AN OVERVIEW OF COMPLIANCE AND ENFORCEMENT IN THE UNITED STATES: PHILOSOPHY, STRATEGIES, AND MANAGEMENT TOOLS

Cheryl E. Wasserman¹

¹Acting Director, Office of Enforcement Policy, Office of Enforcement, U.S. Environmental Protection Agency

SUMMARY

This paper provides an overview of how the United States enforcement program is implemented, specifically what strategies, management systems and tools are employed to make it work successfully. Section 2 examines the philosophical basis for enforcement; Section 3 defines compliance and enforcement strategy elements and planning systems; Section 4 reviews management systems and tools; and Section 5 reviews the infrastructure required for implementation.¹

1. INTRODUCTION

The United States Environmental Protection Agency (EPA) along with its State and local counterparts is responsible for carrying out fourteen major Federally mandated programs.² Environmental programs have grown in number and scope since the early 1970s following Earth Day and well publicized environmental episodes. These events were a powerful impetus to the public outcry for stronger environmental and public health protection. The International Enforcement Workshop in May 1990 now closely follows the anniversary of Earth Day, perhaps heralding a new era of shared recognition of the importance of environmental enforcement and closer cooperation in the international sphere.

The Workshop presents a welcome opportunity to share and reflect upon EPA’s enforcement philosophy, strategies and management tools. In the late 1970s, EPA’s focus shifted from putting a regulatory apparatus in place in the air and water programs, to enforcement of those laws. This natural shift in focus, coupled with some powerful new penalty authorities under the Clean Air and Water Acts, spurred what was then called the Major Source Enforcement Effort (MSEE). Major air and water facilities (defined principally by their size) which had not yet installed pollution control equipment were put on a list. That list was tracked nationally, and EPA brought enforcement actions with penalties either itself or through the States. The emphasis, however, was placed on a strong Federal enforcement presence with significant influence wielded over State penalties and other settlement terms, particularly for major steel and power plants. This effort was highly successful in achieving its stated objectives, but clearly was narrowly focused on initiating enforcement actions, and negotiating settlement agreements.

In the early 1980s, several changes happened simultaneously. EPA and the States had virtually worked their way through the list of major air and water sources. EPA was in crisis due to a changed philosophy, reorganization, and widely shared perception that enforcement was no longer emphasized by senior agency officials. In a much-publicized turnaround, spurred by the Congress and a worried public, a new management team was brought to EPA. One of their tasks was to correct what was a precipitous decline in the number of Federal civil law suits, then and now a barometer for the strength of the enforcement program. In response, enforcement strategies were reconstructed in 1984, and enforcement was emphasized repeatedly by the new Administrator and his Deputy. However, this was not sufficient. So, a new management apparatus was put in place not only to get enforcement back on its feet but also to systematize it and keep it from being subject to the whims of management.

EPA now has well defined strategies, measures, and systems to manage enforcement to an unprecedented degree, reaching into and directing a highly decentralized organizational structure involving multiple levels of government and ten Regions spread throughout the country. What is different about these systems from those previously in place is that they recognize new factors:

· The primary role of State and local governments over enforcement in programs delegated or approved by EPA, balanced with a continuing EPA oversight role;

· The expanding reliance on administrative and criminal enforcement in addition to civil law suits;

· The need to focus increasingly stretched resources to address compliance and environmental results; and

· The need for follow-through on enforcement settlements until full physical compliance is achieved.

Since the mid 1980s, additional trends in environmental programs challenge these measures and management systems:

· A changing universe of regulated sources that far exceeds Federal and State resources, shifting from large individual pollution sources to smaller, more numerous sources.

· More emphasis on pollution prevention, management and processes rather than a singular focus on installation of pollution control equipment.

· More emphasis on continuing operation and maintenance.

· More emphasis on toxic chemicals.

· High turnover among attorneys and inspectors hired away for their expertise by a regulated community under increasing pressure to comply.

The strategies and management systems put in place in the mid 1980s are still evolving to become more targeted (i.e. more strategic), more leveraged (i.e. getting the greatest impact out of any one enforcement action), and more flexible (i.e. more responsive to local conditions and priorities) in response to these challenges. Although the strategies and management systems are far from perfect, they are certainly the best structure for managing enforcement the Agency has found to date.

2. PHILOSOPHICAL BASIS FOR ENFORCEMENT IN THE U.S.

2.1 Why do compliance and enforcement matter?

Perhaps the best place to start is to ask the fundamental question: why are we concerned about compliance and enforcement activities? The reasons include

2.1.1 Program Effectiveness: Compliance is critical to realizing the benefits envisioned by environmental policy, statutes, regulations, standards and permits put in place to protect public health and the environment. Compliance is the regulatory bottom line.

2.1.2 Equity: A consistent and effective response to noncompliance provides an essential element of fairness to the regulatory process that would be missing if those who do not comply benefit relative to those who do, or if violators are treated very differently depending upon their location and circumstance.

2.1.3 Credibility: The rule of law and the credibility of our governmental institutions require that laws that are put in force are taken seriously. The expectation that violations will generate a predictable and proportionate enforcement response is essential to sustaining credibility. Most important, commitment to follow through by the government until compliance is achieved is viewed as the ultimate test of the public will to see a program fully implemented.

2.1.4 Economic Efficiency: To the extent requirements are considered economically efficient, equitable enforcement preserves economic efficiency; imbalance in compliance and enforcement can lead to economic inefficiency.

2.2 What is the basis for the U.S. approach to enforcement?

Understanding the theories underlying environmental enforcement in the United States is important to understanding the U.S. program. This discussion will cover 1) distinctions between compliance and enforcement; 2) deterrence theory; 3) economic theory; and 4) behavior theory, as they shape the development of compliance and enforcement strategies.

2.2.1 Compliance and Enforcement Defined

Compliance, the ultimate goal of any enforcement program, is essentially a state of being, a state in which environmental requirements are achieved and maintained. Enforcement is defined as the application of a set of legal tools, both informal and formal, designed to impose legal sanction (e.g. penalty) to ensure a defined set of requirements is complied with. An issue that is continually debated is whether compliance can be achieved without enforcement. The answer, based on the U.S. experience and theory, is that enforcement is a necessary, but not sufficient, means of achieving compliance. Although enforcement may not be needed to achieve compliance in individual cases, in most situations some level of enforcement is thorough to be needed to create and maintain a complying majority. In 1941, Chester Bowles, of the wartime Office of Price Administration suggested the view that there will always be 5% of individuals who will violate no matter what, 20% who will comply no matter what, and 75% who will comply only if the violators are punished and/or the requirements are perceived as nonarbitrary. This, in concept, is the philosophical underpinning of the U.S. enforcement program.

2.2.2 Deterrence Theory

Deterrence is perhaps the most important underlying theory of enforcement. It justifies how a little well placed enforcement can go a long way toward creating more widespread compliance. Simply stated, deterrence means that sources are discouraged from violating requirements. Theory identifies four ingredients to deterrence: 1) a credible likelihood of detection; 2) swift and sure response; 3) appropriate sanction; and 4) the perception of the first three.³ Specific deterrence is deterring an individual violator from violating again. General deterrence is deterring the broader regulated community from violating.

Deterrence provides enforcement with its multiplier effect. Because no enforcement program can provide sufficient presence of all time, for all violations, each program must rely upon and develop a complying majority and focus on addressing the remainder that does not comply. For each enforcement action, the magnitude of its deterrence effect in inducing others not to violate the law depends on the strength of each of these four factors.

Because an important element in creating deterrence through enforcement is perception, how enforcement actions are taken is just as important as the fact that they are being taken. The annals of military history are filled with stories of military battles won where few in number created an effective image of a formidable fighting force, thereby successfully competing against superior forces. So must enforcement actions, including inspections, be well placed and well publicized for maximum impact.

2.2.3 Economic Theory

Pure economic theory argues that each owner/operator rationally calculates whether it is in his or her economic self interest to comply or to violate requirements, comparing the cost of coming into compliance with the likelihood of getting caught times the penalty of violating.⁴ To remove economic incentives to violate the law it is the policy of the U.S. EPA enforcement program to recover, at a minimum, the economic benefit of noncompliance when imposing penalties on a violator in an enforcement action. This is viewed as not only deterring deliberate economic decisions not to comply, but also as crating more equitable treatment of compliers and non-compliers. It is also considered criminal conduct to deliberately decide not to comply with environmental requirements, such as one might do if compliance decisions were driven by economics.

2.2.4 Behavior Theories

The U.S. approach, while dominated by deterrence and economic theories, increasingly recognizes a broad array of motivations that may explain compliance behavior. Compliance, like human behavior, generally cannot readily be predicted. It is more likely to be the result of complex motivations, all of which must be taken into account.

These other theories, which are conveniently labeled behavior theories, stress cooperation, technical support, and personal relationships between regulatees and government officials as effective means of creating widespread compliance.⁵ The cooperative model stresses the regulatee, the corporation, as a political citizen, the professional willing to comply with the law if it is perceived to be reasonable. The personal motivation model stresses moral and social values and sanctions, e.g. jail terms (incarceration), and personal fines that come directly out of someone’s pocket. It also stresses successful personal relationships between government inspectors and the operators of regulated facilities. The model which views the regulatee as “incompetent,” or unknowledgeable, stresses technical assistance, organization and procedures needed to comply.

2.2.5 Applying theories to Compliance and Enforcement Strategies

The U.S. approach to enforcement strategies now recognizes that they must reflect and respond to a mix of these theories. The range of actions must include both the proverbial carrot and stick to gain compliance.

3. COMPLIANCE MONITORING AND ENFORCEMENT STRATEGIES

Elements of an effective compliance and enforcement strategy are well defined in the United States.⁶ An annual strategic planning process is used to reassess program direction and priorities and refine priorities over a two, three, and most recently a four year planning horizon. Improvements are constantly being made in the process of strategic planning and in what is expected to address each of the basic strategy elements singly and as they are implemented as a whole in any given program.

3.1 Elements of a Compliance and Enforcement Strategy

Each program is requested to address each of seven strategy elements in written strategies and to develop different strategies where needed for sub-elements of the regulatory program.⁷ These strategies are developed nationally in consultation with the State and local governments which also must implement them. Regions will soon be asked to develop their own tailored strategies in response to both national priorities and local needs.

The strategies generally address the following elements:

- identifying the regulated community;

- establishing program priorities;

- promoting compliance;

- monitoring compliance;

- enforcement response to violators;

- clarifying roles and responsibilities of Federal and State or local agencies; and

- establishing management accountability and evaluating results.

Each element of a compliance strategy is reviewed below in terms of the current practice by government officials.

3.2 Identifying the Regulated Community

It becomes quite difficult to develop a strategy to address sources or facilities about whom you have little information. Therefore, the first and most obvious element of a compliance strategy defines the process that will be used to gain a more complete picture of who is affected. Each program has its own way of addressing how to identify the regulated community. Some rely on inventories (e.g., the air program), some on permit applications (e.g., the water discharge program), and some use a process of registration (e.g., the underground storage tank program). Prohibitions from operating without a permit have proven to be an excellent means of ensuring that most sources know they are subject to a requirement although it is not foolproof. A good example is the PCB program where identification is a weak link in the strategy. Because of the anticipated burden on industry of completing a survey, none was required. As a result, a large percentage of the initial government inspections were at facilities that were not even subject to the regulations. Even when programs have lists of facilities, they often have a difficult job in trying to maintain current lists. Any inventory of the regulated community should ideally lend itself to analysis so that the program can assess what types of sources are in and out of compliance, and whether the regulatees are sophisticated, etc. This information helps to shape the direction of other elements of the strategy.

Recently, a requirement that industrial operations prepare and submit for public review a Toxic Release Inventory, has provided an unanticipated benefit in helping Federal and State regulators identify sources of pollution that should have been, but which had escaped inclusion, on current lists.⁸

3.3 Establishing Program Priorities

Environmental requirements now cover virtually the full range of activities involving production, transportation and consumption in our society. As difficult as it is for the regulated community to keep up with these requirements, it is even more difficult for environmental officials to ensure there is compliance and to take the necessary enforcement actions. Therefore, priorities must be set to focus enforcement activities.

Enforcement priorities must include an effective mix of concerns for not only the most obvious risk of public health or environmental harm, but also for program integrity (e.g., requirements such as monitoring, reporting, and record keeping can be essential to implementing the regulatory scheme), and the integrity of enforcement presence (e.g., a violation of an administrative order or court decree may not in itself be significant but must be enforced to demonstrate the significance of a legally imposed order). Current patterns of compliance also should be taken into account to effectively target enforcement activities.

Enforcement priorities are currently defined through several vehicles; each vehicle has a different impact on how the program is implemented. At a very broad national level, annual Agency Guidance specifies program priorities. EPA has placed a premium on fully integrating enforcement into every aspect of program implementation. For example, if a major thrust of the Toxics Program is pre-manufacture testing of new chemicals, there must be a parallel enforcement component to that priority which ensures that industry does indeed perform the necessary testing and reporting of appropriate test date. Each year these enforcement priorities are communicated not only through Agency guidance but also receive wide dissemination through the National Environmental Enforcement Journal funded by EPA and published by the National Association of Attorneys General.⁹

More specifically, enforcement priorities are further established in program measures of success which accompany the annual guidance, defining what constitutes Significant Non-Compliance (SNC) in each program.⁹ How effectively the Significant Non-Compliers are returned to compliance is one measure of program success. Tracking of SNCs ensures that each and every such violation is addressed. The guidance also identifies other program areas for which an enforcement presence is a priority but which do not necessarily require coverage of all violations. Many such priorities are amenable to initiatives designed to send a clear message to the regulated community without addressing most violators. Enforcement initiatives are targeted and concentrated enforcement actions, timed to have a maximum deterrent impact through press coverage, and packaged to gain economies of scale in preparing cases for litigation.

In practice, the environmental programs have not been entirely successful in establishing priorities on a national basis. When significant violators were first defined in the hazardous waste program, for example, an effort was made to establish enforcement priorities at land disposal facilities for groundwater related violations. However, in reality, all groundwater violations do not pose the same level of risk and some very minor violations were included on the Significant Non-Complier (SNC) list. This subsequently was corrected in revised guidance which focuses on those violations which pose the greatest threat to human health and the environment. The Air program has placed a high priority on violations of pollutant standards in areas exceeding national ambient air quality standards for that pollutant. However, the air program also has included violations of any national new source performance standard. Therefore, a violation of volatile organic compound (VOC) requirements in areas exceeding ozone standards has had the same priority as the failure to conduct a performance stack test upon starting up a new source in an area attaining national air quality standards, even if Federal or State officials have reason to believe the source is otherwise in compliance. Similarly, the water program’s emphasis on major sources, the most significant 10% of the 60,000 dischargers, is said sometimes to miss minor sources that are locally significant contributors to water pollution and to focus on some that may not be problem dischargers.

While refinements are being made, a priority setting scheme is never fully satisfactory at the national level. Federal officials are currently working with EPA Regions and States to more successfully supplement national priorities to adjust to local circumstances and to provide more flexibility in accountability systems to permit this adjustment s to be made.

As EPA gets better at defining areas to target enforcement, it has recognized the importance of balancing the need to maintain a broad presence for all types of sources and violations, with the need to focus enforcement without necessarily taking action against all such sources or violations in a category. Increased emphasis is being placed on statistical techniques for implementing targeting strategies. Further, because most government agencies would prefer to respond in some manner after they discover violations, enforcement priorities must focus first on detection of priority violations. This issue is addressed below in Section 3. – Compliance Monitoring.

3.4 Promoting Compliance within the Regulated Community

Compliance programs at the Federal and State level offer a range of mechanisms to disseminate information and provide technical assistance to the regulated community. This includes regulatory “hot lines,” brochures, conferences, and the like. Well-timed threats of enforcement also can provide an incentive for sources to ensure sources avail themselves of these sources of information and assistance.

Promotion activities have traditionally been underfunded and the most expendable activity in a compliance and enforcement program. In recent years, however, with regulatory activities reaching ever smaller and more numerous sources, providing information to the regulated community (i.e. on the requirements for compliance, on why the requirements are important, on what is required to comply and the consequences of noncompliance) is viewed as more essential by Federal and State regulators. Programs try to work with trade associations and other groups such as university based assistance programs to transfer technology and information needed to comply with requirements.

Compliance strategies must seek the proper balance between investments in promoting compliance versus enforcing requirements. Figure 1 offers one model for addressing this issue by postulating five stages to gaining compliance with any requirement for three different program scenarios. It suggests that the appropriate mix in emphasis between promotion versus enforcement changes over time. That desired mix also changes with the type of source, e.g. its sophistication, the complexity of the requirement, etc. For example, compliance promotion has been viewed as a very high priority for small operators of drinking water supplies.

The form and nature of the regulation itself can enhance or impede compliance. Clear, simple requirements, tailored to a source are most amenable both to compliance by the source, and to monitoring and enforcement by governmental officials. Design of the regulatory approach also may involve choices between general rules versus individualized permits, stringency and reliability, the form of the standards, and whether monitoring, reporting and record-keeping can be properly included in the rule.

Individually tailored requirements in permits, while more resource intensive, can make the facility or source far more aware of requirements when the permit specifically interprets how they apply. New amendments to the Clean Air Act try to overcome problems encountered where general rules are virtually unenforceable because they cannot easily be applied to the individual source. The proposed permit program should help avoid this.

At this writing, several new initiatives are under development to enhance the enforceability of regulations and permits. One involves field-testing of regulations before they are final; another is the preparation of enforcement impact analyses to accompany the regulation; another would have inspectors participate in the review of a regulation.

Finally, stepping back from individual requirements, EPA has recognized the importance of promoting sound environmental management and the use of environmental auditing by the regulated community to enhance their overall ability to comply with regulations. EPA has issued a policy statement promoting environmental auditing, has developed resource materials for industry to use, and staff is active in the professional organizations to environmental auditing.¹⁰

3.5 Monitoring Compliance

The term compliance monitoring is used to encompass activities undertaken either by the government or regulated sources to collect and assess information on compliance status. The information serves many purposes:

- enables sources of pollution to take steps to achieve and maintain compliance

- provides reliable and timely detection of violations

- provides evidence to support enforcement actions

- provides compliance statistics to evaluate program progress

There are three primary sources of compliance information: 1) source self-monitoring, reporting and record-keeping, 2) inspections by the government or independent third parties, and 3) citizen complaints. The first two are the most important means of monitoring compliance in the United States. (Ambient monitoring has been used infrequently to monitor compliance because of the difficulty of attributing pollution to an individual source; aerial surveillance also has been used as a valid investigatory technique and has overcome court challenges that it is an invasion of privacy). Each program strategy must make choices as to what information is collected, by whom, and at what frequency. While there are differences among the programs as to the approaches taken, there are also important similarities and common principles.

In theory, compliance monitoring should be a statistically valid indicator of compliance; the methods should be the same as or can be related to those on which the standard was based.

3.5.1 Source self-monitoring, reporting and record-keeping

Regulated parties are expected to maintain compliance, and this implicitly requires that they have a reliable means of keeping track of their own compliance status. In addition, to the extent it is cost-effective to do so, regulations and permits specifically require self-monitoring, record-keeping and reporting sufficient to assess compliance. This provides important information on violations that would otherwise be impossible to obtain by periodic, often infrequent government inspections. It also increases the probability that the source will take seriously its responsibility for its own compliance.

Self-reported monitoring information is sometimes used directly as a basis for follow up enforcement actions but more fundamentally it helps to screen and target inspections. Generally, self reported information is supplemented by inspections to corroborate the accuracy of the reported data.

EPA and the States establish standard procedures, methods, instrumentation and minimum frequency of data collection. Requirements are subject to close scrutiny as a balance is sought between benefits, cost and paperwork burden to government, as well as industry. An issue related to behavior theory and compliance monitoring is whether source self-monitoring should be reported by exception or require complete reprint of all data. Some argue for economic efficiency: only information absolutely needed by regulators should be required. They also argue that reams of data are unusable by agency officials and that agencies are better off with less data and more information. Such exceptions reporting is used in the air program for results of continuous emission monitors. Others argue on behavioral grounds that regulators can control the quality of data and there is more management attention paid with routine reporting of all monitoring data results. This is the approach adopted by the water discharge program.

In practice, source self-monitoring is not as widespread as regulators would like. The development of cost-effective monitoring devices is lagging behind regulatory developments. Source monitoring is used extensively in the water discharge (NPDES) program for all dischargers, for drinking water supplies, and for groundwater protection from hazardous waste land disposal and storage tanks, but to a far less extent in the air program where continuous emission monitors are expensive and until recently were less reliable.

Most of the environmental statutes ensure that self-reported data are available to the public. The U.S. government and most States have laws and regulations granting any citizen the right to examine or copy such agency information. At the Federal level there are limited exceptions to prevent the government from disclosing certain kinds of confidential business data that have been duly labeled and submitted in confidence, but these exceptions are never available for technical information describing the physical nature and environmental impact of a violation. As a practical matter, confidentiality is rarely an issue except in the pesticide and toxics programs in which product formulation, production and distribution data are submitted. Public availability and reporting have proven to be an important deterrent to both violations and failure to report generally particularly when coupled with the citizen right to sue to require submission of mandatory reports and to return violators to compliance.

3.5.2 Inspections

Inspections remain the backbone of agency compliance monitoring programs. Government officials make independent judgments as to the compliance status of a facility. Even with widespread requirements for self-monitoring, inspections play a major role in assuring quality and lending credibility to self-monitoring programs. Government inspections serve several functions: 1) they help to create an “enforcement presence,” evidence of the government’s interest in compliance at the site of operation, 2) they can identify specific environmental problems, 3) they serve to inform the source and agency as to the existence of the problems, and 4) they serve to collect and preserve evidence of non-compliance in support of enforcement cases.

Inspections are conducted either “for cause,” meaning there is reason to suspect that the particular source is violating environmental requirements, or “routine”, conducted under a “neutral” inspection scheme, that is, one that does not unfairly single out a particular facility. The requirement for a neutral inspection scheme has its basis in the constitutional protection granted every citizen in the U.S.

Inspections also can be announced or unannounced. Most U.S. inspections, and virtually all complex sampling inspections are announced with advance notification detailing the kinds of information that should be available to the inspector before or during the visit. This helps to ensure that time will not be wasted, and essential plant personnel are present. Unannounced inspections may be more likely to discover true operating conditions and are occasionally used where there is reason to believe the source is in violation or is misrepresenting its performance data. Despite the grant of rights of entry under most statutes, inspectors sometimes must obtain warrants from the courts if a facility owner or operator does not freely agree to their entry for inspection purposes, consistent with Constitutional guarantees against unwarranted searches and seizures.

Most significantly, no agency can afford to conduct all the inspections it needs. The question is, therefore, one of priorities and the allocation of the scarce inspector resources. To date, priority schemes for inspections are very unsophisticated. They are more focused on one element of the program, the need for breadth of coverage, then they are on targeting inspections on those sources and violation types most likely to yield the greatest benefit from enforcement action. Environmental inspection programs for air and water usually call for inspections of the major sources, generally defined by size and potential environmental impact, at least once per year, and biennially for minor sources. In the hazardous waste program, the focus has been on land disposal facilities.

Recently, there has been some effort to assess how inspection resources can be used more efficiently and effectively with applied statistical techniques. The air program has been developing some alternative models for directing inspections.⁴

EPA inspectors are usually trained in and focus on a single media program. EPA recently established mandatory training requirements for Federal inspectors, including both generic and program-specific components. A strategy issue is the extent to which inspections should be multi-media, and/or more like environmental audits which take into account management systems as well as compliance with specific limits and practice requirements. In what circumstances does it make sense for enforcers to inspect interrelated processes and environmental impacts to ensure the most efficient outcome from the regulatory scheme? Many State and local agencies perform multi-media inspections because they are small and their programs have not been as specialized as EPA’s has been at the national level. The issue of management audits has really arisen with increased emphasis upon chemical emergency preparedness, pollution prevention and waste minimization.

3.5.3 Citizen Complaints

Citizen complaints are an important means of detecting certain types of violations. Examples include wetlands protection requirements, where illegal dredge and fill operations may take place in isolated areas under the watchful eyes of neighbors, and criminal violations where illegal acts may be reported by employees. Our Superfund (CERCLA) statute even provides for a bounty for reporting of a criminal act that leads to a conviction for non-reported hazardous substance releases. At the local level, how well an agency responds to citizen complaints is very important to its support in the community.

3.6 Enforcement Response to Violations

The U.S. enforcement program includes a wide range of potential responses to violations both informal and formal. Each program prepares an enforcement response policy, which defines the appropriate range of responses for each type and magnitude of violation. These enforcement response policies are developed in consultation with the State and local governments which also implement the enforcement programs. The approach to defining acceptable response reflects concerns for

correction of the violation as expeditiously as possible, including the underlying cause of the problem

deterrence of future violations by the party or others;

equitable treatment of violators for similar violations and circumstances

punishment of serious, willful wrongdoing with criminal sanctions

cost-effectiveness – by using the least resource intensive response that permits the other national goals to be achieved.

This is accomplished by pursuing the objectives of timeliness, appropriateness, escalation and follow through.

3.6.1 The range of enforcement responses

At one end of the spectrum of enforcement responses are the informal responses to violations. These informal responses include phone calls, site visits, warning letters, and notices of violations. Next are legal remedies and sanctions imposed administratively, by EPA, and/or judicially, by the courts. Often administrative remedies and sanctions are viewed as actions which would precede judicial action, and judicial criminal enforcement is viewed as the most severe form of action. Formal administrative authorities, as distinguished from informal administrative actions, define the violation, the required response, a date certain for completion of required actions to achieve full physical compliance and are independently enforceable, i.e. the government does not have to provide the original violation and there are adverse legal consequences for failure to comply with the administrative order. Figure 2 summarizes the various tools under EPA’s major statutes.

Most, but not all, administrative and judicial authorities include the imposition of monetary penalties. The trend recently has been toward legislation granting EPA authority to impose penalties administratively because administrative enforcement is less costly and more quickly implemented. There also have been significant enhancements to criminal fines and jail terms for environmental enforcement since criminal penalties and incarceration have proven to be such effective deterrents.

EPA also is able to list violators of Clean Water and Air Acts as ineligible for receiving Federal grants, loans and contracts. This can be a powerful tool in getting recalcitrant sources to correct their problems and in gaining compliance at Federal facilities owned and operated by contractors.

States and some EPA programs have a broader range of enforcement responses, including permit revocation, pipeline severance, etc.

3.6.2 Timely and Appropriate Enforcement Response

U.S. enforcement have always employed enforcement response guidance to define an acceptable range of responses to violations. However, since 1984, each program issues specific guidance defining what constitutes a timely as well as an appropriate enforcement response. Timeliness, one of the three elements in traditional deterrence theory, has been problematic. Often cases take years for negotiations with a violator. Second chances, third chances, warnings, protracted discussions did not bring about timely compliance, nor effective government action. Target timeframes were first introduced operationally at the Federal and State levels in 1984 through the Policy Framework for State/EPA Enforcement Agreements and program-specific implementing guidance.¹¹ The Policy Framework was the product of a Steering Committee of State and Federal officials from all EPA programs charged with defining expectations, roles, and relationships for an effective national enforcement program.

The Policy Framework defines the timeliness part of the concept in terms of specific points in time by which there should be 1) an initial response to a violation; 2) a formal enforcement action if informal means are not effective in returning the violator to compliance; and 3) timely follow through and escalation in the event the violator fails to comply, until full physical compliance has been achieved. The air program, for example, defines the time period by which either compliance should have been achieved or a formal enforcement action taken, as 120 days. The hazardous waste program goal is 135 days for high priority violators from the date of inspection. The appropriateness of exceedences from the timeframes are reviewed annually. The target timeframes themselves are to be reviewed periodically but it is politically difficult to change them once established.

The timely and appropriate enforcement response system is built in the concept that it is the willingness of government officials to follow through on less costly enforcement responses, and to escalate responses in a timely manner that gives weight and force to lesser responses. Each higher order enforcement response carries with it a multiplier effect in its deterrent value. In establishing the program, to build credibility, officials may be forced to utilize more costly formal administrative or judicial action, but when a track record is established, the expectation is that in most instances a simple notice will send violators scrambling to quickly resolve a compliance problem or cooperatively negotiate its resolution.

The Policy Framework also defines “appropriate” enforcement response as having three elements. First, there is the appropriate level of formality of enforcement response. An initial violation can be addressed through a full range of informal and formal enforcement tools. Any and all approaches that the government official believes will be most cost-effective are acceptable. The exception is where compliance problems extend beyond a specified period of time and have not been resolved, i.e., it holds that at a certain point in time the response should be formal. Another exception is the need for court-imposed action where a violator’s schedule to comply exceeds a statutory deadline.

A second element of “appropriate” enforcement response, is that it has to correct the violation. A third element is that for defined violations and circumstances it must include a penalty or other sanction as appropriate to create the necessary deterrence for future violations by that source or other sources. Because only certain enforcement mechanisms can be used to impose a penalty or other sanction, for those more significant violations, it means the more costly formal enforcement responses would have to be used.

Timely and appropriate enforcement response is a priority for Significant Non-Compliers. This recognizes that requiring timely and formal enforcement action for all violators would overburden limited resources.

How has this policy worked in practice? Studies coordinated by the Office of Enforcement¹² repeated annually have found that the concept is widely accepted as a management tool, and an important measure of how effective the enforcement effort is, but with some expectations we are far from meeting its goals.

Some of the reasons for falling short of the mark include inadequate resources, cumbersome enforcement procedures (particularly a lack of simple administrative penalty authority), a reluctance to pursue formal enforcement action, and/or goals which themselves may be very optimistic. Nevertheless, these are the very problems that this system was designed to identify and help address. By comparing those that are able to succeed with those that are not, valuable lessons can be learned about how to improve the enforcement process.

3.6.3 Imposing Civil Penalties and other Sanctions

Civil penalties (dollar fines) and other sanctions such as criminal conviction (jail terms), shutdown of operations, sewer bans, denial of government contracts, and the like play an important role in U.S. enforcement actions. In the past, many enforcement actions merely set forth tailored compliance agreements detailing remedies and schedules for correcting the violation. However, it is now generally recognized that if there is no consequence to violating an environmental requirement (except having to meet with government officials to agree to do what was required in the first instance), there is every incentive to delay compliance until caught. The view is supported by observations that indeed compliance has languished without enforcement even when it is broadly understood that clean up costs will increase substantially if violators are not corrected early and where there would be an actual cost savings from early compliance activities.

Each environmental program identifies where a penalty or other sanction is essential for an enforcement response to be effective, recognizing that penalties cannot be easily sought in each and every case. It is more costly to bring an enforcement action which seeks some sanction both in terms of agency time and resources. This is due to the protection our society affords individuals against governments depriving them of property and/or personal liberties without due process of law. The complexity of our enforcement procedures are therefore proportionate to the potential severity of the sanction. Penalties are more hotly disputed by violators than the fact of the violation and/or needed remedies.

The National Municipal Policy¹³, a strategy to gain compliance by municipalities with treatment and discharge limits under the Clean Water Act, is a good example of how effectively penalties may be used to achieve compliance. Municipalities operating publicly owned treatment works for treatment of sewage were subsidized through Federal grants to construct new treatment works. Given a reluctance to impose penalties on municipal governments, the political sensitivity of doing so, and the existence of the subsidy program, compliance levels lagged behind those of industry. Municipalities soon became the major sources of point sources of pollution in our waterways. The National Municipal Policy changed all that by announcing, with the support of the State association of Water Directors, that firm enforcement measure would be taken, including stiff penalties for violations. Penalties on a level comparable to that imposed on industry were imposed systematically and this community began to believe in the importance of compliance. Communities became progressively more willing to settle rather than resist compliance.

Since 1984, EPA penalty policies require a penalty amount which recovers the economic benefit of noncompliance as well as the gravity of the harm, considering the severity of the violation, its potential harm, the compliance history of the violator, etc.¹⁴ This calculation is aided by BEN, a user-friendly computer model which makes it easier than before to calculate the economic benefit.¹⁵

Finally, EPA and the Department of Justice tend to favor monetary penalties. Efforts to accept environmental good works or clean up alternatives beyond those required for compliance as credit for a penalty or as a basis for mitigating a penalty are closely scrutinized to ensure monies are not diverted from the government inappropriately, and that there remains a real sanction. Recent initiatives to promote pollution prevention and environmental auditing where appropriate in case settlements put pressure on penalty policies to allow some reduction in penalties in exchange for these commitments. For example, EPA is seeking to introduce environmental audit provisions into consent decree negotiations in cases where there is a clear pattern of environmental management problems or a pattern of a given type of violation within a company.¹⁶ The Policy Framework explicitly recognizes that there are non-monetary sanctions which can have a deterrent effect that may be more powerful than monetary penalties, and that those will be acceptable substitutes. This is particularly true at the State and local level. To prevent abuse and foster greater acceptance of those alternative approaches to sanctions, the Policy Framework calls for national guidance as to what alternative sanctions would be acceptable for this purpose.

The criminal sanction is viewed by many as the most effective deterrent in the environmental enforcement arsenal, and has gained substantial public support.¹⁷ Criminal sanctions are increasingly being sought by Federal EPA, the Department of Justice and the Federal Bureau of Investigations, and in a growing number of State programs. It is, however, generally valid only for willful circumventing of a requirement with some exceptions: criminal sanctions are included for negligence under the Clean Water Act, for all instances of unpermitted dumping into our waterways under the Refuse Act, and for fraudulent and false reporting generally under the U.S. Criminal Code (18 U.S.C. Section 1001) which is important to ensure accurate self-monitoring and reporting. Criminal cases can be costly and involve complex procedures. A relatively small but growing number of cases where jail terms have been meted out have begun to change some corporate management ethics. A pronounced policy on compliance with environmental laws that is no more than cosmetic attempt to comply can result in corporate officials being held liable for the wrongdoing of their employees. The U.S. Sentencing Guidelines, which will mandate terms of incarceration for Federal crimes, allows consideration of environmental programs with strong oversight and follow through for the specific activities in question to mitigate the degree of culpability. This seems to be having a significant effect on prevention, internal compliance systems and employee incentives within a corporation to comply.

EPA is also making increasing use of its Contractor Listing authority whereby a listed facility is deprived of the right to be awarded Federal government contracts, loans or guarantees as long as it is on the list. For most violations of Clean Air and Clean Water Act requirements, contractor listing is mandatory for criminal convictions and is discretionary for civil violations at specific facilities. The sanction has offered a lot of economic leverage in several different compliance cases. In addition, EPA is placing ever-increasing attention on the use of publicity surrounding its enforcement actions and in creative settlements requiring violators to use publicity to enhance deterrence.

3.7 Clarifying the State/Federal Relationship

A key element in any strategy is defining roles and responsibilities for carrying out the program. Based on the belief that those closets to the environmental problems are most familiar with them and best able to provide an effective enforcement presence in the field, compliance monitoring and enforcement in the United States is a highly decentralized operation. Significant authority and responsibility resides with States and localities. For example, States perform anywhere from 70-90% of the inspections depending upon the program and are currently responsible for about 70% of the formal enforcement actions. Programs which are solely national programs with an exclusive Federal role, such as enforcement or automobile and fuel standards, toxic chemical production and pesticide registration, are the exceptions because of interstate commerce considerations.

Despite the fact that most Federal statutes are structured so that EPA delegates its authority to or approves State or local programs, under these same statutes EPA retains parallel enforcement authority and is held accountable by Congress for enforcement activity within those States and for overseeing State performance. Congress and the public have viewed a continuing national enforcement presence as important to ensure local politics do not influence compliance and that laws are carried out fairly across the nation.

3.7.1 State/EPA Enforcement Agreements

As noted above, in 1984, EPA and the States drew up a Policy Framework for implementing State/EPA enforcement agreements which set forth clear roles and responsibilities in enforcement. The Policy recognizes the importance of ensuring that enforcement is viewed as firm, effective, and fair on a national basis, and that scarce Federal and State resources be used most effectively. It clarifies the expectations for good performance in implementing a strong enforcement effort and a constructive oversight approach. The criteria for sound program performance pertain to EPA as well as to State programs. The criteria look very much like the elements of a good compliance and enforcement strategy. The annual process serves as a forum for reassessing both Federal and State priorities.

The Policy Framework also establishes protocols for advance notification and consultation on all inspection and enforcement matters and defines criteria for direct Federal enforcement in delegated programs. In addition, it defines consistent national reporting of five key indicators, for all programs, to assess how effectively the national compliance and enforcement program is being carried out. These indicators, which are described more fully in Section 5, are compliance rates, progress in returning significant violators to compliance, number of inspections, number of administrative enforcement actions, and nu