Federal Environmental Civil Penalties Set to Increase Dramatically

EPA is increasing civil penalties for all statutes it administers that call for the assessment of civil penalties. These increases are not recommendations or proposed statutory amendments, but are the result of perhaps the little known 2015 amendment to the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended through 2015 ("the 2015 Act"). This Act applies to all federal agencies that have authority to assess civil penalties and not just EPA. EPA's interim final rule adjusting the level of statutory civil monetary penalties was issued June 23, 2016. It will be effective August 1, 2016 for penalties assessed after that date for violations occurring after November 2, 2015.

For example, a violation of an effluent limit under the Clean Water Act carries a statutory maximum civil penalty under 33 U.S.C. 1319(d) of $25,000. The previous version of the Inflation Adjustment Act allowed it to be raised to $37,500 per violation. The new rule, however, based on the 2015 Act will increase that penalty to $51,570. EPCRA and CERCLA violations for failure to timely report releases of reportable quantities will go from the adjusted rate of $37,500 to $53,907 per violation. The rule is a "catch-up rule" and provides a table detailing all EPA statutory penalties and the changes to the amount effective August 1, 2016. The EPA will adjust this amount annually to reflect changes in inflation.

Because Section 4 of the 2015 Act mandates publication of an interim final rule by July 2016 with the effective date of August 1, 2016, and because the Act does not give the agency discretion in varying the amount of the changed penalty, the rule was promulgated without providing for public comment and will be effective August 1, 2016. Most EPA civil penalty policy documents were developed based on the original statutory amount and were adjusted by the inflation factor under the pre-2015 Act. While the change does not impact the EPA's penalty policies, it is likely that EPA will factor in the changes in determining the gravity based penalty amounts and could make for some very large penalty assessments.

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