Civil Enforcement

Subtitle A: Regulatory Compliance Simplification

Section 212 of Subtitle A: This section requires agencies to write "small entity compliance guides" for each rule requiring a regulatory flexibility analysis under the "Regulatory Flexibility" section of SBREFA (Subtitle D).

These compliance guides are to assist small entities in complying with EPA's rules and must, in plain English, explain the actions a small entity is required to take to comply with the rule. The statute specifies that these guides may be considered as evidence of the reasonableness or appropriateness of proposed fines, penalties or damages.

Section 213 of Subtitle A: Section 213 requires agencies to establish a program to answer inquiries from and give advice to small entities about complying with EPA's laws. The agencies are also required to interpret and apply the law to the specific facts supplied by the inquiring small entity.

EPA's informal guidance program consists of three main components: (1) the EPA Small Business Ombudsman (SBO) located at EPA Headquarters and Regional Small Business liaisons; (2) various hotlines and clearinghouses that serve all entities; and (3) technical experts located throughout Headquarters and the Regions who answer questions or refer small entities to the appropriate state or local resources.

Subtitle B: Regulatory Enforcement Reforms

A. 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." (Additional Information)

Section 222 also establishes one Small Business Regulatory Fairness Board for each regional office of the SBA. SBA calls these the "RegFair Boards." SBA and these Boards hold at least 10 SBREFA hearings per year, one in each region. The Board members are to bring to the SBA Ombudsman's attention any substantiated instances of excessive enforcement. The Boards also comment on the SBA Ombudsman's annual Report to Congress.

The Small Business Administration, an advocacy organization for small business enterprises, has information on upcoming hearings and roundtables.

B. 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 program to reduce or waive penalties for small entities consists of the following three policies:

The Small Business Policy (PDF), "Small Business Compliance Policy" (18 pp, 81.2K) 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), "Policy on Flexible State Enforcement Responses to Small Community Violations" (6 pp, 92.2K) 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.

Finally, companies with more than 100 employees, but which are nevertheless considered "small entities" under the SBA definition of "small business", can use EPA's Audit Policy (PDF), "Incentives for Self-Policing: Disclosure, Correction, and Prevention of Violations" (49 pp, 89.4KB About PDF). The Audit Policy reduces penalties for entities of all sizes who find violations through an environmental audit or systematic procedure reflecting the entity's due diligence, promptly disclose the violations in writing, and correct those violations.

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.

Subtitle D: Regulatory Flexibility Analyses

Subtitle D amended the Regulatory Flexibility Act (RFA) to ensure that small entities have a meaningful opportunity to participate in the development of certain regulations that may significantly affect them. All final rules promulgated after June 26, 1996 must be supported by a Regulatory Flexibility Analysis (RFA) unless the Agency certifies that the proposed rule will not pose a significant economic impact on a substantial number of small entities.

For each rule where the RFA/SBREFA requires preparation of a final regulatory analysis, the Agency must also issue a Small Entity Compliance Guide providing small entities with a plain language explanation of how to comply with the regulation.

Subtitle E: Congressional Review

Congress provided itself with an expedited means of reviewing - and potentially disapproving - final rules issued by federal agencies. This Congressional review component of SBREFA is legally and conceptually distinct from SBREFA's small entity provisions.

Additional Information

As EPA is committed to exploring new and creative ways of achieving environmental results even when small business and other small entities are involved, EPA's Compliance Incentives and Auditing Programs has information that is sometimes relevant to these entities.

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