MarChem Corporation (Board decision, October 5, 2007)

Plain-English summary

MarChem Corporation operated a facility in Maryland Heights, Missouri. EPA alleged that MarChem manufactured three chemical substances, identified in the agreement as Chemicals A, B, and C, that were not listed on the TSCA Inventory, without submitting the required premanufacture notifications. EPA alleged 131 violations involving Chemical A, 26 involving Chemical B, and 52 involving Chemical C. EPA calculated a gravity-based penalty of $2,571,267, then reduced it after analyzing MarChem's financial ability to pay and determined that $300,000 was an appropriate settlement penalty. The Environmental Appeals Board incorporated the Consent Agreement into its Final Order.

Decision snapshot

• Cited authorities: TSCA §§ 5, 8(b), 15, and 16; 40 C.F.R. §§ 22.13, 22.18, 720.3, 720.22(a)(1), and 720.40(b).
• Outcome: Settled. The Consent Agreement was incorporated into the Final Order, and MarChem was assessed a $300,000 civil penalty.
• Key point: Manufacturing a new chemical substance without the required premanufacture notification can result in substantial civil penalties, subject to settlement adjustments for financial ability to pay.

Full text (EPA EAB public release)

             BEFORE THE ENVIRONMENTAL APPEALS BOARD
         UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                         WASHINGTON, D.C.

In the Matter of:

MarChem Corporation Docket Number TSCA-HQ-2007-5008

   Respondent.


                                  FINAL ORDER

         The United States Environmental Protection Agency as Complainant, and

MarChem Corporation, as Respondent, the Parties herein, having signed and consented to entry of the attached Consent Agreement incorporated by reference into this Final Order,

  NOW, THEREFORE, IT IS ORDERED THAT:

        1. Respondent, MarChem Corporation shall comply with all terms of the

Consent Agreement;

         2. Respondent is assessed a civil penalty of Three Hundred Thousand

Dollars ($300,000); and

         3. Respondent shall, in accordance with the payment provisions set forth in

the Consent Agreement, make payment via a certified or cashier's check or through a wire transfer as described in the Consent Agreement.

IT IS SO ORDERED.

                              By: [signature]

                              Dated: 10/5/07


                              CERTIFICATE OF SERVICE

     I certify that the foregoing "Consent Agreement and Final Order," MarChem

Corporation, Docket No. TSCA-HQ-2007-5008, was filed and copies of the same were mailed to the parties as indicated below:

(Interoffice) James Vinch, Esq.
Waste and Chemical Enforcement Division
Office of Civil Enforcement
U.S. Environmental Protection Agency
1200 Pennsylvania Ave., N.W. (Mail Code 2249A)
Washington, D.C. 20460
(202) 564-1256
Fax: (202) 564-0035

(U.S. Mail) Rodney Washburn, Esq.
General Counsel
Dash Multi-Corp, Inc.
2500 Adie Road
Maryland Heights, MO 63043

Secretary
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, N.W.
Washington, DC 20460-0001

        OCT 5 2007

Dated:

            BEFORE THE ENVIRONMENTAL APPEALS BOARD
        UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                        WASHINGTON, D.C.

In the Matter of:

MarChem Corporation Docket Number TSCA-HQ-2007-5008 Maryland Heights, MO

   Respondent


                           CONSENT AGREEMENT

   Complainant United States Environmental Protection Agency (EPA or Agency) and

Respondent MarChem Corporation (MarChem or Respondent), the parties herein, having consented to the entry of this Consent Agreement and proposed Final Order before the taking of any testimony and without adjudication of any issues of law or fact herein, hereby consent to the terms of this Consent Agreement and attached Final Order.

                         I. PRELIMINARY STATEMENT

1. This civil administrative proceeding for the assessment of penalties pursuant to section
   16(a) of the Toxic Substances Control Act (TSCA), 15 U.S.C. § 2615(a), is being simultaneously commenced and concluded pursuant to 40 C.F.R. § 22.13(b) and 40 C.F.R. § 22.18(b)(2) and (3).

2. To avoid the disruption of orderly business activities and expense of protracted and costly
   litigation, Respondent, for purposes of this proceeding: (1) admits that EPA has jurisdiction over the subject matter in this Consent Agreement; and (2) consents to the terms of this Consent Agreement and Final Order.

                II. EPA'S FINDINGS OF FACT AND LAW
   
                                  COUNT I
   

3. Respondent, a corporation located at 2500 Adie Road, Maryland Heights, Missouri
   63043, is a "person" as defined in 40 C.F.R. § 720.3(q) and, as such, is subject to TSCA and the regulations promulgated thereunder.

4. Respondent "manufactures" a "chemical substance," as defined by sections 3(2)(A) and
   3(7) of TSCA, 15 U.S.C. §§ 2602(2)(A) and (7), and 40 C.F.R. §§ 720.3(q) and (e).

5. Any chemical substance which is not included in the chemical substance list (TSCA
   Inventory) compiled and published under TSCA § 8(b), 15 U.S.C. § 2607(b), is a "new chemical substance" pursuant to TSCA § 3(9), 15 U.S.C. § 2602(9), and 40 C.F.R. § 720.3(v).

6. Pursuant to TSCA section 5(a)(1), 15 U.S.C. § 2604(a)(1), and 40 C.F.R. § 720.22(a)(1)
   and § 720.40(b), no person may manufacture a new chemical substance unless such person submits a Premanufacture Notification (PMN) to EPA at least ninety (90) days before manufacturing that substance.

7. TSCA section 15(1)(B), 15 U.S.C. § 2614(1)(B), provides that it is unlawful for any
   person to fail or refuse to comply with any requirement prescribed by TSCA section 5, 15 U.S.C. § 2604.

8. TSCA section 15(1)(C), 15 U.S.C. § 2614(1)(C), provides that it is unlawful for any
   person to fail or refuse to comply with any rule promulgated under TSCA section 5, 15 U.S.C. § 2604.

9. TSCA section 15(3)(B), 15 U.S.C. § 2614(3)(B), provides that it is unlawful for any
   person to fail or refuse to submit reports, notices, or other information as required by TSCA.

10. During an inspection of Respondent's facility on August 26, 2004, EPA discovered that
    Respondent had been manufacturing a chemical substance identified by Respondent as H9735 (Chemical A) that EPA alleges was not on the TSCA Inventory, thereby violating TSCA section 5(a)(1) and 40 C.F.R. § 720.22(a)(1) and § 720.40(b).

11. Pursuant to Inventory Transaction Reports provided by Respondent to EPA on June 15,
    2005 and May 3, 2007, Respondent documented that it had manufactured for commercial purposes a total of 602,936 pounds of Chemical A on 131 separate occasions during the time period of June 11, 2003 through April 12, 2006, without ever submitting a PMN for this chemical. Respondent is no longer manufacturing Chemical A.

12. EPA alleges that from June 11, 2003 to April 12, 2006 Chemical A did not appear on the
    TSCA Inventory.

13. EPA alleges that Respondent's failure to submit a PMN at least ninety (90) days before
    manufacturing Chemical A constitutes a failure to comply with TSCA section 5(a)(1), 15 U.S.C. § 2604(a)(1), and 40 C.F.R. § 720.22(a)(1) and § 720.40(b), which is a violation of TSCA section 15(1)(B), (1)(C), and (3)(B), 15 U.S.C. § 2614(1)(B), (1)(C), and (3)(B).

                                  COUNT II
    

14. Paragraphs 3 through 9 are re-alleged and incorporated herein by reference.

15. During an inspection of Respondent's facility on August 26, 2004, EPA discovered that
    Respondent had been manufacturing a chemical substance identified by Respondent as H4001-80 (Chemical B) that was not on the TSCA Inventory, thereby violating TSCA section 5(a)(1), 15 U.S.C. § 2604(a)(1), and 40 C.F.R. § 720.22(a)(1) and § 720.40(b).

16. Pursuant to an Inventory Transaction Report provided by Respondent to EPA on June 15,
    2005, Respondent documented that it had manufactured for commercial purposes 54,536 pounds of Chemical B on 26 separate occasions during the time period of September 4, 2002 through October 8, 2003, without ever submitting a PMN for this chemical. Respondent is no longer manufacturing Chemical B.

17. From September 4, 2002 to October 8, 2003 Chemical B did not appear on the TSCA
    Inventory.

18. Respondent's failure to submit a PMN at least ninety (90) days before manufacturing
    Chemical B constitutes a failure to comply with TSCA section 5(a)(1), 15 U.S.C.
    § 2604(a)(1) and 40 C.F.R. § 720.22(a)(1) and § 720.40(b), which is a violation of TSCA section 15(1)(B), (1)(C), and (3)(B), 15 U.S.C. § 2614(1)(B), (1)(C), and (3)(B).

                                 COUNT III
    

19. Paragraphs 3 through 9 are re-alleged and incorporated herein by reference.

20. During an inspection of Respondent's facility on August 26, 2004, EPA discovered that
    Respondent had been manufacturing a chemical substance identified by Respondent as H4002-80 (Chemical C) that was not on the TSCA Inventory, thereby violating TSCA section 5(a)(1), 15 U.S.C. § 2604(a)(1), and 40 C.F.R. § 720.22(a)(1) and § 720.40(b).

21. Pursuant to Inventory Transaction Reports provided by Respondent to EPA on June 15,
    2005 and May 3, 2007, Respondent documented that it had manufactured 102,408 pounds of Chemical C on 52 separate occasions during the time period of September 23, 2003 through June 13, 2006, without ever submitting a PMN for this chemical. Respondent is no longer manufacturing Chemical C.

22. From September 23, 2003 to June 13, 2006 Chemical C did not appear on the TSCA
    Inventory.

23. Respondent's failure to submit a PMN at least ninety (90) days before manufacturing
    Chemical C constitutes a failure to comply with TSCA section 5(a)(1), 15 U.S.C.
    § 2604(a)(1) and 40 C.F.R. § 720.22(a)(1) and § 720.40(b), which is a violation of TSCA section 15(1)(B), (1)(C), and (3)(B), 15 U.S.C. § 2614(1)(B), (1)(C), and (3)(B).

                             III. CIVIL PENALTY
    

24. The proposed penalty in this matter is consistent with the TSCA Section 5 Enforcement
    Response Policy, issued August 5, 1988 and amended June 8, 1989 and July 1, 1993 (TSCA ERP). The TSCA ERP was developed in accordance with the Guidelines for Assessment of Civil Penalties Under Section 16 of the Toxic Substances Control Act; PCB Penalty Policy, which sets forth a general penalty assessment policy for TSCA violations. 45 Fed. Reg. 59770 (Sept. 10, 1980) (Penalty Policy). The TSCA ERP, though not a regulation, establishes a framework for applying the statutory factors to be considered in assessing a civil penalty, i.e.: "the nature, circumstances, extent and gravity of the violation or violations and, with respect to the violator, ability to pay, effect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other matters as justice may require." Section 16(a)(2)(B) of TSCA, 15 U.S.C. § 2615(a)(2)(B).

25. The proposed civil penalty in this case reflects: (1) a determination of the gravity-based
    penalty (GBP), in accordance with the statutory factors nature, circumstances, extent and gravity; and (2) adjustments to the GBP, taking into account the statutory factors ability to pay, effect on ability to continue business, prior violations, culpability, and such other matters as justice may require.

26. The GBP is determined by evaluating the nature, circumstances, and extent of the
    violation. In accordance with the TSCA ERP, the failure to submit a PMN when the substance was manufactured and distributed to others or further processed for commercial use by the company is considered "Hazard Assessment," the circumstance level is "Level 3." When the quantity of the chemical manufactured on each separate occasion is over 7,500 pounds, the extent level is "Major." When the quantity manufactured on each separate occasion is between 750 pounds and 7,500 pounds, the extent level is "Significant," and when the quantity of chemical manufactured is less than 750 pounds, the extent level is "Minor." The gravity factor is determined by the value at which, on the TSCA ERP's GBP Matrix, the "circumstances" factor (vertical axis) intersects the "extent" factor (horizontal axis). In accordance with the TSCA ERP, the GBP for the 131 violations identified in Count I is $1,658,312. For the 26 violations identified in Count II, the GBP is $286,000, and for the 52 violations identified in Count III, the GBP is $626,955. Thus, the total GBP for Counts I, II and III is $2,571,267.

27. EPA uses the "ABEL" model to provide guidance in determining an entity's financial
    capability of paying a proposed civil penalty. Based upon tax returns and other financial data provided to EPA by Respondent, and using the ABEL model along with other economic analysis of Respondent's data, EPA determined that Respondent did not have the financial ability to pay the full $2,571,267 civil penalty and remain in business as a going concern. Based on ABEL and an independent economic analysis of Respondent's tax returns and financial data, EPA has determined that an appropriate and fair civil penalty payment to settle this action is $300,000 and Respondent has the financial ability to pay this civil penalty while maintaining its ongoing business.

                                 IV. TERMS OF SETTLEMENT
    

28. This settlement resolves only the civil administrative claims alleged in this Consent
    Agreement for Respondent's facility located at 2500 Adie Road, Maryland Heights, Missouri 63043.

29. If Respondent recommences the manufacture of Chemical A, Chemical B or Chemical C at
    any time in the future, it must submit a PMN to EPA at least 90 days prior to manufacturing any such chemical substance as required by TSCA section 5(a)(1), 15 U.S.C. § 2604(a)(1), and 40 C.F.R. § 720.22(a)(1) and § 720.40(b).

30. Respondent waives its right to request an administrative hearing pursuant to section
    16(a)(2)(A) of TSCA, 15 U.S.C. § 2615(a)(2)(A), and waives its right to file a petition for judicial review of the Final Order assessing the civil penalty pursuant to section 16(a)(3) of TSCA, 15 U.S.C. § 2615(a)(3).

31. For the sole purpose of establishing Respondent's compliance history in any future
    enforcement proceeding that EPA may bring against Respondent within five (5) years of the date of the execution of the Final Order, Respondent admits that it is liable for the violations alleged in this Consent Agreement. By executing this Consent Agreement, Respondent certifies that regarding the violations alleged herein, Respondent is in compliance with sections 5 and 15 of TSCA, 15 U.S.C. §§ 2604 and 2614.

32. The occurrence of any violation is in dispute and the entry of the Consent Agreement
    and Final Order shall not constitute an admission by Respondent of any violation alleged in this Consent Agreement of any statute or regulation; however, Respondent consents to the terms and conditions of this Consent Agreement and Final Order.

    Respondent represents and warrants the facts it has certified and referenced in this
    Consent Agreement are true with the exception of those facts alleged in paragraphs 10 and 12 that Chemical A did not appear on the TSCA Inventory during the time period between June 11, 2003 to April 12, 2006. With respect to paragraphs 10 and 12, Respondent neither admits nor denies the truth and accuracy of the facts alleging that Chemical A was not on the TSCA Inventory during the above-referenced time period.

33. The effect of this settlement (provided in paragraph 28) is conditioned upon the accuracy
    of the certification referenced in paragraph 32.

34. Respondent agrees to pay a civil penalty in the sum of Three Hundred Thousand
    Dollars ($300,000) in accordance with the following terms:

    A. Not more than thirty (30) calendar days after the effective date of the Final Order,
    Respondent shall either submit a cashier's or certified check with a notation of
    "MarChem Corporation, Civil Penalty Docket No. TSCA-HQ-2007-5008,"
    payable to the order of the "Treasurer, United States of America," to:

                              EPA-Washington
                              (Hearing Clerk)
                              Docket No. TSCA-HQ-2007-5008
                              P.O. Box 360277
                              Pittsburgh, PA 15251-6277
    

    or pay by wire transfer with a notation of "MarChem Corporation, Civil Penalty
    Docket No. TSCA-HQ-2007-5008" by using the following instructions:

               Name of Beneficiary:                EPA
               Number of Account for deposit:       68010099
               The Bank Holding Acct:               Treas_NYC
               The ABA Routing Number:              021030004
    

    B. Respondent shall forward a copy of the check or documentation of a wire transfer
    to:

                      Tony R. Ellis, Case Development Officer
                      Waste and Chemical Enforcement Division (2249A)
                      U.S. Environmental Protection Agency
                      1200 Pennsylvania Ave., N.W. (Room No. 5041-A)
                      Washington, D.C. 20460
                      (202) 564-4167
                      Fax (202) 564-0035
    

    C. If Respondent fails to make the payment in a timely manner as required by
    paragraph 34.A., then Respondent shall pay a stipulated penalty of One Thousand
    Dollars ($1,000.00) per calendar day for every day the penalty payment is late,
    unless EPA in writing excuses or mitigates the stipulated penalty. EPA may excuse
    or mitigate the stipulated penalty if EPA determines that the failure to comply
    occurred despite Respondent's exercise of good faith and due diligence.

                       V. OTHER MATTERS
    

35. This Consent Agreement shall be binding upon the Parties, and their respective officers,
    directors, employees, successors and assigns. The undersigned representative of each Party certifies that he or she is duly authorized by his or her respective Party to enter into this binding Consent Agreement.

36. This Consent Agreement shall take full effect upon the signing and filing of the Final Order
    by EPA's Environmental Appeals Board.

37. Respondent's obligations under this Consent Agreement shall end when it has paid in full
    the scheduled civil penalty, paid any stipulated penalties, and submitted the documentation required by the Consent Agreement and Final Order.

38. All of the terms and conditions of this Consent Agreement together comprise one
    settlement agreement, and each of the terms and conditions is in consideration for all of the other terms and conditions. This Consent Agreement shall be null and void if any term or condition of this Consent Agreement is held invalid or is not executed by all of the signatory parties in identical form, or is not approved in such identical form by EPA's Environmental Appeals Board.

39. The penalty, including any stipulated penalties, specified above represents civil penalties
    assessed by EPA, and shall not be deductible for purposes of federal taxes.

40. Failure of Respondent to remit the civil penalties provided herein will result in this matter
    being forwarded to the United States Department of Justice for collection of the amount due, plus stipulated penalties and interest at the statutory judgment rate provided in 28 U.S.C. § 1961.

41. The Parties agree to bear their own costs.

WE HEREBY AGREE TO THIS:

For Complainant: For Respondent:

[signature] [signature]

Rosemarie A. Kelley, Director Susan Wool, President Waste and Chemical Enforcement Division MarChem Corporation Office of Civil Enforcement Office of Enforcement and Compliance Assurance United States Environmental Protection Agency

                                               Date: [illegible]

1 The ABEL model is a computer program used to calculate an entity's ability to pay a civil penalty. ABEL can be downloaded from the Internet at http://www.epa.gov/compliance/civil/econmodels/index.html.