Spitzer Great Lakes Ltd.

Read the official release (epa.gov)

Plain-English summary

Spitzer Great Lakes owned property in Ohio containing transformers, capacitors, switching equipment, and drums of dielectric fluid that were subject to polychlorinated biphenyl requirements. Spitzer conceded the facts supporting seven TSCA violations, and the Presiding Officer assessed a $165,000 civil penalty. The Board held that the Presiding Officer properly used the EPA penalty policy as a guide, held Spitzer to its earlier factual concessions, considered the statutory mitigation factors, and rejected an inability-to-pay argument because Spitzer did not provide required supporting records. The Board affirmed the liability findings and the full penalty.

Decision snapshot

• Cited authorities: TSCA §§ 6, 15, and 16; 15 U.S.C. §§ 2601-2692 and 2615; 40 C.F.R. §§ 22.3, 22.15, 22.24, 22.27, 22.30, 761.1, 761.3, 761.30, 761.40, 761.45, 761.60, and 761.65.
• Outcome: Liability for all seven counts and the $165,000 civil penalty were affirmed.
• Key point: A respondent that concedes the material facts and then waives a hearing cannot reverse those concessions during penalty briefing without explanation or excuse.

Full text (EPA EAB public release)

302 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

          IN RE SPITZER GREAT LAKES LTD.
                           TSCA Appeal No. 99-3

                    FINAL DECISION AND ORDER



                           Decided June 30, 2000



                                     Syllabus

   This is an appeal by Spitzer Great Lakes Ltd. Co. (“Spitzer” or “Respondent”) from

an Initial Decision arising out of an enforcement action initiated by the U.S. Environmental
Protection Agency, Region V (“EPA” or “Region”). The enforcement action was filed
against Spitzer for seven alleged violations of the Toxic Substances Control Act (“TSCA”),
15 U.S.C. §§ 2601-2692, relating to Spitzer’s handling of polychlorinated biphenyls
(PCBs). Spitzer, after retaining counsel, conceded the facts alleged in the complaint and
accordingly was found liable on all seven counts.

   The parties jointly agreed to cancel the hearing on penalty. They also agreed that

there were no material facts in dispute which would have a bearing on the penalty assess-
ment and that they would argue their respective positions regarding an appropriate penalty
through written pleadings. Despite that agreement, in its pleadings Spitzer attempted to
introduce and argue facts that were contrary to facts it had already conceded. After the
reviewing the pleadings, the Presiding Officer assessed $165,000 in civil penalties against
Spitzer.

   On appeal, Spitzer challenges the Presiding Officer’s use of the Agency’s penalty

policy to determine an appropriate penalty, the assessment of a civil penalty without re-
ceiving and/or considering additional evidence, the failure to mitigate the penalty pursuant
to statutory penalty mitigation factors, and the decision not to consider ability to pay as a
mitigating factor.

  Held: Affirmed

    (1) As long as presiding officers give due consideration to questions raised in indi-

vidual cases regarding the propriety of the penalty recommended by the policy, the use of
penalty policies can promote fairness and consistency in enforcement proceedings. Spitzer
did not challenge the propriety of the policy; Spitzer rather asserted that the Presiding Of-
ficer treated the policy as if it were law and thus ignored TSCA. This is not a fair reading
of the Presiding Officer’s decision. The Presiding Officer articulated the statutory factors
set forth in the statute and analyzed each factor sequentially using the PCB Penalty Policy
as a guide. The fact that the Presiding Officer did not adopt Spitzer’s proposed penalty
assessment does not mean that the Presiding Officer gave inappropriate weight to the pen-
alty policy.

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 SPITZER GREAT LAKES LTD. 303

   2) Spitzer’s argument that it should be allowed, without explanation or excuse, to

argue facts at the eleventh hour that are contrary to those that it had earlier conceded would
thwart the purpose of procedural rules by injecting inefficiency and delay into the process.
If Spitzer intended to argue facts or introduce new facts in the penalty phase of the pro-
ceeding it should not have stipulated that there were no material facts in dispute nor given
up its right to a hearing. Accordingly, in the interests of the orderly and efficient adminis-
tration of this case, the Presiding Officer appropriately held Spitzer to its earlier
concessions.

  3) The Presiding Officer did not ignore the statutory penalty mitigation factors. Al-

though Spitzer argued circumstances that it felt demonstrated good faith efforts to comply,
the Presiding Officer saw these circumstances as also indicating that Spitzer was well
aware of its TSCA obligations, making all the more inexcusable its multiple violations of
TSCA’s requirements. This conclusion did not constitute error.

   4) The Presiding Officer did not commit error in ruling that inability to pay would

not be considered as a mitigating factor. Spitzer failed to properly notify the Region that it
would assert inability to pay. When Spitzer finally did argue inability to pay it did not
produce supporting evidence that it had agreed to produce and was required to produce by
order of the Presiding Officer. Under these circumstances, and in accord with previous
Board decisions on this issue, Spitzer’s failure to produce supporting evidence constituted a
waiver of its inability to pay argument.

Before Environmental Appeals Judges Scott C. Fulton, Ronald L.
McCallum, and Kathie A. Stein.

   Opinion of the Board by Judge Fulton:

  This is an appeal by Spitzer Great Lakes Ltd. Co. (“Spitzer” or “Respon-

dent”) from an Initial Decision arising out of an enforcement action initiated by
the U.S. Environmental Protection Agency, Region V (“EPA” or “Region”). The
enforcement action was filed against Spitzer for seven alleged violations of the
Toxic Substances Control Act (“TSCA”), 15 U.S.C. §§ 2601-2692, relating to
Spitzer’s handling of polychlorinated biphenyls (PCBs).

  Spitzer, after retaining counsel for its defense, conceded the validity of the

facts alleged in the Region’s complaint, and accordingly was found liable on all
seven counts. Order Granting Motion for Accelerated Decision (May 25, 1995).
In the second accelerated decision on penalty,1 the Initial Decision presently
before us, which addresses the amount of penalty to impose, the Presiding Officer
assessed $165,000 in civil penalties against Spitzer. In its appeal, Spitzer chal-
lenges the Presiding Officer’s use of the Agency’s penalty policy, the Presiding

    1 The Region filed two motions for accelerated decision dealing with penalty. The first motion,

filed on October 21, 1996, addressed whether Spitzer’s ability to pay should be considered as a miti-
gating factor when the penalty was ultimately assessed. Motion for Partial Accelerated Decision on the
Issue of Penalty. The second, filed on November 19, 1996, addressed the appropriate penalty to be
assessed. Motion for Accelerated Decision on Penalty.

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304 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

Officer’s assessment of a civil penalty without receiving and/or considering addi-
tional evidence proffered by Spitzer, and the Presiding Officer’s decision not to
consider ability to pay as a mitigating factor.2

                                      I. BACKGROUND

  In December 1986, Spitzer purchased property in Lorain, Ohio, from the

American Ship Building Company. Along with the property, Spitzer became the
owner of a number of items containing PCBs, including five transformers, several
capacitors, and switching equipment. A little more than three years later, in March
and April 1990, Spitzer made arrangements for a salvage company, Kelly Salvage
& Steel, Inc., to drain the oil from and remove the five transformers from
Spitzer’s property. The oil from the transformers was drained into fifty-five gallon
drums that remained on-site. The transformers were then taken to a salvage yard.

  Four months later, on August 17 and 18, 1990, the Region inspected

Spitzer’s property to determine whether Spitzer was complying with TSCA regu-
lations governing the manufacturing, processing, distribution, and use of PCBs.
During the inspection, Spitzer disclosed records documenting Spitzer’s former
possession of the five transformers that were removed. Although the transformers
were no longer at the site, the inspectors found, among other things: (1) 115 fifty-
five gallon drums containing dielectric fluid,3 only ten of which were labeled;

    2 The Initial Decision was served on February 3, 1997, and Spitzer filed its appeal 45 days

later on March 20, 1997. Spitzer relied on the following statement from the Initial Decision to con-
clude that its appeal was to be filed within 45 days of the Initial Decision:

   Pursuant to 40 C.F.R. § 22.27(c), this initial decision shall become the final order of
   the Environmental Appeals Board within forty-five (45) days after its service upon the
   parties unless (1) an appeal to the Environmental Appeals Board is taken from it by a
   party to this proceeding or (2) the Environmental Appeals Board elects, sua sponte, to
   review this initial decision.

Initial Decision at 16.

    In an order issued on April 16, 1997, this Board dismissed Spitzer’s appeal as untimely pursu-

ant to 40 C.F.R. § 22.30(a), which states that any appeal from an initial decision must be filed “within
twenty (20) days after the initial decision is served.” (40 C.F.R. § 22.30(a) was revised, effective Au-
gust 23, 1999, allowing parties thirty (30) days from service of the initial decision to file an appeal. 64
Fed. Reg. 40,138 (July 23, 1999)). Spitzer appealed the Board’s dismissal to the 6th Circuit Court of
Appeals, which reversed the Board’s decision and remanded the case for further proceedings. Spitzer
Great Lakes Ltd., Co. v. U.S. EPA, 173 F.3d 412, 416 (6th Cir. 1999). The case is thus back before us
now for a decision on the merits of Spitzer’s appeal.

    3 A dielectric substance is one that does not conduct direct electric current. See

40 C.F.R. § 280.12. Because of their potential to contain PCBs, dielectric fluids are subject to TSCA
regulation pursuant to 40 C.F.R. § 761.1(b).

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 SPITZER GREAT LAKES LTD. 305

(2) one oil switch; and (3) twelve large high-voltage capacitors.4

  Spitzer provided documents to the inspectors indicating that each of the

twelve capacitors contained more than 500 parts per million (“ppm”) of PCBs.
The inspectors also determined that the labeled drums contained dielectric fluid
from the transformers that had been removed. The oil in the unlabeled drums had
not been tested by Spitzer at the time of the inspection, nor had the oil in the
switch. However, the inspection team determined5 that the foregoing equipment
and containers were PCB Items.6 The inspection team also noted that the PCB
items were located in an unenclosed and uncovered area, resting on gravel, dirt,
and weeds.

   On September 23, 1992, the Region issued an administrative Complaint and

Notice of Opportunity for Hearing (“Complaint”) to Spitzer alleging seven viola-
tions of PCB regulations promulgated pursuant to TSCA. The Complaint alleged
that Spitzer: (1) violated 40 C.F.R. § 761.180(a) by failing to develop and main-
tain appropriate records on the storage and disposition of PCBs and PCB items;
(2) violated 40 C.F.R. § 761.30(a)(1)(xii) by failing to maintain records of visual
inspections of each PCB transformer at either quarterly or yearly intervals de-
pending on the amount of PCBs in the transformer; (3) violated
40 C.F.R. § 761.65(b) by failing to store the PCBs and PCB items in an area
with adequate roofing, walls, and floors; (4) violated 40 C.F.R. § 761.65(c)(8) by
failing to label the PCB containers with the date they were placed in storage; (5)
violated 40 C.F.R. § 761.40 by failing to mark the twelve large high voltage ca-
pacitors and the 115 fifty-five gallon drums with the ML label;7(6) violated
40 C.F.R. § 761.40, by failing to mark the storage area for the PCB items with
the ML label; and (7) violated 40 C.F.R. § 761.60 (b)(1) by failing to properly
dispose of the transformers.

 Spitzer filed an answer and requested a hearing on October 14, 1992. An-

swer Respondent and Request for Hearing (“Answer”). In its answer, Spitzer as-

    4 A large high-voltage capacitor is one that contains 1.36 kilograms (“kg”) (3 lbs.) or more of

dielectric fluid and can operate at 2,000 volts (a.c. or d.c.) or above. 40 C.F.R. § 761.3.
5 Although the record does not specify how the inspection team determined that the oil in the
unlabeled barrels contained PCBs, we note that most oil-filled electrical equipment, such as the
switching equipment, is assumed to be PCB-contaminated when its PCB concentration is unknown.
40 C.F.R. § 761.3. In any case, Spitzer has conceded the Region’s determination. Response of Spitzer
Great Lakes Ltd. to Show Cause Order at ¶ 1.
6 A “PCB Item” is any manufactured article, item or container that has been in contact with,

contains, or has as a part of its makeup any PCBs. 40 C.F.R. § 761.3.
7 The “M
L label” is a term used to describe the large PCB warning label defined in
40 C.F.R. § 761.45. The ML label contains letters and striping on a white or yellow background and
warns that the labeled instrument contains PCBs and requires special handling. 40 C.F.R. § 761.45.

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306 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

serted the following affirmative defenses: (1) that it had acted in good faith and
stored all electrical equipment and containers in the same manner as the previous
owner; (2) that it inspected the equipment and containers on a regular basis in
excess of legal requirements; (3) that all oil from electrical equipment was stored
in leak-free fifty-five gallon drums, placed on wooden pallets, and covered with
tarp; (4) that it maintained records of items containing PCBs in a form that “sub-
stantially met the requirements of the law”; and (5) that the civil penalties sought
by the Region were unreasonable in light of the technical deficiencies that may
have occurred since no PCBs contaminated the ground or water. Answer ¶¶ 13-
17.

  An order setting prehearing procedures was issued on October 30, 1992,

which set forth guidelines and a schedule for the prehearing exchange of informa-
tion. Order Setting Prehearing Procedures. The Region filed its prehearing ex-
change on January 8, 1993, and the Respondent filed its prehearing exchange on
January 12, 1993. Complainant’s Prehearing Exchange; Pre-Hearing Statement of
Respondent. In its prehearing statement, Spitzer took the position, among other
things, that “under the circumstances the proposed penalties are too high and that,
in any event, Respondent cannot afford to pay the proposed penalties.” Pre-Hear-
ing Statement of Respondent at ¶ 2.

   On March 18, 1993, the Region filed a motion for accelerated decision on

liability. The Respondent, however, did not file a reply. On July 18, 1994, the
Presiding Officer issued an Order to Show Cause, which observed that the Re-
spondent had not replied to the Region’s motion for accelerated decision and or-
dered the Respondent to show why the motion should not be granted.

   On August 9, 1994, the Respondent replied to the Order to Show Cause by

stating that, “[a]fter doing a thorough investigation * * * Respondent determined
that the facts as set forth in the Complaint were reasonable [sic] accurate and that
litigation over those facts would have been an unnecessary use of the Judge’s
time.” Response of Spitzer Great Lakes Ltd. to Show Cause Order at ¶ 1.

   On May 25, 1995, in light of Spitzer’s response to the show cause order, the

Presiding Officer granted the Region’s motion for accelerated decision on liabil-
ity. Inasmuch as Spitzer acknowledged the facts alleged in the Complaint to be
accurate, the Presiding Officer reiterated those allegations as “findings of fact” and
found Spitzer liable for all seven TSCA violations alleged in the Complaint. Or-
der Granting Motion for Accelerated Decision. Spitzer has not appealed the find-
ings of the May 25, 1995 order.

 On April 2, 1996, the Region filed a motion for further discovery that

sought, among other things, financial statements for the preceding five years, in-
come tax returns for the preceding five years, and a listing of all corporate assets.
According to the Region, this information was needed to determine whether

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 SPITZER GREAT LAKES LTD. 307

Spitzer was able to pay the proposed civil penalties, in view of Spitzer’s having
raised inability to pay the proposed civil penalty as a mitigating factor in its pre-
hearing statement. Motion for Further Discovery at 2; Pre-Hearing Statement of
Respondent, ¶ 2 (Jan. 12, 1993). However, argued the Region, Spitzer did not
provide sufficient data to allow the Region to test that assertion, nor did Spitzer
identify witnesses that would testify as to Spitzer’s financial condition. Motion for
Further Discovery at 2.

  In response to the motion for further discovery, Spitzer stated that it did not

object to the motion, that it would provide any information sought, and that an
order requiring Spitzer to respond to the discovery was not necessary. Response
of Spitzer Great Lakes Ltd. to Complainant’s Motion for Further Discovery at 1.
Since Spitzer did not object to the scope or nature of the discovery sought, the
Region’s motion was granted on July 19, 1996.8 Nonetheless, Spitzer did not pro-
duce any additional documentation of its financial position.

  The Region filed a motion for partial accelerated decision on October 21,

1996, asserting that Spitzer had waived any claim of inability to pay under the
authority of this Board’s decision in In re New Waterbury, Ltd., 5 E.A.D. 529
(EAB 1994). Motion for Partial Accelerated Decision on the Issue of Penalty
(Oct. 21, 1996). The Region noted that forty-five days had passed since Spitzer
was obligated to provide financial information to the Region; that a scheduled
hearing on penalty was less than thirty days away at the time that the Region’s
motion for partial accelerated decision was filed; that with the hearing drawing
near the Region would not have ample opportunity to analyze the financial data if
Spitzer ultimately provided that data; that Spitzer had ignored an order from the
Presiding Officer to disclose the information; and that allowing Spitzer to ignore
the Presiding Officer’s order would undermine the integrity of such orders. Id. at
3-4. Spitzer did not respond to the Region’s motion.9

 On November 1, 1996, the Presiding Officer ruled that inability to pay

would not be considered as a mitigating factor in assessing the civil penalty.
Memorandum Opinion and Order (Nov. 1, 1996). In support of this ruling, the

    8 At the time that the Motion for Further Discovery was granted, the financial information

submitted by Respondent consisted of tax returns for 1991, 1993, and 1994 and financial statements
for 1991, 1992, and 1993. See Complainant’s Motion for Further Discovery at n.1; Complainant’s
Motion for Partial Accelerated Decision on the Issue of Penalty at n.2. The Region, however, argued
that this documentation was insufficient. Motion for Further Discovery at 2. Spitzer has not challenged
that assertion.
9 On October 25, 1996, Spitzer filed a document styled “Response to Proposed Penalty.” In

that pleading, Spitzer presented its assessment of what an appropriate penalty would be in this matter.
Spitzer did not, however, address the motion for partial accelerated decision on penalty filed by the
Region on October 21, 1996, which argued that Spitzer waived the right to assert inability to pay as a
mitigating factor in the assessment of an appropriate penalty.

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308 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

Presiding Officer observed that Spitzer did not give notice to the Region that it
intended to assert inability to pay the proposed penalty in its answer to the Re-
gion’s Complaint as required by the rules of practice, and that when Spitzer did
raise inability to pay in its prehearing statement, it did not submit sufficient evi-
dence to support that claim. Id. The Presiding Officer further noted that Spitzer
had failed to provide the Region with access to financial records requested by the
Region, despite being ordered to do so on July 19, 1996, when the Region’s mo-
tion for further discovery was granted, and contrary to Spitzer’s statement that it
would provide such access. Id. The Presiding Officer cited this Board’s opinion in
In re New Waterbury, Ltd., 5 E.A.D. 529 (EAB 1994), to conclude that because
Spitzer failed to produce evidence to support its inability to pay claim, any objec-
tion to the penalty based on inability to pay was waived. Id. (citing New Water-
bury, 5 E.A.D. at 542).

  A hearing in this matter on penalty had been scheduled for November 19,

1996. See Notice of Hearing (Aug. 27, 1996). However, on November 13, 1996,
      the Region filed a motion to cancel the penalty hearing, representing that in a
      telephone conference with the Presiding Officer’s law clerk, “Counsel for Com-
      plainant and Counsel for Respondent both stated their beliefs that no genuine is-
      sue of material fact would be presented at a hearing to determine the appropriate
      penalty to be assessed in this matter” and that “it would be appropriate in this
      matter to determine the penalty based upon briefing.” Motion to Cancel Hearing at

1997. The motion went on to propose a briefing schedule. Based on the Region’s
      representation, which Spitzer has never disputed, on November 15, 1996, the Pre-
      siding Officer ordered that the hearing on penalty be canceled and established a
      briefing schedule. Order Canceling Hearing and Providing Schedule for Decision
      on Penalty Issue.

      In accordance with the Presiding Officer’s November 15, 1996 order, the
      Region filed its motion for an accelerated decision on penalty on November 19,
      1996, and Spitzer filed its response on December 4, 1996. Along with its re-
      sponse, Spitzer filed the affidavits of Ned Huffman and Alan Spitzer. On Decem-
      ber 5, 1996, the Region moved to strike the affidavit of Alan Spitzer because that
      name had not been included on the list of witnesses that Spitzer provided during
      the prehearing exchange. Complainant’s Motion to Strike.

      Spitzer filed a brief opposing the Region’s motion to strike on December 13,
      1996. Spitzer argued that the Alan Spitzer affidavit was introduced as a substitute
      for the affidavit of another witness who had suffered a heart attack two months
      before the date of the filing. Brief in Opposition to Complainant’s Motion to
      Strike. On the same day, the Region filed a reply to Spitzer’s opposition, arguing
      that it had not been aware of the unavailability of any witness until it received the
      affidavit of Alan Spitzer and that Alan Spitzer’s affidavit covered issues that were
      outside the proposed scope of testimony of the unavailable witness. The Presiding
      Officer did not rule on the Region’s motion to strike, but addressed the matter in

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 SPITZER GREAT LAKES LTD. 309

the Initial Decision by stating that the issue was moot.10 Initial Decision at n.5.

   On January 30, 1997, in an accelerated decision on penalty, the Presiding

Officer considered the circumstances of each violation and the arguments
presented by the litigants. The Presiding Officer then assessed penalties against
Spitzer as follows: $18,000 for Count I; $52,000 for Count II; $20,000 for Count
III; $10,000 for Count IV; $20,000 for Count V; $20,000 for Count VI; and
$25,000 for Count VII, for total of $165,000 in penalties. Initial Decision at 4-14.
The amount assessed reflected the Presiding Officer’s determination of an appro-
priate penalty in view of the gravity of the violations at issue. Although Spitzer
argued that this penalty should be mitigated in view of the circumstances of this
case, the Presiding Officer was not persuaded that mitigation of the gravity-based
penalty was appropriate. It is from the Presiding Officer’s Accelerated Decision
on Penalty that Spitzer takes this appeal.11

  On appeal, Spitzer essentially presents the following issues:12 (1) whether

the Presiding Officer’s application of the U.S. EPA Polychlorinated Biphenyls

   10 The Presiding Officer apparently viewed the affidavit as immaterial in view of the facts

already conceded by Spitzer for liability purposes. The Presiding Officer’s conclusion on this point is
framed as follows:

   The complainant moved to strike the affidavit of Alan Spitzer, which was attached to
   respondent’s response to complainant’s motion for accelerated decision on the penalty
   issue. In light of the findings and conclusions reached on the penalty issue, the motion
   is moot. The findings that were the basis for rulings made in this decision were made in
   the decision on liability.

Initial Decision at n.5.
11
Interestingly, Spitzer has not challenged, in its appeal, the substance of any of the Presiding
Officer’s other rulings, including the Presiding Officer’s November 1, 1996 order rejecting Spitzer’s
inability to pay arguments.
12 The Respondent presented the issues as seven separate questions phrased as follows:

   (1) whether Respondent was permitted to submit additional evidence to the Presiding
   Officer regarding its attempts to comply with TSCA for the purpose of determining the
   appropriate penalty;

   (2) whether EPA’s PCB penalty policy is consistent with the statutory provisions of
   TSCA regarding the imposition of penalties for the violation of TSCA provisions;

   (3) whether it was proper for the ALJ to rely exclusively on the EPA’s PCB penalty
   policy dated April 9, 1990, in determining the amount of the penalty appropriate in this
   case;

   (4) whether Respondent “adopted” the complainant’s method or system of analysis,
   namely the PCB Penalty Policy, by arguing that even under the policy the penalty
   sought by the Complainant was too high;
                                      Continued



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310 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

(PCB) Penalty Policy13 (“PCB Penalty Policy”) inappropriately ignored statutory
penalty assessment factors in assessing a civil penalty; (2) whether the Presiding
Officer should have allowed Spitzer to submit additional evidence to inform the
Presiding Officer’s determination of an appropriate penalty; (3) whether the Pre-
siding Officer gave due consideration to the statutory mitigation factors; and
(4) whether the Presiding Officer should have considered Spitzer’s ability to pay
as a mitigating factor in assessing an appropriate penalty.

                                       II. DISCUSSION

A. Use of the PCB Penalty Policy

  Spitzer argues that EPA’s PCB Penalty Policy can be used as a guideline for

assessing civil penalties, but should not be used exclusively in determining the
appropriate civil penalty. Brief of Respondent-Appellant’s [sic] Spitzer Great
Lakes at 7 (“Appeal Brief”). Spitzer claims that the Presiding Officer completely
ignored the requirements of TSCA and treated the penalty policy as if it had the
force of law. Id. at 18. Spitzer goes on to assert that TSCA requires presiding
officers to exercise independent judgment and to consider the nature, circum-
stances, extent, and gravity of violations when establishing the civil penalty. Id.

  In response, the Region argues that while a presiding officer is required to

conduct cases with objectivity and independence, a presiding officer is nonethe-
less governed by applicable precedents, which include the agency regulations and
policies. Region’s Reply Brief at 15 (“Reply Brief”). The Region further argues

(continued)
(5) whether it was appropriate for the ALJ to make findings of fact on issues concern-
ing the alleged violations in the absence of any direct, probative evidence on those
issues;

   (6) whether the ALJ should have taken into consideration the Respondent’s ability to
   pay in assessing the amount of penalty; and

   (7) whether a $165,000 penalty was appropriate under TSCA in view of Respondent’s
   demonstrated compliance with the TSCA both prior to and after the inspection of the
   U.S. EPA in August of 1990.

Appeal Brief at 3.

    Having thus framed the issues, however, Spitzer, in the remainder of its brief, fails to present

its arguments in a form that meaningfully relates to these articulated issues. Viewing Spitzer’s brief on
the whole, and in a manner most favorable to Spitzer, we believe that the distillation of issues
presented in the text fairly captures the essence of Spitzer’s concerns.
13 U.S. EPA Polychlorinated Biphenyls (PCB) Penalty Policy, April 9, 1990 (“PCB Penalty

Policy”), Notice of Availability of Polychlorinated Biphenyl Policy, 55 Fed. Reg. 13,955 (Apr. 13,
1990).

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 SPITZER GREAT LAKES LTD. 311

that EPA’s PCB Penalty Policy is not separate and apart from TSCA but rather
reflects the Administrator’s interpretation of the TSCA penalty criteria and sets
forth a methodology for analyzing violations. Id. at 17. A presiding officer has the
discretion to deviate from that methodology, argues the Region, but in doing so
the presiding officer must articulate the reason for doing so and provide an ade-
quate record for review by this Board. Id. at 17-18. The Region then states that
accepting Spitzer’s argument would leave presiding officers free to reject the PCB
Penalty Policy without explanation and develop their own methodology for deter-
mining appropriate penalties. Id. at 18-19.

   When assessing civil penalties, TSCA states that the “Administrator shall

take into account the nature, circumstances, extent, and gravity of the violation or
violations and with respect to the violator, ability to pay, effect on ability to con-
tinue to do business, and history of such prior violations, the degree of culpability,
and such other matters as justice may require.” TSCA § 16(a)(2)(B),
15 U.S.C. § 2615(a)(2)(B). EPA’s Penalty Policy uses the factors set forth in the
statute as headings and presents a method for analyzing each factor. See PCB
Penalty Policy at 15-19.

   The use of penalty policies was addressed at length by this Board in In re

Employers Ins. of Wausau, 6 E.A.D. 735 (EAB 1997). In Wausau, we stated that
“EPA’s adjudicative officers must refrain from treating the PCB Penalty Policy as
a rule, and must be prepared to ‘re-examine the basic propositions’ on which the
Policy is based, in any case in which those ‘basic propositions’ are genuinely
placed at issue.” Id. at 761 (citations omitted)(emphasis added). We also observed
that as long as presiding officers give due consideration to questions raised in
individual cases regarding the propriety of the penalty recommended by the pol-
icy, the use of penalty policies can promote fairness and consistency in enforce-
ment proceedings.14 Id. at 760-62.

  In this matter Spitzer has not placed the basic propositions of the PCB Pen-

alty Policy at issue. Spitzer merely makes a conclusory assertion, unsupported by
specifics, that the Presiding Officer ignored TSCA, thus disregarding every statu-
tory penalty factor favorable to Spitzer, and treated the PCB Penalty Policy as if it
were law. This is not, in our view, a fair reading of the Presiding Officer’s deci-
sion. The Presiding Officer noted at the outset of his analysis that penalties under
TSCA are governed by 15 U.S.C. § 2615(a). Initial Decision at 2. The Presiding
Officer then articulated the statutory factors set forth in that section and proceeded

   14 In Wausau we also emphasized, as we have stated in many cases, that “a Presiding Officer,

having considered any applicable civil penalty guidelines issued by the Agency, is nonetheless free not
to apply them to the case at hand.” Wausau, 6 E.A.D. at 758 (citing In re DIC Americas, 6 E.A.D. 184,
189 (EAB 1995); In re Pacific Refining Co., 5 E.A.D. 607, 613 (EAB 1994)).

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312 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

to carefully analyze each factor sequentially using the PCB Penalty Policy as a
guide in applying the statutory factors to the facts of this case. Id. at 2-14.

   Accordingly, we do not find any reason to conclude that the Presiding Of-

ficer ignored TSCA or applied the penalty policy in an inflexible manner. The fact
that the Presiding Officer did not adopt the Respondent’s proposed penalty assess-
ment does not mean that, as Spitzer would have us believe, the Presiding Officer
gave inappropriate weight to the penalty policy. The record indicates that the Pre-
siding Officer went through the statutory factors as reflected in the PCB Penalty
Policy and applied those factors thoughtfully, while considering all of Spitzer’s
arguments in the process. We do not find error in either the decision to consult the
PCB Penalty Policy or in the manner in which the policy was applied.

B. Consideration of Additional Evidence

   Spitzer argues that it was entitled to “submit additional evidence which re-

lates to the nature, circumstances, extent and gravity of the violation * * *.” Ap-
peal Brief at 7. The evidence of concern to Spitzer apparently15 includes an affida-
vit prepared by its President, Alan Spitzer, as well as a number of documents
which purport to be records of inspections of PCB items conducted by Spitzer at
its facility.16

   At the outset, we note that Spitzer’s claim that it was not allowed to “sub-

mit” the material in question is not altogether accurate. For example, the inspec-
tions records referenced by Spitzer were included as part of the prehearing ex-
change between the parties and were consequently part of the record before the
Presiding Officer. See Prehearing Statement of Respondent, Exhibits 15-30. Simi-
larly, while the Presiding Officer did determine that the Alan Spitzer affidavit was
moot, he did not, as suggested by Spitzer’s formulation of the issue, refuse to
admit it per se. In both instances, the Presiding Officer concluded, in essence, that
the evidence in question was immaterial in light of Spitzer’s prior concessions in
the case.

   15 Spitzer’s brief is not a model of clarity on this point. However, inasmuch as the Presiding

Officer ruled that the affidavit of Alan Spitzer was moot, see supra note 10, and found Spitzer liable
(by Spitzer’s own admission) for record keeping violations in years for which Spitzer now claims to
have records, we assume that these are the documents to which Spitzer makes reference.
16 Spitzer asserts that although it was found liable under Count I for failing to maintain com-

plete records for the years 1987-1989, it has records for each of those years and provided those records
to the Region during the prehearing exchange. Appeal Brief at 11. The Region responds by stating that
Spitzer appears to be “confused regarding the facts relevant to particular violations”; that Spitzer did
not contest the proposed penalty for Count I in its Response to Motion for Accelerated Decision; and
that Spitzer’s assertion is not relevant to the violation. Reply Brief at 29-30. Given our ruling below,
we do not need to resolve this dispute.

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 SPITZER GREAT LAKES LTD. 313

  As discussed more fully below, the record here reflects that Spitzer con-

ceded that the allegations of the Complaint were essentially accurate, agreed that
there were no issues of fact bearing on the penalty in the case, sacrificed its right
to a hearing on this issue, and then, in the context of responding to the Region’s
motion for accelerated decision on penalty, attempted both to argue facts that
were at odds with its earlier concessions in the case and to introduce new material
with factual content. Even on appeal, Spitzer advances, without explanation or
excuse, a version of the facts contrary to its earlier admissions. See Appeal Brief
at 4-6.

  In examining this issue, we begin with the Consolidated Rules of Practice

Governing the Administrative Assessment of Civil Penalties, Issuance of Compli-
ance or Corrective Action Orders, and the Revocation, Termination or Suspension
of Permits, 40 C.F.R. part 22, as amended by 64 Fed. Reg. 40,176 (July 23,
1999)(“Consolidated Rules of Practice” or “Consolidated Rules”).17 The Consoli-
dated Rules serve the same purpose that the Federal Rules of Civil Procedure
serve in the U.S. district courts, namely, to “secure the just, speedy, and inexpen-
sive determination” of judicial proceedings. Fed. R. Civ. P. 1. Consequently, pro-
cedural rules are construed in a manner that promotes and ensures judicial effi-
ciency. E.g., Jacobs v. University of Cincinnati, 189 F.R.D. 510, 511 (S.D. Ohio
1999).

   With regard to the inspection reports, Spitzer appears to be attempting to

prove that, although the Complaint alleged that Spitzer did not have records dem-
onstrating that it had inspected the PCB articles at its facility, “Respondent did
have inspection records for each of [the] years [in question].” Appeal Brief at 11.
Yet, Spitzer had earlier conceded the allegations of the complaint, which included
the following paragraph: “At the time of the inspection Respondent had not devel-
oped and maintained complete records on the disposition of the PCB items identi-
fied herein * * * and did not have annual PCB documents for the following calen-
dar years: 1989, 1988, 1987.” Complaint, ¶ 25. The Presiding Officer incorporated
this same conclusion in his May 25, 1995 Order Granting Motion for Accelerated
Decision (on Liability). Order Granting Motion for Accelerated Decision at 4-5.
Spitzer, however, did nothing to disturb that finding and has not sought review of
that finding in this appeal.18

   17The Consolidated Rules of Practice are the regulations at 40 C.F.R. part 22 that govern these

proceedings. 40 C.F.R. § 22.3.
18 Notably, although Spitzer had included documents purporting to be inspection records in its

prehearing exchange, the Region has argued that those records were suspect because: (1) Spitzer had
been unable to produce such records at the facility during Ohio EPA’s inspection; (2) the records
subsequently materialized only in the context of litigation; and (3) it was not credible for Spitzer to
claim that the inspections had occurred in view of its uncertainty regarding the presence of labels on
the transformers at the facility. Region’s Reply to Respondent’s Response to Motion for Accelerated
Continued

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314 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

  Spitzer argues that, notwithstanding its concession of these facts for liability

purposes, it should be permitted to continue to argue the facts, “provided that the
Administrator limits the use of the evidence [presented] to a determination of the
amount of the penalty which should be imposed for the violation.” Appeal Brief at

7. The problem with this argument, however, is that Spitzer also conceded that
   “there were no material facts in dispute on which a penalty might be based.” Initial
   Decision at 8 (emphasis added).

   Under these circumstances, we conclude that the Presiding Officer acted
   appropriately in determining that Spitzer’s argument regarding the inspection re-
   ports, which is fundamentally at odds with the foregoing conceded facts, “comes
   too late.” Initial Decision at 8. Spitzer’s argument that it should be allowed, with-
   out explanation or excuse, to argue at the eleventh hour facts contrary to those
   that it had earlier conceded would, in our view, thwart the purpose of procedural
   rules by injecting inefficiency and delay into the process.19 If Spitzer intended to
   argue facts or introduce new facts in the penalty phase of the proceeding, it should
   neither have stipulated that there were no material facts in dispute nor given up its
   right to a hearing on the issue. Accordingly, in the interests of the orderly and
   efficient administration of this case — a case that had been pending before the
   Agency for a number of years — the Presiding Officer appropriately held Spitzer
   to its earlier concessions. See, e.g., Thompson-Hayward Chem. Co. v. Rohm &
   Haas Co., 745 F.2d 27, 32 (6th Cir. 1984) (“The public interest in an efficient and
   effective administration of justice requires adherence * * * to the general pro-
   position that conceded * * * issues are not reviewable.”); see also Ahghazali v.
   Secretary of Health & Human Servs., 867 F.2d 921, 927 (6th Cir. 1989) (“State-
   ments in pleadings that acknowledge the truth of some matter alleged by an op-
   posing party are judicial admissions binding on the party making them.”).

   Spitzer’s attempted use of the Alan Spitzer affidavit is a slightly different
   variant on this same theme. The affidavit, in essence, avers that: (1) during the
   relevant time frame, Spitzer was taking what it believed were the appropriate
   steps for disposing of PCB-contaminated oil; (2) Spitzer was well on its way to
   properly disposing of the PCB-contaminated oil before any inspections were con-

(continued)
Decision on Penalty at 1-13. It is reasonable to view Spitzer’s concession of facts related to this issue
as conceding the question of the veracity of its records in the Region’s favor.

     19 Throughout these proceedings Spitzer has repeatedly failed to follow the rules of practice,

which has interfered with the Presiding Officer’s efforts to administer this case. For example, Spitzer
failed in its answer to raise “ability to continue to do business” as contemplated by
40 C.F.R. § 22.15(b) even though it would later attempt to raise this issue. Moreover, Spitzer failed to
file a timely response to the Region’s motion for accelerated decision on liability and did not file until
the Presiding Officer issued an order to show cause. Spitzer similarly failed to provide discovery de-
spite its pledge to the Presiding Officer that it would do so and in violation of the Presiding Officer’s
directive that it do so.

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 SPITZER GREAT LAKES LTD. 315

ducted; (3) Spitzer always intended to properly dispose of the PCBs at its facility;
and (4) Spitzer employees would not have kept records if they had intended an
illegal or clandestine disposal of PCBs. Affidavit of Alan Spitzer ¶¶ 4-7. The
thrust of the affidavit appears to suggest that Spitzer took appropriate steps to
comply with the PCB regulations and that any violations that occurred were
merely of a technical nature. Id. at ¶¶ 4-8. While we might agree with Spitzer that
its stipulating to facts for liability purposes does not necessarily foreclose exami-
nation in the penalty phase of the case of facts that provide further context for an
appropriate penalty, we are nonetheless unable to reconcile Spitzer’s late attempt
to add factual content to these proceedings with its concession that there were no
material facts in dispute for purposes of the penalty phase of the case. Spitzer
makes no claim that the factual statements in the affidavit were part of the body of
conceded facts to which the parties had stipulated. Indeed, the opposite would
appear to be true, given the Region’s protest that it was deprived of the opportu-
nity to test the veracity of the assertions in the affidavit. Region’s Motion to Strike
at 2. Under such circumstances, we cannot fault the Presiding Officer’s conclusion
that the Alan Spitzer affidavit did not merit consideration.20

C. Miscellaneous Mitigation Arguments

  TSCA is a strict liability statute; therefore, lack of intent to violate its re-

quirements does not justify noncompliance.21 In re Strandley, 3 E.A.D. 718, 722
(CJO 1991). Nonetheless, TSCA requires that certain equitable concerns be taken
into account when assessing civil penalties against violators. TSCA § 16(a)(2)(B),
15 U.S.C. § 2615(a)(2)(b). These equitable concerns are reflected in the PCB
Penalty Policy, which was developed to promote fairness and consistency in pen-
alty assessments. See Wausau, 6 E.A.D. 735, 762.

   Spitzer argues that the Presiding Officer should have mitigated the penalty

proposed by the Region on a number of different grounds. We note at the outset
that “the Board generally will not substitute its judgment for that of a presiding
officer when the penalty assessed falls within the range of penalties provided in
the penalty guidelines, absent a showing that the presiding officer committed an
abuse of discretion or a clear error in assessing the penalty.” In re Chempace
Corp., 9 E.A.D. 119 (EAB 2000) (citing, e.g., In re Pacific Ref. Co., 5 E.A.D. 607
(EAB 1994)). As discussed below, we find that the Presiding Officer in this case

    20 We note that a careful reading of the Presiding Officer’s decision reveals that the essentials

of the information conveyed by the Alan Spitzer affidavit appear to have already been in the record
before the Presiding Officer through some other source. Consequently, it is not clear that the affidavit
added meaningful content to the proceedings in any event.
21 Intentional violations of TSCA are subject to criminal sanctions. See TSCA § 16(b),

15 U.S.C. § 2615(b).

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316 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

did not abuse his discretion or commit clear error in assessing the penalty recom-
mended for this case by the PCB penalty policy.

   Penalty assessment in TSCA PCB cases occurs in two steps. First, the

Agency calculates a gravity-based penalty that is determined from the nature of
the violation, the extent of potential or actual environmental harm from a given
violation, and the circumstances of the violation. Second, the gravity-based pen-
alty is adjusted upwards or downwards based on culpability, history of prior vio-
lations, ability to pay, ability to continue in business, and other matters as justice
may require. TSCA § 16(a)(2)(B), 15 U.S.C. § 2615(a)(2)(B). Spitzer claims that
the Presiding Officer failed to consider Spitzer’s culpability, prior history of viola-
tions, or other matters as justice may require. Appeal Brief at 16.

   With regard to culpability (and presumably prior history of violations),22

Spitzer states that it never owned a site where transformers were present and did
not have any experience with PCBs. Under the PCB Penalty Policy, culpability is
evaluated based upon (a) the violator’s knowledge of the particular requirement,
and (b) the violator’s degree of control over the violative condition. PCB Penalty
Policy at 15. When considering the violator’s knowledge, the PCB Penalty Policy
frames the question as whether the violator “knew or should have known” of the
relevant requirements. Id. Under the policy, any company possessing PCBs is
deemed to have knowledge of TSCA and the PCB regulations. Accordingly, the
PCB Penalty Policy contemplates a penalty reduction based on this factor only
when a “reasonably prudent and responsible person” would not have known that
the conduct in question was either dangerous or in violation of the PCB regula-
tions. Id.

   Given the hazards associated with mismanagement of PCBs and the notori-

ety of those hazards, the PCB Penalty Policy offers a rational starting point for
assessing culpability. Significantly, Spitzer has not presented any evidence show-
ing that it could not have reasonably known that its handling of PCBs violated the
PCB regulations. On the contrary, the Presiding Officer specifically stated that
“[t]here is evidence that respondent knew it had an obligation under TSCA
rules.”23 Initial Decision at 15. Spitzer has not challenged that finding, nor do we,

     22 Although Spitzer maintains that the Presiding Officer failed to consider its prior history of

violations, Spitzer does not directly address its prior history of violations in its appeal brief. Interpret-
ing the appeal brief in the manner most favorable to Spitzer, we will assume that Spitzer, by stating
that it has no experience with PCBs, intends to state that it has not violated the TSCA PCB regulations
in the past.
23 In this regard the Presiding Officer notes that Spitzer arranged for removal of the oil in the

drums, as required by the rules, in August 1990, before the inspectors came to the Respondent’s facil-
ity. Initial Decision at 15.

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 SPITZER GREAT LAKES LTD. 317

in light of the evidence before us,24 find reason to question that finding. Thus, the
Presiding Officer did not err in declining to mitigate the penalty on this ground.

    With regard to history of prior violations, we note at the outset that the

gravity-based penalties assessed under the PCB Penalty Policy are geared towards
first time offenders. PCB Penalty Policy at 15. Upward adjustments in the grav-
ity-based penalty are made when a violator has a demonstrated history of prior
violations. Id. The Region does not allege that Spitzer has a history of violating
the PCB regulations, nor does the record indicate that the Presiding Officer drew
any such conclusions. The penalty was not increased out of concern about past
violations. Rather, the penalties assessed against Spitzer were assessed in accor-
dance with the PCB Policy, with the underlying premise being that Spitzer had
not committed similar violations in the past. Therefore, no reduction in penalty is
warranted based upon this factor.

   With regard to “other factors as justice may require,” Spitzer argues that it is

entitled to mitigation because it did not force the Agency to conduct a full blown
administrative trial in the case. Appeal Brief at 17. According to Spitzer, its will-
ingness to concede rather than litigate key factual points evinces a positive atti-
tude that should be taken into account under the “other factors as justice may
require” prong of the statute. Based on our review of the record, this argument
was not presented to the Presiding Officer in the case below and is thus raised for
the first time on appeal. As a general rule, we do not consider arguments raised
for the first time on appeal. See In re Woodcrest Mfg., Inc., 7 E.A.D. 757, 764
(EAB 1998), aff’d No. 3:98, CV-0456-AS (N.D.Ind. Dec. 14, 1999); In re Lin,
5 E.A.D. 595, 598 (EAB 1994); In re Genicom Corp., 4 E.A.D. 426, 440 (EAB
1992). As we observed in Woodcrest:

   The Consolidated Rules of Practice, 40 C.F.R. § 22.30(a), permit ad-
   verse rulings or orders of the presiding officer to be appealed. “Be-
   cause the Presiding Officer cannot issue an adverse order or ruling on
   an issue that was never raised during the proceedings below, it fol-
   lows that section 22.30(a) does not contemplate appeals of such is-
   sues.” Lin, 5 E.A.D. at 598. Thus, arguments made * * * for the first
   time on appeal are deemed to have been waived.

Woodcrest, 7 E.A.D. at 764. Accordingly, Spitzer’s argument that it is deserving
of leniency because of its cooperative approach to the litigation below is deemed

     24 Spitzer apparently hired a former employee of the American Ship Building Company, the

company from whom Spitzer purchased the property, and that employee performed inspections of the
transformers and capacitors on Spitzer’s property. Affidavit of Ned Huffman ¶ 2 (Dec. 4, 1996). Al-
though this statement does not indicate whether or not Spitzer knew of its violations, it does suggest
that, to some extent, Spitzer was aware that it had regulatory obligations with regard to its handling of
PCBs.

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318 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

waived.25

   Spitzer further argues that the Presiding Officer failed to take into account

Spitzer’s efforts to dispose of the PCBs before being visited by state or federal
inspectors and maintains that if it were really a “bad guy” it would not have kept
records for as long as it did, would not have emptied the transformers before ship-
ping them away, and would not have acted quickly to dispose of the oil-filled
drums. Appeal Brief at 17. Spitzer also proffers the fact that it had the transform-
ers emptied of oil and removed from its property as proof that it did not have any
sinister intent or purpose.26 Id. As we have already observed, TSCA is a strict
liability statute. Therefore, lack of sinister intent or purpose to violate its require-
ments does not justify noncompliance. In re Strandley, 3 E.A.D. 718, 722 (CJO
1991).

  Moreover, based on our review of the Initial Decision, the Presiding Officer

did not ignore these representations. See Initial Decision at 15. Rather than seeing
these circumstances as proof of Spitzer’s good faith efforts to comply, however,
the Presiding Officer saw them as evidence that Spitzer was, in fact, well aware of
its TSCA obligations, making all the more inexcusable its multiple violations of
TSCA’s requirements while Spitzer still possessed the PCBs. Id. Given that when

   25
       We note that the PCB Penalty Policy does not include in its list of circumstances warranting

penalty mitigation any reference to cooperation during litigation. See PCB Penalty Policy at 17.
Rather, the kind of cooperation envisioned by the policy is that which is geared towards trying to
achieve compliance or environmental improvement. Id. We further note that it is far from clear from
the record in this case whether Spitzer, in conceding facts and sacrificing its right to a hearing, was
motivated by a desire to be cooperative or was simply making tactical or economics-based judgments
based on the reality of its case. Moreover, as we have previously observed, Spitzer’s approach to the
litigation was not uniformly “cooperative.” See supra note 21.
26 Spitzer also advances as another indicator of good faith efforts to comply the fact that, while

it admittedly did not properly document its inspections of its PCB items, it did perform the required
quarterly inspections. On this point, the Presiding Officer in his Initial Decision observed: “Respon-
dent urges that the quarterly inspections were done. Its argument comes too late, however, since it
previously agreed with the finding — respondent described that finding as reasonably accurate — that
it did not inspect the transformers quarterly.” Initial Decision at 4. The Presiding Officer appears to
have erred in this assumption. We find no indication in the record that Spitzer had, in fact, conceded
that the inspections had not been done. This being said, we are persuaded that the Presiding Officer’s
error in this regard was immaterial to the outcome in the case since Spitzer was explicitly accused of,
and found liable for, recordkeeping violations, not inspection violations. See Complaint at ¶ 32, Initial
Decision at 7.

     Moreover, while it may be true that Spitzer had not conceded a failure to inspect, it is also true

that the Region likewise did not concede the point. Indeed, as noted above, the Region questioned the
reliability of Spitzer’s claim that the inspections did, in fact, occur. See supra note 20. Thus, the most
that can be said about this issue is that it was a matter of disputed fact between the parties and was thus
not part of the body of undisputed facts that the parties agreed should guide the Presiding Officer’s
penalty assessment. Spitzer, by conceding that there were no material facts in dispute for purposes of
assessment of a penalty, conceded as well by implication the nonmateriality of this issue.

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 SPITZER GREAT LAKES LTD. 319

disposal did finally occur it, too, was undertaken in a manner inconsistent with the
regulations, we do not believe that the Presiding Officer committed clear error in
rejecting these arguments for mitigation.27

  In sum, we do not find that the Presiding Officer committed an abuse of

discretion or clear error in declining to reduce the penalty because of “other fac-
tors as justice may require.” The record reflects that the Presiding Officer gave
consideration to Spitzer’s purported indicia of good faith and found them to be
more than outweighed by evidence that Spitzer had acted irresponsibly. In view of
the deference ordinarily accorded Presiding Officers’ penalty determinations, we
uphold the Presiding Officer’s ruling on this point.

D. Ability to Pay

   Spitzer argues that it cannot afford to pay the $165,000 civil penalty as-

sessed by the Presiding Officer because: (1) the company loses more than one
million dollars each year; (2) it is unable to cover its debt without regular infu-
sions of capital from its shareholders; (3) paying the assessed penalty will punish
its employees because the company will be forced to cut back on expenses; and
(4) it has already been penalized because it paid $70,000 to remove PCB oil that it
did not create, use, or benefit from. Appeal Brief at 16.

   In response, the Region notes that: (1) the Region filed a discovery motion

seeking documents that would have allowed the Region to determine Spitzer’s
ability to pay the proposed penalty; (2) Spitzer did not object to the discovery
request and stated that it would provide the information; (3) the Presiding Officer
granted the motion and ordered Spitzer to provide the discovery; (4) notwith-
standing the Presiding Officer’s order, Spitzer failed to provide the requested
records; (5) the Region filed a motion for partial accelerated decision on the issue
of penalty asserting that Spitzer had waived its right to mitigate the proposed pen-
alty based on inability to pay, but Spitzer did not respond to the motion; (6) the
Presiding Officer, relying on precedent established by this Board, ruled that
Spitzer had indeed waived the right to assert inability to pay; and (7) on appeal
Spitzer does not allege error in the Presiding Officer’s decision to grant the dis-
covery motion, nor does Spitzer allege error in the decision to grant the motion
for partial accelerated decision. Reply Brief at 25-27.

   We find that the Presiding Officer properly excluded consideration of abil-

ity to pay as a mitigating factor in assessing the penalty against Spitzer. As noted
above, Spitzer raised inability to pay as a mitigating factor in its prehearing ex-
change by stating that “the proposed penalties are too high and that, in any event,
Respondent cannot afford to pay the proposed penalties.” Pre-Hearing Statement

  27   Spitzer has conceded this point in conceding liability on Count VII of the complaint.



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320 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

of Respondent ¶ 2. However, when asked by the Region, and directed by the Pre-
siding Officer, to substantiate that claim, Spitzer failed to respond. See Memoran-
dum Opinion and Order (Nov. 1, 1996).

   This Board addressed the burdens of proof associated with demonstrating

ability (or inability) to pay a civil penalty in In re New Waterbury, Ltd., 5 E.A.D.
529 (EAB 1994).28 As we observed there, under TSCA, “ability to pay” is one of
several factors to be considered when assessing a civil penalty for violations of
TSCA. TSCA § 16(a)(2(B), 15 U.S.C. § 2615(a)(2)(B). The Administrative Pro-
cedure Act (“APA”) generally places the burden of proof on “the proponent of a
rule or order.” APA § 7(d), 5 U.S.C. § 556(d). Therefore, as the proponent of an
order seeking civil penalties in administrative proceedings, the Region bears, in
the first instance, the burden of proof on the appropriateness of a civil penalty.
This reality is reflected in the regulations that govern these proceedings. As we
have previously observed, the relevant portion of the Consolidated Rules of Prac-
tice makes it clear that:

   [U]nder the express terms of this regulation, the complainant bears
   both the burden of going forward and the burden of persuasion with
   respect to the appropriateness of the proposed penalty. In the context
   of this proceeding the appropriateness of the penalty under
   40 C.F.R. § 22.24 is to be determined in light of the statutory factors
   detailed in TSCA § 16(a)(2)(B), which, as noted above, includes abil-
   ity to pay as one of several factors requiring consideration.

New Waterbury, 5 E.A.D. 529, 538.

  Although the Region bears the burden of proof on the appropriateness of the

overall civil penalty, it does not bear a separate burden with regard to each of the
statutory factors. Id. Instead, in order to make a prima facie case, the Region must
show that it considered each of the statutory factors and that the recommended
penalty is supported by its analysis of those factors. With this shown, the burden
then shifts to the Respondent to rebut the Region’s prima facie case by showing
that the proposed penalty is not appropriate either because the Region failed to
consider a statutory factor or because the evidence shows that the recommended
calculation is not supported. Id. at 538-39; In re Chempace Corp., 9 E.A.D. 119,
135 n.22 (EAB 2000).

    28 In addition, EPA’s PCB Penalty Policy states that, “[i]f an alleged violator raises the inabil-

ity to pay as a defense in its answer or in the course of settlement negotiations, it shall present suffi-
cient documentation to permit the Agency to establish such inability.” PCB Penalty Policy at 17. The
policy goes on to state, “If the alleged violator fails to provide the necessary information, and the
information is not readily available from other sources, then the violator will be presumed to be able to
pay.” Id.

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 SPITZER GREAT LAKES LTD. 321

  With regard to “ability to pay,” we have held that since EPA’s ability to

obtain financial information about a respondent is limited at the outset of a case,
“a respondent’s ability to pay may be presumed until it is put at issue by a respon-
dent.” New Waterbury 5 E.A.D. at 541 (citations omitted). Then, as the party with
control over the relevant records, the respondent must, upon request, provide evi-
dence to show that it is not able to pay the proposed penalty:

  [I]n any case where ability to pay is put in issue, the Region must be
  given access to the respondent’s financial records before the start of
  such hearing. The rules governing penalty assessment proceedings re-
  quire a respondent to indicate whether it intends to make an issue of
  its ability to pay, and if so, to submit evidence to support its claim as
  part of the pre-hearing exchange. In this connection, where a respon-
  dent does not raise its ability to pay as an issue in its answer, or fails
  to produce any evidence to support an inability to pay claim after be-
  ing apprised of that obligation during the pre-hearing process, the Re-
  gion may properly argue and the presiding officer may conclude that
  any objection to the penalty based upon ability to pay has been
  waived.

Id. at 542.

   In this proceeding, Spitzer placed ability to pay in issue, albeit during the

prehearing exchange as opposed to in its answer. Having placed that matter in
issue, Spitzer was required to provide evidence sufficient to substantiate its claim.
Here, Spitzer had provided some supporting documentation, but not enough, in
the Region’s view, to allow for a complete assessment. Accordingly, the Region
requested additional documentation. Spitzer did not object to the scope of, or the
need for, the additional documentation. Rather, Spitzer indicated that it would
comply with the request. Then, even after entry of an order directing that it pro-
vide the documentation, Spitzer failed to comply.

  Spitzer does not offer an explanation for its failure to provide the necessary

documentation or comply with the Presiding Officer’s order, nor has it argued
before the Presiding Officer or on appeal that the documentation that it had pro-
vided prior to the request for additional discovery was sufficient to inform a judg-
ment on its ability to pay. Under these circumstances, we find that the Presiding
Officer appropriately concluded that Spitzer had waived inability to pay as a miti-
gating factor.

                             III. CONCLUSION

 For the foregoing reasons we find no error in the Initial Decision issued by

the Presiding Officer. Accordingly, Spitzer is assessed a civil penalty of

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322 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

$165,000. Payment of the full amount of the assessed penalty shall be made by
forwarding a cashier’s or certified check, payable to the Treasurer of the United
States, to the following address within sixty (60) days of the receipt of this
decision:

  U.S. EPA Region V, Regional Hearing Clerk
  First National Bank of Chicago
  P.O. Box 70753
  Chicago, Illinois 60673

   A transmittal letter identifying the case and the EPA Docket number, plus

Respondent’s name and address, must accompany the check. Failure on the part of
the Respondent to pay the civil penalty within the prescribed statutory time frame
after entry of this final order may result in the assessment of interest on the civil
penalty. See 31 U.S.C. § 3717; 4 C.F.R. § 102.13.

  So ordered.

VOLUME 9