11/26/86
Guidance on Implementing the Discretionary Contractor Listing
Program
November 26, 1986
MEMORANDUM
SUBJECT: Guidance on Implementing the Discretionary Contractor
Listing Program
FROM: Thomas L. Adams, Jr.
Assistant Administrator for Air and Radiation
Assistant Administrator for Water
General Counsel
Inspector General
Regional Administrators, Region I-X
Regional Counsels, Region I-X
I. Purpose
This document establishes Agency policy and procedures for
implementing the discretionary contractor listing program in EPA
enforcement proceedings. It should be read in conjunction with the final
revisions to the contractor listing regulations ( 40 CFR Part 15, 50 FR
36188, September 5, 1984 ). The procedures to be followed in all
contractor listing actions are contained in the rule and are summarized in
an Appendix to this document. This policy applies only to discretionary
listing proceedings and supercedes the "Guidance for Implementing EPA's
Contractor Listing Authority" ( General Enforcement Policy No. GM-31, July
18, 1984 ).
The revisions to the contractor listing regulations, together with
this guidance document and other management initiatives, should encourage
greater use of the Agency's listing authority and should expedite the
process for listing a facility.
II. Background
The Clean Air Act ( CAA ), Section 306, and the Clean Water Act
( CWA ), Section 508, as implemented by Executive Order 11738, authorize EPA
to prohibit facilities from obtaining federal government contracts, grants
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or loans ( including subcontracts, subgrants and subloans ), as a
consequence of criminal or civil violations of the CAA or CWA. Commonly
called "contractor listing," this program provides EPA with an effective
administrative tool to obtain compliance with the CAA and CWA where
administrative or judicial action against a facility has failed to do so.
On July 31, 1984, EPA proposed revisions to the contractor listing
regulations ( 40 CFR Part 15 ( 49 FR 30628 ) ) to simplify and clarify the
procedural opportunities which EPA will provide to parties to listing or
removal actions and to provide for mandatory ( i.e., automatic ) listing of
facilities which give rise to criminal convictions under Section 113(c)(1)
of the CAA or Section 309(c) of the CWA. Final rules were promulgated on
September 5, 1985 ( 50 FR 36188 ).
III. Appropriate Cases for Discretionary Listing Recommendations
In numerous cases, initiation of a listing action has proved to be
effective in achieving more expeditious compliance and case settlement.
While regional offices should consider making contractor listing
recommendations in every case where the criteria of 40 CFR Part 15 are
met, listing is a tool to be used in conjunction with other enforcement
actions. ( See IV. Standard of Proof in Listing Proceedings, page 4. ) The
circumstances surrounding each case will dictate whether a listing action
should be initiated. In particular, use of listing may be appropriate in
the following cases:
A. Violations of Consent Decrees
Regional offices should strongly consider making listing
recommendations for all cases of noncompliance with consent decrees under
the CAA or CWA. The recommendation should be prepared at the earliest
possible time after the Region learns of noncompliance with the decree,
but no later than the filing of a motion to enforce the decree.
Initiation of the listing action should be supplementary to, and not in
lieu of, a motion to enforce the decree. Where a consent decree covers
CAA or CWA violations as well as violations of other environmental
statutes, such as the Resources Conservation and Recovery Act ( RCRA ) or
the Toxic Substances Control Act ( TSCA ) ( where EPA does not have
contractor listing authority ), a listing recommendation also should be
considered.
B. Continuing or Recurring Violations Following
Filed Civil Judicial Actions
Where EPA has filed a civil judicial enforcement action, the
Regional Office should initiate a listing action at the earliest possible
time after it determines that: (1) noncompliance is ongoing, (2) the
defendant is not making good faith efforts to comply, and (3) an
expeditious settlement does not appear likely. For example, a defendant
may make a firm settlement offer that is far below the economic savings it
realized from its noncompliance making settlement unlikely.
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Similarly, where EPA initiates a multi-media civil enforcement action
against violations under the CAA or CWA and other environmental statutes
( such as RCRA or TSCA ), and continuing water or air compliance problems
exist without good faith corrective efforts, the Region should consider
bringing a listing action. Therefore, it is important that all CAA and
CWA counts be included in a multi-media enforcement action.
C. Violations of Administrative Orders
Where noncompliance continues after an administrative order has been
under the CAA or CWA, and the Regional Office determines that the facility
is not making sufficient efforts to come into compliance, a listing
recommendation should be considered. Initiation of a listing action
generally should not be in lieu of filing a civil judicial action to
enforce the administrative order, but should support the civil action.
The Regional Office should consider initiating a listing action at the
same time that it files the civil judicial action.
D. Multi-Facility Noncompliance within a
Single Company
Contractor listing can be an effective tool to address a pattern of
noncompliance within a single company. Where continuing or recurring CAA
or CWA violations occur at two or more facilities within the same company,
and EPA previously has taken an enforcement action against each, the
Regional Office should consider making listing recommendations in all such
cases.
While each facility's continuing or recurring noncompliance must be
proved separately ( i.e., one may not use one violation from branch
facility A and one violation from branch facility B to constitute the
minimum two violations required ), one listing recommendation describing
noncompliance at two or more facilities may be submitted to the Assistant
Administrator for the Office of Enforcement and Compliance Monitoring
( OECM ). A joint listing proceeding may be held concerning all facilities.
Joint consideration of two or more facilities' violations will require
fewer Agency resources than listing each facility separately. It will
also discourage companies from switching government contracts from a
listed facility to another facility without taking steps to correct the
violations which gave rise to the listing.
To accomplish this, the Regional Office, with headquarters staff
support, should review the EPA enforcement docket to see if a potential
listing candidate has committed CAA or CWA violations at other company
facilities. Note that a company's facilities may be known by the parent
company name or by the name of the company subsidiaries. Regional offices
may obtain information on other company facilities from Charlene Swibas,
Chief, Information Services Section, NEIC ( FTS 776-3219 ), who will search
EPA's Facility Index System which lists this information for all EPA
regions, or provide a Dunn and Bradstreet report containing this
information.
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The Region may also request data on administrative orders issued
against a company under the headquarters Permit Compliance System ( for CWA
violations ) and the Compliance Data System ( for CAA violations ). In some
cases EPA has issued administrative orders and filed civil enforcement
actions against company facilities which are located in more than one
region. Such multi-regional inquiries may be coordinated with the
Headquarters participating attorney and the Agency's Listing Official.
E. Other Circumstances Where Listing is Appropriate
The regulation provides two other situations where listing may be
appropriate. First, EPA can list a facility after it has issued a Notice
of Non-Compliance under Section 120 of the CAA. The threat of listing in
combination with noncompliance penalties can impose a sufficiently severe
economic cost on a facility to encourage efforts to achieve both
compliance and quicker settlements. Second, Regional Offices may
recommend listing when a state or local court convicts any person who
owns, operates, or leases a facility of a criminal offense on the basis of
noncompliance with the CAA or the CWA. They also may recommend listing
when a state or local court has issued an injunction, order, judgment,
decree ( including consent decrees ), or other civil ruling as a result of
noncompliance with the CAA or CWA.
IV. Standard of Proof in Listing Proceedings
It will be the responsibility of the Office of Regional Counsel to
represent the Agency at any listing proceeding ( where one is requested by
the affected facility ). According to 40 CFR Section 15.13(c), "(t)o
demonstrate an adequate basis for listing a facility, the record must by
preponderance of the evidence that there is a record of continuing or
recurring non-compliance at the facility named in the recommendation to
list and that the requisite enforcement action has been taken."
"Requisite enforcement action" can be established by reference to an
issued administrative or court order, or a filed civil judicial action.
"Continuing or recurring" violations are understood to mean two or more
violations of any standard at a facility, which violations either occur or
continue to exist over a period of time. Such a violation occurs even
when different standards are violated and time has elapsed between
violations. Thus, in a listing proceeding, it is not necessary to prove
all violations of CAA or CWA standards alleged in the underlying
enforcement action. Nonetheless the regional attorney must carefully
review the sufficiency of the evidence and evaluate anticipated defenses.
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V. Fairness Concerns in EPA Use of Contractor Listing
It is the intent of this guidance document to encourage the use of the
Agency's contractor listing authority in appropriate cases. However, it
must be recognized that listing is a severe sanction. Before making a
recommendation in any case, the Regional Office should determine that the
continuing or recurring noncompliance involves clearly applicable CAA or
CWA standards. Likewise, Agency enforcement personnel must be careful in
using listing terminology during discussions with defendants. During
settlement negotiations, for example, it is certainly proper for EPA to
advise defendant of the range of available EPA enforcement authorities,
including contractor listing. However, EPA personnel must distinguish
between a listing recommendation ( made by a "recommending person," usually
the Regional Administrator, to the Assistant Administrator for OECM ), a
notice of proposed listing by the Agency to the affected facility ( which
is sent by the Listing Official after a preliminary decision to proceed is
made by the Assistant Administrator for OECM ), and a final decision to
list which is made either by an Agency Case Examiner at the end of a
listing proceeding, or by the Assistant Administrator for OECM if no
listing proceeding is requested. Where appropriate, EPA personnel should
explain that the Regional Administrator's listing recommendation does not
constitute a final Agency decision to list.
VI. Press Releases on Contractor Listing Actions
EPA will use press releases and other publicity to inform existing and
potential violators of the CAA and the CWA that EPA will use its
contractor listing authority in appropriate situations. The November 21,
1985, "Policy on Publicizing Enforcement Activities" ( GM-46 ), states that
(i)t is EPA policy to issues press releases when the Agency: (1) files a
judicial action or issues a major administrative order or complaint
( including a notice of proposed contractor listing and the administrative
decision to list )...." As discussed in that policy, the press release
should be distributed to both the local media in the area of the violative
conduct and the trade press of the affected industry.
VII. Coordination with the Department of Justice
To ensure that information presented during a listing proceeding will
not compromise the litigation posture of any pending legal action against
a party, EPA will coordinate with the Department of Justice ( DOJ ) before a
recommendation to list is made to the Assistant Administrator for OECM.
If the recommending party is an EPA regional office official, he or she
shall coordinate with the appropriate DOJ attorney before a recommendation
is submitted to the Listing Official. He or she shall also provide the
DOJ attorney's comments to the Listing Official as part of the
recommendation package. If the recommending party is not an EPA official,
the Listing Official shall coordinate with the EPA Office of Regional
Counsel and the appropriate DOJ attorney before a recommendation to list
is presented to the Assistant Administrator for OECM.
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VIII. Applicability of Contractor Listing to Municipalities
Municipalities are subject to listing under appropriate
circumstances. State and local governments and other municipal bodies are
specifically identified by 40 CFR Section 15.4 as "persons" whose
facilities may be listed. The standards for recommending that a municipal
facility be listed are the same as those for listing other facilities.
Listing may not be the most effective enforcement tool in many municipal
cases because often the only federal funds received by a municipal
facility are grant funds to abate or control pollution, which are exempted
from the listing sanction by 40 CFR Section 15.5. However, listing still
should be considered in cases where a municipal facility receives
nonexempt funds or where the principles underlying the listing authority
otherwise would be furthered by a recommendation to list.
IX. Use of Listing in Administrative Orders
Enforcement offices may wish to inform violating facilities early
in the enforcement process of the possibility of being listed. Many
facilities do not know about the listing sanction; such knowledge may
provide additional impetus for a facility to take steps to come into
compliance. For example, some EPA regions notify facilities whose
violations make them potential candidates for listing of this possibility
in the cover letter which accompanies an administrative order requiring
them to take action to correct their noncompliance.
X. Obtaining Information Concerning Government Contracts Held By a
Facility Under Consideration for Listing
After an EPA recommending person, usually the Regional
Administrator, has submitted a listing recommendation to the Listing
Official, the regional office attorney handling the case may require the
facility to a list of all federal contracts, grants, and loans ( including
subcontracts, subgrants, and subloans ). To insure that such a requirement
is not imposed prematurely, the regional office attorney should require
this information from a facility only after advising the Listing Official
of his or her intention to do so. Requiring this information from the
facility is not a prerequisite for a listing facility.
Requiring this information from a facility may be accomplished by
telephone or through a letter similar to the models provided in
Attachments D and E. Attachment D is a model letter requesting
information from a facility which is violating an administrative order
issued under the authority of the Clean Water Act for violating its
National Pollutant Discharge Elimination System ( NPDES ) permit.
Attachment E is a letter to a facility which EPA and the Department of
Justice have filed a civil suit against for violating the Clean Air Act.
Regional office attorneys may elect to have such a request letter serve as
notification to the facility that EPA is considering instituting a listing
action, or they may wish to inform the facility before sending such a
letter. Which approach is taken will depend on the regional office
attorney's judgment of the notification's effects on the overall case
against the facility.
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XI. Headquarters Assistance in Preparing and Processing Listing
Recommendations
In order to encourage the use of the contractor listing authority
in appropriate cases, OECM staff have been directed to assist regional
offices in preparing listing recommendations. Attached are model listing
recommendations indicating the level of detail and support that should be
provided with recommendations. ( See Attachments A, B, and C for model
listing recommendations. ) Where a listing recommendation is sufficient,
the Assistant Administrator for OECM will decide whether to proceed with
the listing action under Section 15.11(c) ( i.e., by directing the Listing
Official to issue a notice of proposed listing to the affected facility )
within two weeks after receiving the recommendation. Questions concerning
contractor listing may be directed to the Agency Listing Official, Cynthia
Psoras, LE-130A, FTS 475-8785, E-Mail Box EPA2261.
Attachments
cc: John Ulfelder
Section Enforcement Counsel
Associate Enforcement Counsel for Air
Associate Enforcement Counsel for Water
Director, Office of Water Enforcement and Permits
Director, Stationary Source Compliance Division
Director, Office of Compliance Analysis and Program Operations
Director, NEIC
Director, Water Management Division ( Region I-X )
Director, Air Management Division ( Regions I, III, V and IX )
Director, Air and Waste Management Division ( Regions II and VI )
Director, Air, Pesticides and Toxics Management Division ( Region IV )
Director, Air and Toxics Division ( Regions VII, VIII and X )
David Buente, Department of Justice ( DOJ )
Nancy Firestone, DOJ
APPENDIX
The Listing Program and Final Revisions to 40 CFR Part 15
A. Mandatory Listing
If a violation at a facility gives rise to a criminal conviction under
Section 113(c)(1) of the CAA or Section 309(c) of the CWA, listing of the
facility is mandatory ( and effective upon conviction under 40 CFR Section
15.10 ). As soon as a conviction occurs, the Director of the Office of
Criminal Enforcement, within the Office of Enforcement and Compliance
Monitoring ( OECM ), must verify the conviction and notify the Listing
Official. The Listing Official sends written notification to the facility
and to the Federal Register. Both documents must state the basis for and
the effective date of the mandatory listing.
Removal from the mandatory list may occur only if: (1) the Assistant
Administrator certifies that the facility has corrected the condition that
gave rise to the criminal conviction under Section 113(c)(1) of the CAA or
Section 309(c) of the CWA, or (2) a court has overturned the criminal
conviction. The August 8, 1984, memorandum, "Implementation of Mandatory
Contractor Listing," ( GM-32 ) discusses the procedures for mandatory
listing in more detail.
B. Discretionary Listing
1. Basis for Discretionary Listing
The following enforcement actions may serve as a basis for
discretionary listing if there is also a record of continuing or recurring
noncompliance at a facility:
a. A Federal court finds any person guilty under Section
113(c)(2) of the CAA, if that person owns, leases, or
supervises the facility.
b. A state or local court convicts any person of a criminal
offense on the basis of noncompliance with clean air or
clean water standards if that person owns, leases or
supervises the facility.
c. A federal, state, or local court issues an injunction,
order, judgment, decree ( including consent decrees ), or
other form of civil ruling as a result of noncompliance with
the CWA or CWA at the facility.
d. The facility is the recipient of a Notice of Noncompliance
under Section 120 of the CAA.
e. The facility has violated an administrative order under:
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o CAA Section 113(a)
o CAA Section 113(d)
o CAA Section 167
o CAA Section 303
o CAA Section 309(a)
f. The facility is the subject of a district court civil
enforcement action under:
2. The Discretionary Listing Process
a. Listing Recommendation and Notice of Proposed Listing
The discretionary listing process begins when a "recommending person"
files a listing recommendation with the Listing Official. Recommending
persons may include any number of public, Regional Administrators, the
Assistant Administrator for Air and Radiation, the Assistant Administrator
for Water, the Associate Enforcement Counsel for Air, the Associate
Enforcement Counsel for Water, and the Governor of any State. The
recommendation to list: (1) states the name, address, and telephone
number of the recommending person; (2) identifies the facility to be
listed, and provides its street address and mailing address; and (3)
describes the alleged continuing or recurring noncompliance, and the
requisite enforcement action (see 40 CFR Section 15.11(b)). The
recommendation to list should describe the history of violations in
detail, including the specific statutory, regulatory, or permit
requirements violated. In addition, regional offices may include as
attachments to the listing recommendation documents prepared for other
purposes, such as complaints, litigation reports, and other explanatory
material which describes the nature of the violations. ( See Attachments
for model listing recommendations. )
The Listing Official must determine whether the recommendation meets
the requirements of Section 15.11(b). If the recommendation is sufficient
and the Assistant Administrator for OECM decides to proceed under Section
15.11(c), the listing official will contact the regional office to ensure
that it still wishes to proceed. If the decision is made to proceed, the
listing official provides a notice of the proposed listing to the owner or
operator of the affected facility and provides the owner or operator of
the facility 30 days to request a listing proceeding. A listing
proceeding is not a formal hearing; rather, it is an informal
administrative proceeding presided over by an Agency Case Examiner. If
the facility's owner or operator requests a listing proceeding, the
Listing Official must schedule it and notify the recommending person and
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the owner or operator of the date, time, and location of the proceeding.
The Assistant Administrator designates a Case Examiner to preside over the
listing over the listing proceeding. 1/
1/ If the owner or operator of the facility does not make a timely
request for a listing proceeding, the Assistant Administrator will
determine whether to list the facility based upon the recommendation
to list and any other available information.
b. Listing Proceeding
The Federal Rules of Civil Procedure and Evidence are not used during
the listing proceedings. The Agency and the facility may be represented
by counsel and may present relevant oral and written evidence. With the
approval of the Case Examiner, either party may call, examine, and cross-
examine witnesses. The Case Examiner may refuse to permit cross-
examination to the extent it would: (1) prematurely reveal sensitive
enforcement information which the government may legally withhold, or (2)
unduly extend the proceedings in light of the usefulness of any additional
information likely to be produced ( see Section 15.13(b) ). A transcript of
the proceeding along any other evidence admitted in the proceeding
constitutes the record. The Agency must provide each element of a
discretionary listing by a preponderance of the evidence ( see Section
15.13(c) ).
The Case Examiner must issue a written decision within 30 calendar
days after the proceeding. The party adversely affected may appeal the
decision to the General Counsel. The appeal, which is filed with the
Listing Official, must contain a statement of: (1) the case and the facts
involved, (2) the issues, and (3) why the decision of the Case Examiner is
not correct based on the record of the proceeding considered as a whole.
The General Counsel must issue a final decision, in writing, as soon as
practicable after reviewing the record. The Listing Official then must
send written notice of the decision to the recommending person and to the
facility, and must publish the effective date of the listing in the
Federal Register if the General Counsel upholds the Case Examiner's
decision to list.
c. Removal from the List of Violating Facilities
Removal from the List of Violating Facilities can occur in any of the
following circumstances:
1. Upon reversal or other modification of the criminal
conviction decree, order, judgment, or other civil
ruling or finding which formed the basis for the
discretionary listing, where the reversal or
modification removes the basis for the listing;
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2. If the Assistant Administrator for OECM determines
that the facility has corrected the condition(s) which
gave rise to the listing;
3. Automatically if, after the facility has remained on
the discretionary list for one year on the basis of
Section 15.11(a)(4) or Section 15.11(a)(5) and a basis
for listing under Sections 15.11(a)(1), (2), or (3) does
not exist; or
4. If the Assistant Administrator for OECM has approved
a plan for compliance which ensures correction of the
condition(s) which gave rise to the discretionary
listing.
The original recommending person or the owner or operator of the
facility may request removal from the list. The Assistant Administrator
for OECM then must review the request and issue a decision as soon as
possible. The Listing Official then must transmit the decision to the
person requesting removal.
If the Assistant Administrator for OECM denies a request for removal,
the requesting person may file a written request for a removal proceeding
to be conducted by a Case Examiner designated by the Assistant
Administrator. The Federal Rules of Civil Procedure and Evidence are not
used during a removal proceeding. The Case Examiner's written decision
must be based solely on the record of the removal proceeding.
Within 30 calendar days after the date of the Case Examiner's
decision, the owner or operator of the facility may file with the Listing
Official a request for review by the Administrator. The Administrator
will determine if the Case Examiner's decision is correct based upon the
record of the removal proceeding considered as a whole. The Administrator
then must issue a final written decision.
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