09/14/89
Final Penalty Policy for New Residential Wood Heaters>
40 CFR Part 60, Subpart AAA>
Clean Air Compendium No. VII.E.30
MEMORANDUM SEP 14 1989
SUBJECT: Final Penalty Policy for New Residential Wood Heaters, 40 CFR Part
60, Subpart AAA
FROM: /s/ Terrell E. Hunt
Associate Enforcement Counsel
Air Enforcement Division
/s/ John S. Seitz, Director
Stationary Source Compliance Division
TO: Addressees
Attached please find the final penalty policy to be used in enforcing
the New Source Performance Standards ( NSPS ) for residential wood heaters
set forth at 40 CFR Part 60, Subpart AAA.
Under the NSPS, wood heaters manufactured after the applicable dates
must meet certain particulate matter emission standards. Thus,
manufacturers must design and produce fuel-efficient appliances. Because we
are regulating mass-produced consumer items, this program will be managed at
Headquarters through the Federal Programs Section of the Stationary Source
Compliance Division and OECM-Air. For this reason, the penalty policy was
developed by OECM and SSCD. Please file this policy as Appendix VII to the
Clean Air Act Stationary Source Civil Penalty Policy, Part E, document #30
of the Policy Compendium.
Attachment
Addresses:
Gerald Emission, Director
Office of Air Quantity Planning and Standards
Edward E. Reich
Acting Assistant Administrator
for Civil Enforcement
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Alan W. Eckert
Associate General Counsel
Air and Radiation Division
Linda Lay, Chief
Federal Programs Section
Stationary Source Compliance Division
Air and Waste Management Division Director
Region II
Air Management Division Directors
Regions I, III, IX
Air and Radiation Division Director
Region V
Air, Pesticides and Toxics Management Division Directors
Regions IV and VI
Air and Toxics Division Directors
Regions VII, VIII and IX
Regional Counsels
Regions I - X
Air Branch Chiefs / Team Leaders
Office of Regional Counsel
Regions I - X
David Buente, Chief
Environmental Enforcement Section
Department of Justice
Bob Van Heuvelen, Assistant Chief
Environmental Enforcement Section
Department of Justice
CLEAN AIR ACT STATIONARY SOURCE PENALTY POLICY
APPENDIX VII
RESIDENTIAL WOOD HEATERS
40 CFR PART 60, SUBPART AAA
The Clean Air Act Stationary Source Civil Penalty Policy ( "the CAA
penalty policy" or "the general penalty policy" ) provides the basis for
determining the minimum civil penalty U.S. EPA will accept in settlement of
enforcement actions taken pursuant to Title I of the Clean Air Act. The CAA
penalty policy provides guidance to pre-trial settlement of initial
enforcement actions in district courts.
The New Source Performance Standard for Residential Wood Heaters, 40 CFR
Part 60, Subpart AAA, warrants a penalty scheme related to the CAA penalty
policy, but adjusted to reflect certain unique features of the wood heater
industry. Unlike other NSPS programs, for example, the wood heater 1/
standard regulates a mass-produced consumer product marketed nationally and
is directed at manufacturers as well as retailers and distributors.
1/ For the purpose of this penalty policy, the following terms will be
used interchangeably and regarded as synonymous: "residential wood
heater," "residential wood stove," "wood heater," "wood stove."
In addition, management of the wood stove enforcement program will be
centralized at Headquarters rather than delegated to the Regions.
This appendix should be used in conjunction with the general penalty
policy to determine the preliminary deterrence amount, which is the sum of
the economic benefit 2/ accruing from noncompliance and the gravity
component reflecting the seriousness of the violation. 3/
2/ The economic benefit gained by a violator due to delayed or avoided
costs will be determined using the BEN computer model. In certain
instances, the government may settle a case for an amount less than the
calculated economic benefit after evaluating the factors mentioned in
the general penalty policy.
3/ In determining of the amount of civil penalty, Section 113 of the CAA
lists three considerations, inter alia: (1) size of the business, (2)
economic impact of the penalty on the business, and (3) seriousness of
the violation.
This appendix retains in full the concept of adjusting the gravity component
to provide equitable treatment of the regulated community. The penalty
adjustments may be based upon consideration of the violator's: (1) degree
of willfulness or negligence, (2) degree of cooperation, including prompt
reporting of noncompliance and prompt correction
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of environmental problems, (3) history of noncompliance, (4) ability to pay,
and (5) other unique factors.
The wood stove penalty policy details most of violations articulated in
the regulations and assesses a basic penalty for each. Of the factors set
forth in the general penalty policy only the size of the violator matrix and
the adjustment factors are retained completely. The matrix for length of
time of violation has been revised. All other factors are inapplicable to
the wood stove penalty policy.
Every gravity component calculation will be based on a case-by-case
examination of the facts underlying the enforcement action. In developing
the penalty values for these violations, we evaluated the relative
importance of each respective requirement to the regulatory scheme. In
certain instances, U.S. EPA may find that a deviation from a requirement is
tantamount to a complete violation and hold the violator liable for the full
amount of the assessed penalty. In other instances, however, U.S. EPA may
believe that the deviation is minor and therefore assess a reduced penalty.
As an example, consider the Section 60.538(b) violation, offering for sale a
stove without a permanent label. If the stove has not label at all, the
full penalty will be levied. If, on the other hand, the permanent label is
merely deficient, not conforming to the requirements under Section
60.536(a)(1)(2), then the penalty amount assessed will likely be less than
the full amount. The following violations fall into this "none / deficient"
category:
- 60.533(o)(2) parameter quality assurance program
- 60.533(o)(3) emission test QA program
- 60.536(a)(1), (2) permanent label
- 60.537(a)(1), (2) maintain record of certification test
- 60.537(a)(1), (3) maintain record of parameter QA program
- 60.537(a)(1), (4) maintain record of emission test QA program
- 60.537(a)(1), (5) maintain record of sales
- 60.537(c) maintain / produce sealed stove
- 60.537(e)(1), (4) apply for small manufacturer exemption
- 60.537(e)(2) report number of exempted stoves manufactured
- 60.537(e)(3) maintain record of production
- 60.537(f) report biennially on certified model lines
- 60.537(g) maintain record of exempted stoves
- 60.537(h) maintain record of used stoves
- 60.537(i) maintain records for five years
- 60.538(a) operation of stove without permanent label
- 60.538(b) offer for sale a stove w/o permanent label
- 60.538(d)(1), (2) offer for sale a stove w/o temporary label
- 60.538(d)(1)(ii) offer for sale a stove w/o owner's manual
For the other violations contained in pages 3 to 6 of this penalty policy,
U.S. EPA intends to assess the full amount.
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CALCULATION OF GRAVITY COMPONENT
SIZE OF THE VIOLATOR ( calculate once per violator )
Net worth of corporation or
net current assets or partnership:
Under $100,000 $1,000
$100,001 - $1,000,000 2,000
$1,000,001 - $5,000,000 8,000
$5,000,001 - $20,000,000 12,000
$20,000,001 - $40,000,000 20,000
$41,000,001 - $70,000,000 40,000
Over $70,000,000 65,000
LENGTH OF TIME OF VIOLATION ( calculate for each violation )
0 to 6 months $ 500
7 to 12 months 1,000
13 to 18 months 1,500
over 19 months 2,000
VIOLATIONS OF 40 CFR PART 60, SUBPART AAA
60.530(c)(2)
Sale of Oregon exempted stove after July 1, $5,000 per model line
1992 and $500 per unit
60.530(c)(3)
Failure to notify of any modification to $500 per unit
Oregon certification
60.530(n)
Failure to perform certification testing $5,000 per model line
and $500 per unit
60.533(o)(2)
Failure to conduct adequate parameter QA $500 per unit not
inspection tested as required
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60.533(o)(3)
Failure to conduct emission test QA $500 per unit not
program tested as required
60.536(a)(1), (2)
Failure to have permanent label on stove $2,000 per model line
manufactured after July 1, 1988 ( related and $2 per unit
to 60.538(b), but we can bring both in
an enforcement action )
60.536(i), (j)
Failure to have temporary label on a stove $1,000 per model line
with a permanent label and $2 per unit
60.536(k)
( please see 60.538(d)(1)(ii) )
60.537(a)(1), (2)
Failure to maintain record of certification $100 per model line
test
60.537(a)(1), (3)
Failure to maintain record of parameter QA $1000 per model line
program
60.537(a)(1), (4)
Failure to maintain record of emission test $1000 per model line
QA program
60.537(a)(1), (5)
Failure to maintain record of sales $1000
60.537(c)
Failure to maintain or produce sealed stove $750 per sealed stove
required
60.537(e)(1), (4)
Failure to apply for small manufacturer's $250
exemption
60.537(e)(2)
Failure to report number of exempted heaters $500
manufactured between 7/1/88 and 6/30/89
60.537(e)(3)
Failure to maintain wood heater production $1,000
records for 7/1/87 to 7/1/89
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60.537(f)
Failure to report biennially on certified $100 per model line
model line
60.537(g)
Failure to maintain record of R&D exempted $500
stoves
60.537(h)
Failure to maintain record of used stoves $500
60.537(i)
Failure to maintain record for five years $500
60.538(a)
Operation of affected facility without a $500 per unit
permanent label
60.538(b)
Offer for sale a stove without certification $2,000 per model line
test or permanent label and $2 per unit
60.538(c)
Offer for domestics sale of export stove $1,000 per unit
Sale of stove without a permanent label after $1,000 per unit
July 1, 1990
60.538(d)(1)(i), (2)
Offer for sale a stove with a permanent label $1,000 per model line
but not temporary label and $2 per unit
60.538(d)(1)(ii)
Offer for sale a stove with a permanent label $500 per unit
but no owner's manual ( encompasses 60.536(k) )
60.538(d)(1)(iii)
Offer for sale a stove with a permanent label $1,000 per model line
but without a catalyst warranty and $2 per unit
60.538(e)
Sale of stove after notice of certification $5,000 per unit
revocation
60.538(f)
Installation or operation of stove $2,000 per unit
inconsistent with label or owner's manual
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60.538(g)
Operation of stove with deactivated or $2,000 per unit
removed catalyst
60.538(h)
Operation of altered stove $5,000 per unit
60.538(i)
Alternation or removal of permanent label $1,000 per unit
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EXAMPLE
An inspector files a violation report against Blockbuster Manufacturing,
which produces the Blue Flame and Heat Jet model lines. The report, dated
November 8, 1988, states that the temporary label on the Blue Flame model
line is deficient and that the company failed to conduct certification
testing on the Heat Jet model line. In addition, the Heat Jet model line
lacks permanent and temporary labels as well as owner's manuals. Blue Flame
production since July 1, 1988 totalled 464 units with sales of 223 units,
while Heat Jet production since July 1, 1988 totalled 108 units with sales
of 36 units. Blockbuster's net worth is estimated at $800,000.
The initial assessment of Blockbuster's violations indicates the
following violations by model line:
Blue Flame
- attaching deficient temporary-label
- selling unit with deficient temporary label
Heat Jet
- failure to conduct certification testing
- failure to attach permanent label
- selling unit without permanent label
( NOTE: the temporary label and owner's manuals violations are inapplicable
for the Heat Jet model line because the units were not permanently labeled)
U.S. EPA issues a Finding of Violation to Blockbuster which includes
both the Blue Flame and Heat Jet violations. In addition, an Administrative
Order is issued to correct these violations. Blockbuster does correct all
the Blue Flame violations by the stated deadline, but does not take any
action toward correcting the Heat Jet violations. When contacted by EPA
personnel after the deadline, Blockbuster say it feels no obligation to
correct the Heat Jet violations. At this point, EPA decides to bring a
civil action against Blockbuster concerning the Heat Jet model line only.
The preliminary deterrence amount is calculated by adding the economic
benefit and gravity components. The economic benefit component is
subdivided into two categories: capital investments, or one-time costs, and
annual expenses. For this example, current capital investments are $9,000
for a full test series and $4,000 for model line labels and manuals.
Current annual expenses include $3,067 for emissions and parameter
inspection quality assurance and $1,400 for research and development. EPA
personnel run the BEN1 model assuming compliance in April 1989 and the
payment of penalty in March 1989. The BEN1 model shows an economic benefit
of $3,252. A
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copy of the BEN1 printout is attached for reference. The gravity component
of $66,788 is calculated as shown below:
Basic Per Length Size of
Violation Rate Unit of Time Violator
No certification test $5,000 $500(108) $500 $2,000
60.533(n)
Not attaching permanent 2,000 2(180) 500
label 60.536(a)(1), (2)
Selling unit without 2,000 2(36) 500
permanent label
60.538(b)
In light of Blockbuster's lack of cooperation in correcting the Heat Jet
violations, EPA decides to increase the gravity component by 25%. The
gravity component becomes $66,788(1.25) = $83,485. The bottom line amount
for the purposes of settlement is $3,252 ( the economic benefit ) - $83,485
( the adjusted gravity component ) = $86,737.
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