V'r "'"•''"'' '" Environmental Protection Agency
Office of Enforcement and Compliance Assurance
Small Local Governments Compliance Assistance Policy
June 2004
http://epa.gov/compliance/resources/policies/incentives/smallcommunity/smalllocalgovca.pdf
A. Introduction and purpose
The Small Local Governments Compliance Assistance Policy promotes comprehensive
environmental compliance among small local governments by establishing parameters within
which states1 can reduce or waive the normal noncompliance penalties of small local
governments that make use of the state's comprehensive compliance assistance program.
Providing conditions and circumstances in which states may reduce or waive normal
noncompliance is intended to reassure small local governments that they will not be forced to
pay a large penalty if environmental violations are discovered or revealed while they are
participating in compliance assistance activities. To be eligible under this policy for reduction or
waiver of the normal noncompliance penalty, a small local government must, within specified
deadlines, either:
• identify and correct all of its environmental violations;
• identify all of its environmental violations and enter into an enforceable commitment to
correct all of its environmental violations in a timely fashion; or
• correct all of its known environmental violations and enter into an enforceable
commitment to develop and implement an environmental management system (EMS) to
1 State means the agency of any state, commonwealth, or territory of the United States that has received
EPA's approval to implement environmental laws and regulations. An Indian Tribe can be a state if it has received
EPA's approval for treatment as a state. In cases in which a state agrees to apply the policy to a small local
government and that state has not been authorized to implement a particular federal program, EPA shall be the state
for purposes of that federally implemented program. Regions should consult with OECA's Office of Regulatory
Enforcement prior to implementing this policy.
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identify the environmental aspects of its operations and ensure continual environmental
improvement.
EPA acknowledges that states and small local governments can realize environmental benefits
by negotiating, entering into, and implementing enforceable compliance agreements and
schedules that require local governments to correct all of their environmental violations
expeditiously while allowing the local government to prioritize among competing environmental
mandates on the basis of comparative risk2. Small local governments can also realize
environmental benefits by entering into enforceable agreements to develop and implement an
EMS to manage the environmental aspects of their operations. States may provide small local
governments an incentive to request compliance assistance by waiving part or all of the normal
penalty for a small local government's violations if the criteria of this policy have been met. If a
state acts in accordance with this policy and addresses small local government environmental
noncompliance with compliance assistance in a way that results in the small local government
making reasonable progress toward compliance, EPA generally will not pursue a separate federal
civil administrative or judicial action for additional penalties or additional injunctive relief.
This policy does not apply to any criminal conduct by small local governments or their
employees.
B. Who is eligible for reduction or waiver of normal noncompliance penalties under this
policy?
2 As described below, EPA does not intend that states and small local governments must prepare a formal
comparative risk assessment as part of the small local government environmental compliance assistance process.
Information available from EPA's National Center for Environmental Assessment, http://cfpub.epa.gov/ncea/, will
help states and local governments identify which local environmental problems pose the greatest risk to human
health, ecosystem health, and quality of life.
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This policy applies to small local governments that own and operate facilities used to
provide municipal services. A local government is defined as an organized unit of general-
purpose local government, authorized in a state's constitution and statutes, and established to
provide general government to a defined area. A defined area can be a county, municipality,
city, town, township, village, or borough. A small local government is a local government that
provides municipal services to 3,300 or fewer permanent residents. A local government that
supplies municipal services to between 3,301 and 10,000 permanent residents can also qualify
for treatment as a small local government if the state determines, in accordance with a capacity
test (described below), that the technical, managerial, and financial capacity of the local
government is so limited that the local government is unlikely to achieve and sustain
comprehensive environmental compliance without the state's assistance.
This policy supersedes the previous version of the policy titled the Policy on Flexible
State Enforcement Responses to Small Community Violations, which became effective on
November 25, 1995. To the extent this policy may differ from the terms of applicable
enforcement response policies (including penalty policies) under media-specific programs, this
document supersedes those policies.
C. How can a small local government qualify for penalty reduction?
This policy seeks to encourage small local governments to achieve sustained
comprehensive environmental compliance in one of two ways. A small local government can
work with the state to identify all of the local government's environmental noncompliance and
then enter into a written and enforceable agreement establishing a schedule to correct all of its
violations in order of risk-based priority. Alternatively, a small local government can enter into
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a written and enforceable agreement establishing a schedule to: 1. correct, as expeditiously as
practicable and in order of risk-based priority, all violations discovered by the state during an
inspection of some subset of the local government's operations; and 2. develop and implement
an EMS for all of its governmental operations. EPA's deference to such an exercise of a state's
enforcement discretion in response to a small local government's violations will be based on an
assessment of the adequacy of the process the state establishes and follows in:
responding expeditiously to a small local government's request for compliance
assistance;
• determining which local governments with between 3,301 and 10,000 residents qualify
for treatment as small local governments;
assessing the small local government's good faith and compliance status;
establishing priorities for addressing noncompliance; and
• ensuring either prompt correction of all environmental violations discovered during the
state's comprehensive environmental compliance evaluation of all the local government's
operations, or prompt correction of all violations discovered during a state inspection of
some subset of the local government's operations and prompt development and
implementation of an EMS for all of its governmental operations.
A state must document all findings and activities that are necessary to show adherence to the
terms of this policy. If the small local government commits to correct its separate violations in
order of risk-based priority, the state's records must discuss the rationale for establishing
priorities among the violations to be addressed and explain why the compliance agreement and
schedule represents the shortest practicable time schedule feasible under the circumstances.
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EPA will defer more readily to a state that has previously submitted to the Agency a
description of its comprehensive compliance assistance program for small local governments,
thereby allowing EPA to familiarize itself with the adequacy of the state's processes.
D. How should a state select participating local governments?
EPA intends this policy to apply only to small local governments unable to satisfy all
applicable environmental mandates without assistance from the state. For the purposes of this
policy, local governments with 3,300 or fewer permanent residents are assumed to need the
state's compliance assistance and are deemed eligible to participate at the state's discretion.
Local governments whose permanent residents number between 3,301 and 10,000 can qualify to
receive the benefits of the policy only if the state determines that the technical, managerial, and
financial capacity of the local government is so limited that the local government is unlikely to
achieve and sustain comprehensive environmental compliance without the state's assistance. To
make this determination, a state must apply a capacity test that measures such indicators as:
the local government finds it difficult to comply with routine reporting requirements
(e.g., in the past year, the local government has submitted less than 90 percent of the
monitoring reports required by applicable environmental regulations);
• the local government has no operation and maintenance plan for its utility operations, or
has an operation and maintenance plan that is not routinely followed (e.g., maintenance
logs are not regularly updated, are incomplete, or are not kept at all);
• the required drinking water sanitary survey has not been scheduled, or the sanitary survey
has been performed, but the local government has not addressed all identified significant
deficiencies;
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utility operators are untrained or uncertified, or staffing of certified operators is
inadequate to meet the local government's needs;
utility systems were installed without state oversight and approval, or began operating
without receiving final operational approval from the state;
rights essential to the provision of municipal services are not clearly established and
documented by contract (e.g., the local government has no contract with the source from
which it obtains its drinking water, or for the disposal of its solid waste);
the local government does not have current and approved by-laws, ordinances, or tariffs
in place with respect to each of its public utility operations;
there is no formal organizational structure for operation and maintenance of the local
government's public utilities clearly identifying the owner, the operator, and the staff and
their responsibilities;
either there are no written job descriptions clearly defining the responsibilities of public
utility staff, or the staff is unfamiliar with such documents;
staff is untrained or inadequately trained;
written policies covering personnel, customer service, and risk management either do not
exist or are routinely ignored;
lines of communication between public utility staff and agencies or private sector staff
that can provide assistance are inadequate or nonexistent;
the local government does not follow standard accounting principles in the funding of its
public utilities, and either has not been audited or was issued an adverse opinion
following an audit;
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• the local government either does not have an annual budget for operation of a public
utility or has an annual budget that is inadequate to meet the demands of operation,
maintenance, and environmental compliance;
public utility rates do not include all users or have not been recently reviewed to examine
operational sustainability and viability;
• a significant percentage of accounts (either payable or receivable) are chronically
delinquent;
periodic budget reports and balance sheets are either not produced, or, if produced, have
not been approved;
• the local government's tax base is inadequate to support needed environmental
expenditures; or
there are demographic factors that present quantifiable negative impacts on the local
government's capacity.
The state must document the capacity test it applied and all findings it made to support its
determination of incapacity, and maintain that documentation in records accessible for EPA
review.
EPA's evaluation of the appropriateness of a state's small local government
comprehensive environmental compliance assistance program will depend in part on whether the
state uses adequate measures of technical, managerial, and financial capacity to ensure that only
those local governments that truly need assistance were assessed noncompliance penalties that
were reduced beyond the extent normally allowed by EPA enforcement policies and guidance.
Not less than quarterly, a state should provide EPA with a list of local governments
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participating in its small local government environmental compliance assistance program to
ensure proper state and federal coordination on enforcement activity. In addition to any records
related to a finding of a local government's incapacity, a state must keep records of contacts
between the state and participating local governments, results of compliance assessments,
actions taken by the local government to achieve compliance, any written compliance
agreements and schedules, and any assessments of a local government's adherence to the terms
of its compliance agreement and schedule should be kept in the state's files accessible for review
by EPA.
E. How should a state assess a local government's good faith?
In considering whether a state has established and is following an adequate process for
assessing a small local government's good faith, EPA generally will look at such factors as the
participating local government's candor in contacts with state regulators and the local
government's efforts to comply with applicable environmental requirements. Measures of a
small local government's good faith include:
• prompt self-disclosure of known violations;
• attempts to comply or a request for compliance assistance prior to the initiation of an
enforcement response;
willingness to participate in a comprehensive compliance evaluation;
• prompt correction of known violations;
• willingness to remediate harm to public health, welfare, or the environment;
readiness to enter into a written and enforceable compliance agreement establishing a
schedule to correct all of its violations as expeditiously as practicable in order of risk-
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based priority, or to enter into a written and enforceable agreement establishing a
schedule to correct all known violations as expeditiously as practicable in order of risk-
based priority and to develop and implement an EMS for all of its governmental
operations; and
• adherence to the terms of the agreement and to the schedule.
F. What is the scope of compliance evaluation and assistance a state should offer?
EPA intends this policy to encourage states to offer local governments comprehensive
compliance assistance; that is assistance intended to ensure compliance with all environmental
statutes and regulations that apply to the small local government's municipal operations.
Accordingly, a state's actions under the policy should promote an evaluation, performed by
qualified personnel, of the small local government's compliance status with respect to all
applicable environmental requirements. EPA acknowledges that a comprehensive evaluation
becomes more difficult to perform and requires more state resources as the size of the local
government increases and as the local government offers more services to its residents. For this
reason, the policy will allow "fenceline" projects at local governments that have between 3,301
and 10,000 permanent residents if the state applies a capacity test consistent with the criteria
described in part D of this policy and determines that the technical, managerial, and financial
capacity of the local government is so limited that the local government is unlikely to achieve
and sustain comprehensive environmental compliance without the state's assistance. A fenceline
project is one that limits its scope to those activities conducted within a subset of the local
government's operations.
A state's assessment of a local government's compliance status should include:
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• a comprehensive evaluation of compliance with every applicable environmental
requirement at all of the small local government's municipal operations (see, Profile of
Local Government Operations, EPA 310-R-001, www.epa.gov/compliance/resources
/publications /assistance/sectors/notebooks/government.html; or the Local Government
Environmental Assistance Network, www.lgean.org) or, in the case of a local
government with between 3,301 and 10,000 permanent residents that qualifies for
participation after application of the state's capacity test, a comprehensive evaluation of
compliance with every environmental requirement that applies within the fenceline of a
defined subset of the local government's operations;
• the local government's current and anticipated future noncompliance with those
requirements:
the comparative risk to public health, welfare, or the environment of each current and
anticipated future noncompliance; and
• the local government's compliance options.
In addition, EPA recommends that the process developed by the state include
consideration of regionalization and restructuring as compliance alternatives. In the case of
fenceline projects, the state should consider if compliance benefits can be achieved by
consolidating staff and processes of the designated operations with other governmental
operations within the local government. The state's process should also include consideration of
the impact of promulgated regulations scheduled to become effective in the future.
This policy is also intended to encourage states to provide participating local
governments incentives to develop and implement environmental management systems (EMSs).
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The EMS aspects of this policy are discussed in part I, below.
G. How should a small local government set priorities for addressing violations?
States seeking EPA's deference should require small local governments to correct any
identified violations of environmental regulations as soon as possible, taking into consideration
the local government's technical, managerial, and financial capacities, and the state's ability to
assist in strengthening those capacities. A small local government should address all of its
violations in order of risk-based priority.3 While information regarding assessment of
environmental risks is available from EPA's National Center for Environmental Assessment at
www.epa.gov/ncea/ecologic.htm, the Agency expects that the comparative risk between
violations will, in most instances, be apparent. For example, violations presenting a risk of
ingestion or inhalation of, or contact exposure to, acute toxins must be a local government's
highest priority for remediation and correction. Any identified violation or circumstance that
may present an imminent and substantial endangerment to, has caused or is causing actual
serious harm to, or presents a serious threat to, public health, welfare, or the environment is to be
addressed immediately in a manner that abates the endangerment or harm and reduces the threat.
Activities necessary to abate the endangerment or harm and reduce the threat posed by such
violations or circumstances are not to be delayed while the state and small local government
establish and implement the process for assigning priorities for correcting other violations.
H. How can the state ensure prompt correction of violations?
If the small local government cannot correct all of its violations within 180 days of the
3 EPA does not intend that local governments should be permitted to delay addressing low-risk violations
that can be easily and quickly corrected without impeding progress on long-term compliance efforts undertaken to
address high-risk violations.
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state's commencement of compliance assistance to the local government, the state and the local
government should, within 180 days of the state's commencement of compliance assistance to
the local government, enter into and begin implementing a written and enforceable compliance
agreement incorporating a schedule4 that:
• establishes a specified period for correcting all outstanding violations in order of risk-
based priority;5
incorporates interim milestones that demonstrate reasonable progress toward compliance;
• contains provisions to ensure continued compliance with all environmental requirements
with which the local government is in compliance at the time the agreement is entered;
and
incorporates provisions, where they would be applicable to the small local government,
to ensure future compliance with any additional already promulgated environmental
requirements that will become effective after the agreement is signed.
Consultation with EPA during the drafting of a compliance agreement and schedule and
the forwarding of final compliance agreements and schedules to EPA are recommended to
ensure appropriate coordination between the state and EPA.
I. What is required of a small local government that elects to address its noncompliance
by developing and implementing an environmental management system?
4 The agreement entered into by the local government and the state may not unilaterally alter or supersede a
local government's obligations under existing federal administrative orders or federal judicial consent decrees.
5 States may allow weighing of unique local concerns and characteristics, but the process should be
sufficiently standardized and objective that an impartial third person using the same process and the same facts
would not reach significantly different results. Public notification and public participation are an important part of
the priority setting process.
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Small local governments that learn of environmental violations as a result of the state's
inspection of some subset of the small local government's operations may address their
noncompliance by entering into a written and enforceable agreement establishing a schedule to:
1) correct the violations discovered by the state; and 2) develop and implement an environmental
management system for all of its governmental operations. Local governments with between
3,301 and 10,000 permanent residents that the state has determined eligible to participate under
the policy on a fenceline basis, may develop and implement an EMS for operations within the
designated fenceline. The local government must enter into such an agreement with the state not
later than 180 days after the state notifies the local government of the violations discovered
during the inspection. The local government must either correct those violations within the same
180 days or include, as part of the EMS agreement it enters into with the state, a written and
enforceable agreement that establishes a schedule to correct the violations in accordance with the
usual terms of this policy.
As part of its schedule, the EMS agreement will include a deadline, not later than one
year after entry into the agreement, for the local government's submission to the state of its EMS
manual (see element 9, below), and a commitment to ensure the performance of an EMS audit
not less than one year and not more than three years after the submission of its EMS manual (see
element 16, below). The EMS manual must contain policies, procedures, and standards
explaining and showing how the small local government's EMS conforms to and will
accomplish these essential elements of an EMS:
1. Environmental policy- The local government must develop a statement of its
commitment to environmental excellence and use this statement as a framework for
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planning and action.
2. Environmental aspects- The local government must identify which of its activities,
products, and services have impacts on the environment and what those impacts are.
3. Legal and other requirements— The local government must identify the environmental
laws and regulations that apply to its operations.
4. Objectives and targets- The local government must establish goals for its operations
that are consistent with its environmental policy , that will eliminate the gap between the
local government's current procedures and an accepted EMS framework, and that will
reduce the environmental impacts of its operations.
5. Environmental management program- The local government must plan specific
actions that will achieve its objectives and targets.
6. Structure and responsibility- The local government will establish roles and
responsibilities for staff and management to implement the environmental management
system, and provide adequate resources.
7. Training, awareness and competence- The local government will have a plan to ensure
its employees are trained and capable of carrying out their environmental responsibilities.
8. Communication- The local government will establish a process for internal and external
communications on environmental management issues.
9. EMS documentation- The local government will maintain information both on its
environmental management system and necessary for its operation. As part of this effort,
the local government prepare an EMS manual that contains the policies, procedures, and
standards explaining and showing how the local government's EMS conforms to and will
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accomplish the essential EMS elements. In accordance with the schedule established by
its EMS agreement, and in no event later than one year after entering into the EMS
agreement, the local government will submit a copy of its EMS manual to the state as
proof that the local government has developed an EMS.
10. Document control- The local government will establish a system to ensure effective
management of documents related to the EMS and to environmental activities.
11. Operational control- The local government will establish a system to identify, plan, and
manage its operations consistent with its objectives and targets.
12. Emergency preparedness and response- The local government will identify potential
emergencies with environmental impacts and develop procedures for preventing them
and for responding to them if unprevented.
13. Monitoring and measurement- The local government will monitor key EMS activities
and track performance. One periodic measure will be an assessment of compliance with
legal requirements.
14. Nonconformance and corrective and preventative action- The local government will
identify and correct deviations from its EMS, and take actions to prevent their recurrence.
15. Records- The local government will maintain and manage records of EMS performance.
16. EMS audit- Not less than one year, and not more than three years after the local
government submits its EMS manual to the state, the state, or an independent third party
approved by the state, will conduct an EMS audit to confirm that a local government has
been and is continuing to implement its EMS.
17. Management review- The local government must provide for periodic review of its
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EMS by local government management, with the goal of continual improvement of both
the system and environmental performance.
A fuller explanation of these 17 essential elements and of the EMS process can be found
in Environmental Management Systems: An Implementation Guide for Small and Medium-Sized
Organizations (EPA Document Number EPA 832-B-01-001; available electronically at
www.epa.gov/owm/isol4001/ems2001fmal.pdf). Additional guidance and information
regarding how to obtain assistance from a local EMS resource center can be found at
www.peercenter.net.
During the development and implementation of its EMS, the small local government may
discover violations that were unknown to it at the time of its entry into the EMS agreement with
the state. Such violations must be disclosed to the state as required by regulations or in
accordance with EPA self-disclosure policies. The small local government and the state may
agree to modify the terms of the terms of the agreement and schedule to incorporate correction of
these violations. The small local government and the state may also to consider discovery of
additional violations a separate event that can be resolved in any manner consistent with the
terms of this policy and EPA enforcement policies and guidelines. An assessment of whether or
not the local government has corrected all discovered violations as expeditiously as practicable
in order of risk-based priority should be part of the EMS audit.
J. What are the limits on EPA deference?
EPA reserves all of its enforcement authorities. EPA will generally defer to a state's
exercise of its enforcement discretion in accordance with this policy, except that EPA may
require immediate with respect to any violation or circumstance that may present an imminent
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and substantial endangerment to, has caused or is causing actual serious harm to, or presents a
serious threat to, public health, welfare, or the environment.6
The Small Local Governments Compliance Assistance Policy does not apply if, in EPA's
judgment:
• a state's small local government environmental compliance assistance program process
fails to satisfy the adequacy criteria stated above; or
a state's application of its small local government environmental compliance assistance
program process fails, in a specific case, to provide adequate protection to public health
and the environment because it neither requires nor results in reasonable progress toward
either achievement of environmental compliance or implementation of an adequate EMS
by a date certain.
Where EPA determines that this policy does not apply, and where EPA elects to exercise
its enforcement discretion, other EPA enforcement policies remain applicable. The state's and
EPA's options in these circumstances include discretion to take or not take formal enforcement
action in light of factual, equitable, or local government capacity considerations with respect to
violations that had been identified during compliance assistance and were not corrected. Neither
the state's actions in providing, nor in failing to provide, compliance assistance shall constitute a
legal defense in any enforcement action. However, a local government's good faith efforts to
correct violations during compliance assistance may be considered a mitigating factor in
EPA will regard as a matter of national significance any violation or circumstance that may present an
imminent and substantial endangerment to, has caused or is causing actual serious harm to, or presents a serious
threat to, public health, welfare, or the environment that is left unaddressed by a small local government participating
in a state environmental compliance assistance program. Such circumstances require consultation with or the
concurrence of, as appropriate, the Assistant Administrator for Enforcement and Compliance Assurance or his or her
delegatee before initiation of an EPA enforcement response.
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determining the appropriate enforcement response or penalty in subsequent enforcement actions.
Nothing in this policy is intended to release a state from any obligations to supply EPA
with required routinely collected and reported information. As described above, states should
provide EPA with lists of participating small local governments and copies of final compliance
agreements and schedules. States should also give EPA immediate notice upon discovery of a
violation or circumstance that may present an imminent and substantial endangerment to, has
caused or is causing actual serious harm to, or presents serious threats to, public health, welfare,
or the environment.
This policy has no effect on the existing authority of citizens to initiate a legal action
against a local government alleging environmental violations.
This policy sets forth factors for consideration that will guide the Agency in its exercise
of enforcement discretion. It states the Agency's views as to how the Agency intends to allocate
and structure enforcement resources. The policy is not final agency action, and is intended as
guidance only. This policy is not intended for use in pleading, or at hearing or trial. It does not
create any rights, duties, obligations, or defenses, implied or otherwise, in any third parties.
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