Opinion ID: 413378
Heading Depth: 3
Heading Rank: 4

Heading: The Interest Rate on Overpayments and Underpayments

Text: 168 Once a source has come into compliance, its penalty payments cease and a final readjustment is made. If an overpayment has been made, the source is entitled to a refund; if an underpayment has been made, an additional payment is assessed. These refunds and assessments include interest at appropriate prevailing rates (as determined by the Secretary of the Treasury). Sec. 120(d)(4)(A), (B). In accordance with the Secretary of the Treasury's directive, EPA maintains that the interest on underpayments is the rate of return on equity, while the rate for overpayments is that equal to the average rate of interest on Treasury notes over the period of noncompliance. See 45 Fed.Reg. 50,094 (1980). 169 Petitioners argue that, because the rate on overpayments may be lower than that of the rate of return on equity, overpayment could yield penalties in excess of the value of delayed compliance. EPA does not contest this, but argues that the overpayer is taking, in effect, advantage of the fact that its investment is placed in the relatively risk-free hands of the Treasury. Although we are not convinced that this particular dual interest structure is the wisest policy, we hold that EPA has reasonably implemented the statutory mandate which directs that the interest rates be set by the Secretary of the Treasury. 170