EPCRA § 313 requires certain facilities to "submit annually, no later than July 1 of each year, a Toxic Chemical Release Inventory Reporting Form ("Form R") for each toxic chemical listed under 40 C.F.R. § 372.65 that was manufactured, imported, processed, or otherwise used during the preceding calendar year in quantities exceeding established chemical thresholds." In re K.O. Mfg., Inc., 5 E.A.D. 798, 800 (EAB 1995). EPA has the authority to enforce the reporting requirements of section 313 and, at the time of the violations at issue in this case, was authorized to impose civil penalties of up to $25,000' for each failure to file a Form R for each day that the violation continued. EPCRA § 325(c), 42 U.S.C. § 11045(c). Unlike the penalty provisions of many environmental statutes, EPCRA § 325(c) does not provide a list of factors to be taken into account in assessing civil penalties. Compare EPCRA § 325(c) with EPCRA S 325(b)(1)(C). Thus, beyond the limitation that the penalty shall not exceed $25,000 per violation, the statute does not provide much guidance on determining the proper amount of the penalty. In re Woodcrest Mfg., Inc., 7 E.A.D. 757, 774 n.11 (EAB 1998). The EPA, however, has prepared a penalty policy to guide the administrative assessment of civil penalties for violations of EPCRA § 313. See Enforcement Response Policy for Section 313 of the Emergency Planning and Community-Right-toKnow Act and Section 6607 of the Pollution Prevention Act (Aug. 10, 1992) (the "ERP"). The ERP serves to assist the Agency's enforcement personnel in formulating an appropriate civil penalty amount for inclusion in an administrative complaint. Once the complaint is filed and the case is heard by a presiding officer, the regulations governing the administrative assessment of civil penalties specify that the presiding officer must consider any civil penalty guidelines or policies issued by the EPA. 40 C.F.R. § 22.27(b). Under the guidance of the ERP, administrative civil penalties are calculated in accordance with a two-step process. ERP at 7. First, a gravity 1 Subsequent to the violations at issue in this case, the Debt Collection Improvement Act of 1996 was enacted directing the EPA to make periodic adjustments of maximum civil penalties to take into account inflation. See 31 U.S.C. § 3701. The EPA has published inflation adjusted maximum penalties, see 40 C.F.R. §§ 19.1 et seq., which apply to violations occurring after January 30, 1997. 2 Except as to the disputed applicability of the Self-Disclosure Policy (as defined below) to issues of voluntary disclosure of violations, the general applicability of the ERP has not been disputed in this case. We have considered the guidance of the ERP in prior cases. See Woodcrest, 7 E.A.D. at 774; In re Spang & Co., 6 E.A.D. 226, 242 n.19 (EAB 1995); see also In re Pacific Ref. Co., 5 E.A.D. 607, 608, n.2 (EAB 1994). By its terms, the ERP became applicable to all administrative actions concerning EPCRA § 313 commenced after August 10, 1992, regardless of the date of the violation. ERP at 1. based penalty reflecting characteristics of the violation is determined utilizing a penalty matrix. Id. at 8. Second, after a gravity-based penalty amount is determined, upward or downward adjustments may be made to take into account factors reflecting characteristics of the violator. Id. As described below, Bollman has not opposed the proposed calculation of the gravity-based penalty; instead its opposition relates to the adjustments to be applied. The ERP guidelines provide that adjustments to the base gravity component of the penalty may be based upon consideration of the following “characteristics of the violator”: (a) any voluntary disclosure of the violation by the violator; (b) the violator's history of prior violations; (c) whether the toxic chemical has been "delisted" subsequent to the violation; (d) the violator's attitude; (e) "other factors as justice may require;" and (f) ability to pay. ERP at 14–20. The ERP provides guidance that a 25% reduction may be granted for violations that are voluntarily disclosed. ERP at 14-15. It further provides that an additional deduction of up to 25% may be obtained by certifying that the violation was immediately disclosed within 30 days of discovery, the facility has undertaken concrete actions to ensure that the facility will be in compliance in the future, and the facility does not have a history of violations. Id. at 15. Thus, the ERP provides for a maximum reduction for self-disclosure of up to 50% of the gravity-based penalty. As explained below, the central issue in this case, however, arises out of the Region's application of another Agency policy in proposing penalty reductions for self-disclosure in this case. See Incentives for SelfPolicing: Discovery, Disclosure, Correction and Prevention of Violations, 60 Fed. Reg. 66,706 (1995) (the "Self-Disclosure Policy"). The Federal Register notice states that the purpose of the Self-Disclosure Policy is to encourage regulated entities to conduct voluntary compliance evaluations and to disclose and correct violations. Self-Disclosure Policy, 60 Fed. Reg. at 66,706-07. It provides this encouragement by stating that EPA will waive the gravity-based penalties (i.e., provide a 100% reduction) for companies that voluntarily identify, disclose and correct violations in accordance with nine enumerated criteria, and that it will reduce the gravity-based penalties by 75% for companies that meet all but one of the nine criteria. Id. at 66,711. The Self-Disclosure Policy also states that it is based on factors that are intended to guide the Agency in the exercise of its "prosecutorial discretion" and that it "does not create any rights, 'The Self-Disclosure Policy expressly states that EPA reserves the right to recover economic benefit that may have been realized as a result of the non-compliance. Id. at 66,706. duties, obligations, or defenses, implied or otherwise, in any third parties." Id. at 66,712. It states further that it should be used in settlement negotiations and “is not intended for use in pleading, at hearing or at trial." Id. Nevertheless, the Region, in presenting its case in the context of this adjudication invoked the Self-Disclosure Policy in calculating the penalty advanced before the Presiding Officer. B. Factual and Procedural Background Bollman operates a manufacturing plant located at 110 East Main Street, in Adamstown, Pennsylvania (the "Facility"). Joint Set of Stipulated Facts, Exhibits and Testimony (the "Stipulations") ¶ 1. In July 1996, the Region filed a seven-count administrative complaint against Bollman alleging seven violations of the Form R filing requirement. The Region alleged that Bollman used at its Facility the following chemicals during the indicated years in amounts exceeding the applicable reporting threshold without timely filing the requisite Form Rs: Sulfuric Acid in 1992 and 1993; Methyl Isobutyl Ketone ("MIBK") in 1992, 1993, and 1994; and Toluene in 1993 and 1994. The Region proposed a penalty of $39,716 for the seven alleged violations. In deriving the proposed penalty, the Region credited Bollman with self-disclosure reductions of 75% of the gravitybased penalties for all violations other than the failure to file the two Form Rs for the 1994 reporting period. (The violations credited with selfdisclosure reductions were alleged in counts I through V of the Complaint.) Bollman filed its answer to the Complaint on July 22, 1996 (the "Answer"), in which Bollman admitted the material factual allegations of the Complaint pertaining to liability for the violations. Bollman, however, argued that the amount of the penalty should be reduced to take into account certain facts identified by Bollman. Bollman proposed that an appropriate penalty would be $10,718. In December 1996, the Presiding Officer issued a Prehearing Order, which among other things required the parties to file prehearing exchanges in accordance with section 22.04 of the Consolidated Rules of Practice, 40 C.F.R. § 22.04. The order specifically directed that “[t]he Complainant shall set out how the proposed penalty was determined, and shall state in detail how the specific provisions of any EPA penalty or enforcement policies and/or guidelines were used in calculating the penalty." See Prehearing Order (Dec. 5, 1996) ¶ 2. In its prehearing exchange submitted in December 1996, the Region provided a detailed, but incomplete, explanation of its proposed penalty. The Region's explanation comprised four pages of the five-page text of its prehearing exchange, and the Region attached as an exhibit a calculation sheet describing how it arrived at the proposed penalty. See Complainant's Prehearing Exchange at 2-5, Ex. 21. The Region also stated that the proposed penalty "accords" with the ERP, a copy of which was attached as an exhibit to the prehearing exchange. Id. Ex. 23. The Region's prehearing exchange set forth the following table showing how the proposed penalty had been derived: Complainant's Prehearing Exchange at 3. The Region also described its calculation in relevant part as follows: According to EPA's EPCRA § 313 Enforcement Response Complainant's Prehearing Exchange at 3-4. The Region did not disclose in its prehearing exchange why it used a 75% reduction for voluntary selfdisclosure when the ERP only provides for a maximum of a 50% reduction for self-disclosure; the Region's Prehearing Exchange also did not make any reference to the Self-Disclosure Policy. In February 1997, the Presiding Officer entered an order scheduling an evidentiary hearing to be held beginning on November 18, 1997. In July 1997, the parties filed their Stipulations in which Bollman stipulated to liability as to all counts of the Complaint. Stipulations ¶ 21. Thus, the only remaining issues for the hearing related to the proper amount of the penalty for the violations. At the hearing, the Region called two witnesses, one of whom was Mr. Craig Yussen, the Region's EPCRA Section 313 Compliance Coordinator. Bollman called two witnesses. The issues on appeal arise out of the testimony of Mr. Yussen, who testified that he had calculated the penalty proposed by the Region in its Complaint. Transcript of Nov. 18, 1997 Hearing (“Tr.”) at 74. In the course of describing how he arrived at the proposed penalty, Mr. Yussen explained that he calculated the reduction for voluntary disclosure by using the Self-Disclosure Policy's guideline for a 75% reduction. Id. at 97. He also explained that in instances where the violation was self-disclosed, the Self-Disclosure Policy "supersedes" the ERP as guidance for calculating the reduction to be granted for self-disclosure. Id. at 199. Mr. Yussen also testified, however, that he did not determine whether Bollman satisfied all of the Self-Disclosure Policy's criteria for applicability of the 75% reduction. Mr. Yussen testified that in calculating the penalty, he made a "presumption" that most of the criteria were satisfied. Id. at 222-26. Mr. Yussen also explained that this case was the first one involving voluntary disclosure in his experience after the Self-Disclosure Policy had become effective. Id. at 154. During Mr. Yussen's testimony, the Presiding Officer asked whether the Self-Disclosure Policy was included in the Region's exhibits and whether it was disclosed to Bollman prior to the hearing. Id. at 105. The Region's counsel explained that the Self-Disclosure Policy was not being used as an exhibit and had not been disclosed because, by it terms, it is to be used for settlement. Id. The Region explained further that "we were being particularly accommodating in using the full 75 percent reduction under the Self-[Disclosure] Policy going beyond the 50 percent reduction that's capped in the Enforcement Response Policy.” Id. at 106. In its post-hearing brief, the Region further stated as follows: In this instance, Complainant, in its discretion, admittedly without knowing all of the relevant background details of Respondent's voluntary disclosure at the time, and in its zeal to recognize and encourage voluntary disclosure, extended a technically unsupported penalty adjustment to Respondent in the Complaint. |