03/11/88
Listing Asbestos Demolition and Renovation Companies Pursuant to
Section 306 of Clean Air Act
March 11, 1988
MEMORANDUM
SUBJECT: Listing Asbestos Demolition and Renovation Companies
Pursuant to Section 306 of the Clean Air Act
FROM: Michael S. Alushin
Associate Enforcement Counsel
Air Enforcement Division
John S. Seitz, Director
Stationary Source Compliance Division
Office of Air Quality Planning and Standards
Terrell E. Hunt, Director
Office of Enforcement Policy
Office of Compliance Analysis and Program Operations
TO: Addressees
We urge you to consider listing, under Section 306 of the Clean Air Act,
contractors who are violators of the asbestos demolition and renovation (
D&R ) standards, 40 CFR Part 61, Subpart M. Since significant amounts of
federal money are involved in asbestos removal, we think that you will find
that contractor listing can be an effective sanction against recalcitrant
violators. It will deprive them of the privilege of contracting or
subcontracting with federal agencies or with any other entity which has
received federal grants or loans for asbestos removal.
Contractors convicted of criminal violations under Section 113(c)(1)
will be automatically listed under the Mandatory Listing provisions, 40
CFR Section 15.10. Under 40 CFR Section 15.11, EPA has the discretion
to list contractors who
o have violated an administrative order under Section 113(a) or (d),
Section 167 or Section 303,
o have been issued a Notice of Noncompliance under Section 120,
o have been issued any form of civil ruling by a federal, state or
local court, as a result of noncompliance with clean air standards,
2.
o have been convicted by a state or local court of any criminal
violations of the CAA or by a federal court for criminal violations
under Section 113(c)(2) ( for making false statements, records or
reports ); or
o have had a civil judicial enforcement action filed against them in
federal district court for CAA violations.
Asbestos D&R contractors differ from the traditional "stationary
sources" of air pollution, because each job is done at a different
construction site, generally owned by someone other than the asbestos D&R
company. Therefore, the enclosed legal memorandum was prepared to clarify
the application of the contractor listing regulations to asbestos D&R
contractors.
This memorandum addresses the question of whether the business address
of an asbestos D&R company may be listed as the "violating facility" when
placing an asbestos D&R company on the List of Violating Facilities under
Section 306 of the Clean Air Act. It concludes that the business address of
an asbestos D&R company, rather than the address of the demolition site,
should be used to identify the "violating facility" when placing an asbestos
D&R company on the List of Violating Facilities.
We need your help to make this program a success. To get off to a good
start, establishing some clear precedents, we need your nomination of
candidates for listing. We hope to start with contractors with both
egregious substantive violations and notice violations. If a nationwide or
very large contractor has distinct regional or other sub-divisions, you
should consider whether naming the smaller unit as the "listed facility" is
more appropriate ( cf. page 6 of the enclosed legal memorandum for a
discussion of this aspect ). Please contact Rich Biondi in SSCD ( 382-2826
) or Charlie Garlow ( 475-7088 ) or Justina Fugh ( 382-2864 ) in OECM-Air to
consult about potential candidates for listing before sending a formal
recommendation to list to Headquarters.
Addressees:
Regional Counsels
Regions I-X
Air Management Division Directors
Regions I, III, & IX
Air and Waste Management Division Director
Region II
3.
Air, Pesticides and Toxics Management Division Directors
Regions IV and VI
Air and Toxics Division Directors
Regions VII, VIII, and X
Air and Radiation Division Director
Region V
cc: Thomas L. Adams, Jr.
Assistant Administrator for Enforcement
and Compliance Monitoring
J. Craig Potter
Assistant Administrator for Air and Radiation
Jonathan Z. Cannon
Deputy Assistant Administrator for Civil Enforcement
Paul R. Thompson, Jr.
Deputy Assistant Administrator for Criminal Enforcement
Gerald A. Bryan, Director
Office of Compliance Analysis and Program Operations
Francis S. Blake
General Counsel
Deputy Regional Administrators
Regions I-X
Deputy Regional Counsels
Regions I-X
Alan W. Eckert
Associate General Counsel for Air and Radiation
Robert A. O'Meara, Chief
Control Technology and Compliance Section, Region I
Ken Eng, Chief
Air Compliance Branch, Region II
Bernard Turlinski, Chief
Air Enforcement Branch, Region III
James T. Wilburn, Chief
Air Compliance Branch, Region IV
Larry Kertcher, Chief
Air Compliance Branch, Region V
4.
John Hepola, Chief
Air Enforcement Branch, Region VI
Charles Whitmore, Chief
Air Compliance Section
Doug Skie, Chief
Compliance Section, Region VIII
Charles Seely, Chief
Compliance Section, Region IX
Michael Schultz, Chief
Compliance Section, Region X
Pam Hill, Air Team Leader
Office of Regional Counsel, Region I
Faith Halter, Air Branch Chief
Office of Regional Counsel, Region II
Marcia E. Mulkey, Air & Toxics Branch Chief
Office of Regional Counsel, Region III
Bill Anderson, Air, Water, and General Law Branch Chief
Office of Regional Counsel, Region IV
Michael G. Smith, Air, Water, Toxics and
General Law Branch Chief
Office of Regional Counsel, Region V
Barbara Greenfield, Air Branch Chief
Office of Regional Counsel, Region VI
Robert Patrick, Air, Toxics and Pesticides Team Leader
Office of Regional Counsel, Region VII
Chris Phillips, Air Branch Chief
Office of Regional Counsel, Region VIII
Nancy Marvel, Air Team Leader
Office of Regional Counsel, Region IX
David Dabroski, Air and Toxics Team Leader
Office of Regional Counsel, Region X
Asbestos Enforcement Contacts
Regions I-X
March 11, 1988
MEMORANDUM
SUBJECT: Defining the "Violating Facility" for Purposes of Listing Asbestos
Demolition and Renovation Companies Pursuant to Section 306 of the
Clean Air Act
QUESTION PRESENTED: Can EPA use the business address or the address of some
other property used by an asbestos demolition and renovation
company to identify the "violating facility" when placing the
company on the List of Violating Facilities?
ANSWER PRESENTED: The business address or the address of some other
property used by an asbestos demolition and renovation company may
be used to identify the "violating facility," rather than the
address of the particular site involved in the violating activity,
when placing an asbestos demolition and renovation company on the
List of Violating Facilities. Under the definition in Section
15.4, the "facility" includes "any ... location or site of
operations ... to be used in the performance of a contract, grant
or loan."
2.
DISCUSSION
Background
Section 306(a) of the CAA ( 42 USC Section 7606(a) ) prohibits
federal agencies from entering into any contract for goods, materials or
services with a person who has been convicted of certain violations of the
CAA if the contract is to be performed at "any facility at which the
violation which gave rise to such conviction occurred if such facility is
owned, leased or supervised by such person." This section provides the
statutory authority for mandatory listing of CAA violators.
Section 306(c) of the CAA ( 42 USC Section 7606(c) ) is the statutory
basis for the discretionary listing of CAA violators. It directs the
President to issue an order:
(1) requiring each Federal Agency ... to effectuate the purpose and
policy of ( the CAA ) in such contracting or assistance activities, and
(2) setting forth procedures, sanctions, penalties, and such other
provisions ... necessary to carry out such requirement.
Section 508(c) of the Clean Water Act ( CWA ) ( 33 USC Section 1368 ) as
amended on October 18, 1982, by Pub. L. 95-500, Section 2, contained an
almost identical provision.
These provisions were implemented by Executive Order 11,738, issued on
September 12, 1973 ( 38 Fed. Reg. 25161 ). The Order states that it is the
policy of the Federal Government
to assure that each Federal agency empowered to enter into contracts for
the procurement of goods, materials, or services and each Federal agency
empowered to extend Federal assistance ... shall undertake such
3.
procurement and assistance activities in a manner that will result in
effective enforcement of the Clean Air Act and the ( Clean Water Act ).
Exec. Order No. 11,738, 35 Fed. Reg. 25161 (1973)
On April 16, 1975, EPA promulgated regulations at 40 CFR Part 15 ( 40
Fed. Reg. 17124 ) which provide procedures for insuring that Executive Branch
agencies conduct their procurement and assistance programs in accordance
with the President's responsibility for ensuring compliance with CAA and CWA
standards. These regulations authorize EPA to suspend or bar "facilities"
which are violating the CAA or the CWA from receiving Federal contracts or
subcontracts, grants or loans, by placing them on a List of Violating
Facilities. The regulations require mandatory listing of violating
"facilities" after the owner or operator is convicted for criminal
violations under Section 113(c)(1) of the CAA or Section 309(c) of the CWA.
They provide for discretionary listing of facilities where there are
continuing and recurring civil violations of the CAA or CWA.
The EPA List of Violating facilities is published in the Federal
Register twice a year and is updated in the Federal Register whenever a
facility is added to the list or removed from the list. The List is also
transmitted to Federal agencies with assistance responsibilities and to the
General Services Administration, which publishes a consolidated list of
barred, suspended or ineligible contractors.
1/ These regulations were revised on September 5, 1985 ( 50 Fed. Reg.
36188 )
4.
The Problem
The question which this memorandum addresses is what is the "facility"
to be placed on the List in the case of an asbestos demolition and
renovation company which has a history of continuing and recurring
violations of the National Emission Standard for Asbestos ( hereafter the
Asbestos NESHAP ) or which is owned or operated by a person who has been
convicted of a criminal violation of the Asbestos NESHAP. 2/
2/ Asbestos NESHAP regulations, issued pursuant to Section 112 of the
Clean Air Act, are codified at 40 CFR Part 61, Section 61.140 et seq.
Since asbestos demolition and renovation companies provide services, it is
sometimes more difficult to identify the "facility" of an asbestos
demolition and renovation company than it is to identify the "facility" of a
company which produces goods. Goods are generally produced in one or more
buildings owned or leased by the producer. Sometimes services are provided
at a location owned or leased by the provider. In other cases, services are
provided at a location owned or leased by the purchaser of the service.
Asbestos demolition and renovation companies which violate the asbestos
NESHAP regulations generally do so in the course of performing a contract to
demolish or renovate a building which is owned or leased by someone else.
If the contractor violates the asbestos regulations, the violations are most
likely to occur at the demolition or renovation site. Listing the address
5.
of the property at which the demolition or renovation work occurred as the
"violating facility" would not accurately identify the asbestos demolition
and renovation company which performed the work and, therefore, would not
accomplish the intended purpose of CAA Section 306(a) -- to assure that
persons or corporations convicted of knowing violation CAA standards or
limitations are ineligible to enter into Federal contracts until the
continuing or recurring violation has been corrected. 3/
3/ Of course, in cases where the owner of the building which was renovated
or demolished has also violated the asbestos NESHAP, the building may
also be listed as a "violating facility".
The issue is whether CAA Section 306 and the regulations promulgated to
implement this section, 40 CFR Part 15, permit EPA to list, as a
"facility", the executive office ( or similar address ) of the person ( or
company ) providing the services and taking the action that violated the
CAA.
Definition of Facility
EPA regulations implementing the Contractor Listing Program are found at
40 CFR Part 15. Section 15.11 authorizes the Listing Official to "place
a facility on the List" under stated conditions. Section 15.4 defines
"facility":
"Facility" means any building, plant, installation,
structure, mine, vessel or other floating craft, location
or site of operations owned, leased or supervised by an
applicant, contractor, grantee, or borrower to be used in
the performance of a contract grant or loan. Where a
location or site of operations contains or includes more
than one building, plant, installation, or structure, the
entire location or site shall be deemed to be a facility,
6.
except where the Assistant Administrator determines that
independent facilities are located in one geographic area. (
emphasis added ).
For the purposes of the Contractor Listing Program, the "facility" of a
company includes any location used by the company to produce the particular
goods or provide the particular services which the government may wish to
purchase or assist others to purchase under a particular contract. 4/
4/ A different definition of "facility" is used in the Asbestos NESHAP, 40
CFR Section 61.141. That definition should be used for the purpose
of determining whether the owner or operator an of an asbestos
demolition and renovation company complies with the NESHAP. If the
Agency determines that the owner or operator of the company violated any
of the requirements of the NESHAP, then the definition in 40 CFR
Section 15.4 should be used to determines that the "violating facility"
is.
To determine whether a particular "building, plant, installation ...
location or site," to the production of the goods or services which the
government might procure or assist others in procuring. Depending on
circumstances, the relevant "facility" may or may not include all locations
owned by a company. If several different locations are involved in
manufacturing a particular product or in supplying a particular service, all
7.
of those locations together make up the "facility". 5/
5/ Where a company has several different divisions or factories or
regional offices, each producing particular goods or services
independently from each other, each would be a separate facility; and if
one of those divisions or factories or regional offices is violating the
CAA or the CWA, that particular unit of the company is the only one that
would be placed on the List of Violating Facilities.
The Legislative History
This definition of "facility" is consistent with the purpose of Section
306, which was designed to be a sanction available to EPA against those who
would provide goods and services to the Federal government using
noncomplying facilities. Section 306 of the CAA is derived from Senate bill
S. 4358. Section 306(a) of the Senate bill read as follows:
Section 306(a) Any person (1) required to comply with an
order issued by a Federal court pursuant to this Act who
fails to comply within the time period specified in such
order, or (2) convicted by a Federal court for knowing
violation of any applicable schedule or timetable of
compliance, emissions requirement, prohibition, emission
standard, or standard of performance, shall be ineligible
to enter into any contract with any Federal agency for the
procurement of goods, materials, and services to perform
such work at or with any facilities subject to such action
by the court which are owned, leased or supervised by such
person. Such ineligibility shall continue until the
Secretary ( of HEW ) certifies compliance with such order,
or that the conviction giving rise to the violation has
been corrected. ( emphasis added ).
S. 4358, 91st Cong., 2d Sess. Section 306 (1970).
8.
The Senate Committee on Public Works issued a report to accompany S.
4358, in which the following explanation of Section 306 was given:
The Committee considered proposals offered by Senator
Muskie and Senator Cook to assure that the Federal
Government does not patronize or subsidize polluters in
its procurement practices and policies.
Section 306 would make any person or corporation who
fails to comply with a court order issued under this Act
or who is convicted of a knowing violation of any schedule
or timetable of compliance, emission requirement,
prohibition, emission standard, or standard of
performance, ineligible for a Federal contract for any
work to be done at the polluting facility....
This section would be limited, whenever feasible and
reasonable, to contracts affecting only the facility not
in compliance, rather than the entire corporate entity or
operating division.
There might be cases where a plant could not
participate in a Federal contract due to a violation but
another plant owned by the same company might bid and
transfer other work to the first plant. This type of
action would circumvent the intent of this provision. In
this case, the company's second facility should also be
barred from bidding until the first plant returns to
compliance.
There would also be instances where a second plant
within a corporation was seeking a contract unrelated to
the violation at the first plant. In such a case, the
unrelated facility should be permitted to bid and receive
Federal contracts. ( emphasis added ).
S. Rept. No. 1196, 91st Cong., 2d Sess. 39 (1970).
Section 306 of S. 4358 was passed by the Senate without change. A
companion bill in the House, H.R. 17255, 91st Cong., 2d Sess. (1970), had no
provision about procurement policies. In conference, the provision making
persons convicted of knowing violations of the CAA ineligible for Federal
contracts or assistance was retained. In lieu of the provision of the
9.
Senate bill extending ineligibility to persons subject to, but not complying
with, court orders, the conference committee substituted a more general
requirement that "the President shall cause to be issued an order (1)
requiring each Federal agency ... to effectuate the purpose and policy of
this chapter in such contracting and assistance activities,...." 6/
6/ When the CAA amendments were reported out of the conference committee,
the conference report on Section 306 stated:
The conference substitute is more limited than the Senate
provision. It provides that persons convicted of a knowing violation of
standards or limitations shall be ineligible to enter into Federal
contracts until the Administrator certifies that the violation has been
corrected. The remainder of the conference substitute follows the
Senate amendment by requiring the President to issue an order requiring
Federal agencies (1) to assist in the implementation of this act and (2)
to establish sanctions for noncompliance.
The Executive Order
The President complied with this mandate by issuing Executive Order No.
11,602 on June 29, 1971. E.O. No. 11,602 was superseded by Executive Order
No. 11,738, on September 10, 1973. 7/
7/ Exec. Order No. 11,738, 38 Fed. Reg. 25,161 (1973), amended Exec. Order
11,602, 36 Fed. Reg.12475 (1971), by adding the words "Federal Water
Pollution Control Act" to Section 1 and changing references to "the Act"
in Sections 2, 4, 6 and 9 to "the Air Act" and adding references to "the
Water Act." Exec. Order 11,738 also adds Section 11, which requires
that regulations issued pursuant to CWA Section 508 shall be uniform
with regulations issued pursuant to CAA Section 306 to the maximum
extent possible.
Exec. Order 11,738 sets forth the following Federal Conference Report No.
1783 ( to accompany H.R. 17255 ), 91st Cong. 2d Sess. ( Dec. 17, 1970 ),
reprinted in 1970 U.S. Code Cong. & Ad. News 5356, 5389.
10.
procurement policy:
Section 1. Policy. It is the policy of the Federal
Government to improve and enhance environmental quality.
In furtherance of that policy, the program prescribed in
this Order is instituted to assure that Federal agencies
are empowered to enter into contracts for the procurement
of goods, materials or services or to extend Federal
assistance by way of grants or contracts in such a manner
that will result in effective enforcement of the Clean Air
Act ... and the Federal Water Pollution Control Act. ... (
emphasis added ).
Section 2 of the Order states, in part:
(b) In carrying out his responsibilities under this Order, the
Administrator shall ... designate facilities which have given rise
to a conviction for an offense under section 113(c)(1) of the Air
Act ... (and) publish and circulate ... lists of those facilities,
together with the names and addresses of the persons who have been
convicted of such offenses ... ( emphasis added ).
Section 3 prohibits any Federal agency from entering into any contract with
or extending any assistance to any facility which has been listed pursuant
to CAA Section 306. Section 4 requires that all Federal procurement
regulations
... issued by any agency of the Executive Branch shall ...
be amended to require ... inclusion of a provision
requiring compliance with the Air Act, the Water Act, and
standards issued pursuant thereto in the facilities in
which the contract is to be performed, or which are
involved in the activity or program to receive assistance.
( emphasis added ).
Section 5 authorizes the Administrator of the Environmental Protection
Agency "to issue such rules, regulations, standards and guidelines as he may
deem necessary and appropriate to carry out the purposes of this Order."
Sections 1 and 5 of Exec. Order 11,738, together with Section 306(c) of the
11.
CAA ( and Section 508(c) of the CWA ), provide the authority for the
discretionary listing program. EPA's Contractor Listing regulations,
codified at 40 CFR Part 15, implement the Executive Order.
Discussion
As defined in 40 CFR Section 15.4 a "facility" includes any building,
location, or site to be used in the course of performing the contract or
loan. While the buildings or sites at which work is performed are often
also the buildings or sites at which a violation occurs, the fact that the
violation may occur "off-site", i.e., at a location owned or operated by a
customer, does not mean that such locations are not part of the "facility"
"to be used in the performance of" a contract. The "facility" of a
contractor also includes the business address which the company uses in its
contracts, even if the business address is simply a post office box.
As Congress recognized, a company may be violating the CAA or CWA at one
"facility" and have other complying "facilities" which are not involved in
the production of the same goods and services. Congress differentiated
between entirely uninvolved "facilities", on the one hand, and involved
"facilities", e.g., where a sister "facility" "B" was used to circumvent a
ban on goods or services produced at "facility" "A".
The definition of "facility" in Section 15.4 implements that concept.
If an asbestos demolition and renovation company has two or more divisions
12.
which operate independently of each other, each division would, at least
presumptively, be a separate "facility" under the definition found in
Section 15.4. If only one of the divisions is convicted of criminal
violations of the asbestos NESHAP or if only one of the divisions has a
record of continuing or recurring noncompliance with the asbestos NESHAP,
only that division of the company would be placed on the List of Violating
Facilities, absent the kind of situation described by Congress.
This is the only way that an asbestos demolition and renovation
"facility" can be defined which is consistent with the intent of the
statutes, the executive orders, and the regulations. A contrary
interpretation would fail to "effectuate the purpose and policy of ( the CAA
) in ( the government's ) contracting and assistance activities" as required
by Section 306. The "facility" concept is intended to carry out, not to
thwart, the intent of Section 306. While the business address of the
"facility" will often coincide with the address of the site where violations
occurred, there is no requirement in Section 306 that it do so. Listing is
intended broadly to sanction "persons" who continue to violate the CAA by
depriving them of access to Federal contracts for goods and services and to
federal grants and loans. Congress did not intend to limit this sanction to
contractors who engage in violative conduct on property that they happen to
own or control. So long as the business address of the asbestos demolition
13.
and renovation company is fairly associated with the activity which is the
violating conduct, that address may be used to identify the "facility" to be
placed on the List, notwithstanding that additional, related work ( and the
actual violations ) occurred elsewhere.
Return to Enforcement Policies