UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

EPA 300-B-02-007

OCT

K

NOV * 1*98

OFFICE OF
ENFORCEMENT AND
COMPLIANCE ASSURANCE

OFFICE OF	COUNSEL

EPA - RE'uiOM X

MEMORANDUM

SUBJECT: Guidance on Implementation of EPA's Penalty/Compliance Order Authority

The Clean Air Act (CAA or Act) contains several provisions authorizing the Agency to
assess administrative civil penalties' and to issue administrative compliance orders2 for violations
of the Act and its implementing regulations. These provisions also authorize the Agency to
assess administrative civil penalties or issue compliance orders against Federal agencies. This
guidance will assist in the implementation of the CAA's administrative penalty authority and
compliance order authority when used against a Federal agency.

n. BACKGROUND

In response to a proposed rulemaking concerning CAA field citations (under section
113(d)(3) of the Act), the Department of Defense took the position that EPA (id not have
authority to issue citations against a Federal agency. To resolve this issue, EPA sought the
opinion of the Office of Legal Counsel (OLQ in the Department of Justice (DO J). The OLC is
the office within the Department of Justice (DOJ) that settles legal disputes between Executive
Branch agencies pursuant to Executive Order No.12146. On July 16,1997, OLC issued an
opinion confirming EPA's authority to assess administrative penalties against Federal agencies

1	CAA sections 113(d), 205(c), 211(d)(1) and 213(d), 42 U.S.C. §§ 7413(d), 7424(c),
7545(d)(1), and 7547(d).

2	42 U.S.C. § 7413(a).

FROM:

TO:

Regional Counsels, Regions I-X
Air Program Directors, Regions I-X

I. INTRODUCTION

COMPL EX 3 9

Internet Address (URL) • http://www.epa.gov

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October 9, 1998

MEMORANDUM

SUBJECT: Guidance on Implementation of EPA's Penalty/Compliance Order Authority
Against Federal Agencies Under the Clean Air Act (CAA)

FROM:	Steven Herman

Assistant Administrator

TO:	Regional Counsels, Regions I-X

Air Program Directors, Regions I-X

I.	INTRODUCTION

The Clean Air Act (CAA or Act) contains several provisions authorizing the Agency to
assess administrative civil penalties1 and to issue administrative compliance orders2 for violations
of the Act and its implementing regulations. These provisions also authorize the Agency to assess
administrative civil penalties or issue compliance orders against Federal agencies. This guidance
will assist in the implementation of the CAA's administrative penalty authority and compliance
order authority when used against a Federal agency.

II.	BACKGROUND

In response to a proposed rulemaking concerning CAA field citations (under section
113(d)(3) of the Act), the Department of Defense took the position that EPA did not have
authority to issue citations against a Federal agency. To resolve this issue, EPA sought the
opinion of the Office of Legal Counsel (OLC) in the Department of Justice (DOJ). The OLC is
the office within the Department of Justice (DOJ) that settles legal disputes between Executive
Branch agencies pursuant to Executive Order No. 12146. On July 16, 1997, OLC issued an
opinion confirming EPA's authority to assess administrative penalties against Federal agencies
under the CAA, including field citations.3 See attached opinion. DOJ applied a "clear statement"
rule of statutory construction, and determined that these provisions authorize the Agency to

1	CAA sections 113(d), 205(c), 211(d)(1) and 213(d), 42 U.S.C. §§ 7413(d), 7424(c),
7545(d)(1), and 7547(d).

2	42 U.S.C. § 7413(a).

3	While the OLC decision does not expressly address EPA's penalty authority under
Section 213(d), EPA believes the same analysis applies to that provision.

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assess administrative penalties against Federal agencies, and that separation of powers concerns
do not bar EPA from exercising this authority.4

III. CAA ADMINISTRATIVE PENALTY ACTIONS

A. Hearing Procedures/Settlement

The hearing procedures set forth at 40 C.F.R. Part 22 apply when EPA issues a penalty
order against Federal agencies in the same manner as when EPA files an administrative action
against private parties. Private parties and Federal agencies have an opportunity to challenge a
CAA penalty complaint using the 40 C.F.R. Part 22 procedures. For instance, if the Region files
an administrative penalty action against a Federal agency under CAA section 113(d)(1), EPA
would file pursuant to EPA's procedural rules in Part 22. Under the Part 22 procedures, service
on an officer or agency of the United States can be accomplished in several ways. For example,
as a matter of practice, EPA has successfully served the base commander when a military service
is involved with a copy of the action to that service's headquarters. If the case proceeded to
hearing, it would be conducted in the same manner as a case against a private party.

Settlement with a Federal agency is encouraged in the same circumstances as with a
private party. See 40 C.F.R. § 22.18. EPA should use the same conference and settlement
discussion procedures with Federal agencies that it uses with private parties under Part 22.
Except where the parties have reached a settlement, a case against a Federal agency would

4This authority can be exercised consistent with Articles II and III of the Constitution. For
example, the Act does not preclude the President from authorizing any process he chooses to
resolve disputes between EPA and other Federal agencies over assessment of administrative
penalties. DOJ noted that nothing in the Act prevented, and EPA intended to provide, a Federal
agency with an opportunity to confer with the Administrator before any assessment is final.

Congress has addressed this issue of providing such an opportunity to confer under other
environmental statutes. In the 1992 amendments to RCRA, Congress provided that "[n]o
administrative order issued to such department, agency, or instrumentality shall become final until
such...agency...has had the opportunity to confer with the Administrator." This concerned both
penalty and compliance orders. 42 U.S.C. § 6961(b)(2). A similar provision was adopted in the
1996 amendments to the Safe Drinking Water Act concerning administrative penalties. 42 U.S.C.
§ 300j-6(b).

In response to the 1992 RCRA amendments, EPA revised its hearing procedures to
provide the opportunity to confer. 40 C.F.R. § 22.37(g). This provided an opportunity to confer
at the end of the administrative hearing process. EPA recently proposed to revise the Part 22
hearing procedures so that this same regulatory approach for an opportunity to confer would
apply generally to administrative hearings under Part 22 involving Federal agencies. 63. Fed.
Reg. 9464, 9476, 9491 (February 25, 1998).

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proceed to hearing under the provisions of Part 22 just as in a case against a private party,
including the opportunity for either party to appeal an initial decision to the Environmental
Appeals Board. Often, however, settlement discussions continue on a parallel track with the
hearing procedures. Cases that settle do not require a conference with the Administrator, as
discussed below. In settling a matter, the respondent Federal agency waives its opportunity to
confer on the settled matter.

As with private parties, any voluntary resolution or settlement of such an action shall be
set forth in a consent agreement/consent order. In addition, Federal parties have the same
opportunity to confer with the appropriate Agency official or employee provided under 40 C.F.R.
§ 22.18. Regions should not confer with the Federal agency outside of their usual procedures to
implement 40 C.F.R. § 22.18. As a result, after EPA issues the complaint, the respondent Federal
agency may confer with the complainant (EPA employee authorized to issue the complaint) under
Part 22 concerning settlement whether or not the respondent requests a hearing. This Part 22
opportunity to confer, however, does not affect the 30-day deadline for filing an answer under §
22.43, just as with a private party under § 22.18(a). Moreover, throughout this administrative
process, the Regions should follow Part 22's requirements regarding ex parte communications.

B. Opportunity to Confer5

Before a penalty becomes final, the respondent Federal agency must be afforded an
opportunity to confer with the Administrator. EPA will provide the same opportunity to confer
with the Administrator prior to final assessment of a CAA administrative penalty as is currently
provided in implementing the RCRA provision, and as proposed in general for Part 22. Although
the "opportunity to confer" requirement can be satisfied by providing an opportunity to confer
with a Regional official with properly delegated authority within a reasonable period of time
following issuance of the penalty order, as a matter of practice, the Administrator will retain the
opportunity to confer personally, as set out below. This is an appropriate way to implement
EPA's existing administrative penalty authority, thereby preserving the President's authority to
resolve disputes within the executive branch. As a result, EPA will provide the respondent
Federal agency an opportunity to confer with the Administrator before a penalty order becomes
final.6

Federal agencies will have the opportunity to meet with the Administrator only after
exhaustion of other Part 22 procedures. Placing the conference at the end of the process will
enable the Agency to proceed with their enforcement case against the Federal agency in the same

5EPA believes this guidance is consistent with Executive Order No. 12088, as it
establishes an efficient and orderly procedure for implementing an opportunity for the head of the
affected Federal agency to confer with the Administrator on disputed issues.

6As discussed below, such opportunity will not be available for administrative penalty
orders unless the Part 22 administrative hearing procedures have been exhausted.

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manner as they do against private parties. Similarly, placing the conference at the end of the
hearing process was adopted in implementing the RCRA provision noted above, and has worked
effectively in practice. See 58 Fed. Reg. 49044 (September 21, 1993).

Under the current Part 22 provisions, the EAB issues a final order under section 22.31,
and sets the effective date of the order. A private party or a Federal agency may seek
reconsideration of the order by filing a motion with the EAB, and the EAB may, if appropriate,
stay the effective date of the final order pending such reconsideration. However, the
Administrator does not participate in a case unless the matter has been referred by the EAB to the
Administrator under section 22.04(a).

In cases involving a respondent Federal agency, the EAB will issue a final order under
section 22.31, with an effective date that is no earlier than 30 days from issuance of the order. If
a Federal agency wishes to confer with the Administrator, it must file a motion to reconsider the
EAB's final order with the EAB under section 22.32 within 10 days of service of the EAB's final
order (5 additional days where service is by mail). In its motion, the Federal agency must indicate
that it desires an opportunity to confer with the Administrator, either in person or through an
exchange of letters, and identify the issues which the Federal agency proposes to discuss with the
Administrator. The motion to reconsider should also raise to the EAB any matters deemed to
have been erroneously decided and the nature of the alleged errors. Upon receipt of such a
request, the EAB will refer the request for a conference to the Administrator and stay the
effective date of its final order pending the outcome of the referral and conference with the
Administrator.7

The referral from the EAB pursuant to section 22.04(a) will authorize the Administrator,
upon completion of the conference, to either issue a final order superseding the EAB's order, or
refer the matter back to the EAB to issue a new final order or reaffirm its previous order on behalf
of the Agency. If the matter is referred back to the EAB, the EAB shall resolve, as necessary,
those issues raised in the motion for reconsideration relating to any errors allegedly made by the
EAB.

Failure to request a conference with the Administrator in this manner and within this time
frame will be deemed a waiver of the right to confer with the Administrator. If there is no timely

7Under the proposed Part 22 procedures, if the respondent Federal agency desires a
conference with the Administrator, the head of the affected Federal agency must request a
conference with the Administrator within 30 days of the EAB's service of a final order and serve
that request on the parties of record. In that event, a decision by the Administrator shall become
the final order. A motion for reconsideration of a final order shall not stay the 30-day period to
request the conference unless specifically so ordered by the EAB.

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request for a conference with the Administrator, any motion to reconsider filed with the EAB will
be ruled on by the EAB.

The conference with the Administrator can occur directly or through an exchange of
letters. A request for a direct conference should be included in the Federal agency's motion for
reconsideration of the EAB's final order with a copy to the Director of the Federal Facilities
Enforcement Office (FFEO) and all parties/counsel of record.8 The request for a direct
conference should specifically identify the issues which the Federal agency proposes to discuss
with the Administrator, and should specifically identify who will represent the respondent Federal
agency. In addition, as part of its request for a direct conference, the head of the Federal agency
should attach copies of all prior administrative decisions and substantive briefs in the underlying
proceedings. Copies of these briefs and underlying decisions also should be provided to the
Director of FFEO.

The parties/counsel of record may request to be present during the direct conference. A
request to attend the direct conference should be in writing and served on the Director of FFEO
and the parties/counsel of record. The Administrator or her designee shall notify the head of the
Federal agency who requested the direct conference and the parties/counsel of record regarding
her plan and arrangements for the direct conference.

Following the conclusion of the direct conference, a person designated by the
Administrator will provide a written summary of the issues discussed and addressed. Copies of
the written summary shall be provided to the parties/counsel of record. Within thirty (30) days of
the conference, the Administrator shall issue a written decision with appropriate instruction
regarding the finality of the order. This decision shall be filed with the Clerk of the EAB and
made part of the administrative case file.

Instead of the direct conference, the conference with the Administrator may be conducted
through an exchange of letters. If so, the head of the Federal agency should include the letter in
its motion for reconsideration of the EAB's final order with a copy to the Director of FFEO and
all parties/counsel of record. In addition, the letter should specifically identify the issues which the
Federal agency proposes that the Administrator consider. The head of the Federal agency should
also attach copies of all prior administrative decisions and substantive briefs in the underlying
proceedings. Copies of these briefs and underlying decisions should be provided to the Director
of FFEO. Within thirty (30) days of receipt of the head of the Federal agency's letter in the event
of a conference by letter, the Administrator shall issue a written decision with appropriate
instruction regarding the finality of the order. As in the direct conference, this decision shall be
filed with the Clerk of the EAB and made part of the Administrative case file.

If the Board referred the matter to the Administrator for decision under section 22.04(a)
prior to the filing of a motion to reconsider under section 22.32, and if the Federal agency wants to

Participation by non-Federal parties in the Administrator's conference will be determined
on a case-by-case basis.

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request a conference with the Administrator, it must do so prior to the Administrator's decision.
To assure that Federal agencies are aware of these procedures, Regions should refer the Federal
agency to Part 22 and other relevant Agency guidance.

IV. COMPLIANCE ORDERS

Unlike RCRA, the CAA does not have a separate statutory provision specifically addressing
Federal agency penalty/compliance orders and requiring a conference with the Administrator prior
to an order's becoming effective. The CAA, however, does provide a general conference
opportunity under section 113(a)(4), prior to a compliance order's becoming effective.9 CAA
compliance orders to Federal agencies should follow the same procedures as for the issuance of
such orders to private parties. For example, as with a private party, a Federal agency respondent
should be provided an opportunity to confer with a Regional official with the authority to issue a
compliance order before the order becomes effective. Because EPA issues a compliance order to
achieve expeditious compliance with CAA requirements and not to assess a penalty, the time period
to request a conference generally should be less than the 30 days afforded to seek a conference for
penalty orders. Ultimately, based on the seriousness of the violations and the nature of the
compliance activities, the Regional office will determine the time period in which the Federal
agency may request a conference, and specify that deadline in the cover letter transmitting the
compliance order or in the compliance order itself. The approach of providing an opportunity to
confer before a compliance order becomes final has worked well under the Safe Drinking Water
Act.

With regard to section 113 compliance orders, section 113 mandates that such orders
require the person to whom it was issued to comply within one year of the date the order was
issued, and shall be nonrenewable. For private parties, EPA would most likely pursue a civil
judicial action against a violator should a schedule longer than a year be required for a return to
compliance. For executive branch agencies, this option is not available to EPA. Therefore, when a
Region believes that a schedule less than a year is infeasible to achieve compliance, the Region
should negotiate a Federal Facility Compliance Agreement (FFCA) which either contains an order
with a delayed issuance date to go into effect when compliance can be reached in one
year or, instead, the Region could first negotiate an FFCA and then issue a separate order when
compliance can be reached within one year. FFEO strongly recommends that when the Region
uses the FFCA, it be submitted for public comment via publication in the Federal Register in order
to ensure public awareness of the compliance order's contents. This is similar to public comment

9As a matter of practice, while EPA will also provide such opportunity to Federal agencies
for compliance orders relating to violations of CAA section 112, 42 U.S.C. § 7412, the
opportunity for a conference does not suggest that the Federal agency may delay taking steps to
come into compliance with these requirements or any other requirements under the CAA.

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on judicial consent decrees. Where compliance is achievable within one year of issuance, Regions
should issue orders.

V.	WAIVERS

Under the CAA Section 113(d)(1)(C), the Administrator's administrative penalty authority
is limited to matters where the total penalty sought does not exceed $220,000 and the first alleged
date of violation occurred no more than 12 months prior to the initiation of the administrative
action, except where the Administrator and the Attorney General jointly determine that a matter
involving a larger penalty amount or longer period of violation is appropriate for administrative
penalty action. Where the Regions determine that a waiver should be granted in an action against a
Federal agency, the Regions should direct their request for a waiver to the Director, FFEO with a
copy to the Director, Air Enforcement Division, Office of Regulatory Enforcement. Waiver
requests should follow the same format as similar requests in cases against private parties and
include reasons justifying the waiver and a fact sheet on the matter.

VI.	PENALTIES

Federal agencies are liable for EPA-assessed CAA civil administrative penalties just like
any other person. 10 If violations occurred prior to July 16, 1997 and are ongoing, EPA could
assess penalties for the violations from July 16, 1997 until correction of the violation. Moreover,
EPA can require correction of and, in some case, may seek penalties for violations that occurred
prior to July 16, 1997. If a Region believes that seeking penalties for violations occurring prior to
July 16, 1997 is warranted, the Region should submit a justification to the Director of the Federal
Facilities Enforcement Office. Regions should consider the size of violator when determining the
appropriate penalty against a Federal agency. In many instances, Federal agencies would be
considered large violators; in these cases, the Regions should apply the 50% formula, under which
the size of the violator component, if very large, may be reduced to 50% of the total penalty at the
discretion of the Agency.

In determining an appropriate penalty, EPA will apply its penalty policies, the October 25,
1991, CAA Stationary Source Civil Penalty Policy, and amendments thereto, and the Mobile
Source Penalty Policies11, including capturing economic benefit for avoidance of costs, against a

10 This policy does not intend to require any conduct contrary to the Anti-Deficiency Act.

nInterim Tampering Enforcement Policy, 6/25/74, Civil Penalty Policy for Incorrect
Aftermarket Catalytic Converter Applications, 4/18/88, Sale and Use of Aftermarket Catalytic
Converters, contained in 51 Fed. Reg. 28133 (8/5/86), Enforcement Policy for Aftermarket
Catalytic Converter Violations, 12/22/88, Volatility Civil Penalty Policy, 12/01/89, Aftermarket

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Federal agency for violations of the CAA in the same manner and to the same extent as against any
private party. The May 1, 1998, "Supplemental Environmental Projects Policy" and any subsequent
updates also apply in this context. Moreover, for settled compliance cases that require work,
stipulated penalties should be included in the Compliance Agreement.

VII.	PRESS RELEASE FOR CAA ENFORCEMENT ACTIONS

EPA uses the publicity of enforcement activities as a key element of the Agency's program
to promote compliance and to deter noncompliance with environmental laws and regulations.
Publicizing EPA enforcement actions against private parties and Federal agencies informs both the
public and the regulated community of EPA's efforts to ensure compliance and take enforcement
actions. EPA's decision to issue a press release and the contents of press releases are not
negotiable with Federal agencies or other regulated entities. Upon the issuance of an order or the
filing of a complaint, FFEO strongly encourages Regions to issue a press release.

VIII.	CONCLUSION

FFEO is issuing this guidance to clarify enforcement procedures for Federal facility
enforcement under the CAA. This guidance supersedes earlier guidance regarding CAA
enforcement at Federal facilities such as that found in the 1988 Federal Facilities Compliance
Strategy. Should you have any concerns or questions, please have your staff call Mary Kay Lynch
at (202)564-2574 or Sally Dalzell at (202) 564-2583.

IX.	NOTICE

This guidance and any internal procedures adopted for its implementation are intended
solely as guidance for employees of the U.S. Environmental Protection Agency. Such guidance
and procedures do not constitute rule making by the Agency and may not be relied upon to create a
right or benefit, substantive or procedural, enforceable at law or in equity, by any person. The
Agency may take action at variance with this guidance and its internal implementing procedures.

Attachment

cc: Air Enforcement Branch Chiefs

Converter Enforcement and Penalty Issues, 8/10/90, Proposed Policy for Enforcing the New
Defeat Device Authority with regard to Catalyst Replacement Pipe Manufacturers and Sellers,
1/02/91, Civil Penalty Policy for Administrative Hearings, 1/14/93, Manufacturers Programs
Branch Interim Penalty Policy, Appendix I: Manufacturers Programs Branch MFB Imports
Program Penalty Policy, 3/31/93, Interim Diesel Civil Penalty Policy, 2/08/94, Tampering and
Defeat Device Civil Penalty Policy for Notices of Violation, 2/28/94.

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Federal Facility Coordinators, Regions I-X

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