Maximum Civil Penalties for Violations of Environmental Statutes are now Significantly Higher After Inflation Adjustment

by Seyfarth Shaw LLP
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Seyfarth Synopsis: EPA finalized its new per violation penalty rules that in some cases now increase by substantial amounts.

In a federal rulemaking published last week, the U.S. Environmental Protection Agency (EPA) issued interim final regulations adjusting the maximum civil penalty dollar amounts for violations of various provisions of law. 81 Fed. Reg. 43091 (July 1, 2016).

The recently enacted Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Act), not only required an adjustment form current penalty maximum levels to account for inflation, but also included a catch-up provision for inflation. That requires each agency to evaluate and provide for an inflation adjustment dating back to the enactment of the relevant statute’s effective date. (Section 5(b)(2)(C) of the 2015 Act provides that the maximum amount of any initial catch-up increase shall not exceed 150 percent of the level that was in effect on November 2, 2015.) See related Implementation of the Federal Civil Penalties Inflation Adjustment Act, OMB Memorandum M-16-06 (February 24, 2016). In addition, beginning January 15, 2017, each agency must make subsequent annual adjustments for inflation.

EPA’s interim final rule revises Table 2 to 40 CFR 19.4, showing the results of the Agency’s calculations and adjustments, that include: (1) the maximum or minimum penalty level established when each statutory section was originally enacted or last adjusted by Congress; and (2) the statutory maximum or minimum civil penalty level, adjusted for inflation under the 2015 Act, that applies to statutory civil penalties assessed on or after August 1, 2016 for violations that occurred after November 2, 2015.

Readers familiar with EPA’s penalty structure know that statutory penalties of $25,000 per day per violation were previously adjusted for inflation to $37,500. With the catch up provision under the interim final rule, the maximum penalty will vary by statute. For example, the $25,000 per violation penalty under the Clean Air Act is now $44,539; under the Clean Water Act is now $44,539; under RCRA is now in a range of $56,467 to $70,117, and under CERCLA (including most EPCRA violations) is now $53,907. Other maximum penalties are also adjusted.

The new civil penalty amounts are applicable only to civil penalties assessed after Aug. 1, 2016, whose associated violations occurred after Nov. 2, 2015.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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