AppendixDAppendixDPENALTYGUIDELINESAppendix

D PENALTY GUIDELINES 

## Penalties are determined

in two stages: Stage one is the determination

of a ‘gravity-based penalty.’ Gravity refers to the overall seriousness

of the violation. To determine the gravity-based penalty, the following factors are considered: The nature of the violation, which may include work practice and occupant protection, supervision, training, certification and administrative violations. The scope of the violation and extent of harm that may result, including the vulnerability

of potentially affected individuals

to lead poisoning. Stage two involves adjusting upward or downward the penalty determined under the gravity-based penalty guideline. Adjustments may be made by considering

the following factors: Violator’s voluntary disclosure
of the violation. Violator’s degree of cooperation

in quickly and effectively correcting the violation. • Violator’s degree of culpability. Violator’s history of prior violations. • Violator’s financial situation and size of operation. Such other factors as justice may require. 

## STAGE

1: Gravity-Based Penalty Guidelines for Lead Violations Nature of the Violation The nature reflects the type of vioation and probability
of harm resulting, or that could result, from the violation. The following system ranks violations using three levels that factor in the probability

and amount of harm associated with the violation. However, the unique circumstances

of a violation must be considered

in establishing

a level. Low- 

## Violations that have little potential of causing harm. These violations generally result from
a paperwork
or administrative failure. Medium- 

## Violations that have some potential of causing harm. These violations generally involve work practice or occupant protection viOlations but where there is no evidence
of persons being directly exposed
or in a position to be directly exposed, such as work in a vacant property.

D-1 10/6/2009High

-Violations that have caused harm or have
a high potential for causing harm These violations most often involve

a high risk or actual exposures
of persons, especially children,
to lead hazards as may be evidenced by work in occupied properties
or lead hazards found in properties re-occupied wfthout proper clean-up and clearance. Scope of Violation

/ Extent of Harm In the context of HFS 163, the measure of the extent of harm focuses on the intent of the rule, which
is to prevent childhood lead poisoning. Minor—
A violation that has minimal potential of causing damage
to human health or the environment,

as may be evidenced when no hazard or only a minor hazard was created and no exposures
or potential exposures were documented. Major-A violation that has potential for causing “serious’ damage
to human health or the environment,

as may be evidenced by the creation of hazardous conditions,
or failure to contain hazardous conditions during work, that if left uncorrected would be accessible

to a child under age 6, a pregnant woman, older children, women of child bearing age; when workers conducting high-risk activities are not properly protected; when lead paint activities are conducted without protecting the environment; and, where a lead hazard has been left behind in the environment

in a location where

a person would likely be exposed, such as bare soil in play areas, porch floors, or on floors or window sills on the interior of a residence
or child-occupied building No evidence of actual exposure

is necessary. Severe

-A violation that has a high potential for causing, or has caused, ‘significant” damage
to human health or the environment, including, insufficient
or no containment

of high-risk lead paint activities

in an occupied dwelling or child-occupied facility; exposure of a child under age 6, a pregnant woman or multiple occupants
of a building to a lead- based paint hazard during

a lead project creation of a lead-based paint hazard in a common area or multiple living units of a multi-family residential dwelling. The scope and extent levels are determined based on the age and status of exposed persons, on the number of persons exposed or potentially exposed to, a lead hazard, or on the amount of lead hazard created or improperly contained and the size of the environmenta[ area contaminated (interior or exterior). Factors that affect the severity of the violation include: 1. The age of any children occupying the dwelling orbuilding. Children under the age of six (6) are more vulnerable

to the effects of lead-based paint hazards
in their environment than older children or adults. The extreme effects that lead c?n have on children under the age of 6 mandates

a “severe” extent factor when such
a child is exposed, Children above the age of 6 can also be affected by lead; therefore, the extent factor takes this fact into consideration. The presence and age of children present must be taken into account when determine the scope and extent of the violation. 2. A pregnaht woman occupying the dwelling or building. Pregnant women represent D-2 10/6/2009a special class of individuals who are also very susceptible

to the dangers of lead-based paint and lead-based paint hazards, When

a pregnant woman
is poisoned byleadbased paint or lead-based paint hazards, her fetus may also be adversely affected, Therefore the presence of a pregnant woman, or woman of child-bearing age, may be taken into consideration when determining the scope and extent of the violation. 3. Conducting high-risk work activities without proper containment and controls. This includes using prohibited work practices, conducting restricted work practices without the proper controls, or conducting any lead-based paint disturbance

in such
a way that potential lead hazards are not properly contained
or cleaned up. Gravity-Based Penalty Matrix for Lead Program POTENTIAL FOR HARM NATURE OF VIOLATION Minor Major Severe Low

j

$100-$150 $150-$250 $2504500 Medium
$150- $250 $250- $500 $500- $750 High $250- $500 $500- $750 $750- $1,000 Gravity-Based Penalty Guidelines for Asbestos Violations Types of violation can range from administrative omissions, such as improper project notification
or not having

a certification card on-site, as required,
to violations with
a greater potential for causing harm such as not having

a certified supervisor on-site or using untrained and uncertified workers or not notifying for the asbestos prect. Type of violation may also refer to the type of asbestos disturbance
or activity involved
in the violation. An uncertified worker
is less likely to cause harm if the material being disturbed

in non-friable and remains non-friable for the duration than if the material

is highy friable such as pipewrap
or ‘lagging.’ Likewise, an uncertified person who takes one sample of floor tile to give an owner information about asbestos content

is less likely to cause real harm than an uncertified person who claims to be able to conduct full asbestos inspections
of an industrial facility and the business subsequently makes renovation decisions based on an inaccurate inspection report of their facilities. The scope and extent of the non-compliance

also play
a part in determining the gravity of the violation. The scopele$ent may relate to the number of persons involved, the number of projects or amount of time during which the vioation has occurred. Finding no trained workers on a multi-worker crew and no certified supervisor overseeing
an un notified project has greater potential for harm, generally, than finding one uncertified worker
in a multi-worker crew of a notified project with
a certified supervisor on-site. Penalties are based on the nature of the violation and scope of the violation, similar to descriptions for lead violations. Violator’s level of responsibility, presence or lack of training, and presence or Jack of certification and supervision are also taken into account as provided

in the table below: D3 10/6/2009Gravity-Based Penalty Matrix for Asbestos Program I POTENTIAL FOR HARM NATURE OF VIOLATION Minor Major Severe Low $ 25 _jSt offense
$50

$75 Medium

$50

$75 $100 High

na $100 $100 STAGE
2: ADJUSTMENT FACTORS Factors to consider
in determining the amount of a civil penalty amount include: Voluntary disclosure prior to Department inspection
or investigation • Attitude and level of cooperation • Degree of culpability • History of prior violations • Supplemental projects • Economic benefit derived from noncompliance • Adjustment for small independent companies and training providers • Financial situation Voluntary disclosure A person may be eligible for a reduction

in the forfeiture
of up to 25% if the person voluntarily discloses aviolation before receiving notice of a pending inspection, investigation

or alleged violation or before an inspection
or investigation

is conducted
or a complaint

is made to the DHFS, EPA or a local government agency. An additional reduction of up to 25% may be made
if the violator reports the potential violation within 30 days of discovery. The reduction for voluntary disclosure and immediate disclosure may be made prior to issuing

a civil notice of non-compliance. The NON should state the amount of the original forfeiture and amount of the reduced forfeiture with the reasons for the reduction. Cooperation Forfeitures may be retluced up to 30% for cooperation when circumstances warrant. This adjustment has the following components: 1. Assistance with investigation. May reduce base forfeiture up to 10% based on a respondent’s cooperation throughout the entire inspection, investigation, case 0-4 10/612009 c

# development and settlement process, including providing

truthful information and documentation

in a timely manner, as requested. 2. Re-establishing compliance. May reduce base forfeiture up to 10% for a respondent’s

immediate good faith efforts to comply and the speed and completeness with which

it corrects violations and returns to fuN compIince. 3. Early settlement. 

# May reduce base forfeiture upto 10% if the case is settled before the flUng of any pre-hearing exchange

documents. Degree of culpability The principal

criteria for assessing culpability

include both of the following: 1. The violator’s knowledge

of the lead-based paint regulation

violated. 2. The degree of the violator’s control over the conditions
of the violation. For forfeiture purposes,

when the violator intentionally

commits an act which he knew would be a violation
or would be hazardous
to health, or when the violator has been issued

a prior NON, the penalty may be increased by up to 25% (as limited to the maximum forfeiture allowed by statute). History of prior violations When

a violator has a history of prior violations of lead-based paint rules, the penalty may be adjusted upward by up to 25% (or to the maximum allowed by statute). The need for such an upward adjustment

is based on the premise

that previous penalties

did not sufficiently

motivate the violator to comply. A corporation

owned by or affiliated with the same parent corporation may not necessarily

affect each other’s history (such as with independently-owned franchises)

if they are substantially independent

of one another
in their management

and the functioning

of their Boards of Directors. Request,

obtain and review underlying

and supporting

financial documents that form the basis of these records as needed to verify their accuracy.

If the violator fails to provide the necessary

information and the information

is not readily available through

other sources, rely on available information. n the case of wholly-owned subsidiaries, the parent corporation’s history of violation shall apply to all of its subsidiaries. The history of violation for a wholly-owned subsidiary

will apply to the parent corporation. Supplemental projects Supplemental projects

are actions which

a respondent agrees to undertake

in settlement
of an enforcement action, but which the violator would not otherwise legally required

to perform.

In return, the cost of the project reduces the amount of the final forfeiture paid by the respondent.

The actions should be substantially

related to protecting

human health from harmful exposure

to lead-based paint or asbestos Consider evidence.ofa violator’s commitment and ability to perform

a supplemental project
in establishing

an appropriate

settlement penalty. Economic benefit derived from noncompliance. A person

who has violated lead-based paint regulations

should not profit from the D-5

10/6/2009violation. Consideration

of economic benefit aspartofthe forfeiture results
ina“level playing field” by ensuring that violators donotobtain aneconomic advantage over competftors who made the necessaryinvestments

in environmental compliance. A forfeiture mustreflect the economic benefit

aviolator receives for noncompliance

inordertotake awaythe economic incentive
toviolate thelaw anddeter noncompliance. Forfeiture maybe increased within the allowed limits, to adjust forthe economic benefitthe personreceived by violating the regulations.

Ifthe forfeiture determined using the gravity-based penalty guidance and adjustment for economic benefit dpes not adequately capturethe economic benefit, consider seeking parity forthe economic benefit tothe violator based onthe circumstances

ofthe individual case.An example might include requiring the violator tosend uncertified employees
to appropriate training and requiring themtobecome certified. Adjustment for small companies Civil forfeitures maybe reduced by upto50%for personswhoare generally not engaged

in regulated asbestos orlead activities asabusiness orwhoare independent contractors with fewer than three employees. Financial situation Under TSCA, EPA generally willnot levy monetary penalties thatare clearly beyond thefinancial meansofthe violator. Absent prooftothe contrary, estabLish

a respondent’s ability to paywith circumstantial evidence relating toa company’s size and sales. Ifaviolator raises the abilityto pay argumentasadefense
inits answerorinthe courseof settlement negotiations, requestthe following typesof information: •Taxreturnsforthelast3 years Balance sheets •Income statements Statements
of changes
in financial position •Statement
of operations •Retained earnings statements •Loan applications, financing agreements, security agreements •Annual and quarterly reportstoshareholders andthe SEC, including 10K reports•Statements
onassetsand liabilities Under some circumstances,

it maybe appropriate
toseek
aforfeiture that might preventacompanyfrom continuing

in business. For example, when thereisalong history of violations.,

it maybe inappropriate

toreduce the amountofaforfeiture because history indicates thataless severemeasurewould be ineffective. 0-6 10/6/2009