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Civil Penalties Services
Under various federal and state laws, alleged violators of environmental requirements may be sued for monetary penalties. In developing their penalty demands, EPA, state regulatory agencies, and citizen groups consider statutorily-identified factors such as the economic benefit the `violator` may have obtained due to noncompliance, the `gravity` (or environmental harm) caused by the violation, the violator`s ability-to-pay for both penalties and required pollution control equipment, its history of noncompliance, and `such other factors as justice may require.`In some cases, EPA is willing to reduce its monetary demand associated with the gravity component of the penalty if the violator will agree to undertake a "Supplemental Environmental Project" (SEP). (The Agency claims never to offset economic benefit.)
EPA uses its "PROJECT" model to calculate the after-tax present value of proposed SEPs, and usually provides less than a dollar-for-dollar credit against penalties associated with "gravity".
In negotiations, EPA is usually willing to discuss whether it is using correct inputs in its economic benefit, gravity, ability-to-pay, and SEP calculations. In cases that proceed to trial, DOJ attempts to use economic benefit as the floor for an appropriate penalty and asks judges to consider imposing the maximum fines allowable under the law. However, "economic benefit" often plays a central role in courts` determinations of monetary penalties.