Hearings Before an EPA Administrative Law Judge

Judge Gerald Harwood

Editors' Summary: Practice before administrative agencies, especially EPA, has always been an important part of an environmental lawyer's job. Administrative practice is becoming increasingly important. Several statutes have recently been amended to provide for the administrative assessment of civil penalties by EPA. The first step after EPA proposes to assess a civil penalty is generally a hearing before an EPA administrative law judge (ALJ). Judge Harwood, EPA's Chief Administrative Law Judge, describes the role of the ALJ within EPA and the statutes under which adjudicatory hearings most frequently arise. Judge Harwood then outlines the procedures followed in hearings before EPA ALJs, from the administrative complaint through the issuance of an initial decision.

Judge Harwood is the Chief Administrative Law Judge for the United States Environmental Protection Agency. This article was writtenby the author in his private capacity. No official report or endorsement by the United States Environmental Protection Agency is intended or should be inferred.

[17 ELR 10441]

When the Environmental Protection Agency (EPA) proposes to assess a civil penalty against a party for violating the law or regulations or to deny, modify, or revoke a license or permit, due process requires that it first grant the party a hearing on the matter. In most instances such hearings are held before an administrative law judge.¹ The administrative law judge is an employee of EPA who by statute is made largely independent of supervision and control by EPA to ensure the judge's impartiality in presiding over and deciding cases.²

The Office of Administrative Law Judges

EPA's administrative law judges constitute a staff office under the Administrator. A Chief Administrative Law Judge has general charge of the office but also presides over cases like the other judges.³

The Office is authorized to have seven judges, including the Chief Judge. For reasons that are largely historical, two of the judges are located outside of Washington, D.C., one judge having his office at the Region IV headquarters in Atlanta, Georgia, and the other judge at the Region VII headquarters in Kansas City, Kansas. The remaining judges are located at EPA headquarters in Washington, D.C.

Cases are assigned to the judges by the Chief Judge. Assignments are made in rotation so far as practicable, except that when the workload permits, the judges in Washington, D.C., will be assigned cases that are heard in Washington, D.C., and the judges in Atlanta and Kansas City will be assigned cases that will be heard in their respective cities.

Another factor taken into account in assigning cases is the availability of the judge because of commitments to cases already assigned and the relative size of the judge's workload. Although all judges theoretically start with the same number of cases, for any number of reasons the percentage of cases that actually go to hearing may vary greatly between judges, and some cases will require considerably more work than others. Finally, the Chief Judge may depart from the rotational order to take a case that is of unusual difficulty.

Statutes Providing for Hearings

Hearings before an administrative law judge are provided under numerous statutory provisions. Cases currently arise most frequently under the following statutes:

Clean Air Act § 120⁴ — assessment of a civil penalty against a stationary source that is not in compliance with any applicable emission requirement.

Clean Air Act § 207(c)⁵ — hearing on the recall of motor vehicles that do not conform to emission standards.

Clean Water Act § 402⁶ — hearing on a challenge to a permit regulating the discharge of pollutants into the water.

Resource Conservation and Recovery Act (RCRA) § 3008⁷ — the assessment of a civil penalty and issuance of a compliance order for failure to comply with requirements relating to the generation, transportation, treatment, storage, and disposal of hazardous waste.

Toxic Substances Control Act (TSCA) § 16(a)⁸ — the assessment of a civil penalty for failure to comply with the requirements relating to toxic substances.

Marine Protection, Research and Sanctuaries Act [17 ELR 10442] § 105(a) and (f)⁹ — the assessment of a civil penalty for violation of the restrictions on ocean dumping and the revocation or suspension of a permit for dumping materials into the ocean.

Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) § 3(c)(2)(B)¹⁰ — suspension of a registration because of failure to secure additional data required to maintain a registration of a pesticide.

FIFRA § 6¹¹ — hearing on refusal to register a pesticide, cancellation of a registration, suspension of a registration, changes in the classification of a pesticide and applications under FIFRA §§ 3 and 18 to modify a previous cancellation or suspension order.

FIFRA § 14(a)¹² — assessment of a civil penalty for violations of the Act.

Hearing Procedures

The procedures in a hearing before the administrative law judge depend upon the statute under which the hearing is brought. One basic procedure, however, applies in all cases. All decisions issued by the administrative law judge are reviewed by the Administrator or his delegate, the Judicial Officer.¹³ The review can be either discretionary or mandatory, and this again depends upon the statute under which the proceeding is brought.

Hearings Governed by Consolidated Rules

The largest number of cases currently being handled by the administrative law judges are governed by the Consolidated Rules of Practice.¹⁴ These rules apply to proceedings under FIFRA § 14(a), RCRA § 3008, TSCA § 16(a), and Marine Protection, Research and Sanctuaries Act § 105.¹⁵ A recent amendment also applies these rules to the assessment of Class II penalties under Clean Water Act § 309(g).¹⁶ In addition to general rules applicable to proceedings under each of these provisions, the consolidated rules contain supplemental rules specifically addressed to each provision.¹⁷

Cases under the consolidated rules are instituted by the issuance of a complaint setting out the acts and practices being questioned.¹⁸ In the case of a complaint under RCRA § 3008, the complaint must also contain a compliance order.¹⁹ An administrative law judge is not assigned to the case until an answer is filed. Motions for an extension of time to answer or for other relief filed prior to the answer must be made to the Judicial Officer if the complaint is issued out of Washington, D.C., or to the Regional Administrator, if the complaint emanated from a Regional Office.

Once the case has been assigned to an administrative law judge, the parties are usually directed by the judge to discuss settlement, if this has not already been done, and to report on the status of settlement.²⁰ If the case cannot be settled, the parties will be directed to exchange their evidence by supplying lists of proposed witnesses with a summary of their expected testimony and copies of documents they intend to introduce into evidence.²¹ They may also be directed to furnish such other information as the judge considers relevant. This is almost always done by correspondence, or if it cannot be satisfactorily handled by correspondence, then by a telephone conference. Very rarely do the proceedings under the consolidated rules require prehearing conferences where the parties are personally present. The matter is set down for a hearing once it has been determined that settlement is unlikely. At least twenty days notice of hearing is required.²² The parties, of course, may still continue with their efforts to settle, and can settle any time up to the commencement of the hearing. Hearings must be held either at the place where the respondent is located or does business, in the city where EPA's Regional Office is located (if the complaint has been issued by a Regional Office), or at EPA headquarters at Washington, D.C., unless there is some good reason for holding it elsewhere.²³ The practice has been in most instances to hold the hearing at the place where the respondent is located or does business.

One special feature to be noted about practice under the consolidated rules is that discovery is not as liberal as it is under the Federal Rules of Civil Procedure where parties are free to engage in discovery and the court gets involved only if a party applies to it for some relief. There is no discovery under the consolidated rules over and above that obtained through the prehearing exchange except to the extent permitted by the judge upon application by a party. In fact, this is generally true of all hearings before EPA.²⁴

In proceedings under FIFRA § 14(a), there is no authority to issue subpoenas. While this limits the ability of a party to obtain information from someone unwilling to furnish it, it does not leave the party totally without a remedy. In such cases, if a party refuses to produce information in its possession or control, the party requesting the information can ask the judge to draw the inference that the information would be adverse to the position of the party refusing to produce the information.²⁵ The inference, however, has to flow logically from the nature of the evidence being sought. For example, if a party claims that it lacks the financial resources to pay a penalty but refuses to produce statements of its financial condition, the inference can be drawn that the party does have the means to pay the penalty. It is unlikely, however, that any inference [17 ELR 10443] could be drawn from the refusal to produce financial statements as to who owns the corporation or whether the stock is held by one individual or several individuals.

Under the consolidated rules, the judge renders an "initial decision." Such a decision becomes the final decision of the EPA unless an appeal is taken by a party or the Judicial Officer elects to review the decision sua sponte within the time allowed in the consolidated rules.²⁶ The rules also allow for the granting of an accelerated decision (really summary judgment) when a party can demonstrate that there is no dispute as to the material facts and the party is entitled to judgment as a matter of law.²⁷

The consolidated rules allow a party to file a motion to reopen an initial decision within 20 days after the initial decision is issued to adduce additional evidence if it is shown that there is good cause why the evidence could not be presented at the hearing.²⁸ Outside of this limited exception, the administrative law judge has no further jurisdictionover the matter once the initial decision is issued. Requests for extensions of time to appeal or for other relief must be made to the Judicial Officer.²⁹ Regardless of whether the complaint issued out of the headquarters in Washington, D.C., or out of a Regional Office, all appeals are taken to the Judicial Officer. While the agency has no further appeal to the courts from a final order, the other party may seek judicial review of an adverse order.³⁰

One final thing to be noted is that, in assessing a civil penalty, the judge must consider any guidelines that the agency has issued with respect to the assessment of civil penalties under the Act involved. If the judge decides not to follow the applicable guideline, the judge must give reasons for not doing so.³¹ This requirement, however, does not apply to the Judicial Officer.³²

Hearings Not Governed by the Consolidated Rules

The consolidated rules do not apply to all adjudicative hearings conducted by EPA, presumably because the nature of the hearing provided under some statutes makes it desirable to have special rules of practice. A common feature of these proceedings is that they are not instituted by the usual complaint and answer. Instead, the hearing is granted only after a party has demonstrated to EPA that there are factual issues on which the party is entitled to an evidentiary hearing. Like the consolidated rules, the procedures provide for prehearing conferences, limited discovery over and above the prehearing exchange, accelerated decisions, motions, and the like. There are, however, features peculiar to each that will be briefly mentioned.

Clean Air Act § 120: Proceedings under § 120 are brought against a major stationary source (building, structure, or installation) that has not complied with the standards regulating the emission of pollutants into the atmosphere.³³ The penalty assessed is the savings realized by the source in not complying with the standard. The savings, or economic benefit, is computed according to a complex formula, and EPA has developed a computer program for its calculation.³⁴

The first step in § 120 proceedings is an EPA notice informing the source of the agency's finding of noncompliance. At this point, the source has two options: calculate the penalty following the agency's model, or petition for reconsideration on the ground that the finding of noncompliance is wrong or that the source is entitled to one or more of the exemptions allowed under the statute.³⁵ The statute requires that EPA act on the petition and hear and determine the matter within 90 days.³⁶

EPA has provided for a hearing in two stages. If the source contests the finding of noncompliance or asserts that it is entitled to an exemption, a hearing is first held to determine the source's liability for a penalty, which must be completed and an initial decision issued within 90 days.³⁷ If found liable, the source must then calculate the penalty. If EPA disagrees with the amount, it recalculates the penalty. The source, if it objects to the recalculation, is then given a hearing on its objections, which must also be completed and decided within 90 days.³⁸ The 90-day limitation applies only to the decision of the administrative law judge, and the time can be extended if both parties agree. In both the hearing on liability and the hearing on the amount of the penalty an appeal is allowed to the Judicial Officer, who must decide the appeal within 30 days.³⁹

Clean Air Act § 207(c): Another proceeding under the Clean Air Act where an adjudicative hearing is provided is where EPA requires an automobile manufacturer to recall a class or category of motor vehicles when EPA has found that a substantial number of vehicles do not conform [17 ELR 10444] to the emission standards though properly maintained or used.⁴⁰

Again, EPA notifies the party that it has been found to be in noncompliance, in this case by sending it a notice of nonconformity and directing it to submit a plan for remedying the nonconformity within 45 days. It should be evident that this may require the recall of thousands of vehicles that have to be corrected in some fashion at the manufacturer's expense in order to bring them into compliance. If the manufacturer disagrees with the finding of nonconformity, he may request a hearing on this issue.⁴¹ This decision is final unless appealed to the Judicial Officer, or unless the Judicial Officer reviews it sua sponte.⁴²

FIFRA § 6: In addition to proceedings for the assessment of civil penalties under § 14(a), FIFRA § 6 provides for adjudicative hearings on the cancellation or suspension of a registration of a pesticide, on a refusal to register a pesticide, or on a change in the classification of a pesticide (e.g., changing the classification from a general use to restricted use pesticide).⁴³

There are two kinds of proceedings involving the cancellation of a pesticide or change in classification. One is where the Administrator issues a notice of intent to cancel the pesticide or change the classification. The other is where the Administrator issues a notice of his intention to hold a hearing to determine whether to cancel the registration or change the classification of a pesticide. In both cases the registrants are sent a copy of the notice and the notice is also published in the Federal Register. In the case of a notice of intent to cancel the registration or change the classification, an affected party must request a hearing within 30 days of the receipt of the notice or the date of publication, whichever is later. This 30 day period is jurisdictional. If the request for hearing is not received by EPA within the 30 days, the registration is cancelled or the classification is changed. The time for responding to the notice of intent to hold a hearing is set by the Administrator in the notice.

Cancellation hearings are likely to involve complex issues and numerous parties. The procedures themselves, however, are not too dissimilar from those found in the consolidated rules. One should note that the general practice has been to require the presentation of direct testimony in the form of a written verified statement, with the witness being available for cross-examination. Though EPA is designated as the Respondent in a proceeding brought on a notice of intent to cancel, it has the burden of going forward to present sufficient evidence to make a prima facie case for cancellation. The burden of proof, however, is upon the party supporting the continued registration.⁴⁴ The procedures allow for an accelerated decision to be issued in favor of EPA, but make no provision for issuing an accelerated decision against EPA.⁴⁵

The statute also authorizes EPA to suspend a registration during the cancellation hearing if necessary to protect the public against an unreasonable risk of harm.⁴⁶ This proceeding is in the nature of a preliminary injunction and is held under an expedited schedule, with 10 days being allowed for the initial decision. An administrative law judge is not required to preside at these hearings, but in practice an administrative law judge has presided.

FIFRA § 3(c): A party is also given a hearing if a registration is suspended under § 3(c)(2)(B)(iv) for failure to supply data to support a registration following a directive by EPA to furnish such data. Again, EPA notifies the registrant of its intention to suspend and the registrant must request a hearing.⁴⁷ The issues in such a proceeding are limited to determining whether the registrant has failed to take the action that served as the basis for the notice of intent to suspend and whether EPA's determination as to the disposition of existing stock of the pesticide is consistent with the Act.⁴⁸ The hearing must be concluded and the determination made within 75 days after receipt of the request for a hearing.⁴⁹

Clean Water Act § 402: An adjudicative hearing is also provided on the terms of final national pollutant discharge elimination system (NPDES) permits issued under Clean Water Act § 402.⁵⁰ NPDES permits are issued after the affected party and the public have been heard on the terms of the permit (usually first issued as a draft permit). After EPA has issued a final permit, an interested party can request a hearing on its terms.⁵¹ The grant of a hearing is discretionary with EPA, and EPA may decide to deny the hearing if there are no factual issues requiring a hearing.⁵² If a hearing is granted, a party is usually limited to the evidence presented and objections made in comments on the draft permit. The administrative record compiled during the comment period must be received and admitted into evidence, but a party can request that a sponsoring witness be made available, and if none is, this can be considered in evaluating the evidence.⁵³

Other Statutes: Several statutes have been amended recently to provide for adjudicatory hearings for assessment of civil penalties. These include the assessment of civil penalties of up to $5,000 against a public water system under Safe Drinking Water Act § 1414(g),⁵⁴ and the assessment of civil penalties for violations of certain provisions of the Comprehensive Environmental Response, Compensation, and Liability Act.⁵⁵

1. Administrative law judges preside over hearings that are required by statute "to be determined on the record after opportunity for an agency hearing." Administrative Procedure Act (APA), 5 U.S.C. § 554(a), ELR STAT. ADMIN. PROC. 004. The statute may expressly say that the hearing is to be "on the record," or this may be inferred from the nature of the hearing provided. Seacoast Anti-Pollution League v. Costle, 572 F.2d 872, 8 ELR 20207 (1st Cir. 1978), cert. denied, 439 U.S. 824 (1978). Administrative law judges may also preside over other hearings if requested by EPA.

2. The pay of the administrative law judge is prescribed by the Office of Personnel Management. 5 U.S.C. § 5372. The judge can be removed only for good cause established and determined by the Merit Systems Protection Board after a hearing, 5 U.S.C. § 7521, and the judge's performance cannot be rated by EPA. 5 U.S.C. §§ 4302, 4303. The judge's impartiality is assured by a rigorous "separation of functions" that insulates the judge from any supervision or direction by agency employees who have participated in the investigation or prosecution of the case and that also prohibits any ex parte discussion by the judge with any person on any fact in issue. APA, 5 U.S.C. § 554(d), ELR STAT. ADMIN. PROC. 004.

3. In addition to the judges, the staff of the Office consists of the hearing clerk, who has custody of the case files, an assistant to the hearing clerk, a legal staff assistant to assist the Chief Judge in the administration of the Office, secretaries, and one attorney advisor.

4. 42 U.S.C. § 7420, ELR STAT. 42226.

5. 42 U.S.C. § 7541(c), ELR STAT. 42247.

6. 33 U.S.C. § 1342.

7. 42 U.S.C. § 6928, ELR STAT. RCRA 019.

8. 15 U.S.C. § 2615(a).

9. 33 U.S.C. § 1415(a) and (f), ELR STAT. 41865.

10. 7 U.S.C. § 136a, ELR STAT. FIFRA 005.

11. 7 U.S.C. § 136d, ELR STAT. FIFRA 012.

12. 7 U.S.C. § 136l, ELR STAT. FIFRA 020.

13. Since in most instances review is by the Judicial Officer, reference to the Judicial Officer hereafter will mean the Administrator when the Administrator elects to review a case.

14. 40 C.F.R. § 22.

15. 40 C.F.R. § 22.01. The consolidated rules also state that they apply to civil penalty cases under Clean Air Act § 211. The Judicial Officer, however, has ruled that § 211 does not authorize the imposition of administrative penalties. See In Re Transportation, Inc., No. CAA(211)-27 (Feb. 25, 1982).

16. 33 U.S.C. § 1319(g). See 52 Fed. Reg. 30671 (Aug. 17, 1987). Class II penalties may reach § 125,000. See Liebesman & Laws, The Water Quality Act of 1987: A Major Step Ahead in Assuring the Quality of the Nation's Waters, 17 ELR 10311, 10317 (Aug. 1987).

17. See, e.g., supplemental rules for civil penalties under RCRA § 3008, 40 C.F.R. § 22.37.

18. 40 C.F.R. §§ 22.13 and 22.14.

19. 40 C.F.R. § 22.37(e).

20. 40 C.F.R. § 22.18.

21. 40 C.F.R. § 22.19(b).

22. 40 C.F.R. § 22.21(b).

23. 40 C.F.R. § 22.19(d).

24. 40 C.F.R. § 22.19(f).

25. See 40 C.F.R. § 22.04(c)(5).

26. 40 C.F.R. § 22.27(c).

27. 40 C.F.R. § 22.20.

28. 40 C.F.R. § 22.28.

29. 40 C.F.R. §§ 22.27(c), 22.29(c).

30. It depends upon the statute as to whether judicial review is in the district court or in the court of appeals. Civil penalties assessed under TSCA § 16 and FIFRA § 14 are by statute specifically made reviewable in the court of appeals. See TSCA § 16(a)(3), 15 U.S.C. § 2615(a)(3); FIFRA § 16(b), 7 U.S.C. § 136n, ELR STAT. FIFRA 022. On the other hand, RCRA has no comparable statutory provision for judicial review of penalties assessed or compliance orders issued under RCRA § 3008. Review in such cases has been obtained in the district court. See Chemical Waste Management v. United States Environmental Protection Agency, 649 F. Supp. 347, 17 ELR 20521 (D.D.C. 1986).

31. 40 C.F.R. § 22.27(b). For FIFRA civil penalty guidelines, see Guidelines for the Assessment of Civil Penalties under Section 14(a) of the Federal Insecticide, Fungicide, and Rodenticide Act, as Amended, 39 Fed. Reg. 27711 (July 31, 1974); for RCRA guidelines, see Final RCRA Civil Penalty Policy (May 8, 1984), ELR ADMIN. MATERIALS 35089; for the TSCA guidelines, see Guidelines for the Assessment of Civil Penalties under Section 16 of the Toxic Substances Control Act, 45 Fed. Reg. 59770 (Sept. 10, 1980), for the general rules that have been supplemented by the following policy statements: Policy for Violations of the Regulations dealing with Polychlorinated Biphenyls, 45 Fed. Reg. 59776 (Sept. 10, 1980); Record-keeping and Reporting Rules, TSCA, Sections 8, 12 and 13, Enforcement Response Policy, (May 15, 1987); and Revised Enforcement Response Policy for the Friable Asbsestos-Containing Materials in Schools: Identification and Notification Regulation (June 22, 1984).

For a recent decision by the Judicial Officer discussing the consideration that the administrative law judge must give to the penalty guidelines, see A. Y. McDonald Industries, RCRA(3008) Appeal No. 86-2 (July 23, 1987).

32. See A. Y. McDonald Industries, Inc., supra note 31.

33. The procedures for hearing cases under Clean Air Act § 120 are found at 40 C.F.R. § 66.

34. See 45 Fed. Reg. 50086 (July 28, 1980), 50 Fed. Reg. 36732 (Sept. 9, 1985). For cases dealing with the assessment of penalties under § 120, see Duquesne Light Co. v. United States Environmental Protection Agency, 698 F.2d 456, 13 ELR 20251 (D.C. Cir. 1983); Duquesne Light Co. v. United States Environmental Protection Agency, 791 F.2d 959, 16 ELR 20790 (D.C. Cir. 1986); American Cyanamid Co. v. United States Environmental Protection Agency, 810 F.2d 493, 17 ELR 20642 (5th Cir. 1987).

35. 40 C.F.R. § 66.66.11-66.13.

36. Clean Air Act § 120(b)(5), 42 U.S.C. § 7420(b)(5), ELR STAT. 42227.

37. 40 C.F.R. §§ 66.41-66.43 and 66.93.

38. 40 C.F.R. § 66.51-66.54.

39. 40 C.F.R. § 66.95.

40. The procedures governing hearings under Clean Air Act § 207(c) are found at 40 C.F.R. § 85.1807.

41. 40 C.F.R. § 85.1807(b).

42. 40 C.F.R. § 85.1807(t).

43. The procedures for hearings under FIFRA § 6 are found at 40 C.F.R. § 164.

44. See 40 C.F.R. § 164.80. For a discussion of EPA's and the Registrant's burden of proof, see Environmental Defense Fund, Inc. v. United States Environmental Protection Agency, 548 F.2d 998, 1012-18, 7 ELR 20012 (D.C. Cir. 1976), cert. denied, 431 U.S. 925 (1977).

45. See 40 C.F.R. § 164.91.

46. FIFRA § 6(c), 7 U.S.C. § 136d(c), ELR STAT. FIFRA 012.

47. FIFRA § 3(c)(2)(B)(iv), 7 U.S.C. § 136a(c)(2)(B)(iv), ELR STAT. FIFRA 005.

48. Id.

49. Id.

50. The procedures for hearings under Clean Water Act § 402 are found at 40 C.F.R. § 124.71-124.91.

51. 40 C.F.R. § 124.74.

52. 40 C.F.R. § 124.75.

53. 40 C.F.R. § 124.85(d)(2).

54. 42 U.S.C. § 300g-3(g), ELR STAT. 41105; see Gray, The Safe Drinking Water Act Amendments of 1986: Now a Tougher Act to Follow, 16 ELR 10338, 10342 (Nov. 1986).

55. CERCLA § 109, 42 U.S.C. § 9609, ELR STAT. 44031. See Atkeson et al., An Annotated History of the Superfund Amendment and Reauthorization Act of 1986 (SARA), 17 ELR 10360, 10403 (Dec. 1986).