Court Assesses Economic Benefit Penalty

Mr. Trotter calculated the economic benefit Friedman & Schmitt obtained in this case as equal to $32,000.

Mr. Trotter based his calculations on the Asbestos Penalty Policy’s guidance that, in the absence of evidence regarding the violator’s actual costs of compliance, the cost of asbestos removal should be estimated at $20 per square foot of asbestos removed in violation of the Asbestos NESHAP’s requirements. Mr. Trotter multiplied 1,600 square feet of RACM removed from Building #2 by $20 per square foot to arrive at the $32,000 economic benefit component of his proposed penalty.

Friedman & Schmitt argue that the $20 per square foot cost of removing RACM overstates the actual economic benefit because testimony in the record shows that the actual cost of removing RACM would have been between $2.50 and $4.50 per square foot.

The Asbestos Penalty Policy specifically states that the $20 per square foot cost of removing RACM is to be used “in the absence of reliable information regarding a defendant’s actual expenses.”

As Friedman & Schmitt correctly note, the record contains testimony that the cost of removing RACM in Sacramento, California, at the time of these violations was between $2.50 and $4.50 per square foot. Specifically, Mr. Schmitt testified that the cost of removal would have been $2.50 to $3.50 per square foot, and Mr. Hussey testified that the cost would have been “somewhere between $3 and $4.50 a square foot.”

On appeal, the Region concedes that economic benefit should be calculated based on the testimony in the record regarding local RACM removal costs.

While the testimony in the record does provide the cost range of $2.50 to $4.50 per square foot, this testimony was general in nature and fell short of providing an exact price for which local removal services might have been obtained. Moreover, the price ranges cited by the witnesses are not entirely consistent. They do, however, overlap with respect to a narrower range of $3.00 to $3.50 per square foot (based on the low end of Mr. Hussey’s estimate and the high end of Mr. Schmitt’s estimate).

Because the testimony in the record is in agreement that local removal services might have been obtained for as little as $3.00 per square foot, we will use this number for purposes of calculating economic benefit with respect to Building #2. Accordingly, we assess an economic benefit component of $4,800.