Incremental increases in statutory civil penalty amounts for statutes administered by the Environmental Protection Agency (EPA) have typically occurred. Dating back to 1990, federal agencies have long been required to issue regulations to adjust their statutory civil penalties to reflect inflation, maintain the deterrent effect of statutory civil penalties, and promote compliance with the law.
The Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996, (“DCIA”) required agencies to review their statutory civil penalties every four years and to adjust the statutory civil penalty amounts for inflation if the increase met the DCIA’s adjustment methodology. Over time, since the DCIA methodology caused statutory civil penalties to lose value relative to total inflation, the formula was revised.
Accordingly, for the first time, this year’s adjustments to federal statutory civil penalties were calculated using a revised set of criteria under the 2015 amendments to the Federal Civil Penalties Inflation Adjustment Act (the “2015 Act”). Under the 2015 Act, federal agencies are required to adjust the level of statutory civil penalties with an initial “catch-up” adjustment through an interim final rulemaking and, starting on January 15, 2017, make subsequent annual adjustments for inflation. Thus, once a federal agency such as EPA has enacted the one-time catch-up rule, each statutory civil penalty amount will be adjusted every year (rather than every four years) to reflect the inflation that has thereafter accrued. However, there is a cap within the 2015 Act, under which the maximum amount of any initial catch-up increase cannot exceed 150 percent of the level that was in effect on November 2, 2015.
EPA’s New Interim Final Rule
In order to comply with the mandated catch-up adjustments under the 2015 Act, EPA just recently published its new interim final rule on July 01, 2016. Contained within the rule is a table which sets out both the original and new inflated statutory civil penalty provisions for each statute administered by the EPA.
As an example, the table indicates that the new statutory maximum total penalty which may be assessed in an administrative penalty enforcement action under the Clean Air Act (CAA) section 113(d)(1), 42 U.S.C. 7413(d)(1), and CAA section 205(c)(1), 42 U.S.C. 7524 (c)(1), has increased from $320,000 to $356,312. For the Clean Water Act (CWA), the EPA’s $25,000 maximum per-day per-violation civil penalty level in judicial enforcement proceedings under 33 U.S.C. 1319(d) is now adjusted to $52,570.
Likewise, violations under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) have been increased to $52,907 per violation. In addition, the maximum civil penalty level under the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6928(g), was increased from $25,000 to $70,117. As mentioned above, the table also provides new inflation adjustments for a number of EPA’s other regulatory schemes.
So What’s the Legal Scoop?
When evaluating any environmental regulation, it is imperative to first determine the scope of the law and who will be impacted.
It appears that EPA’s new penalty levels, as adjusted for inflation, will apply to all violations occurring after November 2, 2015 where the penalties are assessed on or after August 1, 2016. It is also important to highlight that the preamble of the interim final rule states that it does not necessarily change the total penalty amount that may be sought in a particular enforcement case, since enforcement authorities can take into account a number of other fact-specific considerations (e.g., the seriousness of the violation, the violator’s good faith efforts to comply, any economic benefit gained by the violator as a result of its noncompliance, and a violator’s ability to pay). Additionally, it does not appear that EPA’s new rule will directly impact the civil penalty regulations which are adopted under Florida law to implement state-wide programs subject to EPA oversight.
If you have any questions regarding the impact EPA’s recent interim final rule on statutory civil penalties or any other Environmental or Land Use issues, please contact me at firstname.lastname@example.org.