ASBESTOS NESHAP COORDINATOR
Friedman Schmitt calculates economic benefit

Mr. Trotter, the Region 9 Asbestos NESHAP Coordinator, calculated the economic benefit Friedman & Schmitt obtained in this case as equal to $32,000. Mr. Trotter multiplied 1,600 square feet of RACM removed from Building #2 by $20 per square foot as recommended by the Asbestos Penalty Policy to arrive at the $32,000 economic benefit component of his proposed penalty. Using a chart set forth in the General CAA Penalty Policy, Mr. Trotter calculated the penalty increase for the size-of-violator to be $62,500 to take into account Mr. Friedman’s net worth.

Thus, Mr. Trotter calculated the total preliminary deterrence amount of the penalty to be $125,000. Mr. Trotter testified further that this preliminary deterrence amount should be adjusted upward by $9,300 to take into account inflation.

This inflation adjustment is calculated in accordance with a memorandum EPA issued to revise its penalty policies to take into account the increased maximum statutory penalties required by the Debt Collection Improvement Act of 1996. Adding the inflation adjustment to the preliminary deterrence amount produces the $134,300 penalty proposed by the Region in this case.

Friedman & Schmitt challenge Mr. Trotter’s testimony supporting the Region’s requested penalty on the following grounds:

That the $15,000 initial gravity-based penalty for the notice violation is high and fails to take into account that Friedman & Schmitt believed that they did not have to give notice and did not attempt to hide their removal of the RACM;

The $5,000 initial gravity-based penalty for the first day of the wetting violation does not take into account the small amount of RACM remaining in Building #2 and that “no one from the government ever told [them] that they had to wet the material.”;

The $8,500 initial gravity-based penalty for the subsequent 17 days of the continuing wetting violation fails to take into account that this was Friedman & Schmitt’s first violation and that they sought guidance from SMAQMD on how to come into compliance and were told to wait for a subsequent meeting;

The $32,000 economic benefit component of the preliminary deterrence amount was erroneously based on a $20 per square foot cost of removing RACM when testimony in the record shows that the cost is between $2.50 and $4.50 per square foot;

The $64,500 size-of-violator increase based on Mr. Friedman’s net worth fails to recognize that the Asbestos Penalty Policy contains an example suggesting that the size of the contractor, not the size of the property owner, should be used in circumstances similar to the present case;

The inflation adjustment of $9,300 should be reduced consistent with any reductions in the other components of the penalty; and

The penalty should be reduced to take into account the totality of the circumstances of this case.

Courtesy of The EPA