I
                   U.S. Environmental Protection Agency
                   Office of Inspector General

                   At  a  Glance
                                                               08-P-0291
                                                        September 29, 2008
                                                                    Catalyst for Improving the Environment
Why We Did This Review

We conducted this review in
response to a complaint
alleging that the U.S.
Environmental Protection
Agency's (EPA's) Region 5
Regional Counsel arbitrarily
reduced a civil penalty against
Minnesota Metal Finishing,
Inc. (MMF), without
justification.
A Region 5 Penalty Reduction  Was  Unjustified
and Undocumented
Background

MMF is a plating and
anodizing company in
Minneapolis, Minnesota.
Based on a May 2001
inspection, EPA determined
that MMF was in
noncompliance with the
Resource Conservation and
Recovery Act (RCRA) and
designated it a significant
noncomplier. In August 2005,
the Region filed a complaint to
fine MMF $300,000 for its
noncompliance. After
negotiating with EPA, in April
2007 MMF agreed and signed a
settlement agreement to pay a
$110,000 civil penalty.
However, Regional Counsel
subsequently reduced the fine
to $85,000.
For further information,
contact our Office of
Congressional and Public
Liaison at (202) 566-2391.

To view the full report,
click on the following link:
www.epa.qov/oiq/reports/2008/
20080929-08-P-0291 .pdf
 What We Found
EPA Region 5 Regional Counsel's decision to reduce the $110,000 penalty MMF had
already agreed to pay to $85,000 was unjustified.  Further, the Regional Counsel's
basis for the reduction was not documented. Regional Counsel relied on information
in an internal  Office of Regional Counsel memorandum.  He did not have current
reliable financial information to justify the decision nor a complete understanding of
the owner's prior relationship with the company. In addition, Regional Counsel
believed that when the Administrative Law Judge terminated and closed the case on
May 14, 2007, after an agreement between MMF and EPA had been reached, EPA
could be left with no agreement. However, in its correspondence to MMF on
May 17, 2007, the Region noted it would process the earlier agreement if the
company turned down the Region's offer to settle for a reduced penalty amount.

As a result of the Regional Counsel's actions, the government received $25,000 less
than it could have. In addition, Region 5 may have sent a signal to other violators
that they may have their civil penalties reduced regardless of the evidence supporting
EPA's decision.
 What We Recommend
We recommend that Region 5's Regional Administrator direct the Regional Counsel
and the Land and Chemicals Division Director to document their rationale for
reducing the amount of MMF's penalty, and properly determine and document all
future penalty decisions.  We also recommend that the Regional Administrator direct
Regional Counsel and the Director to follow through on hiring staff who can provide
the necessary financial and accounting expertise to understand and assess a violator's
financial health.  Region 5 has already directed staff to properly document in the
future, and has begun the process to hire a civil investigator and attorney to ensure
future penalties are properly calculated and documented. However, we do not
consider Region  5's plans for documenting the MMF penalty rationale to be
sufficient.  Further, Region 5 needs to clearly  define the difference between an
ability-to-pay memorandum and a bottom-line settlement amount.

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