11/21/86

Early Compliance And Stipulated Penalties in VOC Enforcement Cases

                               NOV 21 1986

MEMORANDUM

SUBJECT: Early Compliance And Stipulated Penalties in
         VOC Enforcement Cases

FROM:    John B. Rasnic, Acting Director
         Stationary Source Compliance Division
         Office of Air Quality Planning and Standards

         Michael S. Alushin
         Associate Enforcement Counsel
         Air Enforcement Division

TO:      Air Management Division Directors
         Regions I, III, V and IX

         Air and Waste Management Division Director
         Region II

         Air, Pesticides, and Toxics Management Division
          Directors
         Regions IV and VI

         Air and Toxics Division Directors
         Regions VII, VIII and X

         Regional Counsels
         Regions I-X



    In an August 7, 1986 policy issued by Craig Potter and Richard Mays
("Policy on the Availability of LST Schedules In CAA Enforcement
Actions"), EPA disallowed any compliance schedules in consent decrees
which gave the source more than three months after the filing of the
complaint to reach compliance through the application of low solvent
technology.  Two issues have arisen concerning the application of this
policy which we hope to answer below.

                                  - 2 -

    First, consent decrees may contain a clause providing for compliance
through a means other than add-on controls prior to the compliance date
for add-on controls.  Such a clause could read "(Source) agrees to attain
final compliance by ( date of add-on controls ) through the following
schedule for controls, or by some other means at an earlier date."  The
language should be general in order to keep EPA from committing itself to
a compliance plan other than the add-on control schedule.

    Second, even if the source achieves early compliance through low
solvent technology, EPA will not forgive stipulated penalties which have
been incurred as the result of missed milestones in the schedule for
installing add-on controls.  However, we will not require stipulated
penalties for the milestones which come after the date that the source
achieved compliance through low solvent technology.  The rationale for
this position is that we view the add-on schedule to be the "real" one in
these cases, and in order for sources to take that schedule seriously, we
need to collect stipulated penalties until the time compliance actually
occurs.  Including a clause allowing complete forgiveness of stipulated
penalties would encourage sources to continue to gamble on the possible
success of low-solvent technology, precisely the situation that we hoped
to end by issuing the August 7, 1986 policy.

cc:  VOC Workgroup Members