# Consolidated Rules of Practice Governing the Administrative Assessment of Civil Penalties, Issuance of Compliance or Corrective Action Orders, and the Revocation, Termination or Suspension of Permits

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## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** February 25, 1998
- **Citation:** 63 FR 9464

## Text

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 22 and 59

[FRL-5966-7]
RIN 2020-AA13

Consolidated Rules of Practice Governing the Administrative
Assessment of Civil Penalties, Issuance of Compliance or Corrective
Action Orders, and the Revocation, Termination or Suspension of Permits

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: EPA is today proposing technical amendments and other
refinements to the Consolidated Rules of Practice Governing the
Administrative Assessment of Civil Penalties, 40 CFR part 22, including
the addition of new rules for administrative proceedings not governed
by section 554 of the Administrative Procedure Act.

DATES: Comments must be submitted on or before April 27, 1998.

ADDRESSES: Comments should be submitted in writing to Enforcement and
Compliance Docket and Information Center (2201A), Office of Enforcement
and Compliance Assurance, Office of Regulatory Enforcement, U.S.
Environmental Protection Agency, 401 M Street, SW, Washington, D.C.
20460 or via electronic mail to [email protected]. Comments
submitted on paper must be submitted in triplicate.
EPA will make available, both in paper form and on the internet, a
record of comments received in response to this document. The official
docket will be a paper record of all comments received in writing or by
electronic mail. This record may be reviewed at room 4033 of the Ariel
Rios Federal Building, 1200 Pennsylvania Avenue, N.W., Washington, DC
20044. Persons interested in reviewing the comments must make advance
arrangements to do so by calling 202-564-2614. A reasonable fee may be
charged by EPA for copying docket materials. The Agency also will
publish a copy of the official docket on the Office of Enforcement and
Compliance Assurance's internet home page at
http:\\www.epa.gov\oeca\r*egstat2.html. The Agency intends that this
internet docket should duplicate the official paper record, however, if
technological or resource limitations make it infeasible to include one
or more comments on the internet docket, the internet docket will
identify those comments available only in the official paper docket.

FOR FURTHER INFORMATION CONTACT: Scott Garrison (202-564-4047), Office
Enforcement and Compliance Assurance, Office of Regulatory Enforcement
(2248A), U.S. Environmental Protection Agency, Washington, D.C. 20460.

SUPPLEMENTARY INFORMATION:

I. Background

The Consolidated Rules of Practice (``CROP'') at 40 CFR part 22
were promulgated in 1980 to establish uniform procedural rules for
administrative enforcement proceedings required under various
environmental statutes to be held on the record after opportunity for a
hearing in accordance with section 554 of the Administrative Procedure
Act, 5 U.S.C. 551 et seq. (``APA''). Aside from the addition of
statute-specific amendments to subpart H (see e.g., Rules of Practice
Governing the Administrative Assessment of Class II Civil Penalties
Under the Clean Water Act, 55 FR 23838 (1990), codified at 40 CFR
2.38), the CROP have not been substantially revised since their initial
promulgation. Today's proposal would correct a number of
inconsistencies and ambiguities in the procedures which have become
apparent through experience with the CROP. In addition, the Agency
proposes to update and modernize the procedures to make them more
``user-friendly'' and to aid in streamlining administrative practice.
On July 1, 1991, EPA proposed a separate set of procedures for the
administrative assessment of penalties where a hearing on the record
under APA section 554 is not required, commonly referred to as ``non-
APA'' enforcement actions. See 56 FR 29996. These procedures, to be
codified at 40 CFR part 28, were authorized by Congress in various
statutes. Id. The proposed ``part 28'' procedures were designed to
provide a quick and understandable process by which to resolve non-APA
enforcement actions, while protecting the basic due process rights of a
respondent. Id. at 29997 (discussion of constitutional due process
requirements as established in Matthews v. Eldridge, 424 U.S. 319
(1976)). EPA subsequently issued guidance in September, 1991, to the
EPA Regional Offices calling for use of the proposed part 28 procedures
for Class I penalty actions under section 309(g) of the Clean Water Act
(``CWA'') and, several months later, for Class I penalty actions under
section 311(b)(6) of the CWA. Although use of these procedures did
result in quicker resolution of administrative penalty cases than had
occurred before, Agency experience revealed that the majority of EPA
Regions were following, with some modification, the CROP procedures for
non-APA enforcement actions, in large measure out of familiarity with
the CROP. A side-by-side comparison of the proposed part 28 with the
CROP reveals many similar sections and procedures.
The proposed part 28 introduced a number of useful concepts to
EPA's administrative practice, such as limitations on written legal
arguments or statements (Sec. 28.8), a more clearly described commenter
role for certain CWA and Safe Drinking Water Act (``SDWA'') cases,
expansion of information exchange and restrictions on formal discovery
(Sec. 28.24), a more structured default procedure (Sec. 28.21), and
simplified and expedited settlement procedures (Sec. 28.22). Many of
these concepts are the basis for today's proposed revisions to the APA
procedures of the CROP. See, e.g., proposed Sec. 22.18(a) ``Quick
resolution'' provisions. Given the many similarities between the CROP
and proposed part 28, as well as the Agency's long-standing goal of
enhancing administrative efficiency, the Agency believes that
maintaining two stand-alone sets of procedures for its administrative
enforcement practice which contain more similarities than differences
would be inefficient and confusing. The specific requirements
appropriate to non-APA enforcement actions can be presented effectively
and efficiently as a short subpart to the CROP. Accordingly, today's
proposal includes in subpart I modifications to the basic CROP suitable
for non-APA proceedings. EPA expects to withdraw the part 28 proposal
upon issuance of these CROP amendments as a final rule.
Similarly, the proposed revisions to the CROP would supersede and
replace the anticipated rules governing non-APA hearings on field
citations under section 113(d)(3) of the Clean Air Act (``CAA''). On
May 3, 1994, EPA published the proposed Field Citation Program to be
codified at 40 CFR 59. 59 FR 22776. EPA expects that the part 59 Field
Citation Program will be promulgated as a final rule before the
completion of this CROP rulemaking. Subpart B of part 59, ``Rules
Governing Hearings on Field Citations,'' will govern CAA section
113(d)(3) proceedings until these CROP revisions become final. EPA
expects that upon promulgation of the CROP revisions as a final rule,
subpart B of part 59 would be repealed and the revised CROP would be
used for CAA section 113(d)(3) proceedings.

[[Page 9465]]

In addition, in order to implement the SDWA Amendments of 1996, EPA
anticipates that it will soon repeal subpart J of 40 CFR part 142,
``Procedures for PWS Administrative Compliance Orders.'' Section
142.208 of that subpart stated that the CROP procedures are to apply to
administrative actions enforcing compliance orders issued under section
1414(g) of the SDWA, 42 U.S.C. 300g-3. That instruction is now part of
this proposed rulemaking, and EPA intends to use the relevant CROP
procedures proposed below as procedural guidance for SDWA section
1414(g)(3)(B) administrative enforcement actions during the interim
period before final promulgation of revisions to the CROP.
On December 11, 1996, EPA proposed to modify the procedures for
termination of National Pollutant Discharge Elimination System
(``NPDES'') permits issued under the CWA and for permits issued under
Subtitle C of the Resource Conservation and Recovery Act (``RCRA''). 61
FR 65268. EPA proposed to substitute the procedures contained in the
CROP governing revocation, termination and suspension of other EPA
permits for the existing procedures in part 124, subpart E (which cover
only termination of NPDES and RCRA Subtitle C permits). EPA proposed
two changes to the CROP to implement this proposal: (1) EPA proposed to
insert the word ``termination'' or ``terminate'' as appropriate
wherever the existing CROP refers to ``revocation or suspension'' or
``revoke or suspend'' permits; (2) EPA proposed to add a set of
supplemental rules at Sec. 22.44 to cover NPDES or RCRA permit
terminations. See 60 FR 65280 for a discussion of this proposal. The
comment period on this proposal closed on February 10, 1997. For the
convenience of the public, today's proposal reflects all the changes to
the CROP EPA has previously proposed, with some minor editorial
changes. EPA is not, however, soliciting new comments on changes
previously proposed, nor will EPA respond to any such comments in the
final rule to this proposal. Any comments on the proposal to terminate
NPDES or RCRA permits using the CROP procedures should be directed to
the docket for that proposal, referenced in the December 11, 1996
document. It should be noted, however, that such comments will be
considered late-filed.

II. Proposed Revisions

A. Revisions to Part 22

1. Statement of authority
The ``Authority'' section is reorganized in numeric order, and
updated to include additional authorities. To the extent that these
additional authorities change the scope of the CROP, they are discussed
below in regard to Sec. 22.01(a).
2. Scope of the Rules
Section 22.01(a): The phrase ``Consolidated Rules of Practice''
would be substituted for other phrases such as ``these rules of
practice,'' ``these rules,'' and ``this part,'' for consistency here in
paragraph (a) and throughout the CROP. The first sentence would also be
revised to clarify that these procedures apply only to administrative
adjudications. Substantive changes to the scope of the CROP are
discussed in detail below.
The scope section will mandate that the Agency shall use the CROP
procedures for all administrative adjudicatory proceedings listed
therein. Although the Agency does not commit itself to apply these
procedures to administrative actions other than those listed in the
scope, where it has discretion to do so, the Agency may elect to
informally apply these procedures for other adjudications not listed.
The Agency has, however, attempted to make the proposed scope a
complete list of all the proceedings likely to be commenced subject to
the CROP. Note, too, that the CROP only creates a set of procedures for
use in the exercise of some of EPA's statutory enforcement authorities,
and neither extends nor limits the substantive jurisdiction of the
Agency. Many provisions of the CROP reflect policy choices by the
Agency to exercise less than the full scope of its statutory and
constitutional authority (e.g., extending to 30 days the deadline for
all answers (Sec. 22.15), procedures for issuance of default orders
(Sec. 22.17)). As such, these limitations on the Agency's authority
apply only in proceedings under the CROP, and the Agency may modify
these requirements in future rulemakings.
Section 22.01(a)(2): The CROP would be expanded to include field
citation proceedings under 42 U.S.C. 7413(d)(3), as discussed above.
Part 22 currently applies to penalty proceedings under section
7413(d)(1), and the proposed revision would expand the scope to include
all of section 7413(d).
Section 22.01(a)(3): A reference to 33 U.S.C. 1415(f) inadvertently
omitted from the 1980 CROP is added for clarity and consistency.
Section 22.01(a)(4): This paragraph is revised to clarify which
sections of the Solid Waste Disposal Act (SWDA) authorize the various
proceedings. The scope is expanded by inclusion of proceedings to
suspend or revoke a permit under sections 3005(d) and 3008(h) (42
U.S.C. 6925(d) and 6928(h)) as proposed in the Agency's December 11,
1996, proposal noted above (60 FR 65280). The scope is also expanded to
include assessment of administrative civil penalties under 42 U.S.C.
6961 within the CROP. Reference to 42 U.S.C. 6992d is deleted, because
the demonstration program for medical wastes and its accompanying
regulations (40 CFR part 259) expired on July 22, 1991. The scope is
revised to clarify that the CROP applies to the issuance of compliance
orders under section 3008(a) or section 9006(a) of the SWDA (42 U.S.C.
6928(a) or 6991e(a)).
Additionally, the paragraph would be revised to specify that the
CROP is applicable to both the assessment of civil penalties and the
issuance of compliance orders pursuant to section 4005(c)(2) of the
SWDA (42 U.S.C. 6945(c)(2)). That section, enacted as part of the 1984
Hazardous and Solid Waste Amendments, authorizes EPA to enforce the
Subtitle D prohibition against open dumping in certain circumstances.
Although section 4005(c)(2) refers to the enforcement authorities
available under section 3008, the proposed revision would clarify that
the CROP would apply to these actions.
The procedures governing most SWDA corrective action orders appear
at 40 CFR part 24, but under certain circumstances the CROP may apply.
A new subparagraph (B) would clarify that the CROP generally does not
apply to SDWA section 3008(h) corrective action orders, but only to
those that are part of a proceeding commenced under the CROP for claims
under section 3008(a), to suspend or revoke authorization to operate
under section 3005(e), or for penalties for non-compliance with a
section 3008(h) order. A new subparagraph (C) would clarify that the
CROP procedures generally do not apply to corrective action orders
authorized under SWDA section 9003(h)(4) (42 U.S.C. 6991b(h)(4)),
except where the Agency includes such orders in a complaint seeking
civil penalties pursuant to section 9006. All other corrective action
orders are subject to the part 24 procedures.
Section 22.01(a)(5): A reference would be added to include
proceedings to assess civil administrative penalties pursuant to
section 207 of the Asbestos

[[Page 9466]]

Hazard Emergency Response Act (``AHERA''), codified as Title II of the
Toxic Substance Control Act, 15 U.S.C. 2647. The CROP was amended June
5, 1989, to add Sec. 22.47, a supplemental rule governing
administrative penalty proceedings under AHERA section 207, however,
there was no corresponding amendment to Sec. 22.01(a). 54 FR 24112. The
proposed revision would make clear that such proceedings are governed
by the CROP.
Section 22.01(a)(6): Section 4301(b) of the Oil Pollution Act of
1990 amended section 311(b)(6) of the CWA to allow administrative
penalty proceedings. This proposed rule would expand the scope of the
CROP to include proceedings to assess administrative civil penalties
under section 311(b)(6). The limitation to Class II proceedings would
be dropped from the scope, requiring use of the CROP for non-APA Class
I proceedings as well as Class II penalty proceedings, under both
sections 309(g) and 311(b)(6) of the CWA. Special provisions regarding
the non-APA Class I proceedings would appear in subpart I of the CROP.
The proposed revision of Sec. 22.01(a)(6) also reflects the addition of
proceedings to terminate a permit issued under section 402(a) of the
CWA, as proposed in the December 11, 1996 FR notice discussed above. 60
FR 65,268. Pursuant to that proposed rule, the existing part 124
procedures for terminating permits would be supplanted by the CROP.
Section 22.01(a)(9): A reference would be added to include
proceedings for the assessment of civil administrative penalties under
42 U.S.C. 1423(c) and 1447(b) within the scope of the CROP. A further
reference would be added regarding the issuance of any order requiring
both compliance and the assessment of a civil penalty under 42 U.S.C.
1423(c). These references reflect the amendments to the Safe Drinking
Water Act, Public Law 104-182, 110 Stat. 1613 (1996), which affect
administrative penalty assessment against public water systems and
federal facilities.
Section 22.01(a)(10): A reference would be added to include
proceedings for the assessment of civil penalties or the issuance of
compliance orders under section 5 of the Mercury-Containing and
Rechargeable Battery Management Act (42 U.S.C. 14304). The Mercury-
Containing and Rechargeable Battery Management Act would phase out the
use of mercury in batteries and provide for the efficient and cost-
effective collection and recycling or proper disposal of batteries
regulated under the Act. Section 5 of the Act authorizes administrative
enforcement for violations of the Act, except for section 104 of the
Act, which is enforceable under the Solid Waste Disposal Act.
Section 22.01 (b): A reference would be added to include the new
subpart I, and to provide that subpart H or I provisions will supersede
any conflicting provisions in subparts A--G.
Section 22.01(c): This provision would be amended to empower the
Environmental Appeals Board the authority to resolve procedural matters
not covered in the CROP because it has been designated by the
Administrator to perform this function.
3. Definitions
Section 22.03(a): Surplus language would be deleted from the
definition of ``Act''. No substantive change is intended.
A definition of ``Business confidentiality claim'' would be added
in order to specifically link the treatment of confidential business
information (``CBI'') in CROP proceedings to the general provisions for
CBI in 40 CFR part 2, subpart B. This amendment will clarify that the
same protections that apply to use of CBI in other Agency actions will
apply in proceedings under the CROP.
A definition of ``Clerk of the Board'' would be added to identify
the Clerk of the Environmental Appeals Board, who should receive
service of pleadings and documents in matters pending before the Board.
A definition of ``Commenter'' would be being added for purposes of
administrative civil penalty actions under Section 309(g) of the Clean
Water Act, Class II administrative civil penalty actions under Section
311(b)(6) of the Clean Water Act, and for actions under Section 1423(c)
of the Safe Drinking Water Act, in order to provide commenter
procedures required by those Acts.
The definition of ``Complainant'' would be revised to add
references to the provisions covering commencement of a proceeding and
the content and amendment of a complaint.
The definition of ``Complaint'' would be deleted, as it is fully
covered by the operative provisions of the rule at Sec. 22.14.
The definition of ``Consent Agreement'' would be deleted, as it is
fully covered by the operative provisions of the rule at
Sec. 22.18(b)(2).
The address of the Environmental Appeals Board would be deleted
from its definition, as redundant with Sec. 22.30(a).
The definition of ``Final Order'' would be clarified by
specifically including Consent Orders issued pursuant to Sec. 22.18.
The definition of ``Hearing Clerk'' would be amended to update the
mailing address.
The definition of ``Initial Decision'' would be expanded to include
references to the operative sections of the CROP at Secs. 22.17(c),
22.20(b) and 22.27, thereby distinguishing initial decisions from other
decisions rendered by a Presiding Officer.
The definition of ``permit'' would be expanded to include permits
issued under Section 402(a) of the Clean Water Act and Section 3005(d)
of the Resource Conservation and Recovery Act, consistent with the
December 11, 1996, proposed rule (60 FR 65,268). As used in the CROP,
the term ``permit'' would also apply to authority to operate under
interim status pursuant to section 3005(e) of the Resource Conservation
and Recovery Act.
The definition of ``Presiding Officer'' would be clarified and
amended to provide that, until an answer is filed, the Regional
Judicial Officer serves as Presiding Officer. This change is one of
form only, as Sec. 22.16(c) of the existing Rule allows the Regional
Administrator or a delegate to rule on motions until an answer is
filed, and in practice this authority is delegated to Regional Judicial
Officers. The definition also would be amended to allow Regional
Judicial Officers to preside in proceedings under subpart.
The definition of ``Regional Administrator'' would be revised for
clarity and to eliminate unnecessary language. EPA would delete from
the existing rule the provision defining the term ``Regional
Administrator'' to refer to the Environmental Appeals Board in cases
commenced at EPA Headquarters. In the interests of clarity, the
proposed revisions would specifically refer to the Regional
Administrator where the CROP assigns responsibilities to the Regional
Administrator, and to the EAB wherever the CROP assigns
responsibilities to the EAB. Only one responsibility assigned to the
Regional Administrators under the CROP would not also be assigned to
the EAB for cases commenced at EPA Headquarters, which is the
responsibility of designating Regional Judicial Officers. EPA does not
anticipate any need to provide for a Regional Judicial Officer to
preside in non-APA proceedings commenced at EPA Headquarters. EPA
anticipates that it will use non-APA procedures primarily for cases
expected to be routine and raising few, if any, new issues of law. EPA
expects to rely on Administrative Law Judges to act as Presiding
Officers in all cases initiated

[[Page 9467]]

at EPA Headquarters, because current Agency plans do not call for EPA
Headquarters to initiate significant numbers of routine cases or cases
which raise no significant new issues of law. For the few instances
where Headquarters-based Complainants seek to file non-APA cases, such
cases could be filed with a Regional Hearing Clerk and adjudicated by
the appropriate Regional Judicial Officer.
The definition of ``Regional Hearing Clerk'' would be clarified as
it pertains to cases initiated at EPA Headquarters. The Regional Office
addresses now appear in Appendix A.
Redundant language would be removed from the definition of
``Regional Judicial Officer''.
4. Roles of the Environmental Appeals Board, Regional Judicial
Officer and Presiding Officer; disqualification, withdrawal, and
reassignment.
Section 22.04(a): The heading would be amended, and the entire
section would be revised to clarify the roles of the Environmental
Appeals Board, Regional Judicial Officers, and Presiding Officers in
administrative enforcement proceedings under the CROP. The proposed
changes better describe current practice. Paragraph (a) would be
amended to clarify that the Administrator has delegated to the
Environmental Appeals Board the authority to rule on appeals, and that
in all cases except those in which the Environmental Appeals Board has
referred a matter to the Administrator, appeals and motions must be
directed to the Environmental Appeals Board to be considered. The word
``direction,'' an uncorrected typographical error in the existing CROP,
would be amended to ``discretion.''
Section 22.04(b): The section would be amended to clarify the role
and authority of the Regional Judicial Officer, to whom the authority
to act in a given proceeding is delegated by the Regional
Administrator. This authority includes acting as Presiding Officer in
non-APA administrative enforcement cases, acting as Presiding Officer
in APA cases prior to the filing of respondent's answer and request for
a hearing, and approving settlements of proceedings under the CROP.
EPA proposes to delete the prohibition that Regional Judicial
Officers ``shall not be employed by the Region's Enforcement Division
or by the Regional Division directly associated with the type of
violation at issue in the proceeding'', because Regional
reorganizations have made this language obsolete. EPA's Regional
Offices currently have a variety of different organizational
structures, and these organizational structures may continue to evolve.
Accordingly, EPA proposes to substitute a more generally applicable
requirement which makes no mention of organizational structures: The
Regional Judicial Officer shall not ``have any interest in the outcome
of'' any case in which he or she serves as Regional Judicial Officer.
EPA interprets this clause broadly, as prohibiting anyone who has any
financial interest, personal interest, or career interest in the
outcome of the action from serving as Regional Judicial Officer. EPA
believes this should provide the Regional Judicial Officers sufficient
independence to conduct a fair hearing, because in EPA's experience no
Regional Judicial Officer has been subject to improper influence by
Agency officials. The limitation placed on the Regional Judicial
Officer regarding any ``factually related hearing'' also would be
deleted, because the Agency believes it improper to disqualify a
Regional Judicial Officer merely because that person has participated
in a hearing where similar facts were at issue.
EPA intends that the Regional Judicial Officers should be, and are
in fact, fully independent of improper influence. Nevertheless, EPA
requests suggestions as how this independence should be described in
Sec. 22.04(b). Commenters should be cognizant of the fact that the EPA
employees who serve as Regional Judicial Officers will have duties
other than acting as Regional Judicial Officer, because workloads do
not generally warrant exclusive assignments to that position. One
possible alternative to the language proposed would be a mandate that a
Regional Judicial Officer ``shall not be directly supervised by any
person who directly supervises the prosecution of the case.'' Such a
requirement would provide a more definite standard than the standard
that is proposed, however it would be at odds with Agency's reinvention
efforts to remove layers of management, minimize institutional
barriers, promote cross-media training and promote multimedia
enforcement.
Section 22.04(c): Surplus language would be deleted. No substantive
change is intended by this revision.
Section 22.04(d): Several clarifications are made by deleting
surplus and confusing language. The proposed rule would require parties
to first request that a Regional Administrator, a member of the
Environmental Appeals Board, or the Presiding Officer disqualify
himself or herself before requesting that a higher Agency official
disqualify that person. Although requests for disqualification are very
rare, the proposed rule would reduce unnecessary delay and burdens by
requiring that requests for disqualification first be made directly to
the person whose disqualification is sought. If the request is denied,
then the reviewing official would have more information upon which to
base a ruling than if the initial request were made directly to the
reviewing official. The proposed rule would also authorize the
Environmental Appeals Board, rather than the Administrator, to review
requests for disqualification of Regional Administrators and Presiding
Officers. If a motion to disqualify a member of the Environmental
Appeals Board is denied, a party may appeal that ruling to the
Administrator.
EPA also requests comment on another possible change in the
disqualification procedures which is not included in the text of the
proposed rule published today. Under the proposed rule, both the
interlocutory appeal procedures of Sec. 22.29 and the procedures for
appeal of an initial decision at Sec. 22.30 would apply where a
Presiding Officer denies a motion for disqualification. EPA is
considering a prohibition on interlocutory appeals of motions for
disqualification, in order to avoid unnecessary delay. After issuance
of an initial decision, the parties would still have the right of
appealing any adverse ruling or order of the Presiding Officer,
including a refusal to disqualify himself or herself, pursuant to
Sec. 22.30. This change would make the CROP consistent with Federal
court practice. See 28 U.S.C. 1292 (decisions regarding
disqualification not included in the interlocutory review authority of
the Courts of Appeals), U.S. v. Gregory, 656 F.2d 1132, 1136 (5th Cir.
1981) (interlocutory review of disqualification decision not
available), Dubnoff v. Goldstein, 385 F.2d 717, 721 (2d Cir. 1967)(``A
determination of a District Judge not to disqualify himself is
ordinarily reviewable only on appeal from a final decision on the
[underlying cause of action].''). The Agency requests comment on this
potential revision of the CROP.
5. Filing, Service, and Form of Pleadings and Documents; Business
Confidentiality Claims
Section 22.05: The heading would be revised to include business
confidentiality claims.
Section 22.05(a): The paragraph would be revised to clarify that
the original and a copy of each pleading or other document intended to
be part of the record of the proceeding shall be filed with the
Regional Hearing Clerk or Clerk of the Environmental Appeals Board.
Providing both an original and a copy makes it easier for the hearing

[[Page 9468]]

clerks to maintain both a record file and a public viewing file, in
order to assure public access without risk of altering the official
record. The paragraph also would be revised to clarify when a pleading
or document is ``filed.'' Requirements regarding service, as distinct
from filing, are deleted from Sec. 22.05(a)(2) and moved to
Sec. 22.05(b); the remaining sentence concerning certificates of
service would be renumbered as Sec. 22.05(a)(3). The existing
Sec. 22.05(a)(3) would be renumbered Sec. 22.05(a)(2), and surplus
language deleted. The Agency solicits comments on whether electronic
filing and service should be allowed, and if so, under what conditions.
Section 22.05(b): The paragraph would be amended to consolidate and
clarify service requirements, and to require a copy of each pleading or
document to be served on the Presiding Officer. In paragraph (b)(1),
the provisions regarding service of the complaint are changed to
clarify who must be served when serving a natural person, a domestic or
foreign corporation, a partnership or unincorporated association, an
officer or agency of the United States, a state or local unit of
government or a state or local officer, agency, department, corporation
or other instrumentality. The proposed rule allows service of the
complaint by any reliable commercial delivery service that provides
written verification of delivery.
Paragraph (b)(2) would be amended to allow service of all pleadings
and documents other than the complaint by any reliable commercial
delivery service. The provision regarding mail would be revised to
reflect the fact that both certified mail and return receipt requested
are varieties of first class mail. The phrase ``pleadings and
documents'' is used here and throughout the proposed rule to include
all filings by the parties. The heading would be amended to reflect the
change.
Section 22.05(c): Paragraph (c)(2) would be changed to require more
information on the first page of every pleading and to require tables
of contents and tables of authorities for all legal briefs and
memoranda greater than twenty pages in length (excluding attachments)
to simplify processing and review. Grammatical changes and
clarifications are made in paragraphs (c)(3) and (4). In paragraph
(c)(5), the provision which allowed Hearing Clerks to determine the
adequacy of documents would be deleted, leaving that authority solely
with Presiding Officers or the Environmental Appeals Board.
Section 22.05(d): A new paragraph would be added to specify the
treatment of information claimed as Confidential Business Information
(``CBI'') in documents filed in CROP proceedings, and to link that
treatment with the CBI rules of 40 CFR part 2, subpart B. The purpose
is to facilitate the use of CBI as evidence while appropriately
preserving the confidentiality of the information. Paragraph (d)(1)
provides that any business confidentiality claim shall be made in the
manner prescribed by 40 CFR 2.203(b). A person who files a document
with a Regional Hearing Clerk without making such a claim places that
document in the public record, where it is available to the public for
inspection and copying pursuant to Sec. 22.09. After a document has
been placed in the public record, a subsequent claim of confidentiality
will not be effective. This clarifies the obligations of the claimant
and makes clear which procedures to follow, as well as the consequences
for failure to follow these procedures.
Paragraph (d)(2) describes in more detail how pleadings or
documents containing information claimed confidential are to be filed
with the Regional Hearing Clerk, and the contents of such documents, in
order to assure that such documents are properly filed and the
information within such documents protected. The requirement that
parties file two versions of pleadings or documents, one containing the
information claimed confidential and a second redacted version, does
not preclude a party from filing a single document that merely
references, without disclosing, confidential information filed in
earlier documents.
Paragraph (d)(3) describes the procedures for service of pleadings
of documents containing claimed-confidential information on the
Presiding Officer, complainant, parties, amici, or representatives
thereof authorized to receive confidential information, and makes clear
that only a redacted version of any pleading or document may be served
on a party, amici, or other representative thereof not authorized to
receive the confidential information. Paragraph (d)(4) provides that
only the redacted version of a pleading or document with claimed-
confidential information will become part of the public record, and
further provides that an EPA officer or employee may disclose
information claimed confidential only as provided by 40 CFR part 2.
6. Filing and Service of Rulings, Orders and Decisions
Section 22.06: The requirements regarding service of rulings,
orders and decisions have been changed to allow the more flexible
service of these documents by first class mail or any reliable
commercial delivery service. References to the Regional Judicial
Officer are deleted as surplusage.
7. Computation and Extension of Time
Section 22.07: In paragraph (a), ``holidays'' would be clarified to
mean federal holidays. Paragraph (b) would be revised to require that
any motion for an extension of time be filed sufficiently in advance of
the due date so as to allow other parties the opportunity to respond
and to allow the Presiding Officer or the EAB reasonable opportunity to
issue an order. The reference to ``the Regional Administrator'' would
be deleted as surplusage. In paragraph (c), the ``mail box'' rule for
service would be expanded to encompass the other reliable commercial
delivery services authorized in Sec. 22.05(b). Under the proposed
revision, as under the existing CROP, it is implicit that personal
service is complete upon personal service, without need for a signed
receipt.
8. Ex Parte Discussion of Proceeding
Section 22.08: New language would be included to explicitly allow a
decision maker who has formally recused himself from all adjudicatory
functions to engage in ex parte functions. For purposes of this
provision, the Agency would consider the approval of consent agreements
and issuance of consent orders to be adjudicatory functions.
9. Examination of Documents Filed
Section 22.09: Extraneous language would be deleted and the
reference to waiver of costs for duplication of documents would be
clarified.
10. Intervention and Amicus Curiae
Section 22.11: The section heading would be amended to include
amicus curiae motions. Paragraph (a)(1) would be amended to more
specifically describe the process for intervening, and would make the
standard for intervention equivalent to the standard used in the
Federal courts, Rule 24(a)(2) of the Federal Rules of Civil Procedure.
The final sentence in paragraph (c) of the existing CROP (``The
intervenor shall become a full party to the proceeding upon the
granting of leave to intervene.'') is intentionally omitted. This would
grant the Presiding Officer the discretion to allow an intervenor to
become a party as to part, but not all, of a proceeding. An additional
five days is given to file a response to a motion to intervene, for
consistency with proposed changes to Sec. 22.16. The

[[Page 9469]]

changes to paragraph (a) permit the deletion of paragraphs (c) and (d).
Paragraph (b) describes the procedures for motion for leave to file an
amicus brief, and fifteen days is given to file a response to an amicus
brief. EPA requests comment as to the appropriateness of these
intervention provisions.
11. Consolidation and Severance
Section 22.12: The phrase ``by motion or sua sponte'' would be
deleted as surplusage, and perhaps confusing to persons not trained in
the law. No substantive change is intended by this revision. Paragraph
(a) would be amended to clarify that proceedings brought pursuant to
the non-APA procedures of subpart I may be consolidated with an action
brought under the APA procedures. This paragraph prohibits the use of
the non-APA procedures for hearing any action which is the result of a
consolidation of an APA proceeding and non-APA proceeding. Under these
circumstances, only the APA procedures of the CROP (subpart A--H) are
appropriate.
The Agency considered, but rejected as unnecessary, expressly
prohibiting under Sec. 22.12 the consolidation of actions if such
consolidation could result in the total penalty exceeding any
applicable cap on penalty amounts. The existing language is sufficient
to prevent consolidation in such circumstances because such a result
would ``adversely affect the rights of parties engaged in otherwise
separate proceedings.''
12. Commencement of a Proceeding
Section 22.13: The heading would be amended, and the section
revised, to clarify how an administrative enforcement proceeding is
commenced. For cases where pre-commencement negotiations result in
settlement of a cause of action, paragraph (b) would provide for the
simultaneous commencement and conclusion of a case upon the issuance of
a consent order (provided that, in accordance with Sec. 22.18(b)(2),
the consent agreement contains that information required in a complaint
set forth in Sec. 22.14(a)(1)-(3)). Negotiations with alleged violators
prior to the formal filing of a complaint may in some cases lead to
more efficient and expeditious resolution of cases. See, e.g.,
Executive Order No. 12778 on Civil Justice Reform (56 FR 55195, October
25, 1991). Where such negotiations are productive, the filing of a
consent agreement and consent order would be sufficient to commence a
case, and requiring a separate filing of a complaint would merely waste
paper. In cases subject to the Clean Water Act or Safe Drinking Water
Act public comment provisions, this streamlined approach would not
permitted. The original language of this section would be deleted as
duplicative of the statutory authorizations to commence proceedings.
13. Complaint
Section 22.14: EPA proposes to consolidate paragraphs (a) and (b)
of the existing CROP into a single paragraph governing the content of
all complaints for assessment of civil penalties, for revocation,
termination or suspension of permits, and for compliance and corrective
action orders. As used here and in Secs. 22.17 and 22.27, ``compliance
or corrective action order'' includes orders requiring immediate
compliance or corrective action, and orders establishing schedules for
compliance or corrective action within a specified period of time.
Paragraph (a)(4) would be amended to present in a single paragraph
the content requirements for all complaints, whether they seek
penalties, compliance or corrective action orders, or permit actions.
New language would expressly permit the filing of a complaint without
specifying in the complaint the precise penalty sought, as an
alternative to pleading a specific penalty. Where complainant elects
not to demand a specific penalty in the complaint, complainant is
nonetheless obligated to provide a brief explanation of the severity of
each violation alleged and a citation to the statutory penalty
authority applicable for each violation alleged in the
complaint.1 This notice pleading option would provide the
Agency with added flexibility in issuing a complaint under
circumstances where only the violator possesses information crucial to
the proper determination of the penalty, for example, the economic
benefit the violator derived from its noncompliance or the effect of a
penalty on its ability to remain in business. Complaints following the
notice pleading approach would give respondents in administrative
enforcement proceedings at least as much notice of their potential
liability as they would receive in most enforcement proceedings filed
in the Federal courts. Complementary changes to Secs. 22.17(b) and
22.19(a) assure that, where the Agency employs this notice pleading
approach, the Agency will specify a penalty demand in its prehearing
information exchange and in any motion for default. As is the case in
judicial enforcement proceedings, this notice pleading option is fully
compatible with the Agency's long-standing practice of working with
respondents toward a fair resolution of enforcement actions.
---------------------------------------------------------------------------

\1\ For example, a citation to the statutory penalty authority
might state the following: ``For the violations alleged herein, in
accordance with 15 U.S.C. 2615(a), complainant seeks a penalty of up
to $25,000 for each day the violations continue, taking into account
the nature, circumstances, extent, and gravity of the violation,
and, with respect to the violator, ability to pay, effect on ability
to continue to do business, any history of prior such violations,
the degree of culpability, and other matters as justice may
require.''
---------------------------------------------------------------------------

Paragraph 22.14(a)(5) would combine the right-to-hearing provisions
presently in Sec. 22.14 (a)(6) and (b)(6), as well as new language to
accommodate hearings on the appropriateness of proposed compliance or
corrective action orders. The sentence requiring a copy of the CROP to
accompany each complaint served would be deleted and placed in a
separate Sec. 22.14(b). The requirement of Sec. 22.14(a)(5) in the
existing CROP would be moved to Sec. 22.14(a)(4)(i). Paragraph (a)(6)
would require the complainant to specify in the complaint whether the
non-APA procedures in subpart I shall apply to the proceeding. If a
complaint does not contain an explicit statement that subpart I
applies, the ensuing proceeding shall be conducted in conformance with
section 554 of the APA.
The original paragraph (b) would be merged into the new paragraph
(a). The revised paragraph (b) would contain the requirement, currently
in Sec. 22.14 (a)(6) and (b)(6), that a copy of the CROP accompany each
complaint.
The text originally in paragraph (c) would be deleted, and
subsequent provisions renumbered so that the text presently in
Sec. 22.14(d) would appear in 22.14(c), with minor changes. The
existing provision would be deleted to avoid the possibility of
conflict with the notice pleading option proposed under
Sec. 22.14(a)(4)(ii). The Agency's proposed deletion of this provision
does not signal any general intent to abandon applicable penalty
pleading policies. The Agency's penalty authority remains subject to
any statutory penalty criteria, regardless of changes to the CROP, so
deletion of the existing paragraph (c) should have no substantive
effect on the penalties that would be assessed.
Paragraph (d) would contain the provision presently in paragraph
(e), with minor revisions. The Agency considered, but is not proposing,
language specifically allowing the withdrawal of a complaint without
prejudice, because such language is not necessary. The existing
language of this section does not establish a specific standard that
the Presiding Officer must apply when considering a motion to withdraw
a complaint without

[[Page 9470]]

prejudice, and so, the ``good cause'' standard generally applicable to
motions applies. The good cause standard would allow withdrawal of a
complaint without prejudice in circumstances where, for example,
information obtained after the commencement of the case indicates that
the proper penalty should exceed an applicable penalty cap, thereby
allowing the Agency to refile the case in a forum that would permit
assessment of the proper penalty.
14. Answer
Section 22.15: The requirements for filing and serving copies of an
answer are clarified in paragraph (a). Also, the time allowed for the
filing of an answer would be changed from 20 days to 30 days. RCRA, the
SDWA, and the CWA authorize 30 days to file an answer. The discrepancy
between these statutory authorities and Sec. 22.15 has caused
confusion, particularly in cases involving alleged violations of more
than one statute (multimedia cases), as to which time limitation
applies to the overall cause of action. To avoid any potential
conflict, for all causes of action, the requirement would be changed to
allow answers to be filed within 30 days of service of the complaint.
EPA proposes to add to paragraph (b) a new clause requiring that the
answer state the basis for opposing any proposed penalty, compliance or
corrective action order, or permit revocation, termination or
suspension. This requirement would not add significantly to
respondents' existing burdens, as it is both consistent with good
pleading practice and implicit in the existing rule. Paragraph (c)
would be rewritten for clarity. No substantive change is intended.
15. Motions
Section 22.16: Paragraph (a) would be revised to place explicit
limits on motion practice and to provide a common understanding that
the routine practice shall be the filing of a motion, a response and a
reply, without any further briefing. Any further responsive documents
concerning the motion would be allowed only by order of the Presiding
Officer or EAB. The present CROP is silent as to whether additional
briefing or argument is permitted after the filing of a response to a
motion. To the extent that such replies are presently allowed, there is
no limit on the time for filing a reply, nor any limit to the total
number of replies. With an endless series of replies possible, neither
the Presiding Officer nor the parties can be sure when a motion is ripe
for decision.2 The proposed amendments are intended to
establish more control over motion practice in an effort to simplify
the proceeding, and to reduce delays and litigation costs. EPA believes
that a motion-response-reply structure is both necessary and sufficient
to present the issues fully for the Presiding Officer. The proposed
rule specifically provides the movant an opportunity for a reply
because responses to motions often raise issues not addressed in the
motion itself. The proposed rule then limits the scope of the reply to
those issues raised in the response, in order to avoid giving an unfair
advantage to the movant. For those instances where this motion-
response-reply format may not be appropriate, the Presiding Officer may
order an alternative approach.
---------------------------------------------------------------------------

\2\ See, e.g., In the Matter of McLaughlin Gormley King, et al.,
Docket Nos. FIFRA 94-H-10 through 94-H-15, where a motion to dismiss
was followed by a response, a reply, a sur-reply, a supplemental
reply, and a second sur-reply.
---------------------------------------------------------------------------

The proposed rule would amend paragraph (b) to expand the time for
filing a response to a motion from 10 days to 15 days. EPA anticipates
that this change will improve the quality of the responses, better
clarifying the issues and thereby promoting judicial economy. The
proposed rule also would allow 10 days for the filing of a reply,
reflecting the fact that the movant has already had an opportunity to
anticipate possible objections to its motion and that somewhat less
time should be needed to address such new issues as might be raised in
the response. The clause pertaining to extensions of time would be
deleted as redundant with Secs. 22.07(b) and 22.04(c).
Paragraph (c) would be revised to clarify who renders decisions at
the different stages of a proceeding. The provision concerning oral
argument on motions would be deleted from this section and placed in a
separate Sec. 22.16(d), and expanded to acknowledge that Presiding
Officers, as well as the EAB, have the discretion to order oral
argument on motions.
16. Default
Section 22.17: The heading would be changed, and the entire section
reorganized, for purposes of clarity. Paragraph (a) would describe how
a party may be found in default, and the consequences of such a
finding. The provisions in the current paragraph (a) describing when
penalty monies come due, or when a permit revocation, termination or
suspension becomes effective, would be moved to paragraph (d).
New paragraph (b) addresses content requirements for motions for
default. It includes a requirement that where the motion requests the
assessment of a penalty or the imposition of other relief against a
defaulting party, the movant must specify the penalty or other relief
sought and must put into the record the legal and factual grounds for
the relief requested. This amendment accommodates the changes made in
Sec. 22.14, above, and provides for those instances in which the
complaint does not contain a specific penalty proposal.
Paragraph (c) would be revised to describe the default order
itself. It would provide that a default order shall be an initial
decision, and treated in all respects under the CROP as an initial
decision. Paragraph (c) would result in one substantive change rules
regarding default orders, in regard to the standards for granting
relief. Section 22.17(a) of the existing rule appears to require that a
default order automatically assess the penalty proposed in the
complaint, or automatically revoke or terminate the permit according to
the conditions proposed in the complaint. The proposed revision would
remove this apparent restriction on the Presiding Officers' discretion
so that they may assure that the relief ordered is supported by the
administrative record. In order to make it clear that supporting the
relief proposed in a default case should be less burdensome on the
Agency than it would be if the respondent chose to contest the case,
the language of the revised paragraph (c) would require that the
Presiding Officer grant the relief requested unless the record clearly
demonstrates that the requested relief is inconsistent with the Act.
The Agency would still be required to make a prima facie case in regard
to the appropriateness of the proposed relief, as well as in regard to
liability. The proposed change would not affect determinations of
liability in default, which would remain subject to the ``preponderance
of the evidence'' standard of Sec. 22.24.
Subsection (d) would describe the respondent's obligations once
default has been entered regarding payment of any penalty, revocation,
termination or suspension of any permit, and compliance or corrective
action requirements. The existing rule does not describe or explain
these sanctions, and the Agency believes therefore that these new
provisions provide additional clarity and information to a potentially
defaulting party, and make much more clear the consequences of default.
The existing rule requires payment of the penalty within 60 days after
the default order was issued. This conflicts with the

[[Page 9471]]

Federal Claims Collection Standards, which require payment within 30
days after the date the order was issued, unless EPA decides an
extension is appropriate. See 4 CFR 102.13(g). The proposed rule
therefore requires payment within 30 days after the date the default
order becomes final.
17. Quick Resolution; Settlement; Alternative Dispute Resolution
Section 22.18: This section would be substantially revised to
provide expedited resolution procedures, and to clarify the process and
effect of formal settlements. Paragraph (a) would provide a quick
resolution process, whereby a respondent can bring the case to a close
at any time simply by paying the amount proposed in the complaint. Any
respondent wishing to resolve an action without filing an answer need
only pay the proposed penalty within 30 days of receipt of the
complaint. In cases where an answer has been filed, the respondent may
resolve the action by paying the penalty proposed in the complaint.
This will provide respondents the option of resolving minor and
uncontested violations without engaging an attorney, much in the manner
of a parking ticket. EPA anticipates that this quick resolution
procedure may be of particular interest to small businesses, and
recognizing that small businesses may need additional time to raise
cash to pay a penalty, the provision would allow respondents 60 days
from receipt of the complaint to pay the penalty without having to file
an answer. In order to exercise this option, a respondent would need to
file a written statement within 30 days of receiving the complaint
wherein respondent promises to pay the penalty in full within 60 days
from receipt of the complaint.
The commenter rights provisions of section 309(g) and 311(b)(6) of
the Clean Water Act, and section 1423(c) of the Safe Drinking Water Act
do not permit resolution of a case until the public has had opportunity
to comment on the complaint. Commenters could provide information
indicating that the violations are more serious than indicated in the
administrative complaint. In order to give meaning to the public
comment requirements, and to allow EPA the opportunity to act upon any
such comments before resolution of a case, a respondent would not be
permitted to take advantage of the quick resolution provision in a
commenter-eligible action until ten days after the period for public
comment has closed.
Paragraph (b) would clarify the existing settlement process, and is
divided into three paragraphs. The first paragraph (b)(1), concerning
discussions of settlement, incorporates existing provisions with minor
editorial changes, the most significant of which corrects a citation to
Sec. 22.16 which should refer to Sec. 22.15. Paragraph (b)(2) would
specify that consent agreements be in writing, and that they include
all terms and conditions of settlement. The content requirements of a
consent agreement are also clarified to include compliance order or
corrective action requirements, and an express waiver of the
respondent's right to a hearing and appeal of the consent order. This
clarification is important, so that respondents enter into settlement
agreements with a full understanding that an agreement to settle
involves waiving rights to a hearing and rights of appeal. Paragraph
(b)(2) also establishes additional content requirements for consent
agreements in cases where the complainant proposes to simultaneously
commence and conclude a case through filing of a consent agreement and
consent order pursuant to Sec. 22.13(b), as a result of successful
settlement through negotiations conducted before a complaint is issued.
These additional content requirements should assure that the public
record clearly identifies the causes of action upon which such cases
are based. Paragraph (b)(3) would be revised to expressly provide that
an administrative action is settled only when the Regional Judicial
Officer or Regional Administrator, or, in cases commenced at EPA
Headquarters, the Environmental Appeals Board, approves a consent
agreement and issues a consent order. This provision is added to
eliminate any uncertainty as to who has authority to conclude a
proceeding.
Paragraph (c) would provide that the effect of settlements and full
payment of proposed penalties is limited to those facts and violations
specifically alleged in the complaint, and reserves the Agency's right
to pursue injunctive relief or criminal sanctions. These provisions
merely make explicit the existing law of res judicata and claim
preclusion, and reflect the Agency's routine practice in settlement of
cases. The statutes authorizing administrative proceedings
simultaneously define the limits of the Agency's jurisdiction in those
proceedings to the assessment of penalties, the issuance of corrective
action or compliance orders, or the revocation, termination or
suspension of permits. None of the statutes administered by EPA grant
to an administrative tribunal the authority to assess criminal
sanctions or compel injunctive relief. Because the statutes authorizing
administrative proceedings expressly limit the Agency's authority in
those proceedings, the settlement of a proceeding commenced under part
22 cannot limit the Agency's right to pursue relief that is beyond the
scope of part 22. See generally Restatement (Second) of Judgments
Sec. 83 comment g (1982). Accordingly, adding this provision to the
CROP does not significantly alter respondents' rights.
Paragraph (d) would recognize use of alternative dispute resolution
proceedings. The Agency encourages use of alternative dispute
resolution in appropriate circumstances, both as a fair means of
resolving enforcement actions and as a method of reducing transaction
costs for all parties. The designation of a neutral (who would not be
the Presiding Officer) would not divest the Presiding Officer of
overall responsibility for the case. The Presiding Officer would retain
during dispute resolution proceedings all of the powers and duties
assigned under Sec. 22.04(c), including the authority to bring the case
to hearing if circumstances so warrant. The Agency has considered
including language specifying the impact of dispute resolution
proceedings on deadlines, but instead proposes to leave this to the
discretion of the Presiding Officer. As needed, the parties may request
temporary stays of proceedings and extensions of deadlines.
Other requirements of the CROP (e.g., the consent agreement and
consent order provisions of Sec. 22.18(b), the ex parte prohibitions of
Sec. 22.08, the public comment provisions of Sec. 22.38) also would
continue to apply, notwithstanding any dispute resolution process.
18. Prehearing Information Exchange; Prehearing Conference; Other
Discovery
Section 22.19: EPA proposes to substantially restructure and revise
this section for ease of use and to make information exchange more
timely and efficient. Paragraphs (a) and (b) would be reversed in order
from the existing CROP, reflecting the fact that information exchange
is more common than, and usually precedes, a prehearing conference. The
Agency proposes to expand the scope of the standard prehearing
information exchange in order to expedite resolution of cases.
The requirements for prehearing exchange would now appear in
paragraph (a). In addition to the information required to be exchanged
under Sec. 22.19(b) of the existing CROP, EPA proposes that each party
should be required to exchange all information it considers relevant to
the assessment of

[[Page 9472]]

a penalty. This provision would apply whether or not the complainant
identifies a specific penalty in the complaint. In addition, for
penalty cases where the complainant has not specified a penalty in the
complaint, the proposed rule would require that the complainant shall
specify a proposed penalty and state the basis for that proposed
penalty. EPA requests comment on whether it is necessary for
complainant to specify a proposed penalty in prehearing exchange. As
noted above, EPA has proposed to allow notice pleading under
Sec. 22.14(a)(4)(ii) in order to allow EPA to issue complaints even
where it is unable to obtain information from the violator which is
necessary to confidently determine the appropriate penalty. Although
EPA anticipates that respondents will provide such information during
the course of settlement discussions, it is possible that in some cases
the necessary information will not be available until respondent
submits its prehearing exchange, or even later. If the complainant is
in no better position to propose a penalty at prehearing exchange than
it was at the time it filed the complaint, there is little value to
such a requirement. EPA requests comment on the utility of this
requirement, and on the merits of allowing complainant to postpone for
an additional 30 days, or indefinitely, the making of a specific
penalty demand.
EPA's proposal would change the rules regarding the exchange of
witness lists and documents in order to facilitate supplementing and
amending prehearing exchange prior to hearing. In so doing, the
proposed rule would make more clear the distinction between the filing
of prehearing exchange and the admission of information into evidence.
In order to prevent undue burden and delay caused by last minute
supplements or amendments of the prehearing information exchange, the
Agency considered proposing restrictions on amendments to prehearing
exchange within 30 days of the hearing date. The Agency instead
proposes that all barriers to amending prehearing exchange should be
dropped in the interest of full and complete exchange of information
between the parties (see Sec. 22.19(f)), and proposes under
Sec. 22.22(a) to tighten the standards for admitting into evidence
information that was not timely exchanged.
The Agency requests comment on the merits of requiring by rule that
the parties simultaneously perform their prehearing information
exchange 90 or 120 days after the filing of the answer. Making
prehearing exchange automatic, rather than dependent on assignment of
an ALJ and on the ALJ's issuance of an prehearing exchange order, could
expedite administrative practice and move cases to a more rapid
resolution. Although an early deadline could prompt the parties to
focus intently on settlement at the earliest stages of a proceeding, it
could also lead to wasted resources if parties were compelled to submit
voluminous prehearing exchanges despite imminent settlements.
The Agency has considered, but is not proposing, amendments
concerning the timing of prehearing exchange. The Agency has considered
the merits of requiring that complainant file its prehearing exchange
before respondent, relative to the merits of requiring that prehearing
exchange be made simultaneously by both parties. Allowing respondent to
submit its prehearing exchange several weeks after receiving
complaint's prehearing exchange might allow respondent to focus its
prehearing exchange more narrowly on what it perceives to be the
weakest points of the complainant's case, thereby conserving
respondent's resources and clarifying the key issues in dispute. In
contrast, the traditional, simultaneous prehearing exchange gives both
parties equal incentive to settle before incurring the expense and
effort of preparing the exchange. Staggering the prehearing exchange
creates a disparate incentive, such that the party designated to make
the later exchange may adopt a ``wait-and-see'' attitude, preferring to
review the papers of the party designated to submit first before
accepting a settlement offer it knows to be in its best interest or
before even engaging in serious settlement discussions. In this manner,
sequential prehearing exchange can delay or even impede settlement, and
causes the lead party to incur unnecessary expenditures of resources.
EPA believes that the disadvantages of sequential prehearing exchange
outweigh the anticipated benefits in the great majority of cases.
The disadvantages of a sequential prehearing exchange do not,
however, compel the conclusion that prehearing exchange must
necessarily be simultaneous in every case. There may be instances where
the circumstances suggest that a case might be more expeditiously
resolved if prehearing exchange were structured in some other manner.
Accordingly, the Agency does not propose to make either simultaneous or
sequential prehearing exchange the mandatory and exclusive option, but
instead would continue to allow the Presiding Officer some discretion
regarding the timing of the prehearing exchange required under this
rule.
Paragraph (b) would describe the purpose of any prehearing
conference which may be held, and is substantially similar to paragraph
(a) of the existing CROP. The revisions would no longer compel the
Presiding Officer to require the parties to ``appear at a conference
before him,'' but instead would make the nature of the conference more
flexible.
In paragraph (c), the phrase ``upon motion or sua sponte'' would be
deleted as surplusage, and as potentially confusing. In paragraph (d),
additional surplus language would be deleted. No substantive changes
are intended. Paragraph (e) from the existing CROP would be deleted as
surplusage, as Sec. 22.04(c) (5), (8) and (10) give the Presiding
Officer ample authority in these matters.
Under the proposed revisions, as well as the existing CROP,
Sec. 22.19 is designed to streamline exchanges of information by the
parties and to discourage dilatory tactics and unnecessary and time-
consuming motion practice. In contrast to the Federal Rules of Civil
Procedure, a formal prehearing exchange of information is the primary
vehicle of information exchange under the CROP. This prehearing
exchange may be supplemented in certain cases by additional discovery
pursuant to paragraph (e). In order to expedite the administrative
hearings process, this other discovery is limited in comparison to the
extensive and time-consuming discovery typical in the Federal courts.
The proposed revisions to paragraph (e) would revise the process
for seeking ``other discovery''. The proposed rule would require that
the party seeking discovery must file a motion which ``shall specify
the method of discovery sought, provide the proposed discovery
instruments and describe in detail the nature of the information and/or
documents sought (and, where relevant, the proposed time and place
where discovery would be conducted).'' By ``proposed discovery
instruments,'' the Agency refers to the specific documents which would
effectuate discovery if the Presiding Officer were to order the
requested discovery (e.g., notices of deposition, depositions upon
written questions, written interrogatories, requests for production of
documents and things and entry upon land for inspection and other
purposes, requests for admission).
The proposed revisions would also refine the substantive standards
for issuance of a discovery order. First, discovery motions would only
be

[[Page 9473]]

authorized after completion of the prehearing information exchange
mandated under paragraph (a), so that ``other discovery'' supplements,
rather than supplants, prehearing exchange. Second, the prohibition
against discovery which would unreasonably delay the proceeding would
be expanded to prohibit discovery which would unreasonably burden the
other party. The Agency believes that unnecessarily burdensome
discovery is inappropriate even if such discovery would not delay a
proceeding. Third, the proposed rule would clarify the existing
requirement that discovery seeks ``information [that] has significant
probative value'', by the addition of the clause ``on a disputed issue
of material fact relevant to liability or the relief sought.'' This
revision is intended to clarify, rather than change, the existing
requirement. See, e.g., Chautauqua Hardware Corp., II EPCRA-90-0223,
Order on Interlocutory Review slip op. at 12 (June 24, 1991) (``The
phrase ``probative value'' denotes the tendency of a piece of
information to prove a fact that is of consequence in the case.'')
The Agency proposes to clarify the requirement in the existing rule
that prohibits discovery where ``[t]he information to be obtained is
not otherwise obtainable''. The phrase ``not otherwise obtainable'' has
been the source of much litigation, and the Agency proposes to
substitute instead a requirement that discovery is permissible so long
as it ``[s]eeks information that is most reasonably obtained from the
non-moving party, and which the non-moving party has refused to provide
voluntarily''. This substitution should not substantively change the
discovery standard, but instead make explicit the two most reasonable
interpretations of ``not otherwise obtainable''. One reasonable
interpretation of the ``not otherwise obtainable'' requirement is that
parties should not resort to discovery until more collegial methods of
obtaining information have been exhausted. The proposed change would
effectively require a party to request voluntary disclosure of the
information sought before seeking a discovery order. Another reasonable
interpretation of ``not otherwise obtainable'' is that a party should
not be burdened by discovery seeking information which is readily
obtained through other sources (e.g., texts available in libraries or
from the publishers, reports or materials available from other
government agencies). If the rule did not encompass this interpretation
of ``not otherwise obtainable'', it would unreasonably burden litigants
by permitting discovery of all information that could be obtained
through a party, or by completely prohibiting discovery of information
that could be obtained from third parties. Instead, EPA proposes to
limit discovery to ``information that is most reasonably obtained from
the non-moving party''. Although this requirement would not eliminate
litigation, it provides a more meaningful context than ``not otherwise
obtainable'' for determining whether other discovery should be allowed.
Paragraph (e)(2) of the proposed revision would expressly prohibit
discovery of a party's settlement positions and information regarding
their development, specifically including penalty calculations for
purposes of settlement based on Agency settlement policies. This would
make explicit a limitation that already exists under the current rule,
as Sec. 22.19(f)(1)(iii) limits discovery to information that has
``significant probative value'', and existing Sec. 22.22 prevents the
introduction of evidence which would be inadmissible under Federal Rule
of Evidence 408. Penalty proposals developed for settlement are offers
of compromise which normally would be inadmissible under Federal Rule
of Evidence 408 because they generally lack significant probative
value, and in addition, because their admission would discourage
settlement. In its administrative enforcement programs under the CWA
and SDWA, the Agency utilizes the same settlement policies that it uses
in judicial enforcement proceedings to determine the penalty amount the
Agency would accept in settlement of a case. This has caused some
confusion for respondents who are more familiar with the Agency's other
administrative enforcement programs, which rely on penalty pleading
policies, rather than settlement policies. The proposed rule would
clarify that penalty calculations derived from a settlement policy, as
opposed to calculations of proposed penalties from a penalty pleading
policy, are not subject to discovery. This change would eliminate the
potential for litigation on matters reserved for settlement
discussions.
The existing CROP provides that the Presiding Officer may order
depositions upon oral questions only where additional conditions, over
and above those applicable to discovery in general, are met. Paragraph
(e)(3) of the revised CROP would maintain this higher standard, and
clarify that these requirements are in addition to those of paragraph
(e)(1).
Additional conditions also apply to the issuance of a subpoena
relative to other discovery, specifically, ``an additional showing of
the grounds and necessity therefor.'' The standards for issuing
subpoenas do not appear in Sec. 22.19 of the existing CROP, but
instead, are repeated in six separate Supplemental rules. Paragraph
(e)(4) of the proposed CROP consolidates this material, allowing
elimination of several supplemental rules. This change does not expand
or limit the authority of the Presiding Officer, nor does it authorize
issuance of subpoenas except where authorized by the Act giving rise to
the cause of action.
Paragraph (e)(5) further clarifies that Freedom of Information Act
(``FOIA'') requests, requests for admissions or stipulations,
inspections, statutorily provided information collection requests, and
administrative subpoenas issued by an authorized Agency official other
than the Presiding Officer do not constitute discovery and are not
restricted by the CROP. This revision does not change the CROP, because
these activities have never been subject to a Presiding Officer's
control. This provision should reduce uncertainty, and consequent
litigation, by clarifying that these independent methods of information
collection are wholly outside the Presiding Officer's authority.
Paragraph (f) would impose on each party a duty to supplement or
correct prior exchanges of information when the party learns that a
prior exchange is deficient. As with the subsections already described
above, this subsection is intended to reinforce the practice of full
and complete voluntary information exchange in order to expedite
proceedings and avoid unnecessary and costly motion practice. This
subsection addresses situations where a party learns that a prior
response is incorrect, inaccurate or outdated. It is not intended to
impose a duty on any party to continually check the accuracy of prior
responses, but does prohibit knowing concealment by a party. This
provision would eliminate any procedural barriers to amending
prehearing exchange, however, EPA also proposes at Sec. 22.22(a) that
information that is not exchanged in a timely manner shall not be
admitted into evidence. Moreover, failure to comply with a prehearing
exchange order would still constitute grounds for issuance of a default
order, notwithstanding these changes.
Paragraph (g) clarifies that a failure of a party to provide
information within its control pursuant to an order of the Presiding
Officer may lead to an inference that the information sought

[[Page 9474]]

would be adverse to the non-exchanging party, to exclusion of the
information from evidence, or to issuance of a default order. In the
existing CROP, a version of this requirement applied to information
provided through other discovery, but its applicability to information
provided through prehearing exchange was unclear. The proposed rule
expressly applies this requirement to all information exchanges, and
expressly authorizes the additional sanction that information might be
excluded from evidence.
19. Accelerated Decision; Decision to Dismiss
Section 22.20: Several editorial changes are made to this section.
No substantive change is intended.
20. Assignment of Presiding Officer; Scheduling the Hearing
Section 22.21: Paragraph (a) would be revised to make it clear that
the Chief Administrative Law Judge presides from the time an answer is
filed until he or she assigns another ALJ. This would assure that there
is a Presiding Officer at every stage of a proceeding.
21. Evidence
Section 22.22(a): EPA proposes splitting this subsection into two
paragraphs. Paragraph (a)(1) would addresses the admission of evidence
into the record. It restates the existing standard, with only a minor
editorial revision, and adds a new standard for exclusion of evidence
which is not provided to opposing parties in a timely manner. It
provides that the Presiding Officer shall not admit into evidence any
document, exhibit, witness name or summary of expected testimony that
has not been provided to all parties at least fifteen days before the
hearing date, unless the non-exchanging party had good cause for
failing to exchange the required information and provided the required
information to all other parties as soon as it had control of the
information, or had good cause for not doing so.
Paragraph (a)(2) would address treatment of confidential business
information (CBI), in conformance with the Agency's general
confidentiality requirements. The 40 CFR part 2, subpart B provisions
regarding treatment of CBI are cross referenced and other provisions
are added to clarify how and when CBI may be used as evidence in a CROP
proceeding. A significant substantive change would authorize the
Presiding Officer to consider CBI evidence outside the presence of a
party if necessary to preserve the confidentiality of the business
information. While EPA expects that the Presiding Officers will seldom
need to exercise this authority, experience has demonstrated the need
for it. In In the Matter of Baker Performance, TSCA-91-H-08, a
respondent charged with manufacture of chemical substances not listed
in the TSCA inventory of existing chemical substances argued that the
chemicals in question were identical to chemicals already listed on the
confidential TSCA inventory by competitors. This posed a dilemma for
EPA, forcing EPA to choose between revealing to the respondent its
competitors' trade secrets in order to prove the violation, or else
foregoing full enforcement. EPA chose in that case to accept settlement
on relatively unfavorable terms rather than reveal the CBI. EPA
believes that allowing the independent Administrative Law Judges the
discretion to review confidential evidence outside the presence of a
party in similar cases would strike an appropriate balance between the
right of confrontation and the statutory mandates to protect
confidential business information. Other changes have been made for
clarity.
Section 22.22(c): For clarity, EPA proposes that the term ``written
testimony'' be substituted for ``verified statements''. As they are
described in the existing paragraph (c), verified statements are in
fact testimony, and differ from live testimony only to the extent that
they are presented in written form. No substantive change is intended.
22. Objections and Offers of Proof
Section 22.23(b): Surplus language would be omitted in the interest
of clarity. No substantive change is intended.
23. Burden of Presentation; Burden of Persuasion; Preponderance of The
Evidence Standard
Section 22.24: EPA proposes to split this section into two
subsections, one addressing burden of presentation and burden of
persuasion, and another addressing the preponderance of the evidence
standard. Paragraph (a) would revise the existing language to adopt a
consistent terminology throughout its discussion of burden of
presentation and burden of persuasion, and to encompass compliance
orders and corrective action orders. The proposed rule would clarify
that respondent bears the burden of persuasion in regard to affirmative
defenses only, although it bears the burden of presentation regarding
all defenses. These revisions are consistent with settled law and would
not change respondents' burdens relative to the existing CROP.
Paragraph (b) would consist of language from the existing CROP, without
any change. The title of the section would be amended to aid readers in
locating the preponderance of the evidence standard established in
paragraph (b).
24. Filing the Transcript
Section 22.25: EPA proposes to add a provision disallowing motions
to conform the transcript of a proceeding to the actual testimony
unless filed within 20 days after notice of the availability of the
transcript, in the interests of finality.
25. Initial Decision
Section 22.27: Paragraph (a) would be amended to encompass
compliance orders, corrective action orders, and permit revocations,
terminations and suspensions. It would further require that a copy of
the initial decision be served on the Assistant Administrator for
Enforcement and Compliance Assurance. Other changes are editorial, and
are not intended to make substantive changes in the CROP.
Paragraph (b) would be amended to require that the Presiding
Officer base the recommended penalty upon evidence in the record and in
accordance with any penalty criteria set forth in the Act. A
requirement that the Presiding Officer explain how the penalty
corresponds to any penalty criteria set forth in the Act would be
substituted for the existing requirement that the Presiding Officer
explain the reasons for recommending a penalty other than the penalty
proposed in the complaint. These changes will clarify the essential
neutrality of the Presiding Officer, but will not result in any
substantive or other procedural changes to CROP proceedings.
Paragraph (c) would be amended to clarify the circumstances under
which an initial decision may become a final order of the Agency. It
further clarifies that the respondent must appeal an initial decision
to the EAB as a prerequisite to judicial review. This addition makes
clear the point at which administrative remedies are exhausted for the
purpose of appeal to Federal courts. The purpose of this latter
amendment is to prevent a party from seeking judicial review prior to
seeking review from EPA's administrative appellate body, the
Environmental Appeals Board. This addition to the CROP is proposed to
conform to the holding in Darby v. Cisneros, 509 U.S. 137 (1993). In
Darby the Supreme Court held that in cases where the Administrative
Procedure Act applies, an appeal to ``superior agency

[[Page 9475]]

authority'' is a prerequisite to judicial review only when expressly
required by statute or when an agency rule requires appeal before
review and the administrative action is made inoperative pending that
review. Courts are not free otherwise to impose an exhaustion
requirement where the agency action has already become ``final'' under
section 10(c) of the APA, 5 U.S.C. 704.
The new language is an express requirement that the administrative
appeals process be exhausted before a party may seek judicial review of
a final agency action. Section 22.27(c) makes it clear that the initial
decision of the Presiding Officer would not be operative pending review
by the Environmental Appeals Board. While this holding in Darby applies
to cases governed by section 704 of the APA, exhaustion of
administrative remedies is also required in cases where APA section
10(c) is not applicable. EPA's position with regard to exhaustion of
administrative remedies in CROP cases is consistent with its position
on exhaustion of administrative remedies generally. See, 40 CFR 66.81
and Bethlehem Steel Corp. v. EPA, 669 F.2d 903 (1982) interpreting 40
CFR 66.81. These changes do not alter respondents' rights and do not
create any right of appeal in Sec. 22.27. Appeal is only permitted
pursuant to the provisions of Sec. 22.30.
26. Motion to Reopen a Hearing
Section 22.28: Paragraph (a) would be amended to clarify the
purposes for reopening a hearing. No substantive change is intended.
EPA would amend paragraph (b) to expand from 10 to 15 days the time
allotted for responding to a motion to reopen a hearing, for
consistency with changes to Sec. 22.16. Other changes are made for
clarity.
27. Appeal From or Review of Interlocutory Orders or Rulings
Section 22.29: EPA proposes that paragraphs (a), (b) and (c) be
revised to clarify the nature of interlocutory appeals, and to allow
ten days from service, rather than six days from notice, to request
interlocutory review. The change in the filing deadline will give
parties additional time, and it will measure that time from a date
easily ascertained by all. No other substantive change is intended.
Paragraph (d) would be deleted as surplusage, as the Presiding
Officer's authority to stay a proceeding is inherent in Sec. 22.04(c)
and the limitations of Sec. 22.29(d) are unnecessary.
28. Appeal From or Review of Initial Decision
Section 22.30: The procedure for filing appeals would be clarified,
including, but not limited to, provisions addressing service and
filing, and describing the contents of any appeal brief. Under the
existing CROP, a party which is not fully satisfied by an initial
decision, but who would be willing to let the decision stand as is, may
feel obliged to file an appeal merely to assure that its own issues are
preserved in the event that the other party appeals the initial
decision on other grounds. The proposal includes a new provision
whereby a party who initially declined to appeal, but who receives a
notice of appeal from another party, is granted an additional 20 days
to raise other issues on appeal. This change would eliminate the need
for protective filings by parties who are largely content with an
initial decision. Other substantive changes include extending the time
to file an appeal from 20 to 30 days, and a provision expressly
limiting the scope of appeals to issues raised during the course of the
proceeding or by the initial decision. A new paragraph (e) specifies
that the general requirements for motions at Sec. 22.16 apply to
motions made in appeals to the EAB. A new paragraph (f) would consist
of language presently in Sec. 22.31(a) concerning decisions on appeals.
Moving this language into Sec. 22.30 makes the structure of Sec. 22.30
comparable to Sec. 22.29. Paragraph (f) describes the scope of review
by the EAB and its authority to increase or decrease a penalty, or to
modify any compliance order, corrective action order, or any permit
revocation, termination and suspension. The proposed revision would
allow the EAB to increase the amount of a penalty assessed in a default
order, but would not allow the EAB to increase the default penalty to
an amount greater than that proposed in the complaint or in a motion
for default, whichever is less. This change would avoid an unintended
implication of the present rule, which could be interpreted as
precluding the EAB from reviewing the amount of a penalty in a default
order which assessed less than the penalty complainant sought.
29. Final Order
Section 22.31: Section 22.31 of the existing CROP applies to final
orders on appeal only; provisions regarding other types of final orders
are scattered throughout the CROP. For clarity and consistency,
requirements and provisions applicable to all final orders would be
consolidated in revised Sec. 22.31. Those provisions now in Sec. 22.31
which apply only to final orders on appeal would be moved to
Sec. 22.30, as noted above. Paragraph (a) would make clear that a final
order constitutes final Agency action. It would provide that the final
order resolves respondent's liability for a civil penalty, compliance
or corrective action order, or the status of a permit or authority to
operate, only for the violations and facts alleged in the complaint,
and that it shall not affect the government's right to injunctive
relief or criminal sanctions. It explicitly states that a final order
will not affect a respondent's obligation to comply with all applicable
provisions of the Act and regulations promulgated thereunder. These
provisions do not alter respondents' rights, but merely make explicit
the existing law of res judicata and claim preclusion. The Agency's
routine practice is to make provisions such as these standard elements
of settlement agreements. Including these provisions in the CROP would
provide a clear limit to the scope of final orders, regardless of
whether the final orders are consent orders, final decisions on appeal,
or unappealed initial decisions.
A new paragraph (b) would clarify that final orders are effective
upon issuance, except that unappealed initial decisions which become
final orders pursuant to Sec. 22.27(c) become effective at the same
time they become final orders, i.e., 45 days after service of the
initial decision. This clause pertains to the effective date of the
order itself; the final order may establish compliance schedules,
schedules for payment of penalties, dates of termination of permits,
etc., notwithstanding this clause. Paragraphs (c) and (d) establish
penalty payment schedules and effective dates for other relief,
respectively, which shall apply unless the final order specifies
otherwise. The existing rule requires payment of the penalty within 60
days after the order was received. This conflicts with the Federal
Claims Collection Standards, which require payment within 30 days after
the date the order was issued, unless EPA decides an extension is
appropriate. See 4 CFR 102.13(g). The proposed rule therefore requires
payment within 30 days after the effective date of the final order.
Paragraph (c) also would require payment of penalties directly to U.S.
Treasury lockboxes, rather than to the Hearing Clerks, and would make
applicable to all proceedings a provision currently in Sec. 22.39(d)
regarding assessment of interest on overdue penalties. This Subsection
would

[[Page 9476]]

specify that the collection of interest on overdue payments shall be in
accordance with the Debt Collection Act, 31 U.S.C. 3717, which is
applicable whether or not it is referenced in part 22. The Agency
requests comment on whether the CROP should address payment of
penalties by electronic transfer of funds, and if so, what procedures
would be appropriate.
A new paragraph (e) would make explicit that although a respondent
may choose to conclude an administrative proceeding by settlement or by
allowing an initial decision to become final without appeal to the
Environmental Appeals Board, each of these options falls short of
exhausting the opportunities available within the CROP for
administrative review. This revision would not substantively change the
requirements of exhaustion of remedies, nor would it alter respondents'
rights. This subsection would simply assure that respondents have
notice that appeal of the final order to the Federal courts is not
available where a respondent settles a case pursuant to Sec. 22.18 or
fails to exercise its right to appeal an initial decision to the
Environmental Appeals Board pursuant to Sec. 22.30.
Paragraph (f) would provide that a final order of the Environmental
Appeals Board issued to a department, agency, or instrumentality of the
United States pursuant to Sec. 22.30 shall become effective (and
``final'' as that term is used in 42 U.S.C. 6961(b)(2)) thirty days
after its service upon the parties, in order that the head of the
affected department, agency, or instrumentality may request a
conference with the Administrator. If the department, agency, or
instrumentality requests a conference with the Administrator, then the
Administrator's ensuing decision would become the final order.
Essentially the same provision appeared in Sec. 22.37(g), the Solid
Waste Disposal Act supplemental rule. It is moved into Sec. 22.31 in
order that the same procedure also would be applicable to penalty
actions brought against federal facilities under other statutes such as
the Safe Drinking Water Act (42 U.S.C. 300j-6) and the Clean Air Act
(42 U.S.C. 7413(d), 7524(c) and 7545(d)(1)). In making the language of
Sec. 22.37(g) apply to proceedings commenced under other statutes,
reference to the Federal Facility Compliance Act would be deleted. The
Agency still intends that a final order issued in a case brought under
the Solid Waste Disposal Act shall constitute a final order for
purposes of the Federal Facility Compliance Act. This opportunity to
confer with the Administrator is available only after the Environmental
Appeals Board has issued a final order on appeal, and only if requested
in writing within 30 days. A motion for reconsideration by the
Environmental Appeals Board is not necessary, however, such a motion
does not toll the thirty-day limit unless specifically so ordered by
the Environmental Appeals Board.
30. Supplemental Rules of Practice Applicable to Proceedings Authorized
Under Specific Statutes
Section 22.33: The provisions discussing subpoenas have been
deleted from this supplemental rule, as well as from Secs. 22.34,
22.37, 22.39, 22.40, and 22.43, allowing the elimination of this and
several other supplemental rules. The procedures for subpoenas are now
consolidated in Sec. 22.19, as discussed above. The Presiding Officer's
authority to issue a subpoena remains dependant on the statute giving
rise to the cause of action. Owing to the fact that the subpoena
provisions were the only substantive elements of this supplemental
rule, the entire supplemental rule applying to TSCA proceedings would
be deleted.
Section 22.34: This section would be amended to include, in
addition to proceedings for civil penalty assessment under Title II of
the CAA, proceedings governing the assessment of a civil penalty under
section 113(d) of the CAA. The latter proceedings are presently covered
by Sec. 22.43, which mostly mirrors Sec. 22.34. The one substantive
difference, the Sec. 22.43(b)(2) provision allowing 30 days for filing
an answer, is no longer necessary as a consequence of proposed changes
to Sec. 22.15. Paragraph (a) of this supplemental rule and each of the
other supplemental rules also would be amended to eliminate the
implication that the supplemental rules are not part of the
Consolidated Rules of Practice. The term ``final order'' would be
substituted for the phrase ``administrative penalty order'' in
paragraph (b), for consistency and to encompass field citations as well
as administrative penalty orders issued pursuant to section 113(d)(1)
of the CAA.
A new paragraph (c) would apply to default orders for failure to
answer a field citation. Section 59.5(d) of the Field Citation Rule
provides that when a respondent fails to file a timely answer to a
field citation (and fails to offer to pay the penalty under the quick
resolution procedure at Sec. 22.18(a)(2)), the Presiding Officer shall
issue a default order assessing the penalty proposed in the complaint.
This provision initially was proposed in the May 3, 1994, Federal
Register (59 FR 22776), and EPA does not seek additional comment on it
at this time.
Section 22.35: In the supplemental rules governing proceedings
under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA),
EPA proposes to amend the venue provision of paragraph (b) to address
the situation where a respondent's place of residence is outside the
U.S. FIFRA regulates the domestic conduct of foreign-based pesticide
registrants, manufacturers, producers, distributors, applicators, etc.
Accordingly, for a person who claims a place of residence outside the
U.S., EPA interprets the phrase ``place of residence'', as used in 7
U.S.C. 136l(a)(3), to mean either the person's primary place of
business within the U.S., or the primary place of business of the
person's U.S. agent. Paragraph (c) would be deleted for consistency
with changes to Sec. 22.27(b).
Section 22.36: The supplemental rule regarding the Marine
Protection, Research and Sanctuaries Act would be deleted as surplusage
in light of changes made elsewhere in the CROP to accommodate permit
revocation, termination and suspension proceedings, particularly in
Sec. 22.13.
Section 22.37: The scope of this supplemental rule would be
expanded to include section 3005(d) of the SWDA, which authorizes
termination of permits, and section 9006, which authorizes the issuance
of administrative compliance orders to address violations of
Underground Storage Tank (``UST'') requirements. The notice
requirements presently in paragraphs (b), (c) and (d) would be deleted
as surplusage. On December 2, 1980 (45 FR 79808), EPA suspended these
subsections until further notice, in response to amendments to the SWDA
which eliminated the pre-complaint notice requirements from the Act.
Today, EPA proposes to delete the requirements entirely. The proposed
revision of Sec. 22.15, allowing 30 days for filing an answer, would
make paragraph (e) surplusage as well. A new paragraph (b) would
specify that a complaint may contain a compliance order issued under
section 3008(a) or section 9006(a), or a corrective action order issued
under section 3008(h) or section 9003(h)(4) of the SWDA. This provision
is included to make clear that in these circumstances, the complaint is
an ``order'' as that term is used in the aforementioned sections of the
SWDA. Any such order would automatically become a final order unless,
no later than thirty (30) days after the order is served, the
respondent requests a hearing pursuant to Sec. 22.15. The provision
concerning the Federal

[[Page 9477]]

Facilities Compliance Act contained in paragraph (g) would be moved to
Sec. 22.31(f), in order that it may be applicable to actions commenced
pursuant to other statutes as well as the SWDA.
Section 22.38: In paragraph (a), the scope of this supplemental
rule would be expanded to include civil penalties authorized by section
311(b)(6) of the Clean Water Act. Paragraph (b) would be amended to
provide a more explicit process for implementing the statutory
requirement regarding state consultation. The public notice and comment
provisions would be removed from paragraphs (c), (d) and (f) and placed
in a separate supplemental rule, Sec. 22.45, which would also apply to
proceedings under section 300h-2(c) of the Safe Drinking Water Act. The
proposed text of Sec. 22.45 would provide much more detailed and
comprehensive process than is currently provided under Sec. 22.38(c),
(d) and (f). The applicability of Sec. 22.45 would be noted in
Sec. 22.38(a) in order to provide additional notice that both
supplemental rules apply. The provision presently in paragraph (e)
would be renumbered as (c), and expanded to include proceedings under
section 311(b)(6) of the Clean Water Act, consistent with changes to
paragraph (a). A new paragraph (d) would require that in proceedings
pursuant to section 311(b)(6) of the Clean Water Act penalties be paid
into the Oil Spill Liability Trust Fund.
Section 22.39: Most of the changes to this supplemental rule are
consistent with changes to other supplemental rules already discussed.
In addition, language proposed to be added to the main text of the CROP
at Sec. 22.31 would be deleted from Sec. 22.39(d) (which would be
renumbered as (c)).
Section 22.40: The supplemental rule regarding the Emergency
Planning and Community Right-To-Know Act would be deleted in its
entirety. The subpoena provisions would be deleted from this and other
supplemental rules as discussed above. In addition, the provisions
regarding judicial review in paragraph (c) and collection of penalties
in paragraph (d) can also be deleted as surplusage. No substantive
change is intended by the deletion of this supplemental rule.
Section 22.41: The only changes to the supplemental rule regarding
the Asbestos Hazard Emergency Response Act are consistent with changes
to other supplemental rules already discussed. No substantive change is
intended by these editorial revisions.
Section 22.42: Paragraphs (b) through (e) of the Safe Drinking
Water Act supplemental rule would be deleted as surplusage. No
substantive change is intended by these deletions. A new paragraph (b)
would allow respondents in certain non-APA proceedings the right to
choose that the hearing be conducted in accordance with section 554 of
the APA, as required under section 1414(g)(3)(B) of the Safe Drinking
Water Act. This provision would enable respondent to make subpart I
inapplicable, notwithstanding the Agency's having commenced the
proceeding under subpart I, by requesting in its answer a hearing on
the record in accordance with 5 U.S.C. 554. EPA proposes that a
respondent's failure to exercise this right in its answer shall
constitute a waiver of that right. This limitation is necessary in
order to avoid the delays, disruptions, and duplications of effort
which would result if a case were reassigned from a Regional Judicial
Officer to an ALJ after the proceeding was well underway.
Section 22.43: The provisions of the existing Sec. 22.43 would be
incorporated into Sec. 22.34, as discussed above. A new supplemental
rule applicable to proceedings against a federal facility pursuant to
the Safe Drinking Water Act Amendments of 1996, Pub. L. No. 104-182
would be codified as Sec. 22.43. Paragraph (b) describes the effective
date of any penalty order issued under section 1447(b) of the Act.
Paragraph (c) describes the public notice requirements for issuance of
a final penalty order.
Section 22.44: This section presents a new supplemental rule for
termination of NPDES permits issued under the Clean Water Act and for
permits issued under Subtitle C of the Resource Conservation and
Recovery Act. This new supplemental rule has already been proposed (60
FR 65,268), and EPA does not seek additional comment at this time.
Sections 22.45: The Agency proposes to add a new supplemental rule
governing public notice and comment in proceedings under section 309(g)
of the Clean Water Act and section 300h-2(c) of the Safe Drinking Water
Act. The detailed procedures proposed for public notice and comment are
sufficiently extensive that the Agency proposes to codify them once, in
a single supplemental rule applicable to these two types of
proceedings, rather than repeating the same requirements in two
separate rules. This supplemental rule would complement Sec. 22.38,
such that both would apply to proceedings under section 309(g) of the
Clean Water Act. These public commenter rights are separate from, and
in addition to, the intervention and amicus curie provisions at
Sec. 22.11.
The substance of the proposed Sec. 22.45 replaces and expands on
the procedures presently in Sec. 22.38 (c), (d) and (f), in order to
clarify commenter provisions and to fully satisfy the statutory
requirements. Section 22.45(b) would require the complainant to provide
public notice and an opportunity to comment on a complaint or on a
proposed consent agreement where the parties agree to settle without
the filing of a complaint pursuant to Sec. 22.13(b). This provision
would require the Agency to accommodate commenters in situations where
the agency proposes to settle an action without the filing of a
complaint. Paragraph (b)(2) sets out the type and content of the
required public notice, so that the notice will provide any potential
commenter with sufficient information to make an initial determination
as to whether or not he wishes to comment.
Paragraph (c) expands procedures for participation by a commenter.
These procedures provide a meaningful opportunity for commenters to
present evidence, as required by statute, and at the same time limit
the opportunity commenters might have to delay issuance of a final
order through dilatory or frivolous submissions. Paragraph (c)(1) sets
out the requirements for commenter participation in a proceeding. It
describes both the obligations of the commenter and those of the
Presiding Officer in this context. It establishes express limits on the
scope of commenter participation, and gives the Presiding Officer broad
discretion to further control the extent of commenter participation.
Paragraph (c)(2) sets out limitations on commenter cross-examination of
witnesses, and prohibits the commenter from either participating in, or
being subject to, any discovery or prehearing information exchange.
Paragraph (c)(3) assures that cases are not settled before the end of a
required comment period.
Paragraph (c)(4) describes the procedures governing a commenter's
petition to set aside a consent order where no hearing on the merits
was held. The Agency believes that this language establishes
appropriate limits on such requests, while at the same time meeting the
requirements of the respective statutes and avoiding inappropriate
tainting of the administrative record. Paragraph (c)(4)(i) requires the
complainant to provide all commenters and the Regional Administrator
with a copy of the proposed consent order. The Presiding Officer and
Hearing Clerk do not receive a copy of the proposed order at this
juncture, in order to protect the

[[Page 9478]]

administrative record and assure that the Presiding Officer, who may
have to adjudicate the case if settlement efforts fail, is not privy to
the parties' settlement positions. Paragraph (c)(4)(ii) requires that,
within 30 days of receipt of the proposed order, the commenter must
provide to the Regional Administrator and the parties (but not to the
Presiding Officer or Hearing Clerk) any petition to set aside the
consent order. Paragraph (c)(4)(iii) then permits the complainant to
withdraw the proposed order within 15 days of receipt of a petition, in
order to consider the matters raised. If the complainant does not
withdraw the proposed order within 15 days, the Regional Administrator
shall appoint a Petition Officer to review the petition and make a
determination as to the issues raised. A copy of the Regional
Administrator's order of appointment shall be sent to the Presiding
Officer and the parties. These procedures are designed, once again, to
avoid tainting the Presiding Officer or administrative record with
materials relevant to settlement negotiations only. Paragraph
(c)(4)(iv) gives the complainant 30 days in which to file with the
Petition Officer (not the Presiding Officer) the complainant's response
to the petition. Copies of the response are provided to the parties and
commenter(s), but not to the Presiding Officer and Hearing Clerk.
Paragraph (c)(4)(v) describes the Petition Officer's duties upon
receipt of complainant's response. Note here that the Petition
Officer's written findings will be filed with the Hearing Clerk and
Presiding Officer. Paragraph (c)(4)(vi) describes the Presiding
Officer's duties where the Petition Officer rules that a hearing is
required and the petition for hearing is granted. Paragraph (c)(4)(vii)
describes the Petition Officer's duties where the Officer determines
that a hearing is not required. Paragraph (c)(4)(viii) and (ix)
describe the procedures for issuance of the consent order, for appeal
of such order in the appropriate U.S. District Court, and when the
order becomes final after denial of appellate review.
Sections 22.46 through 22.49: Reserved.
31. Supplemental Rules for Administrative Proceedings not Governed by
Section 554 of the Administrative Procedure Act
Sections 22.50 through 22.53 comprise subpart I, which presents
modifications to the main text of the CROP to facilitate use of the
CROP in administrative adjudications where a hearing on the record is
not required. Such adjudications are commonly referred to as ``non-
APA'' proceedings in reference to the Administrative Procedure Act, of
which sections 554, 556 and 557 apply only to ``adjudication[s]
required by statute to be determined on the record after opportunity
for an agency hearing''. 5 U.S.C. 554(a)(1). A key feature of these
non-APA procedures is that the Presiding Officer need not be an
Administrative Law Judge, as required in proceedings subject to APA
554, 556 and 557. Other differences include greater limitations on
discovery and a prohibition on interlocutory appeals, however, it is
only the absence of an Administrative Law Judge which puts the subpart
I procedures outside the requirements of APA 554, 555, and 556. Owing
to the retention of most of subparts A through G, the subpart I
procedures provide nearly the same level of procedural protection for
respondent's interests as would be available in a hearing fully
conforming to the requirements of subparts A through G.
The subpart I procedures would retain the extensive prehearing
exchange mandated in Sec. 22.19(a) (requiring exchange of witness
lists, summaries of expected testimony, copies of documents or
exhibits, and evidence relevant to the amount of the penalty). Although
courts have confirmed that there is no constitutional due process right
to discovery in administrative adjudications (see e.g., Silverman v.
CFTC, 549 F.2d 28 (7th Cir. 1977); NLRB v. Valley Mold Co., 530 F.2d
693 (6th Cir. 1976) cert. den. 429 US 824), the prehearing exchange
under Sec. 22.19(a) provides substantial discovery well in advance of a
hearing.
The procedures provided through subpart I are adequate to assure a
fair hearing, notwithstanding the absence of an ALJ, additional
prehearing discovery and interlocutory review. The differences between
the APA and non-APA provisions of the CROP are unlikely to affect the
outcome of an administrative enforcement proceeding, and unlikely to
impair the accuracy of the Agency's decisionmaking. Providing an ALJ
for every case, including those lacking significant legal or factual
dispute, would draw limited resources away from more complex and more
significant cases. Allowing interlocutory appeals and additional
discovery, such as interrogatories, depositions, requests for
documents, would add significant delay to administrative enforcement
and could cause extraordinary resource burdens. The absence of these
additional procedural protections in non-APA proceedings poses only
minor risk of impairing the regulated community's interest in fair and
accurate adjudications, yet making them generally available would put
substantial fiscal and administrative burdens on the government.
Accordingly, EPA is not obliged to provide these additional procedural
protections in non-APA proceedings in order to satisfy the requirements
of the due process clause. Matthews v. Eldridge, 424 U.S. 319, 344-45
(1976); also see Chemical Waste Management, Inc. v. U.S. E.P.A., 873
F.2d 1477 (D.C. Cir. 1989).
Although the Agency has not yet through rulemaking established
formal procedures for the assessment of civil penalties through non-APA
proceedings, the Agency has been conducting such proceedings under the
proposed part 28 procedures and program-specific guidance. Where it is
not inconsistent with other regulations, EPA intends that the
procedures for non-APA proceedings proposed herein should be used in
non-APA penalty proceedings pending promulgation of a final rule.
Accordingly, non-APA penalty cases filed after the publication of this
proposed rule should follow the procedures herein. Cases that have
already commenced pursuant to the proposed part 28 procedures shall
continue to be governed by the proposed part 28 procedures, however,
complaints withdrawn in accordance with Sec. 28.18(a)(1) may be refiled
under the proposed CROP. In addition, a proceeding commenced under the
proposed part 28 may be converted into a proceeding under the proposed
CROP provided that no evidentiary hearing has been held and that all
parties and the Presiding Officer agree to the change.
Section 22.50: Section 22.50 defines the scope of subpart I.
Paragraph (a) indicates that the initial decision to bring a proceeding
pursuant to subpart I is made by the Agency and requires that the
Agency indicate such decision in the complaint. The Agency may in any
case decline to apply subpart I and instead give the respondent the
greater process of law afforded by a proceeding conforming to section
554 of the APA. Paragraph (a) acknowledges that the Agency may not
apply subpart I where a statute requires a hearing in accordance with
section 554 of the Administrative Procedure Act. Examples where
Congress has authorized EPA to administratively assess penalties
through proceedings that are not subject to the requirements of section
554 in certain circumstances include: CWA sections 309(g)(2)(A) and
311(b)(6)(A) & (B)(i) (33 U.S.C. 1319(g)(2)(A) and 1321(b)(6)(A) &
(B)(i)); section 109(a) of the Comprehensive

[[Page 9479]]

Environmental Response, Compensation and Liability Act (CERCLA) (42
U.S.C. 9609(a)); section 325(b)(1), (c), and (d) of the Emergency
Planning and Community Right-To-Know Act (EPCRA) (42 U.S.C.
11045(b)(1), (c), and (d)); SDWA section 1414(g)(3)(B) (42 U.S.C. 300g-
3(g)(3)(B)); and CAA section 113(d)(3) (42 U.S.C. 7413(d)(3)); and
issuance of a penalty-only order or a penalty/compliance order under
SDWA section 1423(c) (42 U.S.C. 300h-2(c)). At this time, EPA does not
intend to alter its present practice of providing the full APA process
in CERCLA and EPCRA cases, although if circumstances warrant, the
Agency may in the future exercise its authority to assess CERCLA and
EPCRA penalties through non-APA proceedings. EPA welcomes comment
concerning the types of CERCLA and EPCRA penalty cases for which non-
APA procedures would be appropriate.
Paragraph (b) describes how the subpart works in conjunction with
the preceding sections of the CROP, and also identifies those sections
of the CROP which are inapplicable to a non-APA proceeding brought
under subpart I.
Section 22.51: The term ``Presiding Officer'' would be defined for
the purposes of a proceeding under this subpart to mean a Regional
Judicial Officer, and provides that the Regional Judicial Officer shall
rule on all motions, notwithstanding the provisions of Sec. 22.16(c)
which provide that post-answer motions be ruled on by the
Administrative Law Judge.
Section 22.52: This section defines the parameters of information
exchange for purposes of non-APA proceedings. The Agency's goal is to
encourage complete and voluntary information exchange by the parties
and limit unnecessary motion practice. Parties would be subject to the
prehearing information exchange authorized in Sec. 22.19(a), but most
additional discovery would be prohibited under this subpart. The
proposed Sec. 22.52 would also require the respondent to provide in its
prehearing exchange information in regard to any economic benefit it
may have enjoyed as a result of the alleged non-compliance or a failure
to act. Requiring this information up-front will help to clarify
penalty issues early on, and avoid excessive and time-consuming motion
practice.
The proposed Sec. 22.52 would prohibit most additional discovery
that would otherwise be allowed under Sec. 22.19(e). Although it would
prohibit most discovery, the complainant would be entitled to discovery
of information concerning respondent's economic benefit of
noncompliance and of financial records probative of respondent's
ability to pay a penalty. Under several statutes, this information must
be made part of the administrative record supporting a penalty
determination, but it generally is not available to the Agency except
through discovery of the respondent. Accordingly, discovery of this
information must be permitted in order to prevent respondents from
avoiding enforcement by simply withholding information.
Section 22.53: This section prohibits interlocutory appeals in
proceedings under this subpart. The Agency sees little value in
allowing interlocutory appeals in these relatively informal enforcement
actions, particularly since parties to a proceeding under subpart I
retain full appeal rights once an initial decision is issued. The
Agency is particularly concerned that permitting interlocutory appeals
would slow resolution of non-APA enforcement actions considerably.
32. Appendices
Appendix A: The Appendix would be amended to reflect the current
addresses of EPA Regional Offices and EPA Headquarters.
Appendix B: This new appendix would be added to provide the
addresses of EPA Regional and Headquarters lockboxes. These are the
addresses to which, generally, the payments of civil penalties would be
sent. The Agency requests comment on whether, and if so, how the CROP
should address the electronic transfer of funds in addition to, or in
lieu of, payment by check.

B. Revisions to Part 59

EPA anticipates that its May 3, 1994, proposed part 59 rule on
field citations (59 FR 22776) will become final while these proposed
revisions to the CROP are pending. Upon final promulgation of these
revisions to the CROP, subpart B of part 59 would be superseded and
deleted from the CFR.

III. Invitation of Public Comment

EPA invites comments on all aspects of the revisions proposed to
part 22 and part 59. For the convenience of the reader only, EPA is
publishing in its entirety part 22 as it would be revised. EPA is not
proposing to readopt those portions of part 22 which would remain
unchanged. This Notice of Proposed Rulemaking is limited to those
changes from the existing regulations described in this Notice.
Information on the time period for submission of comments and
directions for their submission may be found in the DATES and ADDRESSES
sections of this document.

IV. Administrative Requirements

A. The Regulatory Flexibility Act

Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, whenever an
agency is required to publish a general notice of rulemaking for any
proposed or final rule, it must prepare and make available for public
comment a regulatory flexibility analysis that describes the impact of
the rule on small entities, i.e., small business, small organizations,
and small governmental jurisdictions. The analysis is not required,
however, where the Administrator certifies that the rule will not have
a significant economic impact on a substantial number of small
entities.
This regulation will impose no significant costs on any small
entities, because it creates no new regulatory requirements, but
instead simplifies existing procedural rules. The overall economic
impact on small entities is therefore believed to be nominal, if any at
all. Accordingly, I hereby certify that this proposed regulation will
not have a significant impact on a substantial number of small
entities.

B. Executive Order 12866

Under Executive Order 12866, (58 FR 51,735 (October 4, 1993)) the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to OMB review and the requirements of the
Executive Order. The Order defines ``significant regulatory action'' as
one that is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local or tribal governments or communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
It has been determined that this rule is not a ``significant
regulatory action'' under the terms of Executive Order 12866 and is
therefore not subject to OMB review.

[[Page 9480]]

C. Paperwork Reduction Act

This proposed rule contains no information collection activities
and, therefore, no information collection request (ICR) will be
submitted to the Office of Management and Budget (OMB) for review in
compliance with the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

D. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA''),
Public Law 104-4, establishes requirements for Federal agencies to
assess the effects of their regulatory actions on State, local, and
tribal governments and the private sector. Under section 202 of the
UMRA, EPA generally must prepare a written statement, including a cost-
benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures to State, local, and tribal
governments, in the aggregate, or to the private sector, of $100
million or more in any one year. When a written statement is needed for
an EPA rule, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effe

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A98-4520. Public record. Not legal advice.