
maintain records of quarterly inspections and maintenance history
for two PCB transformers, in violation of 40 C.F.R.
§ 761.30(a)(1)(xii). Count 2 of the complaint charged respondent
with failure to compile and maintain annual documents on the
disposition of its PCBs and PCB Items, in violation of 40 C.F.R.
§ 761.180(a). A civil penalty in the amount of $54,600 was sought
by complainant.
-------
3
FINDINGS OF FACT
Respondent owns and operates a facility located at One
Gunlocke Drive, Wayland, New York 14572. Respondent is a "person"
as that term is defined in 40 C.F.R. § 761.3.
Following the issuance of the complaint, the matter was
assigned to the below Administrative Law Judge.(ALT) on March 11,
1992. By order dated March 19, 1992, the parties, failing
settlement, were directed to exchange certain prehearing
information consisting of witness lists, documentary evidence and
arguments supporting their respective cases no later than May 19,
1992. By oral motion, complainant sought and received from the ALJ
extension of the prehearing exchange deadline until August 3, 1992.
Complainant and respondent then filed their prehearing exchanges on
August 3, 1992.
Settlement negotiations ensued. According to complainant's
status report of November 3, 1992, respondent agreed during the
settlement discussion to soon provide complainant with a counter
offer and with additional detailed information, including
summaries, of proposed supplemental environmental projects, which
information was not forthcoming. On November 27, 1992, respondent
was ordered to show cause why it had not provided complainant with
the promised counter offer and information regarding proposed
supplemental environmental projects. Respondent never replied to
the order. On January 11, 1993, respondent was ordered to show
cause why an order on default should not be issued against it for
failure to respond to the order served on November 27, 1992. This
-------
4
was sent by certified nail, with a return receipt shown in the
file. Respondent failed to respond to the order of January 11,
1993. On March 4, 1993, an order was issued directing complainant
to submit, within 35 days, a draft of a proposed order on default
against respondent for review, possible revision and signature by
the ALT. A copy of this order was sent to. respondent by certified
mail, with a return receipt shown in the file.
On April 27, 1993, complainant notified the ALJ and respondent
that the Environmental Protection Agency (EPA) was reviewing this
matter to determine where there have been lapses or other problems
in certain information collection request approvals granted by the
Office of Management and Budget under the Paperwork Reduction Act
(PRA). In a status report dated August 19, 1993, EPA determined
that the violations alleged in the complaint were not impacted by
the PRA.
CONCLUSIONS OF LAW
Pursuant to section 16(a) of the Toxic Substances Control Act
(TSGA), 15 U.S.C. § 2615(a), complainant has the authority to
institute enforcement proceedings concerning violations of
regulations promulgated pursuant to section 6(e) of TSCA, 15 U.S.C.
§ 2605(e), and set forth at 40 C.F.R. Part 761. Respondent's
answer to the complaint does not raise any questions which could
support a decision that complainant has failed to establish a prima
facie case, or justify the dismissal of the complaint.
An examination of the prehearing exchange documents submitted
by complainant buttresses the allegations in the complaint that
-------
5
respondent (1) failed to maintain records of quarterly inspections
and maintenance history for two PCB transformers and (2} failed to
compile and maintain annual documents on the disposition of its
PCBs and PCB Items. Complainant has established a prima facie case
to support the allegations in the complaint thatt respondent has
violated 40 C.F.R. § 761.30(a)(1)(xii) and 40 C.F.R. § 761.180(a).
Respondent's failure to comply with the order of November 27, 1992
and its failure to show good cause amounts to a default and
constitutes an admission of all facts alleged in the complaint and
a waiver of a hearing on the factual allegations. 40 C.F.R. §
22.17(a).
ULTIMATE CONCLUSION
TSCA specifies that in assessing a penalty the Administrator
shall take into account the nature, circumstances, extent and
gravity of the violations and, with respect to the violator,
ability to pay, effect on ability to continue to do business, any
history of prior such violations, the degree of culpability, and
such other matters as justice may require. Section 16(a)(2)(B) of
TSCA, 15 U.S.C. § 2615(a)(2)(B). Respondent by its default,
however, has waived the right to contest the penalty which shall
become due and payable without further proceedings.
The penalty proposed in the complaint is $54,600, comprising
$52,000 for Count 1 and $2,600 for Count 2. This penalty amount is
consistent with the provisions of 15 U.S. C. § 2615(a) and the
Polychlorinated Biphenyls (PCB) Penalty Policy of April 9, 1990.
-------
The gravity of the alleged violations of TSCA, including the
actual or potential harm to humans and the environment resulting
from respondent's purported illegal conduct, is incorporated within
the scope of the terms "extent" and "circumstances" as used below.
As stated in the Guidelines for the Penalty Policy (guidelines):
'Circumstances' is used in the penalty policy
to reflect on the probability of the assigned
level of 'extent1 of harm actually occurring.
In other words, a variety of facts surrounding
the violations as it occurred are examined to
determine whether the circumstances of the
violation are such that there is a high.
medium, or low probability that damage will
occur ....
Guidelines for the Assessment of Civil Penalties Under Section 16
of the Toxic Substances Control Act; PCB Penalty Policy, 45 Fed.
Reg. 59,770, 59,772 (1980) (original emphasis). The guidelines
further specify that:
•Gravity' refers to the overall seriousness of
the violation. As used in this penalty
system, 'gravity1 is a dependent variable,
i.e., the evaluation of 'nature,1 'extent,1
and 'circumstances' will yield a dollar figure
on the matrix that determines the gravity
based penalty.
Id. at 59,773.
The Guidelines also provide the following means of determining
the gravity of illegal conduct:
The probability of harm, as assessed in
evaluating circumstances, will always be based
on the risk inherent in the violation as it
was committed. In other words, a violation
which presented a high probability of causing
harm when it was committed (and/or was allowed
to exist) must be classified as a 'high
probability1 violation and penalized as such,
-------
even if through some fortuity no actual harm
resulted in that particular case. Otherwise
some who commit dangerous violations would be
absolved. Similarly, when harm has actually
resulted from a violation, the 'circumstances'
of the violation should be investigated to
calculate what the probabilities were for harm
occurring at the time of the violation. The
theory is that violators should be penalized
for the violative conduct, and the 'good' or
•bad1 luck of whether or not the proscribed
conduct actually caused harm should not be an
overriding factor in penalty assessment.
Id. at 59,772 (original emphasis).
Count 1 of the complaint alleges that respondent violated
40 C.F.R. § 761.30(a)(1)(xii) by failing to maintain records of
quarterly visual inspections and maintenance history for two PCB
transformers, serial numbers 42782 and 42783, for the following
time periods.
October 1982 - December 1982
January 1983 - March 1983
April 1983 - June 1983
July 1983 - September 1983
October 1983 - December 1983
January 1984 - March 1984
April 1984 - June 1984
July 1984 - September 1984
October 1984 ?- December 1984
Each time period enumerated above for which there is no record
of quarterly visual inspections and maintenance history constitutes
a separate violation. Under the limits on multiple violations
imposed by the penalty policy, however, complainant assessed
penalties based on only four violations under Count 1.
The penalty policy provides that the extent of a non-disposal
violation is "significant" where the amount of PCBs involved is at
-------
8
least 220 gallons but not more than 1,100 gallons. Respondent's
two PCB transformers contained a total of about 851 gallons of
PCBs.
The penalty policy also provides that the circumstance level
of a major use violation is 2. A major use violation is defined in
the penalty policy as n[f]ailure to inspect PCB Transformers or to
keep records of such inspections."
The circumstance 2 matrix level is based on the probability
that respondent's alleged illegal conduct is likely to cause
damage. This matrix level also reflects alleged violations which
the EPA considers to be the most likely to result in improper
disposal. Furthermore, the circumstance 2 matrix level reflects
that respondent's alleged violations seriously impair the EPA's
ability to monitor (data-gathering) or evaluate chemicals (hazard
assessment).
Under the gravity-based penalty matrix, the penalty amount for
a violation that is circumstance level 2 and of significant extent
is $13,000. The total assessed penalty for the four violations
cited under Count 1 is therefore $52,000.
Count 2 of the complaint alleges that respondent violated
40 C.F.R. § 761.180(a) by failing to develop and maintain annual
documents on the disposition of respondent's PCBs and PCB Items for
the period July 2, 1978 through December 31, 1978 and for the years
1979 through 1988.
Each time period enumerated above for which annual documents
were not developed and maintained constitutes a separate violation.
-------
9
Under the limits on multiple violations imposed by the penalty
policy, however, complainant assessed penalties based on only two
violations under Count 2. These violations are for (1) 1988 and
(2) the years 1987 and earlier.
The penalty policy provides that the extent of a non-disposal
violation is "significant" where the amount of PCBs involved is at
least 220 gallons but not more than 1,100 gallons.
The penalty policy also provides that the circumstance level
of a minor recordkeeping and manifesting violation is 6. A minor
recordkeeping and manifesting violation is defined in the penalty
policy as "the occasional omission of minor data due to clerical
error, or partially missing records where the person responsible
can substantiate the correct records upon request." Complainant
assessed the alleged violations under Count 2 as circumstance level
6, based on respondent having provided complainant with
reconstructed annual document logs for -the pertinent time periods
prior to issuance of the complaint.
The circumstance 6 matrix level is based on the probability
that there is a small likelihood that damage will result from
respondent's alleged illegal conduct. This matrix level also
reflects alleged violations in which the EPA considers the risk to
the environment and human health to be minimal. Furthermore, the
circumstance 6 matrix level reflects that respondent's alleged
violations impair the EPA's ability to monitor (data-gathering) or
evaluate chemicals (hazard assessment) in a less than important
way.
-------
10
Under the gravity-based penalty matrix, the penalty amount for
a violation that is circumstance level 6 and of significant extent
is $1,300. The total assessed penalty for the two violations under
Count 2 is therefore $2,600.
ORDER
IT IB ORDERED, pursuant to section 16(a) of TSCA, 15 D.S.C.
§ 2615(a), that respondent, The Gunlocke Company, Inc., be assessed
a civil penalty of $54,600.
Payment of the full amount of the penalty assessed' shall be
made by forwarding a cashier's or certified check, payable to the
Treasurer of the United States, to the following address within
sixty (60) days after the final order is issued. 40 C.F.R.
§ 22.17(a).
EPA - Region II
Regional Hearing Clerk
P.O. BOX 360188M
Pittsburgh, PA 15251
Pursuant to 40 C.F.R. § 22.17(b), this order constitutes the
initial decision in this matter. Unless an appeal is taken
pursuant to 40 C.F.R. § 22.30, or the Administrator elects to
review this decision on her own motion, this decision shall become
the final order of the Administrator. 40 C.F.R. § 22.27(c).
Dated:
Frank W. Vanderheydem
Administrative Law Judge
-------
N
-------
1NETI
THE ENVIRONMENTAL APPEALS BOARD
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C.
lore: )
)
Budtafm NoRfaem Railroad ) CAA Appeal No. 93-3
Docket No. CAA Vin-92-12
[Decided February 15, 1994]
tOOL DECISION AND ORDER
-------
BURLINGTON NORTHERN RAILROAD COMPANY
CAA Appeal No. 93-3
FINAL DECISION AND ORDER
Decided February IS. 1994
d Bodtfhd McBBfam InaBiSji stwMtajfer •
ILS. EPA OflhT of Rnf?r*T^i*T*'* (OB) has *ppfnlfd tfaf Inttal
Haismod, •» dm Oe*n Air Act enforcement actton. Thto appeal to
punuam K> 40 CPJL f 2230(a) and wm« tfmelf ffledon December 16,>
1995. •
L BACKGKOVND
^A*^ ^>» flk^ ^^^i^^^I ^^••a ft^OM^v^^K*
me v nui mppcsi wai orougn
bf UA. EPAReftaa vm agunst Burlingnn Noctbem lallroad Compaof
OBNRK) under Scetton 113(d) crftbe deui Air Act, 42 U5.C f 7413(d).
la to TTTrHr*. d* Region sought a peaahr of 165330 for alleged
Ttolatfoiu of die MOOGUU Seue Implemenatioo Plan, arising from the
open burning of creosote-created railroad ties. A bearing on die alleged
-------
2 BURLINGTON NORTHERN RAILROAD COMPANY
violations was held in Helena, Montana, on June 15-16, 1993, and an
Initial Decision issued on November 24, 1993. In his Initial Decision,
Judge Harwood found Respondent liable for die violations but reduced
die penalty assessed to 125,000.
In arriving at dils penalty amount, Judge Harwood calculated
that die •prelimlnarf deterrence amount would be f 25384 and dm no
upward adjustments would be appropriate. Initial Decision at 25*26.
Hmnnu. based on his deterrnlnartnn dm diere was only one violation
lasting one day, a he reduced dtts amount to dw sanitary •M^*"«M"
of 125,000 per violation per day as provided in f 113(d)(l). 42 U.S.C.
At part of his calculation of die preliminary <***i*fnnfT
BNRR of to noncompliance. He sated as follows:
The EPA computed 12,212, aa dw economic benefit
realized by BNR from dw notation. This is based on
an estimated cost of 111.08, a tie eo haul dw ties to an
industrial furnace for Indneradon. The study from
92.60, per de for open*buraing, or a cool of 1520 for
die 200 log*. The
dUt component of the penalty Is reduced to $1,692.
is die sole issue raised by EPA on appeal
More specifically, dw Office of Enforcement argues that Judge
Harwood should not have subtracted the f 520 from dw 92*212 in
M'*MlM
-------
BURLINGTON NORTHERN RAILROAD COMPANY 3
of Initial Decision (OE Brief) at 5-8. OE thus argues that the economic
benefit component of the penalty should be recalculated as 12,212.
BNRR opposes dils recalculation. BNBR Brief la Opposition to EPA's
Nodes of Appeal of InWal Decision (BN1R Brief) at 2. Bom panto
acknowledge thtt resolution of diis appeal can hoc no effect on dw
amount of die penahy stece die statutory •«•»*'•"•••• will be controlling
In any event. OE Brief at 1 n.l;BNKR Brief at ln.1.
O. DOCUSSOff
to appeal an Initial
en d» outcome of die pforrct1lng,i*. die a
k bat filed dris appeal
has ramifications In i
of noneompUanee to assessed.* OE Brief at ln.1. OB
dm the ALT* holding, if upheld, could force BPA to
atpollcf»n
-------
4 BURLINGTON NORTHERN RAILROAD COMPANY
Presiding Officer • * •.")• Rather, our concern is dm die Board does
not want to be drawn routinely into parting die language of an initial
decision asseUiik a penaltr wnen ncttfacr party has appealed "me
: think dm
fcndered by such an exercise can be avoided In dais
wkbout prejudice to tidier pany, but white also eliminating
dm apparendy prompted OFs appeal.
Turning to dw lubmnce of die appeal, OE argues dm Judge
Harwood did not Cully consider EPA penalty guidelines (Including die
BEN Ctart Manual * and BEN tit** Gtdat) and did not provide
complaint OE Brief at 3. * BNRR replies dm Judge Harwood
his discretion in nlmlaring die penalty. BNBR Brief at 2-3. BNRR
K&G6S CBatt CDC BTUiflCUi^tt ffBUCfl Us9Osft O9T ^SKSE* ••wM^B BOC
adopted as regulations and uerefbre do not have dw farce of law; and
dm nekber me BEN UtVt Manual nor die BEN Oav* Soldi were
EPA. Mat4.
A review of d* Initial Decision shows no Indicadon dm Judge
Harwood Intended n depart Cram dw EPA's Clean Air Aa Stationary
Source CMI Penalr/Policy (Policy), dated October 25.1991. White he
indicated dm he was only required to consider die Policy, not fallow
k, die methodology he applied deady purported to fellow die Policy.
Sat Initial Decision at 22-26. More spedficauy, his discussion of the
benefit component ^*T***** bow he adjusted EPA's
computation but does not indicate dm he was intending to depart from
d»ePolkytad£ (The Policy contains no dkriMsinn of me'credk" Issue
involved in this appeal •akhougb k docs reference me BEN Uttr't
as establishing die methodology for calculating economic
> we tar.
-------
BURLINGTON NORTHERN RAILROAD COMPANY 5
benefit) Therefore! we conclude that Judge Harwood wu Intending
to apply the Policy "hen he calculated economic benefit.
OE contend* dm Judge Harwood miaapplled dw Policy and
ted guidance. BNRR docs not dbcuu die proper Interpretation
of die Policy except by nodng dnu dw EPA guideline* ahould not be
gr*en die force of bnr and have oeenwiderfcddcted. BNRR Brief at
4.
We do not believe dm dtia appeal presena a particularly good
^^M«»|^AM tk^ ^mmm^ **f ^^^^^^mm «^^k«il» AktfMalrff t^» A^^^^ A»A
rcsornng me B*UC ot wncncr crem* inouMi oe gr*c& rar
apenahy. Tbepomue of date caae doea not knd kadf to having
tone fray briefed on both tidca. Although BND filed a brief to
thua only a limited Incentive to reaeareh and addrot dw Hate. We
W^lA^H^^ ^ ^^^^mmt^ k^ ^M«»^^ ^^B^^MM^M^^^^^ ^«» jt^i^A^^ ^kl« • --- — ^m^^^*^ ^k ft^
ocuevc B wuuio DC mole •ppmpnB K> otrnoc oui muc wuui K •
bA ^K«^ A^k^k^BA^«l tfMM^a^M*
a izuiy aownanu CDOIEXL,
That aald, we are adll sensitive to dw OE*a underlying <
potentially precedential nature of Judge
language providing DOC a credit be die CMB of optn burning) aa
The paragraph beginning at dw bosom of page 23 and carrying
to dw top of page 24 la revised to read:
The EPA computed 12^12 aa die economic benefit
COR of II 1.06 a de to haul die des to an
, furnace tot indneradon. * The study from
1240 per de for open-burning, or a total of 1520 for
EPA should have credited die 1520 against the 12.212
or properly declined to do so since, aa will be seen,
dK statutory maximum and die penalty will diua be die
same In any event.
-------
6 BURLINGTON NORTHERN RAILROAD COMPANY
In addition, die. last full sentence in the text on page 25 and die
sentence following It are revised to read:
If dw same procedure to followed here, die penalty for
die stae of die violator would be reduced to reflect die
adjustments previously discussed However, dito
adjusted figure, when added to dw amount calculated
for economic benefit, importance 09 die regulatory
tfhc me, and length of dme would result in a penalty
ice •*"«""» to wetted at 125,000.
dw penalTf assessed, a 125,000 penalty to son appropriate.
m. coNauaoif
Pursuant to dx Secdon 113(d) of die dean Air Act, 42 U.S.C
7413(0), a cMl penalty of 125,000 to assessed against Budlngm
NoRhem RaUcoad Co. The full amount of dw penalty shall be paid
whhmstaay (60) days of the date of service of dito decision. Payment
than be made in fun by forwarding a cashier's check era certified check
m dK full amount payable to cbe Treasurer, United States of America,
at dw following address:
EPA* Region vm
Regional Hearing Clerk
P.O. BOK360859M
Pittsburgh. PA 15251
-------
-------
GENERIC WITNESS UPS
1. What's Done Is Done (you can't change the past)
2. A Witness Is Forever (you can run but you can't hide)
3. Don't Take It Personally ( even if it is .)
4. Tell The Truth ("and you don't have to remember anything")
5. Listen, Pause, and Answer (if. possible)
6. Do Not Volunteer, Do Not Volunteer (do not volunteer)
7. Be Simple (the attorney/upper management test)
8. You Are The-Boss (for once)
9. Do Not Argue The Theory Of The Case (lawyer will)
10. The Record Is Cold (uh, and like, sometimes,.uh, cruel)
11. Experts:- Build 'A Pyramid (strong foundation)
-------
------- |