Allen Barry and Tim Barry d/b/a Allen Barry Livestock (Board decision, October 27, 2011)

Plain-English summary

An EPA administrative law judge found Allen Barry and Tim Barry d/b/a Allen Barry Livestock in default for failing to submit required prehearing materials or a signed consent agreement. The ALJ assessed a $75,000 penalty for multiple violations of the company's NPDES permit. The Environmental Appeals Board elected to review the default order on its own initiative because the administrative complaint and default order relied on different penalty caps. The Board determined that the newer inflation-adjusted cap applied, affirmed the default order and initial decision in all other respects, and ordered payment of the $75,000 penalty within 30 days of service.

Decision snapshot

• Cited authorities: 33 U.S.C. §§ 1342 and 1319(g)(2)(B); 40 C.F.R. §§ 19.4, 22.17, 22.30, and 22.31
• Outcome: The Board corrected the applicable penalty cap, affirmed the default order in all other respects, and ordered payment of $75,000.
• Key point: The 2008 inflation adjustment rule applied because EPA filed the enforcement action after January 12, 2009, even though the assessed penalty remained $75,000.

Full text (EPA EAB public release)

                                                                                        IL
               BEFORE THE ENVIRONMENTAL APPEALS BOARD. ~r:1.aA~
           UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

EIUV 2 7 2011
WASHINGTON, D.C.
ClERK ENVIRONMENTAl APP
INITIALS .J'A. _ _ _

                                   )

In re: ) CWA Appeal No. 11-07 Allen Barry & Tim Barry ) d/b/a Allen Barry Livestock )
)
Docket No. CWA-05-2010-0008 )
----------------------)

             ORDER ELECTING TO EXERCISE SUA SPONTE REVIEW
                          AND PENALTY ORDER

   On September 9,2011, Administrative Law Judge ("ALJ") Barbara A. Gunning issued a

Default Order and Initial Decision ("Default Order") in the above-:-captioned matter. 1 The Default

Order finds Allen Barry and Tim Barry d/b/a Allen Barry Livestock ("ABL") in default for

"fail[ure] to submit a prehearing exchange or statement that [ABL] is electing only to conduct

cross-examination of Complaint's witnesses, a motion to enlarge the applicable deadlines, or a

signed consent agreement and final order." Default Order & Initial Decision at 1. The Default

Order assesses an administrative penalty of $75,000 for multiple violations of an National

Pollutant Discharge Elimination System ("NPDES") permit issued to ABL under Clean Water

Act ("CWA") section 402, 33.U.S.C. § 1342.

   The Environmental Appeals Board ("Board") agrees with the ALJ's determination that

ABL is in default. However, the Board is electing to review the Default Order sua sponte,2

    1   The Default Order was served on September 12, 2011.

   2 Under the regulations governing the administrative assessment of civil penalties,

40 C.F.R. pt. 22, the Board has 45 days after service of an initial decision to elect to exercise sua sponte review. 40 C.F.R. § 22.27(c). Since the Default Order was served on September 12, 2011, the Board has until October 27,2011, to so decide. 40 C.F.R. § 22.30(b), because the Board observes that the Administrative Complaint and the

Default Order rely on different administrative penalty caps. Compare Initial Decision & Default

Order at 8 n.1 with Administrative Complaint at 5 ~ 12.

   After accepting as true the facts alleged in U.S. Environmental Protection Agency

("EP A"), Region 5' s ("Region") administrative complaint and determining that those facts

"establish[ed] [ABL's] violations of the CWA as charged," the ALJ "conclude[d] that the penalty

requested by Complainant is not' clearly inconsistent' with the record of the proceeding or the

CWA." Default Order & Initial Decision at 10. The ALJ then stated, "The rules for Adjustment

of Civil Monetary Penalties for Inflation, 40 C.F.R. part 19, provide that penalties under

Section 309(g)(2)(B) of the CWA which are effective after March 15,2004 are increased to

$11,000 per day, and that the maximum penalty shall not exceed $157,500.,,3 Id. at 8 n.l. The

ALJ assessed a penalty equal to that proposed in the administrative complaint: $75,000. Id. at 10

(citing 40 C.F.R. § 22.17( c) ("The relief proposed in the complaint * * * shall be ordered unless

the relief requested is clearly inconsistent with the record ofthe proceeding or the [CWA].")); see

also Administrative Complaint at 5, ~ 12.

   Although the Board ordinarily requests briefing when granting review, where, as here, the

perceived error or lack of clarity derives from the Presiding Officer's default order itself and the Board does not consider that additional briefing will be of assistance absent a clarification from the Presiding Officer, a direct remand without further briefing is appropriate. E.g., In re Gaskey Constr. Corp., CWA Appeal No. 06-02 at 1 n.1 (Mar. 21, 2006) (Order Electing to Review Sua Sponte and Remanding to Regional Judicial Officer).

   3 The Debt Collection Improvement Act of 1996, 31 U.S.C. note, requires each federal

agency to issue regulations adjusting for inflation the statutory civil penalties that can be imposed under the laws administered by that agency, and thereafter to periodically review and adjust the penalty provisions at least once every four years. EPA's adjusted penalty provisions appear in 40 C.F.R. pt. 19.

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On December 11, 2008, EPA promulgated the 2008 Civil Monetary Penalty Inflation

Adjustment Rule ("2008 Rule"), 73 Fed. Reg. 75,340 (Dec. 11,2008). The 2008 Rule

authorizes CWA class II administrative penalties under CWA section 309(g)(2)(B), 33 U.S.C.

§ 1319(g)(2)(B), occurring after January 12,2009, of up to $16,000 per violation and not to

exceed $177,500. 40 C.F.R. § 19.4 tbl.1. EPA's Office of Enforcement and Compliance

Assurance ("OECA") further clarified that "the adjusted penalty caps apply if an action is filed or

a complaint is amended after January 12,2009, even if some or all of the violations occurred on

or before January 12,2009." Memorandum from Granta Y. Nakayama, Assistant Administrator,

OECA, U.S. EPA, to Regional Administrators, U.S. EPA, "Amendments to EPA's Civil Penalty

Policies to Implement the 2008 Civil Monetary Penalty Inflation Adjustment Rule (Effective

January 12,2009)" (Dec. 29, 2008).

    Region 5 filed the underlying action after January 12,2009, on March 17,2010. In the

Board's view, the correct penalty cap for the violations in this matter are those as adjusted by the

2008 Rule. Therefore, under the Adjustment of Civil Monetary Penalties for Inflation, 40 C.F.R.

part 19, penalties under Section 309(g)(2)(B) of the CWA that are effective after January 12,

2009, are increased to $16,000 per day, and that the maximum penalty shall not exceed

$177,500. 40 C.F .R. § 19.4 tbl. 1. The Board affirms the Default Order and Initial Decision in all .

other respects.

   ABL shall pay a total civil penalty of$75,000. Payment of the entire amount of the civil

penalty shall be made within thirty (30) days of service of this Order Electing to Exercise Sua

Sponte Review and Penalty Order,4 unless otherwise agreed to by the Region. Payment may be

   4 Pursuant to 40 C.F.R. § 22.30(f), this constitutes the final order.

                                            -3-

made by certified or cashier's check payable to the Treasurer, United States of America, and

forwarded to:

                          U.S. Environmental Protection Agency
                                    Fines and Penalties
                                Cincinnati Finance Center
                                     P.O. Box 979077
                                St. Louis, MO 63197-9000


   A transmittal letter identifying the case name and the EPA docket number, plus ABL's

name and address, must accompany payment. 40 C.F.R. § 22.31(c). ABL shall serve copies of

the check or other instrument of payment on the Regional Hearing Clerk and on the Region. If

appropriate, the Region may modify the above-described payment instructions to allow for

alternative methods of payment, including electronic payment options. Failure to pay the penalty

within the prescribed time may result in assessment of interest on the civil penalty. See

31 U.S.C. § 3717; 40 C.F.R. § 22.31(c).

   So ordered.

Dated: (10/27/11 ( ENVIRONMENTAL APPEALS BOARDBOARD 5

                                               By:   _~----;>,,1"F-~...L-~
                                                                     _ __
                                                            Charles J. Sheehan
                                                       Environmental Appeals Judge




   5 The two-member panel deciding this matter consists of Environmental Appeals Judges

Charles J. Sheehan and Anna L. Wolgast. See 40 C.F.R. § 1.25(e)(l).

                                           -4-

CERTIFICATE OF SERVICE

   I hereby certify that copies of the foregoing Order Electing to Review Sua Sponte and

Penalty Order in In re Allen Barry & Tim Barry d/b/a Allen Barry Livestock, CWA Appeal No. 11-07, were sent to the following persons in the manner indicated:

By Facsimile & First Class U.S. Mail:
David A. Smith Michael F. Iasparro Smith Hahn Morrow & Flowski, P.C. Hinshaw & Culbertson, LLP 129 South Fourth Street 100 Park Avenue P.O. Box 10 P.O. Box 1389 Oregon, IL 61061-0010 Rockford, IL 61105-1389 facsimile: 815-732-7528 facsimile: 815 490-4901

By Facsimile & EPA Pouch Mail:

Luis Oviedo La Dawn White
Office of Regional Counsel Regional Hearing Clerk U.S. EPA Region 5 U.S. EPA Region 5 77 West Jackson Boulevard, C-14J 77 West Jackson Boulevard, E-19J Chicago, IL 60604-3590 Chicago, IL 60604-3590 facsimile: 312-886-7160 facsimile: 312-886-0747

By Facsimile & EPA Interoffice Mail:
Judge Barbara A. Gunning
Office of Administrative Law Judges
U.S. EPA
1200 Pennsylvania Avenue, MC 1900L
Washington, DC 20460
facsimile: 202-565-0044

Date: OCT 27 2011 L/~~~~-'='
:.L!:::..-?~---=1C=--~Jh
_ __
Annette Duncan
Secretary

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