[Federal Register Volume 64, Number 141 (Friday, July 23, 1999)]
[Rules and Regulations]
[Pages 40138-40190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17337]



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_______________________________________________________________________

Part V





Environmental Protection Agency





_______________________________________________________________________



40 CFR Part 22



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; Final Rule

  Federal Register / Vol. 64, No. 141 / Friday, July 23, 1999 / Rules 
and Regulations  

[[Page 40138]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 22

[FRL-6373-3]
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: Final rule.

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SUMMARY: This Rule revises the Consolidated Rules of Practice 
(``CROP''), including expansion of these procedural rules to include 
certain permit revocation, termination and suspension actions, and new 
rules for administrative proceedings not governed by section 554 of the 
Administrative Procedure Act. The CROP has not been substantially 
revised since 1980. This Rule will remove inconsistencies, fill in gaps 
in the CROP by codifying accepted procedures, and make the CROP more 
clear and easily understood. Most of these changes will not produce any 
procedural or substantive difference in the Agency's administrative 
enforcement actions. Other changes make the CROP more efficient and 
more effective, or to conform to new statutory requirements and new 
judicial decisions.

DATES: Effective Date: This rule shall become effective August 23, 
1999.
    Applicability Date: This rule shall be applicable to all 
proceedings commenced on or after August 23, 1999. Proceedings 
commenced before August 23, 1999 shall become subject to this rule on 
August 23, 1999, unless to do so would result in substantial injustice.

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:
    The following outline is provided to assist the reader in locating 
topics of interest in the preamble.

I. Background

II. Response to Public Comments

A. Significant Comments Supporting Proposed Revisions
B. Significant Comments Critical of Proposed Revisions
    1. Scope (40 CFR 22.1)
    2. Powers and Duties of the Environmental Appeals Board, 
Regional Judicial Officer and Presiding Officer; disqualification, 
withdrawal and reassignment (40 CFR 22.4)
    3. Filing, Service, and Form of Documents (40 CFR 22.5(a)-(c))
    4. Confidentiality of Business Information (40 CFR 22.5(d))
    5. Computation and Extension of Time (40 CFR 22.7)
    6. Ex Parte Discussion of Proceeding (40 CFR 22.8)
    7. Intervention and Non-Party Briefs (40 CFR 22.11)
    8. Commencement of a Proceeding (40 CFR 22.13)
    9. Complaint (40 CFR 22.14)
    10. Answer to the Complaint (40 CFR 22.15)
    11. Default (40 CFR 22.17)
    12. Quick Resolution (40 CFR 22.18(a))
    13. Settlement and Scope of Resolution or Settlement (40 CFR 
22.18(b)&(c))
    14. Alternative Dispute Resolution (40 CFR 22.18(d))
    15. Prehearing Exchange; Prehearing Conference (40 CFR 
22.19(a)&(b))
    16. Other Discovery (40 CFR 22.19(e))
    17. Supplementing Prior Exchanges, and Failure To Exchange 
Information (40 CFR 22.19(f)&(g))
    18. Evidence (40 CFR 22.22)
    19. Filing the Transcript (40 CFR 22.25)
    20. Initial Decision (40 CFR 22.27)
    21. Appeal From or Review of Initial Decision (40 CFR 22.30)
    22. Final Order (40 CFR 22.31)
    23. Motion To Reconsider a Final Order (40 CFR 22.32)
    24. Supplemental Rules Governing the Administrative Assessment 
of Civil Penalties Under the Clean Air Act (40 CFR 22.34)
    25. Scope of Subpart I (40 CFR 22.50)
    26. Presiding Officer (40 CFR 22.51)
    27. Information Exchange and Discovery (40 CFR 22.52)
    28. Interlocutory Orders or Rulings (40 CFR 22.53)
    29. Clean Air Act Field Citations
    30. Other Comments Not Related to a Particular Section of the 
Proposed Rule

III. Miscellaneous Revisions

A. Section Numbering
B. Definitions (40 CFR 22.3)
C. Filing and Service of Rulings, Orders and Decisions (40 CFR 22.6)
D. Examination of Documents Filed (40 CFR 22.9)
E. Consolidation and Severance (40 CFR 22.12)
F. Motions (40 CFR 22.16)
G. Record of the Prehearing Conference (40 CFR 22.19(c))
H. Accelerated Decision; Decision to Dismiss (40 CFR 22.20)
I. Assignment of Presiding Officer; Scheduling a Hearing (40 CFR 
22.21)
J. Offers of Proof (40 CFR 22.23(b))
K. Proposed Findings, Conclusions, and Order (40 CFR 22.26)
L. Motion to Reopen a Hearing (40 CFR 22.28)
M. Interlocutory Appeals (40 CFR 22.29)
N. Supplemental Rules Governing the Administrative Assessment of 
Civil Penalties Under the Federal Insecticide, Fungicide, and 
Rodenticide Act (40 CFR 22.35)
O. Supplemental Rules of Practice Governing the Administrative 
Assessment of Civil Penalties Under the Clean Water Act (40 CFR 
22.38)
P. Supplemental Rules Governing the Administrative Assessment of 
Civil Penalties Under CERCLA Section 109 (40 CFR 22.39)
Q. Supplemental Rules Governing the Administrative Assessment of 
Civil Penalties for Violations of Compliance Orders Issued to Owners 
or Operators of Public Water Systems Under Part B of the Safe 
Drinking Water Act (40 CFR 22.42)
R. Supplemental Rules Governing the Administrative Assessment of 
Civil Penalties Against a Federal Agency Under the Safe Drinking 
Water Act. (40 CFR 22.43)
S. Supplemental Rules Governing the Termination of Permits Under 
Section 402(a) of the Clean Water Act or Under Section 3005(d) of 
the Resource Conservation and Recovery Act (40 CFR 22.44)
T. Supplemental Rules 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 (40 CFR 22.45)
U. Appendices

IV. Administrative Requirements

A. The Regulatory Flexibility Act
B. Executive Order 12866
C. Paperwork Reduction Act
D. Unfunded Mandates Reform Act
E. Executive Order 12875
F. Executive Order 13045
G. Executive Order 13084
H. National Technology Transfer and Advancement Act
I. Submission to Congress and the Comptroller General

I. Background

    The Consolidated Rules of Practice (``CROP''), 40 CFR part 22, are 
procedural rules for the administrative assessment of civil penalties, 
issuance of compliance or corrective action orders, and the revocation, 
termination or suspension of permits, under most environmental 
statutes. The CROP were first promulgated on April 9, 1980 (45 FR 
24360). On February 25, 1998, (63 FR 9464) EPA issued a notice of 
proposed rule making giving public notice and soliciting comments on 
proposed revisions to the CROP.
    During the public comment period, EPA received substantive comments 
from Dow Chemical Company (``Dow''), the U.S. Air Force (``USAF''), the 
Utility Air Regulatory Group (``UARG''), the Utility Water Act Group 
(``UWAG''), the Corporate Environmental Enforcement Council (``CEEC''), 
and joint comments

[[Page 40139]]

from the Chemical Manufacturers Association and the American Petroleum 
Institute (``CMA/API''). The original public comment period closed on 
April 27, 1998. On May 6, 1998 (63 FR 25006), EPA published a second 
notice reopening the public comment period for an additional 60 days. 
During this reopened public comment period, EPA received one set of 
supplementary comments from CEEC.
    All of the public comments submitted in response may be reviewed at 
the Enforcement and Compliance Docket and Information Center, room 4033 
of the Ariel Rios Federal Building, 1200 Pennsylvania Avenue, N.W., 
Washington, DC. 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 public comments 
may also be viewed on the internet at http://www.epa.gov/oeca/
forepart22.html.
    Today's final rule includes most of the revisions identified in the 
proposed rule, with certain additional changes (both to the proposed 
revisions and to other provisions of the existing rule) responding to 
public comments. EPA's response to the public comments appears below.

II. Response to Public Comments

A. Significant Comments Supporting Proposed Revisions

    Dow stated that ``[m]ost of the CROP provisions appear to reflect 
an appropriate balancing of interests'' and that it has a ``favorable 
impression of part 22 as a whole.'' CMA/API support EPA's efforts to 
simplify and clarify the CROP. CEEC states that it supports ``many of 
the types of changes EPA has proposed, as they will increase efficiency 
and reduce complexity in the administrative process.'' The following 
are specific comments supporting particular provisions of the proposed 
rule.
    Commenters generally support the consolidation of the various rules 
into a single set of CROP procedures for APA and non-APA proceedings. 
CMA/API supports the Agency's decision to use the CROP instead of the 
proposed part 28 procedures for Class I proceedings under the Clean 
Water Act and the Safe Drinking Water Act (56 FR 29996 (July 1, 1991)). 
Dow and UARG support the use of CROP procedures in lieu of the 
procedures originally proposed for use under the Clean Air Act Field 
Citation Program.
    Dow states that it supports the ``change'' in Sec. 22.4(d)(1) 
1 that would make appeals from a denial of a motion to 
disqualify a Presiding Officer go to the Environmental Appeals Board 
(``EAB'') ``rather than the Administrator.'' EPA notes that this 
revision of Sec. 22.4(d)(1) is not intended to change the substance of 
the existing rule but merely to eliminate any implication that the 
Administrator must personally rule on appeals from the denial of 
disqualification requests made to Presiding Officers. See In re 
Woodcrest Manufacturing, Inc., EPCRA Appeal No. 97-2, slip op. at 11-12 
(EAB, July 23, 1998)(stating that the term ``Administrator'' is defined 
at 40 CFR 22.4(d)(1) to include the Administrator's delegate, and 
therefore ``the Administrator is not required to act personally on 
disqualification issues, but may instead delegate this authority to 
other individuals within the EPA'').
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    \1\ To conform the CROP to the preferred style of the U.S. 
Government Printing Office, EPA has converted Sec. 22.01 to 
Sec. 22.1, Sec. 22.02 to Sec. 22.2, etc., in this final rule. For 
simplicity, this preamble will use the new numbering system 
throughout, even when referring to sections of the proposed rule or 
the 1980 CROP.
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    Dow supports the proposed change to Sec. 22.5(c)(5), giving the 
Presiding Officer and the EAB, rather than the hearing clerks, 
authority to rule on the adequacy of documents filed. Dow strongly 
supports the inclusion of language in Sec. 22.5(d) stating that the 
Agency's rules governing treatment of Confidential Business Information 
(40 CFR part 2) apply in CROP proceedings.
    Dow supports proposed changes to Secs. 22.5 and 22.6 allowing 
service of documents by reliable commercial delivery services other 
than the U.S. Mail, and supports the decision to expand the ``mail box 
rule'' of Sec. 22.7(c) to provide that service is complete when the 
document is placed in the custody of a reliable commercial delivery 
service.
    CMA/API support the provision in the proposed Sec. 22.14(a)(6) 
requiring that the complaint give notice whether subpart I, non-APA 
procedures apply to the proceeding.
    CMA/API and Dow support the proposed revision to Sec. 22.15(a) 
expanding to 30 days the time allowed to file an answer.
    CMA/API and Dow support the provisions in the proposed rule 
extending the time period for filing a response to a motion from 10 
days to 15 days. Additionally, CMA/API supports not placing page limits 
on motion papers.
    Dow supports the revisions to Sec. 22.17(a) & (c) that give the 
Presiding Officers greater discretion in determining the appropriate 
relief in the default orders, because this ``flexibility will let the 
Presiding Officer ensure that any relief ordered is supported by the 
administrative record.'' CMA/API ``support the provision requiring the 
Presiding Officer, when issuing a default order, to determine that the 
relief sought in the complaint is consistent with the applicable 
statute.''
    CEEC supports the Agency's explicit recognition of Alternative 
Dispute Resolution in the proposed Sec. 22.18(d). Dow supports the 
provisions of the proposed Sec. 22.18(d)(2) that permit the Presiding 
Officer to grant extensions of time for the parties to engage in 
alternative dispute resolution procedures.
    CMA/API support the proposed Sec. 22.19 allowing amendment of 
prehearing exchanges without restriction, and support the Sec. 22.19(f) 
requirement that parties promptly supplement or correct information 
known to be incomplete, inaccurate or outdated, without requiring the 
parties to constantly check the accuracy of their information 
exchanges. CEEC supports the proposed revisions to Secs. 22.19 and 
22.22 that would allow use of information that has not been timely 
provided to the opposing party, upon a showing of ``good cause'' for 
the failure to timely provide that information. CEEC also supports the 
proposed limitation that ``other discovery'' pursuant to Sec. 22.19(e) 
should be available only after the prehearing exchange required under 
Sec. 22.19(a).
    The CMA/API comments support the proposed change in Sec. 22.27(b) 
``requiring the Presiding Officer in all cases to explain how the civil 
penalty imposed corresponds to the statutory penalty criteria, rather 
than just the Agency's penalty policies.'' Dow notes its support for 
the provision in Sec. 22.27(b) requiring that the Presiding Officer 
articulate how the amount of penalty conforms to the criteria set forth 
in the law under which the proceeding has been commenced. Dow supports 
the proposed revision of Sec. 22.27(c) that would make an initial 
decision inoperative pending review by the EAB, because it ``will avoid 
premature recourse to the Federal courts'' and avoid harm to 
respondents whose appeals might be successful. Dow also supports the 
provision in the proposed Sec. 22.28(b) under which a motion to reopen 
a hearing would expressly stay the deadlines for appeal or EAB review 
of the initial decision.
    Both CMA/API and Dow support the new provision in Sec. 22.30(a) 
allowing a party who has initially declined to

[[Page 40140]]

appeal an additional 20 days to raise additional issues in a cross 
appeal.
    EPA received no significant public comment on many of the proposed 
revisions to the CROP. Proposed revisions to Secs. 22.2, 22.6, 22.12, 
22.21, 22.23, 22.24, 22.29, 22.33, and 22.35-22.45 elicited no specific 
comments at all. Today's final rule incorporates all of the changes 
identified in the February 25, 1998, Notice of Proposed Rule Making, 
except as noted below.

B. Significant Comments Critical of Proposed Revisions

1. Scope (40 CFR 22.1)
    a. Summary of Proposed Rule. Section 22.1(a) identifies, statute by 
statute, the types of proceedings that are subject to the CROP. The 
proposed rule would bring within the scope of the CROP a number of 
proceedings that had previously used other procedures or that had no 
formal procedures: field citation proceedings under the Clean Air Act 
(42 U.S.C. 7413(d)(3)), proceedings to suspend or revoke a permit 
issued under section 402(a) of the Clean Water Act (33 U.S.C. 1342(a)) 
or to suspend or revoke a permit under sections 3005(d) and 3008(h) of 
the Solid Waste Disposal Act (42 U.S.C. 6925(d) and 6928(h)) 
(originally proposed in 60 FR 65280, December 11, 1996), proceedings 
for the assessment of administrative civil penalties under section 6001 
of the Solid Waste Disposal Act (42 U.S.C. 6961), section 311(b)(6) of 
the Clean Water Act (33 U.S.C. 1321(b)(6)), and sections 1423(c) and 
1447(b) of the Safe Drinking Water Act, 42 U.S.C. 300h-2(c) and 300j-6, 
including orders requiring both compliance and the assessment of a 
civil penalty under 1423(c), and proceedings for the assessment of 
civil penalties or the issuance of compliance orders under the Mercury-
Containing and Rechargeable Battery Management Act (42 U.S.C. 14304). 
Other amendments would clarify the applicability of the CROP to 
proceedings already within its scope, and delete outdated references.
    Section 22.1(b) explains the interrelation between the subpart H, 
the new subpart I, and the provisions of subparts A-G. Section 22.1(c) 
empowers the Administrator, the Regional Administrator, and the 
Presiding Officer to resolve procedural matters not covered in the 
CROP. The proposed revision to Sec. 22.1(c) would make explicit the 
authority of the EAB to resolve such procedural matters.
    b. Significant Comments and EPA Response. CEEC objects to expanding 
the scope of the CROP to include non-APA proceedings, arguing that EPA 
has failed to explain why the proposed CROP is more suitable than other 
procedures. Dow and CMA/API strongly support revised CROP procedures 
replacing the procedures proposed for the part 59 field citation 
program. CMA/API also supports the decision to include non-APA 
proceedings within the CROP, rather than as a distinct set of 
procedures under part 28.
    The preamble to the proposed rule explained generally why EPA 
considers the proposed CROP suitable for non-APA enforcement cases, but 
it did not expressly contrast the suitability of alternative sets of 
procedures. In drafting the proposed CROP, EPA had the benefit of the 
public comments received in response to the 1991 proposed part 28 
procedures and the 1994 proposed field citations procedures, and the 
benefit of practical case experience with both the proposed part 28 
procedures and the existing CROP procedures. The proposed CROP 
revisions drew from the best provisions of each set of procedures, and 
is as a result more clear, more simple and more efficient than its 
predecessors.
    CEEC questions EPA's decision to use the CROP procedures for non-
APA cases, asserting that it is inappropriate for EPA ``to assume that 
one size fits all.'' CEEC does not identify any class of cases for 
which the proposed CROP might be unsuitable, nor does it identify other 
procedures that might be more suitable. EPA has taken into account the 
limits to a ``one size fits all'' approach through the inclusion of 
statute-specific supplemental rules (subpart H) and the special rules 
for non-APA proceedings (subpart I).
    In apparent contradiction to its criticism of the ``one size fits 
all'' approach of the CROP, CEEC also faults EPA for failing to explain 
why the scope of the CROP fails to encompass corrective action orders 
pursuant to Solid Waste Disposal Act (``SWDA'') sections 3008(h) and 
9003(h)(4), and pesticide cancellation proceedings pursuant to section 
6 of the Federal Insecticide, Fungicide, and Rodenticide Act 
(``FIFRA''). Although the proposed rule would expand the scope of the 
CROP, EPA did not propose that it should replace all administrative 
adjudicatory procedures.
    EPA determined in 1988 that less formal procedures are appropriate 
for corrective action orders because of the need for quick response to 
hazardous waste spills, because such cases present fewer factual issues 
than cases where a regulatee may be forced to pay a civil penalty for 
violating the law, and because the cost of the formal CROP procedures 
is twice as high as the cost of the informal procedures. 53 FR 12256, 
12257 (April 13, 1988). EPA's procedures for corrective action orders, 
codified at 40 CFR part 24, were challenged upon issuance and upheld by 
the Court of Appeals for the District of Columbia Circuit. The D.C. 
Circuit agreed with EPA that ``to the modest extent that EPA's Part 24 
regulations do implicate the private interest in avoiding the expense 
of unnecessary corrective actions, formal procedures [i.e., the CROP] 
do not promise a sufficient lowering of the risk of error to justify 
their significant expense to the Government.'' Chemical Waste 
Management, Inc. and Waste Management of North America, Inc., v. U.S. 
Environmental Protection Agency, 873 F.2d 1477, 1485 (D.C. Cir. 1989). 
EPA continues to believe that the informal procedures of part 24, 
rather than the CROP, are appropriate for SWDA sections 3008(h) and 
9003(h)(4) corrective action orders.
    Pesticide cancellation proceedings are subject to rules codified at 
40 CFR part 164, as are other proceedings related to the registration 
status of a pesticide. Although some sections of part 164 are very 
similar, or identical, to provisions of the CROP, there are also 
fundamental differences, that reflect differences between FIFRA section 
6 and the statutory authorities for various CROP proceedings. Although 
it would be possible to draft a single set of procedures that could 
apply to all corrective action orders and pesticide cancellation 
proceedings, as well as the proceedings within the scope of the CROP, 
it would call for extensive revisions and elaborate supplemental rules. 
At this time, it does not appear that combining either part 24 or part 
164 with the CROP would produce significant efficiencies or 
improvements.
    c. Final Rule. EPA has adopted Sec. 22.1 as proposed, with minor 
changes. In the December 11, 1996, ``Round Two'' permit streamlining 
proposed rule, EPA proposed to remove the procedures existing in 40 CFR 
part 124, subpart E, for proceedings to revoke or suspend a permit 
issued under section 402(a) of the Clean Water Act (33 U.S.C. 1342(a)) 
or to revoke or suspend a permit under sections 3005(d) and 3008(h) of 
the Solid Waste Disposal Act (42 U.S.C. 6925(d) and 6928(h)). See 61 FR 
65268 (December 11, 1996). EPA proposed that such proceedings would be 
conducted pursuant to the CROP procedures, and proposed CROP revisions 
to accomplish this. These changes were incorporated into the February 
25, 1998, proposed CROP revisions. As EPA has not yet finalized the 
Round Two permit

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streamlining rule and 40 CFR part 124, subpart E remains in effect, EPA 
has removed from Sec. 22.1 (a)(4) and (a)(6) the proposed references to 
permit revocation, suspension and termination. EPA anticipates that 
these references will be restored when the Round Two permit 
streamlining rule is finalized.
    EPA has deleted the word ``conducted'' from paragraphs (a)(1), 
(a)(3) and (a)(5). This word is unnecessary, and the deletions make 
these paragraphs more consistent with the rest of Sec. 22.1(a). In 
Sec. 22.1(a)(4)(i), EPA has replaced the word ``and'' in the first 
parenthetical list of citations to the U.S. Code, with the word ``or'' 
for consistency.
    In the proposed Sec. 22.1(b), the word ``establish'' appeared twice 
in the first sentence. EPA has deleted the redundant word. EPA has also 
revised the last sentence of 22.1(b) for clarity.
    2. Powers and Duties of the Environmental Appeals Board, Regional 
Judicial Officer and Presiding Officer; Disqualification, Withdrawal 
and Reassignment. (40 CFR 22.4)
    a. Summary of Proposed Rule. Proposed revisions to Sec. 22.4(a) 
clarify the role of the Environmental Appeals Board, to which the 
Administrator has delegated the authority to rule on appeals. The 
proposed rule clarifies that the Environmental Appeals Board rules on 
appeals from decisions, rulings and orders of a Presiding Officer in 
proceedings under the CROP, acts as Presiding Officer until an answer 
is filed in cases initiated at EPA Headquarters, and approves 
settlement of such cases. The proposed rule provides that appeals and 
motions must be directed to the Environmental Appeals Board except 
those in matters referred by the Environmental Appeals Board to the 
Administrator, and motions for disqualification under paragraph (d).
    Proposed revisions to Sec. 22.4(b) describe the function of the 
Regional Judicial Officer, requiring each Regional Administrator to 
designate one or more Regional Judicial Officers to act as Presiding 
Officers in proceedings under subpart I, and to act as Presiding 
Officers in APA CROP proceedings until an answer is filed. The proposed 
rule provides that the Regional Administrator may delegate to a 
Regional Judicial Officer the authority to approve settlement of 
proceedings, ratify consent agreements and issue consent orders.
    EPA proposed deleting from Sec. 22.4(b) certain limitations on the 
Regional Judicial Officers. One proposed deletion is the current 
prohibition on employment of a Regional Judicial Officer by the 
Region's Enforcement Division or the Regional Division directly 
associated with the type of violation at issue in the proceeding. The 
other is the prohibition, derived from section 554(d) of the 
Administrative Procedure Act, against a Regional Judicial Officer 
having ``performed prosecutorial or investigative functions in 
connection . . . with any factually related hearing.'' The proposed 
rule would add new language precluding an individual from serving as 
Regional Judicial Officer in any case in which he or she has any 
``interest in the outcome.'' The proposed rule retains the provisions 
that prohibit an individual from serving as Regional Judicial Officer 
in the same case in which he or she performed prosecutorial or 
investigative functions, and that require that Regional Judicial 
Officers be attorneys employed by a Federal agency.
    EPA proposed editorial revisions to Sec. 22.4(c), describing the 
role of the Presiding Officer, that do not introduce any substantive 
change.
    The proposed Sec. 22.4(d) establishes new procedures for seeking 
disqualification of the Administrator, a Regional Administrator, a 
member of the EAB, a Regional Judicial Officer (``RJO''), or an 
Administrative Law Judge (``ALJ''), from performing functions they are 
authorized to perform under the CROP. Under the existing rules, any 
party may seek the disqualification of a Regional Judicial Officer by 
motion to the Regional Administrator; or may seek the disqualification 
of any of the other individuals by motion to the Administrator. Under 
the proposed rules, any party must first file a motion with the 
particular individual requesting that he or she disqualify himself or 
herself from the proceeding. If the party has moved to disqualify a 
Regional Administrator, a Regional Judicial Officer, an ALJ, or a 
member of the EAB, and the motion is denied, the party may appeal the 
denial of the motion administratively. The proposed rule does not 
provide for administrative appeal from the Administrator's denial of a 
motion to disqualify herself.
    The proposed Sec. 22.4(d) provides that an interlocutory appeal may 
be taken when an ALJ denies a motion that he disqualify himself or 
herself from a proceeding. However, EPA asked for comments on whether 
to prohibit such interlocutory appeals.
b. Significant Comments and EPA Responses
    22.4(a). Dow suggests clarifying the rule by adding the word 
``initial'' before the word ``decisions'' in the description of the 
Environmental Appeals Board's role in ruling on decisions, rulings and 
orders of a Presiding Officer. EPA accepts the suggested change.
    22.4(b). CEEC states that it opposes expansion of the role of RJOs 
through the CROP. The preamble to the proposed rule stated that EPA had 
no current plans to use the subpart I procedures for any cases other 
than those arising under Clean Water Act (``CWA'') sections 
309(g)(2)(A) and 311(b)(6)(B)(i) (33 U.S.C. 1319(g)(2)(A) and 
1321(b)(6)(B)(i)), and Safe Drinking Water Act (``SDWA'') sections 
1414(g)(3)(B) and 1423(c) (42 U.S.C. 300g-3(g)(3)(B) and 300h-2(c)). 
See 63 FR at 9479. To codify that point, EPA has revised the proposed 
Sec. 22.50 so that it applies only to these cases. With this revision, 
today's rule clearly does not represent any practical expansion of the 
RJOs' role. Since the 1980's, RJOs have presided over cases under CWA 
sections 309(g)(2)(A) and 311(b)(6)(B)(i), and SDWA sections 
1414(g)(3)(B) and 1423(c), under the procedures proposed (but not 
finalized) as part 28 and under other Agency guidance (e.g. Guidance on 
UIC Administrative Order Procedures, November 28, 1986). Now they 
preside over the same kinds of cases using the CROP.
    Of the six commenters on the proposed rule, five (UWAG, UARG, CEEC, 
CMA/API, and Dow) expressed concern that the proposed rule fails to 
protect constitutional due process rights and assure the independence 
and impartiality of Regional Judicial Officers. UARG and UWAG oppose 
use of any EPA attorneys as Presiding Officers, arguing that Agency 
loyalty will create bias or the appearance of bias. CEEC, CMA/API, Dow 
and (by implication) UARG and UWAG oppose the use of EPA enforcement 
attorneys as Presiding Officers. These commenters argue that allowing 
enforcement personnel to be Presiding Officers creates actual or 
apparent bias by commingling the investigative, prosecutorial and 
adjudicative functions. Particular concerns include EPA enforcement 
attorneys presiding over cases brought by their colleagues, and over 
cases with issues or defendants in common with cases the Presiding 
Officer has litigated. Dow, UARG and UWAG urge the Agency to use 
Administrative Law Judges for adjudication of all administrative 
enforcement proceedings, arguing that ALJs are more qualified and are 
insulated against institutional bias.
    In response to these concerns, EPA has made several changes to 
Sec. 22.4(b). First, EPA has added a requirement that a ``Regional 
Judicial Officer shall not prosecute enforcement cases and shall

[[Page 40142]]

not be supervised by any person who supervises the prosecution of 
enforcement cases, but may be supervised by the Regional Counsel.'' 
This change will assure that the persons presiding over subpart I 
proceedings will be able to freely exercise independent judgment, 
without fear of adverse action by EPA enforcement managers.
    Commenters suggested various independence criteria: Dow suggested 
that the CROP should mandate either that the employment and advancement 
of each EPA attorney serving as RJO expressly be made independent of 
his or her rulings as Presiding Officer, or the attorney has no direct 
or indirect supervision (for a total of at least two levels of 
supervision) by persons or offices responsible for enforcement. UARG 
and UWAG believe that hearings should be run only by ALJs, but if the 
Agency refuses to implement that suggestion, they support the idea 
presented in the preamble to the proposed rule that the Presiding 
Officer not be directly supervised by any person who directly 
supervises the prosecution of the case. CMA/API suggested a requirement 
that the Regional Judicial Officer ``should not be employed by or 
supervised by any enforcement component, whether that component is in 
the Office of Regional Counsel or the Regional Office of Enforcement.''
    EPA has considered the various independence criteria suggested by 
the commenters, and has concluded that prohibiting RJOs from 
prosecuting enforcement cases, and prohibiting RJOs from being 
supervised by persons who supervise the prosecution of enforcement 
cases, will sufficiently separate RJOs from enforcement. Although 
Regional Administrators and Regional Counsels necessarily have 
significant responsibility for their Regions' enforcement program, they 
have other responsibilities which give them a broader perspective. 
Accordingly, there is little risk that they would exert improper 
influence over the decisions of an RJO. In order to avoid any 
confusion, the rule explicitly allows supervision by the Regional 
Counsel. The Regional Administrators' authority to personally supervise 
the RJOs is implicit, but may not be delegated to a person who 
supervises the prosecution of enforcement cases (except the Regional 
Counsel).
    EPA's experience with non-APA adjudications to date indicates that 
RJOs maintain their independence and impartiality, and their decisions 
reveal no bias toward the complainant. Only four decisions by EPA 
attorneys serving as Presiding Officer have been reversed on appeal out 
of over 180 decisions rendered over a period of approximately 10 years. 
Moreover, there has not been a single penalty or corrective action case 
where a respondent has appealed a denial of a motion to disqualify a 
Regional Judicial Officer, nor where a respondent has alleged a 
Regional Judicial Officer's actual bias among its grounds for appeal. 
These results demonstrate that the RJOs' present levels of competence 
and independence are reasonable. Today's rule assures that this 
independence will not be compromised.
    The more restrictive requirements suggested in some of the comments 
would not be feasible to implement. Prohibiting supervision by Agency 
officials who have any enforcement responsibilities would prohibit 
virtually all upper management in the Regional Offices, including the 
Regional Administrators, from such supervision. The RJOs' record to 
date indicates that such restrictive standards are not necessary. Other 
suggested standards would invite time consuming litigation over side 
issues, such as whether a supervisor or office is responsible for 
``enforcement'' or whether someone is ``indirectly'' supervising the 
RJO, when the proper questions are whether an RJO is in fact biased and 
whether such bias affected the outcome of a particular case.
    Second, EPA has included in the final rule a provision precluding a 
Regional Judicial Officer from knowingly presiding over a case 
involving any party concerning which the Regional Judicial Officer 
performed any functions of prosecution or investigation within the 2 
years preceding the initiation of the case. CMA/API recommended that 
Regional Judicial Officers should not currently be involved in any 
other proceedings involving the same defendants and should not have 
been involved in the investigation or prosecution of the defendant 
within the previous 5 years. EPA agrees that it could create at least 
an appearance of bias if an EPA attorney were to serve as prosecutor of 
one complaint and shortly thereafter function as adjudicator of another 
complaint against the same party. It is neither necessary nor practical 
for EPA to adopt CMA/API's recommendation that the CROP prohibit 
prosecutorial or investigative activity against the respondent for 5 
years. EPA has included in the final rule a provision precluding a 
Regional Judicial Officer from knowingly presiding over a case 
involving any party concerning which the Regional Judicial Officer 
performed any functions of prosecution or investigation within the 2 
years preceding the initiation of the case. EPA has made this 
requirement contingent upon the RJO's knowledge because name changes 
are sufficiently common in modern industry that a RJO might preside 
over a case without being aware that he or she had previous dealings 
with the same company. Upon becoming aware of such prior relationship, 
the RJO must promptly disqualify himself or herself from the 
proceeding. If, in a particular case, a party were to believe that 
participation in a similar case more than 2 years earlier would bias 
the RJO, that party could move for disqualification under Sec. 22.4(d). 
Note also that, owing to the new prohibition against RJOs prosecuting 
enforcement cases, the potential for these conflicts will decrease over 
time.
    In the response to the public comments, EPA has revised the 
proposed Sec. 22.4(b) to increase the independence of RJOs (prohibiting 
RJOs from prosecuting enforcement cases, prohibiting their supervision 
by persons who supervises prosecution of enforcement cases, and 
prohibiting the RJO from knowingly presiding over a case involving any 
party concerning which he or she performed any functions of prosecution 
or investigation within the 2 years). Other changes sought by the 
commenters are impractical and unnecessary.
    In proceedings subject to section 554 of the APA, Congress has 
determined that Presiding Officers may not be ``engaged in the 
performance of investigative or prosecuting functions for [EPA] in * * 
* a factually related case * * *'', and may not ``be responsible to or 
subject to the supervision or direction of [persons] engaged in the 
performance or investigative or prosecuting functions for [EPA].'' 5 
U.S.C. 554(d). However, subpart I is designed for use in proceedings 
that are not subject to section 554 of the APA. Congress has expressly 
authorized EPA to assess civil penalties through procedures that do not 
meet the standards of section 554. Despite the broad range of options 
this allows, EPA has chosen as a matter of policy to make subpart I 
procedures adhere closely to the APA requirements. The subpart I 
procedures depart from the requirements of section 554 only in regard 
to the independence of the Presiding Officer. The commenters who object 
to subpart I for failing to provide this same level of independence are 
objecting, in effect, to the statutes that authorize non-APA 
proceedings. The Agency does not agree that such a broad limitation on 
its authority is appropriate.

[[Page 40143]]

    Whether adjudication by EPA attorneys under subpart I provides 
adequate protection for respondents' due process rights must be 
evaluated according to the three part standard established in Mathews 
v. Eldridge, 424 U.S. 319 (1976):

    ``[O]ur prior decisions indicate that identification of the 
specific dictates of due process generally requires consideration of 
three distinct factors: First, the private interest that will be 
affected by the official action; second, the risk of an erroneous 
deprivation of such interest through the procedures used, and the 
probable value, if any, of additional or substitute procedural 
safeguards; and finally, the Government's interest, including the 
function involved and the fiscal and administrative burdens that the 
additional or substitute procedural requirement would entail.'' Id. 
at 334-35.

    The private interests in a proceeding under subpart I of the CROP 
are the impact on respondent of a civil penalty and on respondent's 
reputation from a finding of liability, and perhaps in the expense and 
burden of the hearing itself. Although these interests are important, 
they are less important than the private interest at stake in Mathews 
v. Eldridge, where the governmental agency summarily discontinued an 
individual's social security disability benefits while the benefit 
termination hearing was pending. The private interests at stake in CROP 
proceedings do not rise to this level. Moreover, the interests at stake 
certainly are not so significant as individual interests in liberty or 
bodily integrity.
    The risk of an erroneous deprivation of respondents' private 
interests through adjudications by EPA attorneys is low, and certainly 
lower than in Mathews v. Eldridge, where the disability benefits were 
terminated before any hearing was afforded. In a CROP subpart I 
proceeding, the respondent first has an opportunity for a hearing 
before an RJO (including the opportunity to present evidence and to 
cross examine the Agency's witnesses), and has opportunities for 
administrative review before the penalty is assessed (i.e., appeal of 
the initial decision to the EAB). The risk of an erroneous deprivation 
of a respondent's interests should correspond closely to the frequency 
with which decisions by EPA attorneys serving as Presiding Officer are 
reversed on appeal by either the EAB or a federal court, and as 
described above, this rate has been extremely low.
    Balanced against the private interests at stake and the risk of 
their impairment is the government's interest. The government's primary 
interest in having EPA attorneys preside over certain enforcement cases 
is in making efficient use of Agency resources. The costs for an ALJ to 
travel from Washington, D.C., to the hearing location is greater than 
the cost for an EPA attorney to travel from the Regional office to the 
hearing location. In addition, ALJs are paid more than the EPA 
attorneys who serve as Presiding Officers. The other government 
interest is in having the flexibility to increase the number of 
Presiding Officers to meet the administrative case load. In the recent 
past, the number of ALJs was clearly inadequate to handle the number of 
cases. Although the number of ALJs is today more commensurate with the 
number of cases, future imbalances might be alleviated by temporarily 
expanding or contracting the number of EPA attorneys who may serve as 
Presiding Officer.
    To summarize the results of this Mathews v. Eldridge three-step 
balancing test, there appears to be a relatively small risk of 
impairment of private interests that are of a moderate level of 
importance. This small risk of impairing moderately important interests 
must be balanced against the government's interests in making best use 
of its resources. Although it is not possible to weigh these factors 
with mathematical precision, it is clear that the use of EPA attorneys 
as Presiding Officers, subject to the provisions adopted in this rule 
and with the right to appeal to the EAB, is not a violation of 
respondents' rights to due process of law.
    CMA/API recommend that, if EPA allows Agency personnel to serve as 
Regional Judicial Officers, they should be members in good standing 
with a bar. EPA notes that under the Federal personnel rules all 
attorney positions require bar membership, so this need not be 
addressed in Sec. 22.4(b). CMA/API also argues that Regional Judicial 
Officers should have substantial litigation experience including 
adjudication. The position descriptions for Regional Judicial Officers 
require that they be senior attorneys with substantial litigation 
experience, and EPA believes that its internal procedures and controls 
are adequate to assure that Regional Judicial Officers have substantial 
litigation experience. EPA intends to continue its practice of sending 
each of its Regional Judicial Officers to the National Judicial College 
for training in presiding over administrative hearings. This level of 
experience and training is sufficient to prepare Agency attorneys to 
preside over the relatively straight-forward cases expected under 
subpart I.
    Some commenters (CMA/API, UWAG, UARG) were concerned that the 
physical proximity, friendships or colleague relationships of the 
Regional Judicial Officers with Agency prosecuting attorneys would 
create an appearance of partiality, where they may share work and 
social activities, training and secretarial support, and where Regional 
Judicial Officers may overhear statements made by prosecutors. EPA and 
its RJOs make efforts to avoid such contacts where feasible, and the 
contacts that remain are unlikely to result in an actual bias. It does 
not appear that any solution short of complete physical isolation of 
Regional Judicial Officers from the enforcement offices could 
completely eliminate this concern. Such separation would also pose 
significant logistical difficulties for EPA's Regional offices. 
Accordingly, this comment is not adopted in the final rule. EPA 
Regional Offices will continue to take prudent measures to physically 
separate Regional Judicial Officers from personnel responsible for 
enforcement case development and prosecution to the extent feasible.
    CMA/API suggested that a Regional Judicial Officer should not 
adjudicate any case involving the same counsel as another case in which 
he or she performed prosecutorial or investigative functions. EPA 
disagrees. Counsel serve merely as representatives of their clients, 
and bias cannot be presumed to attach merely to a representative.
    CEEC and Dow suggested that the final sentence of the proposed 
Sec. 22.4(b), which stated that RJOs may not have ``any interest in the 
outcome of any case'', is unclear and should incorporate explanatory 
language from the preamble to the proposed rule indicating that it 
includes ``a financial interest, personal interest, or career interest 
in the outcome of the action''. 63 FR at 9467. EPA notes that any 
interpretation of this clause would have to conform to the Standards of 
Ethical Conduct for Employees of the Executive Branch, 5 CFR part 2635, 
which are intended to supersede all agency ethics standards (except 
those approved by the Office of Governmental Ethics and promulgated as 
supplemental ethics regulations pursuant to 5 CFR 2635.105). In order 
to avoid creating a standard which might be interpreted differently 
than these government-wide ethics standards, EPA has removed this 
clause from the final rule.
    A general principle of the government-wide ethics regulations, 
particularly 5 CFR 2635.101, is that all federal employees must perform 
their duties impartially. If an RJO held any interest or bias which 
would compromise his or her ability to preside

[[Page 40144]]

impartially in a particular proceeding, this would be grounds for 
disqualification under Sec. 22.4(d).
    Dow suggests that the CROP prohibit enforcement attorneys from 
serving as Presiding Officers unless the attorney has not issued 
potentially relevant interpretations of the statute or regulations 
allegedly violated. Dow suggests possible bias where the Regional 
Judicial Officer had previously issued interpretations of the 
regulations at issue in a case before him, that may create a reluctance 
to overrule his own prior interpretation. However, all adjudicators 
face the possibility of having to overrule their own prior 
interpretation of a rule, as contained in their own prior decisions. 
EPA is unaware of any court where adjudicators are barred from deciding 
cases where their earlier positions are precedent. In every case, the 
adjudicator's decision must be supported by the evidence and applicable 
law, and parties may appeal any adverse decision to the EAB. 
Accordingly, EPA has not made the suggested change in the final rule.
    UARG and UWAG argue that anyone who has participated in a rule 
making proceeding that leads to the promulgation of a substantive rule 
would have an interest and bias in the interpretation of that rule, and 
should not serve as Presiding Officer in a case where that rule is at 
issue. Although Regional Judicial Officers have presided at public rule 
making hearings during the public comment period, their role is limited 
to conducting an orderly hearing--they are not responsible for weighing 
the evidence and do not participate substantively in the regulatory 
decision making. EPA believes that participation in substantive rule 
making is unlikely to result in bias in the interpretation of the rule. 
The Presiding Officer's decisions must include findings of fact and 
conclusions of law based upon the record in the case, and their 
interpretations of regulations are subject to appellate review. EPA 
declines to add the suggested prohibition with regard to rule making.
    The proposed rule would delete from Sec. 22.4(b) language 
precluding a Presiding Officer from hearing a case that is ``factually 
related'' to one in which he or she performed investigative or 
prosecutorial functions. The 1980 CROP was intended to provide 
procedures for hearings conforming to section 554 of the APA, and the 
``factually related'' clause was derived from section 554(d), that 
provides that ``An employee or agent engaged in the performance of 
investigative or prosecuting functions for an agency in a case may not, 
in that or a factually related case, participate or advise in the 
decision [or] recommended decision * * *.'' As the revised CROP is 
intended for use in proceedings that are not subject to section 554, as 
well as APA proceedings, provisions of the 1980 CROP such as the 
``factually related hearing'' clause are no longer appropriate for 
RJOs.
    It is very probable that any EPA attorney sufficiently experienced 
to be selected as RJO would have prosecuted a substantial number of the 
type of routine cases which are expected to form the bulk of subpart I 
practice, and these cases may contain similar factual issues. Moreover, 
the geographical limits on each Region's enforcement efforts make it 
likely that highly experienced EPA attorneys will have prosecuted cases 
that have parties, locations, or other facts in common with cases they 
might hear as an RJO. The prohibition on hearing ``factually related'' 
cases is too broad for subpart I proceedings, where the cases will 
mainly involve well settled law and simple factual issues. The mere 
fact that two cases have some facts in common need not present any 
significant risk of bias or ``will to win,'' but it may result in 
unnecessary litigation over whether the cases are ``factually 
related.'' Although EPA acknowledges that experience with cases that 
are factually related in a substantial way could potentially be a cause 
for concern, there are many more cases where the factual relation is 
too trivial to result in bias.
    Today's final rule will provide respondents in subpart I 
proceedings a fair and impartial decision maker. Any party may move to 
have a decision maker disqualified, or a decision overturned, on the 
basis of partiality where ``a disinterested observer may conclude that 
[the agency] has in some measure adjudged the facts as well as the law 
of a particular case in advance of hearing it.'' Cinderella Career and 
Finishing School v. FTC, 425 F.2d 583, 591 (D.C. Cir. 1970). In the 
event that an RJO who performed prosecutorial or investigative 
functions in a factually related case denies a motion for 
disqualification, respondent can appeal that decision, and, if the 
appellate body finds that the RJO was not impartial, then the RJO's 
decision will undoubtedly be reversed.
    22.4(c). A comment as to paragraph (c) urges EPA to provide further 
sanctions, in addition to the existing sanction authorizing the 
Presiding Officer to draw adverse inferences against a party. For 
example, the rule should authorize, when a party willfully disregards 
discovery orders, sanctions up to the level of dismissal with prejudice 
or default, such as striking a count from a complaint or striking a 
specific defense. The commenter suggests adding to the rule that a 
Presiding Officer may impose any other appropriate sanction that could 
be imposed by a Federal court in a civil proceeding.
    EPA believes that it is not necessary to add any additional 
language with regard to sanctions that may be imposed by a Presiding 
Officer. The broad language of Sec. 22.4(c)(10) to ``[d]o all other 
acts and take all measures necessary'' authorizes the Presiding Officer 
to impose a broad array of sanctions appropriate for management of 
cases, to ensure the ``maintenance of order and for the efficient, fair 
and impartial adjudication of issues.'' Pursuant to that authority, 
Presiding Officers impose sanctions such as limiting the evidence a 
party may present. See, Paul Durham, d/b/a Windmill Hill Estates Water 
System, EPA Docket No. [SDWA]-C930036, 1997 SDWA LEXIS 1, nn. 5, 6 
(ALJ, April 14, 1997). In addition, Sec. 22.17(a) and 22.19(g) 
specifically provide for sanctions of default or dismissal with 
prejudice, and for exclusion of the information from evidence for 
failure to comply with information exchange required by Sec. 22.19 or 
with an order of the Presiding Officer.
    22.4(d). Commenters generally favor the proposed disqualification 
procedures, but have proposed several revisions to the proposed 
regulation:
    CEEC recommends that EPA add a provision that ``requires the 
individual for whom disqualification is sought to specify reasons for 
his decision'' on the disqualification motion. EPA does not agree with 
the recommendation because it is unnecessary. When a decision maker 
rules on any motion under the CROP, the decision maker provides reasons 
for the ruling unless the reasons therefor are patently evident. The 
precise level of detail provided will depend upon the decision maker's 
informed discretion and the circumstances of the case. There is no 
reason to single out disqualification rulings for purposes of imposing 
an explicit requirement to articulate the basis for the ruling and no 
reason for limiting a decision maker's discretion in this regard.
    Dow proposes that ``EPA should provide a procedure for appeal, in 
cases where the Administrator denies a motion to disqualify himself.'' 
EPA rejects the commenter's suggestion. Since all Agency officials are 
supervised by the Administrator, there is no

[[Page 40145]]

Agency official who could appropriately resolve such an appeal. 
Moreover, any need for such a requirement is remote, for the occasions 
when the Administrator acts or serves as the deciding official under 
the CROP are extremely rare. In practice, the EAB performs the role of 
final decision maker pursuant to its delegation from the Administrator 
under the regulations. For the most part, the Administrator's role is 
residual and limited to cases specifically referred to her by the EAB. 
The EAB has not made such a referral since its creation in 1992. A 
slightly different role is reserved for the Administrator under 
proposed Sec. 22.31(f) (Sec. 22.31(e) of this final rule), which 
provides that, if the EAB were to issue a final order to a Federal 
agency, the agency may request a conference with the Administrator. 
This opportunity is not available to other recipients of EAB orders. If 
a conference occurs as provided in the provision, a decision by the 
Administrator may become the final decision. Nonetheless, EPA does not 
expect that many such requests will be made pursuant to this provision. 
If the Administrator were to deny a motion to disqualify herself from 
participating in a proceeding, the appropriate recourse would be to 
federal court, upon issuance of the final agency action at the end of 
the administrative proceeding.
    Under both the existing rule and the proposed rule (except for 
subpart I cases), an interlocutory appeal under Sec. 22.29 is available 
where a Presiding Officer denies a motion for disqualification. EPA 
requested comment on whether to prohibit interlocutory appeals to the 
EAB following the denial of a disqualification motion, consistent with 
federal court practice.
    In response to EPA's request for comment, Dow and CEEC recommend 
that interlocutory appeals of motions for disqualification be allowed 
because ``there is a far greater likelihood of bias under CROP 
proceedings than in Federal courts,'' especially where the presiding 
officer is not an ALJ. Dow adds, therefore, that although it might be 
acceptable to prohibit an interlocutory appeal from the denial of a 
motion to disqualify an ALJ, because ``ALJs are insulated against 
actual bias,'' it is not appropriate to prohibit an interlocutory 
appeal from the denial of a motion for disqualification where the 
presiding officer is not an ALJ. CEEC argues that prohibiting 
interlocutory appeals would contribute to delay because the 
unavailability of an interlocutory appeals process would increase the 
number of proceedings that would have to be overturned on appeal.
    EPA has considered these comments, but has decided to add a 
provision to the rules prohibiting interlocutory appeals from the 
denial of disqualification motions. EPA believes a prohibition against 
interlocutory appeals will not significantly affect the impartiality of 
the administrative adjudicative process and at the same time will 
prevent unnecessary delays. Based on the Agency's experience to date, 
motions to disqualify decision makers have been very infrequent. 
Therefore, the Agency expects that the circumstances will be extremely 
rare in which either the Agency or private litigants will have the 
burden of a retrial.
    CEEC proposes that the regulatory bases for disqualifying a 
decision maker be expanded to include ``the appearance of 
impropriety.'' Courts have held that appearance of impropriety, without 
more, does not warrant disqualification under due process standards. 
Del Vecchio v. Illinois Department of Corrections, 31 F.3d 1363, 1371-
72 (7th Cir. 1994). Courts have also declined to extend the judicial 
system's strict separation of functions standard to multi-function 
agencies. See e.g., Simpson v. OTS, 29 F.3d 1418, 1424 (9th Cir. 1994); 
EDF v. EPA, 510 F.2d at 1305. Likewise, the more stringent 
``appearance'' standard in 28 U.S.C. 455(a), that requires a Federal 
judge to disqualify himself whenever his impartiality ``might 
reasonably be questioned'', does not apply to agency adjudicators. See, 
e.g., Marine Shale Processors, Inc. v. EPA, 81 F.3d 1371, 1386 (5th 
Cir. 1996). Although EPA intends that RJOs should avoid the appearance 
of impropriety, EPA does not believe that the CROP should create a 
disqualification standard based on appearance of impropriety.
    The criteria for disqualification in a CROP proceeding are whether 
decision makers have ``a financial interest or [a] relationship with a 
party or with the subject matter which would make it inappropriate for 
them to act''. Whether a financial interest or a relationship is 
inappropriate is determined by reference to the Standards of Ethical 
Conduct for Employees of the Executive Branch, 5 CFR part 2635. 
Decision makers who fail to conform to these government-wide ethics 
standards are subject to disqualification.
    c. Final Rule. EPA has reconsidered the proposed change to the 
title of Sec. 22.4, and has decided to retain the original title 
``Powers and duties of the Environmental Appeals Board * * *.''
    EPA has adopted the language proposed under Sec. 22.4(a), with the 
addition of the word ``initial'' before the word ``decisions'' in the 
first sentence, as recommended by a commenter. This paragraph appears 
as Sec. 22.4(a)(1) in today's final rule. As noted above in the 
response to comments on Sec. 22.4(c), a commenter recommended that 
Presiding Officers be given additional authority to impose sanctions. 
Although Sec. 22.4(c) and other sections of the CROP provide adequate 
authority to impose procedural sanctions, EPA notes that Sec. 22.4(c) 
applies only to the Presiding Officer, and not the EAB. In order that 
the CROP should expressly authorize the EAB to employ equivalent 
procedural sanctions, EPA has added a new paragraph to Sec. 22.4(a). 
This new paragraph (a)(2) makes explicit the EAB's authority to impose 
procedural sanctions for failures to conform to CROP requirements and 
to orders of the EAB, an authority that the Agency has always 
considered implicit:

    (2) In exercising its duties and responsibilities under these 
Consolidated Rules of Practice, the Environmental Appeals Board may 
do all acts and take all measures as are necessary for the 
efficient, fair and impartial adjudication of issues arising in a 
proceeding, including imposing procedural sanctions against a party 
who without adequate justification fails or refuses to comply with 
these Consolidated Rules of Practice or with an order of the 
Environmental Appeals Board. Such sanctions may include drawing 
adverse inferences against a party, striking a party's pleadings or 
other submissions from the record, and denying any or all relief 
sought by the party in the proceeding.

    EPA has also made a minor editorial revision to the last sentence 
of what is now Sec. 22.4(a)(1), for reasons of grammar and clarity. EPA 
has changed the last clause from ``motions * * * where the 
Environmental Appeals Board has referred a matter to the 
Administrator'' to ``motions filed in matters that the Environmental 
Appeals Board has referred to the Administrator.''
    As discussed in the response to comments above, EPA has made 
several changes to Sec. 22.4(b) in response to public comments. EPA has 
added a new sentence to Sec. 22.4(b): ``A Regional Judicial Officer 
shall not prosecute enforcement cases and shall not be supervised by 
any person who supervises the prosecution of enforcement cases, but may 
be supervised by the Regional Counsel.'' EPA has also included in the 
final rule a provision precluding a Regional Judicial Officer from 
knowingly presiding over a case involving any party concerning which 
the Regional Judicial Officer performed any functions of prosecution or 
investigation within the 2 years preceding the initiation of the case. 
EPA has deleted from the final

[[Page 40146]]

sentence of the proposed Sec. 22.4(b) language prohibiting RJOs having 
``any interest in the outcome'' of any proceeding. EPA has also revised 
Sec. 22.50(a) to limit the applicability of subpart I to cases under 
CWA sections 309(g)(2)(A) and 311(b)(6)(B)(i) (33 U.S.C. 1319(g)(2)(A) 
and 1321(b)(6)(B)(i)), and SDWA sections 1414(g)(3)(B) and 1423(c) (42 
U.S.C. 300g-3(g)(3)(B) and 300h-2(c)).
    EPA has also made a minor, editorial change to Sec. 22.4(b), 
unrelated to the public comments. The first sentence of the proposed 
Sec. 22.4(b) stated that the ``Regional Administrator shall designate 
one or more Regional Judicial Officers to act as Presiding 
Officer....'' EPA has revised this sentence to say that the Regional 
Administrator shall ``delegate'' that authority.
    EPA has adopted the proposed Sec. 22.4(c) without change.
    As discussed above, EPA has revised Sec. 22.4(d) by adding a 
provision prohibiting interlocutory appeals from the denial of 
disqualification motions.
    EPA has made three minor changes to correct errors in the proposed 
Sec. 22.4(d). Contrary to the Agency's express intent that all motions 
for disqualification be made first to the official whose 
disqualification is sought (see 63 FR at 9467), the proposed 
Sec. 22.4(d) erroneously includes a statement that motions for 
disqualification of a Regional Judicial Officer should be made to the 
Regional Administrator. The final rule requires that all motions for 
disqualification must first be made to the official whose 
disqualification is sought.
    In the final rule, EPA has corrected another error in the proposed 
rule by substituting ``Administrative Law Judge'' for ``Presiding 
Officer'' in Sec. 22.4(d). In Sec. 22.3 of the 1980 CROP, ``Presiding 
Officer'' was defined as an Administrative Law Judge who has been 
designated by the Chief Administrative Law Judge to serve as Presiding 
Officer. However, under the proposed rules, the definition of 
``Presiding Officer'' has been revised to mean either an Administrative 
Law Judge or a Regional Judicial Officer. The proposed Sec. 22.4(d) 
failed to reflect this change. Because the proposed Sec. 22.4(d) used 
the term ``Presiding Officer'' solely to refer to Administrative Law 
Judges, EPA has revised this paragraph to use the term ``Administrative 
Law Judge'' instead.
    Finally, the phrase ``they deem themselves'' should be singular, 
rather than plural. EPA has substituted the phrase ``he deems 
himself''.
    3. Filing, Service, and Form of Documents (40 CFR 22.5(a)-(c))
    a. Summary of Proposed Rule. EPA proposed revisions of Sec. 22.5(a) 
clarifying the requirements for filing documents with the hearing clerk 
or the clerk of the EAB. Proposed revisions of Sec. 22.5(b) clarify the 
requirements for serving documents on other parties and on the 
Presiding Officer. The proposed paragraph (b)(1) would allow service of 
the complaint by any reliable commercial delivery service that provides 
written verification of delivery, and paragraph (b)(2) would allow 
service of all documents other than the complaint by any reliable 
commercial delivery service.
    The proposed Sec. 22.5(c) added provisions which would 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 20 pages in length (excluding attachments) to 
simplify review. The provision that allowed Hearing Clerks to determine 
the adequacy of documents was deleted, leaving that authority solely 
with Presiding Officers or the Environmental Appeals Board.
    b. Significant Comments and EPA Response. Dow says that it is 
unclear whether the language in Sec. 22.5(b)(1) allowing service of the 
complaint ``by certified mail, return receipt requested'' refers to one 
method of service or two alternative methods. EPA has amended this 
phrase to read ``by certified mail with return receipt requested''.
    Dow suggests that Sec. 22.5(b)(1) should allow respondent to waive 
the requirement that EPA send a copy of the CROP with the complaint. 
EPA acknowledges that this is superfluous in many cases, but 
nevertheless believes that this requirement is the most certain way of 
assuring that respondents are aware of their procedural rights.
    USAF requests that the phrase ``officer or'' be deleted from 
Sec. 22.5(b)(1)(ii)(B), questioning EPA's authority to file 
administrative cases against officers of the United States for actions 
within the scope of their employment. EPA agrees that the words 
``officer or'' should be deleted from the proposed section for the 
reasons stated. EPA agrees that under normal circumstances, officers of 
the United States acting outside the scope of their employment would be 
treated in the same manner as other individuals. Where the real party 
in interest is a Federal agency, that agency should be named as 
respondent.
    USAF also notes that the proposed Sec. 22.5(b)(1)(ii)(B) provides 
less guidance as to the manner of service on Federal agencies than the 
language presently codified at Sec. 22.5(b)(1)(iii). USAF urges the 
adoption of language clearly providing for service as provided by 
regulation, and absent regulation, service upon the chief attorney and 
on the senior executive officer responsible for the overall operations 
of the geographical unit of the agency being served. The language 
describing this latter official is adapted from 40 CFR 
Sec. 270.11(a)(3)(ii), that designates who must sign waste permit 
applications. EPA agrees with the Air Force that the proposed rule does 
not succeed in clarifying who must be served. EPA has revised this 
paragraph to require service as provided by the respondent agency's 
regulations, or in the absence of controlling regulation, as otherwise 
provided by law. This will clearly allow Federal agencies to specify 
how they are to be served, and where they do not do so, it will allow 
EPA to serve the agency in any manner permitted by the Federal courts.
    EPA recognizes the benefits of assuring that those directly in 
charge of a federal facility get prompt notice of a complaint, and so, 
has added to the final rule a direction that the complainant should 
send an additional copy of the complaint to the senior executive 
official having responsibility for the overall operations of the 
geographical unit where the alleged violations arose. This language, 
proposed by USAF, is derived from EPA's regulation designating who must 
sign applications for hazardous waste permits, 40 CFR 270.11(a)(3)(ii). 
EPA recognizes that the term ``geographical unit'' may be subject to 
varying interpretations, but has concluded that the imprecision is both 
necessary given the wide variety of federal facilities, and acceptable 
given that this copy of the complaint merely supplements the official 
service of the complaint. In recognition of this imprecision, this new 
provision uses the word ``should'' rather than ``shall.'' EPA will make 
a good faith effort to provide a copy of the complaint to the base 
commander, or equivalent, however, so long as complainant properly 
serves the federal agency according to its regulations or as otherwise 
provided by law, the requirements of Sec. 22.5(b)(1)(iii) are 
satisfied.
    USAF finds the phrase ``all pleadings and documents other than the 
complaint'', used in Sec. 22.5(b)(2) and elsewhere, to be confusing. 
USAF recommends using ``answer'' and/or ``complaint'' in place of 
``pleading'' and ``all filed documents'' or ``all filings'' in place of 
``pleadings and documents''. EPA agrees with this recommendation.
    Dow recommends that Sec. 22.5(c)(2) should specify how respondent 
is to

[[Page 40147]]

determine the docket number. EPA agrees that the proposed rule leaves 
this unclear. EPA has stricken the parenthetical clause ``(after the 
filing of the complaint)'' in order to assure that the docket number 
shall appear on the complaint.
    Dow and CEEC observe that under Sec. 22.5(c)(4) a party who fails 
to furnish or update its name, address, and telephone number, and those 
of its attorney or representative, if any, completely waives its right 
to notice and service. The commenters argue that this sanction is too 
severe for harmless errors. EPA has amended this provision so that 
where a party fails to update information concerning its representative 
and/or service address, service to the outdated representative or 
address shall satisfy the requirements of Sec. 22.5(b)(2) and 
Sec. 22.6. In this manner, the consequences of any failure to update 
this information will be commensurate with the severity of the error.
    In its comments on Secs. 22.17(a) and 22.34(c), Dow notes that 
default is too harsh a sanction for minor errors in service or filing. 
The proposed Sec. 22.5(c)(5) would allow the EAB or the Presiding 
Officer to exclude from the record any document that does not comply 
with Sec. 22.5(c). This would apparently preclude exclusion for service 
errors as significant as those in Sec. 22.5(c) (e.g., failure to serve 
the opposing party, failure to include a certificate of service per 
Sec. 22.5(a)(3), failure to file the original document per 
Sec. 22.5(a)(1)). Therefore, the final rule expands this sanction to 
include failures to conform to paragraphs (a), (b) and (d), as well as 
(c).
    The Agency solicited comments on whether electronic filing and 
service should be allowed, and if so, under what conditions, but 
received no comments. After further consideration, EPA has decided that 
the CROP should permit the Presiding Officer and the EAB, in 
consultation with the parties and the affected hearing clerk, to 
authorize facsimile or electronic service and/or filing on a case-by-
case basis. Accordingly, language is added to Secs. 22.5(a)(1) and 
22.5(b)(2) allowing the Presiding Officer or the EAB to authorize 
facsimile or electronic service and/or filing, subject to any 
appropriate conditions and limitations.
    c. Final Rule In response to public comments, EPA has adopted a 
modified version of the proposed Sec. 22.5(a), (b), and (c). EPA has 
revised this and other sections to use the more general term 
``document'' in place of ``pleadings and documents'', and to use 
``complaint'' or ``answer'' where reference to one or the other is 
specifically intended. EPA has edited Sec. 22.5(b)(1) to read ``by 
certified mail with return receipt requested''. EPA deletes the phrase 
``officer or'' from Sec. 22.5(b)(1)(ii)(B), and revises the proposed 
Sec. 22.5(b)(1)(ii)(B) as follows:

    ``Where respondent is an agency of the United States, 
complainant shall serve that agency as provided by that agency's 
regulations, or in the absence of controlling regulation, as 
otherwise permitted by law. Complainant should also provide a copy 
of the complaint to the senior executive official having 
responsibility for the overall operations of the geographical unit 
where the alleged violations arose.''

    EPA has stricken from Sec. 22.5(c)(2) the parenthetical clause 
``(after the filing of the complaint)''. EPA has revised 
Sec. 22.5(c)(4) as follows:

    ``(4) The first document filed by any person shall contain the 
name, address, and telephone number of an individual authorized to 
receive service relating to the proceeding. Parties shall promptly 
file any changes in this information with the Regional Hearing 
Clerk, and serve copies on the Presiding Officer and all parties to 
the proceeding. If a party fails to furnish such information or any 
changes thereto, service to the party's last known address shall 
satisfy the requirements of Sec. 22.5(b)(2) and Sec. 22.6.''

    EPA has revised the proposed Sec. 22.5(c)(5) to allow the EAB or 
the Presiding Officer to exclude from the record any document that does 
not comply with any requirement of Sec. 22.5.
    In addition to the changes suggested by the commenters, EPA has 
made several other minor changes to Sec. 22.5. EPA has amended 
Sec. 22.5(a)(1) to allow the Presiding Officer and the EAB the 
discretion to allow facsimile or electronic filing under such 
circumstances and limitations as they deem appropriate. EPA also has 
added to Sec. 22.5(b)(2) language allowing the Presiding Officer or the 
EAB to authorize facsimile or electronic service, subject to such 
conditions and limitations as they deem appropriate. EPA has added a 
reference to the EAB to Sec. 22.5(b): ``A copy of each document filed 
in the proceeding shall be served on the Presiding Officer or the 
Environmental Appeals Board, and on each party.''
    EPA has determined that additional clarifications are appropriate 
for Sec. 22.5(b)(2). EPA notes that the U.S. Postal Service considers 
overnight express and priority mail to be forms of first class mail. 
EPA has revised Sec. 22.5(b)(2) to allow service ``by first class mail 
(including certified mail, return receipt requested, Overnight Express 
and Priority Mail), or by any reliable commercial delivery service. 
This change necessitates a corresponding change in Sec. 22.7(c), 
because 5 day grace period for responding to motions sent by first 
class mail is unnecessary for documents served by overnight or same-day 
delivery.
    Finally, EPA has revised the CROP to present numbers consistently, 
adopting the preferred style of the U.S. Government Printing Office. 
Numbers of 10 or more are expressed in figures and not spelled out. 
Accordingly, EPA has revised Sec. 22.5(c) to require a table of 
contents and a table of authorities for all briefs and legal memoranda 
``greater than 20 pages in length''.
4. Confidentiality of Business Information (40 CFR 22.5(d))
    a. Summary of Proposed Rule. The proposed Sec. 22.5(d) addresses 
treatment of information claimed as Confidential Business Information 
(``CBI'') in documents filed in CROP proceedings. The proposed 
paragraph (d)(1) would provide that any business confidentiality claim 
shall be made in the manner prescribed by 40 CFR part 2 at the time 
that the document is filed. It warns that a document filed without a 
claim of business confidentiality will be available to the public for 
inspection and copying pursuant to Sec. 22.9.
    Paragraph (d)(2) would require the submission of a redacted, non-
confidential version in addition to the full document containing the 
information claimed confidential, and describes the process for 
preparing these documents. Paragraph (d)(3) describes the procedures 
for serving documents containing claimed-confidential information and 
makes clear that only a redacted version of any 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 document with claimed-confidential 
information will become part of the public record of the proceeding, 
and further provides that an EPA officer or employee may disclose 
information claimed confidential only as provided by 40 CFR part 2.
    b. Significant Comments and EPA Response. Dow and CEEC express 
concern that under the proposed rule a failure to include a CBI claim 
at the time a document is submitted forecloses any future protection of 
the document. They argue that even where a company has inadvertently 
placed information in the public record, there is still value to in 
preventing further disclosure. They also point out that the Agency's 
CBI regulations at 40 CFR 2.203(c) provide that the Agency ``will make 
such efforts as are administratively practicable to

[[Page 40148]]

associate [a] late [confidentiality] claim with copies of . . . 
previously-submitted information in EPA files. . . .''
    Section 2.203(c) expresses an Agency intent to give effect to late 
claims of business confidentiality, to the extent administratively 
practicable. While it is often administratively practicable to provide 
meaningful protection for a document that has been submitted in a non-
confidential manner to an EPA office for EPA's own regulatory use, it 
is not administratively practicable to protect information that has 
become a matter of public record. There are significant costs 
associated with maintaining the confidentiality of documents EPA uses, 
and EPA must balance them against the potential benefits of protecting 
information that is already likely to be circulating among the public. 
The criteria for determining whether business information is entitled 
to confidential treatment, at Sec. 2.208, include whether the business 
has taken reasonable measures to protect the confidentiality of the 
information. Placing a document in the public record falls short of 
those reasonable measures. Some of EPA's enforcement dockets receive 
daily visitors, while others are less frequently examined. Accordingly, 
once a person has filed a document with a hearing clerk, a subsequent 
effort by that person to assert a business confidentiality claim for 
information contained in that document will generally be ineffective. 
EPA will consider untimely confidentiality claims on a case-by-case 
basis, but claims asserted more than a few days after the original 
filing are unlikely to be granted.
    CEEC also faults EPA for failing to draw sufficient attention in 
the notice of proposed rule making to the provisions addressing CBI. 
CEEC asserts that EPA missed an opportunity to work with the regulated 
community to achieve important regulatory reforms. EPA disagrees. It is 
the purpose of a notice of proposed rule making to elicit comment from 
the public to better inform the Agency's rule making process. EPA has 
made many changes in this final rule in response to the helpful 
comments submitted by CEEC and other commenters. Although EPA has not 
agreed with CEEC's one substantive comment on the CBI provisions, EPA 
appreciates the comment and carefully considered CEEC's point.
    c. Final Rule. EPA adopts Sec. 22.5(d) as proposed, except for 
replacing the phrase ``pleading or document'' with ``document'' as 
discussed in the response to public comments on Sec. 22.5(a), (b) and 
(c), and replacing ``amici'' with ``non-party participant'' for 
consistency with changes to Sec. 22.11(b).
5. Computation and Extension of Time (40 CFR 22.7)
    a. Summary of Proposed Rule. Section 22.7(a) defines time periods 
for determining the date upon which a document is due. The proposed 
rule would revise the term ``legal holiday'' to ``Federal holiday'' for 
clarity.
    Section 22.7(b) sets forth conditions under which the due date may 
be extended. The proposed revision to that paragraph would require that 
a motion for extension of time be filed sufficiently in advance of the 
due date so as to allow other parties an opportunity to respond and to 
allow time for the Presiding Officer or EAB to issue a ruling upon the 
motion.
    Section 22.7(c) of the proposed rule would expand the ``mailbox 
rule'' to provide that service of documents other than the complaint is 
complete either upon mailing or when placed in custody of a reliable 
commercial delivery service, and to allow 5 additional days to respond 
not only to documents served by mail but also to documents served by 
reliable commercial delivery service.
    b. Significant Comments and EPA Response. Dow requested an 
exception from including Saturdays, Sundays and holidays where the time 
period is 10 days or less. The commenter is concerned that there are 
not enough work days and mail delivery days to respond to a document.
    In effect, this would extend the time period for a party's reply to 
a response, which is 10 days, under Sec. 22.16(b). EPA believes that 
two different ways of calculating time periods would cause confusion 
and inconsistency. When a party needs more than 10 days to file a 
document, an adequate solution would be to request an extension of 
time.
    Dow suggested a ``good cause'' exception to the time limit for 
filing a motion for extension of time. EPA believes that including such 
an exception in the rule is unnecessary and may encourage untimeliness, 
and thereby adversely affect the Agency's efforts to make 
administrative proceedings more efficient. A motion for leave to file a 
document beyond the time limit (``out of time''), stating reasons for 
not having filed within the time limit, may be submitted in accordance 
with Sec. 22.16(a), along with the document sought to be filed. The 
time limit provided in the proposed revision does not require a motion 
for extension to be filed so far in advance of the due date so as to 
allow other parties the 15 days provided by Sec. 22.16(b) to respond to 
the motion. A ``reasonable opportunity to respond'' and ``reasonable 
opportunity to issue an order'' will be construed based on the 
circumstances of the case.
    c. Final Rule. Today's additional clarifications to 
Sec. 22.5(b)(2), which define first class mail as including Overnight 
Express and Priority Mail, expressly allow for service by EPA's 
internal mail system, and provide the Presiding Officer and the EAB 
discretion to authorize facsimile or electronic filing, require a 
corresponding change to Sec. 22.7(c). To assume 5 days for delivery by 
mail of a document, and thus to allow 5 additional days for a response, 
is appropriate where a document is served by first class mail and some 
forms of commercial delivery. However, it is not appropriate to make 
such assumption and allowance where there is a date of receipt, logged 
or stamped by the postal or commercial delivery service, showing that 
the document was sent by same day or overnight delivery. Accordingly, 
EPA is revising the third sentence of Sec. 22.7(c) to exempt documents 
served by overnight or same-day delivery. According to the preferred 
style of the U.S. Government Printing Office, measurements of time are 
to be expressed in figures and not spelled out. EPA has revised 
Sec. 22.7(c) to say that ``5 days shall be added''.
6. Ex Parte Discussion of Proceeding (40 CFR 22.8)
    a. Summary of Proposed Rule. The existing Sec. 22.8 prohibits the 
decision making officials in a proceeding from discussing the merits of 
the proceeding with any interested person outside the Agency, with any 
Agency staff member who performs a prosecutorial or investigative 
function in the proceeding or a factually related proceeding. This 
prohibition is also imposed on representatives and to persons likely to 
advise the decision making officials on the proceeding. The proposed 
rule would add a sentence that would exempt officials who have formally 
recused themselves from all adjudicatory functions, including the 
approval of consent agreements and issuance of final orders.
    b. Significant Comments and EPA Response. Dow argues that the CROP 
should also restrict ex parte contacts before a complaint is issued, in 
order to avoid the potential for an adjudicator developing a bias in 
favor of the complainant. Dow suggests that the CROP should prohibit 
any communication regarding contemplated or reasonably foreseeable 
enforcement

[[Page 40149]]

proceedings between potential adjudicators and Agency enforcement 
personnel. Dow also suggests that where Agency enforcement attorneys 
may potentially serve as Presiding Officers, any communications 
regarding contemplated or reasonably foreseeable enforcement 
proceedings should be recorded, kept on file, and served on respondent 
as soon as that attorney is designated Presiding Officer.
    EPA agrees that EPA attorneys who may serve as Presiding Officers 
should avoid communications regarding contemplated or reasonably 
foreseeable enforcement proceedings over which they might preside. 
However, a complete prohibition is neither feasible nor necessary.
    In some instances, it is appropriate for Agency enforcement 
personnel to have prefiling discussions concerning specific enforcement 
cases with Agency attorneys who may be called upon act as Presiding 
Officers. When considering whether to assign a new case to a particular 
Agency enforcement attorney, it may be necessary to inquire of that 
attorney whether a prospective case may present a conflict with any 
cases in which the attorney is acting as Presiding Officer. So long as 
those discussions are carefully limited to transmitting the identity of 
the prospective respondent and a bare statement of the statutory or 
regulatory provisions allegedly violated, and to exploring whether 
there is any potential conflict of interest, but do not address the 
merits of the potential action, such discussions could not influence 
the decisions of the prospective adjudicator, and should not be 
considered prohibited ex parte communications.
    Sound management of the Agency's enforcement program also 
periodically requires some discussion between complainants and 
adjudicators concerning anticipated work loads. For example, EPA 
periodically offers compliance audit programs (see, e.g., Registration 
and Agreement for TSCA Section 8(e) Compliance Audit Program, 56 FR 
4128 (Feb. 1, 1991)) where large numbers potential cases are 
simultaneously settled on essentially identical terms, and it is 
appropriate in such cases for the complainant to discuss process issues 
with the persons who would be responsible for approving the consent 
agreements and issuing final orders. Discussions of how many consent 
agreements might be submitted for approval, when they might be 
submitted, whether or to what extent the consent agreements vary, are 
all permissible procedural matters that are not prohibited ex parte 
communications.
    Compliance audit programs encourage violators to identify their 
violations and disclose them to EPA in exchange for a settlement and 
release of liability on favorable terms. Obtaining advance approval of 
the generic consent agreements could reassure those members of the 
regulated community who are wary of disclosing violations that the 
Agency will in fact conclude the cases according to the terms offered. 
Although this would result in substantive discussion of the terms of 
settlement between prospective complainants and adjudicators, this is 
permissible under the peculiar circumstances of a compliance audit 
program. It is permissible because compliance audit programs are 
entirely voluntary. Each compliance audit program is an offer by the 
Agency to the regulated community at large, and EPA typically engages 
in these efforts precisely because it does not know who is in violation 
and it wants to bring a large and ill-defined sector of the industry 
into compliance. No regulatee is obligated to identify itself as a 
violator or to participate in the program; each chooses to do so only 
if it considers the terms offered by the Agency to be in its best 
interest. Accordingly, where complainants wish to confer with Agency 
officials responsible for approving consent agreements and issuing 
final orders concerning potential compliance audit programs, they may 
do so without violating Sec. 22.8.
    Dow's suggested limitations also pose significant implementation 
problems. Parties may disagree about when an investigation becomes a 
``contemplated or reasonably foreseeable enforcement proceeding'' and 
about what communications concern such a proceeding. For the foregoing 
reasons, EPA has not added any prohibition against communications 
concerning cases before the filing of the complaint. Similarly, EPA 
does not believe that it is necessary to require by rule that potential 
adjudicators retain a written record of all communications regarding 
potential cases. The prohibition in Sec. 22.4(d)(1) against individuals 
serving as Presiding Officer in regard to ``any matter in which they 
have any relationship with a party or with the subject matter which 
would make it inappropriate for them to act'' provides adequate 
protection against any bias that might arise through communications 
prior to the filing of a complaint.
    Dow also comments that where an adjudicator obtains advice from 
other EPA personnel, any such advice should be served on the 
respondent. The focus of Dow's concern is that EPA personnel such as 
technical experts, rule writers, and attorneys might be advising 
adjudicators on the merits of a proceeding. EPA shares Dow's opinion 
that such ex parte advice is generally unnecessary and inappropriate, 
and believes that it is in fact extremely uncommon. EPA agrees with the 
commenter that adjudicators should not be receiving such advice without 
all parties having the opportunity to review and respond to it. The 
CROP provides suitable procedures for adjudicators to solicit such 
advice (e.g., by calling for an expert to testify pursuant to 
Sec. 22.19(e)(4)) and for EPA personnel to volunteer such advice 
(through amicus briefs subject to Sec. 22.11(b)) without risk of ex 
parte communication.
    There are, however, circumstances where it is appropriate for 
adjudicators to obtain from other EPA personnel advice that is not 
served on the parties. Administrative Law Judges periodically consult 
with each other, as do the Agency's RJOs. Adjudicators routinely 
receive advice from the attorneys and law clerks on the staff of the 
Environmental Appeals Board and the Office of Administrative Law 
Judges, and on occasion from hearing clerks and from Agency ethics 
officials. Accordingly, EPA declines to require that all advice to 
adjudicators from EPA personnel be served on the parties.
    c. Final Rule. EPA is adopting Sec. 22.8 as proposed, with minor 
changes. EPA notes that Sec. 22.8 refers in three places to both 
Regional Judicial Officers and Presiding Officers. In order to avoid 
redundancy and potential confusion, EPA has stricken the words ``the 
Regional Judicial Officer.'' Other minor editorial changes in the first 
sentence are the substitution of the word ``proceeding'' for ``case'', 
so as to consistently use the word ``proceeding'' when referring to a 
particular administrative adjudication, and substitution of ``any 
decision'' for ``the decision'' to clarify ex parte communication is 
prohibited in regard to small matters as well as large ones. These 
editorial changes do not alter the substance of the CROP.
    The preamble to the proposed rule indicated that the prohibitions 
on ex parte communications would apply to persons who approve consent 
agreements and issue final orders. 63 FR at 9468 (``For purposes of 
this provision [Sec. 22.8], the Agency would consider the approval of 
consent agreements and issuance of consent orders to be adjudicatory 
functions.''). In some instances, Regional Administrators have 
delegated the authority to review settlements and issue final orders to

[[Page 40150]]

persons associated with the Regions' enforcement programs. The Agency 
has reconsidered the position expressed in the preamble to the proposed 
rule, and has determined that the person who ultimately approves 
settlements on the Agency's behalf and issues these final orders need 
not be as independent as those who adjudicate contested issues. To make 
this change clear, EPA has amended the last sentence of Sec. 22.8 to 
state that the ex parte restrictions shall not apply to a person who 
issues final orders only pursuant to Sec. 22.18(b)(3).
7. Intervention and Non-party Briefs (40 CFR 22.11)
    a. Summary of Proposed Rule. Section 22.11(a) describes the process 
for intervening in a CROP proceeding. The proposed rule provides more 
specific procedures and would make the standard for intervention 
equivalent to the standard used in the Federal courts. Paragraph (b) 
describes the procedures for motion for leave to file an amicus brief; 
the major change proposed was to provide a uniform 15 day period for 
responses to an amicus brief, rather than leaving this to the 
discretion of the Presiding Officer or the EAB.
    b. Significant Comments and EPA Response. Dow suggests that 
Sec. 22.11(b) should expressly allow 15 days for parties to respond to 
a motion for leave to file an amicus brief, as well as 15 days to 
respond to the brief itself. This change is not necessary, because 
``motions'' are subject to Sec. 22.16, which provides for responses 
within 15 days. Nevertheless, EPA accepts Dow's suggestion and has 
revised Sec. 22.11(a) and (b) so that all CROP requirements apply to 
any motion for leave to file an amicus brief or motion to intervene in 
the same manner as if the movant were a party.
    c. Final Rule. EPA is adopting the proposed Sec. 22.11 with 
modifications. EPA has amended the language of Sec. 22.11(a) and (b) so 
that all requirements of the CROP shall apply to any motion for leave 
to intervene or motion for leave to file an amicus brief as if the 
movant were a party.
    EPA has also made two other changes to Sec. 22.11(b) on its own 
initiative. First, it has replaced the terms ``amicus curiae'' and 
``amicus brief'' with ``non-party brief.'' Second, EPA has replaced the 
requirement that motions for leave to file a non-party brief ``state 
the reasons why the proposed amicus brief is desirable'' with the 
requirement that it ``explain the relevance of the brief to the 
proceeding.'' Both changes are intended to improve the clarity and 
specificity of the CROP, and neither is intended to make a substantive 
change.
    To conform to the preferred style of the U.S. Government Printing 
Office, EPA has revised Sec. 22.7(c) to state the time allowed for 
responding to a non-party brief with the numeral ``15'.
8. Commencement of a Proceeding (40 CFR 22.13)
    a. Summary of Proposed Rule. EPA proposed amending Sec. 22.13 to 
define the commencement of an administrative enforcement proceeding, 
and to allow the simultaneous commencement and conclusion of a case 
through the filing of a consent agreement and a final order where pre-
commencement negotiations result in settlement.
    b. Significant Comments and EPA Response. CEEC recommends that the 
CROP should require discussions with a prospective respondent before 
the filing of a complaint. CEEC argues that pre-filing discussions 
would expedite the proceeding by allowing the parties to resolve the 
matter cooperatively, and by allowing early elimination of 
inappropriate allegations or penalties. CEEC proposes that the CROP 
should require that complainant determine whether a potential 
respondent had fair notice of the regulatory requirement(s) that it is 
alleged to have violated, and require EPA to disclose both the 
information in EPA's possession suggesting the violation and the 
information EPA will utilize to set the proposed penalty. CEEC argues 
that such a pre-filing process would maximize the opportunity to 
resolve compliance matters cooperatively and expeditiously.
    EPA has often found it advantageous to engage in pre-filing 
discussions with prospective respondents under the existing CROP, and 
the proposed revisions will increase EPA's incentives to do so. Nothing 
in the proposed rule prevents EPA from engaging in the sort of pre-
filing process CEEC proposes. However, EPA declines to go as far as 
CEEC proposes and create a mandatory pre-filing process. EPA's 
experience with pre-filing negotiations has been mixed: While in many 
cases pre-filing negotiations have produced expedited settlements, in 
other cases they have resulted in delay. Sometimes a respondent is not 
interested in settlement, but uses settlement discussions as a tactic 
in efforts to forestall enforcement. In contrast, active management of 
the case by a neutral presiding officer is generally effective in 
keeping both parties actively engaged in settlement efforts, and 
provides an alternative process when settlement efforts fail.
    Although EPA does not at this time believe that a mandatory pre-
filing process should be part of the CROP, EPA will consider ways to 
expand use of pre-filing negotiations. Although statutory public 
commenter provisions somewhat limit the Agency's authority to pursue 
pre-filing negotiations, the final rule does not add any further limits 
to EPA's discretion in this regard.
    c. Final Rule. EPA is adopting Sec. 22.13 of the CROP as proposed, 
with two minor changes. The first resolves conflicting language in the 
proposed rule concerning whether a case subject to public comment 
requirements of Sec. 22.45 could be commenced through the filing of a 
consent agreement and final order pursuant to Sec. 22.13(b). Although 
the proposed Sec. 22.13(b) states that it is limited to cases not 
subject to Sec. 22.45, the proposed Sec. 22.45(b)(1) and (2) describe a 
process for public notice in cases commenced pursuant to Sec. 22.13(b). 
EPA has revised the public comment procedures of Sec. 22.45 to better 
accommodate cases commenced pursuant to Sec. 22.13(b). Accordingly, EPA 
has deleted from Sec. 22.13(b) the clause which would have made it 
inapplicable in cases subject to the public comment provisions of 
Sec. 22.45. Second, as noted in the discussion of public comments on 
Sec. 22.18(b) and (c), EPA has eliminated the term ``consent order,'' 
and is using the term ``final order'' instead.
9. Complaint (40 CFR 22.14)
    a. Summary of Proposed Rule. The primary substantive change 
proposed in Sec. 22.14 was the addition of explicit authority for 
complainants to use, at their discretion, a notice pleading approach 
comparable to that used in administrative enforcement proceedings under 
the proposed part 28 procedures and in the Federal courts. The proposed 
Sec. 22.14(a)(4) would expressly permit EPA to file a complaint without 
specifying 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. The text originally in paragraph 
(c) would be deleted to avoid the possibility of conflict with the 
notice pleading option proposed under Sec. 22.14(a)(4)(ii).
    The proposed Sec. 22.14(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

[[Page 40151]]

proceeding shall be conducted in conformance with section 554 of the 
APA.
    EPA also proposed editorial revisions, primarily to consolidate the 
provisions applicable to complaints for assessment of civil penalties 
with the essentially parallel provisions for revocation, termination or 
suspension of permits, and to explicitly provide for the issuance of 
compliance and corrective action orders.
b. Significant Comments and EPA Response
    Four of the commenters, CMA/API, CEEC, UWAG and USAF, opposed the 
proposed notice pleading option.
    Implicit in these comments is a concern that respondents will not 
be able to fairly gauge the amount of their potential penalty liability 
based on the information in the complaint. EPA agrees that complaints 
should provide more information than is required under the proposed 
rule. The proposed Sec. 22.14(a)(4)(ii) arguably would allow issuance 
of complaints which do not clearly identify the number of violations 
charged, for example, where a statute authorizes EPA to assess a 
separate penalty for each day a violation continues. In order to ensure 
that respondents understand from the complaint how many violations are 
charged, EPA has revised Sec. 22.14(a)(4)(ii) to require that the 
complaint specify ``the number of violations (where applicable, days of 
violation) for which a penalty is sought''.
    CMA/API objected to the notice pleading option and recommended that 
it be rejected, noting that allowing complaints to issue without 
stating a sum certain would make it ``too easy'' for EPA to proceed 
with an administrative penalty action without gathering sufficient 
information to make an informed decision, and that the Agency might 
file meritless complaints that would nonetheless have a ``stigmatizing 
impact'' on respondents. EPA notes that the proposed Sec. 22.14 would 
still require complainant to state the factual basis for alleging the 
violation, and to specify each provision of a statute, regulation, 
permit or order that respondent is alleged to have violated. The 
proposed change would only allow EPA, at its discretion, to postpone 
stating the extent of the relief sought. Owing to the retention of 
provisions that require complainant to specifically allege respondent's 
violation, the risk that EPA might file meritless complaints is not 
increased by the proposed change.
    CMA/API objects that notice pleading will allow EPA to use the 
administrative complaint as a form of discovery to obtain information 
from the respondent, and argues that EPA's existing information 
gathering tools are adequate for that purpose. EPA does not view the 
administrative complaint as an investigation or discovery tool, but 
rather, the product of an investigation through which EPA has collected 
evidence reasonably supporting the conclusion that the respondent has 
violated the law. However, in some cases the litigation process is the 
only mechanism by which EPA can obtain the financial information 
necessary to determine what penalty is appropriate for those violations 
(see, e.g., FIFRA section 8(b), 7 U.S.C. 136f(b), and Toxic Substances 
Control Act (``TSCA'') section 11(b), 15 U.S.C. 2610(b), which 
expressly prohibit inspections seeking financial information).
    The USAF argues that the proposed change potentially shifts to 
respondents the burden of demonstrating that something less than the 
maximum penalty is appropriate. EPA disagrees, as the proposed 
Sec. 22.24(a) states that complainant bears both ``the burdens of 
presentation and persuasion * * * that the relief sought is 
appropriate'', while respondents only bear ``the burden of presenting * 
* * any response or evidence with respect to the appropriate relief.'' 
Notice pleading is common practice in the state and federal courts, and 
in those courts notice pleading does not put the burden of persuasion 
on the respondent, is not inherently unfair, and does not violate a 
defendant's due process rights.
    USAF objects that notice pleading is unnecessary to achieve the 
Agency's stated goal of ``provid[ing] 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 * * *.'' USAF suggests that a better approach would be to 
require a specific penalty proposal in the complaint, but allow the 
complainant to amend the proposed penalty based on information it 
timely obtains after the commencement of a suit.
    EPA agrees that the approach USAF identified is appropriate in many 
cases. However, where EPA does not have adequate information to 
confidently recommend a specific penalty, EPA would be misleading the 
respondent were it to propose an arbitrary penalty which does not 
reflect significant facts of the case. An unreasonable penalty demand 
may also make EPA liable for respondent's attorneys' fees under the 
Equal Access to Justice Act (``EAJA''), 5 U.S.C. 504. The Small 
Business Regulatory Enforcement Fairness Act of 1996 (``SBREFA''), 
Pub.L. 104-121, expanded the EAJA to allow recovery of attorney's fees 
where an initial penalty demand is later shown to be unreasonable. 
Notice pleading is an appropriate and responsible choice in 
circumstances where liability is clear, but where EPA is not able to 
determine with confidence the reasonableness of a specific penalty 
amount before filing the case.
    If EPA were not to provide the option of notice pleading, the 
SBREFA amendments would make it possible for polluters to escape high 
penalties if they can effectively hide from EPA their financial status 
or the economic benefits derived from their noncompliance with 
environmental regulation. Some statutes require EPA to consider a 
respondent's ability to pay the proposed penalty or its economic 
benefit of noncompliance in assessing a penalty (e.g., FIFRA section 
14(a)(4), TSCA section 16(a)(2)(B), CWA section 309(g)(3), Clean Air 
Act (``CAA'') section 113(e)(1)), and EPA generally considers these 
factors relevant in penalty assessment under other statutes as well. 
However, authority for EPA to gather such information is not always 
clear, and under some statutes it has been expressly withheld (see, 
e.g., FIFRA section 8(b), 7 U.S.C. 136f(b), TSCA section 11(b), 15 
U.S.C. 2610(b)). The SBREFA amendments to the EAJA make the Agency wary 
of seeking large penalties against individuals or privately held 
corporations (who do not generally make public disclosures of their 
financial condition) absent reliable financial information. Because EPA 
does not have the resources to inspect any but the largest facilities 
more than once every few years, inspections typically reveal violations 
that are several years old. The 5-year federal statute of limitations 
may limit the Agency's ability to sanction violators for older 
violations, so a respondent need only hide its financial status for a 
short time in order to forestall EPA from seeking penalties 
commensurate with a serious violation. Notice pleading increases the 
deterrent effect of EPA's enforcement program, and levels the 
regulatory playing field for publicly held and privately held 
corporations.
    CEEC noted in its comments that the February 25, 1998, FR Notice of 
Proposed Rule Making did not analyze the proposed notice pleading 
option in light of the SBREFA amendments to the EAJA. The proposed 
rule, as well as today's final rule, is fully consistent with the EAJA 
as amended by SBREFA. The EAJA does not prohibit notice

[[Page 40152]]

pleading, and nothing in the SBREFA legislative history suggests any 
intent by Congress to limit its use in judicial or administrative 
enforcement. The EAJA does not require the agencies to include specific 
penalty demands in their complaints.
    When a complainant makes an express demand, the remedies of the 
EAJA may be invoked. However, the EAJA explicitly excludes from the 
definition of ``demand'' any ``recitation of the maximum statutory 
penalty'' in the administrative or civil complaint. Consistent with 
this provision, EPA may postpone making a ``demand'' by exercising the 
notice pleading option of Sec. 22.14(a)(4)(ii), and providing ``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'' instead of a specific penalty demand.
    Civil administrative penalty complaints should communicate the 
significance that the Agency places on the alleged violations. The CROP 
accomplishes this in both the traditional method embodied in 
Sec. 22.14(a)(4)(i), and the notice pleading option in 
Sec. 22.14(a)(4)(ii). Section 22.14(a)(4)(i) requires that the 
complaint state ``[t]he amount of the civil penalty which is proposed 
to be assessed, and a brief explanation of the proposed penalty,'' 
while Sec. 22.14(a)(4)(ii) requires ``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''. Moreover, EPA intends to maintain the practice developed 
in the notice pleading cases under the proposed part 28 administrative 
enforcement rules of concurrently supplementing complaints with early, 
informal settlement overtures to respondents. EPA has found this 
process expedites settlement while also providing respondents with more 
specific guidance on the penalty value the Agency places on its 
enforcement case.
    EPA notes that notice pleading is not mandatory, but is instead an 
option. EPA expects that administrative complaints containing specific 
penalty proposals will continue to be a central part of the Agency's 
administrative enforcement program. However, one clear mandate of 
SBREFA is that the Agency should not make a penalty demand unless it 
has evidence to fully support that demand. Notice pleading balances the 
goals of SBREFA with those of the statutes EPA is charged with 
enforcing, as it allows the Agency to pursue enforcement in cases where 
adequate financial information is either unavailable or withheld by the 
respondent during the case development process.
    Today's final rule is fully consistent with the spirit and intent 
of the Equal Access to Justice Act, in that the CROP produces 
complaints that are substantially justified by the facts, circumstances 
and relevant statutory and regulatory requirements alleged to be 
violated. The limitations on discovery in CROP proceedings practically 
force complainants to have in hand at the time an administrative 
complaint is filed virtually all the evidence necessary to prove the 
alleged violations and the appropriateness of the penalty. This is in 
marked contrast to the rules governing civil judicial enforcement, that 
allow complaints to be filed so long as the allegations and factual 
contentions ``are likely to have evidentiary support after a reasonable 
opportunity for further investigation or discovery * * *.'' See Rule 
11(b)(3) of the Federal Rules of Civil Procedure. The notice pleading 
option does not ease the Agency's pre-filing burdens associated with 
documenting that a regulatee has violated the law, but merely allows 
the filing of a complaint with somewhat less information about what 
penalty might be appropriate for those violations.
    UWAG also questioned the efficacy of the notice pleading option, 
asserting that the Agency will be no better informed at the time of 
prehearing exchange or default than it is at the time the complaint is 
issued. EPA has shared this concern, and requested comments on whether 
complainant might postpone stating a specific proposed penalty for an 
additional 30 days, or longer, after prehearing exchange. 63 FR at 
9472. Dow objected to postponement beyond prehearing exchange (although 
it did not state any objection to allowing complainant to state a 
specific proposed penalty for the first time in prehearing exchange). 
As discussed in the response to comments on Sec. 22.19(a) below, it is 
appropriate to allow complainant to review respondent's prehearing 
exchange for 15 days before specifying a proposed penalty. EPA believes 
that this process properly balances the parties' competing interests.
    Most regulatees will engage in settlement discussions with the 
Agency once a complaint has been filed. Such settlement discussions, 
often accompanied by voluntary exchanges of certain documents, almost 
always give EPA additional information about the merits of the Agency's 
allegations and the appropriateness of a penalty. In addition, 
Sec. 22.15(b) requires respondent to state in its answer the 
``circumstances or arguments which are alleged to constitute the 
grounds of any defense; the facts which respondent disputes; [and] the 
basis for opposing any proposed relief * * *.'' As a result of the 
information received through the answer and settlement discussions, 
complainant generally has a better understanding of whether respondent 
has financial limitations significant enough to warrant assessing a 
lower penalty. EPA recognizes that in some cases, a respondent may 
still resist providing necessary information. In such cases, the 
Agency's recourse would be to postpone proposing a specific penalty 
until 15 days after respondent has filed its prehearing exchange, in 
accordance with Sec. 22.19(a)(4). If respondent's prehearing exchange 
fails to contain necessary information, complainant could then move for 
a discovery order, and subsequently amend the penalty demand as 
necessary.
    Several commenters noted that notice pleading might impede quick 
resolution and settlement. CEEC notes that failure to provide a 
specific penalty amount early in the process can frustrate quick 
resolution of the proceedings. UWAG states that the failure to specify 
a sum-certain penalty in the complaint will undercut the Agency's goal 
of resolution of administrative complaints with a minimum of cost and 
delay, since a party will ``have no choice'' but to engage in 
settlement discussions in order to ascertain ``exactly what penalty'' 
the Agency is seeking. CMA/API notes that requiring a specific penalty 
demand amount encourages settlement because it makes clear to the 
respondent the extent of the penalty relief that EPA is seeking. CMA/
API states that without a specific penalty amount stated in the 
complaint, a respondent can neither judge whether settlement is a 
realistic possibility nor gauge EPA's view of the significance of the 
matter. USAF states that the proposed change reduces the respondent's 
ability to negotiate and removes any incentive to negotiate.
    The Agency acknowledges that notice pleading may impede use of the 
quick resolution process, and that it has the potential to delay 
settlement relative to cases where a sum certain penalty amount is 
stated in the complaint. However, notice pleading also provides an 
additional incentive to settle by preserving EPA's full penalty claim 
in the event settlement is not achieved. In those cases where the 
Agency perceives critical information gaps relevant to the amount of 
the penalty, these potential inefficiencies are an acceptable price to

[[Page 40153]]

pay in order to avoid making an unreasonable penalty demand.
    EPA's introduction of the notice pleading option into CROP 
proceedings does not signal any intention to alter the Agency's 
longstanding policies and practices favoring expeditious settlements. 
Over the past 20 years, more than 98 per cent of all administrative 
cases have been settled without trials. Today's final rule evidences 
EPA's continuing commitment to non-adversarial resolution with new 
provisions such as commencement of pre-negotiated cases with a final 
order pursuant to Sec. 22.13(b), the quick resolution of Sec. 22.18(a), 
and procedures supporting alternative dispute resolution at 
Sec. 22.18(d). Although notice pleading could possibly delay 
settlement, it is expected that the need to make efficient use of 
enforcement resources will restrain EPA's use of notice pleading if, in 
actual practice, it significantly reduces the frequency of settlements 
or the pace at which settlements are reached.
    c. Final Rule. EPA has adopted Sec. 22.14 as proposed, with several 
changes. As noted above, EPA has revised Sec. 22.14(a)(4)(ii) to 
require that where complainant chooses not to specify a proposed 
penalty in the complaint, the complaint must state ``the number of 
violations (where applicable, days of violation) for which a penalty is 
sought''.
    EPA also has made several minor changes at its own initiative. The 
proposed Sec. 22.14(a)(6) required complainant to specify in the 
complaint whether subpart I ``applies to such hearing.'' EPA has 
revised this paragraph to clarify that where subpart I applies, it 
applies to the entire proceeding, and not just the evidentiary hearing 
phase.
    EPA has added two new requirements as to content of the complaint. 
Section 22.14(a) now requires in paragraph (7) that the complaint 
include the address of the Regional Hearing Clerk, and in paragraph (8) 
requires instructions for paying penalties, if applicable. EPA has 
observed that the names and addresses of the lock box banks change 
often, and that it would be difficult to keep the proposed Appendix B 
up to date. EPA also notes that Appendix A is redundant with 40 CFR 
1.7, and moreover, notes that these addresses are of less value to 
respondent than the specific address of the Regional Hearing Clerk. EPA 
has decided to expand Sec. 22.14(a) to require that the relevant 
information appear in the complaint, and to delete both appendices.
    In recognition of the fact that most complaints allege more than 
one violation, EPA has amended Sec. 22.14(a)(3) to require that the 
complaint state the factual basis ``for each violation alleged.''
    For the convenience of respondents receiving complaints which do 
not specify a proposed penalty, EPA has amended Sec. 22.14(a)(4)(ii) to 
clarify that the complaint shall include ``a recitation of'', rather 
than a mere ``citation to'', the applicable statutory penalty 
authority.
    EPA has revised Sec. 22.14(a)(4)(iii) and (a)(5), as well as other 
sections of the CROP, to replace the unwieldy phrase ``revocation, 
termination or suspension of all or part of a permit'' with a new term 
``Permit Action.'' EPA has moved the ``revocation, termination or 
suspension'' language into the definition of ``Permit Action'' at 
Sec. 22.3(a), which makes the remainder of the CROP easier to read, and 
will facilitate any future efforts to bring other permit actions within 
the scope of the CROP.
    EPA has changed the title of this section from ``Content and 
amendment of the complaint'' to the more general ``Complaint''. 
Finally, to conform to the preferred style of the U.S. Government 
Printing Office, EPA has revised Sec. 22.14(c) to state the time 
allowed for responding to an amended complaint with the numeral ``20''.
10. Answer to the Complaint (40 CFR 22.15)
     a. Summary of Proposed Rule. EPA proposed to amend Sec. 22.15(a) 
to clarify requirements for filing and serving the answer to a 
complaint, and to extend the time allowed for the filing of an answer 
from 20 days to 30 days. EPA proposed to add to paragraph (b) a new 
requirement that the answer state the basis for opposing any proposed 
penalty, compliance or corrective action order, or permit revocation, 
termination or suspension. EPA proposed editorial changes to paragraph 
(c), and proposed no changes to paragraphs (d) or (e).
    b. Significant Comments and EPA Response. USAF notes that where 
complainant has elected not to specify a penalty in the complaint, 
respondent cannot comply with the proposed requirement in Sec. 22.15(b) 
that the answer state respondent's basis for opposing the proposed 
relief. In response, the final rule now requires that the answer shall 
state ``the basis for opposing any proposed relief * * *''
    CEEC urges that EPA amend Sec. 22.15(e) to allow respondent to 
amend its answer as a matter of right, arguing that respondent is 
unlikely to have all the necessary information at the time the answer 
is due. Allowing amendment of the answer as a matter of right would not 
encourage diligence in answering the complaint, and could disrupt the 
orderly progress of proceedings. Accordingly, EPA declines to adopt 
CEEC's suggestion.
    The existing CROP allows amendments of the answer at the presiding 
officer's discretion, and motions to amend pleadings are generally 
granted. See, e.g., In re Port of Oakland and Great Lakes Dredge and 
Dock Co., 4 E.A.D. 170, 205 (EAB 1992) (``the Board adheres to the 
generally accepted legal principle that administrative pleadings are 
liberally construed and easily amended'') (citations omitted). 
Moreover, in paragraph (a) EPA already has expanded by 50% the time 
allowed for assembling information and preparing an answer. Although 
leave to amend pleadings is liberally granted, allowing amendments to 
the answer as a matter of right would make the CROP significantly less 
efficient. The purpose of the answer is to clarify what is contested 
and what is not contested at an early stage of the proceeding. Allowing 
amendment of the answer as a matter of right would not encourage due 
diligence in framing the issues, and could unfairly prejudice 
complainant if, for example, respondent were to substantially alter its 
defenses shortly before, or even after, the evidentiary hearing. 
Accordingly, CEEC's recommendation is rejected, except in circumstances 
where the complaint has been amended.
    c. Final Rule. For the foregoing reasons, EPA has adopted 
Sec. 22.15 of the CROP as proposed, with the exception of certain 
changes. As discussed above, the language of Sec. 22.15(b) is amended 
to require that the answer state ``the basis for opposing any proposed 
relief * * *'', and the proposed Sec. 22.15(e) is amended to allow 
amendment as of right whenever the complaint is amended.
    Section 22.15(c) of both the proposed rule and the 1980 CROP states 
that ``[a] hearing ... shall be held if requested by respondent in its 
answer.'' As used in this context, the word ``hearing'' refers to an 
adjudicatory proceeding, and encompasses a determination on motion 
papers alone. See In re Green Thumb Nursery, Inc., 6 E.A.D. 782, 790 & 
n.14 (EAB 1997) (holding that there is no right to an oral evidentiary 
hearing). Elsewhere in both the proposed rule and the 1980 CROP, 
``hearing'' refers specifically to the oral evidentiary hearing phase 
of a proceeding. In today's final rule, EPA has endeavored to use the 
term ``hearing'' to refer specifically to the oral evidentiary hearing. 
In order to avoid the implication that a request for a hearing

[[Page 40154]]

necessarily results in an oral evidentiary hearing, EPA has replaced 
the word ``shall'' with ``may.''
    Consistent with the changes noted in Sec. 22.14(a)(4)(iii) and 
(a)(5) above, EPA has revised Sec. 22.15(a) by replacing the phrase 
``permit revocation, termination or suspension'' with a new term 
``Permit Action.'' To conform to the preferred style of the U.S. 
Government Printing Office, EPA has revised Sec. 22.15(a) to state the 
time allowed for filing an answer with the numeral ``30''.
11. Default (40 CFR 22.17)
    a. Summary of Proposed Rule. The proposed Sec. 22.17 would 
reorganize the entire section to indicate the role of each of the 
parties and the Presiding Officer in a sequential manner.
    Paragraph (a) would describe the actions of each party that may 
result in a finding of default and the consequences of such a finding 
for each of the parties. Provisions describing the end of the process 
(i.e., when penalty monies come due, when a permit revocation, 
termination or suspension becomes effective) would be moved to 
paragraph (d).
    Paragraph (b) would describe content requirements for motions for 
default and would include a requirement that when 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 change in 
Sec. 22.14 that allows notice pleading in which the complainant elects 
not to demand a specific penalty in the complaint.
    Paragraph (c) would describe the default order itself, would 
provide that a default order shall be an initial decision, and would 
clarify the standards for granting the default order, for granting the 
relief proposed, and for setting the order aside. In addition, proposed 
paragraph (c) would remove the apparent restriction on the Presiding 
Officers' discretion in existing Sec. 22.17(a), in which a default 
order automatically assesses the penalty proposed in the complaint, or 
automatically revokes or terminates the permit according to the 
conditions proposed in the complaint. Although the proposed paragraph 
(c) would acknowledge that the Presiding Officer has some discretion 
regarding default orders, it would require that the proposed relief 
must be granted unless the record clearly demonstrates that the 
requested relief is inconsistent with the Act.
    Paragraph (d) would specify when penalties assessed by default are 
due, and the effective dates for the default revocation, termination or 
suspension of permits, and for the default issuance of compliance or 
corrective action orders.
    b. Significant Comments and EPA Response. Dow suggests revising 
Sec. 22.17(a) to allow other less serious sanctions. Dow argues that 
minor or technical defaults, such as not including a proof of service 
in a responsive document when proper service is perfected or failing to 
appear at a conference due to weather conditions, do not deserve the 
severe sanctions delineated in the section. Dow's objection seems to be 
two-fold: that issuance of an order of default is mandated upon the 
violative conduct and that an issued order of default might be too 
severe under certain circumstances.
    Dow's objection concerns language that has been in Sec. 22.17(a) 
since 1980. The CROP has not mandated and does not now mandate 
automatic determination of default liability. The proposed rule 
retained the language in Sec. 22.17(a) which states that a ``party may 
be found to be in default'', and in Sec. 22.17(c) included the old 
Sec. 22.17(d) language ``[f]or good cause shown, the Presiding Officer 
may set aside a default order'' [emphasis added]. Moreover, the 
proposed rule adds a new provision at Sec. 22.17(c), which states that 
``[w]hen the Presiding Officer finds that default has occurred, he 
shall issue a default order against the defaulting party unless the 
record shows good cause why a default order should not be issued''. 
Therefore, the new provisions at Sec. 22.17 would allow Presiding 
Officers to exercise discretion in issuing a default order for ``minor 
or technical default.''
    Furthermore, Presiding Officers do have authority to impose 
sanctions less than a complete finding of default when appropriate. 
Section 22.16(b) provides that any party who fails to respond to a 
motion within the designated period waives any objection to the 
granting of the motion. Section 22.19(g) provides that a when a party 
fails to respond to a discovery or prehearing exchange order as 
required, the Presiding Officer may draw adverse inferences and exclude 
information from evidence. As noted above in the response to comments 
on Sec. 22.5(c), EPA has amended Sec. 22.5(c)(5) so that the Presiding 
Officer may exclude from the record documents that are improperly 
served or untimely filed.
    EPA has made no change to Sec. 22.17(a) in response to Dow's 
comment because the CROP does not mandate default for minor errors and 
because other provisions of the CROP authorize less severe sanctions 
that are appropriate for types of nonperformance that fall short of 
default. Nevertheless, EPA has revised Sec. 22.17(c) to emphasize the 
Presiding Officer's discretion, as discussed below.
    The proposed Sec. 22.17(b) would require complainant to specify the 
penalty sought and the legal and factual grounds therefor in any motion 
that ``requests the assessment of a penalty or the imposition of other 
relief against a defaulting party * * *'' This provision was added in 
order to complement the notice pleading option in Sec. 22.14(a)(4)(ii), 
giving respondents notice of complainant's specific penalty demand 
assuring that record will support the penalty assessed. CEEC argues 
that delaying disclosure of the penalty demand until this stage 
``delays resolution, fails to give respondents sufficient notice; 
frustrates small entities' or small business' rights under SBREFA; and 
thwarts EPA's goal to increase administrative efficiency.'' For the 
reasons stated above in the response to comments on Sec. 22.14(a)(4), 
EPA disagrees. Because EPA has retained the notice pleading option in 
Sec. 22.14(a)(4), EPA also retains in Sec. 22.17(b) the requirement 
that complainant specify a penalty and state the legal and factual 
grounds therefor.
    In its objection to the notice pleading option, CEEC states that 
the new provision requires disclosure of the penalty demand in ``any 
motion for default'' when such demand has not been disclosed in the 
complaint. This statement does not correspond exactly to the text of 
the Sec. 22.17(b), which only requires that motions for default specify 
a penalty sought ``[w]here the motion requests the assessment of a 
penalty * * *'' Section 22.17(b), consistent with accepted practice 
under the existing CROP, allows parties to make motions that merely ask 
the Presiding Officer to determine whether a default has occurred, 
without arguing at that time what penalty should be assessed.
    As noted in the response to comments on Sec. 22.17(a), not all 
failures to conform to the CROP will warrant a default judgment. Until 
such time as a respondent is found to be liable for a default judgment, 
it is not necessary for the parties to commit their resources to 
arguing what relief is appropriate. Motions for default may be likened 
to motions for accelerated decision: It is appropriate in many 
instances to file a motion for partial accelerated decision, that 
merely attempts to resolve whether as a matter of law respondent is or 
is not liable for a violation, leaving the determination of the proper 
penalty for

[[Page 40155]]

a subsequent motion if liability is established. This approach spares 
the parties from burdensome litigation over an issue that may be moot.
    CEEC's statement mirrors a statement in the preamble to the 
proposed rule (63 FR at 9469). EPA acknowledges that this statement, 
while generally accurate, is overly broad in that it incorrectly 
implies that every motion for default must specify a penalty. In order 
to avoid unnecessary burdens on the litigants, EPA intends that the 
CROP should continue to allow parties to make motions that merely ask 
the Presiding Officer to determine whether a default has occurred, 
without specifying a penalty in that particular motion. Pursuant to the 
second sentence of paragraph (b), complainant will still be obliged to 
specify a penalty if it moves for the assessment of a penalty against a 
defaulting party. However, this may be a second motion that follows a 
finding that default judgment against respondent is warranted.
    In order to eliminate any confusion resulting from the overly broad 
statement in the preamble or ambiguity in the regulation itself, EPA 
has added an additional clarifying sentence to Sec. 22.17(b): ``The 
motion may seek resolution of all or part of the proceeding.''
    Dow supports the revision of Sec. 22.17(c) that gives the Presiding 
Officers greater discretion in determining the appropriate relief in 
the default orders because this ``flexibility will let the Presiding 
Officer ensure that any relief ordered is supported by the 
administrative record.'' Dow's comment is essentially reiterated by CMA 
and API: both organizations ``support the provision requiring the 
Presiding Officer, when issuing a default order, to determine that the 
relief sought in the complaint is consistent with the applicable 
statute.''
    Even though there were no adverse comments regarding this 
provision, the preceding discussion of paragraphs (a) and (b) suggests 
some useful revisions of paragraph (c). First, corresponding to 
Sec. 22.17(b)'s statement that a default ``motion may seek resolution 
of any or all parts of the proceeding'', Sec. 22.17(c) is revised to no 
longer require that a default order must be an initial decision, unless 
it resolves ``all issues and claims in the proceeding.'' This will 
allow Presiding Officers to find a party liable in default, without 
necessarily determining the appropriate relief in the same order.
    Second, EPA has also relaxed the proposed requirement that ``the 
relief proposed in the complaint or the motion for default shall be 
ordered unless the record clearly demonstrates that the requested 
relief is inconsistent with the Act.'' Under this proposed language, if 
a proposed penalty were inconsistent with the record (e.g., owing to a 
mathematical error), though not to such a degree as to be clearly 
inconsistent with the statutory penalty authority, the Presiding 
Officer would apparently be required to assess the proposed penalty. In 
order to prevent injustice, EPA has amended this language to allow the 
Presiding Officer to impose other relief where ``the requested relief 
is clearly inconsistent with the record or the Act''.
    c. Final Rule. EPA is adopting Sec. 22.17 as proposed, but with 
several modifications. As discussed above, EPA has added one sentence 
to Sec. 22.17(b). EPA has also noted that the rest of the proposed 
Sec. 22.17(b) repeats parts of Sec. 22.16(a). Section 22.16 applies to 
all motions, except as otherwise provided, so restatement is not 
necessary in Sec. 22.17(b). Moreover, the failure to include all of 
Sec. 22.16(a) in Sec. 22.17(b) introduces potential confusion. 
Accordingly, EPA has deleted from the final rule those parts of the 
proposed Sec. 22.17(b) that are redundant with the general requirements 
for motions at Sec. 22.16.
    The proposed Sec. 22.17(a) provided that a default by respondent 
would constitute a waiver of respondent's ``right to a hearing'' on the 
factual allegations in the complaint. Throughout today's final rule, 
for clarity and consistency, EPA has endeavored to use the term 
``hearing'' only to refer to oral evidentiary hearings. As there is no 
right to an oral evidentiary hearing (see, e.g., In re Green Thumb 
Nursery, Inc., 6 E.A.D. 782 (1997)), EPA has revised Sec. 22.17(a) to 
state that default by respondent constitutes a waiver of respondent's 
``right to contest'' the factual allegations in the complaint. EPA has 
replaced the undefined word ``action'' in Sec. 22.17(a) with the word 
``proceeding,'' which is defined in today's final rule as discussed 
below.
    EPA has revised Sec. 22.17(c) as follows: (1) EPA has added the 
clause ``as to all or part of the proceeding,'' to the first sentence, 
before ``unless the record shows''; (2) EPA has revised the second 
sentence to say ``If the order resolves all outstanding issues and 
claims in the proceeding, it shall constitute the initial decision 
under these Consolidated Rules of Practice.''; (3) EPA has expanded the 
next to last sentence in order to allow the Presiding Officer to impose 
relief other than that requested by complainant if it is clearly 
inconsistent with the record of the proceeding. In addition, EPA has 
split the second sentence of the proposed Sec. 22.17(c) into two 
sentences. This editorial revision is not intended to effect a 
substantive change.
    For consistency with changes elsewhere in the CROP, EPA has revised 
Sec. 22.17(d) to refer to the effective date of a ``Permit Action'' 
rather than the effective date of a permit revocation or suspension. To 
conform to the preferred style of the U.S. Government Printing Office, 
EPA has also revised Sec. 22.17(d) to state the time allowed for paying 
default penalties with the numeral ``30''.
12. Quick Resolution (40 CFR 22.18(a))
    a. Summary of Proposed Rule. In cases where the complaint proposes 
a specific penalty amount (and seeks no other relief), the proposed 
Sec. 22.18(a)(1) would provide that the respondent can resolve the case 
at any time by simply paying the proposed penalty in full. The only 
restriction on when the respondent can take advantage of the quick 
resolution provision is in cases involving the public comment 
provisions of Sec. 22.45. In these cases, the respondent must wait 
until 10 days after the period for public comment has closed before 
submitting the penalty payment.
    Where the complaint includes a specific proposed penalty, the 
proposed Sec. 22.18(a)(2) would allow respondent to resolve an action 
without filing an answer by paying the penalty within 30 days of 
receipt of the complaint. By paying the proposed penalty within that 30 
day time frame, the action is resolved before the answer is due and 
hence there is no need for respondent to file an answer.
    If the respondent wishes to resolve the matter by paying the 
proposed penalty in full but needs additional time in which to do so, 
Sec. 22.18(a)(2) would allow the respondent to file a written statement 
with the Regional Hearing Clerk within 30 days of receiving the 
complaint in which it agrees to pay the penalty within 60 days of 
receipt of the complaint.
    b. Significant Comments and EPA Response. Dow noted that in actions 
subject to the public comment provisions, the 30 day public comment 
period may require respondent to file an answer even though it wants to 
resolve the action, because the last sentence of Sec. 22.18(a)(1) 
provides that a respondent cannot utilize the quick resolution 
provision until 10 days after the close of the public comment period. 
This commenter suggested amending the last sentence of Sec. 22.18(a)(1) 
to explicitly provide that the respondent does not have to file an 
answer if it wishes to settle the action by paying the full penalty. 
Instead, EPA believes that the

[[Page 40156]]

better approach is for respondent to file a statement agreeing to pay 
the full penalty, in accordance with Sec. 22.18(a)(2), and delay 
payment until the eleventh day after the close of the public comment 
period. Section 22.18(b)(2) provides ample time for paying the proposed 
penalty after the close of the public comment period, so long as the 
public notice is issued contemporaneously with the complaint. If the 
public notice is delayed, a motion for extension of time may be 
necessary.
    CEEC supports the proposed inclusion of the ``quick resolution'' 
process, but noted that the quick resolution option is not available to 
respondents if the complaint does not propose a specific penalty. The 
proposed language would have prevented respondents who receive 
complaints that did not contain specific penalty demands from 
exercising the quick resolution option even after EPA has made a 
specific penalty demand. This was unintended, and EPA has revised 
Sec. 22.18(a)(1) so that once complainant has made a specific penalty 
demand, respondent may resolve the proceeding by paying the proposed 
penalty in full. The option of notice pleading in lieu of pleading a 
specific penalty amount is intended to provide EPA with flexibility in 
those situations where only the violator possesses information crucial 
to the proper determination of the penalty, such as the economic 
benefit the violator derived from its noncompliance, or its ability to 
pay the penalty. Under such circumstances, EPA needs to obtain and 
review the necessary information before proposing a penalty. Section 
22.19 of the rule provides that EPA must at the prehearing exchange 
stage propose a specific penalty. Once EPA proposes a specific penalty, 
the respondent may, if it wishes, utilize the quick resolution 
provision and pay the proposed penalty in full at that time. As a 
result of this revision, notice pleading does not prevent the use of 
the quick resolution provision by the respondent, it only delays it. 
While the respondent, under such circumstances, would not be able to 
take advantage of the quick settlement until after the prehearing 
exchange, respondents always have the option of early resolution of the 
proceeding pursuant to Sec. 22.18(b), by informally negotiating 
settlement with the Agency.
    The same commenter noted that the quick resolution option was 
available to respondents only if they are willing to pay the full 
amount of the proposed penalty. This commenter also noted that the 
quick resolution provision should include safeguards to prevent or 
redress those situations where EPA may have pled an excessive penalty 
amount. These comments appear to envision a quick resolution that is 
entirely unlike that proposed in Sec. 22.18(a), but which does not 
appear to differ significantly from the settlement process in 
Sec. 22.18(b) and (c). As presently codified, the CROP does not 
explicitly provide for a ``no contest'' plea. EPA intended to remedy 
this by explicitly providing in the proposed Sec. 22.18(a) a formal 
process for a respondent who--upon receipt of the complaint or at any 
later time--wishes to simply pay the proposed penalty and disengage 
from the proceeding. In contrast, the settlement provisions of 
Sec. 22.18(b) and (c) provide opportunity to negotiate a settlement 
that could terminate the proceeding upon payment of a lesser penalty. 
If the respondent believes that EPA has pled an excessive amount, the 
respondent has the option of informally discussing the matter with EPA 
during settlement negotiations, or formally contesting the proposed 
penalty through the hearing process. Consequently, there is no need to 
amend the proposed Sec. 22.18(a) to safeguard respondents' interests.
    The USAF noted that, because of fiscal law requirements, it would 
be difficult for a federal agency to make a penalty payment within 60 
days of complaint issuance, thereby effectively foreclosing federal 
agencies from taking advantage of the quick resolution provision. The 
USAF suggests that 18 months would be appropriate. EPA acknowledges 
that it may be difficult for a federal agency, or a state or local 
agency, to pay a penalty within 60 days of receipt of the complaint. 
However, EPA does not believe that the intended purpose of the quick 
resolution provision would be served by such an extension of the 
payment period. Where respondent is unable to pay the penalty within 60 
days, EPA believes that the Sec. 22.18(b) settlement process would be 
the appropriate process for terminating the proceeding.
    The USAF also noted that this section obligates respondent to admit 
the jurisdictional allegations of the complaint and waive its right to 
appeal a final order, and argues that this deprives the federal 
respondent its right to elevate the matter to the President. The Agency 
maintains that if a federal agency wishes to contest a proposed 
penalty, it should exercise its right to hearing and raise the matter 
through the appeal processes provided. If, on the other hand, the 
federal agency wishes to conclude the action, it must be willing to 
agree to waive its rights to further appeals.
    c. Final Rule. As noted above, EPA has amended the proposed 
Sec. 22.18(a)(1) to allow quick resolution at any point in a proceeding 
once complainant has proposed a specific penalty, including penalties 
specified in complainant's prehearing exchange, and by moving from the 
first to the second sentence the language that limited quick resolution 
to cases where the complaint contained a specific proposed penalty.
    As discussed in connection with the revisions to Sec. 22.14, EPA 
has deleted Appendix B. Accordingly, EPA has revised the first sentence 
of Sec. 22.18(a)(1) to require that payment be made as specified by 
complainant, and deleted reference to Appendix B. In order to address 
interbank funds transfers, EPA has expanded Sec. 22.18(a)(1) to include 
other instruments of payment. With these changes, the first two 
sentences of Sec. 22.18(a)(1) now read as follows:

    A respondent may resolve the action at any time by paying the 
specific penalty proposed in the complaint or in complainant's 
prehearing exchange in full as specified by complainant and by 
filing with the Regional Hearing Clerk a copy of the check or other 
instrument of payment. If the complaint contains a specific proposed 
penalty and respondent pays that proposed penalty in full within 30 
days after receiving the complaint, then no answer need be filed.

    The proposed Sec. 22.18(a)(3) provided that quick resolution would 
constitute a waiver of respondent's ``rights to a hearing''. Throughout 
today's final rule, for clarity and consistency, EPA has endeavored to 
use the term ``hearing'' only to refer to oral evidentiary hearings. As 
there is no right to an oral evidentiary hearing (see, e.g., In re 
Green Thumb Nursery, Inc., 6 E.A.D. 782 (EAB 1997)), EPA has revised 
Sec. 22.18(a)(3) to state that quick resolution constitutes a waiver of 
respondent's ``rights to contest the factual allegations in the 
complaint''.
    EPA has also corrected a typographical error in the word 
``section'' that appeared in the third sentence of the proposed 
Sec. 22.18(a)(1). In the third sentence of Sec. 22.18(a)(1), EPA has 
replaced the phrase ``to revoke, terminate or suspend a permit'' with 
the term ``Permit Action'', as discussed in connection with revisions 
to Sec. 22.3(a) and Sec. 22.14(a)(4)(iii).
    EPA has replaced the undefined word ``action'' in Sec. 22.18(a)(1) 
and (2) with the word ``proceeding,'' which is defined in today's final 
rule as discussed below. Finally, to conform to the preferred style of 
the U.S. Government Printing Office, EPA has revised Sec. 22.18(a)(1) 
and (2) to state all time periods with numerals.

[[Page 40157]]

13. Settlement and Scope of Resolution or Settlement (40 CFR 
22.18(b)&(c))
    a. Summary of Proposed Rule. The proposed Sec. 22.18(b) would 
clarify the existing settlement process. Paragraph (b)(2) would specify 
that consent agreements contain an express waiver of the respondent's 
right to a hearing and appeal of the final order, and establishes 
additional content requirements for consent agreements in cases where 
the complainant proposes to simultaneously commence and conclude a case 
pursuant to Sec. 22.13(b) through filing of a consent agreement and 
final order negotiated before a complaint is issued.
    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 final order.
    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.
    b. Significant Comments and EPA Response. Dow urges that 
Sec. 22.18(b)(2) should expressly provide for partial or contingent 
settlements. Dow's particular concern is that paragraph (b)(2) should 
not require respondent to waive its right to hearing or to appeal 
matters that are raised in the complaint but not included in the 
consent agreement or the final order. Dow's comments do not take issue 
with the waiver of rights to hearing or appeal in settlements of the 
entire proceeding.
    Paragraphs (a), (b) and (c) of Sec. 22.18 define the process by 
which the parties may resolve an entire proceeding, and so, consent 
agreements pursuant to Sec. 22.18(b)(2) and final orders under 
Sec. 22.18(b)(3) can be neither partial nor contingent. Nevertheless, 
EPA disagrees with Dow's conclusion that the proposed rule precludes 
partial or contingent settlements. Where the parties wish to settle 
some of the counts in a complaint, they may file stipulations as to a 
respondent's liability, and/or to the appropriate relief, for those 
counts. Where the parties seek a more final resolution, they may move 
pursuant to Sec. 22.12(b) to sever the case ``with respect to any or 
all parties or issues.'' Upon severance, the parties may settle the 
uncontested portions and litigate the contested portions. Contingent 
settlements (e.g., where the parties agree that if a contested issue is 
resolved in a certain manner, then the parties agree to settle on 
predetermined terms) are possible under the proposed rule, however, the 
documents committing the parties to the contingency agreement would not 
themselves constitute ``consent agreements'' pursuant to 
Sec. 22.18(b)(2). Such contingent settlements could be accomplished, 
for example, through formal stipulations as to the appropriateness of 
certain relief in the event that liability is established, or 
agreements to sign a specific ``consent agreement'' when the agreed 
conditions are met. As the problems Dow describes can easily be 
avoided, EPA believes that the language in the proposed rule is 
desirable in that it gives respondents unambiguous notice that consent 
agreements waive respondents' rights to a hearing and all rights of 
appeal, including appeal to the federal courts as well as appeal to the 
EAB under Secs. 22.30 and 22.32.
    CMA/API object to language proposed for Sec. 22.18(c) that would 
limit the scope of relief available in settlements to those 
``violations and facts'' alleged in the complaint. CMA/API feel this 
provision prevents the parties from taking advantage of the economies 
that result from resolving in a single settlement additional violations 
that may come to light during the proceeding. EPA agrees that it is, in 
many cases, desirable to resolve in a single proceeding additional 
violations that become apparent as a case progresses. However, such 
expansions of a proceeding should be accomplished through motions to 
amend the complaint, pursuant to Sec. 22.14(c). Although even a joint 
or uncontested motion to amend the complaint is somewhat more 
burdensome that expanding the case through a consent agreement alone, 
this burden is outweighed by the interest of assuring a clear public 
record of the Agency's administrative enforcement proceedings.
    This is particularly important where statutes require public notice 
of a proposal to assess penalties for specific violations. Such 
statutes envision that interested members of the public will have had 
notice of all violations cited in the complaint and all violations 
resolved by consent agreement, in order to properly avail themselves of 
their statutory rights as to those actions.
    CEEC also objects to the proposed language limiting settlements to 
``the facts and violations alleged in the complaint'', on the grounds 
that it is improper for the Agency to assess in a subsequent proceeding 
additional penalties for other violations arising out of the same 
circumstances identified in the initial proceeding. As noted above, EPA 
is well aware that resolving as many violations as possible within a 
single proceeding generally demands less resources than pursuing 
multiple cases involving similar facts or issues, and EPA generally can 
be counted on to take advantage of such cost-saving opportunities. 
There are, however, circumstances where this may be inadvisable or 
impossible. For example, where one violation is straightforward and 
undisputed, neither party would gain from delaying resolution of that 
case in order to address within the same proceeding another violation 
sharing certain facts with the first, but concerning a different 
statute, an unsettled area of the law, and presenting substantial 
evidentiary disputes. In other circumstances, where new facts 
establishing other violations come to light after the close of a case, 
it would be impossible to resolve these newly discovered violations 
through the closed case. EPA therefore disagrees with CEEC's contention 
that it is necessarily improper for EPA to seek penalties in a 
subsequent proceeding for violations related to the initial proceeding.
    Section 22.14(a) requires that a complaint specify each statutory 
provision, regulation, permit or order that respondent is alleged to 
have violated, and a concise statement of the factual basis for 
alleging the violation. The complaint thereby describes the violations 
at issue in the case, in terms of the specific legal requirements and 
their specific factual circumstances; anything else is outside the 
scope of the proceeding. This description of the violations that 
comprise the case must also describe the scope of any settlement. Any 
violations that are outside the scope of the complaint must necessarily 
be outside the scope of any possible settlement.
    The language of Sec. 22.18(c) to which CEEC objects merely states 
that payment of a penalty ``shall only resolve respondent's liability * 
* * for the violations and facts alleged in the complaint.'' This 
provision defines the scope of settlement in its most obvious and 
straightforward sense.
    c. Final Rule. EPA is adopting Sec. 22.18(b) and (c) as proposed, 
with minor editorial changes. The proposed Sec. 22.18(b)(2) provided 
that in a consent agreement, respondent must waive ``any right to a 
hearing''. For the reasons noted in the discussion of Sec. 22.18(a)(3) 
above, EPA has revised this to require that respondent waive ``any 
right to contest the factual allegations in the complaint''. EPA has 
also replaced the term ``consent order'' with the term ``final order'' 
or ``proposed final order'' in paragraph (b) and elsewhere (Secs. 22.3

[[Page 40158]]

(definition of final order), 22.13(b), and 22.45(b)(4)). A consent 
order is in fact a final order, and CROP's suggestion that there is a 
distinction only adds potential for confusion. EPA has replaced the 
phrase ``permit revocation, termination or suspension'' with ``Permit 
Action'', as discussed in connection with revisions to Sec. 22.3(a) and 
Sec. 22.14(a)(4)(iii). Finally, reflecting changes to Sec. 22.14(a) 
noted above, EPA has added the requirement that in proceedings 
commenced pursuant to Sec. 22.13(b), the consent agreement shall also 
contain the information required in Sec. 22.14(a)(8).
14. Alternative Dispute Resolution (40 CFR 22.18(d))
    a. Summary of Proposed Rule. The proposed Sec. 22.18(d) would add a 
new provision that recognizes the use of alternative dispute resolution 
(``ADR'') within the scope of the Alternative Dispute Resolution Act, 5 
U.S.C. 581 et seq. The proposed rule would provide that, while the 
parties engage in ADR, the enforcement proceeding is not automatically 
stayed, jurisdiction remains with the Presiding Officer, and all 
provisions of the CROP remain in effect. The parties may select any 
person to act as a neutral, or may file a motion with the Presiding 
Officer to request a neutral. If the Presiding Officer concurs with the 
motion, the Presiding Officer forwards the motion to the Chief 
Administrative Law Judge who designates a qualified neutral.
    b. Significant Comments and EPA Response. Those who commented on 
the proposed Sec. 22.18(d) support the Agency's use of ADR and 
inclusion in the CROP of a provision that recognizes ADR. CEEC believes 
that the proposed rule does not go far enough to encourage ADR, that it 
seems to employ ADR only after a complaint is filed, and that it limits 
the use of ADR by not staying the enforcement proceeding when the ADR 
process is commenced. CEEC urges the Agency to make available and 
encourage the use of a broad array of ADR options, by formalizing the 
availability of the complete range of ADR. Dow Chemical supports the 
allowance upon request of temporary stays and extensions for motions, 
discovery and hearings during ADR proceedings, to encourage voluntary 
settlement and to avoid imposing undue burdens on the parties and the 
Presiding Officer.
    EPA believes that the absence of an automatic stay provision in the 
rule does not unreasonably limit the use of ADR. The Presiding Officer 
always has the discretion to grant a stay in connection with the 
parties' use of ADR, but such a decision should be made for each case 
individually depending on the circumstances, and a stay may be 
inappropriate in cases of excessive delay.
    EPA agrees that a broad array of ADR options should be made 
available to parties, but believes that it is not necessary to list in 
the rule, and thereby possibly limit, the range of ADR options. Section 
22.18(d)(1) provides for ``any process within the scope of the 
Alternative Dispute Resolution Act.'' The neutral serving in the 
particular case may discuss ADR options with the parties.
    CEEC objected that the CROP does not require the Agency to attempt 
to resolve a case before filing the complaint. The CROP does not limit 
ADR to the time after a complaint is filed. The parties may agree to 
use ADR prior to the filing of a complaint.
    c. Final Rule. EPA has adopted Sec. 22.18(d) as proposed, with 
minor technical revisions to paragraph (d)(3) intended to address two 
concerns. First, in subpart I cases, it is appropriate for a neutral to 
be appointed by the Regional Administrator rather than by the Chief 
Administrative Law Judge. Second, it is more accurate to say the 
Presiding Officer ``grants'' a motion, rather than ``concurs with'' a 
motion.
15. Prehearing Exchange; Prehearing Conference (40 CFR 22.19(a)&(b))
    a. Summary of Proposed Rule. EPA proposed to amend Sec. 22.19(a) 
and (b) by reversing paragraphs (a) and (b) in order from the existing 
CROP, reflecting the fact that the information exchange is more common 
than, and usually precedes, a prehearing conference. The requirements 
for the 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 proposed that the complainant 
would specify a proposed penalty if it has not done so in the complaint 
and state the basis for that penalty. The respondent would be required 
to provide all factual information it considers relevant to the 
assessment of a penalty, even if the complainant did not identify a 
specific penalty in the complaint. EPA also proposed under Sec. 22.22 
to tighten the standards for admitting into evidence information that 
was not timely exchanged.
    In addition, EPA requested comments on whether it is necessary for 
the complainant to specify a proposed penalty in the prehearing 
exchange when it has not specified a specific penalty in the complaint 
(notice pleading). Comments were also requested on the merits of 
allowing the complainant to postpone for an additional 30 days, or 
indefinitely, the making of a specific penalty demand where EPA has not 
specified a specific penalty in the complaint. EPA also requested 
comments 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, rather than requiring a prehearing 
exchange order from the Presiding Officer. 63 FR at 9472.
    EPA proposed to revise paragraph (b) to 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.
    b. Significant Comments and EPA Response. CEEC opposes allowing EPA 
to postpone making a specific proposed penalty until the prehearing 
information exchange, insisting that the proposed penalty appear in the 
complaint. Dow does not object to postponing the specific penalty until 
prehearing exchange, but objects to any further postponement. Dow notes 
that if information obtained during or after the prehearing exchange 
warrants a change in the proposed penalty, the CROP already allows for 
amendment of the pleadings. Dow maintains that requiring a specific 
proposed penalty is not a hardship for the complainant, however, 
postponing it beyond prehearing exchange would impose a hardship on the 
respondent. Respondents need to know the proposed penalty amounts to 
make informed decisions about settling or contesting violations. 
Therefore, Dow argues that no further delays or extensions should be 
allowed, except with the consent of the respondent. UWAG suggested that 
the proposal would be ineffective because complainant would be no 
better informed at the time of prehearing exchange than it is at the 
time the complaint is issued.
    As set forth in the discussion concerning Sec. 22.14, EPA has 
retained Sec. 22.14(a)(4)(ii), which allows EPA to elect not to specify 
a specific penalty in the complaint. When complainant has incomplete or 
unreliable information on subjects such as the economic benefit 
respondent received from its unlawful conduct and its ability to pay a 
penalty, it would be of little benefit to respondent for complainant to 
make an uninforme--and possibly unrealistic--penalty demand, which 
would need to be amended when better information becomes available. 
Complainant would risk specifying either a too-high figure that could 
result in EAJA claims, or a too-low figure that fails to achieve

[[Page 40159]]

deterrence, and then be forced to defend its guesswork in the penalty 
litigation. EPA has concluded that complainants should not have to 
specify a penalty demand until after prehearing exchange.
    EPA continues to believe that there is merit to giving respondents 
a specific penalty demand at the earliest practical stage of a 
proceeding, and has therefore not adopted the approach used in the 
federal courts, where specific penalty demands generally are not made 
until the end of the proceeding. Today's final rule requires 
complainant to specify a proposed penalty no later than 15 days after 
respondent has filed its prehearing exchange. The final rule requires 
each party to include in its prehearing information exchange all 
factual information it considers relevant to the assessment of a 
penalty, as well as exhibits and documents it intends to use at the 
hearing, names of witnesses and summaries of their anticipated 
testimony. Owing to the general nature of these prehearing exchange 
requirements, further discovery may still be appropriate, and 
complainants may need to amend their proposed penalties, but the 
prehearing information exchange nonetheless will provide complainants 
with a substantial basis for formulating a specific penalty demand.
    CEEC and Dow oppose automatic prehearing exchange, stating that 
during productive settlement discussions such attention could be better 
spent on settlement. Dow proposes one of the following options: (1) 
making the prehearing exchange totally dependent on an order from the 
Presiding Officer, or (2) making the prehearing exchange automatic, but 
expressly allowing the Presiding Officer to issue a temporary stay or 
to extend the deadline. CMA/API recommend a default time period of 90 
days prehearing exchanges as a starting point, which the parties would 
be allowed to modify by mutual agreement.
    Today's final rule does not require the automatic filing of 
prehearing exchanges. Although such a requirement may expedite 
resolution of many cases, EPA believes that it would be a distraction 
and an unnecessary burden in that greater number of cases that progress 
readily toward settlement. Furthermore, the Presiding Officer may 
require additional information from the parties as part of his or her 
prehearing scheduling order than is provided in Sec. 22.19(a). 
Therefore, the prehearing exchanges will not be required until ordered 
by the Presiding Officer.
    Regarding the proposed Sec. 22.19(b), Dow notes that EPA failed to 
delete the phrase ``before him'', as discussed in the preamble to the 
proposed rules. EPA agrees that this editorial change would help 
clarify that Sec. 22.19(b) no longer requires that the parties 
personally appear before the Presiding Officer, but allows the 
Presiding Officer to conduct telephonic prehearing conferences.
    CEEC proposes that EPA should be required, as part of its 
prehearing exchange, to provide a respondent with all information 
relevant to whether the respondent had fair notice of the regulatory 
requirement(s). Many different offices in EPA conduct compliance 
assistance, provide speakers, and otherwise publicize regulatory 
requirements, and documenting all such efforts in every case would 
present an unreasonable and unnecessary burden on complainant, 
particularly because fair notice of the law is rarely an issue. 
Moreover, it is unlikely that EPA would have evidence showing that 
respondent does not know something. Accordingly, EPA rejects this 
proposal.
    CEEC also proposes that EPA should also be required to disclose all 
information it uses, or chooses to ignore, in determining the penalty 
it seeks for each alleged violation. The proposed Sec. 22.19(a) would 
require complainant to state the basis for the penalty in its 
prehearing exchange, as well as to provide narrative summaries of 
witnesses' expected testimony, and copies of all documents and exhibits 
that it intends to introduce into evidence at the hearing. These 
requirements would assure that complainant discloses all information it 
uses in determining the appropriate penalty. It would not, however, 
require disclosure of all information that EPA ``chooses to ignore.'' 
EPA believes that little or no reliable, relevant information is ever 
knowingly ignored in determining proposed penalties. Moreover, such 
exculpatory evidence and evidence of concerning a respondent's 
inability to pay the proposed penalty is almost always in respondent's 
hands, and not in complainant's. Accordingly, it would be exceedingly 
rare for the requirement proposed by CEEC to provide a respondent with 
new information. This potential benefit is greatly outweighed by the 
burden on the complainant to identify, document, and exchange all the 
information that it has not considered in determining the proposed 
penalty.
    EPA agrees with CEEC's recommendation that Sec. 22.19(a) should be 
amended to make the complainant's and respondent's burdens more equal. 
In the proposed Sec. 22.19(a), complainant would be required to state 
the basis for the proposed penalty, while respondent would have to 
provide ``all factual information it considers relevant to the 
assessment of a penalty''. For cases where complainant has specified a 
proposed penalty before prehearing exchange, Sec. 22.19(a)(3) of 
today's final rule now requires that ``complainant shall explain in its 
prehearing information exchange how the proposed penalty was calculated 
in accordance with any criteria set forth in the Act, and the 
respondent shall explain in its prehearing information exchange why the 
proposed penalty should be reduced or eliminated.'' For those cases 
where EPA has not specified a proposed penalty, Sec. 22.19(a)(4) 
imposes on each party the identical burden of providing ``all factual 
information it considers relevant to the assessment of a penalty.''
    c. Final Rule. For the foregoing reasons, EPA is adopting 
Sec. 22.19(a) with the two substantive changes noted above. In response 
to CEEC's comment, EPA has amended the proposed Sec. 22.19(a) to 
provide a more equitable burden concerning providing information 
concerning the proposed penalty. EPA has also revised Sec. 22.19(a) to 
allow complainant to specify a proposed penalty 15 days after 
prehearing exchange, rather than in its prehearing exchange as 
proposed.
    The parties information exchange burdens necessarily differ 
depending on whether complainant has specified a proposed penalty 
before the prehearing exchange, but the proposed rule did not fully 
address these differences. In order to make the prehearing information 
exchange process address these differences, EPA has significantly 
reorganized and revised Sec. 22.19(a). Paragraph (a)(1) contains the 
provisions describing the nature and effect of the prehearing 
information exchange. The only significant differences between the 
provisions of paragraph (a)(1) and their counterparts in the proposed 
rule are that paragraph (a)(1) expressly requires that prehearing 
exchange be ``filed'' (Sec. 22.5(b) provides for service on the 
Presiding Officer and opposing parties), and clarifies that an order of 
the Presiding Officer initiates prehearing exchange.
    Paragraph (a)(2) describes the contents of prehearing information 
exchange, other than those that depend upon whether complainant has 
specified a proposed penalty. These requirements are unchanged.
    As discussed in the response to comments above, paragraph (a)(3) 
provides that where complainant has already specified a proposed 
penalty, complainant shall include in its prehearing information 
exchange an explanation of how the proposed

[[Page 40160]]

penalty was calculated in accordance with any criteria set forth in the 
Act, and the respondent shall include an explanation why the proposed 
penalty should be reduced or eliminated.
    Paragraph (a)(4) applies where complainant has not specified a 
proposed penalty, and requires each party to include in its prehearing 
information exchange all factual information it considers relevant to 
the assessment of a penalty. It also requires that complainant file a 
document specifying a proposed penalty and explaining how the proposed 
penalty was calculated in accordance with any criteria set forth in the 
Act 15 days after respondent has filed its prehearing information 
exchange.
    EPA has adopted Sec. 22.19(b) as proposed, except that in response 
to comment, EPA has deleted the words ``before him''.
16. Other Discovery (40 CFR 22.19(e))
    a. Summary of Proposed Rule. The proposed Sec. 22.19(e) would 
provide a mechanism for discovery should any be necessary after the 
parties have completed their prehearing exchange. Under the CROP, other 
discovery has always been limited in comparison to the extensive and 
time-consuming discovery typical in the Federal courts, and designed to 
discourage dilatory tactics and unnecessary and time-consuming motion 
practice.
    The proposed revisions to Sec. 22.19(e)(1) would require additional 
detail in motions for discovery, and refine the substantive standards 
for issuance of a discovery order. The proposed rule would add a 
prohibition against discovery that would unreasonably burden the other 
party. The proposal would also elaborate 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.'' The proposed rule would 
clarify the existing prohibition on discovery where ``[t]he information 
to be obtained is not otherwise obtainable'', by substituting 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''.
    Paragraph (e)(2) of the proposed rule would expressly prohibit 
discovery of a party's settlement positions and information regarding 
their development, specifically including penalty calculations that are 
based on Agency settlement policies. Paragraph (e)(3) would clarify 
that the Presiding Officer may order depositions upon oral questions 
only where additional conditions, over and above those in paragraph 
(e)(1), are satisfied. Paragraph (e)(4) would consolidate in the main 
body of the CROP the subpoena standards presently scattered through the 
supplemental rules. This consolidation does not signify any general 
subpoena authority: Subpoenas are available in CROP proceedings only 
where authorized by the Act giving rise to the cause of action.
    Paragraph (e)(5) states that none of the Sec. 22.19(e) limitations 
on discovery limit a party's right to request admissions or 
stipulations, a respondent's right to request Agency records under the 
Federal Freedom of Information Act (``FOIA''), 5 U.S.C. 552, or EPA's 
authority under the Act to conduct inspections, issue information 
request letters or administrative subpoenas, or otherwise obtain 
information.
    b. Significant Comments and EPA Response. Several of the commenters 
object to proposed changes to Sec. 22.19(e)(1) that would allow 
discovery only where it ``[w]ill neither unreasonably delay the 
proceeding nor unreasonably burden the non-moving party'', and where it 
``[s]eeks information that has significant probative value on a 
disputed issue of material fact relevant to liability or the relief 
sought.'' UWAG and UARG are concerned that these criteria are vague and 
might prevent respondents from discovering documents relating to the 
basis for the Agency's determination that a violation has occurred and 
concerning how the Agency determined the proposed penalty. UWAG and 
UARG believe that respondents cannot meaningfully respond to a 
complaint without access to such documents. CEEC states that while 
efforts to lessen the burden of discovery are admirable, the proposed 
limitations on discovery are one-sided and disadvantage respondents. 
CMA/API believe that the proposed criteria of Sec. 22.19(e)(1) are 
``unfair and fundamentally tip the balance in favor of EPA.'' CMA/API 
say the ``unreasonably burdensome'' standard is vague, subjective, and 
too easily abused.
    EPA believes that the changes to Sec. 22.19(e)(1) will not 
significantly alter the amount of discovery permitted, although it is 
hoped that they will reduce the amount of litigation over whether 
discovery is to be allowed. EPA notes that the provisions to which the 
commenters object are less vague than the comparable provisions of the 
existing rule, which have been reasonably effective for 18 years. 
Although the standard ``neither unreasonably delay nor unreasonably 
burden'' does not achieve mathematical exactness, it is the sort of 
standard that judges are accustomed to apply. EPA is confident that the 
impartial presiding officers can implement these standards in a fair 
and efficient manner.
    Although commenters express concern that the proposed discovery 
criteria may prevent respondents from discovering information important 
to their defense, no commenter has identified any specific information 
or category of information that could not be discovered under the 
proposed discovery standards. None of the commenters have articulated 
any reason why discovery should extend to information that does not 
have significant probative value on a disputed issue of material fact 
relevant to liability or the relief sought, or why a presiding officer 
should allow unreasonable delay or unreasonable burdens. EPA perceives 
no basis for the contention that these proposed discovery criteria 
unfairly limit discovery. The proposed changes to the standards for 
granting a discovery motion are incremental, and are unlikely to 
produce different results in the majority of cases. The proposed 
changes are beneficial in that they clarify the types of discovery that 
are appropriate and help prevent inappropriate discovery.
    There is no inherent unfairness in rules that permit less extensive 
discovery than those of the Federal courts. Restrictions on discovery 
work as both an burden and an advantage, and as some of the commenters 
acknowledge, respondents share in the advantages as well as the 
burdens. For example, the extensive discovery allowed in the Federal 
courts allows EPA to expand a judicial case through discovery of all 
manner of violations. The CROP limits the Agency's discovery to 
``information that has significant probative value on a disputed issue 
of material fact relevant to liability or the relief sought.'' As a 
result, EPA foregoes in its administrative proceedings the 
opportunities afforded by extensive discovery in exchange for the 
benefits of more expeditious case resolution.
    EPA finds no merit to the contention that respondents cannot 
meaningfully respond to a complaint without broader discovery of 
documents relating to the basis for the Agency's determination that a 
violation has occurred and concerning how the Agency determined the 
proposed penalty. EPA is unlikely to have unique information relevant 
to the case. Respondents are generally in a better position than is EPA 
to obtain

[[Page 40161]]

first hand information about whether or not they have conducted their 
activities in violation of the law, and about the circumstances 
surrounding any violations. The evidence upon which EPA bases its 
enforcement action is generally acquired from the respondent through an 
inspection or information collection request that is well known to 
respondent, or through respondent's own reporting. The proposed 
Sec. 22.14(a) requires EPA to articulate the regulatory and factual 
basis of its case in the complaint. The proposed Sec. 22.19(a) requires 
EPA in prehearing exchange to identify all witnesses it intends to call 
at hearing, provide summaries of their expected testimony, provide 
copies of all exhibits and documents to be introduced as evidence, and 
specify the basis of the proposed penalty. In this context, it cannot 
reasonably be argued that the limitations on other discovery imposed 
through Sec. 22.19(e) would prevent respondents' full and meaningful 
participation in the hearing.
    Dow asserts that it is not appropriate for Sec. 22.19(e)(2) to 
preclude discovery of penalty calculations based on ``settlement 
policies,'' because this would leave respondent without information 
necessary to respond to the proposed penalty. Dow observes that EPA 
does not have separate written policies for settlement and for pleading 
penalties, and Dow asserts that EPA uses its ``settlement'' policies 
for both purposes. Dow argues that Sec. 22.19(e)(2) should allow 
discovery of any calculations used to derive a proposed penalty for 
pleading purposes or otherwise pursued in the proceeding.
    EPA had intended that the proposed Sec. 22.19(e)(2) should make 
clear that a party's settlement positions and information regarding 
their development are not discoverable. There is merit to Dow's 
contention that EPA should not be able to shield from discovery the 
basis for a proposed penalty simply by basing it on a document formally 
titled a ``settlement policy.'' The preamble to the proposed rule 
describes this paragraph in a manner that appears to avoid this 
problem, ``the proposed revision would 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.'' 63 Fed. Reg. at 9473. 
Accordingly, EPA has replaced the parenthetical clause from the 
proposed paragraph (e)(2), ``(such as penalty calculations based upon 
Agency settlement policies)'', with more restrictive language taken the 
preamble, ``(such as penalty calculations for purposes of settlement 
based on Agency settlement policies)''.
    CMA/API express their understanding and support of limitations on 
discovery and use of settlement positions, but indicate concern that 
Sec. 22.19(e)(2) might signal an EPA intention to abandon its practice 
of sharing penalty and economic benefit calculations in settlement 
negotiations. This revision of CROP draws on two very different 
antecedents, as it merges the different approaches of the part 22 and 
the proposed part 28 procedures. In those programs that have 
historically relied on the 1980 version of the CROP, the Agency has 
specified a penalty demand in the complaint and has provided a copy of 
the applicable penalty policy and penalty calculation worksheets 
typically at initial settlement conferences, but never later than 
prehearing exchange. In contrast, in its CWA and SDWA class I 
administrative enforcement programs under the proposed part 28 rules, 
EPA did not generally argue the basis of a penalty or specify a penalty 
demand until post hearing briefs, in the manner of enforcement 
proceedings in the Federal courts. For those programs where the 
practice has been to specify a penalty in the complaint, EPA does not 
intend any dramatic change from current practice regarding disclosure 
of penalty and economic benefit calculations in settlement 
negotiations. For those programs that evolved in the Federal courts and 
under the proposed part 28 procedures, specifying a penalty and the 
basis for that penalty at prehearing exchange will be a major change, 
but it is certainly a change that will be to respondents' advantage.
    Dow argues that the word ``reasonably'' should be inserted into 
Sec. 22.29(e)(3)(i) so as to allow depositions on oral questions in 
circumstances where the information ``cannot reasonably be obtained by 
alternative methods of discovery.'' EPA agrees that the suggested 
change should result in more efficient proceedings, and has therefore 
adopted this recommendation.
    The proposed Sec. 22.19(e)(5) also elicited several comments. Some 
commenters seem to misinterpret the Agency's proposal as if it were 
offering FOIA and EPA's other information collection authorities as 
substitutes for discovery opportunities taken away in Sec. 22.19(e)(1). 
As noted above, the changes to Sec. 22.19(e)(1) will only produce an 
incremental restriction of discovery, and would preclude only 
inappropriate discovery. Accordingly, substitutes for discovery are 
neither needed nor appropriate, and suggestions that FOIA rights be 
expanded are rejected. EPA proposed Sec. 22.19(e)(5) simply to make 
clear that FOIA requests, 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. The proposed 
revision does not change the CROP, because these activities have never 
been subject to a Presiding Officer's control.2
---------------------------------------------------------------------------

    \2\ See, e.g., In Re: Dominick's Finer Foods, Inc., Docket No. 
CERCLA/EPCRA-007-95 (February 15, 1996) (holding that a pending 
action in which the parties are subject to the discovery rules of 
Sec. 22.19(f) ``is by no means a basis for restricting EPA's 
information gathering rights'' under CERCLA Sec. 104(e)). Cases 
holding that EPA may not be enjoined from exercising its 
investigative authority under the Solid Waste Disposal Act solely 
because of the pendency of a related administrative action: Del Val 
Ink and Color, Inc., RCRA II-91-0104 (January 12, 1993), at 6-7; 
Florida Dept. Of Transportation, RCRA 92-16-R (October 29, 1993), at 
3-6; and Coors Brewing Co., RCRA-VIII-90-09 (January 4, 1991), at 
11-15. Comparable federal court decisions: Linde Thomson Langworthy 
Kohn & Van Dyke v. RTC, 5 F.3d 1508 1518 (D.C. Cir. 1993) (Statute 
authorizing RTC investigations does not contemplate the termination 
of investigative authority upon commencement of civil proceedings.); 
National-Standard Company v. Adamkus, 881 F.2d 352, 363 (7th Cir. 
1989)(''The mere pendency of a related civil action does not 
automatically preclude EPA's use of other authorized law enforcement 
techniques. * * *''); and In Re Stanley Plating Co., 637 F.Supp. 71, 
72-73 (D.Conn. 1986) (Nothing in RCRA suggesting that civil action 
restricts EPA to investigative techniques in accordance with 
discovery rules).
---------------------------------------------------------------------------

    EPA acknowledges that the statutory information collection tools 
available to the Agency are substantial, however, EPA does not believe 
that this undermines the fairness of the CROP proceedings. The central 
factual issue of a CROP proceeding is whether respondent's conduct has 
been consistent with the law, and respondent's ability to gather 
information about its own conduct is always greater than EPA's, 
statutory information collection authorities notwithstanding. In any 
event, it is uncommon for EPA to initiate inspections, information 
collection requests, or administrative subpoenas (other than those 
issued by the Presiding Officer) to gather information to support cases 
that have already commenced.
    EPA notes that the clause ``EPA's authority under the Act'' may 
have contributed to some commenters' view of paragraph (e)(5) as 
endorsing the use of information collection authorities outside of 
those in Sec. 22.19 to ``otherwise obtain information'' support ongoing 
cases. EPA's primary motivation in proposing Sec. 22.19(e)(5) is that 
its authority to conduct investigations

[[Page 40162]]

unrelated to the particular proceeding, perhaps under other statutes or 
at other facilities, should not be restricted by an unrelated 
enforcement proceeding. EPA has replaced the phrase ``authority under 
the Act'' with the more general phrase ``under any applicable law'' in 
order to better convey EPA's intention that activities unrelated to an 
ongoing CROP proceeding are not to be subject to the Sec. 22.19(e) 
limitations.
    EPA cannot agree with commenters' suggestions that EPA's 
information collection authorities be restricted during the pendency of 
a case. EPA administers fourteen different regulatory statutes, several 
of which impose a wide variety of requirements on EPA and on 
regulatees. Many corporations have dozens, or even hundreds, of 
facilities that are regulated by EPA. EPA needs to continually conduct 
inspections and exercise other information collection authorities both 
to identify noncompliance with existing regulations and to determine 
the need for new or revised regulations, whether or not a company is 
presently subject to a CROP proceeding. In effect, the commenters ask 
EPA to blind itself to anything a respondent might do at any facility 
during the course of a CROP proceeding. EPA would be derelict in its 
regulatory and enforcement responsibilities if it were to forego its 
statutorily authorized information collection tools, even for a 
relatively short time.
    Dow stated that although it agrees generally with the proposed 
Sec. 22.19(e)(5), it believes that the CROP should allow for protective 
orders and/or sanctions to prevent a party from abusing or harassing 
another party. The Presiding Officer has the authority, under 
Secs. 22.4(c)(6), 22.4(c)(10), 22.17, and 22.22, to impose certain 
sanctions against a party, such as exclusion of evidence, that are not 
provided in the statute under which a case is commenced. The Presiding 
Officer in a CROP proceeding does not have the broad powers of a 
Federal court judge, and can order only such relief (e.g. penalty, 
compliance order) as is authorized by the statute(s) under which the 
case is commenced. None of the statutes EPA administers authorize 
protective orders or contempt sanctions for misuse of the information 
collection authorities noted in Sec. 22.19(e)(5).
    The USAF urges that Sec. 22.19(e)(5) state that where EPA seeks to 
obtain information from a respondent represented by an attorney in a 
proceeding under the CROP, it shall seek such information through the 
respondent's attorney. The USAF observes that Sec. 22.10 requires 
representatives of parties to conform to the standards of conduct and 
ethics applicable in the Federal courts, and that one such rule would 
require that information collection efforts concerning the subject of 
the litigation are to be made through counsel for the party. EPA notes 
that these ethical rules are already applicable to attorneys and 
representatives for all parties through Sec. 22.10, and need not be 
restated in Sec. 22.19(e)(5).
    More importantly, EPA's ability to enforce an information 
collection request will depend on whether the request has been made of 
the proper individual. Some statutory information collection 
authorities are only applicable to specified persons (e.g., Section 
308(a) of the Clean Water Act, authorizes EPA to require the owner or 
operator of a point source to submit reports and provide information). 
Although an attorney may represent respondent in a particular 
proceeding, it is not clear that the scope of that representation will 
always make the attorney the surrogate of the proper recipient of an 
information collection request. In addition, EPA is a large and 
decentralized agency, and regulates many large and decentralized 
corporations. As a result, it is possible that the individuals 
responsible for a particular enforcement proceeding and those 
responsible for a particular information request may have no knowledge 
of each other's activities. For these reasons, it is not appropriate 
for EPA to commit itself by rule to send all information collection 
requests to respondent's attorney.
    c. Final Rule. As stated above, EPA is adopting the Sec. 22.19(e) 
as proposed with three modifications: Paragraph (e)(2) shall contain 
the language ``(such as penalty calculations for purposes of settlement 
based on Agency settlement policies)''. Paragraph (e)(3)(i) will allow 
depositions on oral questions in circumstances where the information 
``cannot reasonably be obtained by alternative methods of discovery.'' 
Paragraph (e)(5) shall state that ``. . . Nothing in paragraph (e) of 
this section shall limit * * * EPA's authority, under any applicable 
law, to conduct inspections, issue information request letters or 
administrative subpoenas, or otherwise obtain information''.
    EPA has also noted an unintended side effect of moving the subpoena 
provisions from the supplemental rules into the discovery section of 
the proposed rule. In many cases, subpoenas are not used as discovery 
tools, but merely to ensure the attendance of a witness at hearing. The 
witness may also be totally independent from the parties. In these 
circumstances, the standards set forth in Sec. 22.19(e)(1) are 
inappropriate. Therefore, EPA has revised Sec. 22.19(e)(4) so that it 
applies only to subpoenas issued for discovery purposes. Other 
subpoenas would be at the Presiding Officer's discretion, pursuant to 
Sec. 22.4(c)(9). Corresponding language is also added to Sec. 22.21 to 
provide for subpoenas not used as discovery tools.
17. Supplementing Prior Exchanges, and Failure To Exchange Information 
(40 CFR 22.19(f) & (g))
    a. Summary of Proposed Rule. Section 22.19(f) would clarify that 
parties may freely supplement their information exchanges, and 
additionally impose on each party a duty to supplement or correct prior 
exchanges of information when the party learns that a prior exchange is 
deficient. Section 22.19(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 
would be adverse to the non-exchanging party, to exclusion of the 
information from evidence, or to issuance of a default order.
    b. Significant Comments and EPA Response. CMA/API support the 
proposed changes to Sec. 22.19(f). Dow suggests that Sec. 22.19(g) 
should state that ``the Presiding Officer may, in his discretion,'' 
impose the specified sanctions, in order to clarify that the ``abuse of 
discretion'' standard applies on appeal. EPA accepts this suggestion.
    c. Final Rule. EPA is adopting the proposed Sec. 22.19(f) and (g) 
with minor modifications. In the first sentence of paragraph (f), EPA 
has replaced the word ``responded'' with the more expressive phrase 
``exchanged information in response.'' In response to Dow's comment 
noted above, EPA has added the phrase ``in his discretion'' to the 
language of Sec. 22.19(g). EPA also corrected an erroneous citation in 
paragraph (g)(3): it should refer to Sec. 22.17(c) rather than 
Sec. 22.17(a). For consistency with the other paragraphs in Sec. 22.19, 
EPA has added a heading to paragraph (g), ``Failure to exchange 
information''.
18. Evidence (40 CFR 22.22)
    a. Summary of Proposed Rule. Section 22.22(a) proposes both 
structural and substantive changes. Structurally, EPA proposes 
splitting subsection (a) into two paragraphs, (a)(1) and (a)(2). 
Paragraph (a)(1) proposes to add an exclusionary provision for 
information not provided to the opposing party at least 15 days before 
the hearing date unless there was good cause and the

[[Page 40163]]

information was provided as soon as it had control of it or there was 
good cause for not providing the information. Paragraph (a)(2) proposes 
to clarify how and when confidential business information (``CBI'') may 
be used as evidence in accordance with, and specifically referencing 
EPA's general confidentiality requirements in 40 CFR Part 2. In 
conforming with Part 2 requirements, a proposed significant change 
would authorize the Presiding Officer and EAB to consider CBI 
information outside the presence of the public or a party as necessary 
to preserve the confidentiality of business information.
    b. Significant Comments and EPA Response. Dow opposes the automatic 
exclusion of information that is not exchanged in a timely manner 
unless good cause is shown, as proposed in Sec. 22.22(a)(1). Dow 
presents hypothetical situations where it believes a respondent would 
be unable to get exculpatory or mitigating information that comes to 
its attention admitted into evidence, if EPA ``deliberately chooses to 
withhold'' such information ``instead of exchanging it in a timely 
manner.'' In such situations, Dow reasons that there would be no ``good 
cause'' for EPA's failure to exchange the information. As a result, Dow 
advocates the proposed exclusionary provision be revised to state that 
the ``information will be excluded from evidence only upon objection by 
the innocent party (i.e., the party who did not fail to exchange the 
information in a timely manner).''
    Dow's fears are unfounded. If party A withholds information until 
just before the hearing, and party B seeks to have that information 
admitted into evidence, then party A's failure to disclose would 
constitute ``good cause'' for the innocent party B's inability to 
produce the information 15 days prior to the hearing. If the party was 
required to disclose the information in prehearing exchange or other 
discovery, Sec. 22.19(g) gives the Presiding Officer some authority to 
sanction the party who withheld the information. Section 22.19(f) 
prohibits knowing concealment of deficiencies in information that has 
previously been exchanged. It imposes an affirmative duty to promptly 
supplement or correct information provided previously in a prehearing 
exchange, a response to a request for information, or a response to a 
discovery order when a party learns that the information is 
``incomplete, inaccurate or outdated, and the additional or corrective 
information has not otherwise been disclosed to the other party. * * 
*'' Id. An opposing party's failure to supplement as required under 
Sec. 22.19(f) would provide ``good cause'' for admission of evidence. 
In addition, Sec. 22.4(c)(10) empowers the Presiding Officer do all 
acts and measures needed for a fair adjudication of the proceedings.
    The preamble to the proposed rule noted that the CROP is aimed at 
the practice of full and complete exchange of information in order to 
expedite hearings and avoid unnecessary and costly motion practice. 
E.g., 63 FR at 9472, 9473. The Agency believes that the exclusionary 
provision facilitates this end and provides a mechanism to enforce the 
failure of a party to engage in such full disclosure. For parties that 
act in bad-faith, the CROP, as discussed above, provides adequate 
safeguards to address these situations and ensure a fair adjudication.
    Regarding Sec. 22.22(a)(2), CEEC supports the Agency's proposal to 
allow the Presiding Officer to review CBI evidence outside the presence 
of a party if it is necessary to preserve the confidentiality of the 
business information. In contrast, Dow believes that viewing CBI 
evidence outside the presence of a party can impede the non-attending 
party's ability to effectively participate in the hearing and the 
fairness of the hearing. Dow requests that the Agency include a 
provision for disclosure of CBI to all parties and to neutral experts, 
as needed, with safeguards to prevent against using the information 
outside the scope of the hearing.
    The Agency acknowledges the legitimacy of Dow's concerns, however, 
today's rule and 40 CFR part 2 provide adequate mechanisms to 
accomplish most of Dow's suggestions. Notwithstanding today's revision 
of Sec. 22.22(a)(2), EPA retains the authority to disclose CBI in a 
CROP proceeding where appropriate, pursuant to several statute-specific 
provisions of part 2 (see, e.g., 40 CFR 2.301(g), 2.302(g), 2.304(g), 
2.305(g), 2.306(i), 2.310(g)). Disclosure to a neutral expert could be 
accomplished through these authorities, or through the statute-specific 
provisions of part 2 that authorize disclosure to persons performing 
work under contract to EPA (see, e.g., 40 CFR 2.301(h), 2.302(h), 
2.304(h), 2.305(h), 2.306(j), 2.307(h), 2.310(h)). The Agency does not, 
however, have the authority to enforce secrecy agreements between 
respondent and an intervener, nor does it have the authority to impose 
sanctions (other than procedural sanctions such as default) for 
violations of protective orders that might be issued under the 
authority of Sec. 22.4(a)(2) or (c). Therefore, it may be advisable for 
owners of CBI to make such agreements enforceable as contracts.
    As expressed in the preamble to the proposed rule, the Agency 
believes that allowing the independent Presiding Officers the 
``discretion to review confidential evidence outside the presence of a 
party * * * strike[s] an appropriate balance between the right of 
confrontation and the statutory mandates to protect confidential 
business information.'' 63 FR at 9474. Contrary to the Dow's 
suggestion, the Presiding Officer is competent to handle these 
infrequent situations, including the concern about CBI evidence being 
unduly relied upon to the detriment of the non-present party. The 
Presiding Officers handle cases daily involving the Agency's technical 
regulations and corresponding business information. As an impartial 
trier of fact, trained to assure that all cases are fairly adjudicated, 
the Presiding Officer can take into account the failure of a party to 
be present and to rebut any CBI evidence. Additionally, the Presiding 
Officer can pose questions to the absent party about any non-CBI issues 
that exist once the hearing resumes in full. Moreover, as this 
commenter acknowledges, the CROP provides that a party will have access 
to a redacted version of the CBI documents. Thus, a right to 
confrontation and to present its defense will not be unfairly impeded.
    c. Final Rule. EPA is adopting Sec. 22.22 as proposed, with four 
minor changes. In addition to excluding information required to be 
exchanged under Sec. 22.19(a) or (f) that has not been provided to the 
opposing party at least 15 days before the hearing date, 
Sec. 22.22(a)(1) should also exclude information that has not been 
timely provided pursuant to a Sec. 22.19(e) discovery order. This is a 
technical change, in as much as Sec. 22.19(g)(2) already permits the 
exclusion of information not provided pursuant to a discovery order, 
and that it is clearly the intent of the proposed rule to exclude 
information that has not been provided to opposing parties in a timely 
manner. EPA has therefore added to Sec. 22.22(a)(1) a reference to 
Sec. 22.19(e) discovery orders.
    To conform to the preferred style of the U.S. Government Printing 
Office, EPA has revised Sec. 22.22(a) to state the duration of this 
exclusion period with the numeral ``15''.
    EPA has made an editorial change to Sec. 22.22(b), which requires 
witnesses to testify ``orally, under oath or affirmation, except as 
otherwise provided in these Consolidated Rules of Practice or by the 
Presiding Officer.'' EPA has replaced the phrase ``in these 
Consolidated Rules of Practice'' with the more specific language ``in 
paragraphs

[[Page 40164]]

(c) and (d) of this section''. No provisions of the CROP other than 
Sec. 22.22(b), (c) and (d) address whether witnesses must testify 
orally, under oath or affirmation.
    EPA notes that although the existing Sec. 22.22(c) places the 
burden of delivering copies of a witnesses' written testimony on the 
witness, this burden should fall on the party who would call that 
witness to testify. EPA has revised this paragraph to require that 
``the party who has called the witness shall deliver a copy of the 
testimony to the Presiding Officer, the reporter, and opposing 
counsel.''
19. Filing the Transcript (40 CFR 22.25)
    a. Summary of Proposed Rule. Section 22.25 provides that the 
hearing shall be transcribed, and that the reporter shall transmit 
copies to the Presiding Officer, and to the Regional Hearing Clerk who 
shall make copies available to the parties. EPA proposed a new 
provision specifically allowing motions to conform the transcript to 
the actual testimony, provided that such motions are filed within 20 
days after notice of the availability of the transcript.
    b. Significant Comments and EPA Response. Dow asserts that 20 days 
is insufficient time for attorneys and employee witnesses to review, 
correct, and move to amend a hearing transcript, even if the 20 days 
commenced upon receipt of the transcript. Dow recommends that 
Sec. 22.25 be revised to allow motions to conform the transcript to the 
actual testimony either 30 days from the date the transcript is 
received, or 45 days from service of the notice of availability. EPA 
agrees with Dow's recommendation that additional time be allowed.
    EPA originally proposed that the time allowed should be measured 
time from date the parties are notified that the transcript is 
available, as this appeared to be a single, well-defined reference 
point. In practice, this has not been the case, because complainants on 
occasion receive the transcript itself before receiving a formal notice 
of its availability. Moreover, the proposed standard would generally 
give complainant more time than respondent, because complainant 
typically receives the transcript as soon as it becomes available. The 
commenter's suggestion of 30 days from the date the transcript is 
received is good benchmark, as it allows each party the same amount of 
time to review the transcript, however, it is open-ended for so long as 
a respondent declines to request or pay for its copy of the transcript. 
In order to balance fairness to each party with the need for finality, 
EPA has adopt a standard building on both of the commenter's 
suggestions: ``Any party may file a motion to conform the transcript to 
the actual testimony within 30 days after receipt of the transcript, or 
45 days after the parties are notified of the availability of the 
transcript, whichever is sooner.''
    c. Final Rule. EPA is adopting the rule as proposed with the 
exception of modifying the language of Sec. 22.25 to read ``Any party 
may file a motion to conform the transcript to the actual testimony 
within 30 days after receipt of the transcript, or 45 days after the 
parties are notified of the availability of the transcript, whichever 
is sooner.''
20. Initial Decision (40 CFR 22.27)
    a. Summary of Proposed Rule. Section 22.27 is concerned with 
initial decision, and it consists (in both the existing and proposed 
versions) of three paragraphs. Paragraph (a) is concerned with the 
issuance of an initial decision, what it shall contain, and to whom 
copies shall be sent. Paragraph (b) outlines the factors a Presiding 
Officer must take into consideration in determining the amount of a 
civil penalty and the procedures for determining a civil penalty upon a 
default. Paragraph (c) sets forth when an initial decision becomes a 
final order and when it does not; this provision also states that the 
effect of an initial decision appealed to the EAB is stayed pending a 
decision on an appeal by the EAB.
    Many of the changes in Sec. 22.27(a) are intended to clarify the 
language. Other changes include requiring that an initial decision, 
where appropriate, include a compliance order, corrective action order 
or permit revocation, termination or suspension. This provision also 
designates to whom, in addition to the parties, copies of the initial 
decision are to be sent.
    The revised Sec. 22.27(b) would require that the Presiding Officer 
explain in the initial decision how the penalty recommended to be 
assessed therein corresponds to the evidence in the record and any 
penalty criteria set forth in the statute under which the action has 
been commenced. It also establishes that in case of default, the 
penalty recommended to be assessed shall not exceed the lesser of 
amount sought in either the complaint or motion for default.
    In Sec. 22.27(c), the ways in which a party can prevent an initial 
decision from becoming a final order are set forth. The proposed rule 
states that pending the issuance of decisions on appeals of them to the 
EAB, initial decisions are neither final nor operative. This amendment 
is to prevent a party from seeking judicial review prior to seeking 
review from EPA's administrative appellate body, the Environmental 
Appeals Board.
    b. Significant Comments and EPA Response. Dow notes that the second 
sentence of Sec. 22.27(a) arguably requires that every initial decision 
must include a civil penalty assessment. To remedy this, Dow recommends 
that the words ``if appropriate'' be moved so that they follows the 
phrase ``as well as reasons therefor, and''. EPA agrees, and adopts 
Dow's proposed revision.
    Dow supports the inclusion in Sec. 22.27(c) of the provision that 
states, ``An initial decision that is appealed to the Environmental 
Appeals Board shall not be final or operative pending the Environmental 
Appeals Board's issuance of a final order'' as properly balancing the 
needs of EPA and respondents. While Dow is pleased that this ``will 
avoid premature recourse to Federal courts'', Dow argues that EPA 
should not require appeal to the EAB for those issues that cannot be 
adjudicated administratively. As examples of matters that an agency 
cannot address, Dow cites challenges involving constitutional 
questions, challenges to an agency's interpretation of a statute and 
challenges to an agency's authority.
    EPA does not agree with the recommendation that the CROP should not 
require an appeal to the EAB of ``issues that cannot be adjudicated 
administratively.'' It cannot be left to a party to determine the scope 
of the EAB's jurisdiction, and respondents should not bear the burden 
of attempting to predict whether a particular issue must be appealed to 
the EAB as a prerequisite to judicial review. Also, issues that may not 
be adjudicated administratively are often mixed with issues that may be 
adjudicated by the Board. It is appropriate, and in the interest of 
both the Agency and the parties, for the EAB to decide which issues may 
be adjudicated administratively. This will ensure that the EAB has the 
opportunity to exercise its full review authority and protect 
respondents from losing their right to appeal based on a failure to 
exhaust administrative remedies.
    CEEC also objects to the proposed changes to Sec. 22.27(c), arguing 
that it is inappropriate to require respondents to appeal any initial 
decisions to the EAB before appealing to the federal courts. CEEC's 
initial comments (April 27, 1998) gave no reasons why this is 
inappropriate. CEEC reiterated this objection in its supplemental 
comments (June 4, 1998), again without significant explanation. CEEC's 
supplemental comments elaborated on this point only

[[Page 40165]]

to the extent of echoing Dow's comment, stating that it is especially 
inappropriate ``where the issue to be addressed is a constitutional 
challenge, a challenge to an Agency interpretation, or a challenge to 
the Agency's authority.''
    As EPA has already discussed issues specific to requiring appeal to 
the EAB as a prerequisite to judicial review ``where the issue to be 
addressed is a constitutional challenge, a challenge to an Agency 
interpretation, or a challenge to the Agency's authority'', this 
response will address the larger issue raised by CEEC, whether 
respondents should be required to appeal any decisions of a Presiding 
Officer to the EAB as a prerequisite to judicial review.
    The EAB is responsible for assuring consistency in Agency 
adjudications by all of the ALJs and RJOs. The appeal process of the 
CROP gives the Agency an opportunity to correct erroneous decisions 
before they are appealed to the federal courts. The EAB assures that 
final decisions represent with the position of the Agency as a whole, 
rather than just the position of one Region, one enforcement office, or 
one Presiding Officer. EPA considers this a necessary and important 
function, and rejects CEEC's suggestion that this internal appeal and 
review process be abandoned. In addition to meeting EPA's institutional 
needs, this process also offers enormous advantages to respondents who 
are dissatisfied with an initial decision, in that appeals to the EAB 
are much quicker and much less expensive than appeals to a federal 
court.
    CEEC's comment may be based on a misreading of the proposed rule as 
requiring respondent to make an interlocutory appeal to the EAB every 
time there is an adverse decision: ``In its Preliminary Comments, CEEC 
noted its concerns with the proposal requiring appeal to the EAB after 
every ``initial'' decision or order of the Presiding Officer before 
seeking judicial review.''
    To the extent that this comment is intended to apply to any ruling 
or order other than an initial decision (as the latter term is defined 
in Sec. 22.3), it is based on a misreading of the proposed rule. The 
proposed rule would only require that initial decisions (as 
specifically defined in Sec. 22.3) be appealed to the EAB as a 
prerequisite to judicial review. EPA did not propose to require 
interlocutory appeal of rulings and orders other than initial decisions 
as a prerequisite to judicial review.
    CEEC also objects to the process by which EPA has proposed the 
revisions relating to exhaustion of remedies. Terming the inclusion of 
the exhaustion requirement a ``major revision'' to the CROP, CEEC says 
that ``Given the magnitude of this proposed change, EPA should have 
brought this proposal to the attention of the regulated community in 
the summary of its proposed rule-change, and explained it thoroughly.''
    First, the February 25, 1998, Federal Register notice of proposed 
rule making provided adequate notice of EPA's intention to address the 
exhaustion doctrine in its rules of administrative procedure. The one-
sentence summary that begins the notice of proposed rule making 
accurately describes the subject of the notice, though it does not 
attempt to summarize all of the issues raised in the proposal. The body 
of the notice and the proposed regulations clearly identified and 
discussed this issue in detail. See 63 FR 9474-75, 9489. The proposed 
rule allowed 60 days for the public to comment on the entire proposal. 
In addition, in response to CEEC's concern, EPA published a second 
notice on May 6, 1998, reopening the public comment period for an 
additional 60 days.
    CEEC's contention that the initial proposal did not give adequate 
notice of the magnitude of the proposed changes is not persuasive. The 
original notice of proposed rule making attracted the attention of a 
broad spectrum of the regulated community, and elicited comments from 
major trade associations representing the chemical manufacturing 
industry, the petrochemical industry and the utility industry, and 
individual comments from the U.S. Air Force and one major chemical 
company, in addition to the companies represented by CEEC. These 
comments were generally detailed and well considered. Only two of the 
comments addressed Sec. 22.27(c), and only CEEC considered this an 
extraordinary revision. CEEC's contention that the initial proposal did 
not allow enough time to consider and comment on the proposed changes 
is also undermined by the fact that CEEC's supplemental comments were 
the only comments received during reopened comment period, as well as 
by the fact that those supplemental comments did not raise any 
significant issues that were not raised during the original public 
comment period.
    Second, EPA disagrees with CEEC's characterization of the magnitude 
of the proposed changes. EPA considers appeals of an initial decision 
to the EAB as a prerequisite to judicial review under the CROP as 
previously codified, and that, during such appeal, the initial decision 
is inoperative. The regulated community also appears to share this 
understanding, as respondents consistently seek EAB review before 
appealing to the federal courts. The proposed explicit inclusion of the 
exhaustion doctrine simply clarifies the status quo, and thus does not 
represent something that would significantly alter or impact a 
respondent's rights or position under the CROP.
    Although the proposed revision of Sec. 22.27(c) was designed to 
make it explicit that an initial decision must be appealed to the EAB 
as a prerequisite for judicial review, Dow points out that 
Sec. 22.27(c) does not actually say anything about the need for 
administrative appeal before judicial review. An explicit statement 
appears in Sec. 22.31(e)(1) of the proposed rule, however, EPA 
acknowledges that it would be more helpful if the provision advising a 
respondent of the consequences of failing to appeal an initial decision 
to the EAB were included in the section discussing initial decisions, 
rather than the section concerned with final orders. Accordingly, 
language from Sec. 22.31(e)(1) of the proposed rule now appears in a 
new Sec. 22.27(d).
    c. Final Rule. In response to comment, EPA has moved the words ``if 
appropriate'' from the end of the second sentence in Sec. 22.27(a) to 
follow the phrase ``as well as reasons therefor, and'', in order to 
clarify that not all initial decisions will assess a penalty.
    Language from Sec. 22.27(c) and Sec. 22.31(e)(1) relating to 
exhaustion of administrative remedies has been combined in a new 
Sec. 22.27(d). The remainder of Sec. 22.27(c) has also been subdivided 
into four paragraphs for easier reading.
    EPA has made an additional substantive change to Sec. 22.27(a) on 
its own initiative. The existing and proposed rules specify that the 
Regional Hearing Clerk shall forward the entire record of the 
proceeding to EPA Headquarters as soon as an initial decision is 
issued, regardless of whether the case is appealed to the EAB. For 
administrative efficiency, this requirement has been deleted. Regional 
Hearing Clerks will retain the record of the proceeding unless the EAB 
requests it. This change should have no effect on respondents' 
interests.
    EPA has made minor editorial changes to Sec. 22.27(a) as well: EPA 
has deleted the word ``reply'' from the first sentence to make it more 
general, and has replaced the phrase ``permit revocation and 
suspension'' with ``Permit Action'', as discussed in connection with 
revisions to Sec. 22.3(a) and Sec. 22.14(a)(4)(iii)..
    In the fourth and fifth sentences of paragraph (b), the proposed 
rule uses the phrase ``penalty recommended to be

[[Page 40166]]

assessed in the complaint''. The convention elsewhere in the CROP is to 
describe the penalty proposed by complainant as the ``proposed 
penalty'', and the penalty determined by the Presiding Officer as the 
``recommended penalty''. In order to eliminate the ``recommended to be 
assessed'' language and to provide for cases where complainant makes 
its specific penalty proposal in its prehearing exchange, EPA has 
replaced ``penalty recommended to be assessed in the complaint'' in the 
fourth sentence with the phrase ``penalty proposed by complainant''. In 
the fifth sentence, EPA has substituted the phrase ``proposed by 
complainant in the complaint, the prehearing information exchange or 
the motion for default''.
    EPA has also changed the order of the sentences in paragraph (b). 
The sentence stating that ``[t]he Presiding Officer shall explain in 
detail in the initial decision how the penalty to be assessed 
corresponds to the any penalty criteria set forth in the Act'' has been 
moved up to follow the sentence stating that ``the Presiding Officer 
shall consider any penalty guidelines issued under the Act.'' This will 
make it clearer that the obligation to explain in detail how the 
penalty corresponds to the penalty criteria of the Act is not limited 
to circumstances where the Presiding Officer assesses a penalty 
different from that proposed in the complaint.
    As discussed above in connection with public comments on 
Sec. 22.17, EPA has revised the CROP to clarify that a motion for 
default or a default order may apply to all or part of a proceeding. 
EPA has made a corresponding change to Sec. 22.27(c)(3), to clarify 
that it applies only to those default orders that constitute initial 
decisions.
    To conform to the preferred style of the U.S. Government Printing 
Office, EPA has revised Sec. 22.27(c) to state the time after which an 
initial decision becomes a final order with the numeral ``45''.
21. Appeal From or Review of Initial Decision (40 CFR 22.30)
    a. Summary of Proposed Rule. The proposed revisions to 
Sec. 22.30(a) would extend the time to file an appeal from 20 to 30 
days, clarify the procedure for filing appeals, including, but not 
limited to, provisions addressing service and filing, and describing 
the contents of any appeal brief. The proposed rule also contained 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 otherwise 
would have elected not to file an appeal.
    Proposed revisions to paragraph (b) would clarify the respective 
roles of the Regional Hearing Clerk and the Clerk of the Board. 
Paragraph (c) of the proposed rule added a provision expressly limiting 
the scope of appeals to issues raised during the course of the 
proceeding or by the initial decision. Minor editorial changes were 
made to the proposed paragraph (d), as well as to the other paragraphs.
    EPA proposed a new paragraph (e) that would specify that the 
general requirements for motions at Sec. 22.16 apply to motions made in 
appeals to the EAB. EPA proposed a new paragraph (f), consisting 
largely of the language formerly contained in Sec. 22.31(a). 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 Sec. 22.30(f) 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.
    b. Significant Comments and EPA Responses. CMA/API support the 
provision extending the time for filing appeals from 20 to 30 days, 
while Dow objects that 30 days is not sufficient time to review the 
initial decision and file an appeal brief. CROP proceedings have worked 
effectively since 1980 with a 20 day appeal period, and with extensions 
in appropriate cases. Expanding the appeal period by fifty percent 
should substantially reduce the burdens felt by counsel, as well as 
allow improvement in the quality of the briefs filed. While today's 
final rule expands several time periods, EPA still intends that CROP 
proceedings should progress quickly from the filing of the complaint to 
the issuance of a final order. EPA believes that further expansion of 
the appeals period is not necessary at this time.
    Dow also commented that the deadline for response briefs would be 
ambiguous under the proposed Sec. 22.30(a)(2) in cases where two or 
more notices of appeal are filed in serial fashion. EPA concedes that 
in such cases there would not be a single date upon which all reply 
briefs are due, however, the proposed CROP is clear as to when the 
response briefs are due: A brief responding to an appeal is due within 
20 days of service of the appeal brief to which it responds. Requiring 
all reply briefs to be filed on the same day would give the person 
filing the last appeal the most time to respond to the opposing party's 
appeal, while EPA's proposed approach gives each party the same amount 
of time to respond.
    CEEC recommends that the CROP include procedures to ensure that 
members of the regulated community have access to all administrative 
complaints, decisions, orders, settlements, etc. EPA notes that all 
such documents appear in the public docket for each case. The formal 
opinions of the EAB are published in a series of bound volumes titled 
Environmental Administrative Decisions (E.A.D.), which may be purchased 
from the U.S. Superintendent of Documents. The full text of all formal 
EAB opinions may also be accessed electronically at the EAB's World 
Wide Web Site (http://www.epa.gov.eab). Decisions and ``substantive'' 
orders (i.e., having some discussion of legal argument) of the Agency's 
ALJs are on http://www.epa.gov/oalj going back to November 1996. A web 
site for RJO decisions is under construction. Hard copies of ALJ 
decisions (and substantive orders since 1997) may be obtained from the 
Headquarters Hearing Clerk, and RJO decisions may be obtained from the 
Regional Hearing Clerks. Several commercial sources also make available 
the EAB formal opinions, most ALJ decisions and orders, and some RJO 
decisions and orders.
    The Agency's practice has been for the Regional Hearing Clerk to 
maintain a complete docket up through the initial decision, and for the 
Clerk of the Board to maintain the docket of subsequent proceedings. 
EPA acknowledges that this system has made it difficult for persons 
reviewing a case docket in an EPA Regional office to review the entire 
case record. In order that the Regional Hearing Clerk's docket should 
indicate that a case had been appealed, EPA proposed in 
Sec. 22.30(a)(1) that each appellant shall serve copies of its notice 
of appeal and brief with the Regional Hearing Clerk. In response to 
CEEC's comment, EPA has revised Sec. 22.30(a) and (b) to require that 
copies of all documents filed with, or by, the EAB shall also be served 
on the Regional Hearing Clerk.
    Finally, Dow notes that despite EPA's stated intention of removing 
the words ``sua sponte'' from the CROP, EPA neglected to replace this 
expression in the title of Sec. 22.30(b). EPA has finished this task by 
revising this title to read ``Review initiated by the Environmental 
Appeals Board.''

[[Page 40167]]

    c. Final Rule. EPA has adopted Sec. 22.30 as proposed, with several 
modifications. As discussed above, EPA has revised the title of 
Sec. 22.30(b) to read ``Review initiated by the Environmental Appeals 
Board'', and has revised Sec. 22.30(a) to require that copies of all 
documents filed with, or by, the EAB shall also be served on the 
Regional Hearing Clerk. EPA has made several other minor revisions on 
its own initiative:
    As discussed above in connection with the revisions to Sec. 22.11, 
EPA has replaced the term ``amicus curie'' in Sec. 22.30(a)(1) and 
(a)(2) with the term ``non-party participant.''
    In order that the Presiding Officer may be aware of the status of 
his or her decision, EPA has also revised paragraph (a)(1) to require 
that a copy of the notice of appeal be served on the Presiding Officer, 
and revised paragraph (b) to require that the EAB serve on the 
Presiding Officer a copy of its notice of intent to review a decision.
    EPA has also replaced the expression ``Clerk of the Environmental 
Appeals Board'' with ``Clerk of the Board,'' using the term defined at 
Sec. 22.3(a) for consistency.
    Because response briefs are to be filed with the Clerk of the 
Board, the words ``and serve'' are unnecessary and potentially 
confusing as they appear in the proposed Sec. 22.30(a)(2), and have 
therefore been deleted from today's final rule.
    The proposed Sec. 22.30(c) included a new provision: ``The parties' 
rights of appeal shall be limited to those issues raised during the 
course of the proceeding and by the initial decision.'' In order to 
reflect the well established principle that the question of subject 
matter jurisdiction cannot be waived and may be raised at any stage of 
a proceeding, EPA has revised this provision by adding the clause ``and 
to issues concerning subject matter jurisdiction.''
    The proposed Sec. 22.30(f) may incorrectly suggest that a final 
order is the only possible outcome from an EAB decision on appeal of an 
initial decision. However, it is not uncommon for the EAB to remand a 
case. EPA has revised paragraph (f) by adding the following sentence: 
``The Environmental Appeals Board may remand the case to the Presiding 
Officer for further action.''
    EPA has replaced the phrase ``any permit revocation, termination or 
suspension'' in Sec. 22.30(f) with ``Permit Action'', as discussed in 
connection with revisions to Sec. 22.3(a) and Sec. 22.14(a)(4)(iii). To 
conform to the preferred style of the U.S. Government Printing Office, 
EPA has revised Sec. 22.30 to state all time periods with numerals 
only.
22. Final Order (40 CFR 22.31)
    a. Summary of Proposed Rule. Section 22.31 is concerned with final 
orders, and the proposed section consists of six sub-paragraphs. 
Paragraph (a) would specify the effect of the final order. It states 
that a final order constitutes final Agency action and specifies that a 
final order neither affects the right of the United States to seek 
criminal or civil relief for any violation of law nor waives a 
respondent's obligations to comply with applicable law. Paragraph (b) 
would establish the effective date of a final order. Paragraph (c) 
would set forth procedures for paying any civil penalties assessed in a 
final order. Paragraph (d) would establish that any corrective action 
or compliance order, or any permit revocation, termination or 
suspension becomes effective and enforceable as of the effective date 
of a final order unless otherwise specified in the final order. The 
proposed paragraph (e) is concerned with exhaustion of administrative 
remedies, and would specify that where a respondent fails to appeal an 
initial decision or enters into a consent agreement, the right of 
subsequent judicial review is waived. The proposed paragraph (f) 
discusses final orders issued to Federal agencies. This provision would 
specify that where the head of an affected agency seeks the 
intervention of the EPA Administrator, the decision by the 
Administrator will be the final order; this provision would also 
specify that a motion for reconsideration does not affect the 30-day 
time period for the effective date of final orders against Federal 
agencies.
    b. Significant Comments and EPA Responses. The proposed inclusion 
in Sec. 22.31(e) of a provision explicitly addressing exhaustion of 
administrative remedies as a prerequisite to judicial review is viewed 
by CEEC as a ``major'' revision of the CROP. CEEC argues that:

    ``Given the magnitude of this proposed change, EPA should have 
brought this proposal to the attention of the regulated community in 
the summary of its proposed rule-change, and explained it 
thoroughly.''

    As discussed in EPA's response to comments on Sec. 22.27(c), above, 
EPA disagrees with CEEC's characterization of the magnitude of this 
change, and maintains that the proposed rule gave adequate notice of 
the proposed change.
    As discussed in EPA's response to comments on Sec. 22.27(c), above, 
EPA agrees with Dow's comment that the requirement that an 
administrative appeal is a predicate for subsequent judicial review 
should appear in Sec. 22.27. Therefore, the language that appeared in 
the proposed Sec. 22.31(e)(1) has been deleted and moved to 
Sec. 22.27(c). The proposed Sec. 22.31(e)(2), which would specify that 
``[a] respondent which elects to resolve a proceeding pursuant to 
Sec. 22.18 waives its rights to judicial review'', is redundant with 
Sec. 22.18(a)(3) and (b)(2) and can be deleted without substantive 
change. The proposed Sec. 22.31(f) has been redesignated as 
Sec. 22.31(e) in today's final rule.
    The proposed Sec. 22.31(f) describes the manner in which the head 
of another Federal agency may bring disputes over a final order 
directly to the EPA Administrator, and provides that the EAB's decision 
shall not be effective pending the Administrator's review. Essentially 
the same provision already appears in the supplemental rule governing 
Solid Waste Disposal Act cases, Sec. 22.37(g). The proposed rule would 
move this provision from that supplemental rule into the main body of 
the CROP, in order that this process should be available in any CROP 
case brought against a Federal agency.
    The USAF opposes moving this provision from the supplemental rule 
governing Solid Waste Disposal Act cases into the main text of the 
CROP. USAF argues that instead of a generally applicable provision, 
such procedures should be confined to the statute-specific supplemental 
rules. USAF argues that EPA should be required to amend the CROP each 
time Congressional action expands EPA's authority to enforce against 
another Federal agency, in order to provide a forum for resolving 
constitutional and jurisdictional issues.
    The proposed change does not expand EPA's jurisdiction to assess 
civil penalties against a Federal facility, nor does it expand the 
scope of the CROP as it pertains to Federal facilities. EPA can assess 
penalties against Federal facilities for violations of the Safe 
Drinking Water Act (42 U.S.C. 300j-6), the Resource Conservation and 
Recovery Act (``RCRA'') (42 U.S.C. 6961), and the Clean Air Act (42 
U.S.C. 7413(d), 7524(c) and 7545(d)(1)) through a CROP proceeding 
regardless of whether the proposed language is adopted. Should other 
authorities for assessing penalties against Federal facilities become 
available in the future, this will be true for those authorities as 
well. The only effect of the change proposed in Sec. 22.31(f) is to 
provide a mutually understood process for staying a final order while 
the head of the respondent Federal Agency confers with the EPA 
Administrator.

[[Page 40168]]

    The proposed Sec. 22.31(f) is a procedural provision, not a 
jurisdictional provision. It does not, on its own, establish authority 
to assess administrative penalties. It merely provides the process to 
follow where Congress has provided such authority to EPA. Although EPA 
has not made the change USAF seeks, EPA has made a minor change to the 
proposed Sec. 22.31(f)(1) (promulgated today as Sec. 22.31(e)(1)) that 
should help reduce the chance that this might be misperceived as a 
jurisdictional provision, by moving the words ``pursuant to 
Sec. 22.30'', to follow the word ``issued.''
    c. Final Rule. EPA has made no substantive change in response to 
the comments on the proposed Sec. 22.31. As described above, EPA has 
deleted the proposed Sec. 22.31(e) because equivalent provisions now 
appear in Secs. 22.18 and 22.27(c). Also as noted above, EPA has 
changed the proposed paragraph (f) to ``(e)'', and has moved the words 
``pursuant to Sec. 22.30'', to follow the word ``issued'' in 
Sec. 22.31(e)(1).
    On its own initiative, EPA has made several other editorial changes 
to Sec. 22.31. First, the third sentence of the proposed Sec. 22.31(a) 
is inartfully drafted and subject to misinterpretation. The relevance 
of the terms ``liability'' and ``violation'' is not clear in relation 
to proceedings for permit actions. For example, permit actions may 
often involve facts which could establish violations of the permit or 
of environmental regulations, however, permit action proceedings do not 
adjudicate respondents' liability for such violations. In order to 
avoid the implication that a final order in permit action proceeding 
might ``resolve Respondent's liability for a civil penalty'', or 
conversely, that a final order in a penalty proceeding might resolve 
``the status of a permit or authority to operate'', this sentence must 
be revised. In addition, this sentence does not address proceedings 
commenced with a consent agreement and final order pursuant to 
Sec. 22.13(b). Accordingly, EPA has revised the third sentence of the 
proposed Sec. 22.31(a) to state that: ``The final order shall resolve 
only those causes of action alleged in the complaint, or for 
proceedings commenced pursuant to Sec. 22.13(b), alleged in the consent 
agreement.''
    Second, EPA has significantly simplified the second sentence of 
Sec. 22.31(c), by removing the requirements concerning who shall be the 
payee on the check and where the check should be sent, and by amending 
Sec. 22.14(a) to require that these be specified in the complaint. EPA 
notes that the proposed Sec. 22.31(c) was deficient in that it did not 
provide a mechanism to accommodate changes in the lock box banks or 
bank addresses other than by amending the CROP, and that it did not 
provide for cases under Section 311(b)(6) of the Clean Water Act, where 
penalties must be paid to the ``Oil Spill Liability Trust Fund.'' 
Moreover, the focus on the ``check'' left it unclear whether interbank 
funds transfers were permitted. Requiring that the complaint address 
these issues allows EPA to replace the second and third sentences of 
Sec. 22.31(c) with a much simpler statement:

    ``Payment shall be made by sending a cashier's check or 
certified check to the payee specified in the complaint, unless 
otherwise instructed by the complainant. The check shall note the 
case title and docket number. Respondent shall serve copies of the 
check or other instrument of payment on the Regional Hearing Clerk 
and on complainant.''

    Third, EPA has replaced the phrase ``permit revocation, termination 
or suspension'' in Sec. 22.31(d) with ``Permit Action'', as discussed 
in connection with revisions to Sec. 22.3(a) and Sec. 22.14(a)(4)(iii).
    Fourth, EPA has clarified an imprecise sentence in the proposed 
Sec. 22.31(f)(1) (now Sec. 22.31(e)(1). The last sentence of the 
proposed Sec. 22.31(f)(1) stated that ``In that event, a decision by 
the Administrator shall become the final order.'' EPA has replaced ``In 
that event'' with the more explicit statement, ``If a timely request is 
made''.
    Finally, to conform to the preferred style of the U.S. Government 
Printing Office, EPA has revised Sec. 22.31 to state all time periods 
with numerals only.
23. Motion to Reconsider a Final Order (40 CFR 22.32)
    a. Summary of Proposed Rule. Section 22.32 of the 1980 CROP 
provides that parties may move for reconsideration of a final order 
within 10 days of service of the final order, and describes the 
procedure. The proposed rule made only trivial editorial changes.
    b. Significant Comments and EPA Response. Dow objects that 10 days 
is insufficient time to perform the extensive reviews and legal 
research on specific issues raised by the final order. Dow concedes 
that 10 days is sufficient to file a motion for reconsideration, 
provided that additional time is allowed for the filing of briefs in 
support of the motion.
    The purpose of Sec. 22.32 is to provide a mechanism to bring to the 
EAB's attention a manifest error, such as a simple oversight, or a 
mistake of law or fact, or a change in the applicable law. See In the 
Matter of Cypress Aviation, Inc., 4 E.A.D. 390, 392 (EAB 1992). The 
motion for reconsideration is not intended as a forum for rearguing 
positions already considered or raising new arguments that could have 
been made before. This narrow scope of Sec. 22.32 is reflected in the 
fact that the CROP does not require a respondent to seek 
reconsideration in order to exhaust its administrative remedies as a 
prerequisite for judicial review. Accordingly, EPA has not expanded the 
time allotted to file a motion for reconsideration or to file briefs in 
support of a motion for reconsideration.
    c. Final Rule. EPA is adopting Sec. 22.32 as proposed, with two 
modifications. As noted in the discussion of public comments on 
Sec. 22.18(b)&(c), EPA has eliminated the term ``consent order,'' and 
is using the term ``final order'' instead. In the interests of 
exhaustion of remedies and finality, motions for reconsideration are 
not appropriate where the final order results from settlement or quick 
resolution, nor where the parties have declined to appeal an initial 
decision and it has become final by operation of Sec. 22.27(c). 
Accordingly, EPA has amended Sec. 22.32 to clarify that it is limited 
to motions for reconsideration of a final order issued pursuant to 
Sec. 22.30. In addition, to conform to the preferred style of the U.S. 
Government Printing Office, EPA has revised Sec. 22.32 to state the 
time period allowed for motions for reconsideration with the numeral 
``10''.
24. Supplemental Rules Governing the Administrative Assessment of Civil 
Penalties Under the Clean Air Act (40 CFR 22.34)
    a. Summary of Proposed Rule. Section 22.34 presents supplemental 
rules applicable to Clean Air Act penalty cases. Paragraph (b) 
reiterates the requirement of 42 U.S.C. 7413(d)(2)(A) that before 
issuing an order assessing a civil penalty (i.e., a final order), EPA 
shall give written notice to the person against whom penalty is to be 
assessed the order is to be issued, and give that person the 
opportunity to request a hearing. It clarifies the relationship between 
this statutory requirement and the CROP by stating that the such notice 
shall be provided by issuance of a complaint. EPA proposed only minor 
editorial changes to Sec. 22.34(b).
    EPA proposed a new paragraph (c), which would apply to default 
orders for failure to answer a field citation. Section 59.5(d) of the 
proposed rule governing CAA field citations (59 FR 22776, May 3, 1994) 
would provide 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

[[Page 40169]]

resolution procedure at Sec. 22.18(a)(2)), the Presiding Officer shall 
issue a default order assessing the penalty proposed in the complaint.
    b. Significant Comments and EPA Response. Dow commented that 
respondents should be able to waive the written notice required 
pursuant to Sec. 22.34(b), because this is a procedural protection 
provided merely for respondents' benefit. EPA agrees that the second 
sentence of Sec. 22.34(b) appears to require issuance of a complaint in 
every case. In order to allow the parties to take full advantage of the 
efficiencies of Sec. 22.13(b) where prefiling negotiations produce a 
settlement, EPA has amended this provision to specify that a complaint 
is sufficient to satisfy this notice requirement, but without requiring 
that a complaint necessarily must be served. The second sentence of 
Sec. 22.34(b) now reads: ``Service of a complaint or a consent 
agreement and final order pursuant to Sec. 22.13 satisfies this notice 
requirement.''
    c. Final Rule. EPA is adopting Sec. 22.34(a) as proposed, and has 
adopted the proposed Sec. 22.34(b) with the exception of modifying the 
second sentence to read ``Service of a complaint or a consent agreement 
and final order pursuant to Sec. 22.13 satisfies this notice 
requirement.'' EPA has deleted the proposed Sec. 22.34(c), pending 
adoption of a final rule governing CAA field citations. Any changes 
necessary to accommodate field citations will be made when the proposed 
Field Citation rule is finalized.
25. Scope of Subpart I (40 CFR 22.50)
    a. Summary of Proposed Rule. Section 22.50 defines the scope of 
subpart I and its relationship to other provisions of Part 22. The 
proposed paragraph (a) would restrict the scope of subpart I to 
adjudicatory proceedings that are initiated by a complaint stating that 
subpart I shall apply. The proposed paragraph (a) would clarify that 
subpart I does not apply to any proceeding where the statute requires a 
hearing subject to section 554 of the Administrative Procedure Act 
(APA).
    Paragraph (b) lists the provisions of subparts A through G which do 
not apply to subpart I proceedings. Almost all provisions of subparts A 
through G apply to a subpart I proceeding. Paragraph (b) also addresses 
the potential for conflicting provisions in the preceding sections of 
the CROP, providing that where any provisions of subparts A though G 
conflict with any provision of subpart I, the latter supersedes the 
former.
    The preamble to the proposed rule stated that EPA does not intend 
to alter its present practice of providing the full APA process in 
cases pursuant to section 109(a) of the Comprehensive Environmental 
Response, Compensation and Liability Act (``CERCLA'') (42 U.S.C. 
9609(a)) or 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)), but invited comment as to the types of CERCLA and EPCRA 
penalty cases for which non-APA procedures would be appropriate, if the 
Agency decides in the future to assess EPCRA and CERCLA penalties 
through non-APA proceedings.
    b. Significant comments and EPA response. Most commenters (Dow, 
CEEC, UWAG, UARG) oppose any proposed expansion of the role of RJOs 
under subpart I. The preamble to the proposed rule stated that EPA did 
not expect to use non-APA procedures except in the kinds of cases where 
they have historically been used for the foreseeable future. As 
discussed in the response to comments on Sec. 22.4(b), EPA has revised 
Sec. 22.50(a) to expressly limit the applicability of subpart I to 
cases under CWA sections 309(g)(2)(A) and 311(b)(6)(B)(i) (33 U.S.C. 
1319(g)(2)(A) and 1321(b)(6)(B)(i)), and SDWA sections 1414(g)(3)(B) 
and 1423(c)(42 U.S.C. 300g-3(g)(3)(B) and 300h-2(c)). This change makes 
clear that the scope of the RJOs' activities will remain much the same 
as it has been in recent years.
    All who commented on the proposed subpart I (CMA/API, Dow, CEEC, 
UWAG, UARG) expressed concern that it would not protect constitutional 
due process rights. In particular, CEEC considers such a proposal a 
``major concern'' and submits that subpart I procedures do not meet the 
due process standard set forth in Mathews v. Eldridge, 424 U.S. 319 
(1976). Dow, UWAG and UARG believe that there is too great a chance 
that RJOs would have a pro-Agency bias, and suggest that EPA should 
eliminate subpart I and apply APA procedures universally. Dow suggests 
in the alternative that either party should be allowed to opt out of 
subpart I and have APA procedures applied upon request.
    EPA has addressed this due process question in the discussion of 
public comments on Sec. 22.4(b). Also as noted above in the discussion 
of Sec. 22.4(b), the Agency has implemented adequate measures to ensure 
the impartiality of the Regional Judicial Officers. If a litigant has 
reason to believe that a Regional Judicial Officer is biased, then a 
motion for disqualification pursuant to Sec. 22.4(d) may be submitted.
    As to Dow's suggestion of providing parties the option of having 
APA procedures apply upon request, Congress has provided for this 
option only in section 1414(g)(3)(B) of the Safe Drinking Water Act. If 
APA procedures were provided upon respondent's request in all 
proceedings brought under subpart I, the regulated community, rather 
than EPA, would be determining the course of the Agency's enforcement 
program, and imbalances of Agency resources might result. Nevertheless, 
the Agency acknowledges that, on occasion, a complainant may not 
recognize until after a case has been commenced that the subpart I 
procedures would not be adequate, for example, where intervention, 
amici, subpoena, or additional discovery appear crucial to the case, or 
where the issues are such that the proceeding would greatly benefit 
from the unquestioned independence of an ALJ. In those instances, a 
complainant may move to withdraw the complaint without prejudice in 
order that the proceeding be recommenced as an APA proceeding, or 
either party might move that subpart I should not be applied to the 
proceeding.
    As to paragraph (b), Dow and CEEC suggest deleting the reference to 
Sec. 22.11 and allowing intervention and amici curiae. This would be 
inconsistent with the purpose of subpart I, that is to have simpler and 
more efficient proceedings. To add to subpart I more of the provisions 
of subparts A through G would frustrate this purpose. If a party 
believes that intervention or amici curiae would be of crucial 
importance to a particular case, then as discussed above, it may file a 
motion requesting withdrawal or dismissal without prejudice to allow 
refiling under the APA procedures.
    c. Final Rule. EPA has revised Sec. 22.50(a) to limit the 
applicability of subpart I to cases under CWA sections 309(g)(2)(A) and 
311(b)(6)(B)(i) (33 U.S.C. 1319(g)(2)(A) and 1321(b)(6)(B)(i)), and 
SDWA sections 1414(g)(3)(B) and 1423(c) (42 U.S.C. 300g-3(g)(3)(B) and 
300h-2(c)). EPA adopts Sec. 22.50(b) as proposed, with one correction. 
The February 25, 1998, FR notice included a typographical error in 
Sec. 22.50(b). The section number that appeared as ``22011'' has been 
corrected to read ``22.1.''
26. Presiding Officer (40 CFR 22.51)
    a. Summary of Proposed Rule. The proposed Sec. 22.51 presents the 
key modification to the CROP facilitating use of the CROP in 
administrative adjudications not subject to section 554 of the APA, 
that the Presiding Officer

[[Page 40170]]

need not be an Administrative Law Judge (``ALJ''). Instead, the 
Presiding Officer in a ``non-APA'', subpart I proceeding would be a 
Regional Judicial Officer (``RJO''). Unlike an APA proceeding, where an 
RJO presides until an answer is filed and the RJO is replaced by an 
ALJ, in a subpart I proceeding the RJO serves as Presiding Officer 
until the initial decision has become final or has been appealed.
    b. Significant Comments and EPA Responses. Several commenters 
objected to EPA attorneys, rather than ALJs, serving as Presiding 
Officers in subpart I proceedings. Their objections have been fully 
addressed in the discussion of public comments on the proposed 
Sec. 22.4, and are not repeated here.
    c. Final Rule. EPA has adopted Sec. 22.51 as proposed, but with a 
minor addition. EPA has observed that while Sec. 22.51 provides that 
the Presiding Officer ``shall rule on all motions until an initial 
decision has become final or has been appealed'', it does not 
explicitly state that the Presiding Officer will conduct the hearing. 
As is clear from the preamble to the proposed rule, and from the 
responses of the commenters, conduct of the hearing is the key element 
in the Presiding Officer's role in such cases, as it is for ALJ 
Presiding Officers in APA cases. In order to avoid any future 
confusion, the final rule includes an explicit statement that: ``The 
Presiding Officer shall conduct the hearing, and rule on all motions * 
* *''
27. Information Exchange and Discovery (40 CFR 22.52)
    a. Summary of Proposed Rule. The proposed Sec. 22.52 would define 
the parameters of an information exchange in non-APA proceedings. 
Parties would be subject to the prehearing exchange authorized in 
Sec. 22.19(a), but most additional discovery would be prohibited under 
Subpart I. The proposed Sec. 22.52 would require the respondent to 
provide in its prehearing exchange information concerning any economic 
benefit it may have enjoyed as a result of the alleged non-compliance 
or a failure to act.
    Although proposed Sec. 22.52 would prohibit most additional 
discovery that would otherwise be allowed under Sec. 22.19(e), the 
complainant would be entitled to discovery of information concerning 
respondent's economic benefit of non-compliance and of financial 
records probative of respondent's ability to pay a penalty.
    b. Significant Comments and EPA Response. CMA/API and CEEC believe 
that it is unfair to prohibit discovery by private parties but 
authorize discovery by EPA for penalty information. CMA/API and Dow 
oppose requiring respondents to provide information on economic benefit 
in the prehearing exchange because this requirement imposes a burden 
only upon the respondent. CMA/API argues that the prehearing exchange 
burdens for each party should be made equivalent, particularly given 
EPA's far greater information collection powers.
    Dow asserts that Sec. 22.52 is unnecessary because Sec. 22.19(d) 
already provides ways to avoid excessive discovery. Dow argues that 
Sec. 22.19(d) provides ample authority for the Presiding Officer to 
protect against excessive or abusive discovery practices. Dow expresses 
concern that the comparatively less formal procedures of subpart I 
might be used in very complex cases involving a multitude of separate 
alleged violations. In such cases, it is likely that additional 
discovery would be needed and appropriate. Dow urges that EPA abandon 
the subpart I modifications and apply the standard CROP procedures 
universally, as this would allow Presiding Officers to tailor the scope 
of discovery to the needs of each individual case.
    While EPA acknowledges that the prehearing exchange requirements 
and discovery limits of the proposed Sec. 22.52 are asymmetric, EPA 
disagrees with the contention that they are unfair. The comments 
suggest that the commenters perceive ``fairness'' to require that the 
parties be exact equals subject to the exact same rules. However, the 
parties are never equals in a CROP proceeding: The complainant alone 
carries the burden of persuasion, and carries most of the burden of 
presentation. Yet the statutes generally require penalty assessment to 
be based in large part on information held by the respondent, not the 
complainant. The proposed discovery regime redresses this imbalance in 
knowledge and burden by requiring a respondent to provide such 
information to the party required to put it forward to the neutral. 
There is nothing ``unfair'' about this arrangement. Indeed, it is a 
logistical necessity.
    Being subject to such discovery does not invest in the respondent a 
reciprocal right to make discovery of the complainant on ``fairness'' 
grounds. EPA is not obligated to provide additional discovery 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).
    Non-APA proceedings are typically for enforcement cases that do not 
raise significant factual or legal issues. See, e.g., Sen. Rep. 99-50 
(99th Cong., 1st. Sess.), reprinted in ``A Legislative History of the 
Water Quality Act of 1987, Congressional Research Service of the 
Library of Congress (November 1988) at 1448, which states:

    ``To serve its intended function, this administrative 
enforcement tool should be tailored to the less complex cases for 
which it is intended. Administrative enforcement should be as 
flexible and unencumbered by procedural complexities as possible, 
consistent with due process considerations while providing for 
effective input by citizens who may be affected by the violations. 
Administrative cases should be resolved promptly * * *. Because 
administrative penalty assessments will be used in smaller cases and 
often will be based on discharge monitoring reports routinely 
submitted by permittees, formal administrative procedures strictly 
in accordance with the formal adjudicatory procedures of the 
Administrative Procedures [sic] Act are not required. EPA therefore 
has the flexibility to streamline its decisionmaking process and 
procedural rules through promulgation of procedural regulations that 
provide appropriate due process protection.''

    Requiring that subpart I provide discovery equal to Sec. 22.19(e) 
would undermine the objective of subpart I: non-APA proceedings that 
are more efficient than APA proceedings. See, Superfund 
Reauthorization: Judicial and Legal Issues, Oversight Hearings before 
the Subcommittee on Administrative Law and Governmental Relations of 
the House Judiciary Committee, 99 Cong. 1st Sess. 64 (1985)(statement 
of F. Henry Habicht II, Assistant Attorney General, Land and Resources 
Division)(EPA objected to requiring APA procedures for imposition of 
administrative penalties under CERCLA, stating that such procedures 
were too lengthy and laborious). Section 22.52 accounts for most of the 
streamlining in these non-APA procedures relative to the APA 
procedures. If the same procedures apply to subpart I proceedings as 
apply to APA proceedings, the only differences remaining are the 
qualifications and independence of the adjudicator and the absence of 
the right to interlocutory appeal. Congress intended that the non-APA 
process provide faster, simpler, less costly and more efficient 
administrative proceedings, not just an additional corps of 
adjudicators.
    The types of cases that are to be brought under the non-APA 
provisions are typically factually simple. Expanding discovery in 
subpart I would raise costs to the litigants and invite

[[Page 40171]]

delaying motions and fishing expeditions. The inquiry should be 
centered on the conduct of the respondent and any penalty assessment 
factors. Allowing additional discovery of EPA beyond the prehearing 
exchange would not serve those goals, but would raise the complexity 
and cost of proceedings that Congress intended to be as unencumbered as 
possible.
    c. Final Rule. EPA adopts Sec. 22.52 as proposed. EPA notes that 
this section does not affect the authority of the Presiding Order to 
require the attendance of witnesses by subpoena, if authorized by the 
Act, in accordance with Sec. 22.4(c).
28. Interlocutory Orders or Rulings (40 CFR 22.53)
    a. Summary of Proposed Rule. The proposed Sec. 22.53 stated that, 
for proceedings subject to subpart I, ``[i]nterlocutory review as set 
forth in Sec. 22.29 is prohibited.''
    b. Significant Comments and EPA Response. Dow argues that the 
prohibition on interlocutory appeals in subpart I proceedings is 
unnecessary, because Sec. 22.29 already imposes substantial limits on 
interlocutory appeals. Dow believes that interlocutory appeal is 
warranted in any case where the criteria of Sec. 22.29(b) are met 
(i.e., ``(1) The order or ruling involves an important question of law 
or policy concerning which there is substantial grounds for difference 
of opinion; and (2) either an immediate appeal from the order or ruling 
will materially advance the ultimate termination of the proceeding, or 
review after the final order is issued will be inadequate or 
ineffective.'')
    EPA intends to use subpart I primarily for cases where EPA has 
substantial prior enforcement experience, which do not appear to 
present significant new issues of law, and where the sanctions sought 
are relatively modest. In these circumstances, meritless appeals are 
likely to greatly exceed meritorious appeals. Because the likely 
advantages of interlocutory appeal are outweighed by the anticipated 
delays that would result from meritless appeals, the final rule retains 
the prohibition on interlocutory appeal in subpart I cases.
    c. Final Rule. In today's final rule, EPA adopts the proposed 
prohibition on interlocutory appeals in subpart I cases. However, EPA 
has concluded that the proposed Sec. 22.53 is redundant, because 
Sec. 22.50(b) states that Sec. 22.29, which provides for interlocutory 
appeals, does not apply to subpart I proceedings. Although the proposed 
Sec. 22.53 highlighted this provision for purposes of soliciting public 
comment, EPA has concluded that this redundancy is inappropriate in the 
final rule. Accordingly, EPA has deleted the proposed Sec. 22.53. The 
prohibition against interlocutory appeals in subpart I cases is 
accomplished through Sec. 22.50(b)'s exclusion of Sec. 22.29.
29. Clean Air Act Field Citations
    a. Summary of Proposed Rule. EPA proposed that revisions to the 
CROP would supersede and replace the rules governing non-APA hearings 
on field citations under section 113(d)(3) of the Clean Air Act 
(``CAA''). The Field Citation rules were proposed (59 FR 22776, May 3, 
1994) but not yet final at the time EPA proposed the CROP revisions, 
and EPA expected that the Field Citation rules would be published as a 
final rule before the CROP revisions. The preamble to the proposed CROP 
stated that EPA intended to use the procedures that would appear as 
subpart B of the Field Citation rules until the CROP revisions were 
made final.
    b. Significant Comments and EPA Response. CMA/API, Dow and CEEC 
opposed the interim use of the procedures in subpart B of the Field 
Citation rules pending publication of the final CROP. These commenters 
urged EPA to postpone publication of the Field Citation rules until 
after publication of the final CROP procedures
    EPA agrees that commencing a field citation program using one set 
of procedures for a short time before switching to the CROP procedures 
could result in unnecessary burdens and confusion. EPA has postponed 
issuing a final rule governing hearing procedures for CAA field 
citations.
    c. Final Rule. Today's final rule does not contain the provisions 
in the proposed rule relating to the removal from the CFR of procedures 
for CAA field citations. A decision on appropriate hearing procedures 
for field citations, inclusion in subpart I of the CROP, will be made 
when the Field Citation rules are finalized.
30. Other Comments Not Related to a Particular Section of the Proposed 
Rule
    a. Significant Comments and EPA Response. CEEC suggests that the 
CROP should provide respondents an opportunity to review enforcement 
related press releases and raise objections to the Presiding Officer. 
CEEC notes that unfair and misleading press releases reduce incentives 
to reach settlement. EPA makes every effort to assure that press 
releases are accurate, based on the information available to the Agency 
at the time. A complainant may, at its discretion, allow a respondent 
to review a press release before issuance, but EPA does not negotiate 
the terms of enforcement related press releases. To include in the CROP 
a provision providing respondents the right to review EPA's press 
releases and raise objections to the Presiding Officer would create the 
appearance that the government's ability to communicate with the public 
is subject to a private party's control. EPA therefore rejects this 
suggestion.
    b. Final Rule. EPA has made no changes to the proposed rule in 
response to CEEC's suggestion that the CROP should provide respondents 
an opportunity to review enforcement related press releases and raise 
objections to the Presiding Officer.

III. Miscellaneous Revisions

    Through the process of analyzing the public comments, and pursuant 
to EPA's own internal review of the proposed rule, EPA has identified a 
number of typographical and drafting errors. In addition, EPA has 
identified parts of the proposed rule that could be stated more 
clearly, as mandated by Executive Order 12866 (September 30, 1993) and 
the President's memorandum of June 1, 1998, which require each agency 
to write all rules in plain language. In this final rule EPA adopts a 
number of changes on its own initiative, and not in response to any 
particular public comment. Where such revisions pertain to a section of 
the proposed rule that received significant public comment, the changes 
have already been discussed above. This section identifies the 
remaining revisions, which pertain to sections of the proposed rule 
that received no significant public comment. Public notice of proposed 
rule making is not required ``when the agency for good cause finds * * 
* that notice and public procedure thereon are impractical, 
unnecessary, or contrary to the public interest.'' 5 U.S.C. 
553(b)(3)(B). EPA has determined that the following revisions do not 
significantly affect respondents' substantive or procedural rights. 
Accordingly, EPA has determined that providing an additional round of 
public notice before making these minor changes to this procedural rule 
would be unnecessary and contrary to the public interest.

A. Section Numbering

    EPA has converted those section numbers that had contained a 
preceding zero (Secs. 22.01, 22.02, etc.) to conform the CROP to the 
standard numbering of the Code of Federal Regulations set out in the 
regulations of the Administrative

[[Page 40172]]

Committee of the Federal Register at CFR 21.11 (Secs. 22.1, 22.2, etc.) 
in this final rule. For simplicity, this preamble uses the new 
numbering system throughout, even when referring to sections of the 
proposed rule or the 1980 CROP.

B. Definitions (40 CFR 22.3)

    EPA has deleted from the definition of ``Administrative Law Judge'' 
the superfluous Public Law citation.
    EPA has revised the definition of ``Clerk of the Board'' to clarify 
that it means the Clerk of the Environmental Appeals Board.
    In the definition of ``Complainant'', EPA has replaced the 
ambiguous word ``decision'' with ``adjudication''.
    Under the proposed Sec. 22.3, ``Hearing means a hearing on the 
record open to the public and conducted under these Consolidated Rules 
of Practice.'' It is not clear from this definition whether the hearing 
is the proceeding as a whole, or just the oral evidentiary hearing. 
``Hearing'' is used throughout the CROP, most often in reference to the 
oral evidentiary hearing (e.g., prehearing exchange, motion to reopen a 
hearing), and sometimes in the more general sense (e.g., in the 
definition of ``party'' and ``Hearing Clerk''). Moreover, the 
definition of hearing does not acknowledge the fact that protection of 
confidential business information may require that all or part of a 
hearing be closed to the public. EPA has clarified the definition of 
``hearing'' as follows:

    Hearing means an evidentiary hearing on the record, open to the 
public (to the extent consistent with Sec. 22.22(a)(2)), conducted 
as part of a proceeding under these Consolidated Rules of Practice.

    Although the terms ``proceeding'' and ``action'' are used 
throughout the CROP, they have not previously been defined. In the 
final rule, EPA avoids the term ``action'' in reference to a particular 
proceeding, and has added to the CROP the following definition:

    Proceeding means the entirety of a single administrative 
adjudication, from the filing of the complaint through the issuance 
of a final order, including any action on a motion to reconsider 
under Sec. 22.32.

    For consistency with these new definitions of ``hearing'' and 
``proceeding'', EPA has substituted ``proceeding'' for ``hearing'' in 
the definition of ``party.''
    EPA has simplified the definition of ``Initial Decision'' by 
deleting the superfluous phrase ``based on the record of the 
proceedings out of which it arises.''
    EPA has converted the definition of ``permit'' into a definition of 
a new term ``Permit Action.'' By its nature, the CROP provides a set of 
common procedures applicable to various administrative proceedings 
under a large number of regulatory statutes, each of which have their 
own specific terminology. In order to avoid conflict between terms used 
differently in different regulatory programs, EPA has adopted the new 
term ``Permit Action'' as a generic term applicable solely within the 
CROP. This change allows EPA to replace the unwieldy ``permit 
revocation, termination or suspension'' language elsewhere in the CROP 
with ``Permit Action,'' improving the clarity of the CROP and 
facilitating any future efforts to bring other permit actions within 
the scope of the CROP.
    EPA has deleted from this definition the references to permits 
issued under section 402(a) of the Clean Water Act (33 U.S.C. 1342(a)) 
and permits issued under sections 3005(d) and 3008(h) of the Solid 
Waste Disposal Act (42 U.S.C. 6925(d) and 6928(h)). EPA anticipates 
that these references will be restored when the Round Two permit 
streamlining rule (61 FR 65,268) is finalized, involving revocation of 
40 CFR part 124, subpart E. In addition, EPA has added a parallel 
citation to the U.S. Code.
    EPA has made two revisions to the definition of ``Regional Hearing 
Clerk.'' First, EPA has added a clause to the first sentence, 
specifying that the Regional Hearing Clerk ``shall be neutral in every 
proceeding.'' Second, EPA has revised the second sentence, which in the 
proposed rule states that ``Correspondence may be addressed to the 
Regional Hearing Clerk, U.S. Environmental Protection Agency (address 
of Regional Office--see Appendix A).'' EPA has created a new 
Sec. 22.14(a)(7) which requires that the complaint contain the address 
of the Regional Hearing Clerk, which should provide more effective and 
more specific notice than the reference to Appendix A contained in the 
definition of Regional Hearing Clerk. EPA has therefore revised this 
sentence as follows: ``Correspondence with the Regional Hearing Clerk 
shall be addressed to the Regional Hearing Clerk at the address 
specified in the complaint.''
    EPA has revised the definition of ``Respondent'' for clarity, 
replacing ``any person proceeded against in the complaint'' with ``any 
person against whom the complaint states a claim for relief.''

C. Filing and Service of Rulings, Orders and Decisions (40 CFR 22.6)

    The proposed revisions to Sec. 22.6 were intended to delete certain 
references as surplusage and to allow documents issued by adjudicators 
to be served by any reliable commercial delivery service. The proposed 
deletions, however, are inconsistent with the current practice that 
copies of all rulings, orders and decisions (except initial decisions) 
issued by an Administrative Law Judge are served on all parties by the 
Administrative Law Judge's legal staff assistant. Copies of all initial 
decisions are served on the parties by the Regional Hearing Clerk. 
Section 22.6 is amended to be consistent with this practice.
    As noted in the response to comments on Sec. 22.5(b)(2), the U.S. 
Postal Service considers overnight express and priority mail to be 
forms of first class mail. In addition, the proposed rule makes no 
mention of EPA's internal mail system. EPA's internal mail delivery 
system has proven to be generally effective, and it is in fact 
ultimately responsible for delivering first class mail (including 
certified mail) to individual EPA personnel. To address these points, 
EPA has revised Sec. 22.6 to allow service ``by first class mail 
(including certified mail, return receipt requested, Overnight Express 
and Priority Mail), by EPA's internal mail, or by any reliable 
commercial delivery service.''
    EPA has also replaced the expression ``Clerk of the Environmental 
Appeals Board'' with ``Clerk of the Board,'' using the term defined at 
Sec. 22.3(a) for consistency.

D. Examination of Documents Filed (40 CFR 22.9)

    EPA has replaced the term ``Environmental Appeals Board'' with 
``Clerk of the Board,'' to specify the official document custodian.

E. Consolidation and Severance (40 CFR 22.12)

    EPA has added ``or the Environmental Appeals Board'' to 
Sec. 22.12(a) and (b), in order to clarify that the EAB has authority 
to consolidate or sever cases. This authority applies to cases pending 
before the EAB and to cases before a Presiding Officer through 
interlocutory appeal of a denial of a motion to consolidate or sever. 
In order to keep subpart I proceedings expeditious, EPA has also added 
a new requirement that subpart I proceedings may be consolidated only 
where all parties agree. This should eliminate the risk of litigation 
delays over whether one proceeding might be consolidated with another.

[[Page 40173]]

F. Motions (40 CFR 22.16)

    EPA is adopting Sec. 22.16 as proposed, except that a reference to 
Sec. 22.51 has been added to Sec. 22.16(c) in order to avoid any 
apparent conflict between Sec. 22.16(c) and Sec. 22.51, and the 
implication that an ALJ must rule on motions in proceedings under 
subpart I. EPA has also rearranged the sentences of Sec. 22.16(a) to 
improve clarity. To conform to the preferred style of the U.S. 
Government Printing Office, EPA has revised Sec. 22.16(b) to state the 
time allowed for responses and replies with the numerals ``15'' and 
``10'', respectively.

G. Record of the Prehearing Conference (40 CFR 22.19(c))

    The scope of the requirement that the Presiding Officer prepare and 
file ``for the record a written summary of the action taken'' at a 
prehearing conference is not clear. Just as a transcript of a 
prehearing conference may discourage frank and open discussion, the 
implication that the Presiding Officer may produce a formal summary of 
the conference may also reduce the effectiveness of such conferences. 
Moreover, the CROP is not clear whether the Presiding Officer's summary 
is supposed to constitute a finding of law or fact, nor is it clear 
whether the parties have the right to object and change the summary. 
EPA has revised the last two sentences in order to clarify that the 
Presiding Officer is only responsible for ensuring that the record of 
the proceeding includes any stipulations and agreements reached, and 
rulings and orders issued, during the conference.

H. Accelerated Decision; Decision to Dismiss (40 CFR 22.20)

    Section 22.20(b)(2) provides for accelerated decisions and 
decisions to dismiss some but not all issues or claims in a proceeding. 
The last sentence requires that the Presiding Officer ``shall issue an 
interlocutory order specifying the facts which appear substantially 
uncontroverted, and the issues and claims upon which the hearing will 
proceed.'' This sentence is somewhat ambiguous, in that it might be 
construed as requiring an interlocutory order separate from, and in 
addition to, any partial accelerated decision or decision to dismiss 
certain counts. Such an interpretation would be unwarranted, would 
unnecessarily complicate the CROP, and would be contrary to the 
customary practice of the Agency's ALJs. Rule 56(d) of the Federal 
Rules of Civil Procedure, from which this language is derived, does not 
require a separate interlocutory order specifying the facts which 
appear substantially uncontroverted, and the issues and claims upon 
which the hearing will proceed. To clarify that a single decision or 
order can accomplish all the requirements of Sec. 22.20(b)(2), EPA has 
amended the last sentence of that paragraph to state that: ``The 
partial accelerated decision or the order dismissing certain counts 
shall specify the facts which appear substantially uncontroverted, and 
the issues and claims upon which the hearing will proceed.''

I. Assignment of Presiding Officer; Scheduling a Hearing (40 CFR 22.21)

    EPA has amended Sec. 22.21(a) to clarify that the Regional Hearing 
Clerk forwards copies, not originals, of the complaint, answer, and 
other documents in the record to the Chief Administrative Law Judge 
upon receipt of the answer.
    According to Sec. 22.20(a), an accelerated decision is appropriate 
``if no genuine issue of material fact exists and a party is entitled 
to judgment as a matter of law.'' Where this standard is not met, a 
hearing is appropriate. EPA has revised Sec. 22.21(b) to use the same 
criterion as Sec. 22.20(a): The first sentence of Sec. 22.21(b) now 
states that, ``The Presiding Officer shall hold a hearing if the 
proceeding presents genuine issues of material fact.'' In addition to 
making Sec. 22.20 and Sec. 22.21 more clearly complementary, this 
change clarifies that the mere request for a hearing does not require 
that a hearing be held. Neither Sec. 22.21(b) nor Sec. 22.15(c) of the 
1980 CROP required an oral evidentiary hearing merely upon respondent's 
request for a hearing. See, e.g., In re Green Thumb Nursery, Inc., 6 
E.A.D. 782 (EAB 1997) (holding that there is no right to an oral 
evidentiary hearing).
    EPA has also expanded the notice period before a hearing from 20 to 
30 days. This will allow the parties, their attorneys, and witnesses 
additional time to make travel arrangements and to prepare for the 
hearing.
    As noted in the discussion of Sec. 22.19(e), EPA has added to 
Sec. 22.21(b) an explicit statement of the Presiding Officer's 
authority (where provided by the Act) to require the attendance of 
witnesses or the production of documentary evidence by subpoena. This 
statement includes criteria for issuing subpoenas that appeared in the 
1980 CROP (see, e.g., Sec. 22.37(f)(1).

J. Offers of Proof (40 CFR 22.23(b))

    The proposed Sec. 22.23(b) provides for offers of proof regarding 
``evidence * * * excluded from the record.'' Although the Presiding 
Officer may decline to admit certain documents, exhibits or testimony 
into evidence, and may refuse to consider them in his or her decision, 
it is incorrect to describe the status of such documents as ``excluded 
from the record.'' This information is indisputably part of ``the 
record'' of the proceeding for purposes of appellate review. 
Accordingly, EPA has revised this paragraph to state that ``Whenever 
the Presiding Officer denies a motion for admission into evidence, the 
party offering the information may make an offer of proof * * *.'' For 
purposes of clarity, EPA has revised this paragraph (b) using the word 
``information'' in place of ``evidence'' where the subject is 
information which has not been admitted into evidence.

K. Proposed Findings, Conclusions, and Order (40 CFR 22.26)

    Section 22.26 provides that the Presiding Officer must allow 20 
days after receipt of notice of the availability of the transcript 
before requiring the parties to file proposed findings of fact, 
conclusions of law, and a proposed order. In the response to public 
comments on Sec. 22.25 above, EPA announced that it would amend that 
section to allow motions to conform the transcript to the actual 
testimony to be filed ``within 30 days after receipt of the transcript, 
or 45 days after the parties are notified of the availability of the 
transcript, whichever is less.'' EPA has amended Sec. 22.26 in order to 
assure that parties need not file proposed findings of fact, 
conclusions of law, and the proposed order before the last date for 
filing motions to conform the transcript to the actual testimony 
pursuant to Sec. 22.26. For additional clarity, EPA has reorganized 
this section and has also substituted the word ``filed'' for the 
undefined term ``submitted.''
    After the hearing, any party may file proposed findings of fact, 
conclusions of law, and a proposed order, together with briefs in 
support thereof. The Presiding Officer shall set a schedule for filing 
these documents and any reply briefs, but shall not require them before 
the last date for filing motions under Sec. 22.25 to conform the 
transcript to the actual testimony. All submissions shall be in 
writing, shall be served upon all parties, and shall contain adequate 
references to the record and authorities relied on.

L. Motion to Reopen a Hearing (40 CFR 22.28)

    The CROP does not specify when a motion is ``made'', so in the 
interest of clarity, EPA has substituted the word ``filed'' for 
``made'' in the first sentence of Sec. 22.28(a). To conform to the

[[Page 40174]]

preferred style of the U.S. Government Printing Office, EPA has revised 
Sec. 22.28(a) and (b) to state the time periods associated with a 
motion to reopen a hearing with numerals only.

M. Interlocutory Appeals (40 CFR 22.29)

    EPA has corrected a typographical error in the last sentence of the 
proposed Sec. 22.29(a) ``forward the order or ruling to the 
Environmental Appeals Board * * *.'' EPA has corrected a typographical 
error in the proposed Sec. 22.29(b) by replacing the semicolon that 
follows ``proceeding'' with a comma. EPA has also changed the title of 
paragraph (c) from ``Decision'' to ``Interlocutory review.'' The CROP 
does not specify when a motion is ``made'', so in the interest of 
clarity, EPA has substituted the word ``filed'' for ``made'' in the 
last sentence of Sec. 22.29(c). To conform to the preferred style of 
the U.S. Government Printing Office, EPA has revised Sec. 22.29 to 
state all time periods with numerals only.

N. Supplemental Rules Governing the Administrative Assessment of Civil 
Penalties Under the Federal Insecticide, Fungicide, and Rodenticide Act 
(40 CFR 22.35)

    As discussed below, EPA has deleted Appendix A. In Sec. 22.35(b), 
EPA has replaced the reference to Appendix A with a reference to 40 CFR 
1.7, which contains the same EPA offices.

O. Supplemental Rules of Practice Governing the Administrative 
Assessment of Civil Penalties Under the Clean Water Act (40 CFR 22.38)

    EPA has revised Sec. 22.38(b) to provide notice to State agencies 
in proceedings commenced without a complaint, pursuant to 
Sec. 22.13(b). For ease of administration, EPA has made the timing of 
such notice consistent with the public notice requirements of 
Sec. 22.45(b)(1). Where Sec. 22.38(c) refers to section 509(b)(1) of 
the CWA, EPA has added a parallel citation to 33 U.S.C. 1369(b)(1). As 
discussed above, EPA deleted from the proposed Sec. 22.31(c) the 
requirement specifying to whom payment of penalties must be made, in 
favor of the more flexible requirement that complainant direct 
respondent as to how payment should be made. In view of this change to 
Sec. 22.31(c), the proposed Sec. 22.38(d) is unnecessary and has been 
deleted.

P. Supplemental Rules Governing the Administrative Assessment of Civil 
Penalties Under CERCLA Section 109 (40 CFR 22.39)

    The proposed Sec. 22.39(b) says petitions for judicial review must 
be filed ``within 30 days of the date the order making the assessment 
was issued.'' As the CROP does not specify when an order is ``issued,'' 
EPA has amended this provision to state that petitions for judicial 
review must be filed within 30 days after the order has been served on 
the parties. Where Sec. 22.39(b) refers to CERCLA section 109, EPA has 
specified the relevant paragraphs and has added parallel citations to 
the U.S. Code.
    EPA has deleted from Sec. 22.39 a superfluous quotation mark that 
appeared in the proposed rule.

Q. Supplemental Rules Governing The Administrative Assessment of Civil 
Penalties for Violations of Compliance Orders Issued to Owners or 
Operators of Public Water Systems Under Part B of the Safe Drinking 
Water Act (40 CFR 22.42)

    EPA has revised the title of this section to explicitly state that 
it applies to cases against owners or operators of public water 
systems.
    Where Sec. 22.42(a) refers to section 1414(g)(3)(B) of the SDWA, 
EPA has added a parallel citation to 42 U.S.C. Sec. 300g-3(g)(3)(B).
    EPA has also revised Sec. 22.42(b) to provide more certain notice 
to respondents in subpart I proceedings of their right to choose that 
hearings be conducted in accordance with section 554 of the APA. 
Paragraph (b) now requires that the complaint must include notice of 
such right to choose, and notice that the right is waived if respondent 
does not indicate such choice in its answer. EPA has also revised the 
final sentence to require that the hearing clerk notify the parties of 
any changes if the pleadings have been recaptioned.

R. Supplemental Rules Governing the Administrative Assessment of Civil 
Penalties Against a Federal Agency Under the Safe Drinking Water Act 
(40 CFR 22.43)

    Where Sec. 22.43(a) refers to section 1447(b) of the SDWA, EPA has 
added a parallel citation to 42 U.S.C. Sec. 300j-6(b). To conform to 
the preferred style of the U.S. Government Printing Office, EPA has 
revised Sec. 22.43(b) and (c)(6) to state time periods with the numeral 
``30''.
    In paragraph (c)(6), EPA has added a missing comma after the word 
``may'', and has clarified the reference to 40 CFR part 135. The 
proposed rule required that the public notice include reference to the 
requirements of 40 CFR 135. EPA has expanded this clause to state that 
the public notice shall instruct prospective appellants to provide 
copies of any appeal to the persons described in 40 CFR 135.11(a).

S. Supplemental Rules Governing the Termination of Permits Under 
Section 402(a) of the Clean Water Act or Under Section 3005(d) of the 
Resource Conservation and Recovery Act (40 CFR 22.44)

    In the December 11, 1996, ``Round Two'' permit streamlining 
proposed rule, EPA proposed to remove the procedures existing in 40 CFR 
part 124, subpart E, for proceedings to revoke or suspend a permit 
issued under section 402(a) of the Clean Water Act (33 U.S.C. 1342(a)) 
or to revoke or suspend a permit under sections 3005(d) and 3008(h) of 
the Solid Waste Disposal Act (42 U.S.C. 6925(d) and 6928(h)). See 61 FR 
65,268 (December 11, 1996). EPA proposed that such proceedings would be 
conducted pursuant to the CROP procedures, and proposed CROP revisions 
to accomplish this. These changes were incorporated into the February 
25, 1998, proposed CROP revisions. As EPA has not yet finalized the 
Round Two permit streamlining rule and 40 CFR part 124, subpart E 
remains in effect, EPA has removed and reserved Sec. 22.44. EPA 
anticipates that this section will be restored when the Round Two 
permit streamlining rule is finalized.

T. Supplemental Rules 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 (40 CFR 22.45)

    The proposed Sec. 22.45 contains several minor errors. The 
paragraph number ``(1)'' was omitted from Sec. 22.45(b), and the 
reference to ``paragraph (d)(1) of this section'' in Sec. 22.45(c)(3) 
should instead refer to section (c)(1). EPA has corrected these 
typographical errors in today's final rule. EPA has revised the heading 
of this section to refer to ``section 1423(c)'' of the SDWA, rather 
than ``section 300h-2(c),'' which is the U.S. Code section number.
    In addition to correcting the above-mentioned errors, EPA has 
expanded the scope of Sec. 22.45 so that these public comment 
procedures shall apply to class II civil penalty cases under the oil 
pollution provisions of Section 311(b)(6)(B)(ii) of the Clean Water Act 
(33 U.S.C. 1321(b)(6)(B)(ii)). Section 311(b)(6)(C)(i) (33 U.S.C. 
1321(b)(6)(C)(i)) requires that EPA provide public notice of and 
reasonable opportunity to comment on the proposed issuance of a class 
II civil penalty order.
    EPA has also revised paragraphs (b)(1), (b)(2)(i), (c)(1) and 
(c)(3) to better accommodate cases commenced through the filing of a 
consent

[[Page 40175]]

agreement and final order pursuant to Sec. 22.13(b).
    EPA has revised paragraphs (b)(1) and (c)(1) to clarify when the 
public comment period begins and ends.
    EPA has revised Sec. 22.45(b)(2)(ii) and (v) to clarify that 
comments must be submitted to the Regional Hearing Clerk.
    EPA has replaced the undefined word ``action'' in paragraphs 
(b)(2)(ii), (c)(1)(i), (c)(4)(v)(C), (c)(4)(vii) and (c)(4)(viii), with 
the word ``proceeding,'' which today's rule defines as discussed above.
    In Sec. 22.45(b)(2)(iv), EPA has added the word ``and'' after the 
semi-colon.
    EPA has edited Sec. 22.45(c)(1)(iii) and (iv) to refer to 
commenters in the singular, for consistency with the other provisions 
of Sec. 22.45.
    EPA has also revised Sec. 22.45(c)(4)(ii) to more clearly and 
succinctly state that a commenter may petition to set aside a consent 
agreement and proposed final order only on the basis that material 
evidence was not considered.
    EPA has edited the proposed Sec. 22.45(c)(4)(vii) to correct 
deficiencies in grammar.

U. Appendices

    The information in Appendix A of the proposed CROP (``Appendix'' in 
the 1980 CROP) is redundant with 40 CFR 1.7. For that reason, EPA has 
deleted Appendix A. This deletion should have no substantive effect. 
Section 22.5(c)(4) requires that the complaint include complainant's 
address, and the revised Sec. 22.14(a)(7) requires that the complaint 
contain the address of the Regional Hearing Clerk, so respondents will 
have ample notice of the addresses relevant to their cases.
    EPA has observed that the names and addresses of the lock box banks 
change often, and that it would be difficult to keep the proposed 
Appendix B up to date. EPA has decided to delete the proposed Appendix 
B, and instead to require under Sec. 22.14(a)(8) that the complaint 
provide information on how to pay penalties.

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 rule making 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 final regulation will not 
have a significant impact on a substantial number of small entities.

B. Executive Order 12866

    Under Executive Order 12866, (58 FR 51735 (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.

C. Paperwork Reduction Act

    This rule contains no information collection activities and, 
therefore, no information collection request (``ICR'') will be 
submitted to the Office of Management and Budget 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-effective or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may significantly or uniquely affect small 
governments, including tribal governments, it must have developed under 
section 203 of the UMRA a small government agency plan. The plan must 
provide for notifying potentially affected small governments, giving 
them meaningful and timely input in the development of EPA regulatory 
proposals with significant Federal intergovernmental mandates, and 
informing, educating, and advising them on compliance with the 
regulatory requirements.
    Today's rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, or tribal 
governments or the private sector. The rule imposes no enforceable 
duties on any of these governmental entities or the private sector.

E. Executive Order 12875

    Under Executive Order 12875, EPA may not issue a regulation that is 
not required by statute and that creates a mandate upon a State, local 
or tribal government, unless the Federal government provides the funds 
necessary to pay the direct compliance costs incurred by those 
governments, or EPA consults with those governments. If EPA complies by 
consulting, Executive Order 12875 requires EPA to provide to the Office 
of Management and Budget a description of the extent of EPA's prior 
consultation with representatives of affected State, local and tribal 
governments, the nature of their concerns, copies of any written 
communications from the governments, and a statement supporting the 
need to issue the regulation. In addition, Executive Order 12875 
requires EPA to

[[Page 40176]]

develop an effective process permitting elected officials and other 
representatives of State, local and tribal governments ``to provide 
meaningful and timely input to the development of regulatory proposals 
containing significant unfunded mandates.''
    Today's rule does not create a mandate on State, local or tribal 
governments. This rule does not impose any enforceable duties on these 
entities. Instead, it merely revises the procedural rules governing 
EPA's administrative enforcement proceedings.

F. Executive Order 13045

    Executive Order 13045: ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that: (1) is determined to be ``economically significant'' 
as defined under E.O. 12866, and (2) concerns an environmental health 
or safety risk that EPA has reason to believe may have a 
disproportionate effect on children. If the regulatory action meets 
both criteria, the Agency must evaluate the environmental health or 
safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency.
    This final rule is not subject to the E.O. 13045 because it is not 
``economically significant'' as defined in E.O. 12866, and because it 
does not involve decisions based on environmental health or safety 
risks.

G. Executive Order 13084

    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments, or EPA consults with those 
governments. If EPA complies by consulting, Executive Order 13084 
requires EPA to provide to the Office of Management and Budget, in a 
separately identified section of the preamble to the rule, a 
description of the extent of EPA's prior consultation with 
representatives of affected tribal governments, a summary of the nature 
of their concerns, and a statement supporting the need to issue the 
regulation. In addition, Executive Order 13084 requires EPA to develop 
an effective process permitting elected and other representatives of 
Indian tribal governments ``to provide meaningful and timely input in 
the development of regulatory policies on matters that significantly or 
uniquely affect their communities.''
    Today's rule does not significantly or uniquely affect the 
communities of Indian tribal governments. Accordingly, the requirements 
of section 3(b) of Executive Order 13084 do not apply to this rule.

H. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, section 12(d) (15 U.S.C. 
272 note), directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, business practices) that are developed or adopted 
by voluntary consensus standards bodies. The NTTAA requires EPA to 
provide Congress, through OMB, explanations when the Agency decides not 
to use available and applicable voluntary consensus standards.
    This action does not involve technical standards. Therefore, EPA 
did not consider the use of any voluntary consensus standards.

I. Submission to Congress and the Comptroller General

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. The EPA will submit a report containing this rule and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. This rule is not a 
``major rule'' as defined by 5 U.S.C. 804(2).

List of Subjects in 40 CFR Part 22

    Environment protection, Administrative practice and procedure, Air 
pollution control, Hazardous substances, Hazardous waste, Penalties, 
Pesticides and pests, Poison prevention, Superfund, Waste treatment and 
disposal, Water pollution control, Water supply.

    Dated: June 30, 1999.
Carol M. Browner,
Administrator.

    Therefore, 40 CFR part 22 is revised to read as follows:

PART 22--COSOLIDATED 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

Subpart A--General

Sec.

22.1  Scope of this part.
22.2  Use of number and gender.
22.3  Definitions.
22.4  Powers and duties of the Environmental Appeals Board, Regional 
Judicial Officer and Presiding Officer; disqualification, 
withdrawal, and reassignment.
22.5  Filing, service, and form of all filed documents; business 
confidentiality claims.
22.6  Filing and service of rulings, orders and decisions.
22.7  Computation and extension of time.
22.8  Ex parte discussion of proceeding.
22.9  Examination of documents filed.

Subpart B--Parties and Appearances

22.10  Appearances.
22.11  Intervention and non-party briefs.
22.12  Consolidation and severance.

Subpart C--Prehearing Procedures

22.13  Commencement of a proceeding.
22.14  Complaint.
22.15  Answer to the complaint.
22.16  Motions.
22.17  Default.
22.18  Quick resolution; settlement; alternative dispute resolution.
22.19  Prehearing information exchange; prehearing conference; other 
discovery.
22.20  Accelerated decision; decision to dismiss.

Subpart D--Hearing Procedures

22.21  Assignment of Presiding Officer; scheduling the hearing.
22.22  Evidence.
22.23  Objections and offers of proof.
22.24  Burden of presentation; burden of persuasion; preponderance 
of the evidence standard.
22.25  Filing the transcript.
22.26  Proposed findings, conclusions, and order.

Subpart E--Initial Decision and Motion to Reopen a Hearing

22.27  Initial decision.
22.28  Motion to reopen a hearing.

Subpart F--Appeals and Administrative Review

22.29  Appeal from or review of interlocutory orders or rulings.
22.30  Appeal from or review of initial decision.

[[Page 40177]]

Subpart G--Final Order

22.31  Final order.
22.32  Motion to reconsider a final order.

Subpart H--Supplemental Rules

22.33  [Reserved]
22.34  Supplemental rules governing the administrative assessment of 
civil penalties under the Clean Air Act.
22.35  Supplemental rules governing the administrative assessment of 
civil penalties under the Federal Insecticide, Fungicide, and 
Rodenticide Act.
22.36  [Reserved]
22.37  Supplemental rules governing administrative proceedings under 
the Solid Waste Disposal Act.
22.38  Supplemental rules of practice governing the administrative 
assessment of civil penalties under the Clean Water Act.
22.39  Supplemental rules governing the administrative assessment of 
civil penalties under section 109 of the Comprehensive Environmental 
Response, Compensation, and Liability Act of 1980, as amended.
22.40  [Reserved]
22.41  Supplemental rules governing the administrative assessment of 
civil penalties under Title II of the Toxic Substance Control Act, 
enacted as section 2 of the Asbestos Hazard Emergency Response Act 
(AHERA).
22.42  Supplemental rules governing the administrative assessment of 
civil penalties for violations of compliance orders issued to owners 
or operators of public water systems under part B of the Safe 
Drinking Water Act.
22.43  Supplemental rules governing the administrative assessment of 
civil penalties against a federal agency under the Safe Drinking 
Water Act.
22.44  [Reserved]
22.45  Supplemental rules governing public notice and comment in 
proceedings under sections 309(g) and 311(b)(6)(B)(ii) of the Clean 
Water Act and section 1423(c) of the Safe Drinking Water Act.
22.46-22.49  [Reserved]

Subpart I--Administrative Proceedings Not Governed by Section 554 of 
the Administrative Procedure Act

22.50  Scope of this subpart.
22.51  Presiding Officer.
22.52  Information exchange and discovery.

    Authority: 7 U.S.C. 136l; 15 U.S.C. 2610(c), 2615(a) and 2647; 
33 U.S.C. 1319(g), 1321(b)(6), 1342(a), 1415(a) and (f) and 1418; 42 
U.S.C. 300g-3(g)(3)(B), 300h-2(c), 300j-6(a), 6912, 6925, 6928, 
6945(c)(2), 6961, 6991b, 6991e, 7413(d), 7524(c), 7545(d), 7547(d), 
7601, 7607(a), 9609, 11045, and 14304.

Subpart A--General


Sec. 22.1  Scope of this part.

    (a) These Consolidated Rules of Practice govern all administrative 
adjudicatory proceedings for:
    (1) The assessment of any administrative civil penalty under 
section 14(a) of the Federal Insecticide, Fungicide, and Rodenticide 
Act as amended (7 U.S.C. 136l(a));
    (2) The assessment of any administrative civil penalty under 
sections 113(d), 205(c), 211(d) and 213(d) of the Clean Air Act, as 
amended (42 U.S.C. 7413(d), 7524(c), 7545(d) and 7547(d));
    (3) The assessment of any administrative civil penalty or for the 
revocation or suspension of any permit under section 105(a) and (f) of 
the Marine Protection, Research, and Sanctuaries Act as amended (33 
U.S.C. 1415(a) and (f));
    (4)(i) The issuance of a compliance order pursuant to section 
3008(a), section 4005(c)(2), section 6001(b), or section 9006(a) of the 
Solid Waste Disposal Act (``SWDA'') (42 U.S.C. 6925(d) & (e), 6928(a), 
6945(c)(2), 6961(b), or 6991e(a)); or the assessment of any 
administrative civil penalty under sections 3008, 4005(c)(2), 6001(b), 
and 9006 of the SWDA (42 U.S.C. 6928, 6945(c)(2), 6961(b), and 6991e), 
except as provided in 40 CFR parts 24 and 124.
    (ii) The issuance of corrective action orders under section 3008(h) 
of the SWDA only when such orders are contained within an 
administrative order which:
    (A) Includes claims under section 3008(a) of the SWDA; or
    (B) Includes a suspension or revocation of authorization to operate 
under section 3005(e) of the SWDA; or
    (C) Seeks penalties under section 3008(h)(2) of the SWDA for non-
compliance with a order issued pursuant to section 3008(h).
    (iii) The issuance of corrective action orders under section 
9003(h)(4) of the SWDA only when such orders are contained within 
administrative orders which include claims under section 9006 of the 
SWDA;
    (5) The assessment of any administrative civil penalty under 
sections 16(a) and 207 of the Toxic Substances Control Act (15 U.S.C. 
2615(a) and 2647);
    (6) The assessment of any administrative civil penalty under 
sections 309(g) and 311(b)(6) of the Clean Water Act (33 U.S.C. 1319(g) 
and 1321(b)(6));
    (7) The assessment of any administrative civil penalty under 
section 109 of the Comprehensive Environmental Response, Compensation, 
and Liability Act of 1980, as amended (42 U.S.C. 9609);
    (8) The assessment of any administrative civil penalty under 
section 325 of the Emergency Planning and Community Right-To-Know Act 
of 1986 (``EPCRA'') (42 U.S.C. 11045);
    (9) The assessment of any administrative civil penalty under 
sections 1414(g)(3)(B), 1423(c), and 1447(b) of the Safe Drinking Water 
Act as amended (42 U.S.C. 300g-3(g)(3)(B), 300h-2(c), and 300j-6(b)), 
or the issuance of any order requiring both compliance and the 
assessment of an administrative civil penalty under section 1423(c);
    (10) The assessment of any administrative civil penalty or the 
issuance of any order requiring compliance under Section 5 of the 
Mercury-Containing and Rechargeable Battery Management Act (42 U.S.C. 
14304).
    (b) The supplemental rules set forth in subparts H and I of this 
part establish special procedures for proceedings identified in 
paragraph (a) of this section where the Act allows or requires 
procedures different from the procedures in subparts A through G of 
this part. Where inconsistencies exist between subparts A through G of 
this part and subpart H or I of this part, subparts H or I of this part 
shall apply.
    (c) Questions arising at any stage of the proceeding which are not 
addressed in these Consolidated Rules of Practice shall be resolved at 
the discretion of the Administrator, Environmental Appeals Board, 
Regional Administrator, or Presiding Officer, as provided for in these 
Consolidated Rules of Practice.


Sec. 22.2  Use of number and gender.

    As used in these Consolidated Rules of Practice, words in the 
singular also include the plural and words in the masculine gender also 
include the feminine, and vice versa, as the case may require.


Sec. 22.3  Definitions.

    (a) The following definitions apply to these Consolidated Rules of 
Practice:
    Act means the particular statute authorizing the proceeding at 
issue.
    Administrative Law Judge means an Administrative Law Judge 
appointed under 5 U.S.C. 3105.
    Administrator means the Administrator of the U.S. Environmental 
Protection Agency or his delegate.
    Agency means the United States Environmental Protection Agency.
    Business confidentiality claim means a confidentiality claim as 
defined in 40 CFR 2.201(h).
    Clerk of the Board means the Clerk of the Environmental Appeals 
Board, Mail Code 1103B, U.S. Environmental Protection Agency, 401 M St. 
S.W., Washington, DC 20460.
    Commenter means any person (other than a party) or representative 
of such person who timely:

[[Page 40178]]

    (1) Submits in writing to the Regional Hearing Clerk that he is 
providing or intends to provide comments on the proposed assessment of 
a penalty pursuant to sections 309(g)(4) and 311(b)(6)(C) of the Clean 
Water Act or section 1423(c) of the Safe Drinking Water Act, whichever 
applies, and intends to participate in the proceeding; and
    (2) Provides the Regional Hearing Clerk with a return address.
    Complainant means any person authorized to issue a complaint in 
accordance with Secs. 22.13 and 22.14 on behalf of the Agency to 
persons alleged to be in violation of the Act. The complainant shall 
not be a member of the Environmental Appeals Board, the Regional 
Judicial Officer or any other person who will participate or advise in 
the adjudication.
    Consolidated Rules of Practice means the regulations in this part.
    Environmental Appeals Board means the Board within the Agency 
described in 40 CFR 1.25.
    Final order means:
    (1) An order issued by the Environmental Appeals Board or the 
Administrator after an appeal of an initial decision, accelerated 
decision, decision to dismiss, or default order, disposing of the 
matter in controversy between the parties;
    (2) An initial decision which becomes a final order under 
Sec. 22.27(c); or
    (3) A final order issued in accordance with Sec. 22.18.
    Hearing means an evidentiary hearing on the record, open to the 
public (to the extent consistent with Sec. 22.22(a)(2)), conducted as 
part of a proceeding under these Consolidated Rules of Practice.
    Hearing Clerk means the Hearing Clerk, Mail Code 1900, U.S. 
Environmental Protection Agency, 401 M St. SW., Washington, DC 20460.
    Initial decision means the decision issued by the Presiding Officer 
pursuant to Secs. 22.17(c), 22.20(b) or 22.27 resolving all outstanding 
issues in the proceeding.
    Party means any person that participates in a proceeding as 
complainant, respondent, or intervenor.
    Permit Action means the revocation, suspension or termination of 
all or part of a permit issued under section 102 of the Marine 
Protection, Research and Sanctuaries Act (33 U.S.C. 1412).
    Person includes any individual, partnership, association, 
corporation, and any trustee, assignee, receiver or legal successor 
thereof; any organized group of persons whether incorporated or not; 
and any officer, employee, agent, department, agency or instrumentality 
of the Federal Government, of any State or local unit of government, or 
of any foreign government.
    Presiding Officer means an individual who presides in an 
administrative adjudication until an initial decision becomes final or 
is appealed. The Presiding Officer shall be an Administrative Law 
Judge, except where Secs. 22.4(b), 22.16(c) or 22.51 allow a Regional 
Judicial Officer to serve as Presiding Officer.
    Proceeding means the entirety of a single administrative 
adjudication, from the filing of the complaint through the issuance of 
a final order, including any action on a motion to reconsider under 
Sec. 22.32.
    Regional Administrator means, for a case initiated in an EPA 
Regional Office, the Regional Administrator for that Region or any 
officer or employee thereof to whom his authority is duly delegated.
    Regional Hearing Clerk means an individual duly authorized to serve 
as hearing clerk for a given region, who shall be neutral in every 
proceeding. Correspondence with the Regional Hearing Clerk shall be 
addressed to the Regional Hearing Clerk at the address specified in the 
complaint. For a case initiated at EPA Headquarters, the term Regional 
Hearing Clerk means the Hearing Clerk.
    Regional Judicial Officer means a person designated by the Regional 
Administrator under Sec. 22.4(b).
    Respondent means any person against whom the complaint states a 
claim for relief.
    (b) Terms defined in the Act and not defined in these Consolidated 
Rules of Practice are used consistent with the meanings given in the 
Act.


Sec. 22.4  Powers and duties of the Environmental Appeals Board, 
Regional Judicial Officer and Presiding Officer; disqualification, 
withdrawal, and reassignment.

    (a) Environmental Appeals Board. (1) The Environmental Appeals 
Board rules on appeals from the initial decisions, rulings and orders 
of a Presiding Officer in proceedings under these Consolidated Rules of 
Practice; acts as Presiding Officer until the respondent files an 
answer in proceedings under these Consolidated Rules of Practice 
commenced at EPA Headquarters; and approves settlement of proceedings 
under these Consolidated Rules of Practice commenced at EPA 
Headquarters. The Environmental Appeals Board may refer any case or 
motion to the Administrator when the Environmental Appeals Board, in 
its discretion, deems it appropriate to do so. When an appeal or motion 
is referred to the Administrator by the Environmental Appeals Board, 
all parties shall be so notified and references to the Environmental 
Appeals Board in these Consolidated Rules of Practice shall be 
interpreted as referring to the Administrator. If a case or motion is 
referred to the Administrator by the Environmental Appeals Board, the 
Administrator may consult with any EPA employee concerning the matter, 
provided such consultation does not violate Sec. 22.8. Motions directed 
to the Administrator shall not be considered except for motions for 
disqualification pursuant to paragraph (d) of this section, or motions 
filed in matters that the Environmental Appeals Board has referred to 
the Administrator.
    (2) In exercising its duties and responsibilities under these 
Consolidated Rules of Practice, the Environmental Appeals Board may do 
all acts and take all measures as are necessary for the efficient, fair 
and impartial adjudication of issues arising in a proceeding, including 
imposing procedural sanctions against a party who without adequate 
justification fails or refuses to comply with these Consolidated Rules 
of Practice or with an order of the Environmental Appeals Board. Such 
sanctions may include drawing adverse inferences against a party, 
striking a party's pleadings or other submissions from the record, and 
denying any or all relief sought by the party in the proceeding.
    (b) Regional Judicial Officer. Each Regional Administrator shall 
delegate to one or more Regional Judicial Officers authority to act as 
Presiding Officer in proceedings under subpart I of this part, and to 
act as Presiding Officer until the respondent files an answer in 
proceedings under these Consolidated Rules of Practice to which subpart 
I of this part does not apply. The Regional Administrator may also 
delegate to one or more Regional Judicial Officers the authority to 
approve settlement of proceedings pursuant to Sec. 22.18(b)(3). These 
delegations will not prevent a Regional Judicial Officer from referring 
any motion or case to the Regional Administrator. A Regional Judicial 
Officer shall be an attorney who is a permanent or temporary employee 
of the Agency or another Federal agency and who may perform other 
duties within the Agency. A Regional Judicial Officer shall not have 
performed prosecutorial or investigative functions in connection with 
any case in which he serves as a Regional Judicial Officer. A Regional 
Judicial Officer shall not knowingly preside over a case involving any 
party concerning whom the

[[Page 40179]]

Regional Judicial Officer performed any functions of prosecution or 
investigation within the 2 years preceding the commencement of the 
case. A Regional Judicial Officer shall not prosecute enforcement cases 
and shall not be supervised by any person who supervises the 
prosecution of enforcement cases, but may be supervised by the Regional 
Counsel.
    (c) Presiding Officer. The Presiding Officer shall conduct a fair 
and impartial proceeding, assure that the facts are fully elicited, 
adjudicate all issues, and avoid delay. The Presiding Officer may:
    (1) Conduct administrative hearings under these Consolidated Rules 
of Practice;
    (2) Rule upon motions, requests, and offers of proof, and issue all 
necessary orders;
    (3) Administer oaths and affirmations and take affidavits;
    (4) Examine witnesses and receive documentary or other evidence;
    (5) Order a party, or an officer or agent thereof, to produce 
testimony, documents, or other non-privileged evidence, and failing the 
production thereof without good cause being shown, draw adverse 
inferences against that party;
    (6) Admit or exclude evidence;
    (7) Hear and decide questions of facts, law, or discretion;
    (8) Require parties to attend conferences for the settlement or 
simplification of the issues, or the expedition of the proceedings;
    (9) Issue subpoenas authorized by the Act; and
    (10) Do all other acts and take all measures necessary for the 
maintenance of order and for the efficient, fair and impartial 
adjudication of issues arising in proceedings governed by these 
Consolidated Rules of Practice.
    (d) Disqualification, withdrawal and reassignment. (1) The 
Administrator, the Regional Administrator, the members of the 
Environmental Appeals Board, the Regional Judicial Officer, or the 
Administrative Law Judge may not perform functions provided for in 
these Consolidated Rules of Practice regarding any matter in which they 
have a financial interest or have any relationship with a party or with 
the subject matter which would make it inappropriate for them to act. 
Any party may at any time by motion to the Administrator, Regional 
Administrator, a member of the Environmental Appeals Board, the 
Regional Judicial Officer or the Administrative Law Judge request that 
he or she disqualify himself or herself from the proceeding. If such a 
motion to disqualify the Regional Administrator, Regional Judicial 
Officer or Administrative Law Judge is denied, a party may appeal that 
ruling to the Environmental Appeals Board. If a motion to disqualify a 
member of the Environmental Appeals Board is denied, a party may appeal 
that ruling to the Administrator. There shall be no interlocutory 
appeal of the ruling on a motion for disqualification. The 
Administrator, the Regional Administrator, a member of the 
Environmental Appeals Board, the Regional Judicial Officer, or the 
Administrative Law Judge may at any time withdraw from any proceeding 
in which he deems himself disqualified or unable to act for any reason.
    (2) If the Administrator, the Regional Administrator, the Regional 
Judicial Officer, or the Administrative Law Judge is disqualified or 
withdraws from the proceeding, a qualified individual who has none of 
the infirmities listed in paragraph (d)(1) of this section shall be 
assigned as a replacement. The Administrator shall assign a replacement 
for a Regional Administrator who withdraws or is disqualified. Should 
the Administrator withdraw or be disqualified, the Regional 
Administrator from the Region where the case originated shall replace 
the Administrator. If that Regional Administrator would be 
disqualified, the Administrator shall assign a Regional Administrator 
from another Region to replace the Administrator. The Regional 
Administrator shall assign a new Regional Judicial Officer if the 
original Regional Judicial Officer withdraws or is disqualified. The 
Chief Administrative Law Judge shall assign a new Administrative Law 
Judge if the original Administrative Law Judge withdraws or is 
disqualified.
    (3) The Chief Administrative Law Judge, at any stage in the 
proceeding, may reassign the case to an Administrative Law Judge other 
than the one originally assigned in the event of the unavailability of 
the Administrative Law Judge or where reassignment will result in 
efficiency in the scheduling of hearings and would not prejudice the 
parties.


Sec. 22.5  Filing, service, and form of all filed documents; business 
confidentiality claims.

    (a) Filing of documents. (1) The original and one copy of each 
document intended to be part of the record shall be filed with the 
Regional Hearing Clerk when the proceeding is before the Presiding 
Officer, or filed with the Clerk of the Board when the proceeding is 
before the Environmental Appeals Board. A document is filed when it is 
received by the appropriate Clerk. The Presiding Officer or the 
Environmental Appeals Board may by order authorize facsimile or 
electronic filing, subject to any appropriate conditions and 
limitations.
    (2) When the Presiding Officer corresponds directly with the 
parties, the original of the correspondence shall be filed with the 
Regional Hearing Clerk. Parties who correspond directly with the 
Presiding Officer shall file a copy of the correspondence with the 
Regional Hearing Clerk.
    (3) A certificate of service shall accompany each document filed or 
served in the proceeding.
    (b) Service of documents. A copy of each document filed in the 
proceeding shall be served on the Presiding Officer or the 
Environmental Appeals Board, and on each party.
    (1) Service of complaint. (i) Complainant shall serve on 
respondent, or a representative authorized to receive service on 
respondent's behalf, a copy of the signed original of the complaint, 
together with a copy of these Consolidated Rules of Practice. Service 
shall be made personally, by certified mail with return receipt 
requested, or by any reliable commercial delivery service that provides 
written verification of delivery.
    (ii)(A) Where respondent is a domestic or foreign corporation, a 
partnership, or an unincorporated association which is subject to suit 
under a common name, complainant shall serve an officer, partner, a 
managing or general agent, or any other person authorized by 
appointment or by Federal or State law to receive service of process.
    (B) Where respondent is an agency of the United States complainant 
shall serve that agency as provided by that agency's regulations, or in 
the absence of controlling regulation, as otherwise permitted by law. 
Complainant should also provide a copy of the complaint to the senior 
executive official having responsibility for the overall operations of 
the geographical unit where the alleged violations arose. If the agency 
is a corporation, the complaint shall be served as prescribed in 
paragraph (b)(1)(ii)(A) of this section.
    (C) Where respondent is a State or local unit of government, 
agency, department, corporation or other instrumentality, complainant 
shall serve the chief executive officer thereof, or as otherwise 
permitted by law. Where respondent is a State or local officer, 
complainant shall serve such officer.
    (iii) Proof of service of the complaint shall be made by affidavit 
of the person making personal service, or by properly executed receipt. 
Such proof of service

[[Page 40180]]

shall be filed with the Regional Hearing Clerk immediately upon 
completion of service.
    (2) Service of filed documents other than the complaint, rulings, 
orders, and decisions. All filed documents other than the complaint, 
rulings, orders, and decisions shall be served personally, by first 
class mail (including certified mail, return receipt requested, 
Overnight Express and Priority Mail), or by any reliable commercial 
delivery service. The Presiding Officer or the Environmental Appeals 
Board may by order authorize facsimile or electronic service, subject 
to any appropriate conditions and limitations.
    (c) Form of documents. (1) Except as provided in this section, or 
by order of the Presiding Officer or of the Environmental Appeals Board 
there are no specific requirements as to the form of documents.
    (2) The first page of every filed document shall contain a caption 
identifying the respondent and the docket number. All legal briefs and 
legal memoranda greater than 20 pages in length (excluding attachments) 
shall contain a table of contents and a table of authorities with page 
references.
    (3) The original of any filed document (other than exhibits) shall 
be signed by the party filing or by its attorney or other 
representative. The signature constitutes a representation by the 
signer that he has read the document, that to the best of his 
knowledge, information and belief, the statements made therein are 
true, and that it is not interposed for delay.
    (4) The first document filed by any person shall contain the name, 
address, and telephone number of an individual authorized to receive 
service relating to the proceeding. Parties shall promptly file any 
changes in this information with the Regional Hearing Clerk, and serve 
copies on the Presiding Officer and all parties to the proceeding. If a 
party fails to furnish such information and any changes thereto, 
service to the party's last known address shall satisfy the 
requirements of paragraph (b)(2) of this section and Sec. 22.6.
    (5) The Environmental Appeals Board or the Presiding Officer may 
exclude from the record any document which does not comply with this 
section. Written notice of such exclusion, stating the reasons 
therefor, shall be promptly given to the person submitting the 
document. Such person may amend and resubmit any excluded document upon 
motion granted by the Environmental Appeals Board or the Presiding 
Officer, as appropriate.
    (d) Confidentiality of business information. (1) A person who 
wishes to assert a business confidentiality claim with regard to any 
information contained in any document to be filed in a proceeding under 
these Consolidated Rules of Practice shall assert such a claim in 
accordance with 40 CFR part 2 at the time that the document is filed. A 
document filed without a claim of business confidentiality shall be 
available to the public for inspection and copying.
    (2) Two versions of any document which contains information claimed 
confidential shall be filed with the Regional Hearing Clerk:
    (i) One version of the document shall contain the information 
claimed confidential. The cover page shall include the information 
required under paragraph (c)(2) of this section and the words 
``Business Confidentiality Asserted''. The specific portion(s) alleged 
to be confidential shall be clearly identified within the document.
    (ii) A second version of the document shall contain all information 
except the specific information claimed confidential, which shall be 
redacted and replaced with notes indicating the nature of the 
information redacted. The cover page shall state that information 
claimed confidential has been deleted and that a complete copy of the 
document containing the information claimed confidential has been filed 
with the Regional Hearing Clerk.
    (3) Both versions of the document shall be served on the Presiding 
Officer and the complainant. Both versions of the document shall be 
served on any party, non-party participant, or representative thereof, 
authorized to receive the information claimed confidential by the 
person making the claim of confidentiality. Only the redacted version 
shall be served on persons not authorized to receive the confidential 
information.
    (4) Only the second, redacted version shall be treated as public 
information. An EPA officer or employee may disclose information 
claimed confidential in accordance with paragraph (d)(1) of this 
section only as authorized under 40 CFR part 2.


Sec. 22.6  Filing and service of rulings, orders and decisions.

    All rulings, orders, decisions, and other documents issued by the 
Regional Administrator or Presiding Officer shall be filed with the 
Regional Hearing Clerk. All such documents issued by the Environmental 
Appeals Board shall be filed with the Clerk of the Board. Copies of 
such rulings, orders, decisions or other documents shall be served 
personally, by first class mail (including by certified mail or return 
receipt requested, Overnight Express and Priority Mail), by EPA's 
internal mail, or any reliable commercial delivery service, upon all 
parties by the Clerk of the Environmental Appeals Board, the Office of 
Administrative Law Judges or the Regional Hearing Clerk, as 
appropriate.


Sec. 22.7  Computation and extension of time.

    (a) Computation. In computing any period of time prescribed or 
allowed in these Consolidated Rules of Practice, except as otherwise 
provided, the day of the event from which the designated period begins 
to run shall not be included. Saturdays, Sundays, and Federal holidays 
shall be included. When a stated time expires on a Saturday, Sunday or 
Federal holiday, the stated time period shall be extended to include 
the next business day.
    (b) Extensions of time. The Environmental Appeals Board or the 
Presiding Officer may grant an extension of time for filing any 
document: upon timely motion of a party to the proceeding, for good 
cause shown, and after consideration of prejudice to other parties; or 
upon its own initiative. Any motion for an extension of time shall be 
filed sufficiently in advance of the due date so as to allow other 
parties reasonable opportunity to respond and to allow the Presiding 
Officer or Environmental Appeals Board reasonable opportunity to issue 
an order.
    (c) Service by mail or commercial delivery service. Service of the 
complaint is complete when the return receipt is signed. Service of all 
other documents is complete upon mailing or when placed in the custody 
of a reliable commercial delivery service. Where a document is served 
by first class mail or commercial delivery service, but not by 
overnight or same-day delivery, 5 days shall be added to the time 
allowed by these Consolidated Rules of Practice for the filing of a 
responsive document.


Sec. 22.8  Ex parte discussion of proceeding.

    At no time after the issuance of the complaint shall the 
Administrator, the members of the Environmental Appeals Board, the 
Regional Administrator, the Presiding Officer or any other person who 
is likely to advise these officials on any decision in the proceeding, 
discuss ex parte the merits of the proceeding with any interested 
person outside the Agency, with any Agency staff member who performs a 
prosecutorial or investigative function in such proceeding or a 
factually related proceeding, or with any representative of such 
person. Any ex parte memorandum or other communication

[[Page 40181]]

addressed to the Administrator, the Regional Administrator, the 
Environmental Appeals Board, or the Presiding Officer during the 
pendency of the proceeding and relating to the merits thereof, by or on 
behalf of any party shall be regarded as argument made in the 
proceeding and shall be served upon all other parties. The other 
parties shall be given an opportunity to reply to such memorandum or 
communication. The requirements of this section shall not apply to any 
person who has formally recused himself from all adjudicatory functions 
in a proceeding, or who issues final orders only pursuant to 
Sec. 22.18(b)(3).


Sec. 22.9  Examination of documents filed.

    (a) Subject to the provisions of law restricting the public 
disclosure of confidential information, any person may, during Agency 
business hours inspect and copy any document filed in any proceeding. 
Such documents shall be made available by the Regional Hearing Clerk, 
the Hearing Clerk, or the Clerk of the Board, as appropriate.
    (b) The cost of duplicating documents shall be borne by the person 
seeking copies of such documents. The Agency may waive this cost in its 
discretion.

Subpart B--Parties and Appearances


Sec. 22.10  Appearances.

    Any party may appear in person or by counsel or other 
representative. A partner may appear on behalf of a partnership and an 
officer may appear on behalf of a corporation. Persons who appear as 
counsel or other representative must conform to the standards of 
conduct and ethics required of practitioners before the courts of the 
United States.


Sec. 22.11  Intervention and non-party briefs.

    (a) Intervention. Any person desiring to become a party to a 
proceeding may move for leave to intervene. A motion for leave to 
intervene that is filed after the exchange of information pursuant to 
Sec. 22.19(a) shall not be granted unless the movant shows good cause 
for its failure to file before such exchange of information. All 
requirements of these Consolidated Rules of Practice shall apply to a 
motion for leave to intervene as if the movant were a party. The 
Presiding Officer shall grant leave to intervene in all or part of the 
proceeding if: the movant claims an interest relating to the cause of 
action; a final order may as a practical matter impair the movant's 
ability to protect that interest; and the movant's interest is not 
adequately represented by existing parties. The intervenor shall be 
bound by any agreements, arrangements and other matters previously made 
in the proceeding unless otherwise ordered by the Presiding Officer or 
the Environmental Appeals Board for good cause.
    (b) Non-party briefs. Any person who is not a party to a proceeding 
may move for leave to file a non-party brief. The motion shall identify 
the interest of the applicant and shall explain the relevance of the 
brief to the proceeding. All requirements of these Consolidated Rules 
of Practice shall apply to the motion as if the movant were a party. If 
the motion is granted, the Presiding Officer or Environmental Appeals 
Board shall issue an order setting the time for filing such brief. Any 
party to the proceeding may file a response to a non-party brief within 
15 days after service of the non-party brief.


Sec. 22.12  Consolidation and severance.

    (a) Consolidation. The Presiding Officer or the Environmental 
Appeals Board may consolidate any or all matters at issue in two or 
more proceedings subject to these Consolidated Rules of Practice where: 
there exist common parties or common questions of fact or law; 
consolidation would expedite and simplify consideration of the issues; 
and consolidation would not adversely affect the rights of parties 
engaged in otherwise separate proceedings. Proceedings subject to 
subpart I of this part may be consolidated only upon the approval of 
all parties. Where a proceeding subject to the provisions of subpart I 
of this part is consolidated with a proceeding to which subpart I of 
this part does not apply, the procedures of subpart I of this part 
shall not apply to the consolidated proceeding.
    (b) Severance. The Presiding Officer or the Environmental Appeals 
Board may, for good cause, order any proceedings severed with respect 
to any or all parties or issues.

Subpart C--Prehearing Procedures


Sec. 22.13  Commencement of a proceeding.

    (a) Any proceeding subject to these Consolidated Rules of Practice 
is commenced by filing with the Regional Hearing Clerk a complaint 
conforming to Sec. 22.14.
    (b) Notwithstanding paragraph (a) of this section, where the 
parties agree to settlement of one or more causes of action before the 
filing of a complaint, a proceeding may be simultaneously commenced and 
concluded by the issuance of a consent agreement and final order 
pursuant to Sec. 22.18(b)(2) and (3).


Sec. 22.14  Complaint.

    (a) Content of complaint. Each complaint shall include:
    (1) A statement reciting the section(s) of the Act authorizing the 
issuance of the complaint;
    (2) Specific reference to each provision of the Act, implementing 
regulations, permit or order which respondent is alleged to have 
violated;
    (3) A concise statement of the factual basis for each violation 
alleged;
    (4) A description of all relief sought, including one or more of 
the following:
    (i) The amount of the civil penalty which is proposed to be 
assessed, and a brief explanation of the proposed penalty;
    (ii) Where a specific penalty demand is not made, the number of 
violations (where applicable, days of violation) for which a penalty is 
sought, a brief explanation of the severity of each violation alleged 
and a recitation of the statutory penalty authority applicable for each 
violation alleged in the complaint;
    (iii) A request for a Permit Action and a statement of its proposed 
terms and conditions; or
    (iv) A request for a compliance or corrective action order and a 
statement of the terms and conditions thereof;
    (5) Notice of respondent's right to request a hearing on any 
material fact alleged in the complaint, or on the appropriateness of 
any proposed penalty, compliance or corrective action order, or Permit 
Action;
    (6) Notice if subpart I of this part applies to the proceeding;
    (7) The address of the Regional Hearing Clerk; and
    (8) Instructions for paying penalties, if applicable.
    (b) Rules of practice. A copy of these Consolidated Rules of 
Practice shall accompany each complaint served.
    (c) Amendment of the complaint. The complainant may amend the 
complaint once as a matter of right at any time before the answer is 
filed. Otherwise the complainant may amend the complaint only upon 
motion granted by the Presiding Officer. Respondent shall have 20 
additional days from the date of service of the amended complaint to 
file its answer.
    (d) Withdrawal of the complaint. The complainant may withdraw the 
complaint, or any part thereof, without prejudice one time before the 
answer has been filed. After one withdrawal before the filing of an 
answer, or after the filing of an answer, the complainant may withdraw 
the complaint, or any part thereof, without prejudice only upon motion 
granted by the Presiding Officer.

[[Page 40182]]

Sec. 22.15  Answer to the complaint.

    (a) General. Where respondent: Contests any material fact upon 
which the complaint is based; contends that the proposed penalty, 
compliance or corrective action order, or Permit Action, as the case 
may be, is inappropriate; or contends that it is entitled to judgment 
as a matter of law, it shall file an original and one copy of a written 
answer to the complaint with the Regional Hearing Clerk and shall serve 
copies of the answer on all other parties. Any such answer to the 
complaint must be filed with the Regional Hearing Clerk within 30 days 
after service of the complaint.
    (b) Contents of the answer. The answer shall clearly and directly 
admit, deny or explain each of the factual allegations contained in the 
complaint with regard to which respondent has any knowledge. Where 
respondent has no knowledge of a particular factual allegation and so 
states, the allegation is deemed denied. The answer shall also state: 
The circumstances or arguments which are alleged to constitute the 
grounds of any defense; the facts which respondent disputes; the basis 
for opposing any proposed relief; and whether a hearing is requested.
    (c) Request for a hearing. A hearing upon the issues raised by the 
complaint and answer may be held if requested by respondent in its 
answer. If the respondent does not request a hearing, the Presiding 
Officer may hold a hearing if issues appropriate for adjudication are 
raised in the answer.
    (d) Failure to admit, deny, or explain. Failure of respondent to 
admit, deny, or explain any material factual allegation contained in 
the complaint constitutes an admission of the allegation.
    (e) Amendment of the answer. The respondent may amend the answer to 
the complaint upon motion granted by the Presiding Officer.


Sec. 22.16  Motions.

    (a) General. Motions shall be served as provided by 
Sec. 22.5(b)(2). Upon the filing of a motion, other parties may file 
responses to the motion and the movant may file a reply to the 
response. Any additional responsive documents shall be permitted only 
by order of the Presiding Officer or Environmental Appeals Board, as 
appropriate. All motions, except those made orally on the record during 
a hearing, shall:
    (1) Be in writing;
    (2) State the grounds therefor, with particularity;
    (3) Set forth the relief sought; and
    (4) Be accompanied by any affidavit, certificate, other evidence or 
legal memorandum relied upon.
    (b) Response to motions. A party's response to any written motion 
must be filed within 15 days after service of such motion. The movant's 
reply to any written response must be filed within 10 days after 
service of such response and shall be limited to issues raised in the 
response. The Presiding Officer or the Environmental Appeals Board may 
set a shorter or longer time for response or reply, or make other 
orders concerning the disposition of motions. The response or reply 
shall be accompanied by any affidavit, certificate, other evidence, or 
legal memorandum relied upon. Any party who fails to respond within the 
designated period waives any objection to the granting of the motion.
    (c) Decision. The Regional Judicial Officer (or in a proceeding 
commenced at EPA Headquarters, the Environmental Appeals Board) shall 
rule on all motions filed or made before an answer to the complaint is 
filed. Except as provided in Secs. 22.29(c) and 22.51, an 
Administrative Law Judge shall rule on all motions filed or made after 
an answer is filed and before an initial decision has become final or 
has been appealed. The Environmental Appeals Board shall rule as 
provided in Sec. 22.29(c) and on all motions filed or made after an 
appeal of the initial decision is filed, except as provided pursuant to 
Sec. 22.28.
    (d) Oral argument. The Presiding Officer or the Environmental 
Appeals Board may permit oral argument on motions in its discretion.


Sec. 22.17  Default.

    (a) Default. A party may be found to be in default: after motion, 
upon failure to file a timely answer to the complaint; upon failure to 
comply with the information exchange requirements of Sec. 22.19(a) or 
an order of the Presiding Officer; or upon failure to appear at a 
conference or hearing. Default by respondent constitutes, for purposes 
of the pending proceeding only, an admission of all facts alleged in 
the complaint and a waiver of respondent's right to contest such 
factual allegations. Default by complainant constitutes a waiver of 
complainant's right to proceed on the merits of the action, and shall 
result in the dismissal of the complaint with prejudice.
    (b) Motion for default. A motion for default may seek resolution of 
all or part of the proceeding. 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 
state the legal and factual grounds for the relief requested.
    (c) Default order. When the Presiding Officer finds that default 
has occurred, he shall issue a default order against the defaulting 
party as to any or all parts of the proceeding unless the record shows 
good cause why a default order should not be issued. If the order 
resolves all outstanding issues and claims in the proceeding, it shall 
constitute the initial decision under these Consolidated Rules of 
Practice. The relief proposed in the complaint or the motion for 
default shall be ordered unless the requested relief is clearly 
inconsistent with the record of the proceeding or the Act. For good 
cause shown, the Presiding Officer may set aside a default order.
    (d) Payment of penalty; effective date of compliance or corrective 
action orders, and Permit Actions. Any penalty assessed in the default 
order shall become due and payable by respondent without further 
proceedings 30 days after the default order becomes final under 
Sec. 22.27(c). Any default order requiring compliance or corrective 
action shall be effective and enforceable without further proceedings 
on the date the default order becomes final under Sec. 22.27(c). Any 
Permit Action ordered in the default order shall become effective 
without further proceedings on the date that the default order becomes 
final under Sec. 22.27(c).


Sec. 22.18  Quick resolution; settlement; alternative dispute 
resolution.

    (a) Quick resolution. (1) A respondent may resolve the proceeding 
at any time by paying the specific penalty proposed in the complaint or 
in complainant's prehearing exchange in full as specified by 
complainant and by filing with the Regional Hearing Clerk a copy of the 
check or other instrument of payment. If the complaint contains a 
specific proposed penalty and respondent pays that proposed penalty in 
full within 30 days after receiving the complaint, then no answer need 
be filed. This paragraph (a) shall not apply to any complaint which 
seeks a compliance or corrective action order or Permit Action. In a 
proceeding subject to the public comment provisions of Sec. 22.45, this 
quick resolution is not available until 10 days after the close of the 
comment period.
    (2) Any respondent who wishes to resolve a proceeding by paying the 
proposed penalty instead of filing an answer, but who needs additional 
time to pay the penalty, may file a written statement with the Regional 
Hearing Clerk within 30 days after receiving the complaint stating that 
the respondent agrees to pay the proposed penalty in accordance with 
paragraph (a)(1) of this section. The written statement need not 
contain any response to, or admission of, the allegations in the 
complaint.

[[Page 40183]]

Within 60 days after receiving the complaint, the respondent shall pay 
the full amount of the proposed penalty. Failure to make such payment 
within 60 days of receipt of the complaint may subject the respondent 
to default pursuant to Sec. 22.17.
    (3) Upon receipt of payment in full, the Regional Judicial Officer 
or Regional Administrator, or, in a proceeding commenced at EPA 
Headquarters, the Environmental Appeals Board, shall issue a final 
order. Payment by respondent shall constitute a waiver of respondent's 
rights to contest the allegations and to appeal the final order.
    (b) Settlement. (1) The Agency encourages settlement of a 
proceeding at any time if the settlement is consistent with the 
provisions and objectives of the Act and applicable regulations. The 
parties may engage in settlement discussions whether or not the 
respondent requests a hearing. Settlement discussions shall not affect 
the respondent's obligation to file a timely answer under Sec. 22.15.
    (2) Consent agreement. Any and all terms and conditions of a 
settlement shall be recorded in a written consent agreement signed by 
all parties or their representatives. The consent agreement shall state 
that, for the purpose of the proceeding, respondent: Admits the 
jurisdictional allegations of the complaint; admits the facts 
stipulated in the consent agreement or neither admits nor denies 
specific factual allegations contained in the complaint; consents to 
the assessment of any stated civil penalty, to the issuance of any 
specified compliance or corrective action order, to any conditions 
specified in the consent agreement, and to any stated Permit Action; 
and waives any right to contest the allegations and its right to appeal 
the proposed final order accompanying the consent agreement. Where 
complainant elects to commence a proceeding pursuant to Sec. 22.13(b), 
the consent agreement shall also contain the elements described at 
Sec. 22.14(a)(1)-(3) and (8). The parties shall forward the executed 
consent agreement and a proposed final order to the Regional Judicial 
Officer or Regional Administrator, or, in a proceeding commenced at EPA 
Headquarters, the Environmental Appeals Board.
    (3) Conclusion of proceeding. No settlement or consent agreement 
shall dispose of any proceeding under these Consolidated Rules of 
Practice without a final order from the Regional Judicial Officer or 
Regional Administrator, or, in a proceeding commenced at EPA 
Headquarters, the Environmental Appeals Board, ratifying the parties' 
consent agreement.
    (c) Scope of resolution or settlement. Full payment of the penalty 
proposed in a complaint pursuant to paragraph (a) of this section or 
settlement pursuant to paragraph (b) of this section shall not in any 
case affect the right of the Agency or the United States to pursue 
appropriate injunctive or other equitable relief or criminal sanctions 
for any violations of law. Full payment of the penalty proposed in a 
complaint pursuant to paragraph (a) of this section or settlement 
pursuant to paragraph (b) of this section shall only resolve 
respondent's liability for Federal civil penalties for the violations 
and facts alleged in the complaint.
    (d) Alternative means of dispute resolution. (1) The parties may 
engage in any process within the scope of the Alternative Dispute 
Resolution Act (``ADRA''), 5 U.S.C. 581 et seq., which may facilitate 
voluntary settlement efforts. Such process shall be subject to the 
confidentiality provisions of the ADRA.
    (2) Dispute resolution under this paragraph (d) does not divest the 
Presiding Officer of jurisdiction and does not automatically stay the 
proceeding. All provisions of these Consolidated Rules of Practice 
remain in effect notwithstanding any dispute resolution proceeding.
    (3) The parties may choose any person to act as a neutral, or may 
move for the appointment of a neutral. If the Presiding Officer grants 
a motion for the appointment of a neutral, the Presiding Officer shall 
forward the motion to the Chief Administrative Law Judge, except in 
proceedings under subpart I of this part, in which the Presiding 
Officer shall forward the motion to the Regional Administrator. The 
Chief Administrative Law Judge or Regional Administrator, as 
appropriate, shall designate a qualified neutral.


Sec. 22.19  Prehearing information exchange; prehearing conference; 
other discovery.

    (a) Prehearing information exchange. (1) In accordance with an 
order issued by the Presiding Officer, each party shall file a 
prehearing information exchange. Except as provided in Sec. 22.22(a), a 
document or exhibit that has not been included in prehearing 
information exchange shall not be admitted into evidence, and any 
witness whose name and testimony summary has not been included in 
prehearing information exchange shall not be allowed to testify. 
Parties are not required to exchange information relating to settlement 
which would be excluded in the federal courts under Rule 408 of the 
Federal Rules of Evidence. Documents and exhibits shall be marked for 
identification as ordered by the Presiding Officer.
    (2) Each party's prehearing information exchange shall contain:
    (i) The names of any expert or other witnesses it intends to call 
at the hearing, together with a brief narrative summary of their 
expected testimony, or a statement that no witnesses will be called; 
and (ii) Copies of all documents and exhibits which it intends to 
introduce into evidence at the hearing.
    (3) If the proceeding is for the assessment of a penalty and 
complainant has already specified a proposed penalty, complainant shall 
explain in its prehearing information exchange how the proposed penalty 
was calculated in accordance with any criteria set forth in the Act, 
and the respondent shall explain in its prehearing information exchange 
why the proposed penalty should be reduced or eliminated.
    (4) If the proceeding is for the assessment of a penalty and 
complainant has not specified a proposed penalty, each party shall 
include in its prehearing information exchange all factual information 
it considers relevant to the assessment of a penalty. Within 15 days 
after respondent files its prehearing information exchange, complainant 
shall file a document specifying a proposed penalty and explaining how 
the proposed penalty was calculated in accordance with any criteria set 
forth in the Act.
    (b) Prehearing conference. The Presiding Officer, at any time 
before the hearing begins, may direct the parties and their counsel or 
other representatives to participate in a conference to consider:
    (1) Settlement of the case;
    (2) Simplification of issues and stipulation of facts not in 
dispute;
    (3) The necessity or desirability of amendments to pleadings;
    (4) The exchange of exhibits, documents, prepared testimony, and 
admissions or stipulations of fact which will avoid unnecessary proof;
    (5) The limitation of the number of expert or other witnesses;
    (6) The time and place for the hearing; and
    (7) Any other matters which may expedite the disposition of the 
proceeding.
    (c) Record of the prehearing conference. No transcript of a 
prehearing conference relating to settlement shall be made. With 
respect to other prehearing conferences, no transcript of any 
prehearing conferences shall be made unless ordered by the Presiding 
Officer. The Presiding Officer

[[Page 40184]]

shall ensure that the record of the proceeding includes any 
stipulations, agreements, rulings or orders made during the conference.
    (d) Location of prehearing conference. The prehearing conference 
shall be held in the county where the respondent resides or conducts 
the business which the hearing concerns, in the city in which the 
relevant Environmental Protection Agency Regional Office is located, or 
in Washington, DC, unless the Presiding Officer determines that there 
is good cause to hold it at another location or by telephone.
    (e) Other discovery. (1) After the information exchange provided 
for in paragraph (a) of this section, a party may move for additional 
discovery. The motion 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). The 
Presiding Officer may order such other discovery only if it:
    (i) Will neither unreasonably delay the proceeding nor unreasonably 
burden the non-moving party;
    (ii) Seeks information that is most reasonably obtained from the 
non-moving party, and which the non-moving party has refused to provide 
voluntarily; and
    (iii) Seeks information that has significant probative value on a 
disputed issue of material fact relevant to liability or the relief 
sought.
    (2) Settlement positions and information regarding their 
development (such as penalty calculations for purposes of settlement 
based upon Agency settlement policies) shall not be discoverable.
    (3) The Presiding Officer may order depositions upon oral questions 
only in accordance with paragraph (e)(1) of this section and upon an 
additional finding that:
    (i) The information sought cannot reasonably be obtained by 
alternative methods of discovery; or
    (ii) There is a substantial reason to believe that relevant and 
probative evidence may otherwise not be preserved for presentation by a 
witness at the hearing.
    (4) The Presiding Officer may require the attendance of witnesses 
or the production of documentary evidence by subpoena, if authorized 
under the Act. The Presiding Officer may issue a subpoena for discovery 
purposes only in accordance with paragraph (e)(1) of this section and 
upon an additional showing of the grounds and necessity therefor. 
Subpoenas shall be served in accordance with Sec. 22.5(b)(1). Witnesses 
summoned before the Presiding Officer shall be paid the same fees and 
mileage that are paid witnesses in the courts of the United States. Any 
fees shall be paid by the party at whose request the witness appears. 
Where a witness appears pursuant to a request initiated by the 
Presiding Officer, fees shall be paid by the Agency.
    (5) Nothing in this paragraph (e) shall limit a party's right to 
request admissions or stipulations, a respondent's right to request 
Agency records under the Federal Freedom of Information Act, 5 U.S.C. 
552, or EPA's authority under any applicable law to conduct 
inspections, issue information request letters or administrative 
subpoenas, or otherwise obtain information.
    (f) Supplementing prior exchanges. A party who has made an 
information exchange under paragraph (a) of this section, or who has 
exchanged information in response to a request for information or a 
discovery order pursuant to paragraph (e) of this section, shall 
promptly supplement or correct the exchange when the party learns that 
the information exchanged or response provided is incomplete, 
inaccurate or outdated, and the additional or corrective information 
has not otherwise been disclosed to the other party pursuant to this 
section.
    (g) Failure to exchange information. Where a party fails to provide 
information within its control as required pursuant to this section, 
the Presiding Officer may, in his discretion:
    (1) Infer that the information would be adverse to the party 
failing to provide it;
    (2) Exclude the information from evidence; or
    (3) Issue a default order under Sec. 22.17(c).


Sec. 22.20  Accelerated decision; decision to dismiss.

    (a) General. The Presiding Officer may at any time render an 
accelerated decision in favor of a party as to any or all parts of the 
proceeding, without further hearing or upon such limited additional 
evidence, such as affidavits, as he may require, if no genuine issue of 
material fact exists and a party is entitled to judgment as a matter of 
law. The Presiding Officer, upon motion of the respondent, may at any 
time dismiss a proceeding without further hearing or upon such limited 
additional evidence as he requires, on the basis of failure to 
establish a prima facie case or other grounds which show no right to 
relief on the part of the complainant.
    (b) Effect. (1) If an accelerated decision or a decision to dismiss 
is issued as to all issues and claims in the proceeding, the decision 
constitutes an initial decision of the Presiding Officer, and shall be 
filed with the Regional Hearing Clerk.
    (2) If an accelerated decision or a decision to dismiss is rendered 
on less than all issues or claims in the proceeding, the Presiding 
Officer shall determine what material facts exist without substantial 
controversy and what material facts remain controverted. The partial 
accelerated decision or the order dismissing certain counts shall 
specify the facts which appear substantially uncontroverted, and the 
issues and claims upon which the hearing will proceed.

Subpart D--Hearing Procedures


Sec. 22.21  Assignment of Presiding Officer; scheduling the hearing.

    (a) Assignment of Presiding Officer. When an answer is filed, the 
Regional Hearing Clerk shall forward a copy of the complaint, the 
answer, and any other documents filed in the proceeding to the Chief 
Administrative Law Judge who shall serve as Presiding Officer or assign 
another Administrative Law Judge as Presiding Officer. The Presiding 
Officer shall then obtain the case file from the Chief Administrative 
Law Judge and notify the parties of his assignment.
    (b) Notice of hearing. The Presiding Officer shall hold a hearing 
if the proceeding presents genuine issues of material fact. The 
Presiding Officer shall serve upon the parties a notice of hearing 
setting forth a time and place for the hearing not later than 30 days 
prior to the date set for the hearing. The Presiding Officer may 
require the attendance of witnesses or the production of documentary 
evidence by subpoena, if authorized under the Act, upon a showing of 
the grounds and necessity therefor, and the materiality and relevancy 
of the evidence to be adduced.
    (c) Postponement of hearing. No request for postponement of a 
hearing shall be granted except upon motion and for good cause shown.
    (d) Location of the hearing. The location of the hearing shall be 
determined in accordance with the method for determining the location 
of a prehearing conference under Sec. 22.19(d).


Sec. 22.22  Evidence.

    (a) General. (1) The Presiding Officer shall admit all evidence 
which is not irrelevant, immaterial, unduly

[[Page 40185]]

repetitious, unreliable, or of little probative value, except that 
evidence relating to settlement which would be excluded in the federal 
courts under Rule 408 of the Federal Rules of Evidence (28 U.S.C.) is 
not admissible. If, however, a party fails to provide any document, 
exhibit, witness name or summary of expected testimony required to be 
exchanged under Sec. 22.19 (a), (e) or (f) to all parties at least 15 
days before the hearing date, the Presiding Officer shall not admit the 
document, exhibit or testimony into evidence, 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.
    (2) In the presentation, admission, disposition, and use of oral 
and written evidence, EPA officers, employees and authorized 
representatives shall preserve the confidentiality of information 
claimed confidential, whether or not the claim is made by a party to 
the proceeding, unless disclosure is authorized pursuant to 40 CFR part 
2. A business confidentiality claim shall not prevent information from 
being introduced into evidence, but shall instead require that the 
information be treated in accordance with 40 CFR part 2, subpart B. The 
Presiding Officer or the Environmental Appeals Board may consider such 
evidence in a proceeding closed to the public, and which may be before 
some, but not all, parties, as necessary. Such proceeding shall be 
closed only to the extent necessary to comply with 40 CFR part 2, 
subpart B, for information claimed confidential. Any affected person 
may move for an order protecting the information claimed confidential.
    (b) Examination of witnesses. Witnesses shall be examined orally, 
under oath or affirmation, except as otherwise provided in paragraphs 
(c) and (d) of this section or by the Presiding Officer. Parties shall 
have the right to cross-examine a witness who appears at the hearing 
provided that such cross-examination is not unduly repetitious.
    (c) Written testimony. The Presiding Officer may admit and insert 
into the record as evidence, in lieu of oral testimony, written 
testimony prepared by a witness. The admissibility of any part of the 
testimony shall be subject to the same rules as if the testimony were 
produced under oral examination. Before any such testimony is read or 
admitted into evidence, the party who has called the witness shall 
deliver a copy of the testimony to the Presiding Officer, the reporter, 
and opposing counsel. The witness presenting the testimony shall swear 
to or affirm the testimony and shall be subject to appropriate oral 
cross-examination.
    (d) Admission of affidavits where the witness is unavailable. The 
Presiding Officer may admit into evidence affidavits of witnesses who 
are unavailable. The term ``unavailable'' shall have the meaning 
accorded to it by Rule 804(a) of the Federal Rules of Evidence.
    (e) Exhibits. Where practicable, an original and one copy of each 
exhibit shall be filed with the Presiding Officer for the record and a 
copy shall be furnished to each party. A true copy of any exhibit may 
be substituted for the original.
    (f) Official notice. Official notice may be taken of any matter 
which can be judicially noticed in the Federal courts and of other 
facts within the specialized knowledge and experience of the Agency. 
Opposing parties shall be given adequate opportunity to show that such 
facts are erroneously noticed.


Sec. 22.23  Objections and offers of proof.

    (a) Objection. Any objection concerning the conduct of the hearing 
may be stated orally or in writing during the hearing. The party 
raising the objection must supply a short statement of its grounds. The 
ruling by the Presiding Officer on any objection and the reasons given 
for it shall be part of the record. An exception to each objection 
overruled shall be automatic and is not waived by further participation 
in the hearing.
    (b) Offers of proof. Whenever the Presiding Officer denies a motion 
for admission into evidence, the party offering the information may 
make an offer of proof, which shall be included in the record. The 
offer of proof for excluded oral testimony shall consist of a brief 
statement describing the nature of the information excluded. The offer 
of proof for excluded documents or exhibits shall consist of the 
documents or exhibits excluded. Where the Environmental Appeals Board 
decides that the ruling of the Presiding Officer in excluding the 
information from evidence was both erroneous and prejudicial, the 
hearing may be reopened to permit the taking of such evidence.


Sec. 22.24  Burden of presentation; burden of persuasion; preponderance 
of the evidence standard.

    (a) The complainant has the burdens of presentation and persuasion 
that the violation occurred as set forth in the complaint and that the 
relief sought is appropriate. Following complainant's establishment of 
a prima facie case, respondent shall have the burden of presenting any 
defense to the allegations set forth in the complaint and any response 
or evidence with respect to the appropriate relief. The respondent has 
the burdens of presentation and persuasion for any affirmative 
defenses.
    (b) Each matter of controversy shall be decided by the Presiding 
Officer upon a preponderance of the evidence.


Sec. 22.25  Filing the transcript.

    The hearing shall be transcribed verbatim. Promptly following the 
taking of the last evidence, the reporter shall transmit to the 
Regional Hearing Clerk the original and as many copies of the 
transcript of testimony as are called for in the reporter's contract 
with the Agency, and also shall transmit to the Presiding Officer a 
copy of the transcript. A certificate of service shall accompany each 
copy of the transcript. The Regional Hearing Clerk shall notify all 
parties of the availability of the transcript and shall furnish the 
parties with a copy of the transcript upon payment of the cost of 
reproduction, unless a party can show that the cost is unduly 
burdensome. Any person not a party to the proceeding may receive a copy 
of the transcript upon payment of the reproduction fee, except for 
those parts of the transcript ordered to be kept confidential by the 
Presiding Officer. Any party may file a motion to conform the 
transcript to the actual testimony within 30 days after receipt of the 
transcript, or 45 days after the parties are notified of the 
availability of the transcript, whichever is sooner.


Sec. 22.26  Proposed findings, conclusions, and order.

    After the hearing, any party may file proposed findings of fact, 
conclusions of law, and a proposed order, together with briefs in 
support thereof. The Presiding Officer shall set a schedule for filing 
these documents and any reply briefs, but shall not require them before 
the last date for filing motions under Sec. 22.25 to conform the 
transcript to the actual testimony. All submissions shall be in 
writing, shall be served upon all parties, and shall contain adequate 
references to the record and authorities relied on.

Subpart E--Initial Decision and Motion To Reopen a Hearing


Sec. 22.27  Initial Decision.

    (a) Filing and contents. After the period for filing briefs under 
Sec. 22.26 has expired, the Presiding Officer shall issue an initial 
decision. The initial decision shall contain findings of fact,

[[Page 40186]]

conclusions regarding all material issues of law or discretion, as well 
as reasons therefor, and, if appropriate, a recommended civil penalty 
assessment, compliance order, corrective action order, or Permit 
Action. Upon receipt of an initial decision, the Regional Hearing Clerk 
shall forward copies of the initial decision to the Environmental 
Appeals Board and the Assistant Administrator for the Office of 
Enforcement and Compliance Assurance.
    (b) Amount of civil penalty. If the Presiding Officer determines 
that a violation has occurred and the complaint seeks a civil penalty, 
the Presiding Officer shall determine the amount of the recommended 
civil penalty based on the evidence in the record and in accordance 
with any penalty criteria set forth in the Act. The Presiding Officer 
shall consider any civil penalty guidelines issued under the Act. The 
Presiding Officer shall explain in detail in the initial decision how 
the penalty to be assessed corresponds to any penalty criteria set 
forth in the Act. If the Presiding Officer decides to assess a penalty 
different in amount from the penalty proposed by complainant, the 
Presiding Officer shall set forth in the initial decision the specific 
reasons for the increase or decrease. If the respondent has defaulted, 
the Presiding Officer shall not assess a penalty greater than that 
proposed by complainant in the complaint, the prehearing information 
exchange or the motion for default, whichever is less.
    (c) Effect of initial decision. The initial decision of the 
Presiding Officer shall become a final order 45 days after its service 
upon the parties and without further proceedings unless:
    (1) A party moves to reopen the hearing;
    (2) A party appeals the initial decision to the Environmental 
Appeals Board;
    (3) A party moves to set aside a default order that constitutes an 
initial decision; or
    (4) The Environmental Appeals Board elects to review the initial 
decision on its own initiative.
    (d) Exhaustion of administrative remedies. Where a respondent fails 
to appeal an initial decision to the Environmental Appeals Board 
pursuant to Sec. 22.30 and that initial decision becomes a final order 
pursuant to paragraph (c) of this section, respondent waives its rights 
to judicial review. An initial decision that is appealed to the 
Environmental Appeals Board shall not be final or operative pending the 
Environmental Appeals Board's issuance of a final order.


Sec. 22.28  Motion to reopen a hearing.

    (a) Filing and content. A motion to reopen a hearing to take 
further evidence must be filed no later than 20 days after service of 
the initial decision and shall state the specific grounds upon which 
relief is sought. Where the movant seeks to introduce new evidence, the 
motion shall: state briefly the nature and purpose of the evidence to 
be adduced; show that such evidence is not cumulative; and show good 
cause why such evidence was not adduced at the hearing. The motion 
shall be made to the Presiding Officer and filed with the Regional 
Hearing Clerk.
    (b) Disposition of motion to reopen a hearing. Within 15 days 
following the service of a motion to reopen a hearing, any other party 
to the proceeding may file with the Regional Hearing Clerk and serve on 
all other parties a response. A reopened hearing shall be governed by 
the applicable sections of these Consolidated Rules of Practice. The 
filing of a motion to reopen a hearing shall automatically stay the 
running of the time periods for an initial decision becoming final 
under Sec. 22.27(c) and for appeal under Sec. 22.30. These time periods 
shall begin again in full when the motion is denied or an amended 
initial decision is served.

Subpart F--Appeals and Administrative Review


Sec. 22.29  Appeal from or review of interlocutory orders or rulings.

    (a) Request for interlocutory appeal. Appeals from orders or 
rulings other than an initial decision shall be allowed only at the 
discretion of the Environmental Appeals Board. A party seeking 
interlocutory appeal of such orders or rulings to the Environmental 
Appeals Board shall file a motion within 10 days of service of the 
order or ruling, requesting that the Presiding Officer forward the 
order or ruling to the Environmental Appeals Board for review, and 
stating briefly the grounds for the appeal.
    (b) Availability of interlocutory appeal. The Presiding Officer may 
recommend any order or ruling for review by the Environmental Appeals 
Board when:
    (1) The order or ruling involves an important question of law or 
policy concerning which there is substantial grounds for difference of 
opinion; and
    (2) Either an immediate appeal from the order or ruling will 
materially advance the ultimate termination of the proceeding, or 
review after the final order is issued will be inadequate or 
ineffective.
    (c) Interlocutory review. If the Presiding Officer has recommended 
review and the Environmental Appeals Board determines that 
interlocutory review is inappropriate, or takes no action within 30 
days of the Presiding Officer's recommendation, the appeal is 
dismissed. When the Presiding Officer declines to recommend review of 
an order or ruling, it may be reviewed by the Environmental Appeals 
Board only upon appeal from the initial decision, except when the 
Environmental Appeals Board determines, upon motion of a party and in 
exceptional circumstances, that to delay review would be contrary to 
the public interest. Such motion shall be filed within 10 days of 
service of an order of the Presiding Officer refusing to recommend such 
order or ruling for interlocutory review.


Sec. 22.30  Appeal from or review of initial decision.

    (a) Notice of appeal. (1) Within 30 days after the initial decision 
is served, any party may appeal any adverse order or ruling of the 
Presiding Officer by filing an original and one copy of a notice of 
appeal and an accompanying appellate brief with the Environmental 
Appeals Board (Clerk of the Board (Mail Code 1103B), United States 
Environmental Protection Agency, 401 M Street, SW, Washington, DC, 
20460. Hand deliveries may be made at Suite 500, 607 14th Street, NW.). 
One copy of any document filed with the Clerk of the Board shall also 
be served on the Regional Hearing Clerk. Appellant also shall serve a 
copy of the notice of appeal upon the Presiding Officer. Appellant 
shall simultaneously serve one copy of the notice and brief upon all 
other parties and non-party participants. The notice of appeal shall 
summarize the order or ruling, or part thereof, appealed from. The 
appellant's brief shall contain tables of contents and authorities 
(with page references), a statement of the issues presented for review, 
a statement of the nature of the case and the facts relevant to the 
issues presented for review (with appropriate references to the 
record), argument on the issues presented, a short conclusion stating 
the precise relief sought, alternative findings of fact, and 
alternative conclusions regarding issues of law or discretion. If a 
timely notice of appeal is filed by a party, any other party may file a 
notice of appeal on any issue within 20 days after the date on which 
the first notice of appeal was served.
    (2) Within 20 days of service of notices of appeal and briefs under 
paragraph (a)(1) of this section, any other party or non-party 
participant may

[[Page 40187]]

file with the Environmental Appeals Board an original and one copy of a 
response brief responding to argument raised by the appellant, together 
with reference to the relevant portions of the record, initial 
decision, or opposing brief. Appellee shall simultaneously serve one 
copy of the response brief upon each party , non-party participant, and 
the Regional Hearing Clerk. Response briefs shall be limited to the 
scope of the appeal brief. Further briefs may be filed only with the 
permission of the Environmental Appeals Board.
    (b) Review initiated by the Environmental Appeals Board. Whenever 
the Environmental Appeals Board determines to review an initial 
decision on its own initiative, it shall file notice of its intent to 
review that decision with the Clerk of the Board, and serve it upon the 
Regional Hearing Clerk, the Presiding Officer and the parties within 45 
days after the initial decision was served upon the parties. The notice 
shall include a statement of issues to be briefed by the parties and a 
time schedule for the filing and service of briefs.
    (c) Scope of appeal or review. The parties' rights of appeal shall 
be limited to those issues raised during the course of the proceeding 
and by the initial decision, and to issues concerning subject matter 
jurisdiction. If the Environmental Appeals Board determines that issues 
raised, but not appealed by the parties, should be argued, it shall 
give the parties reasonable written notice of such determination to 
permit preparation of adequate argument. The Environmental Appeals 
Board may remand the case to the Presiding Officer for further 
proceedings.
    (d) Argument before the Environmental Appeals Board. The 
Environmental Appeals Board may, at its discretion, order oral argument 
on any or all issues in a proceeding.
    (e) Motions on appeal. All motions made during the course of an 
appeal shall conform to Sec. 22.16 unless otherwise provided.
    (f) Decision. The Environmental Appeals Board shall adopt, modify, 
or set aside the findings of fact and conclusions of law or discretion 
contained in the decision or order being reviewed, and shall set forth 
in the final order the reasons for its actions. The Environmental 
Appeals Board may assess a penalty that is higher or lower than the 
amount recommended to be assessed in the decision or order being 
reviewed or from the amount sought in the complaint, except that if the 
order being reviewed is a default order, the Environmental Appeals 
Board may not increase the amount of the penalty above that proposed in 
the complaint or in the motion for default, whichever is less. The 
Environmental Appeals Board may adopt, modify or set aside any 
recommended compliance or corrective action order or Permit Action. The 
Environmental Appeals Board may remand the case to the Presiding 
Officer for further action.

Subpart G--Final Order


Sec. 22.31  Final order.

    (a) Effect of final order. A final order constitutes the final 
Agency action in a proceeding. The final order shall not in any case 
affect the right of the Agency or the United States to pursue 
appropriate injunctive or other equitable relief or criminal sanctions 
for any violations of law. The final order shall resolve only those 
causes of action alleged in the complaint, or for proceedings commenced 
pursuant to Sec. 22.13(b), alleged in the consent agreement. The final 
order does not waive, extinguish or otherwise affect respondent's 
obligation to comply with all applicable provisions of the Act and 
regulations promulgated thereunder.
    (b) Effective date. A final order is effective upon filing. Where 
an initial decision becomes a final order pursuant to Sec. 22.27(c), 
the final order is effective 45 days after the initial decision is 
served on the parties.
    (c) Payment of a civil penalty. The respondent shall pay the full 
amount of any civil penalty assessed in the final order within 30 days 
after the effective date of the final order unless otherwise ordered. 
Payment shall be made by sending a cashier's check or certified check 
to the payee specified in the complaint, unless otherwise instructed by 
the complainant. The check shall note the case title and docket number. 
Respondent shall serve copies of the check or other instrument of 
payment on the Regional Hearing Clerk and on complainant. Collection of 
interest on overdue payments shall be in accordance with the Debt 
Collection Act, 31 U.S.C. 3717.
    (d) Other relief. Any final order requiring compliance or 
corrective action, or a Permit Action, shall become effective and 
enforceable without further proceedings on the effective date of the 
final order unless otherwise ordered.
    (e) Final orders to Federal agencies on appeal. (1) A final order 
of the Environmental Appeals Board issued pursuant to Sec. 22.30 to a 
department, agency, or instrumentality of the United States shall 
become effective 30 days after its service upon the parties unless the 
head of the affected department, agency, or instrumentality requests a 
conference with the Administrator in writing and serves a copy of the 
request on the parties of record within 30 days of service of the final 
order. If a timely request is made, a decision by the Administrator 
shall become the final order.
    (2) A motion for reconsideration pursuant to Sec. 22.32 shall not 
toll the 30-day period described in paragraph (e)(1) of this section 
unless specifically so ordered by the Environmental Appeals Board.


Sec. 22.32  Motion to reconsider a final order.

    Motions to reconsider a final order issued pursuant to Sec. 22.30 
shall be filed within 10 days after service of the final order. Motions 
must set forth the matters claimed to have been erroneously decided and 
the nature of the alleged errors. Motions for reconsideration under 
this provision shall be directed to, and decided by, the Environmental 
Appeals Board. Motions for reconsideration directed to the 
Administrator, rather than to the Environmental Appeals Board, will not 
be considered, except in cases that the Environmental Appeals Board has 
referred to the Administrator pursuant to Sec. 22.4(a) and in which the 
Administrator has issued the final order. A motion for reconsideration 
shall not stay the effective date of the final order unless so ordered 
by the Environmental Appeals Board.

Subpart H--Supplemental Rules


Sec. 22.33  [Reserved]


Sec. 22.34  Supplemental rules governing the administrative assessment 
of civil penalties under the Clean Air Act.

    (a) Scope. This section shall apply, in conjunction with Secs. 22.1 
through 22.32, in administrative proceedings to assess a civil penalty 
conducted under sections 113(d), 205(c), 211(d), and 213(d) of the 
Clean Air Act, as amended (42 U.S.C. 7413(d), 7524(c), 7545(d), and 
7547(d)). Where inconsistencies exist between this section and 
Secs. 22.1 through 22.32, this section shall apply.
    (b) Issuance of notice. Prior to the issuance of a final order 
assessing a civil penalty, the person to whom the order is to be issued 
shall be given written notice of the proposed issuance of the order. 
Service of a complaint or a consent agreement and final order pursuant 
to Sec. 22.13 satisfies this notice requirement.

[[Page 40188]]

Sec. 22.35  Supplemental rules governing the administrative assessment 
of civil penalties under the Federal Insecticide, Fungicide, and 
Rodenticide Act.

    (a) Scope. This section shall apply, in conjunction with Secs. 22.1 
through 22.32, in administrative proceedings to assess a civil penalty 
conducted under section 14(a) of the Federal Insecticide, Fungicide, 
and Rodenticide Act as amended (7 U.S.C. 136l(a)). Where 
inconsistencies exist between this section and Secs. 22.1 through 
22.32, this section shall apply.
    (b) Venue. The prehearing conference and the hearing shall be held 
in the county, parish, or incorporated city of the residence of the 
person charged, unless otherwise agreed in writing by all parties. For 
a person whose residence is outside the United States and outside any 
territory or possession of the United States, the prehearing conference 
and the hearing shall be held at the EPA office listed at 40 CFR 1.7 
that is closest to either the person's primary place of business within 
the United States, or the primary place of business of the person's 
U.S. agent, unless otherwise agreed by all parties.


Sec. 22.36  [Reserved].


Sec. 22.37  Supplemental rules governing administrative proceedings 
under the Solid Waste Disposal Act.

    (a) Scope. This section shall apply, in conjunction with Secs. 22.1 
through 22.32, in administrative proceedings under sections 3005(d) and 
(e), 3008, 9003 and 9006 of the Solid Waste Disposal Act (42 U.S.C. 
6925(d) and (e), 6928, 6991b and 6991e) (``SWDA''). Where 
inconsistencies exist between this section and Secs. 22.1 through 
22.32, this section shall apply.
    (b) Corrective action and compliance orders. 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. Any such order shall automatically 
become a final order unless, no later than 30 days after the order is 
served, the respondent requests a hearing pursuant to Sec. 22.15.


Sec. 22.38  Supplemental rules of practice governing the administrative 
assessment of civil penalties under the Clean Water Act.

    (a) Scope. This section shall apply, in conjunction with Secs. 22.1 
through 22.32 and Sec. 22.45, in administrative proceedings for the 
assessment of any civil penalty under section 309(g) or section 
311(b)(6) of the Clean Water Act (``CWA'')(33 U.S.C. 1319(g) and 
1321(b)(6)). Where inconsistencies exist between this section and 
Secs. 22.1 through 22.32, this section shall apply.
    (b) Consultation with States. For proceedings pursuant to section 
309(g), the complainant shall provide the State agency with the most 
direct authority over the matters at issue in the case an opportunity 
to consult with the complainant. Complainant shall notify the State 
agency within 30 days following proof of service of the complaint on 
the respondent or, in the case of a proceeding proposed to be commenced 
pursuant to Sec. 22.13(b), no less than 40 days before the issuance of 
an order assessing a civil penalty.
    (c) Administrative procedure and judicial review. Action of the 
Administrator for which review could have been obtained under section 
509(b)(1) of the CWA, 33 U.S.C. 1369(b)(1), shall not be subject to 
review in an administrative proceeding for the assessment of a civil 
penalty under section 309(g) or section 311(b)(6).


Sec. 22.39  Supplemental rules governing the administrative assessment 
of civil penalties under section 109 of the Comprehensive Environmental 
Response, Compensation, and Liability Act of 1980, as amended.

    (a) Scope. This section shall apply, in conjunction with 
Secs. 22.10 through 22.32, in administrative proceedings for the 
assessment of any civil penalty under section 109 of the Comprehensive 
Environmental Response, Compensation, and Liability Act of 1980, as 
amended (42 U.S.C. 9609). Where inconsistencies exist between this 
section and Secs. 22.1 through 22.32, this section shall apply.
    (b) Judicial review. Any person who requested a hearing with 
respect to a Class II civil penalty under section 109(b) of CERCLA, 42 
U.S.C. 9609(b), and who is the recipient of a final order assessing a 
civil penalty may file a petition for judicial review of such order 
with the United States Court of Appeals for the District of Columbia or 
for any other circuit in which such person resides or transacts 
business. Any person who requested a hearing with respect to a Class I 
civil penalty under section 109(a)(4) of CERCLA, 42 U.S.C. 9609(a)(4), 
and who is the recipient of a final order assessing the civil penalty 
may file a petition for judicial review of such order with the 
appropriate district court of the United States. All petitions must be 
filed within 30 days of the date the order making the assessment was 
served on the parties.
    (c) Payment of civil penalty assessed. Payment of civil penalties 
assessed in the final order shall be made by forwarding a cashier's 
check, payable to the ``EPA, Hazardous Substances Superfund,'' in the 
amount assessed, and noting the case title and docket number, to the 
appropriate regional Superfund Lockbox Depository.


Sec. 22.40  [Reserved].


Sec. 22.41  Supplemental rules governing the administrative assessment 
of civil penalties under Title II of the Toxic Substance Control Act, 
enacted as section 2 of the Asbestos Hazard Emergency Response Act 
(AHERA).

    (a) Scope. This section shall apply, in conjunction with Secs. 22.1 
through 22.32, in administrative proceedings to assess a civil penalty 
conducted under section 207 of the Toxic Substances Control Act 
(``TSCA'') (15 U.S.C. 2647). Where inconsistencies exist between this 
section and Secs. 22.1 through 22.32, this section shall apply.
    (b) Collection of civil penalty. Any civil penalty collected under 
TSCA section 207 shall be used by the local educational agency for 
purposes of complying with Title II of TSCA. Any portion of a civil 
penalty remaining unspent after a local educational agency achieves 
compliance shall be deposited into the Asbestos Trust Fund established 
under section 5 of AHERA.


Sec. 22.42  Supplemental rules governing the administrative assessment 
of civil penalties for violations of compliance orders issued to owners 
or operators of public water systems under part B of the Safe Drinking 
Water Act.

    (a) Scope. This section shall apply, in conjunction with Secs. 22.1 
through 22.32, in administrative proceedings to assess a civil penalty 
under section 1414(g)(3)(B) of the Safe Drinking Water Act, 42 U.S.C. 
300g-3(g)(3)(B). Where inconsistencies exist between this section and 
Secs. 22.1 through 22.32, this section shall apply.
    (b) Choice of forum. A complaint which specifies that subpart I of 
this part applies shall also state that respondent has a right to elect 
a hearing on the record in accordance with 5 U.S.C. 554, and that 
respondent waives this right unless it requests in its answer a hearing 
on the record in accordance with 5 U.S.C. 554. Upon such request, the 
Regional Hearing Clerk shall recaption the documents in the record as 
necessary, and notify the parties of the changes.


Sec. 22.43  Supplemental rules governing the administrative assessment 
of civil penalties against a federal agency under the Safe Drinking 
Water Act.

    (a) Scope. This section shall apply, in conjunction with Secs. 22.1 
through 22.32, in administrative proceedings to assess a civil penalty 
against a federal agency under section 1447(b) of the Safe Drinking 
Water Act, 42 U.S.C. 300j-6(b).

[[Page 40189]]

Where inconsistencies exist between this section and Secs. 22.1 through 
22.32, this section shall apply.
    (b) Effective date of final penalty order. Any penalty order issued 
pursuant to this section and section 1447(b) of the Safe Drinking Water 
Act shall become effective 30 days after it has been served on the 
parties.
    (c) Public notice of final penalty order. Upon the issuance of a 
final penalty order under this section, the Administrator shall provide 
public notice of the order by publication, and by providing notice to 
any person who requests such notice. The notice shall include:
    (1) The docket number of the order;
    (2) The address and phone number of the Regional Hearing Clerk from 
whom a copy of the order may be obtained;
    (3) The location of the facility where violations were found;
    (4) A description of the violations;
    (5) The penalty that was assessed; and
    (6) A notice that any interested person may, within 30 days of the 
date the order becomes final, obtain judicial review of the penalty 
order pursuant to section 1447(b) of the Safe Drinking Water Act, and 
instruction that persons seeking judicial review shall provide copies 
of any appeal to the persons described in 40 CFR 135.11(a).


Sec. 22.44  [Reserved]


Sec. 22.45  Supplemental rules governing public notice and comment in 
proceedings under sections 309(g) and 311(b)(6)(B)(ii) of the Clean 
Water Act and section 1423(c) of the Safe Drinking Water Act.

    (a) Scope. This section shall apply, in conjunction with Secs. 22.1 
through 22.32, in administrative proceedings for the assessment of any 
civil penalty under sections 309(g) and 311(b)(6)(B)(ii) of the Clean 
Water Act (33 U.S.C. 1319(g) and 1321(b)(6)(B)(ii)), and under section 
1423(c) of the Safe Drinking Water Act (42 U.S.C. 300h-2(c)). Where 
inconsistencies exist between this section and Secs. 22.1 through 
22.32, this section shall apply.
    (b) Public notice.--(1) General. Complainant shall notify the 
public before assessing a civil penalty. Such notice shall be provided 
within 30 days following proof of service of the complaint on the 
respondent or, in the case of a proceeding proposed to be commenced 
pursuant to Sec. 22.13(b), no less than 40 days before the issuance of 
an order assessing a civil penalty. The notice period begins upon first 
publication of notice.
    (2) Type and content of public notice. The complainant shall 
provide public notice of the complaint (or the proposed consent 
agreement if Sec. 22.13(b) is applicable) by a method reasonably 
calculated to provide notice, and shall also provide notice directly to 
any person who requests such notice. The notice shall include:
    (i) The docket number of the proceeding;
    (ii) The name and address of the complainant and respondent, and 
the person from whom information on the proceeding may be obtained, and 
the address of the Regional Hearing Clerk to whom appropriate comments 
shall be directed;
    (iii) The location of the site or facility from which the 
violations are alleged, and any applicable permit number;
    (iv) A description of the violation alleged and the relief sought; 
and
    (v) A notice that persons shall submit comments to the Regional 
Hearing Clerk, and the deadline for such submissions.
    (c) Comment by a person who is not a party. The following 
provisions apply in regard to comment by a person not a party to a 
proceeding:
    (1) Participation in proceeding. (i) Any person wishing to 
participate in the proceedings must notify the Regional Hearing Clerk 
in writing within the public notice period under paragraph (b)(1) of 
this section. The person must provide his name, complete mailing 
address, and state that he wishes to participate in the proceeding.
    (ii) The Presiding Officer shall provide notice of any hearing on 
the merits to any person who has met the requirements of paragraph 
(c)(1)(i) of this section at least 20 days prior to the scheduled 
hearing.
    (iii) A commenter may present written comments for the record at 
any time prior to the close of the record.
    (iv) A commenter wishing to present evidence at a hearing on the 
merits shall notify, in writing, the Presiding Officer and the parties 
of its intent at least 10 days prior to the scheduled hearing. This 
notice must include a copy of any document to be introduced, a 
description of the evidence to be presented, and the identity of any 
witness (and qualifications if an expert), and the subject matter of 
the testimony.
    (v) In any hearing on the merits, a commenter may present evidence, 
including direct testimony subject to cross examination by the parties.
    (vi) The Presiding Officer shall have the discretion to establish 
the extent of commenter participation in any other scheduled activity.
    (2) Limitations. A commenter may not cross-examine any witness in 
any hearing and shall not be subject to or participate in any discovery 
or prehearing exchange.
    (3) Quick resolution and settlement. No proceeding subject to the 
public notice and comment provisions of paragraphs (b) and (c) of this 
section may be resolved or settled under Sec. 22.18, or commenced under 
Sec. 22.13(b), until 10 days after the close of the comment period 
provided in paragraph (c)(1) of this section.
    (4) Petition to set aside a consent agreement and proposed final 
order. (i) Complainant shall provide to each commenter, by certified 
mail, return receipt requested, but not to the Regional Hearing Clerk 
or Presiding Officer, a copy of any consent agreement between the 
parties and the proposed final order.
    (ii) Within 30 days of receipt of the consent agreement and 
proposed final order a commenter may petition the Regional 
Administrator (or, for cases commenced at EPA Headquarters, the 
Environmental Appeals Board), to set aside the consent agreement and 
proposed final order on the basis that material evidence was not 
considered. Copies of the petition shall be served on the parties, but 
shall not be sent to the Regional Hearing Clerk or the Presiding 
Officer.
    (iii) Within 15 days of receipt of a petition, the complainant may, 
with notice to the Regional Administrator or Environmental Appeals 
Board and to the commenter, withdraw the consent agreement and proposed 
final order to consider the matters raised in the petition. If the 
complainant does not give notice of withdrawal within 15 days of 
receipt of the petition, the Regional Administrator or Environmental 
Appeals Board shall assign a Petition Officer to consider and rule on 
the petition. The Petition Officer shall be another Presiding Officer, 
not otherwise involved in the case. Notice of this assignment shall be 
sent to the parties, and to the Presiding Officer.
    (iv) Within 30 days of assignment of the Petition Officer, the 
complainant shall present to the Petition Officer a copy of the 
complaint and a written response to the petition. A copy of the 
response shall be provided to the parties and to the commenter, but not 
to the Regional Hearing Clerk or Presiding Officer.
    (v) The Petition Officer shall review the petition, and 
complainant's response, and shall file with the Regional Hearing Clerk, 
with copies to the parties, the commenter, and the Presiding Officer, 
written findings as to:
    (A) The extent to which the petition states an issue relevant and 
material to the issuance of the proposed final order;

[[Page 40190]]

    (B) Whether complainant adequately considered and responded to the 
petition; and
    (C) Whether a resolution of the proceeding by the parties is 
appropriate without a hearing.
    (vi) Upon a finding by the Petition Officer that a hearing is 
appropriate, the Presiding Officer shall order that the consent 
agreement and proposed final order be set aside and shall establish a 
schedule for a hearing.
    (vii) Upon a finding by the Petition Officer that a resolution of 
the proceeding without a hearing is appropriate, the Petition Officer 
shall issue an order denying the petition and stating reasons for the 
denial. The Petition Officer shall:
    (A) File the order with the Regional Hearing Clerk;
    (B) Serve copies of the order on the parties and the commenter; and
    (C) Provide public notice of the order.
    (viii) Upon a finding by the Petition Officer that a resolution of 
the proceeding without a hearing is appropriate, the Regional 
Administrator may issue the proposed final order, which shall become 
final 30 days after both the order denying the petition and a properly 
signed consent agreement are filed with the Regional Hearing Clerk, 
unless further petition for review is filed by a notice of appeal in 
the appropriate United States District Court, with coincident notice by 
certified mail to the Administrator and the Attorney General. Written 
notice of appeal also shall be filed with the Regional Hearing Clerk, 
and sent to the Presiding Officer and the parties.
    (ix) If judicial review of the final order is denied, the final 
order shall become effective 30 days after such denial has been filed 
with the Regional Hearing Clerk.


Secs. 22.46-22.49  [Reserved].

Subpart I--Administrative Proceedings Not Governed by Section 554 
of the Administrative Procedure Act


Sec. 22.50  Scope of this subpart.

    (a) Scope. This subpart applies to all adjudicatory proceedings 
for:
    (1) The assessment of a penalty under sections 309(g)(2)(A) and 
311(b)(6)(B)(i) of the Clean Water Act (33 U.S.C. 1319(g)(2)(A) and 
1321(b)(6)(B)(i)).
    (2) The assessment of a penalty under sections 1414(g)(3)(B) and 
1423(c) of the Safe Drinking Water Act (42 U.S.C. 300g-3(g)(3)(B) and 
300h-2(c)), except where a respondent in a proceeding under section 
1414(g)(3)(B) requests in its answer a hearing on the record in 
accordance with section 554 of the Administrative Procedure Act, 5 
U.S.C. 554.
    (b) Relationship to other provisions. Sections 22.1 through 22.45 
apply to proceedings under this subpart, except for the following 
provisions which do not apply: Secs. 22.11, 22.16(c), 22.21(a), and 
22.29. Where inconsistencies exist between this subpart and subparts A 
through G of this part, this subpart shall apply. Where inconsistencies 
exist between this subpart and subpart H of this part, subpart H shall 
apply.


Sec. 22.51  Presiding Officer.

    The Presiding Officer shall be a Regional Judicial Officer. The 
Presiding Officer shall conduct the hearing, and rule on all motions 
until an initial decision has become final or has been appealed.


Sec. 22.52  Information exchange and discovery.

    Respondent's information exchange pursuant to Sec. 22.19(a) shall 
include information on any economic benefit resulting from any activity 
or failure to act which is alleged in the administrative complaint to 
be a violation of applicable law, including its gross revenues, delayed 
or avoided costs. Discovery under Sec. 22.19(e) shall not be 
authorized, except for discovery of information concerning respondent's 
economic benefit from alleged violations and information concerning 
respondent's ability to pay a penalty.

[FR Doc. 99-17337 Filed 7-22-99; 8:45 am]
BILLING CODE 6560-50-P