United States
Environmental Protection
Agency
Office of
Solid Waste and
Emergency Response
&EPA
DIRECTIVE NUMBER:
TITLE:
DATE:
ORIGINATING OFFICE:
9610.12
U.S. EPA Penalty Guidance For
Violations of UST Regulations
November 14, 1990
OSWER
OSWER OSWER OSWER
DIRECTIVE DIRECTIVE DIRECTIVE
-------
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 7
2.1 DEFINITION OF ECONOMIC BENEFIT COMPONENT 7
2.2 AVOIDED COSTS 8
2.3 DELAYED COSTS 11
CHAPTER 3. DETERMINING THE GRAVITY-BASED COMPONENT 12
3.1 DETERMINING THE MATRIX VALUE 12
3.1.1 Extent of Deviation from Requirements 13
3.1.2 Potential for Harm 14
3.2 VIOLATOR-SPECIFIC ADJUSTMENTS 14
3.2.1 Degree of Cooperation/Noncooperation 15
3.2.2 Degree of Willfulness or Negligence 16
3.2.3 History of Noncompliance 16
3.2.4 Other Unique Factors 17
3.3 ENVIRONMENTAL SENSITIVITY MULTIPLIER (ESM) 17
3.4 DAYS OF NONCOMPLIANCE MULTIPLIER 18
CHAPTER 4. SETTLEMENT ADJUSTMENTS 20
CHAPTER 5. USE OF FIELD CITATIONS 22
APPENDIX A: Matrix Values for Selected Violations of Federal Underground Storage Tank
Regulations A-l
APPENDIX B: UST Penalty Computation Worksheet B-l
APPENDIX C: UST Penalty Computation Examples C-l
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 variance with
this guidance and to change it at any time without public notice.
OSWER Directive 9610.12 iii
-------
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
for 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 and financial responsibility
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 280, Subpart
H (promulgated October 26, 1988).
2 40 CFR Part 22, "The Consolidated Rules of Practice Governing the Administrative Assessment of Civil Penalties
and the Revocation or Suspension of Permits." The CROP was extended to cover administrative enforcement actions
under Section 9006 (see 53 FR 5373, February 24, 1988).
OSWER Directive 9610.12 1
-------
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 UST 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.
3 This $10,000 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 civil judicial actions. In settling judicial
cases, however, the Agency may use the narrative penalty assessment criteria set forth in this guidance to determine
or justify the penalty amount that the Agency agrees to accept in settlement.
OSWER Directive 9610.12 2
-------
Exhibit 1. Overview of Enforcement Response Options
MM
ilpo^
.wwn
«!*?, NOV)
OMMlNMHfenat
MM
fUM
Ctutlon
enmity.
S*TH*m«n(
mnH f\n*l OtHf
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 warning
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
OSWER Directive 9610.12
-------
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 field citation will not
only require that the violator take actions to achieve compliance, but will also assess a pre-established,
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 goals: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 if 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").
5 The "EPA Policy on Civil Penalties" (EPA General Enforcement Policy #GM-21, February 1984) 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.
OSWER Directive 9610.12
-------
Exhibit 2. Process for Assessing UST Civil Penalties
Trudtllontl
Initial Penalty
Target Figure
Approach
Final
Penalty
The procedures for determining the economic benefit component and gravity-based component are
discussed in Chapter 2 and Chapter 3. 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.
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 complaint.6 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 will 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 economic benefit
component cannot be greater than the statutory maximum of $10,000 for each tank for each day of violation of the
technical standards and financial responsibility regulations
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 OF 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
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 full economic
benefit unless the benefit is determined to be "incidental" (i.e., less than $100).
Economic Benefit Component = Avoided Costs + Delayed Costs
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:8 (1) the rule-of-thumb approach; and (2) the software program called BEN.9
The rule-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 rule-of-
thumb 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 rule-of-thumb calculation.
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 will 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 into a memorandum
from Courtney Price (Assistant Administrator for Enforcement and Compliance Monitoring) entitled, "Guidance for
Calculating the Economic Benefit of Noncompliance for a Civil Penalty Assessment" (November 5, 1984).
9 For information, contact the BEN/ABEL Coordinator in the Office of Enforcement at the U.S. EPA Headquarters
by phoning (202) 475-6777 orFTS 475-6777.
OSWER Directive 9610.12 7
-------
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 for 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 rule-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 T ^ ^ Number , 1-Marginal
. = { ,. + ,. x Interest x ., } x °
Costs Expenditures Expenditures of Days Tax Rate
365 days
Avoided Expenditures are estimated using local, comparable costs.
Interest 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.
To determine the value of the interest, compounded annually, the equity discount rate should be used.
This represents the risk-free rate (T-bill) 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
10 To obtain the equity discount rate from the Office of Enforcement, or to access BEN, call the BEN/ABEL
coordinator at (202) 475-6777 orFTS 475-6777.
OSWER Directive 9610.12
-------
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"
FR Classes 1 & 2
FR Class 3
FR Class 4
Tax Rate
0.34 (34%)
0.25 (25%)
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 - small 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).
11 For information from the Dun and Bradstreet data base call NEIC at (303) 236-3219 or FTS 8-776-3219. Using
information on the violator's name and location (city and State), NEIC staff can search the data base for information
on the company's annual income.
OSWER Directive 9610.12 9
-------
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
$0
$50,000
$75,000
$100,000
$335,000
$50,000
$75,000
$100,000
$335,000
15%
25%
34%
39%^
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
not greater than Rate
$50,
$60,
$70,
$80,
$90,
$100,
$110,
$120,
$130,
$140,
$150,
$160,
$170,
$180,
$190,
000
000
000
000
000
000
000
000
000
000
000
000
000
000
000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
.15
.17
.18
.19
.21
.22
.24
.25
.26
.27
.28
.29
.29
.30
.30
Taxable Income Tax
not greater than Rate
$200,
$210,
$220,
$230,
$240,
$250,
$260,
$270,
$280,
$290,
$300,
$310,
$320,
$330,
$340,
000
000
000
000
000
000
000
000
000
000
000
000
000
000
000
0.
0.
0.
0.
0.
0.
0.
0.
0.
0.
0.
0.
0.
0.
0.
31
31
31
32
32
32
33
33
33
33
33
34
34
34
34
**This table includes the additional 5% tax
applied to incomes between $100,000 and $335,000.
OSWER Directive 9610.12
10
-------
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 Delayed T ^ ^ Number of
r> + = c j-+ x Interest x
Costs Expenditures Days
365 Days
Delayed Expenditures are estimated using local, comparable costs.
Interest 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.
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 the violator's tax years.
OSWER Directive 9610.12 11
-------
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
Gravity- M . Violator- Environmental Days of
Based = v 1 x Specific x Sensitivity x Noncompliance
Component Adjustments Multiplier Multiplier
Matrix Value is based on potential for harm and deviation from the requirement.
Violator-Specific Adjustments to the matrix value are based on violator's cooperation, willfulness,
history of noncompliance, and other factors.
Environmental Sensitivity Multiplier (ESM) is a value based on the environmental sensitivity
associated with the location of the facility.
Days of Noncompliance 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. The
matrix value is based on the following two criteria:
Extent of deviation from requirement - An assessment of the extent to which the violation
deviates from the UST statutory or regulatory requirements.
Actual or potential harm - An assessment of the likelihood that the violation could (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
OSWER Directive 9610.12 12
-------
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.
Exhibit 4. Matrix Values for Determining the Gravity-Based Component of a Penalty
Extant of Deviation from Requirement
Mode raw
Minor
x
o
**w
2
0
****
O
O,
1,500
750
200
1,000
500
100
mo
250
50
Major
Minor
NOTE- Tne» amounts eonsiitirfft the matrix value only. They ain offll frw Initial penalty
target figure. Th* Initial penalty target if ur* l« eslculaltd as J
initial o»n»ity
TirS« =
*
Component
(MAIM* v««»r-
VM.US K Spaclfle
Environmentjl Days Of
Sensitivity * "'
Mull.plivr
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
per-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.
OSWER Directive 9610.12
13
-------
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 factor, it 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. For purpose of
this guidance, the categories for potential for harm are the following:
Major - 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
lengthy 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 have 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 result 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.
OSWER Directive 9610.12 14
-------
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
Degree of Cooperation/Noncooperation
Degree of Willfulness or Negligence
History of Noncompliance
Other Unique Factors
Range of Percentage Adjustment
Between 50% increase and 25% decrease
Between 50% increase and 25% decrease
Up to 50% increase only
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
Section 3.3 and Section 3.4. Subsequent adjustments made during the settlement stage, including
adjustments for inability to pay, are discussed in Chapter 4.
To ensure that the penalty 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 Cooperation/Noncooperation
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 50 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.
12 For information on establishing environmental auditing programs, see "EPA Policy on the Inclusion of
Environmental Auditing Provisions in Enforcement Settlements," U.S. EPA, Office of Enforcement and Compliance
Monitoring, November 1986.
OSWER Directive 9610.12
15
-------
3.2.2 Degree 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 over 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
adj ustment only).: 3
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, prior 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 the same or a related
requirement would constitute a similar violation.
13 Lack of knowledge of the legal requirements may not be used as a basis to reduce the matrix value. Rather,
informed violation of the law should serve to increase the matrix value.
OSWER Directive 9610.12 16
-------
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.
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);
Toxicity of petroleum or hazardous substance released;
Potential hazards presented by the release or potential release, such as explosions or other human
health 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
OSWER Directive 9610.12 17
-------
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.
DETERMINING THE ENVIRONMENTAL SENSITIVITY MULTIPLIER
Environmental Sensitivity Multiplier (ESM) is based on the potential or actual environmental impact
site, and is given a corresponding value as follows:
at a
Environmental
Sensitivity
Low
Moderate
High
ESM
1.0
1.5
2.0
3.4 DAYS OF NONCOMPLIANCE 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 noncompliance multiplier
(or DNM) in the table below that corresponds to the duration of the violation:
DETERMINING THE DAYS OF NONCOMPLIANCE MULTIPLIER
Days of Noncompliance Multiplier (DNM) is based on the number of days of noncompliance.
Days of Noncompliance
0-90
91-180
181-270
271-365
Each additional 6 months or
fraction thereof
DNM
1.0
1.5
2.0
2.5
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
Gravity-
Based =
Component
Matrix
Value
Violator-
x Specific
Adjustments
Environmental
x Sensitivity x
Multiplier
Days of
Noncompliance
Multiplier
OSWER Directive 9610.12
18
-------
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 $10,000
for each tank for each day of violation.
OSWER Directive 9610.12 19
-------
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 part 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/noncooperation;
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 listed 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. It 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
OSWER Directive 9610.12 20
-------
Reduction of up to 80 percent of the gravity-based component.
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 Center (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 Payments" 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) 475-6777 or FTS 475-6777.
17 For information, contact the appropriate Regional Desk Officer at U.S. EPA Headquarters' Office of Underground
Storage Tanks.
OSWER Directive 9610.12 21
-------
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.
OSWER Directive 9610.12 22
-------
APPENDIX A: MATRIX VALUES FOR SELECTED VIOLATIONS OF FEDERAL
UNDERGROUND STORAGE TANK REGULATIONS
SELECTED VIOLATIONS OF FEDERAL UNDERGROUND STORAGE TANK
REGULATIONS
NOTE: This list of selected violations is NOT intended to be exhaustive
and, therefore, may not include all possible violations
Subpart B--UST Systems: Design, Construction, Installation, and Notification
Regulatory
Citation
§280.20(a)(l)
§280,20(a)(2)
§280.20(a)(2)(i)
§280.20(a)(2)(ii)
§280.20(a)(2)(iii)
§280,20(a)(2)(iv)
§280.20(a)(3)
§280.20(b)(l)
§280.20(b)(2)
§280.20(b)(2)(i)
§280.20(b)(2)(ii)
§280.20(b)(2)(iii)
§280.20(b)(2)(iv)
§280.20 Performance standards for new UST systems
Violation
Installation of an improperly constructed
fiberglass-reinforced plastic tank
Installation of an improperly designed and
constructed metal tank that fails to meet
corrosion protection standards
Installation of a metal tank with unsuitable
dielectric coating
Installation of an improperly designed
cathodic protection system for a metal tank
Improper Installation of cathodic protection
system for a metal tank
Improper operation and maintenance of tank
cathodic protection system
Installation of an Improperly constructed
steel-fiberglass-reinforced-plastic tank
Installation of Improperly constructed
fiberglass-reinforced plastic piping
Failure to provide any cathodic protection
for metal piping
Installation of piping with unsuitable
dielectric coating
Installation of improperly designed cathodic
protection for metal piping
Improper installation of cathodic protection
system for piping
Improper operation and maintenance of
cathodic protection system for metal piping
Unit
Assessment1
(T)
(T)
(T)
(T)
(T)
(T)
(T)
(P)
(P)
(T)
(P)
(P)
(P)
Beyiation
from
Requirement
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
OSWER Directive 9610.12
A-l
-------
Regulatory
Citation
§280.20(c)(l)
§280.20(c)(l)(i)
§280.20(c)(l)
§280.20(c)(l)(ii)
§280.20(d)
§280.20(d)
§280.20(e)
§280.20(e)(l)-(6)
Regulatory
Citation
§280.21(b)
§280.21(b)(l)(i)
§280.21(b)(l)(ii)
§280.2i(b)(2)(i)
... , .. Unit «"«.»««
Violation * j from
Assessment . ' ,
Requirement
Failure to install any spill prevention system
Installation of inadequate spill prevention
equipment in a new tank
Failure to install any overfill prevention
system
Installation of inadequate overfill
prevention equipment in a new tank
Failure to install tank in accordance with
accepted codes and standards
Failure to install piping in accordance with
accepted codes and standards
Failure to provide any certification of UST
installation
Failure to provide complete certification of
UST installation
280.21 Upgrading of existing
Violation
Failure to meet all tank upgrade standards
Improper Installation of interior lining for
tank upgrade requirements
Failure to meet Interior lining Inspection
requirements for tank upgrade
Failure to ensure that tank is structurally
crviinrl "Kf^fntv* inctollinfr riatlir\rlir1 r\rf\te*rtt"ir\jn
(T)
(T)
(T)
(T)
(T)
(P)
(F)
(F)
UST systems
Unit
Assessment1
(T)
(T)
(T)
(T)
Major
Major
Major
Major
Varies2
Varies2
Moderate
Minor
Deviation
from
Requirement
Major
Major
Major
Major
A VlVAlMtll
for
Harm
Major
Major
Moderate
Moderate
Varies2
Varies2
Minor
Minor
Potential
for
Harm
Major
Major
Moderate
Moderate
Matrix
Value
$1500
$1500
$750
$750
see
matrix
see
matrix
$100
$50
Matrix
Value
$1500
$1500
$750
$750
§280.21(b)(2)(ii)
§280.21(b)(2)(ii)
§280.21(b)(2)(iii)
Failure to provide any monthly monitoring
of cathodic protection for tank upgrade
requirement
Failure to provide continuous monthly
monitoring of cathodic protection for tank
upgrade requirement
Failure to meet tightness test requirements
for a tank upgraded with cathodic protection
(T/F)
(T/F)
(T/F)
Major
Major $1500
Moderate Minor $100
Major Moderate $750
OSWER Directive 9610.12
A-2
-------
Regulatory
Citation
§280.21(b)(2)(iv)
§280.21(c)
§280.21(c)
§280.21(d)
§280.2 l(d)<
Violation
Failure to meet requirements for testing for
corrosion holes for a tank upgraded with
cathodic protection
Failure to install any cathodic protection for
metal piping upgrade requirements
Failure to meet tightness test requirements
for cathodically protected metal piping
Failure to provide spill prevention system for
an existing tank
Failure to provide overfill prevention system
for an existing tank
Unit
Assessment1
(T/F)
(P)
(P)
(T)
(T)
MJ V T milVHJ 11
from
Requirement
Major
Major
Major
Major
Major
A V*VUU,tU
for
Harm
Moderate
Major
Moderate
Major
Moderate
Matrix
Value
$750
$1500
$750
$1500
$750
Regulatory
Citation
§280.22(a)
§280.22(a)
§280.22(c)
§280.22(c)
§280.22(e)-
(f)
§280.22(g)
280.22 Notification requirements
Violation
Failure to notify state or local agency within 30
days of bringing an UST system into use
Failure to notify designated state or local agency
of existing tank
Failure to identify on the submitted notification
form all known tanks at that site
Failure to submit a separate notification form for
all notified tanks that are located at a separate
place of operation
Failure to provide complete certification of all
requirements on the notification form
Failure to inform tank purchaser of notification
requirements
Unit
Assessment1
(T)
(T)
(F)
(F)
(F)
(T)
J-» V T i«.t,«Jll
from
Requirement
Major
Major
Major
Major
Moderate
Major
A *JlVlll,M«ll
for
Harm
Major
Major
Moderate
Minor
Minor
Major
Matrix
Value
$1500
$1500
$750
$200
$100
$1500
1 Unit assessment refers to whether the penalty should be applied per tank (T) or facility (F). Where the
violation applies to piping (P), the assessment will depend on whether the piping is associated with one
tank or more than one tank.
2 Deviation from requirement and potential for harm will vary depending upon the specific code or
standard violation.
OSWER Directive 9610.12
A-3
-------
SUBPART C - GENERAL OPERATING REQUIREMENTS
Regulatory
Citation
280.30 Spill and overfill control
Violation
Deviation Potential
for
Matrix
Unit ,,
. .1 ironi iui ,, ,
Assessment . , Value
Requirement Harm
$98030^ Failure to take necessary precautions to prevent
overfill/spillage during the transfer of product
§280.30(b) Failure to report a spilVoverfill (F)
§280.30(b) Failure to Investigate and clean up a spill/overfill (F)
Major Major $1500
Major Major $1500
Major Major $1500
280.31 Operation and maintenance of corrosion protection
Regulatory
Citation
§280.3 l(a)
§280.3 l(b)(l)
§280.3 l(b)(l)
§280.3 l(b)(l)
§280.3 l(b)(2)
§280.3 l(c)
§280.3 l(d)
§280.3 l(d)
§280.32
§280.33(a)
§280.33(b)
Violation
Failure to operate and maintain corrosion
protection system continuously
Failure to ensure that cathodic protection
system is tested within 6 months of installation
Failure to ensure that cathodic protection
system is tested every 3 years thereafter
Failure to meet one 3-year test for cathodic
protection system
Failure to inspect cathodic protection system in
accordance with accepted codes
Failure to inspect impressed current systems
every 60 days
Failure to maintain any records of cathodic
protection inspections
Failure to maintain every record of cathodic
protection inspections
Unit
Assessment1
(F/T)
(F/T)
(T/F)
(T/F)
(T/F)
(T/F)
(T/F)
(T/F)
280.32 Compatibility
Failure to ensure that UST system is made of or
lined with materials compatible with substance (T/P)
stored
280.33 Repairs allowed
Failure to repair UST system in accordance
with accepted codes and standards
Failure to repair fiberglass-reinforced UST in
accordance with accepted codes and standards
(T)
(T)
Deviation
from
Requirement
Major
Major
Major
Moderate
Major
Major
Major
Moderate
Major
Varies2
Varies2
Potential
for
Harm
Major
Major
Moderate
Minor
Moderate
Moderate
Moderate
Minor
Matrix
Value
$1500
$1500
$750
$100
$750
$750
$750
$100
Major $1500
Varies
Varies
see
matrix
see
matrix
OSWER Directive 9610.12
A-l
-------
Regulatory
Citation
§280.33(c)
§280.33(c)
§280.33(d)
§280.33(e)
§280.33(1)
Violation
Failure to replace metal piping that has released
product
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
Failure to test cathodic protection system
within 6 months of repair of an UST system
Failure to maintain records of each repair to an
UST system
280.34 Reporting and recordkeeping
For violations of reporting and recordkeeping, see appropriate regulatory section
(e.g., reporting of releases will be under Subpart D).
Unit
Assessment1
(P)
(P)
(T)
(T)
(T)
Deviation
from
Requirement
Major
Major
Major
Major
Major
Potential
for
Harm
Major
Major
Moderate
Moderate
Major
Matrix
Value
$1500
$1500
$750
$750
$1500
Unit assessment refers to whether the penalty should be applied per tank (T) or facility (F). Where the violation
applies to piping (P), the assessment will depend on whether the piping is associated with one tank or more than
one tank.
2 Deviation from requirement and potential for harm will vary depending upon the specific code or standard
violation.
SUBPART D -- RELEASE DETECTION
280.40 General requirements for all UST systems
Regulatory
Citation
§280.40(a)(l)
§280.40(a)(2)
§280.40(a)(3)
§280.40(b)
§280.40(c)
§280.40(d)
Violation
Failure to provide adequate release detection
method capable of detecting a release from tank
or piping that routinely contains product
Failure to install, calibrate, operate, or maintain
release detection method in accordance with
manufacturer's instructions
Failure to provide a release detection method
that meets the performance requirements 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 UST system that cannot
meet release detection requirements
Unit
Assessment1'
(T/F)
(T/F)
(F)
Deviation
from
Requirement
Major
Major
Major
Potential
for
Harm
Matrix
Value
Major $1500
Major $1500
Major $1500
(F)
(F)
(F)
Major
Major
Major
Major
Major
Major
$1500
$1500
$1500
OSWER Directive 9610.12
A-2
-------
280.41 Requirements for petroleum UST systems
§ 280.41(a)
§280.41(a)(l)
§280.41(a)(2)
§280.41(b)
A anui^ L\J nujiiiuji uuuva ai i^aai ^v^ij ->u uaya, i±
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
(T)
(T)
(T)
(P)
Major
Major
Major
Major
Major
Major
Major
Major
$1500
$1500
$1500
$1500
280.42 Requirements for hazardous substance UST systems
§280.42(a)
§280.42(b)
§280.42(b)(l)
§280.42(b)(2)
§280.42(b)(3)
§280.42(b)(4)
§280.44
§280.44(a)
§280.44(b)
§260.44(c)
Failure to provide release detection for an
existing hazardous substance tank 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 hazardous substance
UST
Failure to provide adequate external liners for a
hazardous substance UST
Failure to provide adequate secondary
containment of piping for a hazardous substance
UST
280.44 Methods of release detection
Failure to provide any release detection for
underground piping
Failure to provide adequate line leak detector
system for underground piping
Failure to provide adequate line tightness testing
system for underground piping system
Inadequate use of applicable tank release
detection methods
(F)
(F)
(T)
(T)
(T)
(T)
for piping
(P)
(P)
(P)
(P)
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
Major
$1500
$1500
$1500
$1500
$1500
$1500
$1500
$1500
$1500
$1500
280.45 Release detection recordkeeping
§280.45
§280.45
§280.45(a)
Failure to maintain any records of release
detection monitoring
Failure to maintain every record of release
detection monitoring
Failure to document all release detection
nprfnrmanrp Harms fnr 5 vpars afiter installation
(F)
(F)
(F)
Major
Moderate
Moderate
Major
Minor
Minor
$1500
$100
$100
OSWER Directive 9610.12
A-3
-------
Failure to maintain any results of sampling,
§280.45(b) testing or monitoring for release detection for at
least 1 year
Failure to maintain every result of sampling,
(F)
Major
Major $1500
§280.45(b)
§280.45(b)
§280.45(c)
§280.45(c)
testing or monitoring for release detection for at
least 1 year
Failure to retain results of tightness testing until
next test is conducted
Failure to document any calibration,
maintenance, and repair of release detection
Failure to document every calibration,
maintenance, and repair of release detection
(F)
(F)
(F)
(F)
Moderate
Major
Major
Moderate
Minor
Major
Major
Moderate
$100
$1500
$1500
$500
1 Unit assessment refers to whether the penalty should be applied per tank (T) or facility (F). Where the
violation applies to piping (P), the assessment will depend on whether the piping is associated with one
tank or more than one tank.
SUBPART E
- RELEASE REPORTING, INVESTIGATION, AND
CONFIRMATION
280.50 Reporting of suspected release
Regulatory
Citation
§280.50(a)-
(c)
Regulatory
Citation
§280.52(a)-
(b)
Violation
Failure to report a suspected release within 24
hours to the implementing agency
280.52 Release investigation and
, **
Violation
Failure to investigate and confirm a release (if
appropriate) using accepted procedures
Deviation
Unit from
Assessment1 Requirement
(F)
confirmation
Unit
Assess-
ment1
(F)
Major
steps
Deviation
from
Requirement
Major
Potential
for
Harm
Major
Potential
for
Harm
Major
Matrix
Value
$1500
Matrix
Value
$1500
280.53 Reporting and cleanup of spills and overfills
Regulatory
Citation
Violation
'. Unit '
Assess-
ment1
Deviation
from
Requirement
Potential
for
Harm
Matrix
Value
§280.53(a) Failure to report a spill/overfill (if appropriate) to
implementing agency within 24 hours (or other
specified time period)
§280.53(b) Failure to contain and immediately clean up a
spill/overfill of less than 25 gallons
§280.53(b) Failure to contain and immediately clean up a
hazardous substance spill/overfill
(F)
Major
Major $1500
(F)
(F)
Major
Major
Major $1500
Major $1500
OSWER Directive 9610.12
A-4
-------
1 Unit assessment refers to whether the penalty should be applied per tank (T) or facility (F). Where the
violation applies to piping (P), the assessment will depend on whether the piping is associated with one
tank or more than one tank.
SUBPART F -- RELEASE RESPONSE AND CORRECTIVE ACTION
, ,
Regulator?
., ..
Citation
i-ion^
§280.61
, ,
Regulatory
' .. ,.
Citation
§280.62
,
Regulatory
J?, ,.
Citation
§280.63
, ,
Regulatory
J?, ,.
Citation
§280.64
280.61 Initial Response
, , ,.
Violation
Failure to take initial response actions within
.- , . j ft i f A
specified time penod after a release is confirmed
TT .,-.
unit
. A
Assessment
,
(F)
Deviation
from
. ,
Requirement
...
Major
Potential
for
Harm
, . .
Matrix
_7 ,
Value
,,. t,,snn
Major $1500
280.62 Initial Abatement Measures and Site Check
... , ,,
Violation
Failure to submit report on initial abatement
measures within 20 days (or other specified time)
of release confirmation
TT . .,
Unit
. A
Assessment
(F)
Deviation
,,
from
Potential
for
,, , ,
Matrix
», ,
Value
TT
Requirement Harm
Major Major $1500
280.63 Initial Site Characterization
. , ,.
Violation
Failure to submit report on initial site
characterization within 45 days (or other specified
time) of release confirmation
TT .,
Unit
A i
Assessment
(F)
Deviation
rrom
Potential
tor
__ , .
Matrix
,T ,
Value
. , TT
Requirement Harm
Major Major $1500
280.64 Free Product Removal
,,, , ,.
Violation
Failure to submit report on free report removal
within 45 days (or other specified time) of release
confirmation
,T .,
Unit
* j
Assessment
(F)
Deviation
~
irom
Potential
tor
-, , .
Matrix
,7 ,
Value
. ,
Requirement Harm
Major Major $1500
1 Unit assessment refers to whether the penalty should be applied per tank (T) or facility (F). Where the
violation applies to piping (P), the assessment will depend on whether the piping is associated with one
tank or more than one tank.
OSWER Directive 9610. 12
A-5
-------
SUBPART G OUT-OF-SERVICE UST SYSTEMS AND CLOSURE
280.72 Assessing the site at closure or change-in-service
, , Unit Deviation Potential '-**..
Regulatory _,, , , t. ,. .. Matrix
., ,. Violation Assess- from for ,, ,
Citation i _ . , Value
ntent Requirement Harm
sv.or.Tw \ Failure to measure (if required) for the presence of a ,, , , . , , . t,,snn
§280.72(a) , , ^ M ' . , (T/F) Major Major $1500
release before a permanent closure
c-,or, *,~,n.\ If contaminated soil, contaminated ground water, or free ,__, , , . , , . a,isnn
§280.72(b) , . . ,. j f , t u + + (T/F) Major Major $1500
r i ir filr in rri in
product is discovered, failure to begin corrective action
280.74 Closure records
§280.74 Failure to maintain closure records for at least 3 years (F) Major Major $1500
c-.or.-7,, Failure to maintain change-in-service records for at least , ,f. ,f. e,,-nn
§280.74 ° (F) Major Major $1500
s 3 years v ' J J
1 Unit assessment refers to whether the penalty should be applied per tank (T) or facility (F). Where the
violation applies to piping (P), the assessment will depend on whether the piping is associated with one
tank or more than one tank.
SUBPART H -- FINANCIAL RESPONSIBILITY
280.93 Amount and Scope of Required Financial Responsibility
, , Unit Deviation Potential , .
Regulatory ' ' . i,. ,. * ' * * Matrix
J?, ,, Violation Assess- from for ,r ,
Citation ,1 _ , Value
ment Requirement Harm
sv,or> n-w \ Failure to comply with financial responsibility , , , . ,, , ,_
§280.93(a) . . V +u ^ u + (F) Major Moderate $750
requirements by the required phase-in time
§280.93(a)(l)- Failure to meet the requirement for per-occurrence _, , , . ,, , ,,,,
^ f (F) Major Moderate $750
(2) coverage of insurance.
§280.93(b)(l)- Failure to meet the requirement for annual aggregate , , , . ,, , ,_
^ fj 66 & ^ Major Moderate $750
(2) coverage of Insurance.
sv,or> r.-wfv Failure to review and adjust financial assurance after , ,,. ,, , .,_,,.
§280.93(f) . . jjv 1 TTCT (F) Major Moderate $750
acqumng new or additional USTs
280.94 Allowable Mechanisms and Combination of Mechanisms
' ' ' ''' '' '' '' '' '' '' '' '' '' '' '' '' '' '' '' '' '' '' '' '' '' ' Unit' Deviation Potential m, . .
Regulatory ,. , .. . * * Matrix
J?, ,. Violation Assess- from for Tr ,
Citation A . _ . .. . __ Value
ment Requirement Harm
c--.or.ru Use of an unapproved mechanism or combination of ,, ,, . ,, , ,,,_,
§280.94 , . ^, f. . . .,.,., (F) Major Moderate $750
mechanisms to demonstrate financial responsibility
280.95 Financial Test of Self-Insurance
, Unit Deviation Potential -.. . ,
Regulatory ,? ^- * * * Matrix
", ,. J Violation Assess^ rrom tor ,, ,
Citation ,i _ , . Value
ment Requirement Harm
OSWER Directive 9610.12 A-6
-------
§280.95
Regulatory
Citation
§280.106(a)(l)
§280.106(a)(2)
§280.106(b)
Regulatory
Citation
§280.107
Use of falsified financial documents to pass financial
test of self-insurance
(F)
Major
Moderate $750
280.106 Reporting By Owner or Operator
Violation
Unit Deviation Potential
Assess- from for
ment1 Requirement Harm
Matrix
Value
Failure to report evidence of financial responsibility
to the implementing agency within 30 days of (F)
detecting a known or suspected release
Failure to report evidence of financial responsibility
to the implementing agency when new tanks are (F)
installed
Failure to report evidence of financial responsibility
to the implementing agency if the provider becomes
incapable of providing financial assurance and the (F)
owner or operator is unable to obtain alternate
coverage within 30 days.
280.107 Recordkeeping
Violation
Failure to maintain copies of the financial assurance
mechanism(s) used to comply with financial
responsibility rale and certification that the
mechanism is in compliance with the requirements
of the rule at the UST site or place of business
Moderate
Moderate
Moderate
Unit
Assess-
ment1
(F)
Minor $100
Minor $100
Minor $100
Deviation
from
Requirement
Moderate
Potential
for
Harm
Matrix
Value
Minor $100
1 Unit assessment refers to whether the penalty should be applied per tank (T) or facility (F). Where the
violation applies to piping (P), the assessment will depend on whether the piping is associated with one
tank or more than one tank.
OSWER Directive 9610.12
A-7
-------
APPENDIX B: UST Penalty Computation Worksheet
UST PENALTY COMPUTATION WORKSHEET
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet.)
PARTI-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 tanks
PART 2 - ECONOMIC BENEFIT COMPONENT
Avoided Expenditures Basis:_
Delayed Expenditures Basis:_
Weighted Tax Rate Source:
Interest Rate Source:
Avoided _ , Avoided Avoided T Number , 1-Marginal
Costs Expenditures Expenditures of Days Tax Rate
365 days
3. Calculated Avoided Costs:
Delayed Delayed T Number of
/-> 1 = -c A x Interest x .
Costs Expenditures Days
365 Days
4. Calculated Delayed Costs:
5. Economic Benefit Component: (carry figure to Line 16). (Line 3 + Line 4)
OSWER Directive 9610.12 B-l
-------
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm:
6. Matrix Value (MV):
7. Per-tank MV:
Extent of Deviation
(from document page 16 or Appendix A)
(if violation is per facility, the amount on
Line 7 will be the same is the amount on Line 6)
PART 4 - VIOLATOR-SPECIFIC ADJUSTMENTS TO MATRIX VALUE
Dollar
Percentage Matrix . ,. ^ ^ T .~ . ., . ,. ^
. x ,, , = Admstment Justincation tor Admstment:
Change Value / ,
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)
PART 5 - GRAVITY-BASED COMPONENT
Level of
Environmental Sensitivity:
13. ESM (from document Page 21)_
14. DNM (from document Page 21)_
Justification:
Gravity- ,, . Environmental Days of
j Matrix ... . AT ,.
Based = v 1 x Sensitivity x Noncompliance
Component Multiplier Multiplier
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:
(from Line 15)
18. Initial Target Penalty Figure:
(Line 16 + Line 17)
SIGNATURE
DATE
OSWER Directive 9610.12
B-2
-------
OSWER Directive 9610.12
APPENDIX C:
UST PENALTY COMPUTATION EXAMPLES
C-1
-------
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 any 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 for 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 income).
[NOTE: The numbers used to determine avoided and delayed expenditures were chosen for convenience
only. They do not necessarily represent true costs in any State or Region in the country.]
C-2
-------
OSWER Directive 9610.12
L
UST PENALTY COMPUTATION WORKSHEET
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet)
Company name.
(5 as
PART 1 - BACKGROUND
Go
Regulation violated HO CfR
£SO.fo(c) -
Previous violations AJ0 -f-i fi^a, -h'em 1/1*0 l*-H&s\ ({
-------
UST PENALTY COMPUTATION WORKSHEET
DELAYED COSTS = Delayed Expenditures x Interest x Number of Days
365 Days
36-5-
4. Calculated Delayed Cost: 4 13 *f
4
5. Economic Benefit Component: * 3 1H (carry figure to Line 16).
(Line 3 + Line 4)
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm: maiof Extent of Deviation
6. Matrix Value (MV): $ 1500 (from document page 16 or Appendix A)
7. Per-tank MV: y & OOQ (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-) (+ or -) Justification for Adjustment
8. Degree of cooperation/
noncooperation O 4(^000 O
9. Degree of willfulness ,, _ ,,. * z_
or negligence: 0 4>(fOOO Q ^UQ
10. History of
noncompliance: ~>_
11. Unique factors: O &(eQOO O_
12. Adjusted Matrix Value
(Line? + Lines 8-11)
C-4
-------
I u ^1
PART 5 - GRAVITY-BASED COMPONENT
Level of
Environmental Sensitivity MoAiroi 4. &, Justification: A-nu scl-east. t'S
/t'tcftj -h> two/*. >'**puc+'
13. ESM (from document Page 21) I. ^ J'M'Aj-UtJcr soared.
impact- o*\ -fhe. t(* (/i r
be #\i r\iiy\t*lf aJl-H* over
14. DNM (from document Page 21) /. g" ^U ^tjQ co^pl.'e^tt
Environmental Day* of
GRAVITY-BASED COMPONENT = Adjusted Matrix Value x Sensitivity x Noncompllance
Multiplier Multiplier
686
15. Gravity-Based Component:
(Line 12 x Line 13 x Line 14)
: T iH I
PART * - INITIAL PENALTY TARGET FIGURE
16. Economic Benefit Component J>
(from Line 5)
17. Gravity-Based Component
(from Line 1 5)
18. Initial Penalty Target Figure
(Line 16 + Line 17)
SIGNATURE DATE
C-5
-------
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 UST systems and one cathodicalty
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 and cathodic protectioa
Owner/Operator Response: Jack Johnson argued that it was the responsibility of the operator to upgrade
his USTs so as to make them insurabte. The operator of the facility claimed that he lacked the resources
to upgrade his USTs and believed that the responsibility for meeting the FR 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 FR 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
-------
uowcn uireuiive
PENALTY CALCULATION DATA
Violation: 40 CFR section 280.93(a)
Days of violation: 430 days from date of noncompllance (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 is 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 were chosen for convenience
only. They do not necessarily represent true costs in any State or Region in the country.]
C-7
-------
UST PENALTY COMPUTATION WORKSHEET
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet)
Company name I7"o/ml&-h"cvi
/ia
Date of requirement H 'I ZCt 111
Date of compliance W / / *? 3.
1. Days of noncompliance
Date of inspection ^3 / &O ffZL
Explanation (V appropriate): d« A*
Co** pi >'« /!(.£. t'f
r
2. Number of tanks
(onl ^ need -Jo
c5" (
or
J
PART 2 - ECONOMIC BENEFIT COMPONENT
Avoided Expenditures
Delayed Expenditures
Basts:
HO
/S. fog pe
Weighted Tax Rate 0.
Interest Rate 6 .(<6l (IV. / *?<, )
AVOIDED =
COSTS
Avoided + Avoided x Interest x Number
Expenditures Expenditures of Days
365 Days
Source: tf\T R. -for $3$0. OOP i
Source:
x (1 > Weighted Tax Rate)
J
3. Calculated Avoided Cost:
C-8
-------
UST PENALTY COMPUTATION WORKSHEET
DELAYED COSTS « Delayed Expenditures x Interest x Number of Davs
365 Days
~ _ ^ u,~ OOP * .
4. Calculated Delayed Cost: 3 /#. ?
5. Economic Benefit Component: / ,S?£? 37*0 teanv figure to Line 16).
(Line 3 + Line 4)
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm: mod-er6~tA, Extent of Deviation tf\A*tof
j
6. Matrix Value (MV): ^ 7"5"0 (from document page 16 or Appendix A)
7. Per-tank MV: -fr 9 5"O (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
f+ or 0 (+ or -> Justification for Adjustment:
8. Degree of cooperation/ . . y i^>
noncooperation ^ W/o +T50 + +300 fl^ottat^ ^ff/nS^cr cc
B. Degree of willfulness / &d*>4.S A^or^. OT
or negligence: +2 £*)» ^75"O * V%% ^<5
CO
10. History of
noncompliance: + <£O Jo
11. Unique factors: O *-*-5O O
12. Adjusted Matrix Value
(Line 7 + Lines 8-11)
C-9
-------
OSWER Directive 9610.12
t
UST PENALTY COMPUTATION WORKSHEET
PART 5 - GRAVITY-BASED COMPONENT
Level of
Level ui .
Environmental Sensitivity ko (*) Justification: PoLer\-H«Jl iwp*jc,+ erp
13. ESM (from document Page 21) * <*"<^ etr;*k**9 - «J*"t*f
tJo
-------
OSWER Directive 9610.12
EXAMPLES
BACKGROUND
Inspection Date: 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 1989.
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
280.72(a).
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 Kelly'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 clean 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 for recreational purposes as well as by various
wildlife as a source of water. The geology in the area of the site is silt
C-11
-------
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 is $8,500 per UST).
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 280.74
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 expenditures: 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).
[NOTE: The numbers used to determine avoided and delayed expenditures were chosen for convenience
only. They do not necessanly represent true costs in any State or Region in the country.]
C-12
-------
OSWER Directive 9610.12
UST 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
Regulation violated
3O
Previous violations A/ on
Date of requirement
Date of compliance
/ / 5" /
8"
1. Days of noncompliance
2. Number of tanks
Date of inspection
/fl A
Explanation (if appropriate):
PART 2 - ECONOMIC BENEFIT COMPONENT
Avoided Expenditures O
Delayed Expenditures /V//4
Weighted Tax Rate /Y//4
Interest Rate
Basis: <^ OSfe -far nafi ft
Basis:
Al/A
Source:
Source:
AVOIDED
COSTS
Avoided + Avoided x Interest x Number
Expenditure* Expenditures of Dava
365 Days
x (1 - Weighted Tax Rate)
3. Calculated Avoided Cost:
C-13
-------
UST PENALTY COMPUTATION WORKSHEET
DELAYED COSTS = Delayed Expenditures x Interest x Number of Days
365 Days
4. Calculated Delayed Cost:.
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: Hi A IAS Extent of Deviation
J
6. Matrix Value (MV): f /5 W (from document page 16 or Appendix A)
7. Per-tank MV: % ISoO (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
f+ or -) (+ or -) Justification for Adjustment:
8. Degree of cooperation/
noncooperation
9. Degree of willfulness
or negligence: ^_
10. History of
noncompliance:
11. Unique factors: Q j f^OO , Q
12. Adjusted Matrix Value
(Line 7 + Lines 8-11)
C-14
-------
OSWER Directive 9610.12
UST PENALTY COMPUTATION WORKSHEET
PART 5 GRAVITY-BASED COMPONENT
Level of
Environmental Sensitivity ttiah _ Justification:
^
tif
13. ESM (from document Page 211 J "^ * ri**r "***
'for fe.cre*-rtcM
. ^- AS a. Savrt* of
14. DNM (from document Page 21) / 6
Environmental Days of
GRAVITY-BASED COMPONENT = Adjusted Matrix Value x Sensitivity x Noncompliance
Multiplier Multiplier
15. Gravity-Based Component:
(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 (fT SO
(from Line 15)
18. Initial Penalty Target Figure
(Line 16 .+ Line 17)
SIGNATURE OATE
C-15
-------
OSWER Directive 9610.12
L
UST PENALTY COMPUTATION WORKSHEET
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet)
PARTI -BACKGROUND
Company name
LOy.
Regulation violated *~(O
U/S'frt
3.&0.
- Fa'rf
vr*.
SSVrss
-f- -hank
Previous violations
Date of requirement 3
/ / *? /
fr 8SQO per
Basis:
S7t2
Source: /T7T/P -for J
Source:
. COO
ed
J"
rcTte )
Avoided + Avoided x Interest x Number
Expenditures Expenditures _ of Days
365 Days
x (1 - Weighted Tax Rate)
. 5-CO
3. Calculated Avoided Cost
: -p /
C-16
-------
OSWER Directive 9610.12
UST PENALTY COMPUTATION WORKSHEET
DELAYED COSTS = Delayed Expenditures x Interest x Number of Days
365 Days
4. Calculated Delayed Cost: Q
5. Economic Benefit Component: r / -f 3C>H fcarrv figure to Line 16).
(Line 3 + Line 4) 7
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm: maiof Extent of Deviation /Yltii
j
6. Matrix Value (MV): J / ST>0 (from document page 16 or Appendix A)
7. Per-tank MV: 3(0000 (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
1+ or -) (+ or -) Justification for Adjustment:
nee
8. Degree of cooperation/ , 0*l<4 <*.?&. r b-e'A-ct KJarsu.t£ c
noncooperation + 10*1* $ (0QOO * '(000 i**££*d/'/iq oe^/W/a/^-rVx-^^e o
9. Degree of willfulness
of opc
of J70
or negligence: * IQJo ? fcOOQ -^OQ ^^^^ % ^
10. History of
noncompliance: Q $(oQOQ 0
11. Unique factors:
12. Adjusted Matrix Value / 1000
(Line 7 -i- Lines 8-11)
C-17
-------
OSWER Directive 9610.12
-
1
1
Level of
Environmental Sensitivity
13. ESM (from document
UST PENALTY COMPUTATION WORKSHEET
PART 5 - GRAVITY-BASED COMPONENT
/rV/^/7 Justification: /fV /> / ^ .
(from Line 5)
17. Gravity-Based Component P 1*5, 000
(from Line 15)
18. Initial Penalty Target Figure r *3 £*, 3 G H
(Line 16 + Line 17)
SIGNATURE DATE.
C-18
-------
UST PENALTY COMPUTATION WORKSHEET
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet.)
PART t - BACKGROUND
Company name
rb
T- A
Regulation violated */0 Stfc-rV.gvn
ra* bU
na
l
c.o
Previous violations A/O tf-C.
Date of requirement 3/ /'Ty
Date of compliance 573.0 / 3*9
1. Days of noncompliance ^ /
2. Number of tanks 3
Date of inspection A/
^k
Explanation frf appropriate):
PART 2 - ECONOMIC BENEFIT COMPONENT
Avoided Expenditures A///4
Delayed Expenditures O
Weighted Tax Rate /V I A"
Interest Rate
Basis:
Basis:
&£
A/
1 A
Source:
Source:
AVOIDED
COSTS
Avoided + Avoided x Interest x Number
Expenditures Expenditures of Days
365 Days
neeili«
x (1 Weighted Tax Rate)
3. Calculated Avoided Cost:
j^>
C-19
-------
OSWER Directive 9610.12
UST PENALTY COMPUTATION WORKSHEET
DELAYED COSTS = Delayed Expenditures x Interest x Number of Davs
365 Days
4. Calculated Delayed Cost:.
5. Economic Benefit Component:.
(Line 3 + Line 4)
_(cany figure to Line 16).
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm:
i
Extent of Deviation
6. Matrix Value (MV):
7. Per-tank MV:
4 f
(Line 2 x Line 6)
(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
(+ or -)
8. Degree of cooperation/
noncooperation
9. Degree of willfulness
or negligence: J
10. History of
noncompliance:
11. Unique factors:
O
o_
Dollar
Adjustment
1+ or -) Justification for Adjustment:
O
£i -Hjt.tr
d
-------
OSWER Directive 9610.12
1
UST PENALTY COMPUTATION WORKSHEET
*
1 !>AflT 5 - G» COMPONENT |
Level of
Environmental Sensitivity__^6k^l _ Justification: Re (?&.$< OoU<£ f/nfi*c{
SeV-Cral dr.'n fas-* -t-J*tLr i^^fis
13. ESM (from document Page 21) 2 «"* * ' r *cr *£<*( by *""??*,
tar r£.cjr£*-rf(* - iH^oo « ^ HL
SIGNATURE DATE.
C-21
-------
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 CFR 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 taxable income of $70,000).
C-22
-------
OSWER Directive 9610.12
PENALTY CALCULATION DATA
Violation: 40 CFR section 280.106(a)(1)
Days of Violation: 30 days from the latest required date of compliance (November 15,1991) to the actual
date of compliance pecember 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 $70,000).
[NOTE: The numbers used to determine avoided and delayed expenditures were chosen for convenience
only. They do not necessarily represent true costs in any State or Region in the country.]
-------
UST PENALTY COMPUTATION WORKSHEET
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet)
;:: : . , .. :;,:::,-. : , :» -:-::-.^::*yil^
'
Company name _ ~J^,rfc/s (5&S
Regulation violated
*c.+tfff\ ^^Q. HO fa}fi)~ Pai/ur-e
Previous violations
-fj e* -ffan ( W 91. ) - TXnA I ft*. 5 « S5£ S *>-?d -+or
Date of requirement /g/2 2.7*70 _ Date of inspection
Date of compliance 13. I /5" 1 11 _ Explanation fif appropriate):
1 . Days of noncompliance
2. Number of tanks V (or
PART 2 - ECONOMIC BENEFIT COMPONENT
r;/io
Avoided Expenditures J^/3//5'S" Basis: 4g~£D -per (J^T -fitfh-f-rLisS -£eS/
Delayed Expenditures N I A _ Basis: A>//4
Weighted Tax Rate O.I* f &*}<> Source: /frT/?' -for income. «
Interest Rate Q. /5/ (1$. I 7* ) Source: ??gX> ModcJi feg^hi discou* +- ra"fe J
AVOIDED =
COSTS
Avoided + Avoided x Interest x Number
Expenditure* Expenditures of Days
- 365 Days -
.x (1 Weighted Tax Rate)
3. Calculated Avoided Cost: 4 P3
C-24
-------
Directive 9510.12
L
UST PENALTY COMPUTATION WORKSHEET
DELAYED COSTS
Delayed Expenditure* x Interest x Number of D«v«
365 Day*
4. Calculated Delayed Cost:
5. Economic Benefit Component:
(Line 3 + Line 4)
(cany figure to Line 16).
PART3.MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm: ff\(tinf
J
IS~OO
6. Matrix Value (M\fl:
7. Per-tank MV: 4 HS~00
(Line 2 x Line 6)
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
8. Degree of cooperation/
noncooperatton
9. Degree of willfulness
or negligence:
10. History of
noncompliance:
11. Unique factors:
Percentage x Matrix =
Change Value
(+ or >
O
0
O
4^5130
Dollar
Adjustment
(+ or -) Justification for Adjustment:
' ^o^ph ed *S
0 -fa/la *Jt'*< flw r> c« T»'
j HS~00 ft
O
?re.vf0»l
*Q
12. Adjusted Matrix Value
(Line 7 -f Lines 8-11)
C-25
-------
UST PENALTY COMPUTATION WORKSHEET
PART 5 - GRAVITY-BASED COMPONENT
Level of
Environmental Sensitivity rt\0GLer*& Justification: fokiM £ *M»* it ^ .n ^^ ^ e:
14. DNM (from document Page 21) 2-S
a ; - .., *.
Environmental Days of
GRAVITY-BASED COMPONENT = Adjusted Matrix Value x Sensitivity x Noncompliance
Multiplier Multiplier
' t-$~ * 2.S" *
1 5. Gravity-Based Component:
(Line 12 x Line 13 x Line 14)
PART 6 - INITIAL PENALTY TARGET FIGURE
1 6. Economic Benefit Component
(from Line 5)
17. Gravity-Based Component ?£/.
(from Line 1 5)
18. Initial Penalty Target Figure H 30
(Line 16 + Line 17) '
SIGNATURE DATE
C-26
-------
UST PENALTY COMPUTATION WORKSHEET
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet)
. PART * BACKGROUND
{
Company name ~IsrrtJ\
Regulation violated Hfi ^
rU
3%O. S06 f«){t) - Far lure.
rrf -finanzfal assurance. uj'rJ4)i*
~J
Previous violations Alfiti&reK**
feet lure, +s> na-H
a
Q^fT i/lf-f-n tU -r
Date of requirement
Date of compliance
Date of inspection 13//5 fa I
Explanation frf appropriate):
1. Days of noncompliance
2. Number of tanks
3 Q
PAFTT 2- ECONOMIC BENEFIT COMPONENT
Avoided Expenditures
Delayed Expenditures O
Weighted Tax Rate O- (6 (!<&%}
Interest Rate O-IVI (f<6.l *). )
A void f (A in-fcmt *H*At ^Jo^d h«ve tx
Basis: P"*l
-------
UST PENALTY COMPUTATION WORKSHEET
DELAYED COSTS Delayed Expenditures x Interact x Number of Davs
365 Days
4. Calculated Delayed Cost:
5. Economic Benefit Component: 3(p%iJO (carry figure to Line 16).
(Line 3 + Line 4)
PART 3 - MATRIX VALUE FOR THE GRAVITY-BASED COMPONENT
Potential for Harm: Mod-erftt Extent of Deviation tYl* *i
6. Matrix Value (MV): $ ^SO (from document page 16 or Appendix A)
7. Per-tank MV: -£ 75£> (if violation is per facility, the amount on Line 7 will
(Line 2 x Line 6) be the same as the amount on LJne 6)
PART 4 - VIOLATOR-SPECIFIC ADJUSTMENTS TO MATRIX VALUE
Percentage x Matrix = Dollar
Change Value Adjustment
f + or -1 f+ or -) Justification for Adjustment:
8. Degree of cooperation/ ^ &»«pti*t *S
noncooperation O 3 1-SD O rt>(loi*>!/*
-------
UST PENALTY COMPUTATION WORKSHEET
PART 5 - GRAVITY-BASED COMPONENT
Level of
Environmental Sensitivity tfA AtLLrgJti Justification: /?£/>#$* fs r>cf li
h*'c&£
Environmental Days of
GRAVITY-BASED COMPONENT = Adjusted Matrix Value x Sensitivity x Noncompllance
Multiplier Multiplier
15. Gravitv-Based Component: $ I *j (e
(LJne 12 x Line 13 x Line 14)
PART 6 - INITIAL PENALTY TARGET FIGURE
16. Economic Benefit Component
(from Line 5)
17. Gravity-Based Component P /
(from Line 15)
18. Initial Penalty Target Figure r
(Line 16 + Line 17)
SIGNATURE _ _ DATE
C-29
-------
OSWER Directive 9610.12
-I
EXAMPLES
BACKGROUND
Inspection Date: 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)0i). 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 property
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).
Tax rate: 34% (the weighted average rate for a company with taxable income of $335,000).
[NOTE: The numbers used to determine avoided and delayed expenditures were chosen for convenience
only. They do not necessarily represent true costs in any State or Region in the country.]
C-30
-------
E
UST PENALTY COMPUTATION WORKSHEET
Assessments for each violation should be determined on separate worksheets and totaled. (If more space
is needed, attach separate sheet.)
Company name
lfl\G. m rt\
PART 1 - BACKGROUND
O'tl
Regulation violated _ HO CP£
5*4-*. nd & rets
i fure
Previous violations
nd/T £i
-k>
cl-e.cn ^
-k g
Date of requirement // / IT
Date of compliance 3/ / /10
1. Days of noncompliance 10 S~
2. Number of tanks c2
Date of inspection /
Explanation (tf appropriate):
PART 2 - ECONOMIC BENEFIT COMPONENT
Avoided Expenditures A/ 1 A
Delayed Expenditures 4 (?IQO
Weighted Tax Rate O.^H ( 3H J*)
Basis:^
Basis:
-far
c Q rQ-ttLC.-k
COSTS
I Expenditures Expenditures
Source: rflTR -Pr>r i
Source:
\n\«T*s\
365 Days
Number | x (1
of Days
- Wrtghted Tax Rale)
3. Calculated Avoided Cost: /O
C-31
-------
E
DELAYED COSTS = Delayed Expenditure* x Interest x Number of D
365 Days
TV -
Cetoo
to*?
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:
Extent of Deviation Wlods>ra &
6. Matrix Value (MV):
7. Per-tank MV:
I OOP
(Line 2 x Line 6)
(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
(+ or -)
8. Degree of cooperation/
noncooperation
9. Degree of willfulness
or negligence:
10. History of
noncompliance:
11. Unique factors:
0
o
31 OOP
50% 4100O
t (OOP
41000
Dollar
Adjustment
1+ or -) Justification for Adjustment:
0
0
rt-CQ
a*
dl.
f-f.Cf isistM* e*
I 'i
^
of
12. Adjusted Matrix Value
(Line 7 -i- Lines 8-11)
C-32
-------
uireciive acnu.iz
L
UST PENALTY COMPUTATION WORKSHEET
PART 5 -GRAVITY-BASED COMPONENT
Level of
Environmental Sensitivity ]Ma &JL raJb Justification: 7»crY/7 /'s locefttcf !i
13. ESM (from document Page 211 /. 5~ d/inh'/y - v^r ^t/S or
rtC£.p-h>r* . I4oi~>-e\s-£rt ar
14. DNM (from document Page 21)_/16__ P<^^'^ *«fir+4t»« of r*«<;*c
- prz>^t/<~f. u
Environmental Days of
GRAVITY-BASED COMPONENT = Adjusted Matrix Value x Sensitivity x Noncompllance
Multiplier Multiplier
* f.S~ * t.S ~ iHS'OO
15. Gravity-Based Component: ft
(Line 12 x Line 13 x Line 14)
PART 6 - INITIAL PENALTY TARGET RGURE
16. Economic Benefit Component
(from Line 5)
17. Gravity-Based Component
(from Line 1 5)
18. Initial Penalty Target Figure
(Line 16 + Line 17)
SIGNATURE DATE.
C-33
------- |