Companies subject to the federal lead paint disclosure rule as well as pesticide and chemical companies subject to other parts of the Toxic substances Control Act (TSCA) and the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) should review a report by EPA’s Office of Inspector General (OIG), which found problems in how the EPA regions enforced violations of those statutes and their implementing regulations. 

According to the OIG, the regions were inconsistent in how they reduced proposed penalties based on the good faith of alleged violators who said they were not able to pay the penalties.  The OIGs recommended, among other things, that the EPA improve its enforcement guidance to ensure that justifications for good-faith reductions are adequately documented.  The Agency agreed to meet this recommendation by amending its current FIFRA and TSCA enforcement response penalty policies (ERPP).

Lead paint rule
The primary concern of the OIG appears to be enforcement of the lead paint rule, which requires disclosure of known lead-based paint and/or lead-based paint hazards by persons selling or leasing housing constructed before 1978.  In its investigation, the OIG looked at 20 TSCA cases —13 involving lead paint disclosure and 7 involving the improper use of PCBs in schools—and 23 FIFRA cases involving the sale of unregistered or mislabeled pesticides.

Findings

The OIG found that:

• Regions in general did not sufficiently document and/or justify good-faith reductions to proposed penalties.
• The EPA has not provided regions with guidance or policies that adequately delineate the processes for documenting the reduction of a penalty, establishing the appropriate level of reduction for good faith, and ensuring that the reductions are in line with the behavior of the respondent.
• Documentation within case files generally did not clearly delineate why and how reductions for good faith were determined.

The OIG concluded that the lack of adequate guidance for determining good-faith reductions and providing adequate documentation for good-faith reductions creates a risk that violators may not be treated equitably.  In addition, the EPA may be losing opportunities to fully collect all penalties due, said the OIG.

Agency response

According to the OIG, EPA’s agreement to amend both the ERPPs and the Agency’s Documenting Penalty Calculations and Justifications in EPA Enforcement Actions (GM-88) will address the lack of inadequate guidance.

Also in response to the report, the EPA agreed to update its 1986 Guidance on Determining a Violator’s Ability to Pay a Civil Penalty.  As part of that effort, the Agency said it will consider whether more guidance is needed on (1) how to evaluate ability-to-pay claims in enforcement cases against individuals, and (2) when to allow a respondent/defendant to pay a civil penalty in installments and how best to structure settlement agreements with delayed payment schedules.

SEP

In addition, the OIG was concerned that EPA’s ERPPs do not prescribe alternatives such as public service when penalties cannot be paid.  The EPA answered that its existing supplemental environmental projects (SEP) policy provides a basis for alleged violators to undertake beneficial environmental projects in place of paying a monetary penalty.  However, the Agency added that it would evaluate whether additional guidance is needed to clarify if non-monetary alternatives such as public service activities can be used to meet the SEP requirements.

Based on its discussions with the EPA, the OIG concluded that all its recommendations are resolved and open, with corrective actions under way.

The OIG report