3EPA
Un«t«0 Suit*
Environmental Protection
Agency
Solid Waste and
Emergency
DfRECTIVE NUMBER: 9610.12
TITLE: U.S. EPA Penalty Guidance for Violations of
UST Regulations
APPROVAL DATE:
EFFECTIVE DATE:
NOV 14 (990
WM4 B90
ORIGINATING OFFICE: Office of Underground Storage
Tanks (OUST)
Q FINAL
D DRAFT
STATUS:
REFERENCE (other documents):
OSWER Directive 9610.11 "UST/LLFST Enforcenent
Procedures Guidance Manual"
OS WER OS WER OS WER
fE DIRECTIVE DIRECTIVE D
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_O_COA WMhngton. DC 20460 U
otm QSWER Directive Initiation Reauest '
2. Orlahutor Information
Name of Contact Penan MalCode Office T««,
Josh Baylson OS-420 OUST 47
3. Title
U.S. EPA Penalty Guidance for Violations of UST Regulations
rective Number
9610.12
ahoneCode
5-9725
4 Summary of Directive (include brief statement ol purpose)
Provides guidance to U.S. EPA Regional Offices on calculating civil penalties against
owners/operators of underground storage tanks who are in violation of the UST
technical standards and financial responsibility regulations.
5. Keywords
underground storage tanks, enforcement, penalties
6a. Does This Directive Supersede Previous Dtrective(s)7 1 1 1 1
[XXJ No | | Yes What directive (number, tide)
b. Does II Supplement Previous Directives)? f— ~| r~~|
| [No IXXjYes What directive (number. We) 9610.11,
UST/LUST Enforcement Procedures Guidance Manual
7. Draft Level
1 1 A-SionedbyAA/DAA x 8 - Signed by Office Director I 1 C - For Review & Commen
V
t O-lnDttlttopmem
8. Document to be distributed to States by Headquarters? 1 lv«« [xjNo
This Request Meets OSWER Directives System Format Standards.
9. Signature of Lead Office Directives Coordinator . _ s\
Beverlv Thomas. OUST Directives Coordinator
10. Name and Trie of Approving Official ^y * + ^ Xj — — *A ~~*
Ronald Brand, Director, OUST
Date . /
"•
-------
&EPA
United Suies
Environmental Protection
Agency
Off tee o<
Solid Waste and
Emergency Response
DfRECTIVE NUMBER: 9610.12
TITLE: U.S. EPA Penalty Guidance for Violations of
UST Regulations
APPROVAL DATE:
EFFECTIVE DATE:
NOV 14 1990
NOV 14 890
ORIGINATING OFFICE: Office of Underground Storage
Tanks (OUST)
S FINAL
Q DRAFT
STATUS:
REFERENCE (other documents):
OSHER Directive 9610.11 "UST/LUST Enforcement
Procedures Guidance Manual"
OSWER OSWER OSWER
'E DIRECTIVE DIRECTIVE
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
MEMORANDUM
SUBJECT: Final "U.S. EPA Penalty Guidance for Violations of UST
Regulations"
FROM: Don R. Clay. Assistant
Office of Solid Waste and
stant
urgency Response
Administrator
James M. Strock
Office of Enfdrcem<
TO: Waste Management Division Directors,
Regions I-III, V-IX
Water Division Directors,
Regions IV & X
Regional Counsels, Regions I - X
Attached is the final version of the "U.S. EPA Penalty
Guidance for Violations of UST Regulations" (OSWER Directive
9610.12). The purpose of this document is to provide guidance to
the Regions on calculating civil penalties against owners and
operators of underground storage tanks (USTs) who are in violation
of the UST technical standards and financial responsibility
regulations.
This version is based on the April .11, 1990 draft and
incorporates Regional comments. Highlights of those comments and
revisions to the document include:
o expanding the upward range of adjustments to the matrix values
to facilitate reaching the statutory maximum penalty,
o replacing the environmental sensitivity factor with the
environmental sensitivity and the days of non-compliance
multipliers,
o reserving a chapter for a discussion of penalties for Federal
field citations, and
-oxamples of the application of this guidance in
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While the Agency has emphasized the need to stress voluntary
compliance with the UST regulations because of the large size of
the regulated community, we also have recognized the need to send
a strong enforcement message to those owners and operators who do
not comply with the regulations. This document is designed to
provide the Regions flexibility in assessing penalties in response
to the unique characteristics of each case, while establishing a
national framework to ensure that penalties are assessed in a fair
and consistent manner, and that such penalties serve to deter
potential violators and assist in achieving compliance. Thus, this
document provides the flexibility to assess penalties for as little
as several hundred dollars and as much as several hundred thousand
dollars, based on the specifics of the case.
This document supplements the "UST/LUST Enforcement Procedures
Guidance Manual" (OSWER Directive 9610.11), which provides guidance
to the Regions on taking enforcement actions, discusses situations
in which Regional enforcement responses are warranted, and the
factors to be considered in determining the appropriate enforcement
response (including the assessment of civil penalties).
The penalty guidance was developed by a workgroup consisting
of UST program managers, staff and attorneys from Regions IV, V and,
VII and OUST staff, and was reviewed by the Office of Waste
Programs Enforcement and the Office of Enforcement for consistency
with Agency policy. We want to thank everyone for their excellent
work in this cooperative effort. If you have any questions or
would like additional information, please have your staff contact
Josh Baylson of OUST on FTS 475-9725.
Attachment
cc: Ron Brand, OUST
Joe Retzer, OUST
UST Regional Program Managers
UST Regional Attorneys
Susan Bromm, OWPE
Kathie Stein, OE
John Rasnic, OAQPS
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OSWER Directive 9610.12
U.S. EPA PENALTY GUIDANCE
FOR VIOLATIONS OF
UST REGULATIONS
November 1990
Office of Underground Storage Tanks
U.S. Environmental. Protection Agency
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OSWER Directive 9610.12
NOTICE
The procedures set forth in this document are intended solely for the guidance of the U.S. EPA.
They are not intended, and cannot be relied on, to create rights, substantive or procedural, enforceable
by any party in litigation with the United States government. The U.S. EPA reserves its right to act at
vanance with this guidance and to change it at any time without public notice.
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OSWER Directive 9610.12
TABLE OF CONTENTS
CHAPTER 1. INTRODUCTION TO UST PENALTY GUIDANCE 1
1.1 U.S. EPA Penalty Authority 1
1.2 Overview of the UST Enforcement Process 2
1.3 UST Penalty Assessment Framework 4
CHAPTER 2. DETERMINING THE ECONOMIC BENEFIT COMPONENT 8
2.1 Definition of Economic Benefit Component B
2.2 Avoided Costs 9
2.3 Delayed Costs 12
CHAPTER 3. DETERMINING THE GRAVITY-BASED COMPONENT 14
3.1 Determining the Matrix Value 14
3.1.1 Extent of Deviation from Requirements 15
3.1.2 Potential for Harm 15
3.2 Violator-Specific Adjustments 17
3.2.1 Degree of Cooperation/Noncooperation 18
3.2.2 Degree of Willingness or Negligence 18
3.2.3 History of Noncompliance 19
3.2.4 Other Unique Factors 19
3.3 Environmental Sensitivity Multiplier 20
3.4 Days of Noncompliance Multiplier 21
CHAPTER 4. SETTLEMENT ADJUSTMENTS 23
CHAPTER 5. USE OF FIELD CITATIONS 26
iii
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OSWER Directive 9610.12
TABLE OF CONTENTS
(Continued)
APPENDICES
Appendix A: Matrix Values for Selected Violations
of Federal Underground Storage Tank Regulations A-1
Appendix 8: UST Penalty Computation Worksheet 8-1
Appendix C: UST Penalty Computation Examples C-1
LIST OF EXHIBITS Page
Exhibit 1: Overview of UST Enforcement Options 3
Exhibit 2: Process for Assessing UST Civil Penalties 5
Exhibit 3: Applicable Tax.'Rates for Determining Avoided Costs 11
Exhibit i: Matrix Value For Determining
the Gravity-Based Component of a Penalty 16
IV
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OSWER Directive 9610.12
CHAPTER 1, INTRODUCTION TO UST PENALTY GUIDANCE
This document provides guidance to U.S. Environmental Protection Agency (EPA) Regional
Offices on calculating civil penalties against owner/operators of underground storage tanks (USTs) who
are in violation of the UST technical standards and financial responsibility regulations. The
methodology described in this guidance seeks to ensure that UST civil penalties, which can be as high
as $10,000 for each tank for each day of violation, are assessed in a fair and consistent manner, and
that such penalties serve to deter potential violators and assist in achieving compliance.
This penalty document is part of a series of enforcement documents which includes: (1) the
Agency's UST/LUST Enforcement Procedures Guidance Manual (OSWER Directive 9610.11, July 1990),
which provides guidance to U.S. EPA Regional personnel on taking enforcement actions against
violations of the UST technical requirements; and (2) the draft •Interim Enforcement Response Strategy
lor Violations of UST Financial Responsibility Requirements,' which provides guidance on taking
enforcement actions against violations of the financial responsibility requirements. Although these
enforcement documents are intended primarily for U.S. EPA Regional enforcement staff, State and local
UST implementing agencies may find it useful to adapt some of the concepts and methodologies for
their own UST enforcement programs.
This chapter briefly describes the U.S. EPA's authorities for taking enforcement action and
assessing civil penalties. It also provides an overview of the enforcement actions that may be taken in
response to UST violations, and indicates how the assessment of penalties fits into the enforcement
framework.
1.1 U.S. EPA PENALTY AUTHORITY
The U.S. EPA's authority for assessing civil penalties for violations of UST requirements is
provided by Subtitle I of the Resource Conservation and Recovery Act (RCRA). Under the Hazardous
and Solid Waste Amendments of 1984, Congress added Subtitle I to RCRA in response to the growing
environmental and health problems created by releases from USTs. The statutory framework for the
national UST program is set forth in Sections 9002 through 9004 of Subtitle I.
Under Section 9006 of Subtitle I, EPA is authorized to take enforcement actions and assess
penalties against violators of requirements promulgated under Subtitle I, including technical standards
and financial responsibility requirements.1 In particular, Section 9006(a) provides the authority to issue
administrative orders requiring compliance within a reasonable specified time period. All such orders
will be processed within the Agency according to the Consolidated Rules of Practice (CROP).2
Pursuant to Section 9006(d), a Section 9006 compliance order may assess a civil penalty, provided that
the penalty does not exceed $10,000 for each tank for each day of violation of the technical standards
1 These are contained in two separate rules: the UST Technical Standards Rule, 40 CFR Part 280,
Subparts A through G (promulgated September 23, 1988) and the UST Financial Responsibility Rule,
40 CFR Part 260, Subpart H (promulgated October 26, 1988).
' .• 2 40 CFR Part 22, The Consolidata^uj** !ft^£radiccJCbv»5;Viing tlv; - ^•'"fative Assessment of
Civil Penalties and the Revocation or ^^tuSys^ftPe,- «"•;*•
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OSWER Directive 9610.12
and financial responsibility rules.3 This document presents guidance for determining the appropriate
civil penalty amount for an administrative complaint and order, and discusses use of penalties in field
citations.
In addition to administrative enforcement actions, EPA may initiate judicial enforcement actions
under Section 9006 to compel compliance with Subtitle I's statutory and regulatory requirements. EPA's
judicial enforcement actions are processed through Federal courts and are reserved for violations of
administrative orders. Under such actions, EPA is authorized to seek judicial penalties of up to $25,000
for each day of continued noncompliance with an administrative order issued under Section 9006 or a
corrective action order issued under Section 9003. In these cases, Agency personnel should seek the
maximum penalty.4
1.2 OVERVIEW OF THE LIST ENFORCEMENT PROCESS
The UST/LUST Enforcement Procedures Guidance Manual (OSWER Directive 9610.11, July 1990)
describes the range of enforcement actions that may be taken in response to an UST violation. These
enforcement options vary from initial responses, such as warning letters or notices of violation (NOVs),
which encourage compliance, to more stringent actions, such as administrative orders and judicial
injunctions, which compel compliance and, if appropriate, penalize violators. Exhibit 1 presents the
various enforcement actions that may be taken once a violation of an UST requirement is identified. In
general, enforcement personnel will take the least costly enforcement action that appears necessary to
achieve compliance and create a strong deterrent, and will escalate the severity of the enforcement
response if the initial action fails.
As shown in Exhibit 1 .there are two approaches to taking enforcement actions. Under the
traditional' approach, enforcement personnel may initially respond to a discovered violation by issuing
a waning letter or NOV to inform the owner/operator of the violation, explain what actions need to be
taken, and indicate possible consequences if the owner/operator fails to achieve compliance. If
necessary, enforcement personnel may then meet with the owner/operator to negotiate an agreed-upon
course of action for the owner/operator to follow to achieve compliance. However, for recalcitrant
violators, or where violations pose a threat to human health and the environment, enforcement
personnel will typically issue administrative complaints or take judicial action. To provide a deterrent
effect, an administrative complaint may include an initial penalty target figure. Upon receipt of the
complaint, a violator may pay the penalty specified, request an informal settlement conference, and/or
request an administrative hearing. Regardless of the violator's response, the outcome generally will be
a final penalty that the violator must pay or else face judicial prosecution. Exhibit 1 shows where the
target and final penalties appear in the enforcement process.
As an alternative to the traditional approach, enforcement personnel may initiate an enforcement
response using field citations (see Chapter 5). Field citations, similar to traffic tickets, are modified
compliance orders issued by inspectors on-site at a facility when violations are discovered. However,
the use of field citations is generally limited to first-time violators when compliance is expected and
when the violation does not pose an immediate threat to human health and the environment. A typical
3 This 510,000 limit also applies to violations of the Interim Prohibition provisions and any
requirement of an approved State program. For violations of the May 1985 (statutory) notification
requirements, the penalty may not exceed $10,000 for each tank.
4 This guidance is in no way intended to limit the penalty amounts sought in
In settling judicial cases, however, the Agency may use the narrative penalty asses&iiiwtf -.nitfefja set
forth in this guidance to determine or justify the penalty amount that the Agency agrees to &;-c&pt in
settlement.
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OSWER Directive 9610.12
Exhibit I
Overview of Enforcement Response Options
Traditional
Approach
Discovery of
Violation
FleM Citation
Approach
Response
(e.g. warning
letter, NOV)
1
Dttarmination of
approprlatt
enforcement
initial
Negotiation
. show cause
meeting)
Administrative
Complaint
Economic
Benefit
Component
Gravity*
portent
Initial Penalty
Target Figure
Settlement
Negotiations
Settlement
Adjustments
Consent Agreement
and Final Order
(or hearing)
Final
Penalty
new
CHatfon
wHh penalty
Judicial
Enforcement
NOTE: This exhibit presents an overview ofenfc.^:\:.'.,' <-,:- .TS onty. fA? doss -wf flwrdbff 8 certain order
of action. Actual enforcement actions may begi:.; :\ /;;; -:,.'!,'. t?>e pflc-r-i*
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OSWER Directive 9610.12
field citation will not only require that the violator take actions to achieve compliance, but win also
assess a pre-estaMshed, non-negotiable penalty. This penalty is usually fairly low (e.g., $100) to
encourage prompt payment and response. In paying the citation penalty, the violator gives up the right
to appeal and consents to the requirements specified; thus, the citation Is analogous to the final penalty
that results from settlement negotiations. This alternative path to arriving at a penalty is also shown in
Exhibit 1. If the owner/operator fails to respond to the field citation, enforcement personnel may resort
to enforcement actions under the traditional approach or may initiate judicial actions.
Under the UST program's franchise approach, States will undertake most of the enforcement
actions. However, in certain cases (e.g., where an owner/operator is particularly recalcitrant or the State
lacks sufficient enforcement authority), Federal assistance may be needed. In such cases, the Regional
office may omit initial, informal responses and proceed directly with administrative or judicial actions.
However, U.S. EPA enforcement also may be needed at the beginning of an enforcement case in
certain circumstances (e.g.. in States without active enforcement programs or on Indian Lands). In
such cases, Regional enforcement personnel may begin with either the traditional responses or may
determine that it is appropriate to use field citations.
1.3 UST PENALTY ASSESSMENT FRAMEWORK
This document provides guidance on calculating penalties to be used in the administrative
enforcement actions described above. Consistent with the U.S. EPA's Policy on Civil Penalties,
penalties assessed under this methodology are intended to achieve the following goafs:5
• Encourage timely resolution of environmental problems;
Support fair and equitable treatment of the regulated community; and
• Deter potential violators from future violations.
Exhibit 2 provides an overview of the major components used to set penalties at levels that will achieve
these goals. Specifically, to deter the violator from repeating the violation and to deter other potential
violators from failing to comply, the penalty must place the violator in a worse position economically
than rf he or she had complied on time. Such deterrence is achieved by:
(1) Removing any significant economic benefit that the violator may have gained from
noncompliance (the 'economic benefit component*); and
(2) Charging an additional amount, based on the specific violation and circumstances of the
case, to penalize the violator for not obeying the law (the 'gravity-based component").
The procedures for determining the economic benefit component and gravity-based component are
discussed in Chapters 2 and 3, respectively. Furthermore, to support fair and equitable treatment of the
regulated community, the penalty must allow for adjustments to take into account legitimate differences
between similar cases. Thus, under this methodology, the gravity-based component incorporates
adjustments that reflect the specific circumstances of the violation, the violator's background and
actions, and the environmental threat posed by the situation.
5 The 'EPA Policy on Civil Penalties' (EPA General Enforcement Policy #GM-21, February 1S!
and the 'Framework for Statute-Specific Approaches to Penalty Assessment* (EPA General
Enforcement Policy #GM-22. February 1984) establish a consistent Agency-wide approach to the
assessment of civil penalties.
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OSWER Directive 9610.12
Exhibit 2
Process for Assessing UST Civil Penalties
Traditional
Approach
Economic Benefit
Component
• AwUadOMti
• 0*tey*dca*t»
Initial
_^b>
Gravity-Based
Component
ItettaVtlw
• Bwliannnnal
• Daysof NonoofflpilanM
MuMplltr
Target Figure
VtoMor accepts
raquMt» tearing
1
, Settlement
Adjustments
• AMKytopqr
• O»»rtotor»
Field CHation
Approach
FtoM Citation
norvragotiaWc
Rnal
Penalty
i :
-5-
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OSWER Directive 9610.12
The sum of the economic benefit component and the gravity-based component yields the initial
penalty target figure that is assessed in the administrative complaint6 For each case that involves
more than one violation, the Regional case team will need to decide on the number of counts
addressed in the complaint Each count should be accompanied by an appropriate penalty calculation,
and the sum of these penalties will be the initial penalty target figure assessed in the complaint. Once
a complaint is issued, the Agency may enter into settlement negotiations with the owner/operator to
encourage timely resolution of the violation. Such negotiations provide the owner/operator with the
opportunity to present evidence to support downward adjustments in the penalty. The process of
adjusting the penalty during settlement negotiations is addressed in Chapter 4. The outcome of such
negotiations win be the final penalty.
For specific types of cases, enforcement personnel may issue field citations, which assess
penalties while encouraging a swift return to compliance without a drawn-out appeals process. The use
of field citations to assess penalties is addressed in Chapter 5.
6 However, it should be remembered that the sum of the gravity-based component plus the
TWO a men econornic benefit component cannot be greater than trte statutory maximum of $10,000 for each tank
ftf h d ^ vioJation ^ tne technical standards and financial responsibility regulations.
J
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OSWER Directive 9610.12
Chapter 2
Determining the Economic Benefit
Component
Traditional
Approach
fl*W Citation
Approach
Economic Benefit
Component
Delayed eoia
Initial Penalty
Target Figure
i
Settlement
"*'0*i
Hna
Penalty
;•£
§
f*~^
'
-7-
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OSWER Directive 9610.12
CHAPTER 2. DETERMINING THE ECONOMIC BENEFIT COMPONENT
As explained in the preceding chapter, to ensure that the penalty deters potential violators, the
initial penalty target figure assessed in the complaint must include two fundamental components:
• Economic Benefit Component, which removes any significant profit from
noncompliance; and
• Gravity-Based Component, which imposes an assessment to penalize current
and/or past noncompliance.
This chapter discusses the process for determining the economic benefit component The gravity-
based component is discussed in Chapter 3.
2.1 DEFINITION OP ECONOMIC BENEFIT COMPONENT
The economic benefit component represents the economic advantage that a violator has gained
by delaying capital and/or non-depreciable costs and by avoiding operational and maintenance costs v
associated with compliance.7 The total economic benefit component is based on the benefit from two
sources: (1) avoided costs; and (2) delayed costs. All penalties assessed must include the fuH
economic benefit unless the benefit is determined to be 'incidental,' i.e., less than $100.
Economic Benefit Component = Avoided Costs + Delayed Costa
Avoided costs are the periodic, operation and maintenance expenditures that should have been
incurred, but were not.
Delayed costs are the expenditures that have been deferred by the violation, but will be incurred
to achieve compliance.
The Agency-wide penalty policy prescribes the use of two methods for calculating a violator's
economic benefit from noncompliance:9 (1) the rule-of-thumb approach; and (2) the software program
7 This policy does not outline a methodology for the recovery, as a measure of economic benefit,
of profits proximately attributable to illegal or non-compliant activities. Because the Federal UST
regulations do not include a permitting process, the Agency is not presently aware of situations where
such profits would be realized, or where we would expect to seek recovery of such profits as a
measure of economic benefit in the Federal UST program. Should EPA determine that the recovery of
such profits is appropriate in a particular case, the Agency wil calculate such profits in a manner
consistent with the RCRA Civil Penalty Policy (October 1990).
8 Revised guidelines for calculating the economic benefit from noncompliance are incorporated
'' Viorandum from Courtney Price (Assistant Administrator for Enforcement and Compliance
I \ Entitled, 'Guidance for Calculating the Economic Benefit of Noncompliance for a Civil
., icssmenf (November 5,1984).
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OSWER Directive 9610.12
called BEN.* The rute-of-thumb approach (described in the sections that follow) should be used for
making an initial estimate of the economic benefit of noncompliance. If the initial estimate is less than
$10,000, the rute-oMhumb calculation may be used as a basis for the economic benefit assessed in the
penalty. If, however, the estimate indicates that the economic benefit is greater than $10,000, the BEN
model should be used. The BEN model should also be used if the violator rejects the ru!e-of-thumb
calculation.
The BEN model, which is accessible by computer from anywhere in the country, uses a financial
analysis technique known as •discounting* to determine the net present value of economic gains from
noncompliance. BEN determines the economic benefit far an individual violator based on 12 specific
factors, or inputs, including the violator's initial capital investment, nondepreciable expenditures, and
operation and maintenance costs. For some inputs, such as income tax rate, annual inflation rate, and
discount rate, BEN will provide standard values if the user does not have actual figures. This use of
standard values allows for national consistency in determining economic benefit. Because the majority
of UST violations will be associated with an economic benefit of less than $10,000, the ru!e-of-thumb
approach will be used in most cases.
The procedures for calculating the economic benefit of noncompliance using the rule-of-thumb
approach are described below. Because of the fundamental differences between avoided and delayed
costs, the process for determining the economic benefit component will depend on the type of cost
involved. The sections that follow describe methods for calculating each type of cost.
2.2 AVOIDED COSTS
Avoided costs are the operation and maintenance expenditures that are averted by the violator's
failure to comply. These are considered to be avoided because they will never be incurred even if the
violator comes into compliance. For example, a violator who has failed to maintain product inventory
records in the past never will have to make up for the costs saved, even if he is directed to start
maintaining inventory records now. Other examples of avoided costs include: (1) failure to conduct a
required periodic test; (2) failure to obtain financial assurance by the phase-in date; and (3) failure to
conduct periodic maintenance of equipment. The violator's benefit from avoided costs is generally
expressed as the avoided expenditures plus the interest potentially earned on the money not spent
DETERMINING AVOIDED COSTS
Avoided = Avoided + Avoided x Interest x Number x (1 - Marginal)
Costs Expenditures Expenditures of Days Tax Rate
365 Days
Avoided Expenditures are estimated using local, comparable costs.
/merest is the equity discount rate provided in the BEN model (currently 18.1 percent).
Number of Days is from the. date of noncompliance to the date of compliance.
365 Days is the number of days in a year.
Marginal Tax Rate is based on corporate tax rates or financial responsibility compliance class.
9 For information, contact the BEN/ABEL Coordinator in the Office of Enforcement at the ip.S. EPA
Headquarters by phoning (202) 475-6777 or FTS 475-6777.
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OSWER Directive 9610.12
To determine the value of the Interest, compounded annually, the equity discount rate should be
used. This represents the risk-free rate (T-WII) plus the cost of financing for pollution control equipment.
This rate can be obtained by calling the EPA Office of Enforcement or by accessing the BEN computer
model.10 As of the beginning of FY91, the equity discount rate was 18.1 percent. When used in the
formula, this number should be expressed as a decimal and not a percentage (e.g., 0.181, instead of
18.1%).
The marginal tax rate (MTR) used in calculating the avoided costs will vary depending on the size
of the business. Exhibit 3 provides a list of appropriate tax rates based on the facility or company's
taxable income. As with the interest rate, this number should be expressed as a decimal, not a
percentage (e.g., 0.15 instead of 15%). To determine the taxable income, enforcement staff should
contact EPA's National Enforcement Investigations Center (NEIC) to determine whether the business in
violation is listed in the Dun and Bradstreet Business Information Report data base.11 The data base
provides information on the annual incomes of a large number of companies across the country,
including the smaller, 'Mom and Pop' businesses. Although most of the incomes listed in the data base
are those reported to Dun and Bradstreet, the data base also includes some estimated incomes for
companies that have not reported.
If information on annual income cannot be obtained from NEIC, enforcement staff may use the
company's financial responsibility compliance class as a basis for determining the appropriate marginal
tax rate, as follows: '
MARGINAL TAX RATES BASED ON FINANCIAL RESPONSIBILITY COMPLIANCE CLASS
Compliance Class* Tax Rale
FR Classes 1 & 2 0.34 (34%)
FR Class 3 0.25 (25%)
FR Class 4 0.15 (15%)
a Compliance class is determined as follows: Class 1 • large petroleum marketing firms with
1,000 or more USTs or any firm with net worth over $20 million; Class 2 - large and medium-sized
petroleum marketing firms with 100 to 999 USTs; Class 3 - smaller petroleum marketing firms with
13 to 99 USTs; and Class 4 - very small marketing firms with 1 to 12 USTs or less than 100 USTs
at one site, all other firms with net worth of less than $20 million, and municipalities.
In the absence of specific information on the violator's FR compliance class, enforcement staff should
assume that the violator is in FR Class 4 (which will result in the highest penalty).
10 To obtain the equity discount rate from the Office of Enforcement, or to access BEN, cafl the
BEN/ABEL coordinator at (202) 475-6777 or FTS 475-6777.
11 For inforwrasw- from the Dun and Bradstreet data base call NEIC at (303) 236-3219 or FTS
8-776-321F !-•<" r •' '"Tvtion on tne violator's name and location (city and State). NEIC staff can
search the uav-j fr \. > •/ information on the company's annual income.
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OSWER Directive 9610.12
Exhibit 3
Applicable Tax Rates for Determining Avoided Costs
MARGINAL TAX RATE BASED ON FEDERAL CORPORATE TAX RATES
(from 1989 U.S. Master Tax Guide):
Taxable income over Not over Tax rate
SO $50,000 15%
$50,000 $75,000 25%
$75,000 $100,000 34%
$100,000 $335,000 39%"
$335,000 34%
*An additional 5% tax is applied to income between $100,000 and $335,000
to phase out the benefits of the graduated rates in that income range.
The marginal tax rate is applied to each increment of income specified above (e.g., for an income of
$75,000, 15% is applied to the first $50,000 and 25% to the next $25,000). The weighted average
tax rates below have been calculated for each $10,000 increment in income to reflect the actual tax
burden at each income level These values will facilitate the determination of penalty amounts by
eliminating the need to calculate the tax burden on each increment of marginal taxable income. To
find the weighted tax rate, round the estimated taxable income to the nearest $10,000 and use the
tax rate indicated in the table.
WEIGHTED AVERAGE TAX RATES BY INCOME LEVEL"
Taxable Income Tax Taxable Income Tax
not greater than Rate not greater than Rate
$50,000 0.15 $200,000 0.31
$60,000 0.17 $210,000 031
$70,000 0.18 $220,000 0.31
$80,000 0.19 $230,000 0.32
$90,000 0.21 $240,000 0.32
$100,000 0.22 $250,000 0.32
$110,000 0.24 $260,000 0.33
$120,000 0.25 $270,000 0.33
$130,000 0.26 $280,000 0.33
$140,000 0.27 $290,000 0.33
$150,000 0.28 $300,000 0.33
$160,000 0.29 $310,000 0.34
$170.000 0.29 $320,000 0.34
$180,000 0.30 $330,000 0.34
$190,000 0.30 > $340,000 0.34
"This table includes the additional 5% tax applied to incomes between
$100.000 and S335.000.
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OSWER Directive 9610.12
2.3 DELAYED COSTS
Delayed costs are the capital expenditures and one-time non-depreciable costs that have been
deferred because the violator failed to comply with the requirements. Examples of delayed costs
include: (1) failure to install required equipment, such as cathodic protection; and (2) failure to clean up
a spill. These expenditures are considered only to be delayed, and not avoided altogether, because
the violator will eventually have to incur these costs to come into compliance. The benefit from delayed
costs is generally expressed as only the return on investment that could have been earned on the
money not spent.
DETERMINING DELAYED COSTS
Delayed Costs = Delayed Expenditures x Interest x Number of Days
365 Days
Delayed Expenditures are estimated using local, comparable costs.
Merest is the equity discount rate used in the BEN model (currently 18.1 percent).
Number of Days is from the date of noncompliance to the date of compliance.
365 Days is the number of days in a year.
For delayed costs there is no computation of the tax rate. Although there may be a modest tax
consequence for the violator because of delayed costs, this effect was deemed to be insignificant.
Furthermore, such a tax consequence only would be incurred if the violation were to span more than
one of tne violator's tax years.
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OSWER Directive 9610.12
Chapter 3
Determining the Gravity-Based
Component
Approach
Component
• Environnnnttl
S*mMtv1ty MuMptar
• Dm of Nonoomplianes
MuMpter
Initial Penalty
Vtofktof iw0odi!tM/
l
Stttttmorrt
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OSWER Directive 9610.12
CHAPTER 3. DETERMINING THE GRAVITY-BASED COMPONENT
The second component of a penalty, and the one that serves to deter potential violators, is the
gravity-based component. The purpose of the gravity-based component is to ensure that violators are
economically disadvantaged relative to owner/operators of those facilities in compliance, and to penalize
current and/or past noncompliance. The gravity-based component consists of four elements:
Matrix Value (Section 3.1 );
• Violator-Specific Adjustments to the Matrix Value (Section 3.2);
Environmental Sensitivity Multiplier (Section 3.3); and
• Days of Noncompliance Multiplier (Section 3.4).
The gravity-based component is then added to the economic benefit component to arrive at the initial
penalty target figure assessed in the complaint
DETERMINING THE GRAVITY-BASED COMPONENT
Environmental Days of
Gravity-Based = Matrix Value x Violator-Specific x Sensitivity x Noncompliance
Component Adjustments Multiplier Multiplier
Matrix Value is based on potential for harm and deviation from the requirement.
Wo/ator-SpecMc Adjustments to the matrix value are based on violator's cooperation, willfulness,
history of noncompliance, and other factors.
Environmental SensHMty Multiplier (KM) is a value based on the environmental sensitivity
associated with the location of the facility.
Days of Noncompf/ance Multiplier (DNM) is a value based on the number of days of
noncompliance.
If the complaint results in settlement negotiations, certain factors used to adjust the matrix value may be
re-assessed during negotiations to determine whether a downward adjustment in the gravity-based
component is appropriate. In general, it is the violator's responsibility to provide evidence in support of
reducing the penalty assessment during the settlement stage (see Chapter 4).
3.1 DETERMINING THE MATRIX VALUE
The first step in determining the gravity-based component is determining the initial matrix value.
s^-Jj? ^ased on the following two criteria:
—
jX of deviation from ^quirrgr.fijj- An assessment of the extent to which
therviolation deviates frav thVu^caatutory or regulatory requirements.
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OSWER Directive 9610.12
a Actual or potential harm - An assessment of the likelihood that the violation
couU (or did) result in harm to human health or the environment and/or has
(or had) an adverse effect on the regulatory program.
A matrix has been developed in which these two criteria form the axes (Exhibit 4). Three gravity
levels apply to each of these criteria - major, moderate, and minor - and form the grid of the matrix.
Thus, the matrix has nine cells, each of which contains a penalty amount. The specific cell to be used
in determining the matrix value is identified by selecting a gravity level for both factors. As a guide to
determining the appropriate gravity level, Appendix A provides a list of selected violations of the Federal
UST requirements and the associated deviation from the requirements and potential for harm.
Based on the type of violation (see Appendix A), penalties will be assessed on a per-tank basis if
the specific requirement or violation is clearly associated with one tank (e.g., tank upgrading). If the
requirement addresses the entire facility (e.g., recordkeeping practices), the penalty will be assessed on
a pec-facility basis. For requirements that address piping, the unit of assessment will depend on
whether the piping is associated with one tank or with more than one tank. Appendix A indicates the
suggested unit of assessment for specific violations.
3.1.1 Extent of Deviation from Requirements
The first factor in determining the matrix value is the extent of deviation from the requirements.
The categories for extent of deviation from the requirements are the following:
• Major - The violator deviates from the requirements of the regulation or
statute to such an extent that there is substantial noncompliance. An
example is installing a bare steel tank without cathodic protection.
Moderate - The violator significantly deviates from the requirement of the
regulation or statute, but to some extent has implemented the requirement as
intended. An example is installing improperly constructed cathodic
protection.
Minor - The violator deviates slightly from the regulatory or statutory
requirements, but most of the requirements are met. An example is failing to
keep every maintenance record on properly constructed cathodic protection.
3.1.2 Potential for Harm
The second criterion for determining the matrix value of a violation is the extent to which the
owner/operator's actions resulted in, or were likely to result in, a situation that could cause harm to
human health or the environment. When determining this (actor, ft is the potential in each situation that
is important, not solely whether the harm has actually occurred. Violators should not be rewarded with
lower penalties simply because no harm has occurred. The potential extent of this harm, if it were to
occur, is addressed by the environmental sensitivity multiplier, discussed in Section 3.3 of this chapter.
The potential-for-harm factor will also be applied to violations of administrative requirements (e.g.,
recordkeeping and notification requirements) that are integral to the regulatory program. For violations
of these requirements, enforcement personnel should consider the 'importance' of the requirement
violated. For example, failure to submit tank notification data may be considered to have significant
potential for harm because the Agency has few other sources of information on the location of USTs.
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OSWER Directive 9610.12
Exhibit 4
Matrix Values for Determining the
Gravity-Based Component of a Penalty
Extent of Deviation from Requirement
£
NOTE: These amounts constitute the matrix value only. They are oat the Initial penalty
target figure. The Initial penalty target figure Is calculated as follows:
Initial Penalty
Economic /«47B/r Violator- Environmental Days of \
Beneflt +(vi/il? x Specific x Sensitivity x Noncompllance)
I Y*LU* £ Multiplier Multiplier /
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OSWER Directive 9610.12
For purpose of this guidance, the categories lor potential for harm are the following:
ftjajor - The violation causes or may cause a situation resulting in a
substantial or continuing risk to human health and the environment and/or
may have a substantial adverse effect on the regulatory program. Examples
are: (1) improperly installing a fiberglass reinforced plastic tank (because a
catastrophic release may result); or (2) failing to provide adequate release
detection by the specified phase-in date (because without release detection a
release may go unnoticed for a tengthy period of time with detrimental
consequences).
• Moderate - The violation causes or may cause a situation resulting in a
significant risk to human health and the environment and/or may nave a
significant adverse effect on the regulatory program. An example would be
Installing a tank that fails to meet tank corrosion protection standards
(because it could resuft in a release, although the use of release detection is
expected to minimize the potential for continuing harm from the release).
Minor - The violation causes or may cause a situation resulting in a relatively
low risk to human health and the environment and/or may have a minor
adverse effect on the regulatory program. An example would be failing to
provide certification of UST installation (assuming that the installation was
done correctly).
3.2 VIOLATOR-SPECIFIC ADJUSTMENTS
In general, adjustments to the matrix value may be made at both the pre-negotiation and
settlement stages of penalty assessment to address the unique facts of each case and to resolve the
case quickly. Prior to settlement negotiations, enforcement personnel have the discretion to use any
relevant information to adjust the matrix value upwards or downwards. These adjustments are solely at
the discretion of EPA enforcement personnel.
Specifically, to ensure that penalties are assessed in a fair and consistent manner, and take into
account case-specific differences, enforcement personnel have the option of adjusting the matrix value
based on any information known about the violator's: (1) degree of cooperation or noncooperation; (2)
degree of willfulness or negligence; (3) history of noncompliance; and (4) other unique factors.
VIOLATOR-SPECIFIC ADJUSTMENTS TO THE MATRIX VALUE
Adjustment Factor Range of Percentage Adjustment
Degree of Cooperation/Noncooperation Between 50% increase and 25% decrease
Degree of Willfulness or Negligence Between 50% increase and 25% decrease
History of Noncompliance Up to 50% increase onty
Other Unique Factors Between 50% increase and 25% decrease
The sections that follow discuss these four adjustment factors. In addition, the matrix value
should be adjusted to reflect the environmental sensitivity and the days of noncompliance, which are
discussed in Sections 3.3 and 3.4. respectively. Subsequent adjustments made during the settlement
stanc, inclur^- adjustments tor inability to pay, are discussed in Chapter 4.
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OSWER Directive 9610.12
To ensure that the penally maintains a deterrent effect, enforcement staff should consider
adjustments toward increased penalties In all cases (i.e., make upwards adjustments to the matrix
value). It is up to the violator to present information during settlement that mitigates use of such
upward adjustments. However, to ensure that penalties are calculated fairly and consistently, any
upwards adjustment may be made only if the circumstances of the case warrant such adjustments.
Furthermore, for any adjustments made to the matrix value, justification must be provided on the penalty
assessment worksheet (see Appendix B).
3.2.1 Degree of Cooperatlon/Noncooperatlon
The first factor that may be considered in adjusting the matrix value is the violator's cooperation
or good faith efforts in response to enforcement actions. In adjusting for the violator's degree of
cooperation or noncooperation, enforcement staff may consider making upward adjustments by as
much as SO percent and downward adjustments by as much as 25 percent of the matrix value.
In order to have the matrix value reduced, the owner/operator must demonstrate cooperative
behavior by going beyond what is minimally required to comply with requirements that are closely
related to the initial harm addressed. For example, an owner/operator may indicate a willingness to
establish an environmental auditing program to check compliance at other UST facilities, if appropriate,
or may demonstrate efforts to accelerate compliance with other UST regulations for which the phase-in
deadline has not yet passed.12 Because compliance with the regulation is expected from the
regulated community, no downward adjustment may be made if the good faith efforts to comply
primarily consist of coming into compliance. That is, there should be no 'reward* for doing now what
should have been done in the first place. On the other hand, lack of cooperation with enforcement
officials can result in an increase of up to 50 percent of the matrix value.
3.2.2 Oegree of Willfulness or Negligence
The second adjustment that may be made to the matrix value is for willfulness or negligence,
which takes into account the owner/operator's culpability and intentions in committing the violation. In
assessing the degree of willfulness or negligence, the following factors may be considered:
• How much control the violator had ever events constituting the violation (e.g.,
whether the violation could have been prevented or was beyond the
owner/operator's control, as in the case of a natural disaster);
• The foreseeability of the events constituting the violation;
• Whether the violator made any good faith efforts to comply and/or took
reasonable precautions against the events constituting the violation; and
• Whether the violator knew or should have known of the hazards associated
with the conduct; and
• Whether the violator knew of the legal requirement that was violated (resulting
in an upward adjustment only).13
12 For information on establishing environmental auditing programs, see 'EPA Policy on the
, Inclusion of Environmental Audrtinp "m-fr-inns in Enforcement Settlements,* U.S. EPA, Office of
Enforcement and Compliance k'. .. ^.. ' -^mber 1986.
**»»>.* <.-.. _j
13 Lack of knowledge of the Icyc,, . i.ients may not be „.* d s^. ..•£& to reduce the matrix
value. Rather, informed violation of the law should serve to increase tha matrix value.
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OSWER Directive 9610.12
In certain circumstances, the amount of control that the violator has over how quickly the violation
is remedied also can be relevant. Specifically, if correction of a violation is delayed by factors that the
violator clearly can show were not reasonably foreseeable and out of his or her control, the penalty
assigned for the duration of noncompliance may be reduced (see Section 3.4), although the original
penalty for noncompliance should not be. In assessing the degree of willfulness, enforcement staff may
consider making upward adjustments by as much as 50 percent and downward adjustments by as
much as 25 percent of the matrix value.
3.2.3 History of Noncompliance
The third factor to be considered in adjusting the matrix value is the violator's history of
noncompliance. Previous violations of any environmental regulation are usually considered clear
evidence that the violator was not deterred by previous interaction with enforcement staff and
enforcement actions. Unless the current violation was caused by factors entirely out of the control of
the violator, pnor violations should be taken as an indication that the matrix value should be adjusted
upwards. When assessing the history of noncompliance, some of the factors that may be considered
are:
• Number of previous violations;
• Seriousness of the previous violations;
• Time period over which previous violations occurred;
• Similarity of the previous violations;
• Enforcement tools utilized (e.g., whether the owner/operator's previous
behavior required use of more stringent enforcement actions); and
• violator's response to the previous violation(s} with respect to correction of
the problem.
For purposes of this document, a 'prior violation* includes any act or omission for which an accountable
enforcement action has occurred (e.g., an inspection that found a violation, a notice of violation, an
administrative or judicial complaint, or a consent order). A prior violation of trie same or a related
requirement would constitute a similar violation.
In cases of large corporations that have many divisions and/or subsidiaries, if the same
corporation is involved in the current violation the adjustments for history of noncompliance will apply.
In addition, enforcement staff should be wary of a company that changes operators or shifts
responsibility for compliance to different persons or organizational units as a way of avoiding increased
penalties. A consistent pattern of noncompliance by several divisions or subsidiaries of a corporation
may be found, even though the facilities are at different locations. Again, in these situations,
enforcement staff may make only upward adjustments to the matrix value by as much as 50 percent
3.2.4 Other Unique Factors
This guidance allows an adjustment for unanticipated factors that may arise on a case-by-case
basis. As with the previous factors, enforcement staff may want to make upward adjustments to the
matrix value by as much as 50 percent and downward adjustments by as much as 25 percent for such
reasons.
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OSWER Directive 9610.12
3.3 ENVIRONMENTAL SENSITIVITY MULTIPLIER (ESM)
In addition to the violator-specific adjustments discussed above, enforcement personnel may
make a further adjustment to the matrix value based on potential site-specific impacts that could be
caused by the violation. The environmental sensitivity multiplier takes into account the adverse
environmental effects that the violation may have had, given the sensitivity of the local area to damage
posed by a potential or actual release. This factor differs from the potential-for-harm factor (discussed
in Section 3.1.2) which takes into account the probability that a release or other harmful action would
occur because of the violation. The environmental sensitivity multiplier addressed here looks at the
actual or potential impact that such a release, once it did occur, would have on the local environment
and public health.
To calculate the environmental sensitivity multiplier, enforcement personnel must first determine
the sensitivity of the environment. For purposes of this document, the environmental sensitivity will be
either low, moderate, or high. Factors to consider in determining the appropriate sensitivity level
include:
Amount of petroleum or hazardous substance potentially or actually released
(e.g.. size of the tanks and number of tanks at the facility that were involved
in the violation, as they relate to the potential volume of materials released);
• Toxicrty of petroleum or hazardous substance released;
• Potential hazards presented by the release or potential release, such as
explosions or other human hearth hazards;
* Geologic features of the site that may affect the extent of the release and may make
remediation difficult;
• Actual or potential human or environmental receptors, including:
Likelihood that release may contaminate a nearby river or stream;
Number of drinking water wells potentially affected;
Proximity to environmentally sensitive areas, such as wetlands; and
Proximity to sensitive populations, such as children (e.g., in schools).
Ecological or aesthetic value to environmentally sensitive areas.
Thus, a 'low* sensitivity value may be given in a case where one tank containing petroleum is located in
clay soil in a semi-residential area where all drinking water is supplied by municipal systems, and where
little wildlife is expected to be affected. A moderate sensitivity value may be given if: several tanks
were in violation; the geology of the site would allow for some movement of a plume of released
substance; and several drinking water wells could have been affected. A high sensitivity value may be
given if: a number of tanks (or very large tanks) were involved; there were several potential receptors of
the released substance through drinking water wells or contact with contaminated surface water; and
the contamination would be difficult to remediate. Each level of sensitivity is given a corresponding
multiplier value, as provided below.
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OSWER Directive 9610.12
DETERMINING THE ENVIRONMENTAL SENSITIVITY MULTIPLIER
SentHMty Multiplier (ESM) is based on the potential or actual environmental
impact at the sfte, and is given a corresponding value as follows:
Environmental
Sensitivity ESM
Low 1.0
Moderate 1.5
High 2.0
3.4 DAYS OF NONCOMPUANCE MULTIPLIER
The final adjustment that may be made to the matrix value takes into account the number of days
of noncompliance. To determine the amount of the adjustment, locate the days of noncompiiance
multiplier (or DNM) in the table below that corresponds to the duration of the violation:
DETERMINING THE DAYS OF NONCOMPLIANCE MULTIPLIER
Days of Noncomp/iance Multiplier (DNM) is based on the number of days of noncompliance:
Days of
Noncompliance DNM
0-90 1.0
91 -180 1.5
181-270 2.0
271 - 365 2.5
Each additional 6 months
or fraction thereof add 0.5
The DNM is then multiplied by the adjusted matrix value and environmental sensitivity multiplier to
obtain the gravity-based component of the penalty, as follows:
DETERMINING THE GRAVITY-BASED COMPONENT
Environmental Days of
Gravity-Based = Matrix Value x Violator-Specific x Sensitivity x Noncompliance
Component Adjustments Multiplier Multiplier
The economic benefit component is added to the gravity-based component to form the initial penalty
target figure to be assessed in the complaint As discussed previously, this figure cannot exceed
310,000 for each tank for each day of violation:
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OSWER Directive 9610.12
Chapter 4
Settlement Adjustments
Initial Penalty
target figure
1
S«tU«RMnt
Adjusmwrn*
• AMfeytopty
• Otmrfacton
: *
, -t
- t
*
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OSWER Directive 9610.12
CHAPTER 4. SETTLEMENT ADJUSTMENTS
After the initial penalty target figure has been presented to the potential violator in a complaint,
additional adjustments may be made as pan of a settlement compromise. All such adjustments are
entirely within the discretion of Agency personnel. The burden is always on the owner/operator to
provide evidence supporting any reduction of the penalty.
In response to a complaint, the owner/operator may request an informal conference and/or a
hearing to settle the penalty and violation. The Federal Consolidated Rules of Practice (CROP)
procedures for administrative actions at 40 CFR Part 22 provide for a settlement conference and a right
to a public hearing, giving the owner/operator the opportunity to present data to support a penalty
adjustment. At a minimum, enforcement personnel may consider adjustments based on the four
violator-specific adjustment factors discussed in Chapter 3, including:
• Degree of cooperation/noncooperatton;
Degree of willfulness or negligence;
History of noncompliance; and
• Other unique factors.
The settlement adjustment is usually not made to the economic benefit component unless new and
better information about the economic benefits is made available. The Agency should maintain a
record that includes a statement of the reasons for adjusting the penalty.
In addition to the adjustment factors fisted above, and because of the nature of the UST
regulated community, one factor that commonly will be discussed during negotiations is the
owner/operator's inability to pay. An adjustment may need to be made for inability to pay to ensure fair
and equitable treatment of the regulated community, ft is important, however, that this reduction not
allow the regulated community to regard violations of environmental requirements as a way to save
money. Furthermore, a penalty should not be reduced when a violator refuses to correct a violation.
has a history of noncompliance, or in cases with egregious violations, e.g., failure to abate a release
that is contaminating drinking-water supplies.
The Agency should assume that the owner/operator is able to pay unless the owner/operator
demonstrates otherwise. The inability to pay adjustment should be based on the amount of the initial
penalty target figure and the financial condition of the business, but it is the owner/operator's
responsibility to provide evidence of inability to pay. The owner/operator may provide evidence, such
as tax returns, to document his or her claims. In cases when the owner/operator fails to demonstrate
inability to pay, the Agency should determine whether the owner/operator is unwilling to pay, in which
case no adjustments to the initial penalty target figure should be made. In cases where the
owner/operator can successfully demonstrate: (1) that the company is unable to pay; or (2) that
payment of all or a portion of the penalty will preclude the violator from achieving compliance, the
following options may be considered:
• An installment payment plan with interest;
• A delayed payment schedule with interest;
An in-kind mitigation activity performed by the owner/operator;
• An environmental auditing program implemented by the owner/operator; or
Reduction of up to'^0 percem .n^;j.~ •"- .. -«..^onent.
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OSWER Directive 9610.12
A reduction of the gravity-based component should be considered only after determining that the other
four options are not feasible.14
In order to evaluate a violator's claim regarding inability to pay, two sources of information are
available to determine the likelihood that a company can afford to pay a certain civil penalty:
National Enforcement Investigation Canter (NEIC). The NEIC of EPA's Office of Enforcement
has developed the Superfund Financial Assessment System that can determine a company's ability to
pay. For publicly owned companies, specific financial data is available from NEIC. If investigating a
private company, enforcement staff can report financial data to NEIC and it will be keyed into NEIC's
computerized economic computer model for analysis.15
ABEL EPA's Office of Enforcement developed the 'ABEL* model as part of an ongoing effort to
evaluate the financial health of firms involved in enforcement proceedings. The ABEL model has been
used by EPA, Regions, and States to evaluate a firm's claim regarding inability to pay based on 21
inputs gathered from the company's Federal income tax returns from the previous 3 years.
Enforcement staff may access ABEL by computer dial-up on a personal computer with a modem and an
ABEL user ID number.16 In addition, OUST has developed a PC-based model called ABELPRO which
is a simplified version of ABEL that is run on a PC using a LOTUS spreadsheet or Macintosh Excel.17
14 The Agency is currently developing cross-media guidance on environmental mitigation projects
which, when final, will supersede the •Alternative Payments1 section of the Agency's February 16, 1984
penalty policy (#GM-22). Until the revised Agency guidance is finalized, the Agency's 1984 penalty
policy should be consulted for additional guidance.
15 For further information, contact the NEIC at (303) 236-5100 or FTS 8-776-5100.
16 To obtain the ABEL User's Manual and user ID numbers for computer hookup, contact the
BEN/ABEL Coordinator at the U.S. EPA Headquarters, by phoning (202) 475-677? c^FTS 475-6777.
17 For information, contact the appropriate Regional Desk Officer at U.Si, EPA Headquarters' Office
of Underground Storage Tanks.
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OSWER Directive 9610.12
Chapter 5
Use of Field Citations
Approscfi
•n-y^afcjA. 3fcA^-i. j-Li. >. ^i-*j. t
s « KRWDEVnKBH
'*" «mttv«ykMtipter
iltlal Penalty
VMttraoocpti Mquwtt hwlng
rr
>*-
Tltiai
Penalty
RtWCftrton
FIild
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OSWER Directive 9610.12
CHAPTER 5. USE OF FIELD CITATIONS
< Reserved >
The Office of Underground Storage Tanks (OUST) has been exploring the use of field citations as
an alternative means of assessing civil penalties and obtaining compliance with UST requirements.
Once the manner in which field citations will be used in the Federal UST program has been determined,
this policy will be revised to reflect how field citations fit into the UST penalty policy.
•26-
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OSWER Directive 9610.12
APPENDIX A:
MATRIX VALUES FOR SELECTED VIOLATIONS OF
FEDERAL UNDERGROUND STORAGE TANK REGULATIONS
-------
OSWER Directive 9610.12
APPENDIX A:
MATRIX VALUES FOR SELECTED VIOLATIONS OF FEDERAL UNDERGROUND STORAGE TANK REGULATIONS*
Regulatory
Citation
Violation
Unit
Aaaeea-
Iil0ni~
SUBPART B - UST SYSTEMS: DESIGN, CONSTRUCTION, INSTALLATION, AND
528020(a)(1)
§260.20(a}(2)
§280.20(a)f2)(l)
$28020(a)(2)
m
0)
0)
(p>
(p»
m
«PI
(pj
(p>
Deviation from
Requirement
NOTIFICATION
Major
Major
Major
Moderate
Moderate
Major
Major
Major
Major
Major
Moderate
Moderate
Major
Potential
for Harm
Major
Moderate
Moderate
Moderate
Moderate
Moderate
Moderate
Major
Moderate
Moderate
Moderate
Moderate
Moderate
Matrix Value
$1500
$750
$750
$500
$500
$750
$750
$1500
$750
$750
$500
$500
$750
-' Unit "->«" j-nent refers to whether the penalty should be applied per tank (T) or per facility (F). Where the violation applies to piping (P), the assessment will depend on whether
the pip'"' '• -ssociated with one tank or more than one tank.
E: THIS UST OF SELECTED VIOLATIONS IS MOT INTENDED TO BE E
rrve AND, THEREFORE, MAY NOT INCLUDE ALL POSSIBLE VIOLATIONH
-------
OSWER Directive 961
Regulatory
Citation
Violation
Unit
Assess-
ment-'
SUBPART B - UST SYSTEMS: DESIGN, CONSTRUCTION, INSTALLATION, AND
§280.20(c>(1)
§28020(c)(1)(i)
§280.20(c)(1)
f2B0.2Hl
(T/F)
(T/F)
Deviation from
Requirement
NOTIFICATION
Major
Major
Major
Major
Varies?
Varies?
Moderate
Minor
Major
Major
Major
Major
Major
Moderate
Potential
tor Harm
(Continued)
Major
Major
Moderate
Moderate
Varies?
Varies?
Minor
Minor
Major
Major
Moderate
Moderate
Major
Minor
Matrix Value
$1500
$1500
$750
$750
see matrix
see matrix
$100
$50
$1600
$1900
$750
$750
$1500
$100
tank upgrade requirement
y Deviation from requirement and potential tor harm will vary depending upon specHIc code or standard violated.
• NOTE: THIS UST OF SELECTED VIOLATIONS IS HOT INTENDED TO BE EXHAUSTIVE AND, THEREFORE, MAY NOT INCLUDE ALL POSSIBLE VIOLATIONS.
-------
A-3
OSWEH Directive 8610.12
Regulatory
CKaUon
Violation
Unit
Assess-
ment-
SUBPART B - UST SYSTEMS: DESIGN, CONSTRUCTION, INSTALLATION, AND
§280.21
-------
OSWER Obeett
12
Reguktonr
Citation
Violation
Unit
Assess-
ment
Deviation from
Requirement
Potential
for Harm
Matrix Value
SUBPART C - GENERAL OPERATING REQUIREMENTS
J280.30(a)
5280300)
§280.30(b)
5280.31 (a)
5280.31 (b)(1)
5260.31 (b){1)
5280.31(b)(1)
280.30 8a« and overfill control
Failure to take necessary precautions to prevent overfill/spillage during the
transfer of product
Failure to report a spUUoverflll
Failure to Investigate and clean up a epill/overfill
280.31 Operation and maintenance of corrosion protection
Failure to operate and maintain corrosion protection system continuously
Failure to ensure that cathodlc protection system la tested within 6 months of
Installation
Failure to ensure thai cathodic protection system to tested every 3 years
thereafter
Failure to meet one 3-year teal for cathodlc protection system
5280.31 (b)(2) Failure to Inspect cathodtc protection system in accordance with accepted
5280.31 (c)
(280.31 (d)
5280.31 (d)
5260.32
Failure to Inspect Impressed currant systems every 60 days
Failure to maintain any records of cathodlc protection Inspections
Failure to maintain every record of cathodlc protection Inspections
280.32 CompatfbUHy
Failure to ensure that UST system is made of or lined with materials
eomnatlbla with substance Stored
(F,
(F)
(F)
(Frt)
rm
(Tff)
-------
A-5
OSWER Directive 9610.12
".T;' -'-'siry Violation
Unit Deviation from
Assess- Requirement
nMnt~
Potential
for Harm
Matrix Value
8UBPART C - GENERAL OPERATING REQUIREMENTS (Continued)
-jaft 44 B^MB^I*^ AlbMamoJ
20V.99 nejpSjrBj SJIOvWO
5280 33(a) Failure to repair UST system In accordance with accepted codes and
standards
§280 33(b) Failure to repair fiberglass-reinforced UST In accordance with accepted codes
and standards
§280.33(c) Failure to replace metal piping that has released product
§28" *' '-.' Failure to repair fiberglass-reinforced piping in accordance with
manufacturers specifications
* ?~ " ' Failure to ensure that repaired tank systems are tightness tested within 30
, > . days of completion of repair
system
§280.33(0 Failure to maintain records of each repair to an UST system
28034 Reporting and racordkoeping
(T) Varies?
(T) Varies?
(P) Major
(P) Major
(T) Major
(T) Major
(T) Major
Varies?
Varies?
Major
Major
Moderate
Moderate
Major
see matrix
see matrix
$1500
$1500
$750
$750
$1500
(For violations of reporting and racordkeeplng, see appropriate regulatory section (eg., reporting of releases will be under Subpart D).
SUBPART D - RELEASE DETECTION
280.40 Owteralre<|UlreiT»trUforaUUSTayat«ms
§280.40(a)(1) Failure to provide release detection method capable ol detecting a release
from tank or piping that routinely contains product
§280.40(a)(2) Failure to Install, calibrate, operate, or maintain release detection method In
(T/F) Major
JT/F) Major
Major
Major
$1500
$1500
accordance with manufacturer's Instructions
TE: THIS UST OF SELECTED VIOLATIONS IS MOT INTENDED TO BE
STIVE AND, THEREFORE, MAY NOT INCLUDE ALL POSSIBLE VIOLATION
-------
OSWER Directive nnu.12
Regulatory
CltatUm
Violation
Unit
Assess-
ment
Deviation from
Requirement
Potential
for Harm
Matrix Value
SUBPART D - RELEASE DETECTION (Continued)
§?<»JlO(a)(3}
§2PQ.40(b)
,:«. .:;••'.
i2S0.40(c)
§280.40(d)
5280.41 (a)
§280.41 (a)(1)
5280.41 (a) (2)
5280.41 (b)
S280.42(e)
S280.42(b)
§280.42(b)(1)
S280.42(b)(2)
Failure to provide a release detection method that meets the performance
requirement* In {280.43 or §280.44
Failure to notify Implementing agency when release detection indicates
release ,
Failure to provide any release detection method by phase-in date
Failure to close any LIST system that cannot meet release detection
requirements.
280.41 Requlremento for petroleum UST system*
Failure to monitor tanks at least every 30 days, if appropriate
Failure to conduct tank tightness testing every 5 years. If appropriate
Failure to conduct annual tank tightness testing, If appropriate
Failure to use any underground piping monitoring method
system
Failure to provide adequate release detection for a new hazardous substance
UST system
Failure to provide adequate secondary containment of tank for a hazardous
substance UST
Failure to provide adequate double-walled tank/adequate lining for a
(F)
(F)
(T)
o)
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
$1800
$1500
$1500
$1500
$1500
$1500
$1500
$1500
$1500
$1500
$1500
$1500
hazardous substance UST
' NOTE: THIS LIST OF SELECTED VIOLATIONS IS NOT INTENDED TO BE EXHAUSTIVE AND, THEREFORE, MAY NOT INCLUDE ALL POSSIBLE VIOLATIONS.
-------
A-7
OSWER Directive 961012
Regulatory
Citation
-•
f 23C 42(b)(3)
!•»<«,(•)
128044
§280.44(0)
S280.44(b)
(280 A4fc)
..i /i. -i
$280.45
*28045(a)
§28045(6)
$280.45(0)
4280.45(0)
§280.45(C)
Violation
SUBPART D » RELEASE DETECTION (Continued)
Failure to provide adequate external linen lor a hazardous substance UST
Failure to provide adequate secondary containment of piping for a hazardous
substance UST
280.44 Methods) off refeaee djetecfJon for pfpfnQ
Failure to provide adequate line leak detector system for underground piping
Failure to provide adequate line tightness testing system for underground
piping system
In&d0
(F)
(F)
(F)
Deviation from
Requirement
Major
Major
Major
Major
Major
Major
Moderate
Moderate
Major
Moderate
Major
Major
Potential
for Harm
Major
Major
Major
Major
Major
Malar
Uitlnr
Major
Minor
Minor
Major
Minor
Major
Major
Matrix Value
|
$1500
$1500
$1500
$1500
$1500
K1SOO
$100
$100
$1500
$100
$1500
$1500
detection
>TE: THIS UST OF SELECTED VIOLATIONS IS NOT INTENDED TO BE
STIVE AND, THEREFORE, MAY NOT INCLUDE AU. POSSIBLE VIOLAHON9I
-------
OSWER Direct
Violation
Citation
Unit
merrti'
Deviation from Potential
Requirement for Harm
Matrix Value
SUBPART O - RELEASE DETECTION (Continued)
§280.45(e)
Failure to document evaiy calibration, maintenance, and repair ol release If)
detection
Modeiate
Moderate
9800
SUBPART E - RELEASE REPORTING, INVESTIGATION, AND CONFIRMATION
280.50 Reporting ol suspected release
Failure to report a suspected release within 24 hours to trie Implementing
agency
Major
Major
$1900
§280.52(a)-(b)
280.52 Release Investigation and confirmation step*
Failure to Investigate and confirm a release (H appropriate) using accepted
procedures
Major
(280.61
Failure to take initial response actions within specified lime period after a (F)
release is confirmed
Major
Major
91500
S260.53(a)
1280.53(11)
(280.53(0)
280.53 Reporting and cleanup of aptO* and overfllle
Failure to report a spill/oveiflll (H appropriate) to Implementing agency within |F)
24 hours (or other specified time period)
gallons
Failure to contain and Immediately clean up a hazardous substance (F)
spilVoverUU
Major Major 91500
Major Major 91500
Major Major 81500
SUBPART F - RELEASE RESPONSE AND CORRECTIVE ACTION
Major
91500
• NOTE: THIS UST OF SELECTED VIOLATIONS IS NOT INTENDED TO BE EXHAUSTIVE AND, THEREFORE, MAY NOT INCLUDE ALL POSSIBLE VIOLATIONS.
-------
A-9
OSWER Directive 9610.12
Regulatory -
Citation
Violation
Unit
Assess-
nwntl'
Deviation from
Requirement
Potential
tor Harm
Matrix Value
SUBPART F •• RELEASE RESPONSE AND CORRECTIVE ACTION (Continued)
$280.62
*?Y.?3
§2°C.64
Failure to submit report on Initial abatement measures within 20 days (or
other specified time) ol release oonllrmation
Failure to submit report on Initial site characterization wrthin 45 days (or other
specified time) ol release confirmation
Failure to submit report on free report removal within 45 days (or other
(F)
(F)
(F)
Major
Major
Major
Major
Major
Major
S1500
$1500
$1500
SUBPART G - OITT-OF-SERVICE UST SYSTEMS AND CLOSURE
5280.70(8)
5280.70(6)
S28D.70(b)
&!*).-*'*
$280.71(8)
$280.71 (b)
$280.71 (b)
280.70 Temporary doeure
Failure to continue operation and maintenance of cathodlc protection system
In a temporarily closed tank system
temporarily closed tank system
Failure to comply with temporary closure requirements for a tank system for 3
or more months
Failure to permanently close or upgrade a temporarily closed tank system
after 12 months
Failure to notify Implementing agency ol a closure or change-in-service
Failure to remove all liquids and sludges lor tank closure
Failure to remove closed tank from the ground or fill tank wtth an inert solid
(FA)
(FA)
(FA)
(FA)
(FA)
(FA)
(FA)
Major
Major
Major
Major
Major
Major
Major
Moderate
Major
Moderate
Major
Major
Major
Moderate
$750
$1500
$750
$1500
$1500
$1500
$750
$280.71 (c)
lor tank closure
Failure to empty'and clean tank system and conduct a site assessment prior
to a chang»-ln-aervlce
(FA)
Major
Major
$1500
JTE THIS UST OF SELECTED VIOLATIONS IS NOT INTENDED TO Bl
JSTIVE AND, THEREFORE, MAY NOT INCLUDE ALL POSSIBLE VK>LATrO~.
-------
-10
OSWER DirecOIVmo.12
Ttcvjyletory
Violation Unit
Assess-
ment™
Deviation from
Requirement
Potential
for Harm
Matrix Value
SUBPART G - OUT-OF-SERVICE UST SYSTEMS AND CLOSURE (Continued)
5280.72(8)
$280.72(0}
§28074
S3TC74
1
•
S280.93(a)
280.73 Aeaeaslng the elie at closure or change-In-service
Failure to measure (If required) for the presence of a release before a (T/F)
permanent closure
H contaminated soil, contaminated ground water, or free product Is (T/F)
discovered, failure to begin corrective action
280.74 Ctoeure recorde
Failure to maintain closure records for at least 3 years (F)
Failure to maintain change-In-service records tor at least 3 years (F)
SUBPART H - FINANCIAL RESPONSIBILITY
Failure to comply with financial responsibility requirements by the required (F)
phase-In time
i260.93(a)(1)-(2) Failure to meet the requirement tor pet-occurrence coverage of Insurance. (F)
i260.93(b)(1)
5280.93(1)
{28044
{280.05
•(2) Failure to meet the requirement for annual aggregate coverage of Insurance (F)
Failure to review end adjust financial assurance after acquiring new or (F)
additional USTs
Use of en unapproved mechanism or combination of mechanisms to (F)
demonstrate financial responsibility
Use of falsified financial documents to pass financial tost of self-Insurance (F)
§280.106(a)(1) Failure to report evidence of financial responsibility to me Implementing (F)
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Moderate
Mafor
Major
Major
Major
Moderate
Moderate
Moderate
Moderate
Moderate
Moderate
Minor
$1500
$1500
$1500
$1500
$750
$750
$750
$750
$760
$750
$100
agency within 30 days of detecting a known or suspected release
• NOTE: THIS LIST OF SELECTED VIOLATIONS IS NOT INTENDED TO BE EXHAUSTIVE AND, THEREFORE. MAY NOT INCLUDE ALL POSSIBLE VIOLATIONS.
-------
A-11
OSWER Directive 961012
Regulatory
Citation
Violation
Unit
Deviation from Potential
Requirement for Harm
MatrU Value
SUBPART H - FINANCIAL RESPONSIBILITY (Continued)
$260.106(4(2) Pollute to leport evidence of financial responsibility to the implementing
agency whan new tanka are installed
(F)
Moderate Minor
$100
S260.106(b)
Failure to report evidence of financial responsibility to the implementing (F)
agency H the provider becomes Incapable of providing financial assurance
and the owner or operator Is unable to obtain alternate coverage within 30
days.
Failure to maintain copies of the financial assurance mechanism(s) used to (F)
comply with financial responsibility rule and certification that the mechanism
Is in compliance with the requirements of the rule at the UST site or place of
businesa
lerate Minor
Moderate Minor
$100
$100
S>TE: THIS UST OF SELECTED VIOLATIONS IS NOT INTENDED TO BE BMRbSTIVE AND. THEREFORE, MAY NOT INCLUDE ALL POSSIBLE VIOLATIONS.
-------
OSWER Directive 9610.12
APPENDIX B:
UST PENALTY COMPUTATION WORKSHEET
-------
OSWEH Directive 9610.12
(This page is blank)
-------
OSWER Directive 9610.12
I UST PEMALTY COMPUTATION WORKSHEET I
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet.)
PART 1 - BACKGROUND
Company name.
Regulation violated.
Previous violations
Date of requirement Date of inspection.
Date of compliance Explanation (if appropriate):
1. Days of noncompliance
2. Number of tanlcs
PART 2 - ECONOMIC BENEFIT COMPONENT
Avoided Expenditures Basis:.
Delayed Expenditures
Weighted Tax Rate Source:
Interest Rate Source:
AVOIDED =
COSTS
Avoided + Avoided x Interest x Number | x (1 • Weighted Tax Rate)
Expenditures Expenditures of Dave
366 Days
3. Calculated Avoided Cosi:
Page 1 of 3
-------
OSWER Directive 9610.12
L
UST PENALTY COMPUTATION WORKSHEET
DELAYED COSTS = Delayed Expenditures x Interact x Number of Dave
365Deye
4. Calculated Delayed Cost:.
5. Economic Benefit Component: (cany figure to Line 16).
(Line 3 + Line 4)
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm: Extent of Deviation.
6. Matrix Value (MV): (from document page 16 or Appendix A)
7. Per-Uink MV: (if violation is per facility, the amount on Line 7 will
(Line 2 x Line 6) be the same as the amount on Line 6)
PART 4 - VIOLATOR-SPECIFIC ADJUSTMENTS TO MATRIX VALUE
Percentage x Matrix = Dollar
Change Value Adjustment
(+ or-) f+ or •) Justification for Adjustment:
8. Degree of cooperation/
noncooperation
9. Degree of willfulness
or negligence:
10. History of
noncompliance:
11. Unique factors:
12. Adjusted Matrix Value
(Line 7 + Lines 8-11)
Page 2 of 3
-------
OSWER Directive 9610.12
I UST PENALTY COMPUTATIOK WORKSHEET I
PAflT 5 ' ORAVnY^ASED COMPONENT
Level of
Environmental Sensitivity Justification:
13. ESM (from document Page 21).
14. DNM (from document Page 21).
Environmental Day* of
GRAVITY-BASED COMPONENT = Adjuated Matrix Value x Sensitivity x Noncompllance
Multiplier Multiplier
15. Gravity-Based Component: _
(Line 12 x Line 13 x Line uf
PART «- INITIAL PENALTY TARGET FIGURE
16. Economic Benefit Component
(from Line 5)
17. Gravity-Based Component..
{from Line 15)
18. Initial Penalty Target Figure
(Line 16 + Una 17)
SIGNATURE DATE.
Page 3 of 3
-------
OSWER Directive 9610.12
(This page is blank)
-------
OSWER Directive 9610.12
APPENDIX C:
UST PENALTY COMPUTATION EXAMPLES
-------
OSWER Directive 9610.12
EXAMPLE 1
BACKGROUND
Inspection Date: April 12,1990
Facility Name and Description: Ed's Gas and Go is a small gas station in a semi-rural part of the county.
The facility has 4 tanks, apparently installed prior to 1965. Judging from the condition of the facility and
adjacent store, Ed's income appears to be less than $50,000 per year.
Violations: During the inspection, the inspector observed that Ed failed to provide a method of release
detection by the December 22,1989 deadline, in violation of 40 CFR section 280.40(c).
Owner/Operator Response: Ed claimed no knowledge of the requirements for release detection. After
being informed of methods for meeting the requirement, he indicated that he would use annual tank
tightness testing and monthly inventory control, in accordance with 40 CFR section 280.41 (a)(2). Ed
began to conduct adequate monthly inventory control and arranged to have his tanks tested within 10
days.
Previous Actions at Facility: Previously, Ed had been given a warning letter for failure to comply with the
notification requirements, but had complied upon receipt of the letter. No other previous violations were
identified.
Current Status at Site: The inspector observed that given the age of the tanks, and Ed's previous inability
to detect iny releases, there was a good chance for a release to occur and go unnoticed for a significant
length of time. However, Ed's subsequent tightness tests indicated that the tanks were tight. The geology
in the area is fractured shale. There are no drinking water wells or sensitive wildlife receptors within a 5-
mile radius of the site.
PENALTY CALCULATION DATA
Violation: 40 CFR section 280.40(c)
Days of violation: 120 days from date of noncompliance (December 22,1989) to date of compliance
(April 22,1990. which was 10 days after the inspection).
Avoided expenditures: $2.50 per day = $300 for 120 days (estimated cost tor labor needed to conduct
dairy inventory control, based on 1/2 hour labor at $5.00 per hour)
Delayed expenditures: $520 x 4 tanks = $2,080, where the average cost for a tank tightness test is $520.
This is considered a delayed expenditure because it was necessary to achieve compliance in this time
frame.
Interest rate: 18.1% (the equity discount rate used in the BEN model for 1990).
Tax rate: 15% (the weighted average tax rate for a facility with less than $50,000 annual IncomeV
[NOTE: The numbers used to determine avoided and delayed expenditures were chosen fc:
only. They do not necessarily represent true costs in any State or Region in the country.]
C-2
-------
OSWER Directive 9610.12
I _ UST PENALTY COMPuTATK>M WORKSHEET . _ I
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet)
PART 1 • BACKGROUND
Company name £a* &A& <*nel <$o
Regulation violated HO Cf£ setttm A$0 jo(t} -
bu
December 2.i
Previous violations A/J -A/ -foxt 4ifff\ i/to fa+fev\
*4
Date of requirement ta./22/ZI _ Date of inspection *f fl* ffO
Date of compliance If 12/11 Explanation (if appropriate):
1. Days of noncomoliance IS.O
2. Number of tanks H
PART 2- ECONOWC BENEFIT COMPONENT
Avoided Expenditures ^ 3OO Baste: J 3.S~0 er . ->s mo-ora
Delayed Expenditures * otOtO Basis: JS£0 p*r -t^nk -for fyh+MKs -fes-fr
Weighted Tax Rate d/S" (t$%) Source: MTR. 4of tACet**. ^ i SQ OOP
Interest Rate dJgf (\%% ) Source: 8ifA/
AVOIDED
COSTS
Avoided + Avoided x Interest x Number
Expenditures Expenditures cfDavs
385 Days
f . t$l
x (1 - Weighted Tax Rate)
J
3. Calculated Avoided Cost:_
C-3
-------
OSWER Directive 9610.12
I UST PENALTY COUPUTATIOli WORKSHEET I
DELAYED COSTS = Delayed Expenditures x Interest x Number of Dave
365Daye
4. Calculated Delayed Cost: / / 3 *t
5. Economic Benefit Component: X 3?Y (cany figure to Line 16).
(Line 3 + Line 4)
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm: fYl&tof Extent of Deviation
6. Matrix Value fMVt: ^ l$00 (from document page 16 or Appendix A)
7. Per-i ink MV: 4 (t OOP (» violation is per facility, the amount on Line 7 will
(Line 2 x Line 6) be the same as the amount on Line 6)
PART 4 . VIOLATOR.SPECIFIC ADJUSTMENTS TO MATRIX VALUE
Percentage x Matrix = Dollar
Change Value Adjustment
f+or-1 (+ or -1 Justification for Adjustment:
8. Degree of cooperation/ f
noncooperation 0 4(0000 Q -ratio ' j
Xtrt«j|
9. Degree of willfulness ^ ^/« * * T/- f^f- r.a, •--**-
or negligence: 0 IbOOO 0 V(*{<* re
-------
OSWER Directive 9610.12
I U8T PENALTY CCttPlHATIOK WORKSHEET I
PART 5 - GRAVITY-BASED COMPONENT
Level of
Environmental Sensitivity Mod-era"te. Justification: A-ny fC.\<6S£. f'S
f;Uf
-------
OSWER Directive 9610.12
EXAMPLE 2
BACKGROUND
Inspection Date: March 20,1992
Facility Name and Description: Johnson's Petromart, located at Prairie View Lane, is one of eight facilities
in a convenience store chain that spans three counties. This facility has a total of 5 USTs, and there are a
total of 34 USTs at the 8 facilities. Based on an examination of the parent company's tax returns, it was
determined that the company's taxable income was $280,000.
Violations: During the inspection, the inspector observed that the facility had no records of financial
assurance coverage as required by the April 26,1991 deadline. Subsequently, the inspector requested
records for each of the 8 Johnson facilities. Upon further investigation, the inspector determined that the
owner of the chain, Jack Johnson, had acquired private insurance (the owner did not qualify to self-insure)
for the other 7 facilities. At the remaining facility, however, neither the owner nor the operator had obtained
the required coverage, thereby constituting a violation of 40 CFR section 280.93(a). This facility is among
the oldest in the Johnson's chain and is operated with 4 bare steel LIST systems and one cathodicafly
protected UST system. The other 7 facilities were opened subsequent to the interim prohibition and
installed USTs that meet the Federal design, construction, and installation requirements. Therefore,
obtaining insurance for these USTs was easier than for the facility in violation. The insurance company
had indicated that it would be willing to ensure the remaining facility provided that the tanks were retrofitted
with spill/overfill protection andcathodic protection.
Owner/Operator Response: Jack Johnson argued that it was the responsibility of the operator to upgrade
his USTs so as to make them insurable. The operator of the facility claimed that he lacked the resources
to upgrade his USTs and believed that the responsibility for meeting the PR requirements was the owner's.
The enforcement staff determined that the owner was aware of his responsibility to insure the USTs at all of
his facilities and that only he had the means to do so. The Agency attempted to enter into compliance
negotiations with Jack Johnson, but to no avail. The Agency planned to Issue an administrative complaint
on July 1,1992.
Previous Actions at Facility: Previously, one of the Johnson's facilities had been issued a warning letter for
failure to notify the Agency after bringing a new UST into operation. The owner had complied after
receiving the letter. Three other facilities had been issued warning letters for failure to maintain all of the
required monitoring records for release detection.
Current Status at Site: At the time of the most recent inspection, it was determined that the facility in
violation of the PR requirements had an adequate method of release detection, and no releases were
determined to have occurred The geology in the area of the facility Is clay. The facility is located in a
semi-residential/commercial area; however, there are no drinking water wells or sensitive wildlife receptors
within a 3-mile radius of the site.
C-6
-------
OSWER Directive 9610.12
PENALTY CALCULATION DATA
Violation: 40 CFR section 2B0.93(a)
Days of violation: 430 days from date of noncomplfance (April 26,1991) to date of compliance (which, for
purposes of assessing the penalty, was determined to be July 1,1992, to coincide with the date of the
administrative complaint),
Avoided expenditures: $27.40 per day = $11,781 for 430 days (estimated insurance premium, based on
an annual premium of $2,000 per UST for 5 USTs)
Delayed expenditures: $15,000 x 4 = $60,000 (where the average cost for system retrofit is $15,000).
This fs considered a delayed cost because retrofitting would enable Johnson's to achieve compliance with
the financial responsibility requirement
Interest rate: 18.1% (the equity discount rate used in the BEN model for 1990).
Tax rate: 33% {the weighted average rate for a facility with $280,000 In taxable Income).
{NOTE: The numbers used to determine avoided and delayed expenditures wars chosen for convenience
only. They do not necessarily represent true costs in any State or Region in the country.]
C-7
-------
OSWER Directive 9610.12
| U9T PENALTY COMPUTATION WORKSHEET |
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet)
PART 1 - BACKGROUND
Company name ^ToninzatfS Pffrv rflgf"t
Regulation violated ^0 C?R s^cfrgv* 3L%0 93 (*} - ?<*.<(<"«. 4o
^^"^™^~"- ~^^ ~~ I
-Pull •finartc.i&f c0i/£rage lo^t Co*HQ/fanc£, dead(it>i€
j- -r
Previous violations A}o-f-< -face -fid* t/i o
A.g
Date of requirement ^laCr 111 _ Date of inspection 1 / 3.O
Date of compliance W/ / ^3. _ Explanation (if appropriate):
-------
OSWER Directive 9610.12
I UST PENALTY COMWTATPHWOJgCKgET I
DELAYED COSTS a Delayed Expenditures x Intereet x Number of Dave
SSBDaye
_ ^ <*"-, OOP * •
4. Calculated Delayed Cost: $ CS;
s. Economic Benefit Component: 4 33. s 3ihO (cany figure to line 16).
(Line 3 + Line 4)
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm: ModerATe, Extent of Deviation.
ttfgj
6. Matrix Value fMVi: * r5P (from document page 16 or Appendix A)
7. Per-tank MV: » Y^U (if violation Is per facility, the amount on Line 7 will
(Line 2 x Line 6) be the same as the amount on Line 6)
PART 4 • VTOLATOR-SPECIFIC ADJUSTMENTS TO MATRIX VALUE
Percentage x Matrix = Dollar
Change Value Adjustment
f+ or-1 (+ or -1 Justification for Adjustment:
8. Degree of cooperation/ « ... ._ /• /- / #w7£ ,
noncooperation * 40/» ?75P *• ->3QO /Kjot'tfCe te^J^r ^<
9. Degree of willfulness - 0t*>«er M$ aw* of
or negligence:
10. History oJ
noncomplianca ^^Q/o *-f$u r *f&U Hv''*i/s i/'"o
11. Unique factors:
12. Adjusted Matrix Value
(Uns 7 + Lines 8-11)
C-9
-------
OSWER Directive 9610.12
I
UST PENALTY COMPUTATION WORKSHEET
PART S - GRAVITY-BASED COMPONENT
Level of .
Environmental Sensitivity A 0 tO _ Justification: Pofenh'tJ im Act
-------
OSWER Directive 9610.12
EXAMPLES
BACKGROUND
Inspection Dae: N/A
Facility Name and Description: Kelly's Kwik Stop is a convenience store that recently had its three USTs
taken out of operation. Prior to their removal, the USTs were operated by the owner of the convenience
store, Karen Kelly, and owned by Darby Distributors, an oil jobber. The taxable income of Darby
Distributors was $400,000 in 1988.
Violations: On May 20,1989, Ms. Kelly reported the presence of petroleum vapors outside of her
convenience store. The Agency investigated the site and confirmed the presence of a petroleum release.
Ms. Kelly reported that Darby Distributors had removed the 3 USTs located at her place of business on
March 17,1989; she was not aware of the requirement to notify the Agency prior to permanent closure or
of the requirement to conduct a site assessment Ms. Kelly also could not say whether Darby Distributors
had fulfilled these requirements. Upon a review of the Agency's records, it was determined that Darby
Distributors had failed to notify the Agency of the closure, thereby constituting a violation of 40 CFR section
280.71. The distributor was also unable to produce records demonstrating compliance with the closure \\
site assessment requirements, constituting a violation of 40 CFR section 280.74. The distributor also failed
to assess the site for the presence of a release before permanent closure, in violation of 40 CFR section
260.72(3).
Owner/Operator Response: When the Agency contacted Darby Distributors, they indicated that they would
initiate corrective action only if they, and not Ms. Kelly, were actually responsible for the release. The
Agency informed them that as the owner of the USTs formerly in operation at KeDy's Kwik Stop they as well
as Ms. Kelly are responsible for addressing any release from those USTs. The Agency also Informed
Darby Distributors that administrative orders were being prepared to compel them to dean up the release
and pay penalties for violations of the closure requirements (the Agency was dealing separately with Ms.
Kelly). At that time, the company requested to enter Into negotiations with the Agency In order to establish
a corrective action schedule and determine the amount of the penalties to be assessed.
Previous Actions at Facility: There were no previous incidents of violation at the facility.
Current Status at Site: Kelly's Kwik Stop is located in a rural part of the county. There are, however, two
private drinking-water wells within a mile of the facility and several others within 4 miles of the facility. The
facility is located one-half mile from a river that is used lor recreational purposes as wefl as by various
wildlife as a source of water. The geology in the area of the site is silt
C-11
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OSWER Directive 9610.12
PENALTY CALCULATION DATA
Violation: 40 CFR section 280.71 (a)
Days of Violation: 94 days, from the latest required date of compliance (February 17,1989) to the actual
date of compliance (May 20,1989), where actual compliance is assumed to be coincident with Ms. Kelly's
report to the Agency.
Avoided expenditures: Deemed negligible.
Delayed expenditures: None.
Interest rate: 18.1% (the equity discount rate used in the BEN model for 1989).
Tax rate: 34% (the weighted average rate for a company with taxable income greater than $340,000).
PENALTY CALCULATION DATA
Violation: 40 CFR section 280.72(a)
Days of Violation: 64 days, from the latest required date of compliance (March 17,1989) to the actual
date of compliance (May 20,1989), where actual compliance is assumed to be coincident with Ms. Kelly's
report to'the Agency.
Avoided expenditures: $8,500 x 3 USTs = $25,500 (where the average cost for a site assessment at
closure i j $8,500 per UST).
Delayed expenditure* None.
Interest rate: 18.1% (the equity discount rate used in the BEN model for 1989).
Tax rate: 34% (the weighted average rate for a company with taxable income greater than $340,000).
PENALTY CALCULATION DATA
Violation: 40 CFR section 280.74
Days of Violation: 64 days, from the latest required date of compliance (March 17,1989) to the actual
date of compliance (May 20,1989), where actual compliance is assumed to be coincident with Ms. Kelly's
report to the Agency.
Avoided expenditure*: None.
Delayed expenditures: Deemed negligible.
Interest rate: 18.1% {the equity discount rate used in the BEN model for 1989).
Tax rate: 34% (the weighted average rate for a company with taxable income greater than $340,000).
TU*.- -.imbers used to determine avdc&cH&rj ckxyed expenditures were chosen for convenience
<&o not necessarily represent true costs in any State or Region in the country.)
C-12
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OSWER Directive 9610.12
I UST«NALTVCO*IPinATlOWWOflKS*«ET I
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet)
PART I-BACKGROUND
^^\ I ^\ •» / « / t
Company name Uarhu tsfSTnburDrS
Regulation violated *fO £*FR sech'eM a?gQ 7-J (e^ ~ Ferlt/re
30 tLaui J>fiOf -fa
Previous violations
A/0/7&
Date of requirement S. I If I gr <7 Date of inspection.
Date of compliance £/20 /of Explanation (if appropriate):
1. Days of noncompliance
2. Number of tanks i3
WWT 2 - ECONOMIC BENEFIT COMPONENT
Avoided Expenditures O Basis: C,OS>te -for nafiftcafitM HCqliq>'
Delayed Expenditures A/1 A Basis:
Weighted Tax Rate /VM Source:
Interest Rate Wn Source: .
AVOIDED = [Avoided + Avoided x Interest x NumbeT] x 0 - Weighted Tax Rate)
Expenditures Expenditures
L 365 Days
COSTS {Expenditures Expenditures of Dave
7\
'J
3. Calculated Avoids >35S-_ v 0
C-13
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OSWER Directive 9610.12
L
UST PENALTY COMPUTATION WORKSHEET
DELAYED COSTS = Delayed Expenditures x Interest x Number of Days
365 Days
4. Calculated Delayed Cost:.
5 Economic Benefit Component:.
(Line 3 + Line 4)
.(carry figure to Line 16).
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm:
6. Matrix Value (MV):.
7. Per-iank MV:
(Line 2 x Line 6)
tAf
Extent of Deviation
(from document page 16 or Appendix A)
(if violation is per facility, the amount on Line 7 will
be the same as the amount on Line 6)
PART 4 - VIOLATOR-SPECIFIC ADJUSTMENTS TO MATRIX VALUE
Percentage x Matrix
Change Value
8. Degree of cooperation/
noncoo Deration
/ol
9. Degree of willfulness «
or negligence: * 'iOl*
10. History of
noncompliance: 0
11. Unique factors:
12 Adjusted fv.;.1'.
(Line? + i.i,-«ji 8-1
0
1 tSDO
tl^OO
JISVO
Dollar
Adjustment
(+ or -\ Justification for Adjustment:
on 1 14
'600
o
belt*
C-14
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OSWER Directive 9610.12
UST PENALTY COMPUTATION WORKSHEET
PART S • GRAVITY-BASED COMPONENT
Level of
Level 01
Environmental Sensitivity /fiat) _ Justification: 1\e,/-t4S£
V se&r+J cfrtfibA* -
J ant- OL river VSed b*i kvn*a»
13. ESM from document Page 21 )___2*__ . , » J / 1 i-
(>T'5D
(Line 12 x Line 13 x Line 14)
PART 6 • INITIAL PENALTY TARGET FIGURE
16. Economic Benefit Component O
(from Line 5)
17. Gravity-Based Component * (f f SO
(from Line 15)
18. Initial Penalty Target Roure
(Line 16 + Line 17)
SIGNATURE DATE.
C-15
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OSWER Directive 9610.12
L
U8T PENALTY COMPUTATION WORKSHEET
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet.)
II PART 1 - BACKGROUND
Company nama ufafku UfSJrt otsfon'S
Regulation violated *fQ CF& s-<-L& 0-f- -tank
Previous violations.
Date of requirement 3 / / 7- / 9 3 • Date of Inspection
Date of compliance &/3Q'fsl _ Explanation fif appropriate):
1. Days of noncompliance
2. Number of tanks -3
PART 2 - ECONOMIC BENEFIT COMPONENT
Avoided Expenditures 4 SS, SD& Basis: ^ SSDO per VST sfc
Delayed Expenditures A/ 1 A _ Basis: __
Weighted Tax Rate 0.34 /3» ^>) Source: MrR -for J
Interest Rate C IBt ( 1%. I %} Source: 8£XJ nnadef ftftu 4is(au*+ rote )
AVOIDED
COSTS
Avoided + Avoided x Interest x Number
Expenditures Expenditures QfDavs
365 Days
Ac * [fas, 57?*
x (1-Weighted Tax Rate)
3. Catculated Avoided Coat: £ I v ^
i
C-16
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OSWER Directive 9610.12
UST PENALTY COMPUTATION WORKSHEET
DELAYED COSTS = Delayed Expenditures x Interest x Number of Dav«
365 Days
4. Calculated Delayed Cost: Q_
5. Economic Benefit Component: ^/"ft ,?6.V (carry figure to Line 16).
(Line 3 + Line 4)
PART 3 • MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm: ftldtof Extern of Deviation ffldi
6. Matrix Value (MV>: J /SOU (from document page 16 or Appendix A)
7. Per-iank MV: 4 (oQ06 (if violation is per facility, the amount on Line 7 will
(Line 2 x Line 6) be the same as the amount on Line 6)
PART 4 - VIOLATOR-SPECIFIC ADJUSTMENTS TO MATRIX VALUE
Percentage x Matrix = Dollar
Change Value Adjustment
(+ or -1 (+ or -) Justification tor Adjustment:
8. Degree of cooperation/
noncooperatton * /07a JleQQQ +_
« «. _. -i«.j_ 0***t.r *jppe#rtd -h
9. Degree of willfulness . . * ^~\ ,*~L~T1< *.£ **•*
or negligence: •* 'iQ/e r (pQOti 3HQO ^ '"
Q
10. History of
noncompliance: O & bOOO 0
11. Unique factors: MaMO 0 fiJlA
12. Adjusted Matrix Value 43000
(L- 7 + Lines 8-11)
C-17
-------
OSWER Directive 9610.12
L
UST PENALTY COMPUTATION WORKSHEET
PART S - GRAV1TY-8ASED COMPONENT
Level of
Environmental Sensitivity__£tL422 _ Justification: Re (445*- Co /%, 000
(from Line 15)
18. Initial Penalty Target Figure '$€.'& (a
(Line 16 + Line 17)
SIGNATURE DATE,
C-18
-------
OSWER Directive 9610,12
Assessments tor each violation should be determined on separate worksheets and totaled. (H more space
is needed, attach separate sheet)
PART 1 - BACKGROUND
Company name Tkrbu 'DiS'hri :£?«/Tfe>rS
u
Regulation violated HO £PR St chart £%Q. 3t- "Fzf/vre. -bo
i//\ fe.c.Grd<* tag* bit
Weighted Tax Rate Af IA Source:
Interest Rate All A Source:
AVOIDED = I Avoided + Avoided x Interest x Number | x (1 - Weighted Tax Rate)
COSTS Expenditures Expenditures of Dave
L 365Daya
r"! * 0 '
a
3. Calculated Avoicied Cost:
C-10
-------
OSWER Directive 9610.12
I U9T PEHALTY COMPUTATION WORKSHEET I
DELAYED COSTS o Delayed Expenditures x Interest x Number of Dave
365 Days
4. Calculated Delayed Cost: ^ O
5. Economic Benefit Component: £ O (carry figure to Line 16).
(Line 3 + Line 4)
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm: VY\4ior Extent of Deviation
6. Matrix Value fMVl: 1 I€>OO (from document page 16 or Appendix A)
7. PeM.Tnk MV: 4 (G~00 (If violation is per facility, the amount on Line 7 will
(Line 2 x Line 6) be the same as the amount on Una 6)
PART 4 - VfOLATOR-SPECfFiC ADJUSTMENTS TO MATRIX VALUE
Percentage x Matrix = Dollar
Change Value Adjustment
f-KQT -1 (4. or.) Justification for Adjustment:
8. Degree of cooperation/ ^ j onU. d-H*.* be)** u&med. af
noncooperation
9. Degree of willfulness
or negligence:
10. History of
noncompliance:
*
r» mCt. of-
A///4
11. Unique factors: O i\5VO O Ail A
1Z Adjusted Matrix Value
(Urn 7 + Lines 8-11)
C-20
-------
OSWER Directive 9610.12
L
liST PENALTY COWPUTATOK WORKSHEET
PART 5 - GRAVITY-BASED COMPONENT
Levelot /^' / />
Environmental Sensitivity Hi a~k Justlflcatton: Re(f&s< CQvt& f
x, <*i\A. o. river tX-ctf fa
13. ESM (from document Pace 21) £ v*r ***** **
14. ONM (from document Page 21) /
Environmental Day* of
GRAVITY-BASED COMPONENT = Adjusted Matrix Value x SeneKMty x Noncompllance
Multiplier Multiplier
15. Gravity-Based Component: &HSDO
(Line 12 x Line 13 x Line 14)
PART 6 - INITIAL PENALTY TARGET FIGURE
H 6. Economic Benefit Component * O
(from Line 5)
17. Gravity-Based Component ?
(from Line 15)
18. Initial Penalty Taroet Figure * H 57? 0
(Line 16 + Line 17)
2* >'+>'« I Ptnaiht T+reftf -for Darby
=. \/t'0 (Abff* #1 f tftol^tto* #2. «• l/ro
cessaniv .-eov^.,., :rua ^
SK3NATURE_ _ DATE
021
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OSWER Directive 9610.12
EXAMPLE 4
BACKGROUND
Inspection Date: December 15, 1991
Facility Name and Description: Jerry's Gas and Grocery is a medium-sized facility in a commercial section
of town. The facility has 4 USTs, 3 of which were installed in 1968 and one in 1989. It was estimated that
the company's taxable income was $70,000 in 1990.
Violations: On October 16,1991, the Agency discovered that Jerry's Gas and Grocery had a release. At
the time of the release, an adequate method of release detection was not in use at the facility, constituting
a violation of 40 CFR section 280.40(c) for the 3 tanks installed in 1968. The Agency sent written
notification (after informing the owner of the release by telephone) of the release to the facility and
requested, among other things, that the facility report evidence of financial responsibility within 30 days.
While conducting a file review on December 15, the compliance staff observed that the facility had failed to
report this evidence, in violation of 40 CPR section 280.106(a)(1). A site inspection conducted on this date
indicated that an adequate method of release detection was still not In use.
Owner/Operator Response: When notified of these violations, the owner submitted evidence that he had,.
acquired a letter of credit from a bank to meet the FR requirement and began to conduct inventory control
and daily monitoring immediately, and arranged for tank tightness tests. The owner, however, had failed to
initiate corrective actions (beyond the initial abatement measures) for lack of funds. The owner's failure to
report his financial assurance mechanism within the required time period, therefore, delayed the contacting
of the bank and the collection of funds with which to initiate corrective action.
Previous Actions at Facility: In 1989, the facility was assessed penalties for failure to notify the Agency of
the new UST installation.
Current Status at Site: Because an adequate method of release detection was not in operation, the
release went undetected for a matter of months. The geology In the area of the facility Is fractured shale.
The facility is located in a commercial area. There are no drinking water wells or sensitive wildlife receptors
within a 5-mile radius of the site.
PENALTY CALCULATION DATA
Violation: 40 CFR section 280.40(c)
Days of violation: 358 days, from the latest required date of compliance (December 22,1990) to the
actual date of compliance (December 15,1991).
Avoided expenditures: $2455 total = $895 labor for 358 days, at $2.50 per day (estimated cost for labor
needed to conduct daily inventory control based on 1/2 hour labor at $5.00 per hour) + $1560 for
tightness testing for 3 tanks (where the average cost for tank tightness testing is $520 per tank).
Delayed expenditures: None.
Interest rate: 18.1% (the equity discount rate used In the BEN model for 1991).
Tax rate: 18% (the weighted average rate for a company with taxeL $70,000).
C-22
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OSWER Directive 9610.12
PENALTY CALCULATION DATA
Violation: 40 CF« section 280.106(a)(l)
Days of Violation: 30 days from the latest required date of compliance (November 15,1991) to the actual
date of compliance (December 15,1991).
Avoided expenditures: $8219 = Amount of interest avoided on $1,000,000 letter of credit because of
failure to provide the Agency with evidence of financial responsibility (based on 30 days of interest at 10%,
the rate charged by Jerry's bank for letter of credit drawdown).
Delayed expenditures: None.
Interest rate: 18.1% (the equity discount rate used In the BEN model for 1990 and 1991).
Tax rate: 18% (the weighted average rate for a company with taxable income of $70,000).
[NOTE: The numbers UKX* to determine svoided and delayed expenditures; were clvosen for convenience
only. They do not ne' • ~-: «. -.-•;«..-. •* -rjsts in any State or Region in the cojrfiry.)
C-23
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OSWER Directive 9610.12
I. U8T PENALTY COMPtflATION WORKSHEET I
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet.)
PART 1 • BACKGROUND
Company name "J^ffciS 6&S
Regulation violated Hft C1=-R ena.(Kje.S
o-f n ew US? i/\s4* II* h'art.
Date of requirement f&.Ill./tTO _ Date of Inspection 12. //5" fa I
Date of compliance /g //5" / model (cq^hj discoi»4-
AVOIDED
COSTS
Avoided + Avoided x Interest x Number
Expenditures Expenditures of Dave
365 Days
x (1 - Weighted Tax Rate)
3. Calculated Avoided Cost: 4,
C-24
-------
OSWER Directive 9610.12
I
DELAYED COSTS
Delayed Expenditures x Intereat x Number of Dava
368 Day*
4. Calculated Delayed Cost:
5. Economic Benefit Component:
(Line 3 + Une 4)
(carry figure to Une 16).
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm:
6. Matrix Value fMVl: 4
7. Per tank MV: 4 HS'OQ
(Line 2 x Line 6)
Extent of Deviation
(from document page 1 6 or Appendix A)
(if violation is per facility, the amount on Line 7 will
be the same as the amount on Line 6}
PART 4 • VIOLATOR-SPECIRC ADJUSTMENTS TO MATRIX VALUE
Percentage x Matrix
Change
f+or-1
n « , , ,
8. Degree of cooperation/
noncooperation
9. Degree of willfulness
or negligence:
10. History of
noncompliance:
11. Unique factors:
O
Value
.
O JHSVO
1*1500
Dollar
Adjustment
1+ or •) Justification for Adjustment:
Complied as
» , r i*t-
0 ^llo^Ji no
-------
OSWER Directive 9610.12
UST PENALTY COMPUTATION WORKSHEET
PART 5 • GRAVITY-BASED COMPONENT
Level of
Environmental Sensitivity t/ftadLertJQ Justification: &{*«&& W liuUi TO
13. ESM (from document Page 21) /• 6
n^
14. PNM (from document Page 21) 3-S ** /.^^
Environmental Days of
GRAVITY-BASED COMPONENT = Adjusted Matrix Value x Sensitivity x Noncompllance
Muttlpller Multiplier
' '•£• * 2.S" *
15. Gravity-Based Component:
(Li.ie 12 x Line 13 x Line 14)
PART 6 • INITIAL PENALTY TARGET FIGURE
16. Economic Benefit Component
(from Line 5)
17. Gravitv-Based Component
(from Line 15)
18. Initial Penalty Target Figure /2V 30?
(Line 16 + Line 17)
SIGNATURE DATE.
C-26
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OSWER Directive 9610.12
I U8T PENALTY COUPUTATlOff WORKSHEET I
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet)
PART 1 - BACKGROUND
Company name 7Isrr &a & 4. &
^
Regulation violated HO £?R Stc.+>OY\ 3&0. /0&M&}- Faitvre. -to
e.\/'>cUnc*- fyf -fi'nana'al assurance
Previous violations A/aft -fat* H*os\
Date of requirement ////5"/J tnoejeA fee^tit eJirce>t,n't
AVOIDED = Avoided + Avoided x Interest x Number
COSTS Expenditures Expenditures of Dava
385 Day*
x (1 • Weighted Tax Rate)
x.,*, , 30 1
T><*5- J
3. Calculated Avoided Cost:
-------
OSWER Directive 9610.12
L
08T PENALTY COMPUTATION WORKSHEET
DELAYED COSTS » Delayed Expenditures x Interest x Number of Dava
385 Days
4. Calculated Delayed Cost:
5. Economic Benefit Component: ?(f&7& (carry figure to Line 16).
(Line 3 + Line 4)
PART 9 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm: moa-erflt Extent of Deviation
6. Matrix Value (MV): » /SO (from document page 16 or Appendix A)
7. Per-iunk MV: •> rSO (if violation is per facility, the amount on Line 7
(Line 2 x Line 6) be the same as the amount on Line 6)
PART 4 - VIOLATOR-SPECIFIC ADJUSTMENTS TO MATRIX VALUE
Percentage x Matrix = Dollar
Change Value Adjustment
f+or-i f+ or -) Justification for Adjustment:
8. Degree of cooperation/ ^ /, ,, .
noncooperation O ST-SD O ft>floi~»*j
9. Degree of willfulness
or negligence: 0
1°' JSnpllance: +30% ^SO *'t&f Mw/»/r,
11. Unique factors: O
12. •££['•&.. .\ '.'U Value
(Line 7 4-Unas 8-11)
C-28
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OSWER Directive 9610.12
I U8T PENALTY CCWPtHATTON WORKSHEET I
PART 5 • GRAVITY-BASED COMPONENT
Level of
Environmental Sensithritv V\A AeLl. rgjfc Justification: "R^U^-f /l5 *0f lifafu
hive. ii***ci cm etrov^cS er
, -
13. ESM (from document Page 21)_L£ -
pofaivtotJ ln*~i*\6n f-
14. DNMffrom document Paoa 211 /.fP /4X"+. Tr^c^^ect sh+tt.
/5
p tt'c&&
Environmental Days of
GRAVITY-BASED COMPONENT a Adjusted Matrix Value x SerwWvtty x Noncompllanoe
Multiplier Multiplier
15. Gravity-Based Component: $ I'J
(LJne12xLine13xLine14)
PART $' INITIAL PENALTY TARGET FIGURE
16. Economic Benefit Component $>
(from Line 5)
17. Gravftv-Based Component i
(from Line 15)
18. Initial Penalty Taroet Figure
(Line 16 -HJne 17)
SIGNATURE _ DATE
C-29
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OSWER Directive 9610.12
EXAMPLES
BACKGROUND
Inspection Dae: January 8,1990
Facility Name and Description: The Mammoth Oil facility located at 345 Pine Street has 5 USTs and is
owned and operated by Mammoth Oil Company, a national petroleum marketer with taxable income over
$335,000.
Violations: Upon inspection of the facility, the Agency discovered that 2 new bare steel USTs were
installed on November 15,1989 without cathodic protection. This omission constituted a violation of 40
CFR section 280.20(a)(2)(iQ. The tanks failed to meet the performance standards specified in section
280.20(a)(2)(ii), or any of the codes or standards outlined by the regulations as acceptable for compliance.
Owner/Operator Response: When notified of the violation, the company's attorneys asked to enter into
negotiations to determine the schedule and terms of compliance, as well as any penalties that might be
assessed. The result of the negotiations was a consent order in which the owner agreed to install properly
designed cathodic protection (in accordance with the National Association of Corrosion Engineers
Standard RP-02-85) and pay the penalty by March 1, 1990.
Previous Actions at Facility: The facility was issued a notice of violation in 1987 for failure to notify the
Agency of a new UST installation. In 1988, the company was issued two administrative orders, one
compelling remediation of a release and the other assessing penalties for failure to report the release to
the Agency.
Current Status at Site: At the time of the inspection, the facility was conducting a method of release
detection in accordance with the requirements. The Agency determined that It was unlikely that there was
a release at the present time. The geology in the area of the facility is gravel The facility is located In an
urban residential area There are no drinking water wells or sensitive wildlife receptors within a 3-mile
radius of the area
PENALTY CALCULATION DATA
Violation: 40 CFR section 280.20(a)(2)(ii)
Days of violation: 105 days, from the required date of compliance (November 15,1989) to the actual date
of compliance (March 1,1990).
Avoided expenditures: None.
Delayed expenditures: $3,050 x 2 USTs = $6,100 (where the average cost for installation of a cathodic
protection system is $3,050 per UST).
Interest rate: 18.1% (the equity discount rate used in the BEN model for 1990).
Tex rate: 34% (the weighted average rate for a company with taxable income of $335,000).
[NOTE: The numbr,. •'-.;;'»..: .tarmine avoided and delayed expenditures were chosen for convenience
only. They do not iv :*-si::. ^present true costs in any State or Region in the country.)
C-30
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OSWER Directive 9610.12
QST PENALTY CO*H»tnATIOH WORKSHEET
I
Assessments for each violation should be determined on separate worksheets and totaled. (N more space
is needed, attach separate sheet.)
FARM-BACKGROUND
Company name
Oil
Regulation violated HO CJP&.
3iO
rtV
LeC](^-- frti
Ca-Hn
4t>
Previous violations
£ cat} art
- 4-ifJO ad Vu'/*rs^* -fe'i/g
Date of requirement //
Date of eompliance 3/ / l1O
1. Days 3f noncompliance /OS"
Z Number of tanks o2
Date of Inspection
/ Iff ItO
Explanation (tf appropriate):
PART 2 • ECONOMIC BENEFIT COMPONENT
Avoided Expenditures fi) I A
Basis:.
Delayed Expenditures 4 (01 00
Weighted Tax Rate O-W ( $H *)•}
Basis: £0
Source: rflTR £>r i
Interest Rate G.IKi ( (&. / >> rtodLd (e
-------
OSWER Directive 9610.12
I
U8T PENALTY COMPUTATION WORKSHEET
J
DELAYED COSTS
Delayed Expenditures x Interest x Number of Days
365 Days
blQQ x .(Gl r 105°
4. Calculated Delayed Cost:
5. Economic Benefit Component:
(Line 3 •»• Une 4)
.(carry figure to Line 16).
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Extent of Deviation fftodsra
Potential for Harm: Ml ode,
G. Matrix Value fMW. 4 S~00
7. Per-t«nk MV:
I OOP
(Line 2 x Line 6)
(from document page 16 or Appendix A)
(if violation is per facility, the amount on Une 7 will
be the same as the amount on Une 6)
PART 4 - VIOLATOR-SPECIFfC ADJUSTMENTS TO MATRIX VALUE
Percentage x Matrix
Change Value
f+or-\
8. Degree of cooperation/
noncooperation
9. Degree of willfulness
or negligence:
10. History of
noncompliance:
Dollar
Adjustment
f+ or -) Justification for
. ^
31000 Q
50% 4000
11. Unique factors: 6> .
tlOOO +
41000 0
12. Adjusted Matrix Value
(Une? + Lines 8-11)
43000
C-32
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OSWER Directive 9610.12
I U8T PENALTY COMPUTATION WORKSHEET |
PART 5 • GRAVITY-BASED COMPONENT
Level of
Environmental Sensitivity W\a dLt. raJb Justification: fact Iffy i'S loca'ticx »
fi
13. ESM (from document Page 21)__Afl_ tjri*k'Aj - VGr Ut-tfl or
t ar*
14. DNM (from document Page 21)_I£_ P*'"" tAir**** of
Environmental Day* of
GRAVITY-BASED COMPONENT = Adjusted Matrix Value x SenaMMty x Noneompllanee
Multiplier Multiplier
* $3000 r /. 5" * i. S ~
15. Gravity-Based Component:
(Line 12 x Line 13 x Line 14)
PART 6 - INITIAL PENALTY TARGET FIGURE
16. Economic Benefit Component
(from Line 5)
17. Gravity-Based Component ¥ tf 5~00
(from Line 15)
18. Initial Penalty Taroet Figure
(Line 16 -t- Line 17)
SIGNATURE DATE.
C-33
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