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U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

EPA Needs to Update Its 

Pesticide and Chemical 

Enforcement Penalty 

Policies and Practices 

Report No. 13-P-0431 September 26, 2013 

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code to learn more 

about the EPA OIG. 
 

 

Report Contributors: Ganesa Curley 

 Jerri Dorsey

 Jeffrey Harris 

Lauretta A. Joseph 

 Calvin Lin

 Steve Weber 

Abbreviations 

EPA U.S. Environmental Protection Agency 

ERP Enforcement Response Policy 

ERPP Enforcement Response and Penalty Policy 

FIFRA Federal Insecticide, Fungicide, and Rodenticide Act 

FY Fiscal Year 

OECA Office of Enforcement and Compliance Assurance 

OIG Office of Inspector General 

PCB Polychlorinated Biphenyls 

TSCA Toxic Substances Control Act 

Cover photo:	 A farmer mixes herbicide prior to application; the farmer wears complete 

protection while using the chemicals. (U.S. Department of Agriculture’s 

National Resources Conservation Service photo) 

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email: OIG_Hotline@epa.gov write: EPA Inspector General Hotline 

phone: 

fax: 

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Mailcode 2431T 

online: http://www.epa.gov/oig/hotline.htm Washington, DC 20460 
 

U.S. Environmental Protection Agency 13-P-0431 

September 26, 2013 Office of Inspector General 

At a Glance
 

Why We Did This Review 

The purpose of this review 

was to evaluate how the 

U.S. Environmental Protection 

Agency’s (EPA’s) Federal 

Insecticide, Fungicide, and 

Rodenticide Act (FIFRA) and 

Toxic Substances Control Act 

(TSCA) enforcement tools 

achieve intended outcomes; 

and whether penalty 

negotiations are managed to 

protect human health and the 

environment. This briefing 

report contains findings and 

recommendations related to 

FIFRA and TSCA good faith 

reductions and ability to pay 

penalties. FIFRA regulates the 

distribution, sale and use of 

pesticides. TSCA provides the 

EPA with authority to require 

reporting, recordkeeping and 

testing requirements, and 

restrictions to chemical 

substances and mixtures. 

This report addresses the 

following EPA theme: 

 Taking action on toxics and 

chemical safety. 

For further information, 

contact our public affairs office 

at (202) 566-2391. 

The full report is at: 

www.epa.gov/oig/reports/2013/ 

20130926-13-P-0431.pdf 

EPA Needs to Update Its Pesticide and Chemical 

Enforcement Penalty Policies and Practices 

What We Found 

We found that EPA regions differed in how they documented decisions and 

justified penalties related to FIFRA and TSCA enforcement penalty reductions. 

EPA regions generally did not consistently determine and document reductions in 

proposed penalties based on good faith of the violators, and in some regions 

reductions appeared automatic without adequate justification. The lack of 

adequate guidance for determining good faith reductions and supporting 

documentation for good faith reductions creates a risk that violators may not be 

treated equitably. In addition, EPA may be losing opportunities to fully collect all 

penalties due. 

We found that the EPA lacks a sufficient policy to address violators who are 

unable to pay FIFRA and TSCA penalties. The current “ability to pay” model and 

policy are limited to cases where an individual may not have the cash to pay a 

penalty. However, no guidance exists for applying non-monetary penalty 

alternatives such as public service for FIFRA and TSCA inability to pay cases 

when cash is not available to pay a penalty. Also, training for enforcement staff 

needs to be updated to include more guidance on ability to pay cases. Therefore 

EPA’s enforcement actions for FIFRA and TSCA ability to pay cases may be 

limited by its outdated policy, model and training, which could impact the regions’ 

consistent handling of the growing number of ability to pay claims being received 

from individuals.

 Recommendations and Planned Corrective Actions 

We recommend that the EPA provide adequate guidance for determining a good 

faith reduction, develop a systematic approach to ensure that justifications for 

good faith reductions are documented, revise the EPA’s ability to pay penalty 

policy and evaluate the individual violator model, and provide regional staff with 

updated training for case development. 

The Office of Enforcement and Compliance Assurance agreed with two of our 

five recommendations and provided alternative actions that meet the intent of the 

remaining recommendations. All recommendations are resolved and open with 

corrective actions underway. No further response to this report is required. 
 

 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

THE INSPECTOR GENERAL 

September 26, 2013 

MEMORANDUM 

SUBJECT:	 EPA Needs to Update Its Pesticide and Chemical Enforcement Penalty 

Policies and Practices 

Report No. 13-P-0431 

FROM:	 Arthur A. Elkins Jr. 

TO:	 Cynthia Giles, Assistant Administrator 

Office of Enforcement and Compliance Assurance 

This is a report on the subject evaluation conducted by the Office of Inspector General (OIG) of the 

U.S. Environmental Protection Agency (EPA). This report contains findings that describe the problems 

the OIG has identified and corrective actions the OIG recommends. This report represents the opinion of 

the OIG and does not necessarily represent the final EPA position. Final determinations on matters in 

this report will be made by EPA managers in accordance with established audit resolution procedures. 

Action Required 

You are not required to provide a written response to this final report because you provided agreed-to 

corrective actions and planned completion dates for the report recommendations. The OIG may make 

periodic inquiries on your progress in implementing these corrective actions. Should you choose to 

provide a final response, we will post your response on the OIG’s public website, along with our 

memorandum commenting on your response. You should provide your response as an Adobe PDF file 

that complies with the accessibility requirements of Section 508 of the Rehabilitation Act of 1973, as 

amended. 

We will post this report to our website at http://www.epa.gov/oig. 

If you or your staff have any questions regarding this report, please contact Assistant Inspector General 

for Program Evaluation Carolyn Copper at (202) 566-0829 or copper.carolyn@epa.gov; or Acting 

Director for Toxics, Chemical Management, and Pollution Prevention Evaluations Jerri Dorsey at 

(919) 541-3601 or dorsey.jerri@epa.gov. 
Purpose

• The purpose of this review was to evaluate how

U.S. Environmental Protection Agency (EPA) Fe

Insecticide, Fungicide, and Rodenticide Act (FIF

Toxic Substances Control Act (TSCA) enforceme

achieve intended outcomes; and whether pena

negotiations are managed to protect human he

the environment.

• This briefing contains findings and recommend

related related to FIFRA and TSCA:

– Good faith reductions– Ability to pay

13‐P‐0431 
Background

• FIFRA regulates the distribution, sale and use o

pesticides.

• TSCA, which excludes pesticide regulation, pro

EPA with authority to require reporting, recordand testing requirements; and restrictions to c

substances and mixtures.

• Enforcing environmental laws is part of the EPA

mission to protect human health and the envir

13‐P‐0431 
Background

Enforcement Response Policies (E

FIFRA and TSCA enforcement policies level the playing by providing f i a r and consistent enforcement of comp

nationwide.

• FIFRA • TSCA

– To provide fair and – To assure that

equitable treatment of the penalties are: regulated community, • Equi bl ta e and including: consistent.

• Predictable enforcement • Eliminate econo

responses. incentives incentives to vio

vio

• Fair penalty assessments. • Deter violations

• Swift resolution of

environmental problems.

• Deterrence of future

violations.

13‐P‐0431 
•

Background

Lead i Pa nt Di l sc osure Rule

• This rule requires disclosure of known lead‐based pa

and/or lead‐based paint hazards by persons selling o

housing constructed prior to 1978.

Exposure Exposure to lead can contribute contribute to elevated elevated blood lefor children living in properties where lead paint exis

lack of notification of possible existence of lead pain

required required by EPA’s Lead Rule.

• According to the Centers for Disease Control and Pre

childhood lead poisoning is the most preventable

environmental environmental disease disease among children children under age 6. levels of lead exposure can cause developmental pro

such as learning disabilities, decreased intelligence a

behavioral problems.

13‐P‐0431 
Methodology

• We selected a judgmental sample of 43 out of 29

and TSCA Fiscal Year (FY) 2010 closed enforceme

enforceme

This involved 23 FIFRA cases and 20 TSCA cases. 

20 TSCA cases involved 13 Lead Disclosure and 7 

(Polychlorinated Biphenyl) cases.

– FIFRA enforcement penalties analyzed/addressed 

of unregistered unregistered pesticides pesticides and label violations violations.

– TSCA enforcement penalties analyzed/addressed 

imp p ro er use and management of PCBs in school

the implementation of the Lead Paint Disclosure 

households.

13‐P‐0431 
Methodology

• We reviewed FIFRA and TSCA statutes, as well as t

applicable enforcement policies, processes and cr

• We conducted interviews of Office of Enforcemen

Compliance Compliance Assurance Assurance (OECA) staff (specifically (specifically, t

Waste and Chemical Enforcement Division and th

of Compliance); as well as enforcement staff from 

Regions 2, 4, 5, 7 and 10.

• We performed our evaluation from June 2011 to 

2013 in accordance with generally accept de gove

auditing standards. Those standards require that 

and perform the evaluation to obtain sufficient an

appropriate evidence.

13‐P‐0431 
Finding

Good Fai ht Reductions Lack de Sup

• We found that EPA regions differed in how they

documented and justified reduced penalties for sa

FIFRA and TSCA enforcement cases.

• Specifically, regions in general did not sufficiently d

and/or justify good faith reductions to proposed p

• Furthermore Furthermore, the agency has not provided provided regions regions

administer the enforcement process, guidance or 

that adequately delineate the processes to docum

reduction of a penalty, establish the appropriate l

reduction for good faith, and assure that the reduc

in line with behavior behavior of the respondent. respondent.

13‐P‐0431 
Finding

Good Faith Reductions Lacked Support (

• Documentation within case files generally did not clearly 

why and how red ti uc ons for good f ith a were d t e ermined

• One region used nothing more than a simple statemen

justification. For example one region wrote, “...A 30% r

recommended based on respondent’s cooperation and 

efforts to comply.”

• Another regional justification stated, “...We are also giv

reduction for good faith....”

• EPA policy, states: states: “...In all instances instances, the facts and rationa

rationa

justifying penalty reduction must be recorded in the case included in any memoranda accompanying settlement.”(A Framework for Statute‐Specific Approaches to Penalt

Assessment: Implementing EPA’s Policy on Civil Penalties

February 16, 1984)

• Without adequate documentation to justify reductions, t

assurance assurance that reduction reduction decisions decisions are consistent consistent across l

violators.

13‐P‐0431 
Conclusion/Recommendation

Goo

d Fait

h Re

ductions

We concluded that the lack of adequate guidance 

determining good faith reductions and adequatedocumentation for good faith reductions createsthat violators ma

y not be treated

e

quitabl

y. In ad

EPA may be losing opportunities to fully collect apenalties due.

Recommen

dations:

We recommend that the Assistant Administrator for Enforce

Compliance Assurance:

1. Provid

e guidance

for

determining goo

d

f i a

t

h re

ductio

2. Develop an approach to ensure justifications for good 

reductions are adequately documented.

13‐P‐0431
Conclusion/Recommendations

G d oo

d

F ith a

R de

ductions (cont.)

Agency Response Response and OIG Evaluation EvaluationAgency Response to Recommendation

1:

The agency did not concur with recommendation

1 to update guidance fo

goo

d f i a

t

h re

ductions.

Base

d on discussions

wi ht

h

t

h

e agency on

t

h

e d f ra

f

t r

agreed that the corrective actions to remedy recommendation 2, the re‐is

GM‐88 – “Documenting Penalty Calculations and Justifications in EPA EnfoActions”

– will also address the condition of inadequate guidance. GM‐88 

the current FIFRA and TSCA Enforcement Response Penalty Policies (ERPP

will utilize both the ERPs and GM‐88 as guidance to determine and suppo

to penalties for good faith.

OIG Evaluation:

The agency’s corrective actions address the intent of the recommendationth

e OIG considers thi

s recommend ti a on

t

o

b

e resol d ve

d.

13‐P‐0431 
Conclusion/Recommendation

Goo

d Fait

h Re

ductions

(cont

Agency Response and OIG Evaluation (cont.)A

genc

y Res

ponse to Recommendation 2:

The agency concurs with recommendation

2 and provided

a planned corre

plan and

a completion date.

OIG Evaluation:

We concur with this action. The agency provided

a corrective action plan a

completion completion date for this action. action. Therefore, Therefore, the OIG considers considers this recomm

recomm

be resolved.

13‐P‐0431 
Finding

Ch ll a enges Exist for Ability to Pay C

We found that the EPA’s enforcement enforcement actions actions for FIFTSCA ability to pay cases may be limited by an outd

policy, model and training.

• EPA’s ERPP does not prescribe alternatives (such a

service and payment plans) when a penalty canno

paid.

– Although alternatives are allowed, the current lead‐ba

disclosure ERPP only provides guidance on penalty red

It does not include when and how alternatives can be 

– Consequently, if EPA does not apply a non‐monetary a

form of payment when a violator is unable to pay, enfoagainst noncompliance is absent.

13‐P‐0431 
Finding

Challenges Exist for Ability to Pay Cases 

 EPA’s “INDIPAY INDIPAY” economic economic model is limited limited in it

ability to help teams evaluate claims for FIFRA/

ability to pay cases.

– INDIPAY is intended to evaluate individual taxpay

claims of inability to afford penalties, clean‐up co

compliance costs.

– Currently, the model does not assess an individua

assets.

– An updated model could help improve the accura

the agency’s ability ability to pay claims. claims.

13‐P‐0431 
Finding

Challenges Exist for Ability to Pay Cases 

 EPA does not pr ideov adequate guidance or tra

evaluating ability to pay claims for case teams.

– OECA does not currently provide any case develo

training.

– The EPA guidance guidance is inadequate inadequate for case teams or 

analysts on how to handle claims for individuals, 

under the Superfund program.

– Lack of adequate guidance and training could imp

regions’ consistent handling of the growing numb

ability ability to pay claims being received received from individu

individu

13‐P‐0431 
Conclusion/Recommendations

Ability to Pay

EPA needs to update its policy to better address violators wh

unabl

e

t

o pay penalties.

Recommendations:

We r c mmend recommend e o that the Assistant Assis an t t Administrator Adminis a or tr t for Enforce

En or 

f ce

and Compliance Assurance:

3. Update the existing Lead

‐Based Paint Disclosure ERP

include guidance on:

a. How to evaluate ability to pay claims for individuals, and

b. When and how to apply alternatives such as payment plan

public service to ability to pay cases.

4. Evaluate Evaluate the INDIPAY INDIP YA economic economic model to determine determine

whether revisions would improve applicability to leapaint disclosure cases with individual violators.

5. Provide regional staff with updated training for case

development, i l nc

uding evaluation

o

f

ability to pay

c

13‐P‐0431 
“

O G a ua o

Conclusion/Recommendations

Ability to Pay (cont.)

Agency Response esponse and OIG E al v uationAgency Response to Recommendation 3:

The agency provided alternative actions in lieu of the OIG recommendation 

agency recommended recommended updating updating the 1986 “Guidance Guidance on Determining Determining a Viola

Viola

to Pay a Civil Penalty” guidance instead of the Lead‐Paint Disclosure ERPP.

OIG Evaluation:

We concur with the alternative corrective action provided by the agency. ThOIG considers this recommendation to be resolved.

13‐P‐0431 
Penalt which it believes will have more ant across the 

Conclusion/Recommendations

Ability to Pay (cont.)

Agency Response Response and OIG Evaluation Evaluation (cont.) (cont.)Agency Response to Recommendation 4:

The agency in its response advised that the INDIPAY model “is not suitable

types of real estate fact‐specific analyses. However, the agency believes th

necessary to update the INDIPAY model to address its limitations relating t

valuation of real estate assets. Based on discussions with the agency, the a

agreed to update the 1986 “Guidance on Determining a Violator’s Ability t

Penalty,” which it believes will have more signific significant impact across the age

updating the model.

OIG Evaluation:

We concur with the alternative corrective action provided by the agency. T

OIG considers this recommendation to be resolved.

13‐P‐0431 
Conclusion/Recommendation

s

Ability to Pay (cont.)

Agency Response Response and OIG Evaluation Evaluation (cont.) (cont.)Agency Response to Recommendation 5:

The agency concurs with recommendation

5 and provided

a corrective act

completion date.

OIG Evaluation:

We concur with this action. The agency provided

a corrective action plan a

completion date for this action. Therefore, the OIG considers this recomm

be resolved.

13‐P‐0431 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS (in $000s) 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Planned 

Completion 

Date 

Claimed 

Amount 

Agreed-To 

Amount 

1 

2 

3 

4 

9 

9 

15 

15 

Provide guidance for determining good faith 

reductions. 

Develop an approach to ensure justifications for 

good faith reductions are adequately documented. 

Update the existing Lead-Based Paint Disclosure 

ERPP to include: 

a. How to evaluate ability to pay claims for 

individuals, and 

b. When and how to apply alternatives such as 

payment plans and public service to ability to 

pay cases. 

Evaluate the INDIPAY economic model to 

determine whether revisions would improve 

applicability to lead paint disclosure cases with 

individual violators. 

O 

O 

O 

O 

Assistant Administrator for 

Enforcement and 

Compliance Assurance 

Assistant Administrator for 

Enforcement and 

Compliance Assurance 

Assistant Administrator for 

Enforcement and 

Compliance Assurance 

Assistant Administrator for 

Enforcement and 

Compliance Assurance 

9/30/13 

9/30/13 

6/30/14 

6/30/14 

5 15 Provide regional staff with updated training for case 

development, including evaluation of ability to pay 

claims. 

O Assistant Administrator for 

Enforcement and 

Compliance Assurance 

9/30/14 

O = recommendation is open with agreed-to corrective actions pending 

C = recommendation is closed with all agreed-to actions completed 

U = recommendation is unresolved with resolution efforts in progress 

13-P-0431 19 

1 
 

 

 

 

 

Appendix A 

Agency Response to Draft Report 

July 3, 2013 

MEMORANDUM 

SUBJECT: Response to the Office of Inspector General Draft Report: “EPA Needs to Update 

Its Pesticide and Chemical Enforcement Penalty Policies and Practices,” dated 

June 6, 2013, Report No. OPE-FY11-0018 

FROM: Cynthia Giles 

Assistant Administrator 

TO: Carolyn Copper 

Assistant Inspector General 

Office of Program Evaluation 

Thank you for the opportunity to respond to the draft findings and recommendations presented in 

the Office of Inspector General (OIG) Draft Report, “EPA Needs to Update Its Pesticide and 

Chemical Enforcement Penalty Policies and Practices” (Report). Following is a summary of 

comments from the Office of Enforcement and Compliance Assurance (OECA), followed by 

OECA’s position on each of the Report’s recommendations. For those Report recommendations 

with which OECA agrees, we propose corrective actions and estimated completion dates. For 

those Report recommendations with which OECA does not agree, we explain our position and 

either propose alternatives to those recommendations or, in the case of Recommendation 1, we 

propose that no further action is needed. 

Summary Comments 

The TSCA cases addressed in OIG’s Report involved the Lead-Based Paint Disclosure Rule. It is 

important to note that the focus of the lead enforcement program has shifted away from lead 

disclosure cases and toward renovation, repair, and painting (RRP) cases. As noted in the 2014 

National Program Managers’ Guidance, 95 percent of lead enforcement resources should be 

allocated to RRP enforcement. With this shift in focus, OECA has worked with the regions to 

ensure national consistency in penalty calculations and documentation. 

OIG Response: The OIG did not solely review Lead-Based Paint Disclosure Rule cases. 

The OIG reviewed 43 cases, of which 23 were FIFRA cases, seven were TSCA PCB cases, 

and 13 were TSCA Lead-Based Paint Disclosure Rule cases. The results of the OIG review 

disclosed that the lack of guidance and supporting documentation for good faith reductions 

pertained to both FIFRA and TSCA cases. Recommendations 1 and 2 relate to both FIFRA 

and TSCA policies. 

13-P-0431 20 
 

Recommendation 1: OECA disagrees with the OIG’s recommendation that OECA update the 

criteria in the Lead-Based Paint Disclosure Rule Enforcement Response and Penalty Policy (LBP 

Disclosure ERPP) for determining good-faith reductions. While the Report states that 

documentation for good-faith reductions in case files was inadequate, the Report does not 

identify any specific deficiencies with regard to the criteria themselves. Therefore, rather than 

revising the guidance related to criteria for good-faith reductions in LBP Disclosure Rule cases, 

which are increasingly rare, OECA will continue to work with the regions on national 

consistency in RRP cases. 

OIG Response: The OIG met with the agency to discuss the draft findings and 

recommendations. Based on discussions with the agency, it was agreed that the corrective 

actions to remedy recommendation 2, the re-issuance of GM-88, “Documenting Penalty 

Calculations and Justifications in EPA Enforcement Actions,” will also address the 

condition of lack of guidance. GM-88 will augment the current FIFRA and TSCA ERPPs. 

The regions will utilize both the ERPPs and GM-88 as guidance to determine and support 

reductions to penalties for good faith. The agency’s corrective actions address the intent of 

the recommendation. Therefore, the OIG considers this recommendation to be resolved. 

Recommendation 2: In order to ensure justifications for good faith reductions are adequately 

documented in case files, OECA will re-circulate GM-88, “Documenting Penalty Calculations 

and Justifications in EPA Enforcement Actions,” to Enforcement Directors and Regional 

Counsel. 

OIG Response: We concur with the corrective action provided by the agency and thus 

consider this recommendation to be resolved. 

Recommendation 3.a: In its Report, the OIG found that “[t]here is no EPA guidance for case 

teams or financial analysts on how to handle claims for individuals, except for under the 

Superfund program.” See Report at 13. To address this finding, the OIG recommends that OECA 

update the existing LBP Disclosure ERPP to include guidance on how to evaluate ability-to-pay 

claims for individuals. 

OECA disagrees with OIG’s statement that there is no EPA guidance on how to handle claims 

for individuals. In addition to the 1986 “Guidance on Determining a Violator’s Ability to Pay a 

Civil Penalty,” the EPA developed the INDIPAY model specifically for the purpose of assisting 

case teams in evaluating ability to pay claims by individuals. OECA does agree, however, that 

additional guidance may be needed on whether and the extent to which the EPA should assess a 

civil penalty where the INDIPAY model assesses an individual’s ability to pay as zero. 

OIG Response: The OIG revised the final report to more accurately reflect the above 

statements regarding the lack of guidance. The OIG concurs that additional guidance is 

needed that adequately addresses the extent to which the EPA should assess a civil penalty 

where the INDIPAY model assesses an individual’s ability to pay as zero. 

13-P-0431 21 
 

 

   

 

OECA plans to update the 1986 “Guidance on Determining a Violator’s Ability to Pay a Civil 

Penalty.” As part of that effort, OECA 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. 

OIG Response: We concur with the alternative corrective action provided by the agency and 

thus consider this recommendation to be resolved. 

Recommendation 3.b: After finding that EPA’s LBP Disclosure ERPP “does not prescribe 

alternatives (such as public service and payment plans),” the OIG recommends that OECA 

update the LBP Disclosure ERPP “to include when and how to apply alternatives such as 

payment plans and public service to ability to pay cases.” (See OIG Draft Report at 11 and 15.) 

This OIG recommendation appears to be drawn from references in the EPA’s 1984 “A 

Framework for Statute-Specific Approaches to Penalty Assessments: Implementing EPA’s 

Policy on Civil Penalties” (Framework or “GM-22”) to the Agency’s consideration of “a delayed 

payment schedule” or “non-monetary alternatives, such as public service activities” when a 

violator cannot afford to pay a civil penalty. (See Framework at 23.) 

Delayed Payment Schedules 

OECA plans to update the 1986 “Guidance on Determining a Violator’s Ability to Pay a Civil 

Penalty.” As part of that effort, OECA 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. 

Non-monetary Alternatives 

Since issuing the 1984 Framework, the EPA issued the 1998 Supplemental Environmental 

Projects (SEP) Policy. A SEP is a beneficial environmental project a respondent/defendant 

agrees to undertake as part of an enforcement settlement. The project must be one that the 

respondent/ defendant is not already required to perform. As a matter of fiscal law, SEPs must 

have a nexus to the underlying violation and cannot augment the EPA’s or another agency’s 

appropriations. Provided a project meets the conditions of the SEP Policy, the EPA may consider 

a respondent/defendant’s agreement to perform a SEP as a factor in determining the civil penalty 

to be assessed. Furthermore, EPA has provided specific guidance on the SEPs that may be 

appropriate in cases involving violations of lead-based paint rules under TSCA.1 

Finally, TSCA Section 16(a)(2)(C), 15 U.S.C. § 2615(a)(2)(C), authorizes the Administrator to 

compromise, modify or remit, with or without condition, any civil penalty that may be imposed 

1 See August 2010 “Consolidated Enforcement Response and Penalty Policy for the Pre-Renovation Education Rule; 

Renovation, Repair and Painting Rule; and Lead-Based Paint Activities Rule” (LBP Consolidated ERPP) at 26 and 

Appendix D. 

13-P-0431 22 
 

 

 

under this section. The EPA has issued policy on implementing this subsection.2 As discussed in 

the August 2010 LBP Consolidated ERPP, an example of this policy would be the remittance of 

a portion of the unadjusted gravity-based penalty developed for violations of the RRP rule in 

consideration of the violator’s acceptance of the suspension or revocation of the its LBP 

certification or training authorization. According to the LBP Consolidated ERPP, the violator 

would still be liable for a penalty for any economic benefit accrued as a result of the violation(s). 

In addition, the terms of the remittance and suspension or revocation must be incorporated in a 

Compliance Agreement and Final Order. Finally, the LBP Consolidated ERPP notes that TSCA 

Section 16(a)(2)(C) may also be used to remit penalties if respondent completes projects similar 

to those implemented under the SEP Policy. 

Rather than revise the LBP Disclosure ERPP, OECA proposes to evaluate whether additional 

guidance is needed to clarify whether “non-monetary alternatives, such as public service 

activities,” must meet the SEP Policy. 

OIG Response: We concur with the alternative corrective action provided by the agency and 

thus consider this recommendation to be resolved. 

Recommendation 4: In support of Recommendation 4 -- that OECA evaluate the INDIPAY 

model “to determine whether revisions would improve the applicability to lead disclosure cases 

with individual violators” -- the OIG found that “[c]urrently, the model does not assess an 

individual’s assets.” We disagree with this finding and the OIG’s recommendation that changes 

to INDIPAY are necessary to “assess an individual’s assets.” Contrary to the OIG’s draft finding, 

the INDIPAY model does take into account an individual’s assets in assessing an individual’s 

ability to pay based on information provided by the respondent/defendant. The reason the model 

is not equipped to provide the user with the assessed value of an individual’s specific assets is 

that such determinations are very case-specific and based on market value. For example, the 

market value of real estate is based on an evaluation of the property (e.g., square footage, 

purpose, condition, improvements) and an assessment of its value in the market in which it is 

located at a particular point in time. 

Because the model is not suitable for this kind of fact-specific analysis, OECA proposes that no 

further action is needed to update the INDIPAY model. Where appropriate in a particular case, 

the EPA may engage an expert to assess the value of a respondent/defendant’s assets. If EPA 

decides to expend resources in a given case to estimate the value of specific assets, such values 

can then be loaded into the model to fine-tune the ability-to-pay analysis of a particular 

individual. 

OECA will consider whether more guidance is needed on how to evaluate ability-to-pay claims 

in enforcement cases against individuals, as part of OECA’s update of the Agency’s 1986 

“Guidance on Determining a Violator’s Ability to Pay a Civil Penalty.” 

2 See Appendix C, TSCA Enforcement Policy and Guidance Documents; Memorandum, “Settlement with 

Conditions,” A.E. Conroy II (November 16, 1983). 

13-P-0431 23 
 

OIG Response: As noted by the agency in its response, the current model “is not suitable” 

for these types of fact-specific analysis. However, the agency believes that it is not 

necessary to update the INDIPAY model to address its limitations relating to the valuation 

of real estate assets. Based on discussions with the agency, the agency has agreed to update 

the 1986 “Guidance on Determining a Violator’s Ability to Pay a Civil Penalty,” which it 

believes will have more impact than updating the model. We concur with the alternative 

corrective action provided by the agency and thus consider this recommendation to be 

resolved. 

Recommendation 5: As indicated, OECA plans to update the 1986 “Guidance on Determining 

a Violator’s Ability to Pay a Civil Penalty.” Once that updated guidance is issued, OECA will 

provide training on evaluating a violator’s ability to pay a civil penalty to reflect the new 

guidance. 

OIG Response: We concur with the corrective action provided by the agency and thus 

consider this recommendation to be resolved. 

In Agreement 

No. Recommendation High-Level Intended 

Corrective Action(s) 

Estimated Completion 

by Quarter and FY 

2 Develop a systematic 

approach to ensure 

justifications for good faith 

reductions are adequately 

documented. 

OECA will re-circulate to the 

Enforcement Directors and 

Regional Counsel existing 

guidance on the documentation 

of penalties in case files. See 

memorandum dated August 9, 

1990, “Documenting Penalty 

Calculations and Justifications 

in EPA Enforcement Actions,” 

from the former Assistant 

Administrator for 

Enforcement, James M. Strock. 

4th Quarter of FY 2013 

5 Provide regional staff with 

updated training for case 

development, including 

evaluation of ability to pay 

claims. 

OECA plans to update the 

1986 “Guidance on 

Determining a Violator’s 

Ability to Pay a Civil Penalty.” 

Once that updated guidance is 

issued, OECA will provide 

training on evaluating a 

violator’s ability to pay a civil 

penalty to reflect the new 

guidance. 

4th Quarter of FY 2014 

13-P-0431 24 
 

Not in Agreement 

No. Recommendation Agency Explanation/Response Proposed Alternative 

Recommendation 

1 Update criteria for 

determining good faith 

reductions. 

The criteria for determining 

good faith reductions are sound 

and readily accessible in the 

Lead-Based Paint Disclosure 

Rule ERPP. 

No further action 

proposed. 

3.a. Update Lead-Based Paint 

Disclosure ERPP to 

include guidance on how 

to evaluate ability to pay 

for individuals. 

The issue of how to evaluate 

ability to pay claims for 

individuals is not limited to the 

enforcement of TSCA’s LeadBased Paint Disclosure Rule. 

Rather, whether a violator can 

afford to pay a civil penalty in 

addition to correcting 

noncompliance can arise in the 

enforcement of other 

environmental requirements 

under TSCA and other statutes. 

Because this issue is crossmedia in nature, it should be 

addressed on a cross-media 

basis in lieu of revising the 

Lead-Based Paint Disclosure 

Rule ERPP. 

OECA plans to update 

the 1986 “Guidance on 

Determining a Violator’s 

Ability to Pay a Civil 

Penalty.” As part of that 

effort, OECA will 

consider whether more 

guidance is needed on (1) 

how to evaluate abilityto-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. 

3rd Quarter of FY 2014 

3.b. Update Lead-Based Paint 

Disclosure ERPP to 

include guidance on when 

and how to apply payment 

plans in ability to pay 

cases. 

The issues of when to consider 

and how to structure delayed 

penalty payments are not 

limited to lead-based paint 

disclosure cases but can arise 

regardless of which statutory 

penalty authority is being 

enforced. 

OECA plans to update 

the 1986 “Guidance on 

Determining a Violator’s 

Ability to Pay a Civil 

Penalty.” As part of that 

effort, OECA will 

consider whether more 

guidance is needed on (1) 

how to evaluate abilityto-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 

13-P-0431 25 
 

agreements with delayed 

payment schedules. 

3rd Quarter of FY 2014 

3.b. Update Lead-Based Paint 

Disclosure ERPP to 

include guidance on when 

and how to apply 

“alternatives...such as 

public service in ability to 

pay cases.” 

This OIG recommendation 

appears to be drawn from a 

reference in EPA’s 1984 “A 

Framework for Statute-Specific 

Approaches to Penalty 

Assessments: Implementing 

EPA’s Policy on Civil 

Penalties” (Framework) to 

“non-monetary alternatives” 

when a violator cannot afford to 

pay a civil penalty. (See 

Framework at page 23.) 

In 1998, EPA issued the 

Supplemental Environmental 

Projects (SEP) Policy. A SEP is 

a beneficial environmental 

project a respondent/defendant 

agrees to undertake voluntarily 

as part of an enforcement 

settlement. The project must be 

one that the respondent/ 

defendant is not already 

required to perform. As a matter 

of fiscal law, SEPs must have a 

nexus to the underlying 

violation and cannot augment 

EPA’s or another agency’s 

appropriations. 

Rather than revise the 

Lead-Based Paint 

Disclosure ERPP, OECA 

proposes to evaluate 

whether additional crossmedia guidance is needed 

to clarify whether “nonmonetary alternatives, 

such as public service 

activities” must meet the 

SEP Policy. 

2nd Quarter of FY 2014 

4 Evaluate the INDIPAY 

economic model to 

determine whether 

revisions would improve 

applicability to lead paint 

disclosure cases with 

individual violators. 

This recommendation is based 

on the OIG’s draft finding that 

“[c]urrently, the [INDIPAY] 

model does not assess an 

individual’s assets.” We 

disagree with this finding and 

the OIG’s recommendation that 

changes to INDIPAY are 

necessary to “assess an 

individual’s assets.” The 

INDIPAY model does take into 

account an individual’s assets in 

assessing an individual’s ability 

3rd Quarter of FY 2014 

13-P-0431 26 
 

 

to pay based on information 

provided by the 

respondent/defendant. The 

model is not the appropriate tool 

for assigning a dollar value to 

an individual’s specific assets, 

which is fact-specific and based 

on market value. 

OECA will consider whether 

more guidance is needed on 

how to evaluate ability-to-pay 

claims in enforcement cases 

against individuals, as part of 

OECA’s update of the Agency’s 

1986 “Guidance on 

Determining a Violator’s 

Ability to Pay a Civil Penalty.” 

See response to 

Recommendation 3.b. 

Contact Information 

If you have any questions or concerns regarding this response, please contact the OECA Audit 

Liaison, Gwendolyn Spriggs, at 202-564-2439. 

Attachment 

cc: Lawrence Starfield, OECA 

 Susan Shinkman, OECA/OCE 

Pam Mazakas, OECA/OCE 

 Rosemarie Kelley, OECA/OCE 

Andrew Stewart, OECA/OCE 

Susan O’Keefe, OECA/OCE 

 Caroline Makepeace, OECA/OCE 

Lauren Kabler, OECA/OCE 

Gwendolyn Spriggs, OECA/OAP 

13-P-0431 27 
 

 

Appendix B 

Distribution 

Office of the Administrator 

Assistant Administrator for Enforcement and Compliance Assurance 

Assistant Administrator for Chemical Safety and Pollution Prevention 

Agency Follow-Up Official (the CFO) 

Agency Follow-Up Coordinator 

General Counsel 

Associate Administrator for Congressional and Intergovernmental Relations 

Associate Administrator for External Affairs and Environmental Information 

Principal Deputy Assistant Administrator for Enforcement and Compliance Assurance 

Deputy Assistant Administrator for Chemical Safety and Pollution Prevention 

Audit Follow-Up Coordinator, Office of Enforcement and Compliance Assurance 

Audit Follow-Up Coordinator, Office of Chemical Safety and Pollution Prevention 

13-P-0431 28