Environmental Enforcement:

Penalties May Not Recover Economic Benefits Gained by Violators

RCED-91-166: Published: Jun 17, 1991. Publicly Released: Jun 24, 1991.

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Pursuant to a congressional request, GAO examined the Environmental Protection Agency's (EPA) penalty policies and practices.

GAO found that: (1) although total penalties assessed by EPA increased in fiscal year (FY) 1990, the amounts showed little relationship to the economic benefit of the violations; (2) total penalties assessed by EPA in all of its programs increased from $35 million in FY 1989 to $61 million in FY 1990, but the absence of documentation made it impossible to calculate the amount EPA should have collected; (3) state and local authorities did not regularly recover the value of the economic benefit in penalties, and repeated violations occurred in the absence of penalties; (4) such factors as limited budgetary resources, program targets for settled cases, and concerns that high penalties would jeopardize local business deterred regulatory officials from following EPA penalty policies and recovering economic benefits; (5) EPA headquarters lacked sufficient information to oversee its regional office practices, and the organizational responsibilities for enforcement were diffuse, with 15 offices responsible for either setting or carrying out enforcement policies; and (6) EPA oversight of state penalty practices was limited, largely because EPA did not require the states to adopt its own civil penalty policy.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To institute the internal controls necessary to ensure that the agency's uniform civil penalty policy is followed, the Administrator, EPA, should require that EPA regional offices provide information on administrative penalties for the Office of Enforcement's penalty reporting system and that they include, for civil judicial and administrative cases, initial calculations of economic benefit and gravity, subsequent revisions to these calculations, reasons for penalty reductions, and final penalty amounts.

    Agency Affected: Environmental Protection Agency

    Status: Closed - Implemented

    Comments: EPA has taken action to recover economic benefits through activities such as regional reviews of files to determine whether such benefits were considered, and through training. Also, EPA has substantially enhanced data gathering and is now capturing information on assessments in administrative and judicial cases. However, because of reporting burdens, EPA is not requiring reporting of information on proposed penalties or on the gravity and benefit components of civil cases.

    Recommendation: To institute the internal controls necessary to ensure that the agency's uniform civil penalty policy is followed, the Administrator, EPA, should identify, once the reporting system has been modified, the individuals or offices within the agency that will be responsible for monitoring penalty practices and for taking any corrective actions indicated.

    Agency Affected: Environmental Protection Agency

    Status: Closed - Implemented

    Comments: In June 1994, EPA consolidated and realigned all of the headquarters enforcement functions into one new office, the Office of Enforcement and Compliance Assurance (OECA). Now that the reorganization of headquarters enforcement functions is complete, the Assistant Administrator of Enforcement and Compliance Assurance is responsible for reviewing the penalty practices of EPA's regional offices and for taking any corrective actions needed. In FY 1995, OECA initiated a regional auditing program, under which compliance with the agency's penalty policy is reviewed.

    Recommendation: To institute the internal controls necessary to ensure that the agency's uniform civil penalty policy is followed, the Administrator, EPA, should require states, in their federally delegated air, hazardous waste, and water programs, to adopt economic benefit policies that are based on EPA uniform civil penalty policy and, in the interim, require economic benefit policies as conditions of annual programs.

    Agency Affected: Environmental Protection Agency

    Status: Closed - Not Implemented

    Comments: EPA believes that while the recommendation merits further consideration, it would prefer that states voluntarily adopt an economic benefit policy, a position EPA has taken since 1986, with little result.

    Recommendation: To institute the internal controls necessary to ensure that the agency's uniform civil penalty policy is followed, the Administrator, EPA, should require states, once they have adopted economic benefit policies, to report final calculations of economic benefit and gravity, subsequent revisions to these calculations, reasons for penalty reductions and final penalty amounts, as part of the enforcement information they now provide.

    Agency Affected: Environmental Protection Agency

    Status: Closed - Not Implemented

    Comments: EPA believes that this would require a massive amount of data collection and development of a database compatible in all states, but EPA already has such a database in place and collects data from states.

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