[Federal Register Volume 60, Number 121 (Friday, June 23, 1995)]
[Notices]
[Pages 32675-32678]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15435]
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ENVIRONMENTAL PROTECTION AGENCY
[FRL-5225-5]
Interim Policy on Compliance Incentives for Small Businesses
AGENCY: Office of Enforcement and Compliance Assurance, EPA.
ACTION: Notice.
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SUMMARY: The Office of Enforcement and Compliance Assurance (EPA) is
issuing this Interim Policy on Compliance Incentives for Small
Businesses. This interim Policy is intended to promote environmental
compliance among small businesses by providing incentives for
participation in compliance assistance programs, and encouraging the
prompt correction of violations. The Policy accomplishes this in two
ways: by setting forth guidelines for the Agency to reduce or waive
penalties for small businesses that make good faith efforts to correct
violations, and by providing guidance for States and local governments
to offer these incentives.
DATES: Comments must be received on or before July 31, 1995.
ADDRESSES: Comments may be mailed to: Small Business Policy, Mail Code
2224-A, United States Environmental Protection Agency, 401 M Street,
S.W., Washington D.C. 20460.
FOR FURTHER INFORMATION CONTACT: Elliott Gilberg, 202-564-2310, Office
of Compliance, Mail Code 2224-A, or [[Page 32676]] David A. Hindin,
202-564-2230, Office of Regulatory Enforcement, Mail Code 2248-A,
United States Environmental Protection Agency, 401 M Street, S.W.,
Washington D.C. 20460.
SUPPLEMENTARY INFORMATION: Pursuant to this Interim Policy, EPA will
exercise its discretion, under applicable media-specific policies, to
refrain from initiating an enforcement action seeking civil penalties,
or to mitigate civil penalties, whenever a small business makes a good
faith effort to comply with environmental requirements and where there
is no criminal behavior and no significant health, safety or
environmental threat. In addition, EPA is creating special incentives
for small businesses who take the initiative to identify and correct
environmental violations by requesting compliance assistance from the
government. In such circumstances, and provided the small business
meets certain criteria set forth in the Policy, EPA will exercise its
discretion to waive the entire penalty for environmental violations.
Moreover, EPA will defer to state actions that are consistent with this
Policy.
Dated: June 13, 1995.
Steven A. Herman,
Assistant Administrator, Office of Enforcement and Compliance
Assurance, United States Environmental Protection Agency.
A. Introduction
This document sets forth the Environmental Protection Agency's
Interim Policy on compliance incentives for small businesses. This
Policy is one of the 25 regulatory reform initiatives announced by
President Clinton on March 16, 1995, and implements, in part, the
Executive Memorandum on Regulatory Reform, 60 FR 20621 (April 26,
1995).
The Executive Memorandum provides in pertinent part:
To the extent permitted by law, each agency shall use its
discretion to modify the penalties for small businesses in the
following situations. Agencies shall exercise their enforcement
discretion to waive the imposition of all or a portion of a penalty
when the violation is corrected within a time period appropriate to
the violation in question. For those violations that may take longer
to correct than the period set by the agency, the agency shall use
its enforcement discretion to waive up to 100 percent of the
financial penalties if the amounts waived are used to bring the
entity into compliance. The provisions [of this paragraph] shall
apply only where there has been a good faith effort to comply with
applicable regulations and the violation does not involve criminal
wrongdoing or significant threat to health, safety, or the
environment.
Pursuant to this Interim Policy, EPA will exercise its discretion,
under applicable media-specific policies, to refrain from initiating an
enforcement action seeking civil penalties, or to mitigate civil
penalties, whenever a small business makes a good faith effort to
comply with environmental requirements and where there is no criminal
behavior and no significant health, safety or environmental threat. In
addition, as announced in the package of regulatory reform initiatives,
EPA is creating special incentives for small businesses who take the
initiative to identify and correct environmental violations by
requesting compliance assistance from the government. In such
circumstances, and provided the small business meets certain other
criteria set forth below, EPA will exercise its discretion to waive the
entire penalty. Moreover, EPA will defer to state actions that are
consistent with this Policy.
B. Background
The Clean Air Act (CAA) Amendments of 1990 require that states
establish Small Business Assistance Programs (SBAPs) to provide
technical and environmental compliance assistance to stationary
sources. On August 12, 1994, EPA issued an enforcement response policy
which provided that an authorized or delegated state program may,
consistent with federal requirements, either:
(1) assess no penalties against small businesses that voluntarily
seek compliance assistance and correct violations revealed as a result
of compliance assistance within a limited period of time; or
(2) keep confidential information that identifies the names and
locations of specific small businesses with violations revealed through
compliance assistance, where the SBAP is independent of the state
enforcement program.
In a further effort to assist small businesses to comply with
environmental regulations, and to achieve health, safety, and
environmental benefits, the Agency is adopting a similar policy for
water, toxics, hazardous waste, and other media programs. This interim
Policy sets forth the Agency's implementation of the Executive
Memorandum.
C. Purpose
This interim Policy is intended to promote environmental compliance
among small businesses by providing incentives for participation in
compliance assistance programs, and encouraging the prompt correction
of violations. The Policy accomplishes this in two ways: by setting
forth a settlement penalty Policy that rewards such behavior, and by
providing guidance for States and local governments to offer these
incentives.
EPA is committed to a strong enforcement and compliance assurance
program as a means to protect human health and the environment. We
expect this Policy to encourage greater participation in compliance
assistance programs that offer services to small businesses (referred
to generically as SBAPs in this Policy). The Policy will allow greater
openness among SBAPs and specific facilities, the small business
community in general, and other federal and state officials. It will
promote the sharing of information on pollution prevention measures,
cost effective means of compliance and other valuable compliance-
related activities with and among the regulated community. Application
of the policy to all media programs should encourage small businesses
to look for ``whole facility'' approaches to environmental compliance.
Ultimately, by bringing many small businesses into compliance, this
Policy will enhance the quality of our air, water, and land. '
Measuring the success of compliance assistance programs is a
critical component of EPA's ability to assess the results of compliance
and enforcement activities. EPA will work with States to evaluate the
effectiveness of this Policy and, in 1997, EPA will consider whether
this Policy should be continued, modified or discontinued.
D. Applicability
This Policy applies to facilities owned by small businesses as
defined here. A small business is a person, corporation, partnership,
or other entity who employs 100 or fewer individuals (on a companywide
basis). This definition is a simplified version of the CAA Sec. 507
definition of small business. On balance, EPA determined that a single
definition would make implementation of this Policy simple and would
allow for consistent application of the Policy in a multimedia context.
This interim policy is effective immediately. This Policy applies
to all civil judicial and administrative enforcement actions taken
under the authority of the environmental statutes and regulations that
EPA administers, except for corrective action programs and the Public
Water System Supervision Program under the Safe Drinking Water
Act.1 This Policy [[Page 32677]] applies to all such actions filed
after the effective date of this Policy, and to all pending cases in
which the government has not reached agreement in principle with the
alleged violator on the amount of the civil penalty.
\1\ This Policy does not apply to corrective action programs
(such as CERCLA, RCRA Sec. 7003, and SDWA Sec. 1431) because these
programs are primarily remedial in nature and generally do not seek
penalties. This Policy does not apply to the Public Water System
Supervision Program because EPA is developing another policy which
addresses compliance by small communities.
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This Policy sets forth how the Agency expects to exercise its
enforcement discretion in deciding on an appropriate enforcement
response and determining an appropriate civil settlement penalty for
violations by small businesses. This Policy is to be used for
settlement purposes and is not intended for use in pleading, or at
hearing or trial. To the extent that this Policy may differ from the
terms of applicable enforcement response policies under media-specific
programs, this document supersedes those policies. This Policy
supplements, but does not supplant the August 12, 1994 Enforcement
Response Policy for Treatment of Information Obtained Through Clean Air
Act Section 507 Small Business Assistance Programs.
E. Criteria for Civil Penalty Mitigation
EPA will eliminate or mitigate its settlement penalty demands
against small businesses based on the following criteria:
(1) For purposes of sections F(1) and F(2), the small business has
made a good faith effort to comply with applicable environmental
requirements as demonstrated by receiving compliance assistance from a
non-confidential government or government supported program that offers
services to small businesses (such as a SBAP or state university), and
the violations are detected during the compliance assistance.2
\2\ If the compliance or technical assistance program keeps the
information obtained confidential (i.e., does not share or disclose
facility specific information on compliance status with a regulatory
agency), this Policy does not apply. However, if a small business
wishes to obtain a corrections period after receiving compliance
assistance from a confidential program, the business need only
disclose the violations to the appropriate regulatory agency
pursuant to criterion 1 and comply with the other provisions of this
Policy.
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Good faith does not exist if an agency specifically offered a
compliance assistance program concerning the relevant regulated
activities to the business and it failed to participate in such
program.
(2) This is the small business's first violation of this
requirement. This Policy applies to businesses that have not previously
been subject to a warning letter, notice of violation, field citation,
or other enforcement action by a government agency for a violation of
that requirement within the past five years. If a business has been
subject to multiple enforcement actions for violations of environmental
requirements in the past five years, this Policy does not apply even if
this is the first violation of this particular requirement.
(3) The policy does not apply if:
(a) The violation has caused actual serious harm to public health,
safety, or the environment; or
(b) The violation may present an imminent and substantial
endangerment to public health or the environment; or
(c) The violation presents a significant health, safety or
environmental threat (e.g., violations involving hazardous or toxic
substances may present such threats).
(4) The violation does not involve criminal conduct.
(5) The business corrects the violation within the corrections
period set forth below.
Small businesses are expected to remedy the violations within the
shortest practicable period of time. Small businesses may take up to 90
days following detection of the violation to correct the violation, or
to take substantial steps to correct the violations (e.g., apply for
necessary permits, secure financing, order equipment). For violations
that cannot be corrected within 90 days, the correction period may be
extended for an additional period not to exceed 90 days, so long as the
business enters into a written agreement that sets forth the additional
correction period and any additional steps to be undertaken by the
business to achieve compliance. The schedule may extend for an
additional period of 180 days, i.e., up to a period of one year from
the date the violation is detected, only if necessary where the small
business corrects the violation by implementing pollution prevention
measures. Correcting the violation includes remediating any
environmental harm associated with the violation.3 Any corrections
period longer than 180 days should be incorporated into an enforceable
order. The requirements of the correction period should be made clear
to the small business prior to offering compliance assistance.
\3\ If significant efforts will be required to remediate the
harm, criterion 3 is likely not to have been satisfied.
F. Penalty Mitigation Guidelines
EPA will exercise its enforcement discretion to eliminate or
mitigate civil settlement penalties as follows.
1. EPA will eliminate the civil settlement penalty in any
enforcement action if a small business satisfies all of the criteria in
section E.
2. If the small business meets all of the criteria, except it needs
a longer corrections period than provided by criterion 5 (i.e., more
than 180 days for non-pollution prevention remedies, or 360 days for
pollution prevention remedies), EPA will waive up to 100% of the
gravity component of the penalty, but may seek the full amount of any
economic benefit associated with the violations.4
\4\ In determining how much of the gravity component of the
penalty is appropriate, EPA should consider the nature of the
violations, the duration of the violations, the environmental or
public health impacts of the violations, good faith efforts by the
small business to promptly remedy the violation, and the facility's
overall record of compliance with environmental requirements.
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3. If a small business has not met all the criteria above, but has
otherwise made a good faith effort to comply, EPA has discretion,
pursuant to its applicable policies, to refrain from filing an
enforcement action seeking civil penalties or to mitigate its demand
for penalties to the maximum extent appropriate. These policies
generally recognize good faith efforts to comply and allow for
mitigation of the penalty where there is a documented inability to pay
all or a portion of the penalty, thereby placing emphasis on enabling
the small business to finance compliance.
G. Other Factors
To ensure that this Policy enhances and does not compromise public
health and the environment, the following conditions apply:
1. Violations detected through federal, state, or local enforcement
inspections or reported to an agency as required by applicable
regulations or permits remain fully enforceable.
2. A business is subject to all applicable enforcement response
policies (which may include discretion whether or not to take formal
enforcement action) for all violations that had been detected through
compliance assistance and were not remedied within the corrections
period. The penalty in such action may include the time period before
and during the correction period.
3. A business's good faith efforts to correct violations detected
during compliance assistance should be considered as a mitigating
factor in determining an appropriate enforcement response or penalty in
a subsequent enforcement action. However, a State's or EPA's actions in
providing [[Page 32678]] compliance assistance is not a legal defense
in any enforcement action. This Policy does not limit EPA or a state's
discretion to use information on violations revealed through compliance
assistance as evidence in subsequent enforcement actions.
H. Applicability To States
EPA recognizes that states are partners in enforcement and
compliance assurance. Therefore, EPA will defer to state actions in
delegated or approved programs that are generally consistent with the
guidelines set forth in this Policy.
This Policy does not require SBAPs to provide to EPA information
that identifies the names or locations of specific businesses that are
found to be in violation through compliance assistance. EPA recommends,
however, that whenever an agency provides a correction period to a
small business, the agency notify the appropriate EPA Region or state
of its action, to assure that federal and state enforcement responses
to the identified violations are consistent. A state program that
offers confidentiality may not also offer a corrections period for the
same violations (see footnote 2).5
\5\ The CAA Sec. 507 policy establishes criteria for EPA
approval of SBAPs in State Implementation Plans to satisfy the
mandate in the CAA, and addresses confidential assistance in that
context.
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In developing this Policy, EPA balanced three primary
considerations. First, the Agency is seeking to provide States with
ample opportunity to adopt innovative approaches to environmental
compliance. Thus, the Policy provides the parameters within which
States have flexibility to tailor SBAPs to their needs.
Second, EPA recognizes that participation in SBAPs by individual
businesses is typically voluntary. Assistance is provided generally
upon request. Thus, the Agency is seeking to assure states of the
ability to provide incentives that will encourage many small businesses
to participate in SBAPs.
Third, the environmental statutes covered by this Policy generally
require, as a condition of delegation or authorization, that programs
be consistent with Federal requirements and that states have the
authority to take appropriate enforcement action with respect to
violations.6 Thus, EPA has an obligation to ensure that state
SBAPs are structured so as to maintain an appropriate level of
enforcement authority within delegated or authorized state programs.
The Agency believes this Policy will allow states sufficient latitude
to use an appropriate combination of delegated state enforcement
authority and compliance assistance activity to improve compliance in
the small business community.
\6\ For example, the Resource Conservation and Recovery Act
provides that the Administrator may authorize any State to
administer and enforce the Act unless he finds, among other things,
that ``such program does not provide adequate enforcement of
compliance with the requirements of'' the Act. 42 U.S.C. 6926(b).
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[FR Doc. 95-15435 Filed 6-22-95; 8:45 am]
BILLING CODE 6560-50-P
