EPA Should Update Its Enforcement-Related Economic Tools and Civil Penalty Policies

Most people have never heard of EPA’s “BEN,” “ABEL,” and “PROJECT” models and really don’t care to know anything about them. But if your company is accused of violating environmental requirements, you might want to have a crash course on how EPA calculates environmental civil penalties or at least an updated manual that you can consult prior to entering into penalty negotiations with EPA.

However, during the last eight years, EPA has not updated any of its statute-specific civil penalty policies, some of which go back to 1984 and others were modified no more recently than in 1995. During the subsequent years, EPA issued policy pronouncements that modified aspects of these pre-existing statute-specific policies. The various documents are not codified in one place, so it is easy for the regulated community and outside counsel to be unaware of the existence individual policy statements.

Similarly, since various dates early in this decade, EPA has not issued an update of the “user manuals” that were intended to explain various aspects of BEN, ABEL, and PROJECT -- the key economic models that EPA uses in determining civil penalty settlement amounts. However, since that time, EPA has modified some major aspects of BEN (e.g., how the so-called “equipment replacement cycle” is calculated) and should now explain these changes to the general public so that their reasonableness may be assessed. EPA should also now be in a good position to clarify the appropriate tax treatment for Superfund cleanup expenditures in ABEL’s ability-to-pay calculations, which was left murky in the April 2003 version of the ABEL User’s Manual. The absence of updated manuals creates the potential for unnecessary confusion, disagreements, and conflict.

Issuing updated manuals and statute-specific civil penalty policies will probably not be an early, high priority for the new political leadership of EPA. However, BEN, ABEL, PROJECT, and EPA’s statute-specific civil penalty policies will probably be used much more often during the next four years than they were during the past eight. Hopefully, the new Administration will recognize the value of updating the documents identified above, thereby making EPA’s enforcement program more transparent and easier for the regulated community to work with and to understand. Doing so may also reduce the potential contentiousness that might otherwise result from a reinvigorated enforcement program during the foreseeable future.