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New EPA Rule Increases Civil Monetary Penalties in the Name of Inflation

Civil penalties, including those levied by the United States Environmental Protection Agency (“EPA”) under statutes such as the Clean Air Act (“CAA”) and Resource Conservation and Recovery Act, dramatically increased on August 1, 2016.  Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the “Inflation Improvement Act”), federal agencies are required to adjust for inflation on an annual basis.  The Inflation Improvement Act further mandates an initial “catch-up” adjustment, which allows for an up to 150% increase in monetary penalties over those penalty levels in effect on November 2, 2015.

In an effort to simplify – or alternatively, further confuse – the EPA provides a formula for determining the cost-of-living or inflation adjustment in its interim final rule at 81 Fed. Reg. 43091 (Jul. 1, 2016).  Therein, it also presents a table showing civil monetary penalty inflation adjustments for each of the major federal environmental statutes.  For example, CAA violations under 42 U.S. C. § 7524(a) and (c) will increase from maximum penalties of $25,000 and $200,000 to $44,539 and $356,312, respectively.

The new rule was published as an interim final rule on July 1, without providing the opportunity for public comment.  Because the Inflation Improvement Act does not allow for public comment, the rule went into effect just 30 days after.  While EPA enforcement policies that consider the seriousness of the violation and a violator’s good faith compliance efforts are unaffected by this rule, the fact remains that the cost of non-compliance continues to rise.  In light of EPA’s recent National Enforcement Initiatives for the 2017 and 2019 fiscal years, the cost of doing business in the regulated industries will be undoubtedly high and with continued risk.

The attorneys at Lieberman Blecher & Sinkevich are experienced in defending regulatory enforcement actions at the federal and state levels.  We welcome the opportunity to discuss how we may help you or your business navigate the complexities of environmental law and regulation.

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