Enforcement

Small Businesses and Enforcement

EPA has many compliance and enforcement resources specifically designed to meet the needs of the Small Business and Small Communities. In addition the Small Business Regulatory Enforcement Fairness Act (SBREFA) accords some right to small business and places responsibilities on federal agencies.

Small Business Regulatory Enforcement Fairness Act

The Small Business Regulatory Enforcement Fairness Act (SBREFA), signed into law on March 29, 1996, is an amendment to the Regulatory Flexibility Act (RFA) of 1980 that is designed to strengthen the RFA's analytical and procedural requirements. It applies to the federal regulatory enforcement agencies and is aimed at providing assistance to small businesses and other small entities, making tools available for better understanding of the regulatory and enforcement processes, and seeing that there is no unfair treatment relating to the regulatory enforcement process.

The Act adopts the Small Business Act's definition of "small entity" as defined in 5 U.S.C. Section 601, 15 U.S.C. Section 632 and Small Business Administration (SBA) regulations. This includes small businesses, small governmental jurisdictions (population of less than 50,000), and small organizations (e.g., not-for-profit organizations) that are not dominant in their field. The definition of a "small business" is determined by a business' SIC/NAICS code and annual receipts or number of employees.

While SBREFA addresses regulatory requirements also, the SBREFA subtitles relevant to civil enforcement are:

Subtitle B: Regulatory Enforcement Reforms

  • The RegFair Program

    • Section 222 of Subtitle B ("Oversight of Regulatory Enforcement"): provides small businesses the means to comment on agency enforcement actions. The Act created the office of the Small Business Ombudsman to oversee agency enforcement by ensuring that small businesses "subject to an audit, on-site inspection, compliance assistance effort or other enforcement-related communication or contact by agency personnel" have a means to comment on such enforcement activities. This oversight program is called the "RegFair Program."
    • The SBA Ombudsman must also report annually to Congress and evaluate the enforcement activities of agencies and "include a rating of responsiveness to small businesses of the various regional and program offices of each agency."
    • The Small Business Administration, an advocacy organization for small business enterprises, has information on upcoming hearings and roundtables.

EPA's Penalty Reduction Program for Small Entities

  • Section 223 of Subtitle B ("Rights of Small Entities in Enforcement Actions"): This requires that agencies regulating small entities establish a policy or program that provides for the reduction and, under the appropriate circumstances, the waiver, of civil penalties for statutory or regulatory violations by small entities.
  • EPA's existing penalty policies for air, water and hazardous waste have always provided for a reduction in penalties based on "ability to pay." EPA's has these additional policies that reduce or waive penalties for small entities:
    • The Small Business Policy (PDF) (5 pp, 256K, About PDF) , "Small Business Compliance Policy" applies to companies with 100 or fewer employees and provides penalty waivers as incentives to participate in on-site compliance assistance programs and to conduct environmental audits to discover, disclose and correct violations. EPA will waive the entire civil penalty if a disclosing small business meets certain criteria, including: (1) any voluntary discovery of the violation; (2) prompt disclosure of the violation; and (3) correction of the violation within the specified period. EPA reserves the right to seek as a penalty the economic benefit experienced because of the violations, if that amount puts similar businesses at a significant economic disadvantage. There are exceptions to the Policy for imminent and substantial endangerment, criminal conduct, and recurrent violations by the same company.
    • The Small Communities Policy (PDF) (10 pp, 130K, About PDF) , "Policy on Flexible State Enforcement Responses to Small Community Violations" addresses the small government jurisdiction component of "small entities." This Policy supports States' use of enforcement flexibility to provide compliance incentives such as penalty waivers, compliance assistance and enforcement agreements to address competing environmental violations for small communities with a population of fewer than 2,500 residents.
  • Subtitle C: Equal Access to Justice Act

    • Section 231 (Administrative Proceedings) and Section 232 (Judicial Process): These sections amend the Equal Access to Justice Act (EAJA) to require courts to award attorney fees and other expenses to a party when a "demand by the agency is substantially in excess of the judgment finally obtained by the United States and is unreasonable when compared with such judgment." Similar changes are made to EAJA for administrative adjudications. These amendments increase the maximum attorney fee award from $75 to $125 per hour and excludes the award of attorney fees when there is a willful violation, bad faith, or special circumstances.

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