Environmental Law Update provides information on developments in environmental law as it applies to property, probate and trust matters. The editors of Probate & Property welcome information and suggestions from readers.

Lead Paint Penalties Arrive
In January 1998, the EPA issued a guidance document clarifying its enforcement policy for violations of federal disclosure requirements relating to lead-based paint in older housing. The Residential Lead-Based Paint Hazard Reduction Act of 1992, known as Title X, applies to most pre-1978 housing. A few types of housing, such as efficiency apartments, dormitory rooms and short term rentals, are excluded.

In brief, Title X requires both landlords and sellers of pre-1978 housing to disclose to tenants and purchasers the presence of known lead-based paint, make available any relevant reports, provide an EPA-approved lead hazard information pamphlet and keep records relating to all these actions. Interestingly, the law does not require any abatement of lead-based paint, no matter how bad the condition_ only disclosure. Still, violators of the disclosure rule are subject to several types of enforcement actions, including civil penalties of up to $11,000 for each violation and crim-inal penalties. This column focuses on the law's applicability in thelandlord-tenant context.

The new enforcement policy establishes the procedures EPA will employ for determining the appropriate enforcement response to disclosure violations. Under the policy, the agency will issue first-time violators a Notice of Noncompliance (NON), in lieu of a civil penalty. A NON will be issued unless the violation is considered "egregious," such as when a child or pregnant woman has been "put at risk of lead poisoning." The NON requires the violator to take corrective action but does not impose any fines. Individuals who ignore the NON may be subject to a penalty.

The policy states that civil penalties are appropriate for second-time and "egregious" violators. If, however, the violations are committed "knowingly or willfully," the agency may seek criminal sanctions, including penalties and imprisonment for up to one year. EPA also may seek an injunction to force compliance with the Title X disclosure rule.

Penalty Matrix
The policy sets penalties in two stages: the Gravity-Based Penalty stage (GBP) and the adjustment stage. The GBP looks at the overall seriousness of the violation, considering the nature and circumstances of the violation and the extent of harm that may result from each violation. These are factored into a matrix to reach an appropriate penalty, the upper limit of which is $11,000 per violation. The second stage adjusts the GBP number up or down. Adjustments are made based on various factors, including the violator's ability to pay, history of prior violations, degree of culpability, whether the violations were disclosed voluntarily and whether the violator qualifies as a "small business." Significantly, the overall attitude of the violator may reduce the penalty by as much as 30%. EPA also may completely negate the penalty if discovery of the violation was the result of a self-imposed auditing procedure.

The policy provides that each requirement of the disclosure rule is separate from the others and that penalties will be assessed on each violation. Thus, the landlord of an eight unit apartment house who is unaware of the law and violates separate provisions (for example, failure to distribute the pamphlet and failure to disclose known lead paint), could be liable for 16 violations, each of which carries a potential $11,000 price tag. The Title X penalties can add up quickly. Because the agency has been enforcing the law for only a short time, it is too soon to tell what level of penalty the agency believes is appropriate.

Lawyers who represent owners of multi-family housing must make sure that their clients understand the law. Although numerous articles have been written about Title X, awareness of the law in the real estate industry is far from universal. Title X is an easy law to violate. EPA and HUD have had to issue two sets of guidance documents to clarify its meaning, and those agencies are working on a third. Compliance often rests at the rental agent level, where job turnover is common. The current policy makes clear that noncompliance can be expensive.

Environmental Law Update
Editor: James B. Witkin, Linowes and Blocher, 1010 Wayne Ave., Silver Spring, MD 20910.