10/29/91

Guidance on Choosing the Appropriate Forum in Clean Air Act Stationary Source Civil Enforcement Actions

               UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                          WASHINGTON, D.C.  20460

MEMORANDUM

SUBJECT:  Guidance on Choosing the Appropriate Forum in Clean Air Act

          Stationary Source Civil Enforcement Actions

FROM: /s/ Michael S. Alushin
          Enforcement Counsel
          Air Enforcement Division

      /s/ John B. Rasnic
          Director
          Stationary Source Compliance Division

TO:       Addressees

I.  INTRODUCTION

    This memorandum transmits the final Guidance on Choosing the
Appropriate Forum in Clean Air Act Stationary Source Civil Enforcement
Actions ( "Guidance" ), to be used for determining whether an enforcement
action is best pursued in the administrative or the judicial forum.  A
draft of this Guidance was circulated to the Regions in August, 1991.
Regional comments were relatively minor, and for the most part were
adopted and incorporated in the final Guidance.  A discussion of the most
significant comments appears in Section IV below.

II.  SUMMARY OF THE GUIDANCE

    The Guidance consists of a number of factors that must be considered
in determining whether to bring a Clean Air Act ( CAA ) civil enforcement
action in the administrative or judicial forum.  The factors, which are
each discussed in detail, include the two statutory limitations on
administrative actions:  a $200,000 cap on penalties sought, and a twelve
month limitation on the oldest alleged violation.  Guidelines on the
proper handling of multiple and repeat violations have been greatly
expanded in recognition of their importance, particularly with regard to
the $200,000 statutory cap.  The remaining factors discussed are the need
for court-supervised injunctive relief, evidence of criminal violation,
extensive post-filing discovery, and new legal issues.  Our goal has been
to preserve maximum Regional Flexibility while at the same

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time clearly delineating a small number of fundamental case selection
requirements.

III.  ADMINISTRATIVE CASE DEVELOPMENT

    A vital element of our new administrative program is administrative
case development.  Many of the Agency's current administrative enforcers
in other media have stressed to us the critical importance of
investigating and developing administrative actions to the fullest extent
possible prior to the filing of the administrative complaint.  This case
development, which can be accomplished by various statutory tools such as
CAA section 114 requests and the new section 307(a) subpoena power, is
important for several reasons.

    First, an administrative action should be fully developed to allow the
Agency to plead a firm, accurate and defensible penalty amount in the
complaint.  This amount, the preliminary deterrence amount under the CAA
Stationary Source Civil Penalty Policy, is based on numerous factors.
Information addressing each factor is needed prior to filing in order to
accurately calculate the pleaded penalty amount.

    Second, since one of the goals of the administrative program is
expedited enforcement proceedings, the Agency should minimize its requests
for post-filing discovery.  This will both prevent the Agency's own
requests from causing delay, and place the Agency in a favorable position
to resist defendants' post-filing discovery requests.  Third, post-filing
administrative discovery is much more limited than discovery in judicial
actions.  Thus, where extensive post-filing discovery and investigation is
necessary, the Guidance states that the Agency should generally proceed
judicially where broad discovery under the Federal Rules of Civil
Procedure is available.

    One notable circumstance in which full pre-filing administrative case
development may not be possible is where the oldest violation to be pled
is already close to a year old ( e.g., an asbestos NESHAP case obtained
from a delegated State where the alleged violations are already somewhat
dated ).  The current policy is to address administratively only those
alleged violations dated within twelve months of the filing of the
administrative complaint.  Thus, a prospective administrative action
containing violations already close to twelve months old may need to be
filed quickly in order to keep the violations within the twelve month
limit.  1/

  1/ If the amount to be pled in such an action is near $200,000, the
    Agency decision-maker may wish to consider whether the action might be
    better filed in the judicial forum, to preserve a unitary action if
    later investigation provides evidence of additional violations.  In
    contrast, if the administrative forum is chosen, a separate new
    administrative action would be required to address any subsequently
    discovered violations if their inclusion in the previous action would
    exceed the $200,000 statutory cap.

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IV.  RESPONSES TO SPECIFIC COMMENTS

    1.    Twelve Month Limit on First Alleged Date of Violation / Meaning
of the Phrase "Initiation of the Administrative Action."  One Region
argued vigorously that the CAA's twelve month limit on the first alleged
date of violation should be tolled by the filing of an NOV or FOV, rather
than by the filing of an administrative complaint.  The argument turns on
the interpretation of the durational limit set out in CAA section 113(d),
which provides that "(t)he Administrator's authority under this Paragraph
( i.e., the authority to issue administrative penalty orders ) shall be
limited to matters where ... the first alleged date of violation occurred
no more than 12 months prior to the initiation of the administrative
action" ( emphasis added ).

    The threshold issue is whether the boldface phrase means only the
filing of an administrative complaint, or whether it could be construed to
also include the issuance of a federal or State NOV.  2/

  2/ If the latter approach were adopted, the Agency could file an
    administrative complaint at any time subsequent to the issuance of the
    NOV, subject only to general CAA and other statutes of limitations on
    the filing of enforcement actions.

But even assuming that the phrase could be legally construed to include
both administrative complaints and NOVs, the separate policy issue is
whether it would be advisable for the Agency to adopt this approach to
tolling the durational limit ( the "NOV approach" ), or whether the Agency
should use only administrative complaints for this purpose ( the
"administrative complaint approach" ).

    For initial implementation of this program, we believe that the best
policy course is to adopt the administrative complaint approach.  After
conducting a considerable amount of legal research and consulting with
many of the Regional Counsel and Air program offices, we have concluded
that using NOVs to toll the twelve month limit would involve substantial
legal risk.  The NOV approach, if broadly adopted, would be strenuously
litigated by defendants.  This would significantly slow our administrative
enforcement program and leave in limbo all administrative penalties
assessed in actions that employed the NOV approach until federal court
opinion(s) resolved the matter.  3/

  3/ SSCD is reviewing with the Regions whether it would enhance the
    program to use the NOV approach.  If we should seek to use this
    approach, the legal principle would be established through test cases
    selected in consultation with Headquarters.

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    Moreover, the administrative complaint approach helps ensure that the
CAA administrative enforcement actions will proceed expeditiously.  In
most circumstances, the key to quick resolution of these actions will be
the expeditious filing of the Agency's administrative complaint and the
defendant's answer, which together will provide a solid foundation for
settlement.  The NOV approach would allow the Agency to delay the filing
of an administrative complaint for months or even years -- an undesirable,
process-slowing result.

    In response to Regional concerns that a substantial number of
potential administrative enforcement actions would be time-barred under
the administrative complaint approach, the draft final Revised Guidance on
Significant Violators ( SV ), Timely and Appropriate ( T&A ), and
Federally Reportable State / EPA Enforcement Responses for Significant Air
Pollution Violators ( SVs ) ( "SV / T&A Guidance" ) has been amended to
allow enforcement actions that are good candidates for administrative
penalty action but which contain violations that are in danger of becoming
time-barred, to be moved to the top of the priority list so that an
administrative complaint can be filed within the twelve month limit.  4/

  4/ Hopefully, the Regions and the States will be able to further
    streamline their enforcement coordination in order to reduce the
    number of potential administrative actions that would run this
    immediate risk.

Moreover, after the Agency has acquired some experience with using the
administrative complaint as the twelve month toll, we will consult with
the Department of Justice about extending the twelve month period for any
classes of actions that we can demonstrate to be routinely time-barred
under the administrative complaint approach.

    If even after the amendment to the SV / T&A Guidance the
administrative complaint approach still effectively precludes a
substantial number of violations from being addressed in an administrative
action, a judicial action, or in some cases a field citation, will still
be available to address the violations.

    2.    Flexibility Regarding Court-Supervised Injunctive Relief.
Several Regions argued that the draft Guidance, which stated that
court-supervised injunctive relief should be sought for complex or
capital-intensive compliance activities, was too restrictive.  Instead,
these Regions urged this type of compliance activity be made a
discretionary factor, albeit a weighty one, in the decision to seek
court-supervised injunctive relief.  Recognizing that court-supervised
injunctive relief may not always be necessary in these situations, the
Guidance has been amended to require the injunctions "in most
circumstances."  However, we expect that

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court-supervised injunctions will be employed in all but exceptional
situations of this type.

    3.    Administrative Action for Penalties with Concurrent Judicial
Action for Injunctive Relief.  One Regional commentator requested that the
"Need for Court-Supervised Injunctive Relief" section of the Guidance be
amended to permit the Agency to split an enforcement action into an
administrative action for penalties and a judicial action to secure
injunctive relief.  We have declined to follow this suggestion, since a
unitary enforcement action, pursued in either the administrative or
judicial forum as appropriate, is the most straightforward and effective
enforcement method.

    4.    $200,000 Statutory Cap -- Per Action, Per Year, or Per Violator.

One Regional commentator asked for additional guidance on whether the
$200,000 statutory cap is per action, per year, or per violator or
violation.  As set out in the new "Multiple and Repeat Violations"
section, the statutory cap is per enforcement action.

V.   CONCLUSION AND CONTACT PERSONS

    We would like to thank the members of the Title VII Administrative
Penalty Workgroup and all the Regional personnel, both in the Air Program
Offices and in the Offices of Regional Counsel, who provided invaluable
expertise and advice in preparing this Guidance.  For questions or
comment, please contact Scott Throwe of SSCD ( FTS 398-8699 ) or Steven
Viggiani of OE-Air ( FTS 260-2842 ).

Attachment

Addressees:

    Edward E. Reich, Acting Assistant Administrator
    Office of Enforcement

    William G. Rosenberg, Assistant Administrator
    Office of Air and Radiation

    Scott C. Fulton, Acting Deputy Assistant Administrator
    Office of Enforcement

    Michael Shapiro, Deputy Assistant Administrator
    Office of Air and Radiation

    John S. Seitz, Director
    Office of Air Quality Planning and Standards

    Frank M. Covington, Director
    NEIC

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    Bruce Rothrock, OCAPO
    Robert Heiss, OCAPO
    Jonathan Libber, OCAPO
    Regional Administrators, Regions I - X
    Regional Counsels, Regions I - X

    Air Management Division Director
    Region I

    Air and Waste Management Division Director
    Region II

    Air, Toxics and Radiation Management Division Director
    Region III

    Air, Pesticides and Toxics Management Division Director
    Region IV

    Air and Radiation Division Director
    Region V

    Air, Pesticides and Toxics Division Director
    Region VI

    Air and Toxics Division Director
    Regions VII, VIII, IX and X

    John Cruden, Chief
    Environmental Enforcement Section
    U.S. Department of Justice

    Bill Becker, STAPPA-ALAPCO

        GUIDANCE ON CHOOSING THE APPROPRIATE FORUM IN CLEAN AIR ACT
                STATIONARY SOURCE CIVIL ENFORCEMENT ACTIONS

    This guidance document discusses the factors to consider when
determining whether the administrative or judicial forum is most
appropriate for a Clean Air Act ( CAA ) stationary source civil
enforcement action.  1/

  1/ Certain relatively minor violations may be best addressed through
    field citations.  Guidance for the field citation program will be
    issued sometime in 1993.

    EPA's enforcement options have been expanded by the CAA's new
Administrative penalty authority.  It is important that the Agency view
this new authority as a supplement to, not a replacement of, the Agency's
existing civil judicial enforcement program.  The administrative forum
will provide a more streamlined enforcement option, suitable for
addressing many violations.  There are, however, statutory limits on the
use of administrative remedies.  Long-term, court-supervised injunctive
relief is available only in the judicial forum.  Enforcement actions that
will require extensive post-filing discovery should in most circumstances
be filed in the judicial forum, both to take advantage of broadranging
civil discovery and to keep administrative cases moving expeditiously and
without extensive adjustment of pleaded penalty amounts.  Consequently, in
many instances judicial enforcement will still be preferable or required.
It is therefore necessary that the factors discussed below be considered
when deciding in which forum to proceed with an enforcement action.  2/

  2/ These factors are not an exhaustive list.  Any other relevant factors
    ( such as case-specific federal / State coordination issues ) should
    also be considered.

    The factors set out below are intended solely for the guidance of
government personnel.  They are not intended and cannot be relied upon to
create rights, substantive or procedural, enforceable by any party in
litigation with the United States.  The Agency reserves the right to act
at variance with this policy and to change it at any time without public
notice.

1.   Statutory Limitations

    Section 113(d)(l) of the Clean Air Act generally limits EPA's
administrative authority to cases where:

    o     the total penalty sought does not exceed $200,000, and

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    o     the first alleged date of violation occurred no more than twelve
          months prior to the initiation of the administrative action.  3/

  3/ The current EPA policy is to address administratively only those
    alleged violations dated within twelve months of the filing of the
    administrative complaint under EPA's Consolidated Rules of Practice,
    40 CFR Part 22.

    These limitations will determine which enforcement actions are
initially eligible for administrative enforcement.  4/

  4/ Both of these limitations can be altered by a joint determination by

    EPA and the Department of Justice.

However, it should not be assumed that all such actions can in fact be
handled administratively.  A substantial number of actions that fit within
these statutory limits may still require filing in the judicial forum
depending on the nature of the violations and the other enforcement
remedies ( e.g., injunctive relief ) involved.

2.   Multiple and Repeat Violations

    Multiple violations of different regulatory requirements can be
pursued through an administrative action provided that the penalty sought,
calculated in accordance with the CAA Stationary Source Civil Penalty
Policy, does not exceed the $200,000 statutory cap.  A determination as to
whether the cap has been exceeded must be made based on the number of
violations the Agency can plead at that time.  For example, if the Agency
obtains an inspection report that reveals multiple violations at a
facility resulting in a calculated penalty of less than $200,000, an
administrative action is permissible.  However, if the report ( or other
evidence of violation that the Agency possesses at that same time)
reveals multiple violations resulting in a calculated penalty of over
$200,000, the violations should be pursued through a judicial action.  The
Agency should neither split the violations ( regardless of type ) among
two administrative actions each capable of being pled at under $200,000,
nor forego the pleading of violations with reasonable evidentiary support
in order to bring a single administrative action within the statutory cap.

    However, if the Agency brings an administrative action against a
facility, and then at a later date obtains evidence revealing that the
facility has committed other violations which, if combined with the
violations already pled, would exceed a calculated penalty of $200,000,
then a separate administrative action can be brought against the facility
to address the newly discovered violations.  If the newly discovered
violations can be pled in the previously

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filed action without exceeding the statutory cap, then ordinarily the
Agency should seek to amend the previously filed complaint to include the
violations.

    In sum, the primary actor in determining whether multiple violations
can be pursued in an administrative action is whether the penalty
calculated from all the violations that can reasonably be pled at the time
the Agency prepares to sue exceeds the $200,000 statutory cap.  5/

  5/ Of course, the other factors set out in this guidance may
    independently affect whether an administrative action should be
    brought.

    Repeat violations -- that is, multiple violations of the same
regulation -- generally should be dealt with in accordance with the
guidance set out above, except where there is evidence of criminal intent.
The Agency decision-maker should consider whether a source that repeatedly
violates a regulatory requirement will be sufficiently deterred by a
proceeding in the administrative forum.  The need for court-supervised
injunctive relief to bring a recalcitrant source into compliance should
also be considered.  If the Agency decides that such relief will be
necessary, the action must be brought in the judicial forum, the only
forum where such relief is available.

3.   Need for Court-Supervised Injunctive Relief

    Enforcement actions that will require significant court supervised
injunctive relief, or that will require violators to perform
compliance-related activities on a schedule of more than one year, should
generally be brought in the judicial rather than the administrative forum.
Enforcement actions involving a straightforward injunctive component of
less than one year can be brought as administrative penalty actions, with
the injunctive component addressed by the concurrent issuance of a section
113(a) administrative compliance order.

    Administrative law judges are not empowered to order injunctive relief
in CAA administrative penalty actions.  However, the Agency itself may
issue section 113(a) administrative orders containing compliance schedules
that do not exceed one year.  Thus, in enforcement actions where the
Agency will require violators to perform compliance activities over a one
year period or less, the Agency may choose, after consideration of the
factors below, to bring an administrative penalty action and concurrently
issue a section 113(a) administrative compliance order.

    In deciding whether a compliance order would adequately substitute for
court-ordered injunctive relief, the violator's

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potential recalcitrance and the complexity of the relief sought should be
considered.  If, based on the violator's compliance history and its
conduct in the current and past enforcement actions, it seems probable
that the violator will not obey a compliance order, then court-ordered and
supervised injunctive relief should be sought.  In most circumstances,
court-supervised injunctive relief should also be sought where the
violator will be required to perform complex or capital-intensive
compliance activities, since these situations present an increased
likelihood for disputes over satisfactory performance and for missed
compliance deadlines.

4.   Evidence of a Criminal Violation

    Generally, criminal violations must be addressed in a criminal
judicial action.  A separate civil action to address civil violations can
be pursued in the judicial or administrative forum in accordance with the
EPA's June 15, 1989 guidance on Procedures for Requesting and Obtaining
Approval of Parallel Proceedings.  For example, a judicial action can be
brought where a violator's activities present an immediate, substantial
danger to human health and require a prompt injunction to halt the danger.

5.  Extensive Post-Filing Discovery

    In most circumstances, enforcement actions that will require extensive
post-filing discovery should be directed to the judicial forum.  A
judicial action will provide the Agency with broadranging discovery rights
and obligations under the Federal Rules of Civil Procedure; in contrast,
the administrative forum provides very limited post-filing discovery under
40 CFR Part 22.  Moreover, extensive post-filing case development may
result in extensive adjustment of penalty amounts, which in an
administrative action would also oftentimes necessitate extensive
amendment of the penalty amounts pled in the complaint.

6.  New Legal Issues

    When an enforcement action involves novel legal issues, the Agency
must carefully weigh the decision to pursue the action in the
administrative or judicial forum.  A favorable opinion in federal district
court will set a substantially stronger beneficial precedent than will a
favorable administrative opinion.  However, when an enforcement action
arises in a judicial district which has been hostile to the Agency's
interests in the past, the action might be better brought in the
administrative forum even if it involves precedential issues.