BACKGROUND THIS MATTER AROSE AS A RESULT OF AN INVESTIGATION BY EPA IN JULY 1981 OF THREE STAR MUFFLER, INC. (THREE STAR) WHICH REVEALED THAT THREE STAR WAS REMOVING CATALYTIC CON- VERTERS FROM MOTOR VEHICLES. BASED ON THIS INVESTIGATION AND ADDITIONAL SUPP0RTING DOCUMENTATION, EPA OBTAINED AND SERVED A SEARCH WARRANT ON APRIL 13, 1982 TO INSPECT THE PREMISES AND VARIOUS RECORDS OF THREE STAR. THIS INSPEC- TION AND THE FOLLOW-UP INVESTIGATION CONDUCTED BY EPA STAFF OVER THE NEXT FEW WEEKS, CONFIRMED THAT THREE STAR EMPLOYEES REMOVED CATALYTIC CONVERTERS FROM 39 VEHICLES AND RENDERED INOPERATIVE ELEMENTS OF THE EMISSION CONTROL SYSTEM DESIGN ON 3 VEHICLES IN VIOLATION OF SECTION 203(A)(3)(B) OF THE CLEAN AIR ACT, 42 U.S.C. 7522(A)(3)(B). A NOTICE OF VIOLATION LETTER WAS ISSUED TO THREE STAR ON AUGUST 27, 1982 WHICH PROPOSED A PENALTY OF $105,000 BASED ON 42 VIOLATIONS OF THE CLEAN AIR ACT TAMPERING PRO- HIBITION. DISCUSSIONS WERE SUBSEQUENTLY HELD BETWEEN EPA STAFF AND THREE STAR TO EXPLORE THE POTENTIAL FOR SETTLEMENT OF THIS CASE. RESPONDENT WAS WILLING TO EXPEND NO MORE THAN $1,260 IN OUT OF POCKET EXPENSES, WHICH IS WELL BELOW THE GUIDELINES USED BY EPA IN SETTLEMENT OF SIMILAR CASES. BASED ON THE EGREGIOUSNESS OF THE VIOLATIONS AND ESTIMATES THAT AS MUCH AS $90,000 IN PROFITS WERE REALIZED BY THREE STAR THROUGH THE REMOVAL OF CATALYTIC