[Federal Register Volume 68, Number 151 (Wednesday, August 6, 2003)]
[Notices]
[Pages 46604-46606]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20035]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-7540-5]


Science Advisory Board Staff Office; Request for Nominations for 
an Ad Hoc Science Advisory Board Panel on Illegal Competitive Advantage 
Economic Benefits

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.0

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SUMMARY: The Environmental Protection Agency (EPA) Science Advisory 
Board (SAB) Staff Office announces the formation of a new SAB advisory 
panel to provide advice to the Agency regarding economic benefit 
recapture issues, to be referred to as the ``Illegal Competitive 
Advantage (ICA) Economic Benefit (EB) Advisory Panel'' (ICA EB Advisory 
Panel) and is soliciting nominations for members of the panel.

DATES: Nominations should be submitted no later than August 27, 2003.

ADDRESSES: Nominations should be submitted in electronic format through 
the Form for Nominating Individuals to Panels of the EPA Science 
Advisory Board provided on the SAB website. The form can be accessed 
through a link on the blue navigational bar on the SAB Website, http://www.epa.gov/sab. To be considered, all nominations must include the 
information required on that form. Anyone who is unable to submit 
nominations via this form any contact Dr. K Jack Kooyoomijan, 
Designated Federal Office (DFO), as indicated below.

FOR FURTHER INFORMATION CONTACT: Any member of the public wishing 
further information regarding this Request for Nomination may contact 
Dr. K. Jack Kooyoomijan, (DFO), U.S. EPA Science Advisory Board, 1200 
Pennsylvania Ave., NW., (1400A), Washington DC, 20460, by telephone/
voice mail at (202) 564-4557, by fax at (202) 501-0582; or via e-mail 
at [email protected].
    For technical information pertaining to the Agency's White Paper 
and the supporting background documents, please contact Mr. Jonathan 
Libber the U.S. EPA, Office of Enforcement and Compliance Assurance 
(Mail Code 2248A), by telephone/voice mail at (202) 564-6102, by fax at 
(202) 564-9001; or via e-mail at [email protected].

SUPPLEMENTARY INFORMATION: 

Summary

    The Environmental Protection Agency (EPA) Science Advisory Board 
(SAB) Staff Office is announcing the formation of a new Advisory Panel 
to review and provide advice to the Agency concerning the White Paper 
addressing the ``illegal competitive advantage'' (ICA) issues related 
to EPA's policy of recapturing violator's economic benefit from 
environmental noncompliance. Most of the Agency's cases involving 
economic focus on the financial gain that arises from relatively 
straightforward delayed and/or avoided pollution control costs, and the 
Agency's ``BEN'' (Benefits) computer model calculates the economic 
benefit in those situations. Where ICA issues arise, the economic 
benefit derived from scenarios that do not fit the BEN model's 
simplified paradigm of avoided and/or delayed expenditures may or may 
not apply. The SAB is soliciting nominations to establish the members 
of the new Panel to be known as the Illegal Competitive Advantage (ICA) 
Economic Benefit (EB) Advisory Panel (ICA EB Advisory Panel).
    The ICA EB Advisory Panel is being formed to provide advice to the 
Agency, as part of the EPA SAB's mission, established by 42 U.S.C. 
4365, to provide independent scientific and technical advice, and 
recommendations to the EPA Administrator on the technical bases for EPA 
decision making. The Board is a chartered Federal Advisory Committee, 
which reports directly to the Administrator.

Background

    A cornerstone of EPA's Office of Enforcement and Compliance 
Assurance (OECA) civil penalty program is recapture of the economic 
benefit that a violator may have gained from illegal activity, whenever 
EPA can effectively measure that gain. Recapture helps level the 
economic playing field, discouraging and preventing visitors from 
obtaining an unfair financial advantage over their competitors who made 
timely and necessary investments in environmental compliance. Since 
1984, EPA's policy has been to recapture a violator's economic benefit 
from violating the law (See document entitled ``Policy on Civil 
Penalties,'' specifically at page 3 and its companion document, A 
Framework for Statute-Specific Approaches to Penalty Assessments at 
pages 6-11. EPA's Office

[[Page 46605]]

of Enforcement and Compliance Assurance (OECA) has taken lead to 
develop these approaches to capture the economic benefits. Both of the 
above documents, which describe such policies, can be found at the 
following URL http://www.indecon.com.
    In some, but not all ways, the analysis is similar to the field of 
commercial damages, comparing a hypothetical ``but-for'' scenario to 
the actual state of the world. Often the violations involve the failure 
to install pollution control equipment in a timely fashion and the 
consequent failure to incur operational and maintenance costs during 
the period of noncompliance. In most of these cases, a safe assumption 
is that all other aspects of the company's operations are identical in 
both the compliance (i.e., ``but for'') and noncompliance (i.e., 
``actual'') scenarios. Based on this assumption, the analysis becomes a 
relatively straightforward net present value calculation, focusing on 
the cost savings from delayed installation and avoided operation of the 
pollution control equipment. In the mid-1980s, EPA developed the 
``BEN'' computer model to allow lay persons to perform the necessary 
present value calculations in these cases. In other situations that may 
involve deliberations in a courtroom setting, the Agency may rely for 
its economic benefit calculations upon an expert witness, who employs 
whatever analytical tool the expert deems most suitable for application 
to that particular case. That tool may sometimes be the BEN model, but 
the expert would be using BEN only if its analytical framework fit the 
expert's approach for that particular case. BEN's application in such a 
courtroom setting would therefore be similar to using a straight-
forward spreadsheet application similar to the use of expert testimony 
for the basis of the expert's calculations. As a practical matter since 
1995, the Agency has been mitigating civil penalties when violators 
agree to perform supplemental environmental projects (SEPs).

Proposed Charge to the Panel

    The Agency is asking the SAB's ICA EB Advisory Panel to review and 
provide advice on a White Paper entitled ``Identifying and Calculating 
Economic Benefit that Goes Beyond Avoided and/or Delayed Costs.'' 
Specific charge questions include the following:
    (a) Are there any categories of cases that would be useful for the 
Agency to consider in calculating the ICA economic benefit, other than 
those that are identified in the White Paper? Should any of these 
categories be combined?
    (b) How can the Agency more accurately characterize the types of 
cases that are described in the White Paper? Have any of the examples 
and counter-examples in the White paper been misidentified with regard 
to whether they are amenable to the BEN model's simplifying paradigm?
    (c) Are there any suggestions for modifying the described 
analytical approach to calculate the economic benefits and;
    (d) The Agency's proposed approach strives to avoid any double-
counting of the benefit by laying out all the relevant cash flows 
stemming from the violations, as opposed to simply adding on the 
additional calculations to a BEN run. What additional measures (if any) 
should the Agency put in place to avoid such potential double-counting?

Document Availability

    The White Paper entitled ``Identifying and Calculating Economic 
Benefit That Goes Beyond Avoided and/or Delayed Costs'' to be reviewed 
by the Panel can be obtained from the EPA Web site at: http://www.epa.gov/Compliance/civil/programs/econmodels/index.html. For 
further information regarding the White Paper, please contact Mr. 
Jonathan Libber at the address provided earlier in this notice. The 
following informational background documents are also provided under 
http://www.indecon.com, and include the following: BEN Computer Model 
Version 2.0; BEN Users Manual dated September 1999, Policy on Civil 
Penalties; and A Framework for Statute-Specific Approaches to Penalty 
Assessments.
    It is the Peer Review White Paper entitled ``Identifying and 
Calculating Economic Benefit That Goes Beyond Avoided and/or Delayed 
Costs'' that is the focal point of this upcoming advisory. The other 
documents serve as background information for the ICA EB Advisory Panel 
and the interested public. Additional information will be made 
available at the SAB Web site at: http://www.epa.gov/sab where the SAB 
will post notices when it develops the narrow cast list of candidates, 
lists the biosketches of the shortlist candidates, receives comments on 
the shortlist candidates, makes the final selection of the ICA EB 
Advisory Panel, posts copies of the Federal Register notices of 
upcoming meetings, posts agendas of the ICA EB Advisory Panel, and 
posts any other related information specific to the SAB Advisory on 
this topic.

SAB Staff Office Request for Nominations

    Any interested person or organization may nominate qualified 
individuals for membership on the Panel. Individuals should have 
expertise in one or more of the following areas: (a) Financial 
Economics, which includes Corporate Finance, (b) Economic Benefit 
Recapture Issues, (c) Business/Commercial Damages, which includes Anti-
Trust Law, Torts and Economics, (d) Business Economics and Competitive 
Strategy, which includes aspects of Statistical Decision-Making and 
Game Theory, as well as Competitive Effects of Vertical Integration, 
and Quantitative Economics, and (e) Industrial Organization, in the 
context of environmental regulations and their enforcement, as well as 
Environmental and Regulatory Economics, Environmental Ethics and 
Sustainability in this context.

Process and Deadline for Submitting Nominations

    Any interested person or organization may nominate qualified 
individuals to add expertise in the above areas for the Pane. 
Nominations should be submitted in electronic format through the Form 
for Nominating Individuals to Panels of the EPA Science Advisory Board 
provided on the SAB website. The form can be accessed through a link on 
the blue navigational bar on the SAB Web site, http://www.epa.gov/sab. 
To be considered, all nominations must include the information required 
on that form.
    Anyone who is unable to submit nominations using this form may 
contact Dr. K. Jack Kooyoomjian at the mailing address in the section 
above entitled, For Further Information Contact: Nominations should be 
submitted in time to arrive no later than August 27, 2003. Any 
questions concerning either this process or any other aspects of the 
notice should be directed to Dr. Kooyoomjian.
    The EPA Science Advisory Board Staff Office will acknowledge 
receipt of the nomination and inform nominators of the panel selected. 
From the nominees identified by respondents to this Federal Register 
notice (termed the ``Widecast''), SAB Staff will develop a smaller 
subset (known as the ``Short List'') for more detailed consideration. 
In addition to the expertise listed above in Item 5, criteria 
used by the SAB Staff in developing this Short List are given at the 
end of the following paragraph. The Short List will be posted on the 
SAB on the SAB Web site at:

[[Page 46606]]

http://www.epa.gov/sab, and will include, for each candidate, the 
nominee's name and their biosketch. Public comments will be accepted 
for 21 calendar days on the Short List. During this comment period, the 
public will be requested to provide information, analysis or other 
documentation on nominees that the SAB Staff should consider in 
evaluating candidates for the Panel.
    For the EPA SAB, a balanced advisory panel is characterized by 
inclusion of candidates who possess the necessary domains of knowledge, 
the relevant scientific perspectives (which, among other factors, can 
be influenced by work history and affiliation), and the collective 
breadth of experience to adequately address the charge. Public 
responses to the Short List candidates will be considered in the 
selection of the panel, along with information provided by candidates 
and information gathered by EPA SAB Staff independently on the 
background of each candidate (e.g., financial disclosure information 
and computer searches to evaluate a nominee's prior involvement with 
the topic under review). Specific criteria to be used in evaluating an 
individual subcommittee member include: (a) Scientific and/or technical 
expertise, knowledge, and experience (primary factors); (b) absence of 
financial conflicts of interest; (c) scientific credibility and 
impartiality; (d) availability and willingness to serve; and (e) 
ability to work constructively and effectively in committees.
    Short List candidates will also be required to fill-out the 
``Confidential Financial Disclosure Form for Special Government 
employees Serving on Federal Advisory Committees at the U.S. 
Environmental Protection Agency'' (EPA Form 3110-48). This confidential 
form, which is submitted by EPA SAB Members and Consultants, allows 
government officials to determine whether there is a statutory conflict 
between that person's public responsibilities (which includes 
membership on an EPA Federal advisory committee) and private interests 
and activities, or the appearance of a lack of impartiality, as defined 
by Federal regulation. The form may be viewed and downloaded from the 
following URL address: (http://www.epa.gov/sab/pdf/epaform3110-48.pdf). 
The Panel members will likely be asked to attend up to two public face-
to-face meetings and several public conference call meetings over the 
anticipated course of the review.

    Dated: July 31, 2003.
Vanessa T. Vu,
Director, EPA Science Advisory Board Staff Office.
[FR Doc. 03-20035 Filed 8-5-03; 8:45 am]
BILLING CODE 6560-50-M