EPA-901/9-76-003b
ECONOMIC LAW
ENFORCEMENT
VOLUME II
STRENGTHENING
ENVIRONMENTAL
LAW ENFORCEMENT:
AIR POLLUTION
The Judges, (detail American woodcut, 19th Century)
CONNECTICUT ENFORCEMENT PROJECT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
HARTFORD, CONNECTICUT 06115
SEPTEMBER, 1975
-------
This report has been reviewed by EPA and
approved for publication. Approval does
not signify that the contents necessarily
reflect the views and policies of the
Environmental Protection Agency, nor does
mention of trade names or commercial pro-
ducts constitute endorsement or recommen-
dation for use.
Copies of this document are available in
limited quantities through the Connecticut
Department of Environmental Protection,
State Office Building, 165 Capitol Avenue,
Hartford, Connecticut, 06115.
-------
The Judges (detail)
John Andrew and Son (after W H. Drake)
American, 19th Century
Wood engraving
Courtesy Museum of Fine Arts, Boston. Ma.
-------
EPA-901/9-76-003b
ECONOMIC LAW
ENFORCEMENT
VOLUME IE
STRENGTHENING
ENVIRONMENTAL
LAW ENFORCEMENT:
AIR POLLUTION
Final Report Submitted Under Contract #M00103910
by: The Connecticut Enforcement Project
Department of Environmental Protection
Hartford, Connecticut 06115
to: The U.S. Environmental Protection Agency
Region I
Boston, Massachusetts 02203
September 1975
Region V, Library
230 South Dearborn Street
9 minors 6oeoi>
-------
CONTENTS
PART I.
Chapter I
Chapter II
PART II.
Preface
Chapter I
Chapter II
Chapter III
Conclusion
Appendix
PART III.
Chapter I
Chapter II
Chapter III
Chapter IV
Chapter V
USING ECONOMIC CIVIL ASSESSMENTS 1-1
Using Economic Civil Assessments to Ensure 1-2
Compliance with Emissions Standards and
Abatement Orders
Using Economic Civil Assessments to Ensure 1-12
Compliance with Progress Report Requirements
BASELINE PROFILE
General Enforcement
Order Overruns
Most Difficult Cases
CALCULATING ECONOMIC REMEDIES
Calculating Assessments
Determining the Cost of Compliance
Handling Inflation
Adjusting for Individual Income Tax Rates
Using the Cost of Capital
PART IV. CIVIL ASSESSMENT REGULATIONS
Section 22a-6b-602 - Violating Emissions Standards
Section 22a-6b-603 - Violating the Terms of an Order
Section 22a-6b-601 - Violating Progress Report
Requirements
II-l
II-2
II-8
11-27
11-39
11-47
11-48
III-l
III-2
111-12
111-16
111-18
111-22
IV-1
IV-2
IV-6
IV-9
-------
11
PART V.
Chapter
Chapter
Chapter
Chapter
Chapter
OPERATING MANUAL FOR THE APPLICATION OF CIVIL
ASSESSMENTS
I The Connecticut Enforcement Program
II How to Apply Section 602 Assessments
III How to Apply Section 603 Assessments
IV How to Apply Section 601 Assessments
V
How to Conduct Hearings in Civil Assess-
ment Cases
VI
How to Use Surety Devices As Part of the
Total Enforcement Program
Chapter
Chapter VII How to Use and Update Tools Employed in
Levying Civil Assessments
A. Calculating the Cost of Compliance
B. Determining the Applicable Cost of Capital
C. Using Inflation Indexes
D. Estimating the Source's Income Tax Rate
E. Operating the Wang Calculator
V-l
V-5
V-7
V-27
V-35
V-44
V-52
V-61
V-62
V-128
V-149
V-151
V-153
PART VI.
Chapter I
Chapter II
Attachments
REDUCING THE ADMINISTRATIVE COST OF ENFORCEMENT VI-1
The Impact of the Emissions and Order
Compliance Regulations on Administrative
Costs
The Impact of the Progress Report Regu-
lations on Administrative Costs
VI-4
VI-12
VI-16
-------
PART 1
USING ECONOMIC CIVIL ASSESSMENTS
-------
1-2
CHAPTER I
USING ECONOMIC CIVIL ASSESSMENTS TO
ENSURE COMPLIANCE WITH EMISSIONS STANDARDS
In February, 1975, the Department sent several of its
most recalcitrant sources of air pollution a certified letter
notifying them that Connecticut's new economic approach to
environmental law enforcement had become legally operative.
The letter warned them that thenceforth they would be liable
to an assessment equal to the full value of any further delay
they experienced in complying with the terms of the order they
had up until then been flouting. The letter included copies
of the regulations authorizing the Department to impose economic
civil assessments on sources violating an emissions standard or
not complying with the terms of an order (Sections 602 and 603
of the Civil Assessment Regulations'. See Part IV of this Volume.)
These letters had a quick and certain impact. Companies
that had previously chronically experienced long overruns in
meeting compliance deadlines suddenly experienced no more delay.
This chapter briefly summarizes how these new tools work,
and the next chapter provides a similar brief profile of another,
simpler economic civil assessment now being used by the Air
Compliance Unit to induce sources to submit required progress
reports promptly. Both chapters are brief overviews of how
Connecticut's new economic approach to regulatory law enforce-
ment, briefly described in Volume I, has been adapted to the part-
icular problems of enforcing Connecticut's air pollution standards.
THE ENFORCEMENT
RECORD
Connecticut's exceptionally vigorous air compliance enforce-
ment program has been rewarded by a high level of voluntary com-
pliance. Sources are told exactly what is expected of them; they
are induced to propose their own compliance plans; and their
progress is monitored closely. However, the Air Compliance Unit
has not had the tools to deal effectively with a small number of
cases that have persistently failed to comply. These cases con-
sume a disproportionate and very large share of the Unit's ad-
ministrative effort. Moreover, they pose a constant threat to
the high level of voluntary compliance by others: "If competitor
X has been able to avoid having to pay for abatement measures
over the last several years, why should I rush to meet the State's
-------
1-3
deadline? Nothing will happen if I don't meet it, and, in any
case, it's not fair to impose these costs on me and not on X."
If the current level of voluntary compliance is undercut, ad-
ministrative costs will soar as more and more cases require
enforcement attention, and Connecticut's progress in cleaning
the air will be threatened.
Connecticut's air compliance enforcement record is an
excellent one. Of 4,000 registered sources of air pollution
in July, 1974, only 323 had to be issued orders, and, of these
cases, only 23 percent experienced cumulative delay longer than
a month. However, a hard core group of 27 cases experienced
more than 15 months' delay beyond scheduled (and often extended)
compliance deadlines.
Air Enforcement Actions and Results
(number of cases 1971-1974)
<
*
>
4000
^ «
/ In Compliance
1
> <
> <
1469
p.
Complied Quickly
Meet Deadline
323
171
1 27 1
Premises
Inspected
Notices o
Violation
Issued
Orders
Issued
\ Failures
Vleet Order
/Deadlines
Overruns
Greater Than
15 Months
Source: "Monthly Report of Activities, Air Compliance Unit"
June 1974, Air Compliance files.
This estimate is based on a random sample of Air Compliance
Unit files. It does not include those who meet amended
order deadlines.
This record contrasts not only with that of many other states
but with that of other Connecticut programs. For example,
because the Water Resources Unit has not had the staff or the
enforcement powers necessary to make the State's laws regarding
coastal filling credible, most such filling is done in complete
disregard of the law.
-------
1-4
The hard core of intractible cases that have not responded
to repeated reasonable persuasion, bluff, and threat are a
serious problem. Thirteen percent of all sources put under
order account for 75 percent of all accumulated delay in order
compliance. Eight percent account for 56 percent. These "worst
cases" overrun their compliance deadlines by an average 267
percent. They cost the Department 75 percent more to process
than the average case, 137 percent more than sources that comply
on schedule.
These are cases of willful noncompliance. It takes the
Department almost twice as long to get these sources into pre-
order conference as the average case, almost three times as
long as the average case that complies on schedule. They do
not come from a common industry. (If they did, one might sus-
pect that companies in that industry were faced with particularly
intractible technical problems; however, coming as they do from
industries where others have complied promptly, these sources
cannot rely on such an excuse.) Nor do they represent a similar
size of operation.
What these hard-core recalcitrants do share is the approp-
riation of significant economic savings from noncompliance to
themselves. For example, for every month an asphalt batching
plant delays installation of a baghouse capable of cleaning
20,000 actual cubic feet per minute of particulate-laden air, it
will save $1666.25. This sort of financial inducement to
noncompliance must be counterbalanced if these sources are to
be made to comply.
The Department has not had the tools necessary to provide
such incentives. It has had only two responses available to it
when faced with noncompliance.
* It could persuade, compromise what it required,
cajole, bluff, and threaten. The Air Compliance
Unit has used a skillful blend of these approaches
to achieve the results it has to date.
* It could go to court to seek an injunction and/or
any of a wide variety of penalties theoretically
available. However, this response is, at best,
slow, costly, and uncertain. To date the courts
have issued three injunctions and no penalties or
other sanctions in all Air enforcement cases sent
them. (See Part II, page 36.) Not surprisingly,
some businessmen have perceived the economic
benefits of noncompliance as being significantly
greater than the risk of serious enforcement
sanctions.
Most cases will always be handled by the first of these approaches,
However, it is not enough by itself; to be credible, persuasion
must be backed up by an effective "next step." The Department
has needed an adequate, more sure, quicker enforcement next step
than it has had to date.
-------
1-5
ADMINISTRATIVELY-IMPOSED
ECONOMIC ASSESSMENTS
The Department's new administratively-imposed, economic
civil assessments give it the tool it has needed. These assess-
ments are just large enough to make compliance pay, and they
are imposed quickly and easily by the Department, without
having first to wait for court action. These two benefits are
tightly linked: it is use of the economic standard that makes
administrative imposition philosophically and legally acceptable.
Administrative
Imposition
By allowing the Department to impose civil assessments
(and to require regulatees to post, and perhaps forfeit, sureties)
itself, the delay, cost, and uncertainty of relying on the
judicial process to provide enforcement back-up is simply
eliminated.
Once the Department determines that a source is not in
compliance and has been given the requisite notice, it can
calculate the appropriate assessment and send the source a
notice of violation informing it of the grounds for the assess-
ment, the amount assessed, and the source's right to request a
hearing within twenty days. If the source does not request a
hearing within this time period (or if the hearing and possible
subsequent judicial review fail to invalidate the assessment),
the assessment becomes a fully enforceable final order. If the
source does not pay what is required in such a final order, the
order will be enforced by the Sheriff exactly as if it were a
court judgement.
This delegation to the Department would be disturbing
philosophically were it not carefully limited. Without the
safeguards built into the regulations, most of which were
required by the legislature, such a delegation might well be
seen as giving too much power to the regulator, leaving the
citizen exposed to excessive executive discretion.
The regulations provide a long list of carefully drafted
substantive and procedural safeguards to protect the regulatee.
Except for repeat violators, no one may be assessed without
actual prior notice of what they are required to do and of their
potential liability under these regulations for failing to do
so. Every action of the Department is subject first to an
administrative hearing conforming to the requirements of the
Connecticut Administrative Procedure Act and to the Department's
own Rules of Practice and then to judicial review.
By far the most critical safeguard is the economic standard
used to determine the amount of each assessment. Each assessment
cannot be larger than the total benefit the regulatee has
realized by delaying compliance. Tying the assessment to this
standard:
-------
1-6
makes remedy-setting a ministerial task, not a
discretionary one (although the Department still
has the discretion not to impose an assessment or
to mitigate it.)
* ensures that the assessment is remedial and not
punitive, civil and not criminal. (This safe-
guard is critical because, if the assessment could
be larger than the amount needed to remove the in-
centive not to comply, a court might determine
that the assessment was punitive and therefore
criminal. Criminal penalties can only be imposed
by a court.)
* ensures that no regulatee can be assessed any more
than it has actually saved by not obeying the law.
The standard's accuracy is assured by a final, critical safe-
guard: the correction hearing. If a regulatee, once in com-
pliance, can demonstrate that actual costs were lower than the
estimates used in calculating the inital,assessment, it is
guaranteed that its assessment will be lowered. The Depart-
ment must return- with interest, the difference between what
was and what should have been paid.
Economic
Assessments
The heart of the Department's new enforcement approach,
then, is its economic standard. This standard (1) ensures
that those contemplating noncompliance are confronted with
just the right level of incentive and (2) makes prompt im-
position of this incentive possible.
Economic civil assessments counterbalance all the benefits
of delaying compliance:
* Avoiding whatever portion of the installed capital
costs of control facilities that would be attrib-
utable to the period of delay in accounting
for real (as versus tax) depreciation of the
facilities.
* Avoiding the costs of operating and maintaining
these facilities during this same period, and
* Avoiding the opportunity costs of investing
in a no-yield abatement project rather than in-
vesting the money at a profit.
Once the Department has determined what these three cost factors
are, it uses business's familiar capital budgeting formula to
determine what each month's delay is worth to the regulatee.
It then imposes an assessment in that amount for every month's
noncompliance.
-------
1-7
Because the basis for the assessments includes the reg-
ulatee's opportunity costs,these assessments make compliance
positively attractive. In effect, they allow the State to
guarantee that pollution abatement projects will yield the same
return as commercial investments: making the required abate-
ment investment absolutely guarantees the source that it will
not be assessed a monthly charge based on both the cash out-
lays required for the investment and a commercially attractive
yield it could earn on these outlays.
(These economics are explained more fully in Volume I and
in detail in Part III of this Volume.)
Administering
Economic Assessments
Economic civil assessments are easy to use. With the use
of available cost curves and tables, most of the necessary
data can be estimated reliably in a few minutes. Once this
information is available, a simple economic formula fed into
a desk calculator will adjust for tax, inflation, and other
variables and calculate the correct assessment in seconds.
The two most important pieces of information needed to
determine the correct assessment amount are (1) the installed
capital costs and (2) the annual operating and maintenance
costs. If these basic costs of compliance had to be estimated
case-by-case, the administrative cost of imposing each assess-
ment might well become a significant problem. However, in
almost all cases, cost curves linking these costs to the number
of actual cubic feet per minute (ACFM) of polluted air requiring
treatment, a readily available figure, have been developed.
They make the task of obtaining these two inputs quite simple.
Following through the case of the delinquent asphalt
batching company will demonstrate just how simple these cost
curves make the job of estimating capital and O&M costs. Assume
that a Department engineer detects a noncomplying asphalt batch-
ing company and that the Department decides to impose a civil
assessment. It must determine the capital and O&M costs the
company should have met to be in compliance. All the engineer
need do is (1) note the number of ACFM's requiring treatment
(2) look up the appropriate cost curves in Chapter VII of Part
V of this Volume ,and (3) read the appropriate cost estimates
off the curves.
-------
1-8
PARTICULATE CONTROL COSTS - BAGHOUSE
.1 .4 1.6 6.2 25.0 100.0
(CFMs in Thousands)
Source: EPA Publication AP-51, PP 164, 175.
Connecticut Tax and Registration Forms.
Using the capital and the O&M cost curves for baghouses used
to control particulates shown above, the Department engineer
would read up from the point on the bottom scale representing
20,000 ACFM's (the volume of air requiring treatment at the batch-
ing company's plant) to the point on the cost curves immediately
above --$50,000 for the installed capital costs and $13,500
for the annual operating and maintenance expense.
These cost curves, drawn chiefly from national data and
checked against actual Connecticut cases, are generally reliable.
In most cases, estimates based on these cost curves will prob-
ably not over/underestimate actual costs by a significantly
greater amount than will the much more time-consuming,case-by-
case estimates — and -- in any case, the regulations guarantee
of correction with interest once a source comes into compliance
makes total initial accuracy unnecessary.
Other variables are determined with even less trouble.
The cost of capital for a regulatee's industry is read off a
list. The inflation factor in the formula needs to be updated
only once a year -- and then it is merely a matter of averag-
ing the changes in an easily available price index over the
preceding three years.
-------
1-9
INDUCING COMPLIANCE WITH
EMISSIONS STANDARDS AND ORDERS
This new enforcement tool is being used to induce sources
of pollution to move to comply with the State's emissions stand-
ards promptly.
Sections 602 and 603 work closely together towards this
end. Section 602 imposes assessment liability if a source emits
more than the state standards permit — unless the source is
moving to control its emissions pursuant to an order. Section
603 authorizes assessments for delay in complying with the terms
of an order. In both cases, the assessment is designed to
counterbalance the benefits of deferring the cost of controlling
the polluting emissions, and a month's delay by a source would
give rise to exactly the same assessment under either regulation.
Emissions
Assessments
Polluting facilities that have not installed the equipment
necessary to control their emissions are liable to Section 602
assessments. Repeat offenders and those with actual prior
notice can be assessed for the value of up to two years of past
noncompliance. All sources are liable from the moment they are
detected and notified that they are not in compliance until they
either comply or are proceeding under an order to do so.
The most important purpose of these regulations is to
encourage sources that are not in compliance with applicable
emissions standards to come to the Department and agree to an
order setting forth a specific schedule of steps leading quickly
to full compliance. The regulation will encourage such coop-
eration because it makes continuing noncompliance risky and
because it rewards cooperation with the Department.
The Department will not impose a 602 assessment once the
regulatee has agreed to an order. (The Department, of course,
retains the right to issue an assessment before issuing an
order.) By signing an order before receiving an assessment,
the regulatee avoids all Section 602 liability, including up to
two years of predetection noncompliance, plus however many months
have passed since detection. The regulatee can only become liable
to civil assessment again if it falls behind schedule. Even then,
this new liability is not likely to become nearly as large as the
regulatee1s potential liability under Section 602 had been.
-------
1-10
Liability under Section 602 will also provide insurance
against regulatees contesting orders as a means of frustrating
the Department's effort to tighten the enforcement of order
terms. Without this insurance, regulatees may be influenced
by the existence of Section 603 to contest abatement orders
more frequently than they have in the past. Previously accept-
ing an order was painless; if its deadlines were not met nothing
would happen. With 603 in place, -however, accepting an order
means accepting some risk of assessment. This risk could,
however, be avoided for little cost simply by contesting the
abatement order. As long as an order remains contested, which
could be quite a long time given the pace of both administrative
hearings and judicial appeals (especially if there were suddenly
a great many contested cases to process), the order is not legally
binding and cannot be enforced by Section 603. The hard-core
recalcitrant would no doubt seize on such a loophole quickly.
Others might as well, thereby adding to the Department's adminis-
trative costs and slowing compliance significantly.
Having regulatees liable to Section 602 assessments protects
against such an outcome. It gives the Department a powerful
plea-bargaining lever. If a regulatee chooses to contest rather
than comply promptly, the Department can impose the 602 assessment.
The regulatee's rights are not threatened by this plea-
bargaining device. The regulatee cannot be charged more than
what it saved by not being in compliance. If it wins its appeal,
any portion of the assessment that was rejected at the hearing
or by a court on subsequent appeal would be returned to it with
interest. Thus, the assessment merely neutralizes the incentive
to use contests as a means of postponing compliance expenditures.
A regulatee that feels it has good grounds for contesting an
order will still do so: the benefits it can expect if it wins
will not be reduced in any way by the 602 assessment. Further, if
the regulatee can convince a judge of the need, a court can stay
either the collection and/or the cumulation of the assessments
during an appeal.
Assessments for
Order Noncompliance
Once Section 602 has induced noncomplying facilities to
move to comply and they are under order, Section 603 ensures
that they comply with the terms of the order by the deadlines
specified in its compliance schedule.
This incentive works very simply. For every month or portion
thereof that a source falls behind schedule, it becomes liable to an
economic assessment equal to the value of delay for that period.
-------
1-11
The Department will not impose these assessments im-
mediately, however. Its purpose is to induce rapid compliance,
not to collect assessments. It will first warn the regulatee
that it is liable, but that it can "catch up" and still meet
the final compliance deadline, in which case it will have
erased the liability. If such warning letters do not have the
desired effect, the Department can try to bring the regulatee
up short by imposing any of several surety requirements on it.
(These devices can provide a whole series of gradually escalating
responses to continuing delay. Volume I explains these devices
and how they can be used.) Ultimately, if these devices do not
work, the Department will have to impose the full civil assessment,
In some cases, e.g. repeat offenders, it may want to do so
immediately. In any case, the Department's ability to impose
such less severe incentives, e.g. surety requirements and
forfeitures, rests on its ability to impose the full civil assess-
ment if the regulatee balks at the alternative. However, the
Department's ability to impose economic civil assessments should
greatly improve its credibility. As a result it rarely should
have to do more than warn those who begin to fall behind. The
impact of the first set of 602/603 warning letters demonstrated
how effective a credible warning can be.
**************
The Department's new administratively-imposed economic
civil assessments gives it the ability to force even the hard-
core recalcitrants to comply promptly. Consequently, it can
expect an even higher level of voluntary compliance than it
has experienced to date. This will mean a 22-43 percent saving
in the Department's administrative costs and continued rapid
progress in cleaning Connecticut's air.
-------
1-12
CHAPTER II
USING ECONOMIC CIVIL ASSESSMENTS
TO INDUCE PROMPT FILING OF PROGRESS REPORTS
The Air Compliance Unit requires sources under order
to submit monthly reports indicating exactly what progress
towards compliance has and has not been made since the last
report. These progress reports (1) make it difficult for
regulatees to forget or let slide their commitments to come
into compliance and (2) allow the Department to track regul-
atee progress with fewer time-consuming phone calls and field
inspections than would otherwise be necessary.
However, if they are not submitted, or if they are in-
complete or very late, not only do they not serve these pur-
poses, they become an administrative burden to the Department.
Delinquent reports require follow-up.
In the early summer of 1974, 44 percent of all progress
reports due were missing or seriously late. After a concerted
follow-up campaign, 17 percent were still delinquent. And
25 percent of the reports submitted were incomplete.
Beyond such cajoling and reminding there was nothing the
Department could realistically do. In theory, it could ask
the Attorney General to go to court to seek an injunction
and/or up to $180,000 a week in various penalties. This is,
however, a silly theory. Even for those who flagrantly dis-
regard emissions standards, the Department has found seeking
a court remedy to be an expensive, ever-so slow, and uncertain
procedure. For a small, if useful, procedural requirement,
this option is simply too expensive: the careful procedures
and safeguards built into the process are designed to protect
citizens when a great deal is at stake; they render the pro-
cess unuseable for such small, procedural matters. The long
delays inherent in these procedures also make this response
laughably inappropriate as a means of enforcing the submission
of reports that become largely useless within a month when the
next report is due.
In late 1974, the Department introduced economic civil
assessment regulations that would allow it to enforce its
progress report requirements. These regulations (1) prescribe
the form, timing, and content of progress reports (Section 19-
508-12 (f) and (2) impose uniform financial liability for fail-
ure to meet any of these requirements (Section 22a-6b-601).
-------
1-13
Section 19-508-12(f) became necessary once enforcement
was to be tightened up. It makes clear exactly what is re-
quired, thereby protecting the regulatee from unforeseeable
liability and the Department from the arguments (1) that the
regulatee didn't know what was required and (2) that perhaps
no violation had taken place.
These economic civil assessments are fixed fee charges:
$50 for the first delinquent or incomplete progress report,
$100 for subsequent violations. Such fixed charges are
appropriate because (1) the costs to regulatees of complying
with the reporting requirements do not vary far from these
figures and (2) the size of the assessment does not warrant
case-by-case measurement.
The two assessment rates are based on a survey conducted
by CEP of the costs of gathering the information required for
a progress report, writing the report, and transmitting it
to the Department. The $50 initial charge is just above the
average cost to the regulatees sampled of reporting. The
second $100 charge is designed to provide an adequate incen-
tive for those regulatees whose reporting costs are above the
average. The sample indicated that these charges should be
adequate to counterbalance the economic incentive not to
comply.
These assessments should do more than remove the incentive
not to comply. Lower level staff likely to be responsible
for reporting will probably be mildly embarrassed explaining
why they need to have a check made out to the Department.
More important, the Department can use this small,
simple civil assessment as a warning demonstration, a shot
across the regulatee"s bow. Once a regulatee has paid its
first $50 check to the Department, it will have been made
fully aware of the Department's new power to impose assessments
administratively. Since, not surprisingly, sources that are
seriously behind on their compliance schedules are also quite
likely to have a record of progress report delinquency, the
Department will usually be able to use a progress report
civil assessment as a Section 602/603 warning device as well
as a Section 601 enforcement tool.
The Department's new regulations should improve the re-
sults of the progress report program while cutting costs.
These regulations should cut the existing delinquency rate
to roughly a quarter of what it is now. They should reduce
the number of incomplete reports by 55 percent. They should also
cut staff time devoted to enforcing the progress report re-
quirement by 40 percent. In short, the Department's new
regulations should have substantial program benefit while
conserving staff resources.
-------
PART II
BASELINE PROFILE OF THE ENFORCEMENT PROCESS
FOR PRIVATE AND INDUSTRIAL SOURCES
IN THE AIR COMPLIANCE ENFORCEMENT UNIT
-------
II-2
PREFACE
Designing - and later evaluating - a new enforcement program
for the Department of Environmental Protection requires an accurate
and comprehensive understanding of:
1) The enforcement problems currently posed by Connecticut
polluters, and
2) The existing administrative processes now used to handle
these problems.
This document summarizes the Connecticut Enforcement Project's
baseline analysis of the current enforcement practices of the
Department of Environmental Protection.
This analysis contains three chapters, each one focusing
successively on narrower and more difficult enforcement problems.
The first chapter describes the nature and scope of the
Department's "usual" enforcement effort. It examines
the efficacy of the two enforcement mechanisms, notices
of violation and state orders, as they are applied to
all regulatees. The Department's enforcement experience
with most sources indicates a general pattern of com-
pliance and cooperation. This chapter is divided into
3 sections: (1) inspections, the primary means by
which violations are detected; (2) notices of viola-
tion, the Department's preliminary enforcement mechan-
ism; and (3) orders, the Department's main enforcement
tool.
The second chapter examines Department experience with
polluters who delay their compliance with state orders.
Half of those sources issued orders fail to meet their
compliance deadlines and overruns in these cases aver-
age five months of delay - increasing the interval
between detection and compliance by 38%. These sources
also impose great costs on the Department since DEP
personnel spends about 64% more time on these cases
than it does on sources who comply with their orders.
The third chapter analyzes enforcement experience with
the small "hard-core" of violators who cost the Depart-
ment the most time and effort. This group of cases,
about 8% of all orders issued, account for 56% of all
compliance overruns. They tend to come from the same
industries as most order recipients and to have the
same number of employees, but they comprise an excep-
tional group in that they impose on the Department 137%
more costs per case than do sources which comply with
their orders.
-------
II-3
This study points to the specific problems of enforcement
which provided the framework for the Connecticut Enforcement
Project's design of an economic enforcement system. While the
baseline of enforcement problems is always changing, this study
should also provide a starting place from which the impact of
the new enforcement system can be measured.
-------
II-4
TABLE OF CONTENTS
Page
SUMMARY OF FINDINGS 6
INTRODUCTION: GENERAL ENFORCEMENT 7
Chapter I THE ENFORCEMENT PROCESS 8
INSPECTIONS
Types of Inspections 9
Results of Inspections 10
Origins of Detections 11
NOTICES OF VIOLATION 12
Types of Violations 13
Types of Violations (Excluding Motor Vehicle and 14
Procedural Violations)
ORDERS 15
Time Required to Issue Orders 16
Percent of All Violations Requiring Orders 17
Violations Commonly Requiring Orders 18
Orders by Type of Violation 19
Allocation of Time of Staff Responsible For
Issuing Orders 20
Distribution of Companies Receiving Orders
by Industry 21
Size of Companies Receiving Orders , 22
Administrative Hearings on Orders 23
Methods of Compliance with Orders 24
Average Length of Orders to Install Equipment 25
Time Required to Order and Install Equipment 26
-------
11-5
Page
CHAPTER II ORDER OVERRRUNS 27
Percent of Sources Failing to Meet Order Deadlines 29
Distribution of the Extent of Delay 30
Impact of Changes in Compliance Plans on On-Time
Performance 31
Impact of Third Party Delays on On-Time Performance 32
Progress Reports 33
Average Length of Overruns Past Compliance Deadlines 34
Average Length of Overruns of Companies Needing
Abatement Equipment 35
Impact of Delay on Department Staff 36
Referrals to the Attorney General 37
Costs of Delay 38
CHAPTER III MOST DIFFICULT CASES 39
Distribution of Delay 40
Distribution of Worst Cases by Industry 41
Size of Worst Case Sources 42
Average Delay of Worst Cases 43
Time Required to Issue an Order to a Worst
Case Source 44
Costs of Worst Cases 45
Impact of Delay: The Costs of Worst Cases and
of Cases Without Delay 46
CONCLUSION 47
APPENDIX 48
-------
II-6
SUMMARY OF FINDINGS
An analysis of a random sample of 48 Air Compliance
cases (7% of all cases) from October 1971 to July 1974 reveals
the following profile of the enforcement process:
I. In terms of usual enforcement experience:
— 4 weeks elapse between the time of detection and the
time when a notice of violation is issued.
3.7 months pass from the day of issuance of a notice
of violation until the day an order is signed.
7 months pass from the day an order is signed to the
day compliance is scheduled.
II. In terms of enforcement experience with order overruns:
Over 50% of the orders issued were not completed by
the time required in the compliance timetable.
Order recipients who delay overrun their compliance
deadlines by an average of 5.1 months.
Over 30% of the orders issued are completed by means
other than the plan originally proposed in the com-
pliance timetable,
-- Regulatees blamed third-party delay for over 65% of
all missed compliance deadlines.
— Over 17% of the progress reports required by the com-
pliance timetable are either never submitted or sub-
mitted late.
III. In terms of enforcement experience with the most difficult
cases:
8% of all orders issued account for 56% of all delay
and 13% of all orders issued account for 75% of all
delay,
— The "worst 8%" are not differentiated from the general
order group by industry although they do tend to be
either large or small in size.
— The "worst 8%" have delays which are 65% greater than
average orders and which impose 135% more cost on the
Department than the average order.
-------
II-7
INTRODUCTION: GENERAL ENFORCEMENT
MOST SOURCES INSPECTED BY DEP ARE ALREADY IN COMPLIANCE
OR COMPLY QUICKLY.
Ait1 Enforcement Actions and Rftnul t «*
(number of cases 1971-.1974)
In Compliance
323
\et Deadline
—
171
pi? — i
1469
Premi setFVxT No I Tec sT of~\ V Orders \ NT Fa i lures to\\ Over run s V
Inspected )\Violati.on ) \Issued \ )Mect Order ) KSreater than }
//Issued // / /Dendline9**//15 Month s /
— . , . .. ,. -,— - ' f , , . — ' * """' ' —"~ ** *"T""' — «- " *— "-) i — — —r
On each of the following pages, the five bar graphs shown above
will appear in the upper Jeft-hand corner. The shaded bar
graph indicates which of the above categories is under dis-
cussion.
Source: "Monthly Report of Activities, Air Compliance Unit",
Juno 1974, Air Compliance files.
* Enforcement actions taken between 10/1/71 and 5/31/74.
** This estimate is based on a random sample of air files.
It does not include those who meet amended order deadlines.
DISCUSSION: Connecticut's citizens have been extraordinarily
cooperative in working to clean the State's air. Since October
of 1971 (when the DEP assumed responsibility for coordinating
and enforcing this effort) less than 4% of the over 10,000
registered sources of air pollution had to be issued orders.
Only 47% of those issued orders were delayed in any way. In
other words, 98% of all Connecticut sources either complied on
their own or did so promptly after being contacted by the De-
partment.
On the other hand, a handful of sources have willfully sought
to evade or at least delay complying with Connecticut's standards,
The State's new economic enforcement approach is designed to
work equally well for both groups. It is intended to be a
tough, loophole-free system that will not let the willful
scofflaw through. On the other hand, and just as important,
it is intended to have no effect, to impose no new burdens,
on the law-abiding majority.
-------
II-8
Inspections
nn
El
CHAPTER I
THE ENFORCEMENT PROCESS
INSPECTIONS
The Department relies primarily on field inspections to
detect or confirm cases of noncompliance.
- Half of all inspections are annual, pre-
announced inspections of major sources.
- 25 percent of all field inspections find
violations of air standards.
- Most commonly, detections result from
citizen complaints.
-------
MII-9
^-,
Inspections
MOST INSPECTIONS"1" ARE ANNUAL, PRE-ANNOUNCED "PIQ" INSPEC-
TIONS MADE OF SOURCES KNOWN TO HAVE SERIOUS POLLUTION POTENTIAL,
Types of Inspections*
Field
Inspections
Complaint-
Inspections \ / \ "* / Special
Source
Inspections
Compliance**
Inspections
Source: Random sample of Air Compliance files, 1971-1974;
Interviews with Air Compliance Unit staff.
* Analysis of 3053 inspections conducted 6/1/73 to 5/31/74.
** Assumes one compliance inspection for each notice of
violation issued, excluding motor vehicle emissions
violations.
There are four types of inspections:
- Inspections made in response to citizen complaints.
If it is not possible to determine whether or not
there is a violation from checking the Department's
files, the DEP will conduct a field inspection.
- "PIQ" (Pre-Inspection Questionnaire) inspections.
The Department inspects sources with significant pol-
lution potential regularly, usually once a year. Be-
fore each inspection, the Department requests that the
source answer questions about its processes: hence the
term "Pre-Inspection Questionnaire".
- Special source inspections. From time to time the De-
partment decides to inspect certain types of sources
with particular pollution problems, such as gasoline
storage facilities.
- Compliance inspections. When a source is found in
violation, it is given a specified period of time to
achieve compliance. When the source reports that it
is in compliance, the Department will inspect the
site to verify the claim.
Inspectors also spot violations while on "area surveillance";
they sometimes patrol certain areas to watch for motor vehicle
exhaust violations, and may see stationary sources violating
visible emissions standards.
-------
Inspections
nn
11-10
EL
25 PERCENT OF ALL INSPECTIONS FIND VIOLATIONS OF AIR
STANDARDS.
Inspections Resulting in Notices of Violation*
In Compliance
When Inspected
Found in
Violation
Source: Air Compliance Files; Interviews with Air Com-
pliance Unit staff.
Data is based on all inspections, excluding compliance
inspections, and all notices of violation , excluding
motor vehicle violations, issued between July 1,1973
and May 31, 1974.
-------
Inspections '||
fln
11-11
EL
ALMOST HALF OF THESE DETECTIONS ORIGINATE FROM CITIZEN
COMPLAINTS.
Origins of Detections
Area
Surveillance
or "PIQ"
Inspections
Citizen
Complaints
Special Source
Inspections*
Source: Random sample of notices of violation issued
from October 1971 to May 1974.
* Inspections resulting from policy decision to inspect
particular type of source.
COMPLAINTS BY CITIZENS HAVE ALSO PROVEN TO BE QUITE RELIABLE—
NOTICES OF VIOLATIONS RESULTED IN 13 OF THE 15 CASES EXAMINED.
-------
ir-12
Notices of Violation 1
NOTICES OF VIOLATION
Sources found in violation are issued "notices of vio-
lation". These notices allow the source 30 days to achieve
compliance before an order is issued by the Department.
Easily correctable mobile source and pro-
cedural violations account for half of
notices issued.
Particulate violations account for two-
thirds of the rest of notices issued.
-------
Notices of Violation
11-13
MOBILE SOURCE AND PROCEDURAL VIOLATIONS ACCOUNTED FOR
HALF THE NOTICES OF VIOLATION ISSUED BETWEEN OCTOBER I, 1?71
AND MAY 31, 1974.+
Notices of Violation, by^ Type of Violation
(percent of all notices of violation)
o
-H
>
0)
a
Mobile
Source
Exhaust
Procedural
Violations
Visible
Emissions
Fugitive
Dust
Hydro-
carbons
Odors
Other
Particulate
Matter
Nitrogen
Oxides
Design
Violations*
Sulfur
Oxides
32
17
16
11
Source: "Monthly Report of Activities: Air Compliance Unit"
June 1974.
E.g. flue-fed incinerators.
The unit treats mobile source emissions differently than
other emissions violations, following up such violations
by letter rather than initiating expensive order proceed-
ings. Procedural violations are easily correctable vio-
lations of registration or permit requirements.
-------
Notices of Violation
11-14
OF THE NOTICES OF VIOLATION GIVEN FOR VIOLATIONS OF
EMISSIONS STANDARDS, 70 PERCENT ARE GIVEN FOR VIOLATIONS
OF PARTICULATE STANDARDS.
Notices o_f Violation, by_ Type of Violation
(percent of emission standards violations*)
Non-particulate Violations
Particulate Violations
Visible
Emissions
Fugitive
Dust
Hydro-
c carbons
o
H
4J
"> Odors
i— (
• H
? Other
"" Particulate
01
>< Nitrogen
Design
Violations
Sulfur
Oxides
23
18
10
10
4
•; 4
2
33
Source: "Monthly Report of Activities: Air Compliance Unit",
June 1974.
* Excludes mobile source and procedural violations.
-------
11-15
Orders
ORDERS
If" a source previously issued a notice of violation fails
to comply within the specified period of time, the Department
issues an order, usually after negotiations, requiring compliance,
and usually specifying dates by which incremental steps toward
compliance are to be achieved.
- 3.7 months typically pass between the issuance
of a notice of violation and of an order.
- 22% of those who receive notices of violation
are also issued orders.
- Some types of violation, like particulates and
odors, regularly require orders.
- As a result, half of all orders issued are for
abatement of particulate violations.
- Those members of the Air Unit most directly
responsible for enforcement actions spend 40%
of their time on particulate violations.
- Despite the predominance of one type of pol-
lutant in enforcement actions, no pattern in the
size of companies under order is apparent.
- Nor is there any obvious pattern in the in-
dustrial composition of companies under order.
- Only 3% of all order recipients seek to contest
their order, and only half of the hearings re-
quested ever have to be held. This low appeals
rate is one indication that the orders are wide-
ly accepted as reasonable.
- Violators achieve compliance in many different
ways. Most commonly, they must add abatement
equipment to meet air standards.
- Violators who must add abatement equipment are
allowed 57% more time than the average order
recipient to meet air standards.
- 36% of the time allowed in such abatement orders
is for equipment delivery.
-------
Orders
11-16
THE DEPARTMENT TYPICALLY ISSUES ORDERS TO NONCOMPLYING
REGULATEES 112 DAYS (3.7 MONTHS) AFTER THE ISSUANCE OF A NO-
TICE OF VIOLATION.
DEP order
review &
processing
Average Time Required for Steps between the Issuance
o_f a Notice of Violation and of_ an Order (in days)
Sending of Order
Approval by Commissioner
Approval by Director
Typing
Review by Assistant Director
Review of Order by General Counsel
Order Delivered to General Counsel
Order Drafting
Lapse between arrangement S conference date
Arrangement of conference
(Notification of DEP by APCA)
Assignment of case to engineer
Preliminary "package" prepared for engineer
responsible for the case
Grace period after notice of violation
Source: Random sample of Air Compliance Orders.
DISCUSSION: The first 78 days (70%) of the pre-order period
consists of (1) allowing a regulatee a reasonable period of
time to comply, (2) assembling materials relative to the case
and commencing informal communications with the regulatee/
and (3) arranging a conference between DEP personnel and com-
pany officials. In short, most of this time is devoted to
ensuring that the regulatee understands what is required of
him and has sufficient time to develop a concrete, realistic
compliance plan. The remaining 34 days, in which an order
reflecting discussions with the regulatee is drafted and re-
viewed, demonstrates a record of reasonably prompt review by
each DEP staff office that must approve an order before it is
promulgated.
Processing time includes weekends. Adjusting for a five
day week, orders are issued in 80 working days after the
issuance of a notice of violation.
-------
Orders
11-17
in
:•:•:•:•! I I i—i
22 PERCENT OF ALL VIOLATIONS ARE NOT CORRECTED (OR CAN
NOT BE CORRECTED) WITHIN 30 DAYS.
Percent of Cases Issued Notices of Violation in
Compliance at. the End of: 3_0 Days, 1971-1974
Complied
promptly
Not in Compliance
After 30 Days
Source: "Monthly Report of Activities: Air Compliance Unit",
June 1974.
THE DEPARTMENT COMMENCES THE ORDER PROCESS FOR THE 22 PERCENT
STILL NOT IN COMPLIANCE AT THE END OF 30 DAYS.
-------
11-19
Orders
CERTAIN TYPES OF VIOLATION GENERALLY LEAD TO ORDERS,
E.G. PARTICULATE AND ODOR VIOLATIONS; OTHER TYPES ARE TYPI-
CALLY CORRECTED QUICKLY AND DO NOT REQUIRE ORDERS.
Percent of N.V.'s Going to Order, 1971-1974
Particulate
Matter*
Odors
Design
Violations**
Hydrocarbons
Sulfur
Oxides
Visible
Emissions
Nitrogen
Oxides
Fugitive
Dust
Procedural
Violations
Mobile—Source
Exhaust
2.5
.2
'99
80
49
33
Source: "Monthly Report of Activities: Air Compliance Unit",
June 1974.
* Excludes visible emissions and fugitive dust.
** Flue-fed incinerators.
DISCUSSION: The percent of notices of violation (N.V.'s) that
go to order is a good indication of how difficult ana expensive
it will be for a class of cases to comply with the air standards
-------
Orders
11-19
OVER HALF OF ALL ORDERS ISSUED BETWEEN OCTOBER 1, 1971
AND MAY 31, 1974 WERE FOR ABATEMENT OF PARTICULATE VIOLATIONS.
Percent of All Orders by Type of_ Violation, 1971-1974
Particulate
Matter*
Odors
Hydrocarbons
Visible
Emissions
Procedural
Violations
Fugitive
Dust
Design
Violations
Nitrogen
Oxides
Sulfur
Oxides
31
23
20
20
2
1
]j Particulate
[ : Violations
— | Other
|l Violations
J
Source: "Monthly Report of Activities: Air Compliance Unit'
June 1974.
* Excludes visible emissions and fugitive dust.
Only 2% of orders issued were for procedural or motor vehicle
violations.
-------
Orders
11-20
THE ENFORCEMENT CONTROL CENTER SPENDS 40 PERCENT OF ITS
TIME ON PARTICULATE CONTROL CASES.
Allocation pf Enforcement Control Center
Staff Time by Class o_f Violation
Hydrocarbpns
Particulate
Violations
Other
Odors
Sourpe: Time Logs maintained from 6/1/74 to 7/31/74.
DISCUSSION; The staff of the Enforcement Control Center is the
element of the Air Compliance Unit responsible for the issuance
and follow-up of notices of violation and of orders.
-------
11-21
Orders
in
THE COMPANIES UNDER ORDER ALSO VARY GREATLY BY INDUSTRY"1",
Industry Percent of Orders
chemicals
electrical equipment
fabricated metal products
food manufacture [ ) 2
furniture and fixtures I 1
machinery [ j 6
misc. manufacturing I_J 1
ordnance ij 1
paper [ 1 2
petroleum loading S storage j
primary metal industries I ^J_JJ^______
printing and publishing j j1
products of coal & petroleum I j4
restaurants || i
rubber and plastics
stone, clay, glass S. concrete products ["
textiles []
transportation equipment I
apartment buildings I 10
all others [_ ^_ | 16
I
Source: DEP Air Compliance Unit Order files; Connecticut
Manufacturing Directory, 1973.
+ All 1971-1974 orders were classified by SIC.
-------
Orders :
i
Hi
fir-
11-22
ORDER RECIPIENTS ARE LIKELY TO BE RELATIVELY LARGE COMPANIES,
Distribution of Order Recipients by Size of Establishment
w
0-9
10-49
50-249
250-499
500-999
1,000+
50
31
17
12
31
14
10
1
Percent of all
Conn, companies
Percent of all
Conn, companies
receiving orders
19
Source: Connecticut industry analysis is based on a random
sample of Connecticut Manufacturing Directory, 1973.
Air order listings include all orders completed~oF~
in process in July, 1974.
DISCUSSION; That order recipients tend to be relatively
large establishments is not surprising. Small firms are
likely to be in service industries or in other industries
with low pollution potential. Moreover, if small firms
do pollute, their problems are usually technically less
complex than those of larger firms, especially those large
firms with major capital investments. Consequently, small
firms are more likely to be able to come into compliance
promptly and not require the issuance of an order. Final-
ly, the DEP naturally tends to allocate its limited staff
resources to the most serious sources of pollution first.
-------
Orders
Hi
11-23
A VIOLATOR WHO WISHES TO CHALLENGE THE REASONABLENESS
OF HIS ORDER, OR WHO CLAIMS NO VIOLATION HAS OCCURRED, MAY
CHALLENGE THE ORDER IN AN ADMINISTRATIVE HEARING.
BUT, AS OF NOVEMBER 1974,
ONLY THREE PERCENT OF
VIOLATORS WITH ORDERS
HAVE ASKED FOR ORDER
HEARINGS ...
... AND MOST OF THESE
CASES WERE SETTLED BE-
FORE THE HEARING WAS
HELD.
55%
Hearing
Held
Settled
Before
Hearing
Source: "Monthly Report of Activities, Air Compliance Unit",
December 1974; Air Compliance files.
DISCUSSION; That so few orders are challenged could be be-
cause the Department's orders are generally accepted as
reasonable and/or regulatees are reluctant to undertake the
expensive, time-consuming legislative fight,especially as
long as they feel they can ignore the order or at least its
compliance deadlines with relative impunity. The second of
these factors has unquestionably been important. But the
exceptionally low contest rate seems also to reflect the first
factor significantly. In interviews the Air Complince En-
forcement Unit staff uniformly stated that their objective
was to establish a reasonable compliance schedule with the
source — and then to try to hold the source to this schedule.
The Unit in fact expends considerable effort trying to get the
source to propose its own schedule and to negotiate the order
directly with the source based on the source's proposal. Un-
til recently the Water Compliance Unit did not negotiate with
the source prior to issuing its orders; and, although the
engineers there also tried to establish reasonable orders,
that Unit experienced a 14% request-for-hearing rate in its
initial years and a 5% rate over the last several years. How-
ever, now that the Water Compliance staff negotiates with its
sources, its rate of actual hearings has dropped to roughly
the same level as that of the Air Unit.
-------
Orders '
11-24
in
MOST SOURCES ISSUED ORDERS COMPLY BY ADDING ABATEMENT
EQUIPMENT.
Type of Corrective Action Taken by Persons Subject to Order
(in percent of all such persons)
42
18
16
14
12
Add Change
Abatement Inputs*
Equipment
Minor Alter Close Part
Changes in Production of Operations
Existing Process in Violation
Equipment
Source: Random sample of Air Orders.
* For example: shifting to low sulfur fuel, changing solvents
used.
-------
11-25
Orders :
; t
(ll
n,-,
VIOLATORS REQUIRED TO INSTALL EQUIPMENT ARE ALLOWED
AN AVERAGE OF 52 PERCENT MORE TIME TO ACHIEVE COMPLIANCE
THAN IS NORMALLY ALLOWED.
Average Order Schedule
(in months)
All cases
11
, 57%
Cases
Requiring the
Purchase of
Abatement
Equipment
Source: Random sample of Air Orders.
-------
11-26
Orders '
in
THE GREATEST PART — 36 PERCENT — OF THE TIME ALLOWED
IN ORDER COMPLIANCE SCHEDULES ISSUED TO SOURCES THAT MUST
ADD CONTROL EQUIPMENT IS AN ALLOWANCE FOR OBTAINING DELIVERY
OF THE EQUIPMENT.
Times Allowed for Completing Required
Steps i_n the Average Compliance Timetable
(in months)
Test equipment and be in compliance
*with all regulations
-Install equipment
Receive equipment
• Order equipment
Let bids for equipment
• Review report and choose strategy
for compliance
•» Obtain consulting engineer report
Source: Random sample of Air Orders.
DISCUSSION: Obtaining delivery of equipment is sometimes
difficult for regulatees to control, especially during a
period of rapidly expanding demand for pollution abatement
equipment such as the early 1970's. However, regulatees
have little incentive to exert the sort of effort they
would in normal commercial dealings to insure prompt deli-
very. Early delivery only means early installation and
operating and maintenance costs.
-------
11-27
Order Overruns
CHAPTER II
ORDER OVERRUNS
The following chapter details the problems the
Department has had with delay, and explores the impact
that these delays have had on DEP costs.
56% of order recipients overrun their com-
pliance deadlines.
However, only 23% of order recipients
overrun their compliance deadlines by
more than one month.
Regulatees claim that most overruns—65%
—are caused by third-party delays.
20% of regulatees with overruns claimed
changes in their compliance plans as
the primary reason for delay. In fact,
however, such changes do not affect
on-time performance.
Progress reports are a key tool used by
the DEP to police order delay. As of
February, 1975, 17% of all required
progress reports are either submitted over
two weeks late or are not submitted at all.
When regulatees overrun their compliance
schedules, they do, so, on average, by
5.1 months, increasing the length of
order timetables by 81%.
Cases with compliance delay are also
slower in negotiating their orders with
the State than the average case.
-------
11-28
Order Overruns :
Continued
Overruns are also significant for those who
are ordered to purchase and install equip-
ment. Overruns for these cases average 9
months, increasing order timetables by 81%.
One effect of overruns is that over 40% of
Enforcement Control Center time is spent
policing delay.
Cases that the Air Unit cannot prod into
compliance by exerting moral pressure and
legal threats are referred to the Attorney
General. This procedure has been undertaken
in 5% of orders issued to date.
Because delay is difficult to discourage,
the Department spends 63% more staff resources
on recalcitrant cases than on those in which
no delay occurs.
-------
11-29
Order Overruns '
On«_
56 PERCENT OF ALL ORDE-R RECIPIENTS ILLEGALLY OVERRUN
THEIR COMPLIANCE DEADLINES.
Percent of All Orders Issued 1971-1974
Overrun
Amended
Compliance
Deadline
Meet Amended
Compliance
Deadline
Overrun
Original
Compliance
Deadline
Comply on
Schedule
Source: Random sample of Air Orders, 1971-1974;
views with Air Compliance Unit staff.
Inter-
DISCUSSION; Some delays, such as strikes or unavoidable sup-
pliers' delays, are legitimate. Other delays occur for want
of proper planning or motivation and could be avoided. This
study does not distinguish between these two areas because
such judgements are subjective and difficult to make. Some
sources granted amendments could also have avoided compliance
overruns. Amendments are sometimes granted in recognition
that previous delay was unavoidable and sometimes to stimu-
late future activity from the violator, regardless of past
history.
-------
Order Overruns
11-30
MOST ORDERS WITH DELAY OVERRUN THEIR COMPLIANCE DEADLINES
BY LESS THAN ONE MONTH. ONLY 23 PERCENT OF ALL ORDERS FAIL TO
COMPLY WITHIN ONE MONTH OF AN ORIGINAL OR AMENDED DEADLINE.
Orders by_ Length of Overrun
(overruns as a percent of scheduled time)
44
33
16
On Time
0-1
Month
Late
1-15
Months
Late
Comply on time, or less
than one month late
Comply more than
one month late
15+
Months
Late
Source: Random sample of Air Orders, 1971-1974.
DISCUSSION; This compliance record is significantly superior
to those of the Water Compliance and Water Resource Units.
The average Water Compliance order is delayed over 15 months.
Of 12 recent Water Resources encroachment line violations that
have been issued orders to remove, none have been removed. In
other words, the Air Compliance Enforcement Unit's approach of
first negotiating an order that seems reasonable to the company
and then paying close, persistent attention to the progress be-
ing made by the source under the order, has paid off.
-------
Order Overruns
I jl |[i _
11-31
20 PERCENT OF REGULATEES WITH OVERRUNS CLAIM CHANGES
IN COMPLIANCE PLANS AS THE PRIMARY REASON FOR DELAY. YET
THESE CHANGES DO NOT AFFECT ON-TIME PERFORMANCE.
OF THE 65 PERCENT OF ALL ORDER
RECIPIENTS WHO FOLLOW THE COM-
PLIANCE PLANS SUGGESTED IN THEIR
ORDER, 46 PERCENT COMPLY ON
SCHEDULE.
OF THE 35 PERCENT OF ALL ORDER
RECIPIENTS WHO CHANGE COMPLIANCE
PLANS, 50 PERCENT COMPLY ON
SCHEDULE.
50%
35%
19%
' -
35%
I
15*
1
On Delayed Met On Delayed Mot
Schedule Revised Schedule Revised
Deadline* Deadline**
Source: Random sample of Air Compliance Orders, 1971-1974.
* Met amended order deadline, or granted extension.
** 58% of this group cited "change in compliance plans" as the reason for
delay.
-------
Order Overruns '
Dn
11-32
REGULATEES CLAIM THAT MOST OVERRUNS — 65 PERCENT — ARE
CAUSED BY THIRD-PARTY DELAYS.
Reasons Given by Reguldtees for Overruns I
•Third
Party
Delays
fhanqo in
Compliance
Plans
uato
Modifications*
Source: Random sample of Air Orders, 1971-1974.
* Modifications made that were later found to bo in-
sufficient to achieve compliance.
DISCUSSION; Much third-party delay has been legitimate,
especially during the last year or so when pollution control
equipment manufacturers have had large backlogs. However,
this excuse has also been an all-to-easy haven for companies
not intent on prompt compliance — and sources clearly have
no economic incentive to press suppliers for early delivery.
It is an easy excuse in large part because it is extremely
difficult for the Department to verify such claims — espe-
cially when dealing with the small hard-core of those active-
ly and sometimes unscrupulously trying to avoid compliance.
Companies that had previously experienced chronic "third-
party delay" have demonstrated a remarkable ability to achieve
prompt delivery from their suppliers once put under a bond they
might lose if they fell behind schedule again.
-------
11-33
Order Overruns
Dn
SUPPLEMENTARY NOTE: PROGRESS REPORTS
One of the conditions of almost all orders is that the
source will submit a monthly progress report to the Depart-
ment summarizing its progress towards compliance over the
last month. If the source is behind schedule, it must ex-
plain the salient details of the delay. This procedure al-
lows the Enforcement Unit to pinpoint and react to developing
problems quickly. It also saves the Department a great many
expensive field inspections.
The success of this device depends entirely on the
prompt and dependable submission of progress reports. The
Enforcement Unit, at low cost, has been able to improve reg-
ulatees1 records in this respect. As of July, 1974, 44% of
all progress reports were missing or more than two weeks
late. In January, 1975 , only 17% of progress reports were
missing or late.
But many of the most difficult violators continue to
ignore this requirement. Of the 23 cases delayed most in
1974, 30% submitted at least two progress reports late or
did not submit them at all.
-------
Order Overruns :
(Inn-
11-34
CASES WITH DELAY TYPICALLY OVERRUN THEIR COMPLIANCE DEAD-
LINES BY 5.1 MONTHS (81 PERCENT OF SCHEDULED TIME).
Average Time from Order Issuance to Compliance
(in months)*
11.4
6.3
81%
Scheduled
Actual
Source: Random sample of Air Compliance Orders, 1971-74.
* Average overrun for all Air Compliance Orders, includ-
inq those without delay, is 2.3 months, or 33% of the
average scheduled time of 7 months.
-------
Order Overruns '
flu
11-35
WHEN CASES REQUIRING ABATEMENT EQUIPMENT OVERRUN, COM-
PLIANCE IS TYPICALLY DELAYED FOR 9 MONTHS (81 PERCENT BEYOND
SCHEDULED TIME).
Average Time from Order to Compliance
SCHEDULED
11
(in months)
Receive Equipment
x (4 months delay) ^,
Let Bids;
Place Orders
(3 months delay)
Develop Plans
(1 month delay)
Consulting Report
ACTUAL
20
Source: Random sample of Air Orders, 1971-1974.
DISCUSSION; Although the longest absolute delay comes in the
"receive equipment" step, the largest percentage overrun comes
in placing the orders. This is understandable because this is
the point at which the source must make its heaviest financial
commitment.
-------
Order Overruns
On
11-36
MORE THAN 40 PERCENT OF ENFORCEMENT CONTROL CENTER TIME
IS SPENT TRYING TO REDUCE DELAY.
Allocation of_ ECC* Staff by_ Major Tasks
(percent of total EEC time)
Follow-up
on Orders
Follow-up
On Notices
of Violation
Inspection
Report
Order
Conferences
Progress
Reports
Complaints
Drafting Notices
of Violation
Amendments
to Orders
Drafting
Orders
All Other
Activities
16
12
10
Combating
Delay
Other
Duties
23
Source: Time Logs maintained July 1974 to September 1974.
* ECC: Enforcement Control Center.
DISCUSSION; The Air Compliance Enforcement staff successfully
limits delay by staying in close contact with the sources un-
der order, especially once trouble develops. Monthly progress
reports from the source let the Department learn quickly of the
existence, extent, and cause of much delay. (They also keep
reminding the source of a duty some managers would be quite con-
tent to put out of mind for a month or so.) "Follow-up" in-
cludes evaluating the problems the regulatee has encountered,
deciding what response is appropriate, and communicating with
the regulatee. Amendments are granted if the delay was for a
legitimate cause and/or if the grant will encourage new efforts
from the source. It is noteworthy that most of this enforcement
time is spent on "follow-up" provisions, suggesting the import-
ance of cajoling and moral suasion in stimulating further activ-
ity from the violator.
-------
Order Overruns •••
11-37
ONLY 4 PERCENT OF ALL ORDERS HAVE BEEN REFERRED TO THE
ATTORNEY GENERAL FOR ENFORCEMENT.
Percent of Air Orders.
10/71-11/75"
percent ef Referrals to. the
Attorney General. 10/71-11/74
100
19
13
31
19
Status uncertain
DEP lost legal challenge
EPA enforcement action
Responded to further Air
Compliance negotiations*
Responded to AG negotiat-
ing efforts/legal threats*
Now in court
Injunctions
^ource: Air Compliance files.
* Based on discussion of cases with Air Compliance staff.
IN ONLY THREE CASES HAS THE ATTORNEY GENERAL OBTAINED A
COURT REMEDY.
Number Number of Court
of Cases Remedies Obtained
AH Referrals Injunction
Source: Air Compliance tiles.
Fines and
Other Penalties
of all Types
DISCUSSION: The low rate of referrals to the Attorney General
is explained by (1) the usually good records of Air Compliance
regulatees and (2) The perceptions of the Air Compliance staff that
the utility of referral is low. The members of the Air Compli-
ance Section refer cases only when they feel all benefit from
negotiations has ended and that legal action is the only avail-
able recourse. This procedure has not led to results satisfac-
tory to the Air Compliance staff: court proceedings are slow,
cumbersome, and uncertain.
The AG attempts to avoid these delays and uncertainties by try-
ing first to bluff and negotiate a satisfactory settlement be-
fore going to court. This is, however, a difficult task since
(1) the cases referred have been referred because negotiations
with the State have already broken down and (2) the AG has no
additional leverage he can bring to bear on the recalcitrant
source save the threat to go to court. And, on the record,
such a threat is unlikely to greatly impress such sources.
-------
11-38
Order Overruns
THE COSTS OF DELAY TO THE DEPARTMENT ARE ENORMOUS. A
CASE WHICH DELAYS COMPLIANCE COSTS THE DEP 64 PERCENT MORE
THAN A CASE WHICH COMPLIES WITH AN ORIGINAL OR AMENDED DEAD-
LINE.
Average per Case Costs to PEP of Handling Cases Under
Orders Issued between October, 1971 and July, 1974
Case Without Delay Case With Delay
$583
Verify Compliance
Issue Amendments
Evaluate
Progress Reports
Order Follow-up
Sr . Staff Review*
Order, Drafting
Order Conference
Notice of Violation
Inspection
Verify Compliance
Refer to AG
Issue
Amendments
Evaluate
Progress Reports
$355
32
21
16
93
38
29
58
14
48
Order Follow-up
Admin. Hearing
—6
Sr. Staff Review*
Order Drafting'
Order Conference
Notice of Violation
Inspection
32
13
79
85
162
42
38
60
14
48
A
64
i
i
- — 10
Processing Costs,
in Dollars
Processing Costs,
in Dollars
Source: Time logs maintained from July 1 to August 31, 1974;
interviews with Air Compliance staff. Calculations of
costs with and without delay assume that the costs of a
step increase proportionately with the time needed for
that step. Since DEP costs mount less quickly before
a source has encountered delay than after it has missed
one or more deadlines, this approach probably greatly
underestimates the cost of delay.
"Senior Staff Review" includes review by the Director of
Air Compliance, legal counsel, and top DEP staff.
-------
11-39
Most Difficult Cases '
CHAPTER III
i
DEALING WITH THE MOS^T DIFFICULT CASES
A small number of cases account for the bulk of the De-
partment 's enforcement problems.
- 8% of all orders account for 56% of all
delay.
- The industrial distribution of these 8%
worst cases is not sttikingly different
from that of all air orders issued.
- These worst cases are relatively evenly
distributed by size of source under order.
- The worst 8% overrun their compliance
deadlines by an average of 18.4 months.
- The worst cases typically require 6.9
months to agree to an order — 64% more
than those sources that comply on time.
- These most difficult cases typically
cost 74% more in staff resources than
an average case.
- On average they cost 135% more than do
cases in which no delay occurs.
-------
Most Difficult Cases '
II 40
8 PERCENT OF ALL ORDERS ISSUED ACCOUNT FOR 56 PERCENT
OF ALL DELAY; 13 PERCENT FOR 75 PERCENT.
Concentration of
i nna ,, . i no*
1 "%
8%
y
X
x
^ ^
X ^f
*
-------
Most Difficult Cases
flfln
11-41
THE DISTRIBUTION OF WORST CASES BY INDUSTRY IS NOT
GREATLY DIFFERENT FROM THAT OF ALL ORDER RECIPIENTS.
Industry
Restaurants
Textiles
Coal Products
Chemicals
Stone, Clay, & Glass Products
Rubber & Plastics
Machinery
Fabricated Metals
Apartments*
Petroleum Loading
Primary Metals
All Others
Percent qf Cases by Industry
1971-1974
[k
14
14
10
10
14
Orders Issued.
Worst Cases
25
Source: Random sample of Air Compliance orders issued 1971-
1974; Connecticut Manufacturing Directory, 1973.
* Seven apartment houses in Stamford have overrun their
compliance deadlines sufficiently to qualify as "worst
cases". Thpy have been treated here as one case. They
claim that they are prevented from achieving compliance by
the City of Stamford's refusal to pick up compacted waste,
and have jointly hired .a lawyer to represent them.
-------
11-42
Most Difficult Cases '
flnn_
THE DISTRIBUTION OF WORST-CASE SOURCES BY SIZE IS NOT
SIGNIFICANTLY DIFFERENT FROM THAT OF ALL ORDER RECIPIENTS.
Distribution of Order Recipients by Size
g
w
0)
a
3
0-9
10-49
50-249
250-499
500-999
1000+
9%
9%
Worst Cases
All Orders
17*
17%
17%
31%
17%
14%
264
10%
8%
19%
Source: Connecticut Manufacturing Directory, 1973; Random
sample ofDEP Air Compliance orders, 1971-1974.
* All seven apartment buildings have been treated as one caso,'
for reasons explained on the previous page.
-------
Most Difficult Cases '
^MB
1
11-43
(Inn™
THE WORST 8 PERCENT OF ALL CASES OVERRUN THEIR COMPLIANCE
DEADLINES BY AN AVERAGE OF 18.4 MONTHS (INCREASING THEIR ORDER
TIMETABLES BY 267 PERCENT).
Average Time From Order Issuance to Compliance
(in months)
25.3
6 .9
267%
Scheduled*
Actual
Source: Air Compliance files.
* Scheduled time for these sources is 1.4% less than the
7 months allowed on average.
-------
Most Difficult Cases
r—. 11-44
Dfln
THE WORST CASE SOURCES TYPICALLY REQUIRE 6.9 MONTHS TO
AGREE TO AN ORDER — 64 PERCENT MORE THAN THOSE SOURCES THAT
COMPLY ON TIME.
Average Time from Detection to Order Issuance
(in months)
Staff Reviews Order
Prepare Order .10
Arrange Conference
Issue Notice
of Violation*
4.2 ,-''
.76
1.3
2.0
,, •"
""
5.2
1.0
1
1.9
2.0
/ i
s s
/ s •
s '
s
6.9
.9
.43
3.6
2.0
Cases Average Average
Without Cases Worst-
Delay With Delay 8% Cases
Percent Increase
23
64
Source: Random sample of Air Compliance orders, 1971-1974.
No data was available on differences in the time interval
between detection and notice of violation issuance Cor
these kinds of cases. This step includes a one month in-
terval for the issuance of the notice of violation and a
one month "grace period".
DISCUSSION: The worst cases take more time at virtually every
stage of the pre-order period than do other cases. This pat-
tern is especially noticeable in the interval before a confer-
ence is held, the "arrange conference" step. Cases with delay
require .6 month more time at this stage than do cases without
delay, an increase of 46%. The most difficult cases require
much more time than do even those cases with delay — 1.7
months, or an 89% increase.
This early pattern of delay, when third-party difficulties are
clearly not a factor, provides strong support for the percep-
tion of the enforcement staff that these cases do not comply
promptly as a matter of choice. A company reluctant to install
expensive compliance equipment is also likely to be slow to
come to a conference in which it is expected to commit itself
to a binding order timetable.
-------
11-45
Most Difficult Cases
]nrin_
THE WORST CASES EACH COST AN AVERAGE OF 75 PERCENT MORE
IN STAFF RESOURCES THAN THE AVERAGE CASE.
Per Case Administrative Costs to DEP
Averag
Verify Compliance
Refer to AG
Issue Amendment
Evaluate
Progress Reports
Order Follow-up
Sr. Staff Review
Order Qrafting
Order Conference
Notice of Violation
Inspection
a Case*
$480
32
53
54
131
40
34
59
14
46
DifficuJ
Verify Compliance
Refer to AG
Issue Amendments
Evaluate
Progress Reports
— 7
Admin. Hearing
0 Sr. Staff Review
Order Drafting
Order Conference
Notice of Violation
Inspection
_t Case
$842
32
57
120
109
265
51
41
89
14
' 48
— 1
75*
Source: Time logs maintained from 7/74 to 9/74; Interviews
with Air Compliance staff; Random sample of Air
Compliance Orders, 1971-1974.
* Average case costs reflect total costs spent on each step
divided among total number of orders.
-------
11-46
Most Difficult Cases '
a
(Inn-
AND THESE CASES HAVE COST THE DEP 137 PERCENT MORE,THAN DO
CASES IN WHICH NO DELAY OCCURS.
i
Per Case Administrative Costs to DEP
Average Case Without Delay
Difficult Case
$842
Verify Compliance
Issue Amendments
Evalute Progress Report
Order Foli,ow-up
Sr. Staff Review
Order Drafting
Order Conference
Inspection
$355
32
21
; §
93
38
29
58
J-*
48
Verify Compliance
Refer , to AG
Issue Amendments
Evaluate
Progress Reports
Order Follow-up
Admin. Hearing
Sr. Staff Review
— 6
Order Drafting
Order Conference
Inspection
32
57
120
109
265
51
41
89
48
A
16
137%
Source: Time logs maintained from 7/74-9/74; Interviews with
Air Compliance staff.
-------
11-47
CONCLUSION
The baseline shows about two-thirds of all sources in-
spected are currently in compliance and that the great major-
ity not in compliance can and do correct their violations
quickly and effectively. The Department's twin enforcement
devices, the notice of violation and the state order, provide
adequate enforcement in the great majority of cases.
As in other enforcement settings, however, a small group
of violators poses inordinate burdens on the enforcement agen-
cy. As important, their ability to delay or avoid compliance
undercuts voluntary cooperation by others and holds back the
gradual environmental improvement sought by the Department.
Over half of the sources issued orders experience some
delay in meeting compliance deadlines. Of this half/ 8% incur
delays that average over 1.3 years per case. This handful of
sources is distinguished neither by type of industry nor by
size of operation. They are marked, however, by their ability
to delay compliance, despite vigorous and expensive efforts by
the Department.
The new enforcement tools developed by the Connecticut
Enforcement Project and the Department are designed to give
the Department the tools it needs to deal effectively with
this recalcitrant minority.
-------
11-48
APPENDIX: RANDOM SAMPLE OF AIR ORDERS
The information used in these analyses is based on a random
sample of Air Compliance orders. All data was taken from the
form "Check List for Orders." The orders actually included in
this sample are listed below by company name;
~\ *
A.G.I*
American Chemical & Refining
American Standard
American Wire
Art Metal
Barnum Hotel*
Berol Co.
Borg Textiles
Bridgeport Brass
Bryant Electric
Bullard*
Capital Tire
Carpenter Technology
Chase Brass & Copper
Cities Service Oil
Columbia Magnetics
Commercial Foundaries*
Conn. Galvanizing
Diversified Industries*
D. M. Reed, Inc.
Tl. I. duPont
Elco Industry, Inc.
Eyelet Specialty
Fabric Fire Hose*
Fairmont Corp.
Feldspar
Fern Apts.
Fleming Rutledge Oil
Gade Farm*
General Dynamics
Greenbacker-Schwink
Guilford Gravure
Hartford Finance
Hoffman Fuel
Eoyt Bedford Apts.
Hudson*
IdleWild Farm
Independent Oi]
Keratene
King's Dept. Store
Knights of Columbus Printing Plant*
-------
11-49
Lorraine Industries
Meriden Foundary
Natural Can *
North-Judd Manufacturing
O.F. Mossberg
Peckhara Materials
Phizer, Inc.*
Plainville Casting*
Pioneer Metal Products
Porce-Len/ Inc.
Rocco Becce Pig Farm
Rostand Mfg.
Scoville*
Shell Oil
Sommers Thin Strip Brass*
Suisman and Blumenthal
Sun Chief Electrics
Sun Oil Co.
Technical Rubber*
Thames Valley Steel*
United Illuminating
Upjohn
Vulcan Radiator*
Wiremold Co.
Win. Prym. Co.*
These orders form the basis for (and were used only for) the
charts found on pp. 11-16 and 11-43.
-------
PART III
CALCULATING ECONOMIC REMEDIES
-------
Ill-2
CHAPTER I
CALCULATING ASSESSMENTS
Economic remedies must be just large enough to make
compliance economically attractive: they must take away
the entire benefit of noncompliance — including whatever
return the noncomplying person may be able to earn on the
use of the money it has not spent on pollution control for
however long the delay continues. Such economic assessments
should ensure voluntary compliance because they simultaneously
remove the incentive to delay and guarantee those who do
comply a commercially attractive "return" on their abate-
ment investments — not having to pay the assessments.
This "return" will be sufficiently attractive to make citizens
feel that compliance "pays" because it is calculated at the
cost of capital rate appropriate for each source, i.e. because
it is as large as the returns the source is obtaining on in-
vestments it has recently chosen to make.
An economic assessment is defined to be that payment
which would, if made at the end of each month throughout a
specified assessment period, have the same net economic
impact on a company as the expenditures necessary for com-
pliance with Department requirements throughout that assess-
ment period. In other words, the present value of the stream
of assessment payments made over the assessment period would
equal the present value of the net flow of compliance costs
over the same period.
Economic assessments are based on a simple economic
calculus that is commonly used by businessmen in evaluating
investment alternatives. This calculus requires four main
steps:
(1) Identify the gross cash flow of all expenditures
necessary for the source to comply with the law
during each year of the assessment period and
adjust for anticipated inflation (deflation).
Both initial and replacement installed capital
costs and operating and maintenance expenses must
be considered.
(2) Obtain net cash flow by adjusting the figures in
(1) for the effect of tax deductions and credits,
chiefly for depreciation of capital equipment and
for operating and maintenance expenses.
(3) Discount this net cash flow to a present value
(using a cost of capital rate if the source is a
business).
-------
Ill-3
(4) Calculate the final civil assessment as that
amount which would, if paid monthly over the
assessment period, create a stream of payments
whose present value (using the same discount
rate as in (3)) would equal the present value
of the cost of compliance.
The rest of this chapter outlines this methodology in greater
detail. It explains what information is needed, how this
information must be adjusted to take the impact of taxes
into account, how the calculations are handled by the assess-
ment formula, and how this formula is derived. It then ex-
plains how this formula was used to establish the schedules
of maximum civil assessments found in the regulations, and,
finally, it briefly explains how it is used to calculate
individual assessments.
DETERMINING THE COSTS
OF COMPLIANCE
CASH FLOW
The first step in determining the proper amount of an
economic assessment is to identify what costs will be in-
curred in each year of the period during which control activ-
ities can be presumed to continue. (How these costs are
determined, the most difficult step in making individual
assessments, is explained briefly in Chapter II of this Part
and, in detail, in Chapter VII of Part V.) These costs, and
how they will be handled in the assessment formula, are out-
lined below briefly:
(1) Initial capital costs for pollution control equip-
ment facilities considered as an expenditure in
year zero.
(2) Replacement costs for this abatement equipment.
It is assumed that the equipment will be replaced
at the end of each depreciation period within the
assessment period and that the cash outlay is
increased (decreased) by the average of the infla-
tion (deflation) experienced over the three years
prior to the date of the assessment. (The assess-
ment period is 20 years for reasons discussed
below; in individual assessment cases the
depreciation period is presumed to be 10 years
unless the Commissioner finds otherwise. The
10 year figure is based on a CEP survey of the
typical life expectancy of commonly used air
pollution control equipment.)
-------
Ill- 4
(3) The salvage value of any equipment to the extent
that it is not fully depreciated at the end of the
assessment period. This factor is, of course,
a credit that reduces the net cost. Salvage
value is also adjusted for inflation (deflation).
(4) Annual operating and maintenance costs, i.e. such
costs as are required to ensure the continuous
effective operation of the pollution abatement
equipment over its full depreciable life. These
costs are increased (decreased) each year to
account for inflation (deflation).
All of these expenses are affected importantly by the
impact of various tax provisions. The assessment formula must
consider the effects on a source's U. S. income tax of:
(1) An investment tax credit for the purchase of
new abatement equipment.
(2) The ability to deduct from taxable income each
year
(a) Depreciation on the capital cost of
equipment over its useful life (or at
accelerated rates approved for such
equipment), and
(b) Annual costs of operation.
In developing assessments from the net cash flow of the
costs of compliance created from these cost estimates and tax
considerations, the following assumptions apply:
* Tax savings are calculated as if the violator
is in a tax bracket with a known effective rate
(the variable T in the assessment formula) in
all years.
* Regulatees either have or will have sufficient
taxable income to take full advantage of any
tax credits or deductions to which they are
entitled by virtue of required control expend-
itures, or their effective U. S. income tax rate
(T) will be 0. (See Chapter 5.)
* An investment tax credit is in effect, and is
obtained at the time equipment is purchased.
* For purposes of discounting, operating costs
are considered to be paid and corresponding
tax savings realized at the beginning of each
year. Tax savings from depreciation are realized
at the end of each year.
-------
Ill-5
If equipment is not fully depreciated at the
end of the assessment period, it can be sold
at a salvage value equal to its economic worth.
In that case a portion of the tax credit must
be refunded, pro-rated according to the pro-
portion of useful life remaining. (The formula
for salvage value is given in the derivations
section below.)
For all purposes other than calculating the
depreciation tax deduction, where realistically
accelerated depreciation in case by case assessment
is used, straight-line depreciation is used.
THE ASSESSMENT
FORMULA
Department staff do not have to push their way through
the host of calculations required to set out the costs of
compliance cash flow, adjust it for tax and inflation, dis-
count to present value, etc. All these calculations are
handled automatically by the assessment formula. All the
staff need do is put a tape casette with the formula into a
desk calculator and type in a few variables and all this work
will be done in seconds.
This section explains the formula and its derivation.
Notation
Input variables:
AP = Assessment period in years.
CC = Annual cost of capital or discount rate, as a
decimal fraction.
EL = Expected life of equipment, in years.
DL = Depreciable life of equipment, in years.
CCE = Capital cost of equipment for initial equipment,
in dollars.
OP = Operating costs in the first year, in dollars.
RI = Annual rate of inflation, as a decimal fraction.
T = Effective marginal corporate income tax rate, as a
decimal fraction. £f there is a state corporate
income tax, T would be the total effective tax
rate. It would be given by the formula:
T = Ts + (1 - Ts) Tf, where T is the state
corporate income tax rate and TJ the federal
one) .
-------
III-6
TC = Investment tax credit rate, as a decimal fraction.
Output variable:
CA = Civil assessment per month, in dollars.
Other variables:
PVO = Net present value of operating costs over assess-
ment period, net of any tax savings arising from
operating costs.
PVIE = Net present value of initial equipment, net of any
tax credits and savings arising from the purchase
and depreciation of this equipment.
PVE = Net present value of equipment cost over entire
assessment period. (Includes discounted value
of initial and replacement equipment, less the
value of tax credits and deductions and of any
salvage value at the end of the assessment period.)
A = Amortization factor, giving amount of monthly pay-
ment required per dollar of present value to be
amortized.
Formula
The civil assessment is given by formula (1) below, with
the additional variables defined by equations (2) through (5).
(These formulae are derived in the following section.)
CA = (PVO + PVE) A
AP
PVIE =
PVE =
(1 T) 1
(l-TC)
1 -I ^
1-/1
L ^
'1 + CC \l fl + RI\ \
r*1/1"1 — "D T ilVi ^_ r*f* i 1 ^
,cc Riyy \i+.cc) J
- > vT ^ - 1
•(DL) (CC
+ R!\AP~
+ CC/
+ RI\EL
+ ccy
;; V (1 + CCpL
PVIE
)P
CCE
(1 + CO
1 -
(1 + CC)
AP
(1)
(2)
(3)
(4)
(5)
-------
Ill- 7
Derivations
CA:
The total present value of compliance costs is the sum
of PVO and PVE* The economic assessment is the monthly payment
which amortizes this sum over AP years. Hence, the sum is
multiplied by the amortization factor A.
PVO:
We assume that operating costs are paid in the beginning
of the year. Each year operating costs increase by an infla-
tion factor of (1 + RI), regardless of the age of equipment
then in use. We convert operating costs for year I to present
value by discounting by the factor I/ (1 + CC) I~1. Assuming
T is the current maximum rate of .48, there is a tax savings
of 48 percent of operating costs each year, so net operating costs
are .52 of gross operating costs each year. In general,
PVO =
AP
1 = 1
(1 - T) (OP) (1 + RI)
1-1
(1 + CO1"1
Formula (2) above is an equivalent but explicit formula,
derived from the sum of a geometric series.
PVIE:
The cost of initial equipment is CCE. Deducted from this
is the tax credit (the variable TC) obtained immediately, and
tax savings of the fraction T of allowable depreciation for
each year of depreciable life of the equipment. Using straight-
line depreciation, annual depreciation is CCE/DL. Depreciation
in year I is discounted by the factor I/ (1 + CC)1. Thus
DL
PVIE = CCE - (TC) (CCE) -
/CCE \
I EL )
(1 + CC)
Formula (3) above is equivalent.
PVE:
.th
The equipment cost of the K " set of replacement equip-
ment (where K = 0 for initial equipment) is equal to the pur-
chase price of the initial equipment times a cumulative infla-
tion factor of (i + RI) K x EL.
-------
III-8
The savings due to the tax credit on replacement equipment
and to deductions for depreciation are proportional to equipment
cost, and are thus also inflated by the same cumulative inflation
factor. Note that all expenditures and savings on this piece of
replacement equipment occur (EL) x (K) years further in the
future than the corresponding cash flows for the initial equipment
purchase. Provided that the entire useful life of the Kfch replace-
ment equipment lies within the assessment period, its contribution
to net present value is
(EL)(K) , .
1 + RI \ (PVIE
1 + CC ) \ I
If the assessment period AP is an integral multiple of the
equipment life EL, then the useful life of all replacement
equipment will be within the assessment period. In that case,
(AP/EL) -1 (EL)(K) , ,
PVE = V /I + RI \ PVIE
K = 0 \1 + CC j V /
Formula (4) is equivalent but simpler.
If AP is not an integral multiple of EL, then the last
piece of replacement equipment still has a salvage value at
the end of the assessment period. We assume that the salvage
value is equal to the economic value of the equipment, which
is the present value of remaining "services" of this equipment
plus the tax savings from any remaining allowable depreciation.
If the equipment was purchased in year J and has a remaining
lifetime of I years (where I is less than EL) its salvage value is
CCE (1 + RI)
J
--
1- +
Vi- 11 + Ri V
_X1 (i + ccj
(l-TC) +-± (TC)
This salvage value is such that the net present value of
equipment costs over any period does not depend on what com-
bination of new and used equipment is owned during that period.
As a result, equation (4) for PVE holds regardless of whether
AP is an integral multiple of EL.
A:
The amortization factor is based on the standard formula
for a monthly annuity of unit amount for AP years at an annual
interest rate of CC. Since the formula is for monthly payments,
the numerator is the monthly cost of capital.
DETERMINING
MAXIMUM ASSESSMENTS
For purposes of calculating maximum assessments, we assume
the follov/ing values: (Note that CA increases with increases
in DL, CCE, OP, RI, CC AND AP, and decreases with increases in
EL, T and TC).
-------
Ill- 9
* RI = .15 (i.e., 15%). The typical rate of inflation
has increased markedly over the last several decades
and reached levels not far from 15 percent in 1974.
* CC = .20 (i.e., 20%). Over the long run, the cost of
capital has generally exceeded the inflation rate by
about 5 percent to provide an adequate return and to
compensate investors for inflation.
* AP = 20 years. Twenty years is a common time frame for
evaluating many capital projects. Since abatement equip-
ment is an auxiliary to production facilities, such
equipment or replacements will have to be used for the
lifetime of the underlying plant requiring control, if
the source is to remain in compliance with the law.
Consequently it is reasonable to assume that sources
evaluating a commitment to abatement will think in terms
of the common 20-year period. Moreover, a common
assessment period helps ensure that assessments are
comparable and therefore fair.
* EL = 5 years. Very few significant types of air pollu-
tion control equipment have useful lives less than five
years long.
* PL = 5 years. Federal tax law permits that pollution
abatement equipment be depreciated over a five-year
period, or over the expected lifetime of the equip-
ment, whichever is shorter.
* T = .48 (i.e., 48%). Although a zero tax rate is possi-
ble, and assuming a rate lower than the maximum corpor-
ate rate could be defended easily and would increase
the assessment maximum significantly, the schedule of
maxima used in §§602 and 603 assumes the 48 percent
rate because it is the rate likely to apply in all but
a small minority of cases in which assessments are
likely.
* TC = .07 (i.e., 7%). This is the current rate of the
U. S. investment tax credit.
* CCE, OP - maximum figure in range. To obtain the
maximum assessment when CCE and OP may assume any
value over a specified range, CCE and OP are set
at the upper limits of their respective ranges.
An Example: Derivation
of a Maximum Assessment
The following computations illustrate the calculation of
the civil assessment for the upper left cell in Schedule A of
§602(d) of the Air Compliance Civil Assessment Regulations.
(This cell is for cases with cost of equipment, CCE=$2500 and
annual operating cost, OP=$1000. Other input variables are
set at the values specified above.)
-------
111-10
PVO . .52 (&*»)
20
PVIE
PVE =
.93 -
/I
1 -ll
, /I
L v1
.48
5(.20)
+ .15\2° "
+ .20/
+ .15\5
+ .2oy
(1
(1607.25)
- 7152.23
2500 = 1607.25
4806.26
.015719
•i _
(1+20)20
CA = (7152.23 +4806.26) .015719 = 187.98
For this example the civil assessment would be $187,
for each month in which the polluter failed to comply with
sions standards.
[by (2)]
[by (3)]
[by (4)J
[by (5)]
[by (1)]
,98
emis-'
SETTING
INDIVIDUAL ASSESSMENTS
Individual assessments are determined using the same
economics and assessment formula as were used to fix the maximum
assessment schedules. However, the Department will utilize cur-
rent, real values for CCE, OP, EL, DL, RI , T, TC and CC.
* Equipment Costs (CCE) will be based on Department
estimates of the installed equipment costs re-
quired to bring an uncontrolled source into com-
pliance or on evidence of the actual cost.
(See Chapter II.)
* Operating and Maintenance Expenses (OP) will be
based on Department estimates of the annual cost
of operating and maintaining this equipment prop-
erly. (See Chapter II.)
* Equipment Life (EL) is 10 years unless the
Commissioner determines otherwise in a correc-
tion hearing. He will use reliable tables from,
e.g. the U. S. EPA and/or IRS, in doing so.
Depreciable Life (PL) is 5 years unless Federal
tax law changes or unless the Commissioner de-
termines that the lifetime of a particular piece
of equipment (and therefore its depreciable life)
is less than five years.
-------
III-ll
* The Rate of Inflation (Deflation)(RI) will be
valued as an average of recent annual rates based
on an appropriate price index. (See Chapter III.)
* The U. S. Income Tax Rate (T) applicable to the
source will be assumed to be 48 percent if the
source is a corporation (with very limited excep-
tions) and zero percent if it is a public body or
a nonprofit institution. The rate will vary if
the source is an individual or partnership. (See
Chapter IV.)
* The Investment Tax Credit (1C) will be the rate
set in the current tax law.Tit is now 7 percent.)
* The Cost of Capital (CC) will be set in most cases
as the marginal rate obtaining in the industry at
the time. (See Chapter V.)
The following chapters explain how to estimate installed
capital and annual O&M costs, how to adjust for inflation, how
to take different individual tax rates into account, and how to
obtain the cost of capital so critical to the formula.
-------
111-12
CHAPTER II
ESTIMATING EQUIPMENT AND OPERATING COSTS
The most important variables in the assessment calculation
are the installed equipment costs and the annual expense of
operating and maintaining the equipment. To impose civil assess-
ments at the appropriate level, the Department must be able to
estimate what the equipment and operating costs for a source
will be easily and accurately.
HOW THE COSTS OF
COMPLIANCE ARE ESTIMATED
In roughly 88 percent of the Air Compliance Unit's enforcement
cases, the costs of compliance can be estimated with the help of
cost curves. These curves measure the relationship between one
or two readily available facts, primarily the volume of air that
must be treated and the type of pollutant involved, and the cost
of the necessary control measures. Thus, for example, for any
particulate emission, the control costs (for either a baghouse,
a wet scrubber, or an electrostatic precipitator) can be
related to the flue gas flow rate of the process emitting the
particulates. With these curves available, all a Department
staff member need do to obtain reliable cost estimates is to
* determine the key variables (flow, type of
pollutant) necessary to use the curves;
* decide what control technique (baghouse,
scrubber, etc.) is most likely to achieve
compliance with the State's environmental
standards;
* read the cost estimates off the appropriate
cost curves.
The full set of curves that have been developed to date, along
with a discussion of how they were derived and tested, and of
how they should be used, follows in Chapter VII of Part V of
this Volume.
Given the enormous variety of situations requiring control,
there will inevitably be cases for which curves have not been
developed. In these cases tests of Department staff indicate
that estimates, accurate within 20 percent, can be obtained in
one to sixteen hours a case. (See Chapter VII of Part V again)
The fact that such estimates will be necessary for only a few
percent (because most sources will not require assessments)
of a small minority of all cases (because cost curves are
available for the majority) makes the time required for making
such case-by-case estimates an easily managed administrative
cost.
-------
Ill-13
An example will help clarify how cost curves would be used
in most cases.
Using Cost
Curves; An Example
Let's see what the Department would have to do to estimate
the costs of compliance in the following case: a brass manu-
facturer who emits particulates from an uncontrolled reverbatory-
type furnace used to melt zinc containing brass. From informa-
tion furnished on the Department's registration form (or from an
on-site inspection) a Department engineer determines that the
process emission rate is 252 pounds per hour, and that the pro-
cess weight rate is 7200 pounds per hour. He also determines
that the currently installed hooding captures virtually all
emitted particulates with the fan operating at 22,000 actual feet
per minute (ACFM) during maximum loading conditions. Since the
Department's regulations permit an emission rate of only 7.8
pounds per hour for a plant of this size, the brass manufacturer
is in clear violation of the Department's regulations.
In comparing the magnitude of the process emission rate
(252 pounds per hour) to the Department regulation allowing 7.8
pounds per hour, the Department engineer ascertains that compli-
ance will require a control strategy with 97 percent efficiency.
This required efficiency, coupled with an industry preference
for the use of dry collection systems wherever possible, leads
the engineer to choose a baghouse as the method of control for
which he must develop cost estimates.
With this information about operating parameters and type
of control equipment, the Department engineer turns to the appro-
priate costing curves developed and maintained by the Department.
The relevant curves are reproduced below.
Since the gas volume flow rate to be controlled is 22,000
ACFM, the cost curves indicate that equipment costs for the bag-
house will be $54,000 and that the annual operating costs will
be $15,000.
The curves for equipment costs (CCE in the assessment for-
mula) and operating and maintenance costs (OP) follow:
-------
111-14
Installed Cost Of Baghouses
-Particulate Control-
1000
100
tn
O
Q
O
en
CQ
O
EH
10
-p
en
O
CJ
-------
111-15
Annual Operating i& Maintenance Cost Of Baghouses
-Particulate Control-
100
CO
V-l
(0
o
Q
O
W
•O
c
(0
W
10
-P
CO
O
U
(1)
O
c
(U
-p
c
•H
(0
s
•H
-P
OJ
04
O
ffl
c
.5
.1
.1
Example O&M Cost =
$15,000/yr.
- - ,- L-'-j
t" ftcltuai ^Conn. !
Coisting Data
Gas Volume Through Collector
(Thousands of ACFM)
Figure 13
-------
II1-16
CHAPTER III
HANDLING INFLATION
Inflation affects both the purchase price of replacement
equipment and the annual operating and maintenance costs. The
significance of taking inflation into account in estimating
the cash flow of the costs of compliance over a period of years
hardly needs to be underlined after the experience of the last
several years. Plant costs have increased almost 25 percent
in 1972-74, and operating and maintenance costs, which reflect
chiefly labor and energy costs, have been even more volatile.
INDEXING
INFLATION
The economic assessment formula adjusts the estimated costs
of compliance cash flow for inflation. All the Department need
do is adjust the figure used as the assumed inflation (deflation)
rate each year to reflect the average experience of the previous
three years. A three-year rolling average is used to flatten
out sudden sharp shifts in the rate both to reduce sudden shifts
in assessment levels and because people making capital decisions
similarly "smooth" adjustments in their "inflation expectations".
The civil assessment regulations allow the Commissioner to
peg the inflation rate used in the assessment calculus to what-
ever index or indexes of price change he finds most appropri-
ate. The U. S. Bureau of Labor Statistics, although it com-
piles cost indexes for hundreds of products and commodities,
does not yet prepare a pollution control index.
The best available index is the CE Plant Cost Index pub-
lished by the trade journal, Chemical Engineering. It contains
four major components: (1) equipment machinery and supports,
(2) construction labor, (3) building materials and labor, and
(4) engineering supervision and manpower. This weighted index
is generally accepted in the engineering profession as a highly
accurate and reliable guide, and is currently used by the U. S.
Environmental Protection Agency to update Agency publications.
-------
111-17
Using this index, the rate of inflation (RI) the Department
would use in its economic assessment calculus throughout 1975
would be 7.9 percent:
CALCULATING THE RATE OF INFLATION
CE Plant Cost Xndex (1957-59 = 100)
19b
188
180
172
164
156
148
i
1
1
a:
37
L>
3_
/
'
.rf
/
/
/
/
s
^
4*
**
>i -U
c u >( ^ a >
(0 <3 (0 3 0) O
•3 S S "n w 2
Annual Index
1969 = 119.0
1970 = 125.7
1971 = 132.2
1972 = 137.2
1973 = 144.1
1974 = 165.4
Inflation Rate 3 Year Average
3.8%
} 5.0%
14.8%
7.9%
-------
111-18
CHAPTER IV
ADJUSTING FOR INDIVIDUAL
INCOME TAX RATES
The civil assessment formula (explained in Chapter I)
assumes that the person subject to assessment is in a 48 percent
income tax bracket. This is a workably accurate assumption for
over 80 percent of all companies. However, there are a few com-
panies that will have lower tax rates. Moreover, most individuals
and partnerships will be taxed at a lower rate, and municipalities
and nonprofit institutions are not subject to tax at all. For
these cases the Department may wish to adjust the formula's tax
assumption.
A source that does not pay income tax would be subject to
a civil assessment roughly twice that of persons who are taxed
at the 48 percent rate, assuming that the Department decides to
adjust the formula for differences in tax rate. This is so be-
cause investing in and operating abatement facilities generates
a series of tax deductions and credits. These tax benefits be-
come more significant the higher the source's income tax is.
The entire capital cost of the facility becomes a series of de-
ductions through the tax laws' depreciation provisions, and these
provisions allow especially accelerated depreciation on pollution
control investments. The costs of operating and maintaining the
facility are deductible in exactly the same manner as other
business expenses. Further, pollution abatement investments
are eligible for an investment tax credit. Without adjustment,
the formula takes all these tax benefits into account automatic-
ally, at the 48 percent income tax rate.
Whether and how the Department wants to go about adjusting
for differences in individual regulatees tax rates depends on
whether it is dealing with corporations, individuals/partner-
ships, or municipalities.
Corporations
Generally the Department will not have to worry about adjust-
ing for individual income tax rates where corporations are con-
cerned. There are three types of corporations that may have
low income tax rates: (1) companies operating at a loss, (2)
companies that benefit from extraordinary tax deductions or
credits, notably depletion allowances, even though they are
operating profitably and (3) very small companies.
Companies operating at a loss generally do not expect to
continue profitless for long. When they do become profitable,
-------
111-19
they will be able to use the tax advantages that accumulated
during the period during which they were operating at a loss.
Consequently, such companies will not alter their evaluation of
of what an abatement project will cost them after tax signifi-
cantly. Moreover, their calculations and the CEP formula take
into account the after-tax costs of any commitment well into the
future, and the normal businessman is most unlikely to assume
that he will be operating unprofitably continuously for twenty
years. In other words, the Department need not worry about
adjusting the formula for companies operating temporarily at a
loss.
Companies with low tax rates because of extensive deduction
and credits other than for operating losses are, however, a more
serious problem. Special provisions in the tax laws, most not-
ably depletion allowances that benefit companies involved in
extractive activities, can largely or entirely eliminate a com-
pany's income tax liability. U. S. Steel and Occidental Petrol-
eum, for example, pay negligible income taxes because of the
tax cover such provisions allow. For such companies the after
tax cost of an abatement investment is much higher than for
most other businesses. However, the situation is likely to be
relatively rare, especially given recent Congressional action
to reduce and eliminate the oil depletion allowances. Therefore,
unless the Department is dealing with an extractive industry,
the Department staff should probably not worry about such cases.
Very small companies will be taxed at significantly lower
rates, because the tax on corporations _is graduated. This year
the rate is 20 percent for the' first $2*5,000 of taxable income,
22 percent for the second $25,000 of taxable income, and 48 per-
cent for taxable income in excess of $50,000. This schedule of
rates is effective for 1975 only. If it is not extended or other-
wise changed, the former schedule will apply. Those rates are 22
percent for the first $25,000, 26 percent for the second $25,000,
and 48 percent thereafter. Where a corporation's taxable income
is sufficiently low that its overall tax rate deviates substan-
tially from 48 percent, the Department may well want to modify
the formula's income tax rate assumptions to fit the specific
facts of the case.
Individuals
and Partnerships
When the Department is dealing with individuals or partner-
ships, it should initially assume a tax rate of 19 percent for
individuals (the approximate Connecticut average for household
heads in 1972) and 18 percent for partnerships (the approximate
Connecticut average for manufacturing partners in 1969). In
addition, given the wide range of effective tax rates paid by
such persons, the Department will want to adjust its tax assess-
ment formula from case to case. How it can do so at low cost is
outlined in the section immediately after the brief discussion
of municipalities.
"T
-------
111-20
Municipalities and
Non-Profit Institutions
Municipalities and non-profit institutions do not pay income
tax and therefore derive no tax benefits from whatever capital
or operating and maintenance expenses they incur in order to
abate pollution. When dealing with such institutions, the
Department should adjust its civil assessment formula to assume
a zero tax rate.
OBTAINING INDIVIDUAL
TAX RATES
When the Department decides it must obtain individual tax
rates in order to set accurate civil assessments, it can do so
in two relatively simple ways:
* It can ask the regulatee to submit (1) its most
recent balance sheets and income statements if it
is a business and (2) its most recent income tax
statement if the regulatee is an individual. This
statement is private information, and can be ob-
tained from the IRS only by a state tax agency.
However, the civil assessment regulations specific-
ally provide that the Department can require such
information, including financial data, as it needs
from the regulatee. Moreover, since individuals
who are likely to be subject to civil assessments
are also likely to be taxed at above average rates,
the information will probably be provided voluntarily.
* For companies, especially publicly-held companies,
this information is a matter of public record and
may be found routinely in financial and investment
publications such as Moody"s Industrial Manual or
the Value Line Investment Survey.(The first of
these works is available in the Connecticut State
Library.)
ADJUSTING THE FORMULA FOR
CHANGES IN THE TAX LAWS
In applying civil assessments in individual cases, Depart-
ment staff will not have to research or work through the impact
-------
Ill-21
of specific tax provisions. All this is handled automatically
by the formula.
However, from time to time the provisions of the tax laws
are changed. The investment tax credit is especially likely
to be changed with cyclical change in the economy. The pro-
visions in the formula should be changed accordingly. Chapter
I identifies exactly where such adjustments should be made in
the formula for each of the taxes that may have to be adjusted.
-------
111-22
CHAPTER V
USING THE COST OF CAPITAL
One of the innovations of the Connecticut Enforcement Project
is the attempt to put the regulatory agency into the shoes of the
regulatee. Just as businessmen faced with environmental regulation
focus immediately on the cost of raising and using money to meet
environmental standards now and in the future, so must economic
civil assessments take the current and continuing costs of using
money into account.
Once the cost of compliance cash flow (which describes the
cash outlays that will be required in each year of a control pro-
gram) has been established, the economic assessment formula dis-
counts it at the cost of capital rate appropriate to the particu-
lar regulatee to a present value. If the cost of capital is 10
percent, expenditures of a year from now ©f $1,100 would be dis-
counted to a present value of $1000 (i.e., 1100/(1 + .10)).
Such discounting is necessary because ten dollars of expense
three years from now is less painful than ten dollars due now.
It is less painful because, over the three years one retains those
ten dollars one can use them. If, for example, one could obtain
a ten percent yield on one's resources in each of the three years,
one would be justified in feeling that the net reduction in one's
current worth attributable to this future ten dollar expense is
$7.51([
Businessmen evaluating the costs of different investment
projects, including abatement projects, have to take the time
value of money into account. They are keenly aware that $10 spent
three years in the future entails considerably less cost than $10
spent now. Similarly, $10 received (or saved in taxes) three
years hence is less valuable than such a saying received immedi-
ately. They consider the total present value of a project as its
immediate costs plus future costs, reduced by a discount factor
equal to the time value of money.
USING THE
COST OF CAPITAL
The cost of capital to a regulatee is its marginal cost
per year of obtaining additional capital funds.
For most businesses, the cost of capital is the weighted
average of the costs of debt (e.g. bond issues or bank debt)
and equity (e.g. sales of common stock). If a company's capi-
tal is 50 percent debt with a marginal cost of 10 percent, and
50 percent equity with a current cost of 20 percent, the com-
pany's cost of capital will be 15 percent.
-------
111-23
The CEP formula uses a marginal cost of capital rate so that
the low interest costs on bonds sold twenty or thirty years ago
do not depress the rate so as to make it a misleading measure of
the current cost of money to the regulatee. The marginal cost
of capital rate also effectively reflects changes in the market
price of money of all sorts. When interest rates go up (and
common stock prices down), the marginal cost of capital will go
up, accurately reflecting the increased cost a regulatee will
have to pay for the resources required for the control project.
The cost of capital is the right discount factor to use in
the economic assessment calculus because (1) it is the cost
business must pay for its money and (2) it therefore represents
a minimum rate of return businessmen must obtain on their in-
vestments. A business will be able to earn at least this rate
of return on any resources available to it, which makes it the
proper discount rate for bringing future costs to present value.
The cost of capital is also a good measure of the opportun-
ity costs of investing in pollution control. Not only are the
outlays required for such expenditures not recouped, but they
clearly generate no income above expenses. In the meantime,
the regulatee must pay its cost of capital rate to obtain the
money needed to pay for the expenditures. The civil assessment
formula discounts future costs by the cost of capital and in-
cludes opportunity costs by using the cost of capital as the
interest rate in the amortization formula. The flat, monthly
rate which is thereby derived represents not only the dollar
cost of control but also an interest component which equals the
minimum rate of return available on the investment. The re-
sulting civil assessment thus offsets not only equipment and
operating cost savings due to noncompliance but also the return
on capital which would be made by investment of these savings
in a profitable venture.
COMPONENTS OF THE
COST OF CAPITAL
Since the cost of capital is the cost of raising or borrow-
ing money, it is natural that different people and businesses
have different costs of capital.
Industry-wide
Costs of Capital
Although the cost of capital is a key tool used all the
time by businessmen and economists, it is hard to pin down
exactly, especially on a company-by-company basis, chiefly be-
cause of the difficulty of measuring the cost of the equity com-
ponent. If equity is based on book value, distortions are
possible for a variety of accounting reasons, e.g. because assets
purchased long ago that have appreciated substantially may still
be carried at book value. Using market value avoids this
-------
111-24
difficulty; in fact, the market adjusts equity values taking
future as well as current value into account. However, market
values (1) are not available for many potential regulatees, and
(2) are subject to sharp swings not always entirely caused by
facts relevant to the particular case. Consequently, litigation
to determine a company's cost of capital is almost always drawn
out, expensive, and unhelpful.
Connecticut's CEP regulations avoid these difficulties
entirely by using industry average cost of capital figures. This
practice has several other, equally important advantages.
* The Department's staff will not have to gather
financial data about each company and go through
a series of financial calculations (with which
most engineers are unfamiliar). Instead, the
staff will only have to decide to which industry
group the regulatee belongs and look up that
industry's cost of capital on a one-page table
maintained by the Department.
* The Department will not have to worry about
adjusting for temporary changes in the strength
of a company's financial condition.
Moreover, the use of industry average data seems an acceptably
accurate surrogate measure of company cost of capital rates.
The CEP calculated the cost of capital for a large number of
Connecticut companies and found relatively small deviations
from the industry average, figures. The courts have long
approved the use of industry average cost of capital figures
in the regulation of individual companies.
The Department has now compiled industry-wide cost of
capital averages for each of the industrial groupings in Connec-
ticut. These averages were derived using the weighted cost of
capital methodology outline above, using data drawn from such
readily available and reliable sources as Standards and Poors,
Financial Dynamics, the Federal Trade Commission's Quarterly
Reports of Financial Data for Manufacturing Companies, and the
Internal Revenue Service's Corporation Income Tax Returns. This
table may be found in Section B in Chapter VII of Part V below.
Municipal Costs
of Capital
Like businesses, municipalities have a cost of capital.
Since bond revenue is usually the only source of raising capital
for most cities, towns, and villages, the municipal cost of
capital is usually equal to the bond rate which must be paid on
newly issued municipal bonds. (While some economists believe
that the governmental cost of capital should reflect the costs
of taking money out of the private sector (and should thus be
equal at least to the average private sector cost of debt), this
theory has not yet achieved general acceptance — at least not
in the governmental community.) Accordingly, the municipal
-------
111-25
cost of capital will be the most recent average municipal bond
rate in Connecticut.
Individual Costs
of Capital
Individuals too have costs of capital, most frequently the
interest rate they must pay on money they borrow. Accordingly,
in instances where civil assessments are to be imposed against
individuals, the individual cost of capital will be the current
average interest rate on generally available personal loans.
-------
PART IV
CIVIL ASSESSMENT REGULATIONS
-------
IV-2
VIOLATING EMISSIONS STANDARDS
ADMINISTRATIVE REGULATIONS
Regulations and notices published herein are
printed exactly as submitted by the forwarding
agencies. These, being official documents
submitted by the responsible agencies, are
consequently not subject to editing by the
Commission on Official Legal Publications.
DEPARTMENT OF ENVIRONMENTAL PROTECTION
Assessment of Civil Penalties for Violation of Air
Emissions Standards and Orders of the
Commissioner
Section 1. The Regulations of Connecticut State
Agencies are amended by adding sections 22a-6b-602 and
22a-6b-603, inclusive, as follows:
Sec. 22a-6b-602(a). Title
This section shall be known and may be cited as "Civil
Penalty Regulations: Emission Violations."
Sec. 22a 6b-602(b). Definitions
(1) "Assessment period" means the period of time,
expressed in months or portions thereof, during which
a regulatce has failed to incur all the expenses necessary
to insure immediate and continued compliance with ap-
plicnblc emission standards except that it does not in-
clude the time that a person is under a final order of the
Commissioner, or the "order assessment period" defined
in Section 22a-6b-603(b), or any period before the date on
which Sections 22a-6b-G02 and 22a-6b-603 of the Civil
Penalty regulations become effective.
(2) "Civil penalties final order" means an order of
the Commissioner issued pursuant to Sections 22a-6b-101,
2l!;i-Gb-G02, and 22a-Gb-603 of the Civil Penalty Regula-
tions which has become final by the passage of time or
by the consent of the regulatce or after hearing.
(3) "Commissioner" means the Commissioner of the
Department of Environmental Protection or his lawfully
designated agent.
(4) "Compliance timetable" means the schedule of
dates by which a person under a final order is to come
into compliance with Department regulations.
(5) "Cost of capital" means cither: (i) the weighted
average of the marginal rates the Commissioner finds a
person or class of persons typically must pay per year
for debt and owner's equity or (ii) the annual rate of
return or of savings that the Commissioner finds a per-
son or class of persons could achieve with a sum of
money equal to the cost of compliance; as determined
by the Commissioner for a person or class of persons.
'6) "Cost of compliance" means the net, after tax,
estimated present value of the sum of equipment costs,
operating costs, and all other costs and savings the reg-
nlatee will experience in order to come into compliance
inclndins, but not limited to inflation, depreciation, such
replacement costs as will later be necessary to replace
capital equipment that has either worn out or become
obsolete, ami a discount rate equal to the cost, of capital.
(7) "Department" means the Department of Environ-
mental Protection.
(8) "Depreciable life" means the time period of useful
life expectancy for capital plant and equipment. This
period shall be defined as 10 years until and unless the
Commissioner finds otherwise pursuant to Section 22a-6b-
602(g) (2) in which case he may consider the depreciation
periods allowed for tax purposes by the U. S. Internal
Revenue Service and such other guides as he determines
are similarly reliable.
(9) "Depreciation" means the amortization of equip-
ment costs over their depreciable life.
(10) "Emit" means the act of releasing or discharg-
ing or causing to be released or discharged any air pol-
lutant in violation of the terms of Sections 19-508-9 and
19-508-18 to 19-508-22, inclusive, of the Regulations for
the Abatement of Air Pollution. An "emissions standard"
is any requirement set forth in Sections 19-508-9 and
19-508-18 to 19-508-22, inclusive, and an "emissions viola-
tion" is a violation of an emissions standard.
(11) "Equipment costs" means the installed capital
costs of such equipment as is or may be required to bring
an unabated activity into compliance with applicable
emission standards. Such costs shall include, but not be
limited to, the cost of equipment required to control
emissions effectively, auxilliary equipment, technical and
engineering services, and all development and start-up
costs including labor, materials and necessary testing.
For the purpose of estimating the cost of compliance
prior to the date that the unabated activity has been
brought into compliance with applicable emissions stand-
ards, the Commissioner may assume that what he finds
to be the most environmentally effective and reliable
equipment available will be used. The Commissioner
shall, upon petition by the regulatce once the regulatee
has come into compliance, correct the penalty due using
actual equipment costs pursuant to Section 22a-6b-602(g)
(2).
(12) "Final order" means an order of the Commis-
sioner issued pursuant to Title 19, Chapter 360, Sections
19-508, 19-510, 19-514, 19-51,r> and/or 19-517 of the Con-
necticut General Statutes which has become final by the
passage of time or by the consent of the regulatee or
after hearing.
(13) "Inflation" means the average annual rate of in-
flation as measured by the changes in the Wholesale Price
Index prepared by the United States Department of
Labor or such other index of inflation as the Commis-
sioner may determine is most appropriate over the 3 years
prior to the year in which the civil penalty is to be
assessed.
(14) "Operating costs" means the non-depreciable
annual costs for the operation and maintenance of equip-
ment and processes required for the abatement, of air
pollution which will protect installed control equipment
and insure continuous compliance with applicable emis-
sion standards.
(15) "Person" includes every individual, firm, part-
nership, association, syndicate, company, trust, corpora-
tion, municipality, and any other legal entity.
(16) "Regulatee" means a person who owns or operates
a process or piece of property that has been, is, or may
become an unabated activity.
(17) "Unabated activity" means the ownership or
operation of any process or piece of property, real or
personal, which (i) emits or causes to be emitted, any
air pollutant in excess of the emission standards pre-
scribed in Section 19-508-9 and 19-508-18 to 19-508-22,
inclusive, of the Regulations for the Abatement of Air
Pollution or (ii) is not equipped or operated with the
emission controls required by Sections 39-508-18 to 19-
508-22 Ownership or operation of each such process or
piece of property is a separate "unabated activity" re-
gardless of the number of identical or closely simila^
processes or pieces of property owned by the same per-
son or located on the same premises.
-------
IV-3
Sec. 22a-6b-602(c). Civil penalties for violating emis-
sion standards
Any person carrying on an unabated activity shall be
liable for a civil penalty assessed by the Commissioner
pursuant to Public Act 73-665, Section 2(a)(2), and in
accordance with the procedures prescribed in Section
22a-6b-100 to 22a-6b-102, inclusive, of the Civil Penalty
Regulations.
Sec. 22a-6b-C02(d). Schedule of maximum assessments
(1) Persons maintaining unabated activities may be
assessed monthly amounts for each snch activity no
greater than the amount listed in the following schedule
for the combination of equipment costs and operating
costs wliicli will be or has been required to bring the
unabated activity into compliance with applicable emis-
sions standards.
(2) The maximum monthly amounts set forth in this
schedule represent the economic advantages a person
responsible for an unabated activity could gain from one
month's delay in bringing that activity into compliance
assuming economic and tax conditions all tending to in-
crease the value to the rcgulatec of such delay. These
maximum amounts have been calculated in three broad
steps, a gross cash flow for each set of compliance ex-
penditures, chiefly equipment costs and operating costs,
is defined, this gross cash flow is discounted to present
value; and tlie maximum monthly civil penalty is cal-
culated as that amount which would, if paid monthly,
amortize the gross present value of the proje.ct. The
Commissioner shall provide a written explanation of
these calculations upon request.
(3) The Commissioner shall impose lesser penalties
pursuant to Section 22a-Cb-602(e)(l-2) if he finds the
probable advantages of delay are smaller than indicated
in this schedule, and he may further lower these penal-
ties puisuant to Sections 22a-6b-602(e)(5) and/or 22a-
6b-G02(g).
(4) In no ease shall the assessment exceed $25,000 plus
$1000 for caeli day that the unabated activity continues
after the regulatee has received a civil penalties final
order.
(5) The Commissioner has determined that the reme-
dies provided by this schedule will insure immediate and
continued compliance and will protect (i) the public
health, safety, and welfare; (ii) the public trust in the
air, water, land and other natural resources of the state;
and (iii) the reasonable use of property.
Sec. 22a-6b-602(e). Determination of amount in individ-
ual cases
(1) The Commissioner shall determine the amount of
the monthly civil penalty he may assess for any individ-
ual unabated activity based on the actual or probable
cost of compliance required of that particular activity.
Individual assessments are calculated in four broad
steps: the gross cash flow of the required compliance
expenditures, chiefly equipment costs and operating
costs, is determined; the net cash flow is established by
taking tax and other savings into account; this net cash
flow is discounted to present value; and the individual
monthly civil penalty is calculated as that amount which
would, if paid monthly, amortize the net present value
of the project.
(2) The Commissioner shall calculate the total civil
penalty by multiplying the monthly civil penalty by the
number of months or fractions thereof in the assessment
period.
(3) The Commissioner shall provide a written explana-
tion of this methodology upon request. lie shall also
provide a written summary of the calculations used,to
determine a particular assessment, except to the extent
he is required to maintain the confidentiality of certain
information pursuant to Section 22a-6b-602(i), upon
written request by an interested party or the affected
regulatee.
(4) In no case shall an individual assessment exceed
cither (i) the maximum civil penalty Section 22a-Cb-
602(d) would allow per month for an unabated activity
with the same equipment costs and operating costs or
(ii) for the total civil penalty due during the entire
assessment period, $25,000 plus $JOOO for each day that
the unabated activity continues after the regulateo has
received a civil penalties final order.
Schedule at Maximum Allowable Monthly Civil Fcnnlties lor an Unobnted Activity with Specified Coats.
Operating
Costs
$0-1000
$1001 2."iOO
$25111 5000
$5001-7500
$7501-10,000
$10,001-15,000
$15,001-20,000
$20,001-25,000
$2,"i, 00 1-35,000
$35,001-.r>0,000
$50,001-75,000
$75,001-100,000
$100,001-200,000
$200,001-350,000
Equipment Costs
,§
188.
357.
638.
919.
1200.
1762.
2324.
2886.
4011.
5697.
8508.
11318.
22561.
39425.
11
win
263.
432.
713.
994.
1275.
1837.
2400.
2962.
4086.
5772.
8583.
11394.
22837.
39501.
it
as
415.
583.
864.
1145.
1426.
1989.
2551.
3113.
4237.
5924.
8734.
11545.
22788.
39652.
§S
II
717.
885.
1166.
1448.
1729.
2299.
2853.
3415.
4539.
6226.
9036.
11847.
23090.
39954.
o o
00
It
1170.
1339.
1620.
1901.
2182.
2744.
3306.
3868.
4993.
6679.
9490.
12300.
23543.
40407.
||
1623.
1792.
2073.
2354.
2635.
3197.
3759.
4321.
5446.
7132.
9943.
12754.
23996.
40861.
||
2227.
2396.
2677.
2958.
3239.
3801.
4364.
4926.
6050.
7736.
10547.
13358.
24601.
4146o.
rH O
S8
Iff
3134.
3303.
3584.
3865.
4146.
4708.
5270.
5832.
6957.
8643.
11454.
14264.
25507.
42371.
$100,001-
150,000
4645.
4813.
5094.
5375.
5857.
6219.
6781.
7343.
8467.
10154.
12964.
15775.
27018.
43882.
$150,001-
200,000
6155.
6324.
6605.
6886.
7167.
7729.
8292.
8854.
9978.
11664.
14475.
17286.
28528.
45393.
$200,001-
300,000
9177.
9346.
9627.
9908.
10189.
10751.
11313.
11875.
13000.
14686.
17497.
20307.
31550.
48415.
$300,001-
500,000
15220.
15389.
15670.
15951.
16232.
16794.
17356.
17918.
19043.
20729.
23540.
26350.
37593.
54458.
§1 11
I! 51
30328. •
30496. *
30777. "
31038. *
31340. *
31902. "
32464. *
33026.
34150. •
35837. *
38647. *
41458. •
52701. *
* *
$350,001-nnd nbove ••««••••••"
a civil penalties final order.
-------
IV-4
(5) In setting a civil penalty in a particular ease, the
Commissioner shall consider all factors which he deems
relevant, including, but not limited to those listed below;
and he may, as a result of considering ami balancing
these factors, lower the civil penalty. The factors he
shall consider include:
(i) The amount of the assessment necessary to insure
immediate and continued compliance;
(ii) The character and degree of impact the, unabated
activity has on the public trust in the air, water, and
land and on the natural resources of the state, especially
any rare or unique natural phenomena;
(iii) The character and degree of injury to, or inter-
ference with, public health, safety or welfare which is
caused or threatened to be caused by the unabated
activity;
(iv) The conduct of the person incurring the civil
penally in taking all feasible steps or procedures neces-
sary nr appropriate to comply or to correct the unabated
activity;
(v) Any prior violations by such person of statutes,
regulations, orders or permits administered, adopted or
issued by the Commissioner;
(vi) The economic and financial conditions of such
person;
(vii) The character and degree of injury to, or inter-
ference with reasonable use of property which is caused
or threatened to be caused by such unabated activity.
Sec. 22a-6b-602(f). Enforcement proceedings
(1) Warning letter. If the Commissioner finds that
an emissions violation has probably occurred, he shall
send the responsible regulatee a civil penalties warning
letter by certified mail or by personal delivery or service.
This letter shall notify the regulatee that the Commis-
sioner hns reason to believe a violation has occurred. For
those cases to which Sections 22a-6b-G02(g)(4)(i) and
22a-Cb-G02(g)(4)(ii) apply, this warning letter shall also
notify the regulatee that it may be able to avoid the
imposition of civil penalties under Section 22a-Gb-G02 if
it takes prompt and effective action pursuant to the
terms of Section 22a-6b-602(g) (4).
(2) Hearings, (i) Any person in receipt of a notice
of violation issued pursuant to Section 22a-6b-i01(a) of
the Civil Penalty Regulations may apply to the Commis-
sioner for a hearing pursuant to Section 22a-6o-101(b).
(ii) Such hearing shall be conducted by the Commis-
sioner, a Deputy Commissioner, or a hearing officer from
the Office of Adjudication of the Department. Such hear-
ing shall be conducted pursuant to Sections 4-177 to
4-185, inclusive, of the General Statutes and to the Rules
of Practice of the Department.
(iii) The Department shall have the burden of pro-
ducing evidence to prove the emissions violation that
provides the basis for imposing the penalty and the rea-
sonableness of the proposed assessment, and the risk of
non-persuasion by a preponderance of the evidence shall
fall upon the Department.
(iv) If the Commissioner, Deputy Commissioner, or
hearing officer presiding at the hearing determines that
information important to an accurate determination of
.•ill or part of the civil penalty amount is not available
at the time of the hearing but will become available
later, he may defer determining the amount of the civil
penalty due until he establishes that the previously miss-
ing information is availnble, Jit which time he shall
promptly hold a hearing pursuant to Section 22a-6b-G02
((,')(2) regarding the amount of the civil penalty due.
lie may not collect any portion of the civil penalty until
this hearing is held and a eivil penalties final order issued.
(I!) Appeals. Any person may appeal a eivil penalty
final order of the Commissioner issued after a hearing
pursuant to Section 2(f) of Public Act 73-GG5.
Sec. 22a-6b-602(g). Mitigation
(1) General. The Commissioner may mitigate any eivil
penalty upon such terms as he in his discretion deems
proper or necessary upon consideration of the factors
set forth in Sections 2(b) and 2(c) of Public Act 73-665.
(2) Correction of penalties, (i) A regulatee in receipt
of a notice of violation issued pursuant to Section 22a-
6b-10i(a) of the Civil Penalty Regulations may petition
the Commissioner for correction of the civil penalty as-
sessed against him at any time up to two years after
the Commissioner finds that the regulatee has come into
compliance. Such petition shall set forth in writing any
evidence that the cost of compliance has been or will be
less than the Commissioner had initially determined in
assessing the civil penalty, and it shall be sent by cer-
tified mail or personal service to the Commissioner or
the Director of Air Compliance.
(ii) The Commissioner may, in response to such a
petition or at his own initiative, lower an assessment he
determines was excessive. If the Commissioner takes no
action in response to such a petition, or if his response
is not satisfactory to the regulatee, the regulatee may
obtain a hearing of right once it has come into compli-
ance or at any other time specified in a final order or a
civil penalties final order. Following such a hearing the
Commissioner shall mitigate the civil penalty if and to
the extent that the actual cost of compliance has been
less than he had initially determined.
(iii) Refunds shall be made with interest calculated
from the time of payment and at the cost of capital rate
used to assess the civil penalty.
(3) Reduction of the assessment period for delays
beyond the regulatee's control. The Commissioner shall
exclude from tlie assessment period such periods of non-
compliance as the regulatee proves have been caused by
strikes or lockouts; riots, wars, or other acts of violence;
floods, hurricanes, or other Acts of God j or other equally
severe, unforeseeable and uncorrectible accidents; where
such acts or events were occasioned directly upon the
rcgulatce or a person under contract to the regulatee.
In addition, the Commissioner shall exclude from the
assessment period such periods of non-compliance as
were occasioned by delays attributable to the Air Com-
pliance Unit of the Department in excess of routine proc-
essing times. Nothing in this section shall prohibit a
regulatee from proposing, or the Department from ac-
cepting, a compliance timetable which excludes from the
assessment period periods of non-compliance caused by
other acts cr events beyond the control of the regulatee,
such as contractors' or suppliers' delays.
(4) Nonimposition during prompt compliance, (i) If,
vipon receipt of a warning letter defined in Section 22a-
6b-602(f)(l) and continuously thereafter until (a) the
end of ninety days or such longer period as the Com-
missioner may allow or (b) at the end of the assessment
period, whichever occurs first, the regulatee takes all
steps necessary to bring the unabated activity promptly
and effectively into continuing compliance with appli-
cable emissions standards, the Commissioner shall not im-
pose the civil penalty assessable under section 22a-6b-
602 before (a) the end of the ninety day period or such
longer period as the Commissioner may allow or (b) the
end of the assessment period, whichever occurs first.
(ii) If the warning letter requests preparation of a
compliance plan, the regulatee shall be deemed to have
ta'ken prompt and effective action during the period
between receipt of such a request and submission of the
requested plan if (a) the plan is a detailed written plan
of action including a timetable which, once implemented,
will achieve compliance as promptly and effectively as
possible and if (b) it is submitted no later than forty
days after receipt of such a request. The regulatee shall
also be deemed to have taken prompt and effective action,
-------
IV-5
even though it takes no further steps, during the sub-
sequent period between its submission of such a satis-
factory plan of action and five days after it has been
notified that the Department has completed its review
of the plan and/or has issued a compliance order!
Thereafter — and, if the warning letter does not request
the preparation of a compliance plan, from the time the
regulatee receives the warning letter — the rcgulatee
must take all steps necessary to achieve continuing com-
pliance as promptly and effectively as possible if it is to
meet the standard of performance required in Section
22a-6b-602(g)(4)(i).
(hi) Sections 22a-6b-602(g)(4)(i) and 22a-6b-602(g)
(4) (ii) shall not apply to persons to whom the Depart-
ment has, within the preceding 5 years, issued a written
order under Section 19-508-12 (b) (2) of the Regulations
for the Abatement of Air Pollution; or a warning letter
under Section 22a-6b-602(f)(l) of this regulation; or
actual written notice that that person has been found
in violation of one or more emissions standards; or
actual written notice both of the duty to comply with
the relevant requirements of Sections 19-508-9 and 19-
508-18 to 19-508-22, inclusive, and of the potential lia-
bility to civil penalties for failure to do so; provided
that such prior order, warning letter, or actual notice
(1) refers to the same section(s) of the Department's
Regulations for the Abatement of Air Pollution that are
the subject of the current action and (2) was given by
certified mail or by personal delivery or service.
(5) Notice, (i) The Commissioner shall report every
case in which he lowers a civil penalty pursuant to Sec-
tion 22a-6b-602(e) or in which he mitigates a civil pen-
alty pursuant to Sections 22a-6b-602(g) (1-3), if the
monthly civil penalty without such lowering or mitiga-
tion would be greater than three hundred dollars, in the
Monthly Report of Activities of the Air Compliance Unit.
This report shall state the name and address of the
regulatee, the amount of the reduction, the amount of
the civil penalty still to be assessed, and the grounds for
such lowering or mitigation.
(ii) The Commissioner shall also send written notice
to all persons who have, within the proceeding twelve
months, requested copies of this Monthly Report, cither
thiough the Monthly Report or otherwise, of any hear-
ings to be held regarding such cases where the amount
of the civil penalty may be an issue at least ten days prior
to the hearing.
Sec. 22a-6b-602(h). Limited inclusion of past failure to
abate in the assessment period
If the Commissioner finds that it is reasonable to infer
that the emissions violation(s) for which a civil penalty
is being assessed arc the result of a regulatce's past
failure to make the control expenditures necessary to
bring the similar activities into compliance with appli-
cable emissions standards, and if the regulatee is not
protected from the imposition of civil penalties pursuant
to Section 22a-6b-602(g)(4), the Commissioner may in-
clude the period of such pro-violation failure in the as-
sessment period used to calculate the civil penalty as
prescribed in Section 22a-6b-602(e) subject to the fol-
lowing limitations:
(1) No assessment period shall begin before the date
on which this regulation becomes effective;
(2) No assessment period shall include a pre-detection
period greater than two years.
Sec. 22a-6b-602(i). Request for information by the
commissioner
(1) The Commissioner may require the regulatee to
provide such additional information, including informa-
tion regarding costs, as he deems necessary to effectuate
the purposes of Section 22a-6b-602.
(2) Any person who files any statement, record or
report with the Commissioner containing false or mis-
leading information or other claims will be liable to
criminal prosecution for a Class A misdemeanor punish-
able by imprisonment for a period of up to one year and
a fine of up to one thousand dollars ($1000) for each
violation pursuant to Section 53a-157 of the Connecticut
General Statutes.
(3) Any information disclosing trade secrets and com-
mercial or financial information provided by a regulatee
pursuant to this section will remain confidential if the
rcgulatee so requests in a letter sent by certified mail or
personal service to the Commissioner or the Director of
Air Compliance, except that such information may be
disclosed to other officers, employees, or authorized rep-
resentatives of the state concerned with carrying out
these regulations or when relevant in any hearing con-
ducted under the authority of these regulations by the
Department of Environmental Protection or in any judi-
cial proceeding, subject to such safeguards as the hear-
ing officer or presiding judge may impose.
Sec. 22a-6b-602(j). Collection
(1) Payment of the civil penalties assessed under this
section may be required monthly, or at such time or time
intervals as the Commissioner determines will most effec-
tively limit the Department's administrative costs and
further the objectives defined in Section 22a-6b-602(d).
(2) The present value of the total civil penalty as-
sessed, calculated at the time the notice of violation is
issued, shall be held constant regardless of the timing
of its collection.
-------
IV-6
VIOLATING THE TERMS OF AN ORDER
ADMINISTRATIVE REGULATIONS
Regulation! and notice* published herein art
printed exactly us submitted by the forwarding
agencies. These, being official documents
submitted by the responsible agencies, art
consequently not subject to editing by the
Commission on Official Legal Publications.
DEPAETMENT 07 EKVTHONMENTAL FKOTBCTIOir
Sec. 22a-6b-603(a). Title
This section shall be known and may be cited as "Civil
Penalty Regulations: Violation of the Terms of an Order
to Abate an Emissions Violation."
Sec. 22a-6b-603(b). Definitions
Except for the following terms, the definitions of Sec-
tion 22a-Gh-602(b) will apply to these regulations:
(1) "Order assessment period" means the period of
time, expressed in months or portions thereof, that a
person under a final order is behind in conforming to
that order's compliance timetable as measured by the
time that has elapsed between the date of a scheduled
deadline and the date that the abatement, control or com-
pliance measures called for in the scheduled deadline are
actually completed.
(2) "Scheduled deadline" means the date in a compli-
ance timetable by which an abatement, control, or com-
pliance measure is scheduled to be completed; such dead-
line may be for any of the intermediate steps in the
compliance timetable or for the final step at which com-
pliance is to be completed.
Sec. 22a-6b-603(c). Civil penalties for violating the
terms of an order
Any person subject to a final order of the Commissioner
to abate an emissions violation who is not in compliance
with the terms of that order shall be liable to a civil
penalty assessed by the Commissioner pursuant to Public
Act 73-665, Section 2(a)(3), in accordance with the pro-
cedures prescribed in Section 22a-6b-101 to 22a-6b-102 of
the Civil Penalty Regulations, inclusive.
Sec. 22a-6b-G03(d). Schedule of maximum assessments
(1) Persons responsible for an unabated activity that
is under but not in compliance with the terms of a final
order may be assessed a civil penalty no larger than the
produet of (a) the maximum monthly civil penalty the
Commissioner may assess under the schedule of maximum
assessments of Section 22a-6b-602(d) against a person
-------
IV-7
for an unabated activity with the same equipment costs
and operating costs and (h) the number of months and/
or fractions thereof the Commissioner determines are in
the order assessment period.
(2) The Commissioner shall provide a written explana-
tion of how these maximum assessments are calculated
to any regulatee upon request.
(3) The Commissioner shall impose lesser penalties
pursuant to Section 22a-6b-603(e)(l-2) if he finds the
probable advantages of delay arc smaller than indicated
in this schedule, and he may further lower these penal-
ties pursuant to Sections 22a-6b-603(e)(5) and/or 22a-
6b-e03(g).
(4) In no case shall the assessment exceed $25,000 plus
$1000 for each day that the unabated activity continues
after the regulatee has received a civil penalties final
order.
(5) The Commissioner has determined that the maxi-
mum remedies provided in this schedule will insure im-
mediate and continued compliance and will protect (i)
the public health, safety, and welfare; (ii) the public
trust in the air, water, land and other natural resources
of the state; and (iii) the reasonable use of property.
Sec. 22a-Gb-CC3(e). Determination of amount in individ-
ual cases
(1) The Commissioner shall determine the amount of
the monthly civil penalty he may assess for each individ-
ual caso of ;m unabated activity not conforming to or
complying with the terms of a final order based on the
achuil or probable cost of compliance required of that
particular activity. Individual assessments are calcu-
lated in four broad steps: the gross cash flow of the re-
quired compliance expenditures, chiefly equipment costs
and operating costs, is determined; the net cash flow is
established by taking tax and other savings into account;
this net casli flow is discounted to present value; and the
individual monthly civil penalty is calculated ns that
amount which would, if paid monthly, amortize the net
present value of the project.
(2) The Commissioner shall calculate the total civil
penalty by multiplying the monthly civil penalty by the
number of months or fractions thereof in the order
assessment period.
(3) The Commissioner shall provide a written explana-
tion of tliis methodology upon request. He shall also
provide a written summary of the calculations used to
determine a particular assessment, except to the extent
ho is required to maintain the confidentiality of certain
information pursuant to Section 22a-6b-603(h), upon
written request by an interested party OT the affected
regulatoo.
(4) Tu no case shall an individual assessment exceed
eitlior (\^ the maximum civil penalty Section 22a-6b-
602(d) would allow per month for an unabated activity
with the same equipment costs and operating costs, or
(ii) for the total civil penalty due during the entire order
assessment period, $25,000 plus $1000 for each day that
the unabated activity continues after the regulatee has
received n civil penalties final order.
(5) In setting a civil penalty in a particular case, the
Commissioner shall consider all factors which he deems
rdrvant, including but not limited to those listed below;
and hr may, as a result of considering and balancing
these factors, lower the civil penalty. The factors he
shall consider include:
(i) The amount of the assessment necessary to insure
immediate and continued compliance;
(ii) The character and degree of impact the unabated
activity has on the public trust in the air, water, and
land and on the natural resources of the state, especially
any rare or unique natural phenomena;
(iii) The character and degree of injury to, or inter-
ference with, public health, safety or welfare which is
caused or threatened to be caused by the unabated ac-
tivity ;
(iv) The conduct of the person incurring the civil pen-
alty in taking all feasible steps or procedures necessary
or appropriate to comply or to correct the unabated ac-
tivity ;
(v) Any prior violations by such person of statutes,
regulations, orders or permits administered, adopted or
issued by the Commissioner;
(vi) The economic and financial conditions of such
person;
(vii) The character and degree of injury to, or inter-
ference with reasonable use of property which is caused
or threatened to be caused by such unabated activity.
Sec. 22a-6b-603(f). Enforcement proceedings
(1) Hearings, (i) Any person in receipt of a notice of
violation issued pursuant to Section 22a-6b-101(a) of
the Civil Penalty Regulations may apply to the Com-
missioner for a hearing pursuant to Section 22a-6b-
101 (b). -
(ii) Such hearing shall be conducted by the Commis-
sioner, a Deputy Commissioner, or a hearing officer from
the Office of Adjudication of the Department! Such hear-
ing shall be conducted pursuant to Sections 4-177 to 4-185
of the General Statutes and to the Bules of Practice of
the Department.
(iii) The Department shall have the burden of pro-
ducing evidence to prove the basis for imposing the pen-
alty and the reasonableness of the proposed assessment,
and the risk of non-persuasion by a preponderance of the
evidence shall fall upon the Department.
(iv) If the Commissioner, Deputy Commissioner, or
hearing officer presiding at the hearing determines that
information important to an accurate determination of
all or part of the civil penalty amount is not available
at the time of the hearing but will become available
later, he may defer determining the amount of the civil
penalty due until he establishes that the previously miss-
ing information is available, at which time he shall
promptly hold a hearing pursuant to Section 22a-6b-
603(g) (2) regarding the amount of the civil penalty due
He may not collect any portion of the civil penalty until
this hearing is held and a civil penalties final order issued.
(2) Appeals. Any person may appeal a civil penalties
final order of the Commissioner issued after a hearing
pursuant to Section 2(f) of Public Act 73-665.
Sec. 22a-6b-603(g). Mitigation
(1) General. The Commissioner may mitigate any
civil penalty upon such terms as he in his discretion
deems proper or necessary upon consideration of the
factors set forth in Sections 2(b) and 2(c) of Public Act
73-665.
(2) Correction of penalties, (i) A regulatee in receipt
of a notice of violation issued pursuant to Section 22a-
6b-101(a) of the Civil Penalty Regulations may petition
the Commissioner for correction of the civil penalty as-
sessed against him at any time up to two years after the
Commissioner finds that the regulatee has come into
compliance. Such petition shall set forth in writing any
evidence that the cost of compliance has been or will be
less than the Commissioner had initially determined in
assessing the civil penalty, and it shall be sent by certi-
fied mail or personal service to the Commissioner or the
Director of Air Compliance.
(ii) The Commissioner may, in response to such a
petition or at his own initiative, lower an assessment he
-------
IV-8
determines was excessive. If the Commissioner takes
no action in response to such a petition, or if his response
is not satisfactory to the regulatee, the regulatec may
obtain a hearing of right once it has come into compli-
ance or at any other time specified in a final order or R
civil penalties final order. Following such a hearing the
Commissioner shall mitigate the civil penalty if and to
the extent that the actual cost of compliance has been
less than he had initially determined.
(iii) The Commissioner shall also mitigate the civil
penalty if and to the extent that the regulatee comes
into actual final compliance with less delay than the total
number of days of delay for which assessments have
previously been made while the regulatee was under a
final order.
(iv) Refunds shall be made with interest calculated
from the time of payment and at the cost of capital rate
used to assess the civil penalty.
(3) Reduction of the order assessment period for de-
lays beyond the regulatee's control. The Commissioner
shall exclude from the order assessment period such
periods of non-compliance as the regulatee proves (i)
have been caused by strikes or lockouts; riots, wars, or
other acts of violence; floods, hurricanes, or other Acts
of God; or other equally severe, unforeseeable and un-
correctible accidents; where such acts or events were
occasioned directly upon the regulatee or a person under
contract to the regulatee. In addition, the Commissioner
shall exclude from the order assessment period such
periods of non-compliance as were occasioned by delays
attributable to the Air Compliance Unit of the Depart-
ment in excess of routine processing times. Nothing in
this section shall prohibit a regulatee from proposing, or
the Department from accepting, a compliance timetable
which excludes from the order assessment period periods
of non-compliance caused by other acts or events beyond
the control of the regulatee, such as contractors' or sup-
pliers' delays.
(4) Notice, (i) The Commissioner shail report every
case in which he lowers a civil penalty pursuant to Sec-
tion 22a-6b-603(e) or in which he mitigates a civil pen-
alty pursuant to Section 22a-6b-603(g) (1-3), i£ the
monthly civil penalty without such lowering or mitiga-
tion would be greater than three hundred dollars, in the
Monthly Report of Activities of the Air Compliance Unit.
This report shall state the name and address of the reg-
ulatee, the amount of the reduction, the amount of the
civil penalty still to be assessed, and the grounds for
such lowering or mitigation.
(li) The Commissioner shall also send written notice
to all persons who have, within the preceding twelve
months requested copies of this Monthly Report, either
through the Monthly Report or otherwise, of any hear-
ings to be held regarding such cases where the amount
of the civil penalty may be an issue at least ten days
prior to the hearing.
Sec. 22a-6b-603(h). Request for information by the
commissioner
(1) The Comm;ssioncr may require the regulatee to
provide such additional information, including informa-
tion regarding costs, as he deems necessary Jo effectuate
•the purposes of Section 22a-6b-603.
(2) Any person who files any statement, record or
report with the Commissioner containing false or mis-
leading information or other claims will be liable to
criminal prosecution for a Class A misdemeanor punish-
able by imprisonment for a period up to one year and
a fine of up to one thousand dollars ($1000) for each
violation pursuant to Section 53a-157 of the General
Statutes.
(3) Any information disclosing trade secrets and com-
mercial or financial information provided by a regulatee
pursuant to this section will remain confidential if the
regulatee so requests in a letter sent by certified mail
or personal service to the Commissioner or the Director
of Air Compliance, except that such information may be
disclosed to other officers, employees, or authorized rep-
resentatives of the state concerned with carrying out
these regulations or when relevant in any hearing con-
ducted under the authority of these regulations by the
Department of Environmental Protection or in any judi-
cial proceeding, subject to such safeguards as the hear-
ing officer or presiding judge may impose.
Sec. 22a-6b-603(i). Collection
(1) Payment of the civil penalties assessed under this
section may be required monthly, or at such time or time
intervals as the Commissioner determines will most effec-
tively limit the Department's administrative costs and
further the objectives defined in Section 22a-Gb-G03(d).
(2) The present value of the total civil penalty as-
sessed, calculated at the time the notice of violation is
issued, shall be held constant regardless of the timing of
its collection.
Be it known that the foregoing regulations are made, adopted
and promulgated by the undersigned pursuant to Sections 22n-6 and
19-508 of the General Statutes and Section 2 of Public Act No.
665 of the 1973 Public Acts, after the publication in the Connecticut
Law Journal on September 24, 1974, of the notice of the proposal
to adopt, them, the holding of advertised public hearings on Novem-
ber 12, 13, and 14, 1974, and after consideration of all relevant mat-
ter presented, pertaining to Assessment of Civil Penalties for Viola-
tion of Air Emissions Standards and Orders of the Commissioner.
In Witness Whereof, I have hereunto set my hand and seal this
27th day of November, 1974.
DOUGLAS M. COSTLE
Commissioner
Approved: Attorney General, December 20, 1974; Standing Legis-
lative Regulations Review Committee, December 16, 1974. Received
and filed: Secretary of the State, January 2, 1975. Effective Jan-
uary 2, 1976.
-------
IV-9
VIOLATING PROGRESS REPORT REQUIREMENTS
ADMINISTRATIVE REGULATIONS
Regulation! and nolicti ptiMi«f\«rf herein art
printed exactly us nibmidtJ by (He forwarding
agencies. Tkete, being official documenii
tubtntlted by tk» rupansibli agenda, art
consequently not tubject to editing by Ike
Commiuton on Official Legal Publicationi.
DEPARTMENT OF ENVIRONMENTAL PROTECTION
Submission of Progress- B«porti and Assessment
of Civil Penalties
Section 1. Section 19-508-12 of the Regulations of Con-
necticut State Agencies ia amended by adding a new sub-
«ection (f) as follows:
Sec. 19-608-13. Violation! and enforcement
(f) Progress report requirements. (1) Requirement,
time, form. Any person against whom a final order ha*
been issued shall submit progress reports as required and
prescribed by the terms of the order. Such progress
reports shall be submitted in such a form as the commis-
sioner prescribes.
(f) (2) Contents. Progress reports shall contain a
separate declaration for each required step of an order's
compliance timetable, stating either that compliance with
the step is on schedule, or that compliance with the step
is off-schedule. Progress reports declaring that compli-
ance is proceeding on-schedule shall contain a concise
but comprehensive description of (1) the action com-
pleted on each and every step required by the order
during the time period covered by the report, and (2)
the date or dates on which compliance with such step or
steps was completed. Progress reports declaring that
compliance is proceeding off-schedule shall contain a con-
cise but comprehensive description of (1) the specific rea-
sons for the tardiness, (2) the current state of completion,
and (3) the special action which will be taken to return
"on-schedule" by the date of the next progress report.
Progress reports shall contain such other information as
the commissioner may require by the terms of a final
order.
(f) (3) Proof of compliance. Progress reports shall
include the name and address of any vendor whose gooda
were ordered for compliance purposes since the prior
progress report. Where the terms of an order reported
upon require the purchase of any material, service or
equipment, progress reports shall include copies of the
purchase order or orders. The commissioner may require
such other proof as he deems necessary to determine the
progress and degree of compliance.
(f) (-4) Verification of contracted work. Progress
reports shall include the name and address of any con-
sultants, subcontractors, or other agents employed under
the terms of the order since the prior progress report
together with a concise but comprehensive description of
the actions they are to take to assist in compliance with
the orders. Whenever any vendor, consultant, subcon-
tractor or other agent is undertaking any activity regard-
ing any step in the order, the progress report shall include
a verification by the person under order that the vendor,
consultant, subcontractor, or other agent is proceeding
on-schedule.
(f) (5) Liability. Any person required to submit
progress reports shall be liable for failure to meet any of
the requirements of this section notwithstanding any
delegation of responsibility to an agent to complete and
submit reports. Any person who files a progress report
containing false or misleading information or other claims
shall be subject to criminal prosecution pursuant to sec-
tion 53a-157 of the General Statutes.
Civil Penalty Regulations for Air Compliance
Sec. 22a 6b 600. Title
Sections 22a-6b-600 to 22&-6b-900 inclusive, shall be
known and may be cited as "Civil Penalty Regulations:
Air Compliance."
Sec. 22a-6b-601. Violation of progress report require-
ments
When, following hearing or default, the commissioner
determines that a person has failed to submit a progress
report in compliance with the requirements of section
10-508-12 (f), and that mitigating circumstances do not
justify waiver or reduction of penalties, the commissioner
may issue or make finnl an order, assessing a civil penalty
according to the following schedule:
(1) For a first violation of any part of section 19-508-12
(f), a civil penalty of fifty (50) dollars;
(2) For each successive violation of any part of section
19-508-12 (f), a civil penalty of one-hundred (100) dollars
Ba it known that the within and foregoing regulations are adopted
and promulgated by the uodcmigned pursuant to Boettoni IB SOS
and 22a « of the General Statutes and Public Act No. 66!i of the
1973 Public Acta after the publication m the Connecticut LAW
Journal on July 9, 1974, of the notice of the pro[>o«ia,] to adopt them,
the holding of advertised public hearmgg on August 8, 1974, on the
issuance thereof and after consideration of all relevant matter
pre»cnted pertaining to Submiftaion of Progreaa Report! and Aaten-
ment of Civil FenaUiea.
In Witness Whereof, I hare hereunto aet my Imnd and seal thlj 3th
dajr of September, 1974.
ECKARDT C. BECK
Deputy Commijuvjntr
Approved Attorney General, Oclohrr 31, 1974; Bunding I
-------
PART V
OPERATING MANUAL
FOR THE APPLICATION
OF CIVIL ASSESSMENTS
Covering Department Regulations:
22a-6b-602 - Violation of Air
Emissions Standards
22a-6b-603 - Violation of the Terms
of an Order to Abate
an Emissions Violation
22a-6b-601 - Violation of Progress
Report Requirements
-------
V-2
ABSTRACT
This manual contains:
* a short description of the Connecticut Enforcement
Program
* a step-by-step guide to the application of the Air
Compliance civil assessments
* a program guide for civil assessment hearings
officers
* a description of how to use surety devices as part
of the total enforcement program
* an explanation of how to use and update tools em-
ployed in levying civil assessments
IMPORTANT NOTE
This Operating Manual is an Internal Document
of the Department of Environmental Protection. It is
intended to help DEP staff implement and operate the
Department's Civil Assessment Regulations. It can be
bound separately from this volume and distributed to
operating staff members for easy reference.
NOTHING CONTAINED HEREIN, IN WHOLE OR IN PART,
HAS THE FORCE OF LAW. THE APPLICABLE LAW GOVERNING
THE ASSESSMENT OF CIVIL PENALTIES IS TO BE FOUND IN
THE DEPARTMENT'S REGULATIONS, 22a-6b-100 et seq.
-------
V-3
TABLE OF CONTENTS
.Page
I. The Connecticut Enforcement Program V-5
II. How to Apply Section 602 Assessments V-7
A. Understanding the Scope of the Regulation V-7
B. Determining a Violation V-8
C. Applying the Waiver Provision of 602 (g) (4) V-8
D. Including Past Failure to Abate V-9
E. Calculating an Assessment V-10
F. Mitigating an Assessment V-ll
G. Imposing an Assessment V-12
H. Managing the Hearing Procedures V-13
I. Collecting an Assessment V-14
J. Correcting an Assessment V-15
K. Forms and Letters V-16
III. How to Apply Section 603 Assessments V-27
A. Understanding the Scope of the Regulation V-27
B. Measuring the Period of Delay V-28
C. Assessing, Reviewing, and Collecting a
603 Forfeiture V-30
D. Forms and Letters V-31
IV. How to Apply Section 601 Assessments V-35
A. Understanding the Scope of the Regulation V-35
B. Imposing an Assessment V-35
C. Managing the Hearing Procedures V-36
D. Collecting the Assessment V-37
E. Forms and Letters V-38
V. How to Conduct Hearings in Civil Assessment Cases V-44
-------
V-4
Page
VI. How To Use Surety Devices As Part of the Total
Enforcement Program V-52
VII. How To Use and Update Tools Employed in Levying
Civil Assessments V-61
A. Calculating the Cost of Compliance V-62
B. Determining The Applicable Cost of Capital V-128
C. Using Inflation Indexes V-149
D. Estimating the Source's Income Tax Rate V-151
E. Operating the Wang Calculator V-153
-------
V-5
CHAPTER I
THE CONNECTICUT ENFORCEMENT PROGRAM
Over the last decade environmental law and regulation have
expanded dramatically. The effectiveness of environmental law
enforcement has not kept pace.
Connecticut responded to the need for stronger enforcement
with the Enforcement Act of 1973, P.A. 73-665. This law gives the
Department of Environmental Protection a wide range of new enforce-
ment powers. Most notably, it authorizes the Commissioner to
impose civil assessments in such amounts as will ensure immediate,
continued compliance with applicable laws, regulations, orders
and permits.
The Department may impose these assessments directly, without
first going through the courts. (Everything the Department does
under this authority is, however, subject to subsequent court
review.) This fact makes the tool practical, credible.
To achieve these ends, the Enforcement Act has entrusted the
Department with exceptional power. The Department is charged both
with deciding to bring a case and with determining what to do with
it. It must exercise this power with great care: it is not a
judge and does not have judicial discretion. It must adhere care-
fully, closely, and in every case both to the specific limitations
defined by the Legislature, and to its clear intent to limit the
Department's discretion as much as possible consistent with achiev-
ing its primary enforcement objective.
The most important of these limitations is the use of economic
standards to determine the amount of the assessment in every case.
These standards ensure that no person can be charged more than that
person has saved from noncompliance. This standard also ensures
that the assessment's incentive will be large enough to make com-
pliance pay (and to protect companies that have complied from un-
fair competition from those that have not.)
The Department's civil assessment regulations provide for
assessments equal to the economic benefit a source realizes during
each incremental period that it delays or avoids coming into com-
pliance. In effect, they tax away the financial advantages of
noncompliance. (Volume I of the Connecticut Enforcement Project's
final report, "An Introduction to Connecticut's Economic Approach
to Environmental Law Enforcement" gives a broad overview of this
economic approach, and Part III of this Volume explains the eco-
nomics as they apply in Air enforcement in detail.)
-------
V-6
In the Air Compliance area, the Department has so far promul-
gated civil assessment regulations that apply to violations of
the requirement that those under order submit progress reports
(§601) to violations of existing emission standards (§602), and
to failures to comply with the terms of orders to abate illegal
emissions (§603).
This Operating Manual is designed to help Department personnel
apply these regulations. Chapters II to IV:
* discuss how various operating issues, from warning
those who may be liable to collecting unpaid assess-
ments from recalcitrant sources, should be handled
for each of the 601-603 regulations;
* provide a series of forms and letters for use in
administering each regulation.
Later Chapters cover how to conduct hearings, how to use the
Department's power to require sureties, and how to use and update
the tools needed for setting accurate economic civil assessments
easily.
Volume I of the Enforcement Project's report provides a brief
overview of the Department's new economic enforcement approach,
including a summary description of how it is applied in all the
Department's other program areas. Part I of this Volume provides
a fuller description of how this approach is applied in the Air
program.
A copy of the Enforcement Act can be found in Volume I, and
copies of the Air Compliance civil assessment regulations covered
by this Manual are reproduced in Part IV of this Volume.
-------
V-7
CHAPTER II
HOW TO APPLY THE 602 REGULATIONS
Section 602 authorizes the Department to impose economic civil
assessments on any person who violates Connecticut's particulate,
hydrocarbon, carbon monoxide, nitrogen oxides, and sulphur oxides
emissions standards. However, the Department will not impose a
civil assessment under this regulation as long as the source is mov-
ing promptly and effectively to bring its illegal emissions into
compliance. Its primary purpose is to enable the Department to make
sure, quickly and inexpensively, that noncomplying sources take what-
ever remedial steps are required without delay.
A. UNDERSTANDING THE SCOPE
OF THE REGULATIONS
Any company or premise can have many 602 infractions simulta-
neously: every machine that emits one of the pollutants covered by
the regulation is a separate "unabated activity," and each "unabated
activity" is liable for a separate civil assessment, each with sep-
arate maxima. The regulations, §22a-6b-602(b) (17) , define "unabated
activity" as any process or piece of property which
(i) emits or causes to be emitted, any air pollutant
in excess of the emission standards prescribed in
§19-508-9 and 19-508-18 to 19-508-22, inclusive
of the Regulations for the Abatement of Air Pollu-
tion; this includes emissions of particulates,
carbon monoxide, hydrocarbons, sulfur oxides,
and nitrogen oxides;
(ii) is not equipped or operated with the emission
controls required by §§19-508-18 to 19-508-22.
Each such process or piece of property is a separate "unabated ac-
tivity" regardless of the number of identical or closely similar
processes or pieces of property owned by the same person or located
on the same premises.
Liability under this regulation includes all periods in which
a regulatee has failed to incur all the necessary expenses to in-
sure immediate and continued compliance with applicable emission
standards. It excludes, however,
(1) The time that a person is under a final order
of the Commissioner
-------
V-8
(2) the time before these regulations took effect
(February 18, 1975)
(3) any time more than two years before a violation
is detected.
B. DETERMINING
A VIOLATION
The processes of detecting and proving equipment violations of
illegal emissions does not vary from current Department practice.
A violation of any equipment or emissions standard set forth in
§§19-508-18 to 19-508-22 of the Department's Regulations is a 602
violation.
C. APPLYING THE WAIVER
PROVISION OF 602(g)(4)
Unless a person responsible for an emissions violation had
prior notice of its duty to abate such a violation, it may hot be
assessed a 602 civil penalty as long as it moves promptly and ef-
fectively to come into compliance after it has been detected and
put on notice. Section 22a-6b-602(g)(4) defines what constitutes
notice and what actions satisfy the "prompt and effective" stand-
ard in some detail.
Section 22a-6b-602(g)(4)(iii) provides that the waiver pro-
vision does not apply and that a 602 civil penalty may be assessed
if any notice has, within 5 years of the date of the detection of
the violation, been given the violator in any of the following
forms:
(1) a written order, or
(2) a warning letter under §19-508-12 (b) (2), or
(3) actual written notice that he has been found in
violation of one or more emission standards, or
(4) actual written notice of both the duty to comply
with the relevant requirements of the Air Regula-
tions, §§19-508-9 and 19-508-18 to 19-508-22 and
of the potential liability to civil assessments
for failure to do so.
Note, however, that for such notice to be valid, it must:
(1) be sent by certified mail or personal delivery
or service and
(2) have referred to the same regulations that are
the subject of the current action.
-------
V-9
To be sure, once the Department has undertaken a significant mail-
ing and education campaign, there will be relatively few cases in
which this non-imposition or waiver section will apply. In the
interim, however, the following procedures should be followed in
dealing with a source that can claim coverage by the waiver provi-
sion of §22a-6b-602(g)(4)(i) and (ii) because it has not received
such notice.
No civil assessment will be imposed on such a source if it
takes all steps necessary to bring the unabated activity "promptly
and effectively" into continuing compliance with applicable emis-
sion standards. Such prompt and effective action must continue
either (a) until the source comes under a final order of the Depart-
ment setting out a binding schedule of compliance steps enforceable
by civil assessments authorized by §603, or (b) until actual, full
compliance is achieved. Prompt and effective action is specific-
ally defined for the period immediately after detection as follows:
(1) The regulatee must submit an acceptable, detailed
written plan of action including a compliance
schedule within 40 days of receipt of a warning
letter in which the Department requests such a
plan.
(2) It need do nothing from the time it submits such
an acceptable compliance plan until 5 days after
it has been notified of the results of the Depart-
ment1 s review of this plan, typically the time it
received a DEP order.
(3) Thereafter the source either comes under a DEP
order (which, once it is final, ends 602 liabil-
ity) or it must take whatever steps are approp-
riate in the circumstances to achieve compliance
as quickly and completely as possible. If the
source is doing less than what a DEP order would
have required of another similarly-situated source,
it is very probably not meeting this standard.
If a source qualifies for the waiver provision, the Depart-
ment should send him warning letter CA-602-W in lieu of an assess-
ment letter.
D. INCLUDING PAST
FAILURE TO ABATE
Usually civil assessments run prospectively from the date of
detection to the date of compliance. However, the regulation spec-
ifically provides that the Department may, under certain circum-
stances, impose 602 civil assessments that cover past periods of
noncompliance which occurred before formal detection. Section
22a-6b-602(h) defines these circumstances as those where:
-------
V-10
(1) it is reasonable to assume that the emission
violation is the result of a regulatee's past
failure to make the control expenditures nec-
essary for compliance, and
(2) the regulatee is not protected by the waiver
provisions of (g)(4).
Since there are serious problems in proving past violations,
the Department must have a good basis for alleging that a source
has not been complying in the period before detection. For example,
if the Department finds no control equipment on a rotary kiln, e.g.
no scrubber, baghouse, or other control device, there is a clear
inference of past violation. On the other hand, if an incinerator's
particulate emission is in violation of Department standards because
of a bad air mix, .the current violation is not adequate proof of
past noncompliance. The Department must proceed cautiously in as-
sessing for past delay.
The regulations also impose two restrictions on assessments
made for past delay:
(1) No assessment period shall include any time before
these regulations.became effective,
(2) No assessment period shall include a predetection
period greater than two years.
E. CALCULATING
AN ASSESSMENT
Civil assessments, which are calculated using the familiar
businessman's capital budgeting process, are just large enough
to make compliance attractive. Specifically, the civil assess-
ment is calculated to be that payment which, if made at the end
of each month throughout a specified period, would have the same
net economic impact on a company as the expenditures necessary
for compliance with emission standards. While the formula for
this calculation is relatively complex (See "Part III - Economics"
above), Department staff do not have to understand it to use it.
It has been programmed on a Wang Calculator and is easy to use.
For most assessments, only four variables must be determined
in order to calculate the amount due. These are:
(1) Equipment costs
(2) Operating costs
(3) The cost of capital for the source's industry, and
(4) In some cases the source's applicable income tax rate.
-------
V-ll
The precise components of these variables are spelled out in
greater detail in the "Definitions" section of the Regulations
(see §22a-6b-602(b)). For the purposes of ascertaining these vari-
ables for assessment purposes:
(1) Obtain the equipment and operating costs using
Chapter VII (A) of this manual, "Calculating the
Cost of Compliance."
(2) Obtain the cost of capital for the appropriate
industry using Chapter VII (B) of this manual,
"Determining the Applicable Cost of Capital."
(3) If the source is a medium or large business (not
in an extractive industry) assume a 48 percent effective
tax rate; if it is a govenment body or a non-profit
institution assume a zero percent rate. Otherwise
see Chapter VII (C) of this manual.
To calculate an assessment, write these variables onto the
calculation worksheet which follows this section and calculate
the assessment by using these variables in the Wang Calculator
(See Chapter VII (E) of this manual, "Operating the Wang Calcu-
lator. ")
THE MONTHLY ASSESSMENT CALCULATED ON THE WANG SHOULD BE MULTIPLIED
BY THE PERIOD OF DELAY IN THE ASSESSMENT PERIOD TO ASCERTAIN THE
TOTAL AMOUNT OF THE ASSESSMENT THAT WILL BE IMPOSED UNDER THESE
REGULATIONS. IF NONCOMPLIANCE CONTINUES, THE FINAL CIVIL ASSESS-
MENT SHOULD BE DETERMINED BY MULTIPLYING THE MONTHLY ASSESSMENT BY
THE ADDITIONAL PERIOD OF NONCOMPLIANCE AND ADDING THIS AMOUNT TO
THE AMOUNT ALREADY ASSESSED.
F. MITIGATING
AN ASSESSMENT
These economics-based civil assessments are just large enough
to ensure immediate and continued compliance with Connecticut's en-
vironmental standards. However, there may be specific instances
where additional factors may be relevant in determining how large
the assessments should be in individual cases. Sections 603(g)(l)
and (3) instruct the Commissioner to take any such factor into ac-
count and to mitigate any civil assessment upon such terms as he in
his discretion deems necessary and proper.
In imposing an assessment under this regulation, attention
should be given to determining whether any one or combination of
the following facts, on balance, is noteworthy enough to miti-
gate the assessment amount:
(i) The character and degree of impact the un-
abated activity has had on the public trust
in the air of the State, especially on any
rare or unique natural phenomena
-------
V-12
(ii) The character and degree of injury to, or
interference with, public health, safety, or
welfare which is caused or threatened to be
caused by the unabated activity
(iii) The conduct of the person incurring the civil
penalty in taking all feasible steps or pro-
cedures necessary or appropriate to comply or
to correct the unabated activity
(iv) Any prior violations by such person of statutes,
regulations, orders or permits administered,
adopted, or issued by the Commissioner
(v) The economic and financial conditions of such
person
(vi) The character and degree of injury to, or inter-
ference with reasonable use of property which is
caused or threatened to be caused by such unabated
activities.
Any mitigating circumstances should be noted in the regulatee's
file and brought to the attention of the Director of the Enforcement
Section of the Air Compliance Unit who will recommend to the Commis-
sioner the appropriate action to be taken in view of these circum-
stances. Both the formula assessement and the mitigating circum-
stances should be formally noted on the "Civil Assessment Checklist",
a copy of which follows on page V-17.
G. IMPOSING
AN ASSESSMENT
The decision on whether to impose an assessment in an indi-
vidual case is made at the discretion of the Commissioner, although
he may delegate this authority. In any case, the decision to make
such an assessment must begin with a recommendation from the As-
sistant Director for Enforcement. Once this decision has been made,
the procedure for imposition is a simple one.
The Department's first step will be to send Assessment Letter
CA-602-2 to the violator, CERTIFIED MAIL, RETURN RECEIPT REQUESTED.
The date the letter is sent out should be logged on the Civil As-
sessment Checklist.
As these letters indicate, once the regulatee receives the
letter, it has twenty days in which to request a hearing. If the
regulatee does not request a hearing within this period, the as-
sessment letter automatically becomes a final order of the Commis-
sioner. The assessment is then payable on the date specified in
the assessment letter. The Civil Assessment Checklist can be used
to keep track of this 20 day deadline.
-------
V-13
H. MANAGING THE
HEARING PROCEDURES
Section 22a-6b-101 of the Civil Penalty Regulations defines
when a hearing is required, how it must be conducted, and when
it may be appealed. Before a hearing is held, be sure to read
the guide to conducting hearings, Chapter V of this manual.
The Department should generally be able to avoid hearings by
using one of the following devices:
* When a source objects that an assessment is too high,
the Department can agree to collect a smaller amount
than that assessed that is agreeable to the source.
(Civil assessments are due and payable at the time
that the order by which they are imposed becomes a
final order of the Commissioner. However, the Depart-
ment can schedule (or postpone) collection over as
long a period as it thinks most beneficial — as long
as it charges interest for the value of the deferral
to those who receive the benefit.) Postponing the
collection of part of the amount assessed does not
lower thesource's liability, but it is a gesture of
reasonableness likely to be rewarded by a gentleman's
agreement to avoid a hearing. In negotiating such an
agreement, Department staff should make clear that re-
duced collection (1) does not mean that the assessment
has been lowered and(2) that the final amount due will
be determined later when adequate information is avail-
able. This option entails minimum expense to the De-
partment, allows it to seem reasonable to the regula-
tee, and still allows it to collect some money immedi-
ately.
* If the regulatee forces a hearing, the Department may
defer a hearing on the accuracy of the amount of civil
assessment if it finds that necessary information is
missing but will become available later. (See §22a-
6b-602(f)(iv).) Deferral in no way limits the source's
ultimate liability.
* The correction procedure can and should be used as an
attractive alternative to the hearing process. If a
source questions the accuracy of a civil assessment
calculation, the Department should make clear that
there is a correction-as-of-right procedure which can
be followed in .lieu of the hearing process.
Any action regarding variable collection or deferral should
be clearly noted in the regulatee's file with the reasons the De-
partment took such action.
For a further discussion of variable collection and deferral
see Chapter VI.
-------
V-14
I. COLLECTING
AN ASSESSMENT
The Department does not anticipate having any trouble in
collecting civil assessments. Other agencies with similar en-
forcement programs have not had any trouble in collection and
none is expected here. However, for the rare delinquent case,
the Enforcement Act provides an easy collection procedure.
If a source does not pay his assessment by the date indicated
on his assessment notice, send him the collection letter, CA-602-
C, which follows at the end of this section. If payment is not
received within three weeks of receipt by the source of the collec-
tion letter, the case should be turned over to Mr./Ms.
who will refer the matter over to the Clerk of the appropriate
Superior Court which will enforce the assessment.
When an assessment is received, the check should be properly
logged and delivered to the Department's Bureau of Administration
under transfer letter, CA-602-T. The Bureau will have the check
deposited in the proper account and will provide you with a re-
ceipt for the assessment check which should be placed in the source's
file.
J. CORRECTING
AN ASSESSMENT
One of the key safeguards built into the regulations is a guar-
antee that a source can have any assessment lowered if it was based
on excessive cost estimates. The source has a right to a reviewable
hearing on this issue as soon as it comes into compliance, and the
Department may hold such a hearing earlier if it feels this appro-
priate, given the regulatee's cooperation and the availability of the
necessary evidence. Overassessments are returned with interest.
This safeguard goes a long way to ensure that assessments are never
excessive or uneconomic . It is important to understand that the
scope of this correction procedure is fair but narrow:
(1) The only elements of the civil assessment calculus
subject to correction are the figures for:
(a) equipment cost
(b) operating and maintenance cost
(c) the assessment period (e.g., if the period
of delay turns out to be shorter than that
for which an assessment was made)
(d) depreciable life of the equipment (if a fig-
ure other than the 10-year figure authorized
in the Regulation is used). The other ele-
ments of the assessment calculus, e.g., the
rate of inflation, are not subject to the
correction procedure.
-------
V-15
(2) Only "hard evidence" will be accepted to substantiate
claims for correction. This means that in most cases
actual purchase vouchers or similar invoices will be
required as evidence that actual compliance costs were
less than those estimated by the Department for the
purpose of making an assessment. Since purchasers can
easily obtain proof of purchase from vendors such evi-
dence should be required. The reviewing engineer
should carefully scrutinize correction applications to
make sure that they include all elements of cost that
were considered in making the initial assessment.
(See Chapter VII (A) of this manual.)
-------
V-16
K. FORMS AND LETTERS:
THE 602 REGULATIONS
The following forms and letters should be used for applying
civil assessments for violations of emission standards:.
* 602 Assessment Checklist
* General Notice of Civil Assessment Letter
(CA-602/603-GN)
* Assessment Warning Letter (CA-602-W)
* Assessment Letter (CA-602-A)
* Collection Letter (CA-602-C)
* Letter Explaining Factors Used in Assessment
Calculation (CA-602/503-FAC)
* Correction Letter (CA-602/603-COR)
* Transfer Letter (CA-602/603-T)
* Refund/Denial Letter (CA-602/603-R)
Copies of these forms and letters may be found on the
following pages.
-------
V-17
CIVIL ASSESSMENT CHECKLIST; SECTION 602
§ of
Manual Initia
Name of Source:
Violation Detected By:
Violation Detected On:
II (C) Waiver Provisions Applicable? /~7 Yes /~7 No
II (C) Warning Letter (CA-602-W) Sent On:
II (C) If Waiver Provisions Apply, Date on Which Source Fails to Meet
Compliance Obligations of 602(g)(4):
Note Reason:
II (D) Period of Violation in Months:
II (E) Assessment Variables
Equipment Cost:
Operating Cost:
Cost of Capital:
Income Tax Rate:
II (E) Monthly Liability:
II (E) Assessment Equals:
II (F) Mitigating Circumstances, if any:
II (F) If Mitigation Occurs, It Was Noted in the Monthly
Report of:
II (G) Assessment Letter (CA-602-A) Sent Certified Mail On:
II (G) Return Receipt Shows Receipt By Source On:
II (G) Twenty Days After Receipt Is:
II (H) Request for Hearing Received by Above Date: /~7 Yes / / No
II (I) Payment Received On:
II (I) Collection Letter Sent On:
II (I) Collection Referred On:
II (J) Request for Correction Received On:
II (J) Correction / / Granted / / Refused On:
Payment Sent to the Bureau of Administration On:
-------
V-18
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
SUBJECT: Liability for Monetary
Assessments
Dear
The Department of Environmental Protection has been enforc-
ing Connecticut's air quality emissions standards since 1972.
These standards attempt to strike the most effective balance in
protecting the health, safety, and economic well-being of Connect-
icut "s citizens.
Over 96 percent of Connecticut's known sources of air pollu-
tion are now in compliance. In fairness to those who are in com-
pliance, and in order to ensure that Connecticut's environmental
laws are respected, the Commissioner of Environmental Protection
has been authorized to make money assessments against those that
are not in compliance with applicable emissions standards or abate-
ment orders. So that these assessments will be large enough to en-
sure "immediate and continued compliance," they have been designed
to remove any economic incentive to delay coming into compliance.
As the owner of a source of air pollution, you are liable for
any violations of emission standards or for any delinquency in
meeting the terms of a state order that develop after the effective
date of this new assessment authority, February 18, 1975. This
liability is in addition to the Commissioner's other enforcement
powers: to require and cause the forfeiture of sureties and to re-
fer violators to a prosecutor or the Attorney General for criminal
and/or civil action.
We are enclosing copies of the state regulations that
(1) define what you must do to avoid liability for
such assessments. (Regulations for the Abatement
of Air Pollution, §§19-508-9 and 19-508-18 to
19-508-22, including amendments to §19-508-12 (f).)
(2) explain your potential assessment liability for
violating any of these standards. (Enforcement
Regulations, §§22a-6b-100 to 22a-6b-102 (proced-
ure) and 22a-6b-601 to 22a-6b-603 (failure to file
required progress reports, violations of emissions
standards, and failure to comply with the terms of
an order). The maximum amount you may be assessed
for each month of emission or order violations is
listed in the table in §22a-6b-602(d).)
-------
V-19
If you wish to discuss these regulations or have any ques-
tions, please do not hesitate to call the Air Compliance Enforce-
ment Section at 566-3160.
Thank you for your help in creating and maintaining a better
environment for Connecticut.
Sincerely,
Henry Beal
Director of Air Compliance
Enc.
CA-602/603-GN
-------
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
NOTICE OF EMISSIONS VIOLATION; WARNING LETTER
NOTICE NO.
VIOLATION: §19-508-
Dear
The Commissioner of Environmental Protection has determined
that you are now in violation of the above-mentioned regulation
governing emission standards. For this violation you are liable
to civil penalties to be assessed pursuant to Department Regula-
tions 22a-6b-100 et seq. However, under the terms of the De-
partment's Regulations, you may be able to avoid imposition of
the penalties if you take prompt and effective action to bring
your currently unabated activity into compliance with applicable
standards.
Specifically, you will be deemed to have taken prompt and
effective action if you
(a) submit a detailed written plan of action includ-
ing a timetable which, once implemented, will
achieve compliance as promptly and effectively
as possible, and
(b) submit this plan within 40 days of receipt of
this letter, and
(c) either consent to a compliance order issued by
the Department, or independently take all steps
necessary to achieve prompt,continuing, effect-
ive compliance.
If you do not meet these standards of performance, the
"second chance" waiver provisions of the Department's Regula-
tions will not apply and the Commissioner will proceed to
impose an assessment against you.
If you have any question concerning this notice, please
contact M of the Air Compliance Unit Enforcement
Section at 566-3160.
Sincerely,
Henry Beal
Director of Air Compliance
CA-602-W
-------
V-21
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING
HARTFORD, CONNECTICUT 06115
CIVIL ASSESSMENT
NOTICE
No. 2-
TO:
RE:
Premise Name
Premise Address
The Commissioner of Environmental Protection has determined that you are now in violation of the below-
mentioned Regulation governing emission standards. Therefore, pursuant to the provisions of Department
Regulations 22a-6b-100 et. seg., this letter constitutes notice of the violation, a statement of the
amount of civil assessment(s) to be imposed for-this violation, and a statement of your right to a hearing.
VIOLATION:
The Commissioner has determined that you have now been in violation of S
of the Department's Administrative Regulations for the Abatement of Air Pollution for a
period of months.
ASSESSMENT: You are hereby notified that yoQ have been assessed S
violation. Furthermore, for each additional month until you are either in"compliance
for this period of
or operating under the terms of a State Order, the Commissioner will impose an additional
assessment of $ per month.
HEARING: You have a right to a hearing on this assessment. To request a hearing you must deliver
to the Commissioner or the Director of Air Compliance a written application for hearing
within twenty days of the receipt of this notice.
PAYMENT: Unless a hearing is requested, this notice shall become a final order of the Commissioner
twenty-one days after the date of receipt. Payment of the civil assessment shall be due
twenty-five days after receipt of this notice. Payment should be made by check to the
order of "Conn. Department of Environmental Protection" and should be delivered to the:
"Assistant Director of Air Compliance Enforcement
Department of Environmental Protection
165 Capitol Avenue — Room 133
Hartford, Connecticut 06115
If you have any questions concerning this notice, please contact the Assistant Director at the above
address or, by phone, at 566-3160. All correspondence should be identified with the Civil Assessment
Notice Number (see top right-hand corner).
Signed(Assistant Director)
Date Signed(Director)
Date
SERVICE
A copy of the foregoing Notice was submitted to. the above-named as indicated below:
/ / Personally delivered to
Recipient's Signature
/ / Certified mail to the usual place of business or residence. Registration No.:
Date
RPD
Town
Premise
AQCR
NEDS County EPA 100T Premise: / 7 Yes
7""7 No
Reg.#
Yr
Day
CA-602-A (FE1102 ^6/13/75))
-------
V-22
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Subject: State Order No.
Violation Notice No,
Dear
The Department of Environmental Protection has found that you
were violating the State's emissions standards and has consequently
imposed a civil assessment on you pursuant to Department Regulation
22a-6b-602. Notice of the violation and the consequent civil as-
sessment was sent to you by certified mail on .
/ / Since you did not request a hearing, this notice
became a final order of the Commissioner on
/ / This notice became a final order of the Commissioner
after hearing on .
Payment of the assessment was due on and is
now over three weeks late. ~~
The law provides that, if the assessment is not paid promptly,
it may be enforced in the same manner as a judgment of the Superior
Court. Accordingly,if we do not receive your payment, the Commis-
sioner will file his final order with the Clerk of the Superior
Court, whereupon his civil assessment order will have the same
status as a judgment of the Superior Court and will be enforced by
the Sheriff accordingly.
We expect to receive your delinquent payment no later than
. If we do not receive payment from you by
that time, we will be compelled to institute proceedings with
the Superior Court.
If you have any questions concerning this letter, please
feel free to contact me at 566-3160.
Sincerely,
Assistant Director,
Air Compliance Unit,
Enforcement Section.
CA-602-C
-------
V-23
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Subject: State Order No.
Reference: Your Request of / /
Assessment Notice No.
Dear
In response to your request pursuant to §22a-6b-602(e)(3)
or 603(e) for a written explanation of the methodology used to
determine your assessment, we enclose the Department's "Calcu-
lating Economic Remedies".
The variables used to calculate your assessment in the
manner described in this document are as follows. (Please
refer to Enforcement Regulations §22a-6b-602(b) for defini-
tions of these variables):
"Equipment Costs":
"Operating Costs":
"Inflation":
"Depreciable Life":
"Cost of Capital":
If you have any further questions concering the assessment
calculation, please do not hesitate to contact M
of the Enforcement Section at 566-316CK
Sincerely,
Assistant Director,
Air Compliance Unit,
Enforcement Section.
CA-602/603-FAC
-------
V-24
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
/ Your Ref.:
Notice of Violation No.:
Dear
This letter is written in response to your inquiry regard-
ing possible correction of the amount of the civil assessment
imposed upon you.
Department Regulations 22a-6b-602(g) (2) and 603(g) (2) pro-
vide that a regulatee in receipt of a civil penalty notice of
violation may petition the Commissioner for correction of a
civil assessment imposed upon him any time up to two years after
the Commissioner finds the regulatee has come into compliance.
The regulation requires that your petition be in writing,
setting forth any evidence that the cost of compliance has been
or will be less than the Commissioner had initially determined
in imposing the civil assessment. Such a petition must be sent
by certified mail or by personal service to the Commissioner or
the Director of Air Compliance.
The Commissioner may, in response to the petition, or on his
own behalf, lower an assessment he determines was excessive. If
the Commissioner takes no action in response to such a petition,
or if his response is not satisfactory to you, you may obtain a
hearing of right once you come into compliance or at any other
time specified in a final order. Following such a hearing, the
Commissioner must correct the civil assessment if and to the
extent that the actual cost of compliance has been less than he
had initially determined. If you are not satisfied with this
decision, you may then appeal it to the courts.
Any refunds to be made to you under this regulation shall
be made with interest calculated at the same cost of capital
rate used to make the civil assessment.
If you have any questions concerning this letter or the
nature of the correction procedures under the Regulations,
please contact me at 566-3160.
Sincerely,
Assistant Director,
Air Compliance Unit,
Enforcement Section-
CA-602/603-COR
-------
V-25
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Source:
Civil Assessment Notice No.
Amount of Payment: $
Bureau of Administration, Financial Services
Department of Environmental Protection
Room
The attached check represents payment by the above-named
source for a civil assessment imposed pursuant to the Depart-
ment's regulations 22a-6b-100 et seq.
/ / There remains a possibility that all or part
of this check may have to be paid back to the
issuer with interest. Therefore, please de-
posit this check into the civil assessment
pending receipts fund and return a receipt of
such deposit to me.
/~7 The issuer of this check has no further oppor-
tunity to appeal or seek correction of the as-
sessment that gives rise to this payment.
Please deposit the check into the General Fund
and return a receipt of such deposit to me.
Sincerely,
Air Compliance Unit,
Enforcement Section .
CA-602/603-T
-------
V-26
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Your Ref.:
Notice of Violation No.:
Dear
Pursuant to the correction procedures provided by Department
Regulations 22a-6b-602(g) (2) and 603 (g) (2), the Commissioner has
considered the evidence you have presented in your written peti-
tion for correction.
The Commissioner has
/ / determined that your assessment will be lowered
by the amount of $ . A check for this
amount, with interest,is enclosed with this
letter.
/~7 determined that your assessment for each month
of continuing violation shall be reduced from
to .
/ / determined that the initial civil assessment
imposed upon you is correct and that your
petition for correction is hereby denied for
the reason(s) here described:
If you have any questions concerning this letter or the
correction proceedings, please contact me at 566-3160.
Sincerely,
Assistant Director,
Air Compliance Unit/
Enforcement Section.
CA-602/603-R
-------
V-27
CHAPTER III
HOW TO APPLY THE 603 REGULATIONS
Section 603 authorizes the Department to impose civil
assessments on those who fail to comply with the terms of an
order.
A. UNDERSTANDING THE SCOPE
OF THE REGULATION
All orders issued pursuant to §§19-508-9 and 19-508-18
to 19-508-22 of the Department's Regulations, inclusive, which
have become final either by the passage of time or by the con-
sent of the regulatee or after hearing, can be enforced under
this regulation.
Most violations will be defined in terms of failing to
comply with a deadline established in the order's compliance
schedule, be it the final date for meeting emissions standards
or one of the intermediate steps. Within reasonable limits,
partial nonperformance is a full violation. However, as the
following example indicates, falling behind in an order's com-
pliance schedule is a single violation.
Example:
Consider the case of a source with the following compliance
timetable and actual compliance dates:
Step
1:
2:
3:
4:
Action
Hire Engineer
Order Equipment
Scheduled Actual
Compliance Compliance
Date
Date
Month 2
Month 3
Receive Equipment Month 9
Install and
Operate Equipment
Month 12
Month 4
Month 5
Month 14
Month 17
Civil
Assessment
Imposed
Yes
No
Yes
No
A civil assessment imposed for noncompliance
with Step 1 covers a two month violation. While
Step 2 is also completed two months behind sched-
ule, this is not a new violation for it is the
same two months delay incurred in meeting Step 1,
-------
V-28
However, when Step 3 is completed five months
late, a new violation (an additional delay of
three months) has occured and a new civil as-
sessment can be imposed. Similarly, if final
compliance occurs with this same five months
delay, there is no new violation. Thus, the
603 regulations impose assessments only for
the total cumulative delay in meeting a com-
pliance timetable.
B. MEASURING THE
PERIOD OF DELAY
The amount a source has saved by not complying with the terms
of an order is a direct function of how long the source has delayed
and therefore so is its civil assessment liability. This makes de-
termination of the time a source is behind schedule critical to cal-
culating civil assessments.
The period of delay is measured as the length of time between
the date of scheduled compliance and actual compliance. It can be
measured for interim steps in the order schedule and/or for the fi-
nal compliance deadline. If civil assessments are tied to the final
deadline only, the Department does not have to worry about calculat-
ing cumulative delay step by step or about having to make refunds
with interest in the event the source catches up some of the time it
lost in earlier steps. (If the source has been assessed early in
its schedule and then "catches up" all or part of the delay before
the final compliance deadline, the Department is required to repay
a proportionate share of the assessment with interest.) However,
especially for recalcitrant sources that do not react to warning
letters, imposing an assessment on an intermediate step may be useful,
Since the regulations speak in terms of maximum MONTHLY as-
sessments, time periods of delay should be measured in months or
fractions of months. For ease of calculation, monthly periods of
delay should be expressed in fractional equivalents, e.g., 10 days
= 10/30 = .33 months.
Excluding Delay Before
February 18, 1975
The Department is not including delay accrued before the
effective date of the 603 regulation, February 18, 1975, in the
assessment period used in calculating civil assessments. This
poses special problems during the first year or two of the regu-
lation's use.
To measure the assessment (or violation) period for sources
that were under order before February 18, 1975, EXCLUDE THE CUMU-
LATIVE DELAY THAT OCCURRED PRIOR TO THIS EFFECTIVE DATE. For
such sources,civil assessments will apply only to any incremental
delinquency that develops after February 18, 1975. For example:
-------
V-29
Source A is on a compliance timetable which
commenced on January 1, 1974. Step 6 of the
order, requiring the issuance of purchase
orders, was due on September 1, 1974, but was
not completed until December 1, 1974 (3 months
behind schedule). When the source reaches step
10 of the order, requiring the installation of
equipment on May 1, 1975, he is still 3 months
behind schedule. He does not install the equip-
ment until August 1, 1975 and thus completes
his compliance timetable three months late.
However, since this source was under order be-
fore the effective date of the regulation, his
cumulative delay which occurred before that date
is to be subtracted from the total period of de-
lay. Here, since there was no increment of delay
after February 18, 1975, there will be no civil
assessment applied to this source.
Delays Verifiably Beyond
The Source's Control
The regulations's purpose is to ensure that order recipients
exercise diligence, competency, and urgency in complying with the
Department's orders. Delays that the source could not have fore-
seen or avoided and that can be verified if claimed are therefore
excluded from the period of delay that defines civil assessment
liability by §603 (g) (3). This Section, provides that the Commis-
sioner must exclude from the assessment period any delay which is
caused:
* by strikes or lockouts; riots, wars, or other acts
of violence; floods, hurricanes, or other Acts of
God; or other equally severe, unforeseeable and
uncorrectable accidents; or,
* by delays attributable to the Air Compliance Unit
of the Department in excess of routine processing
times.
None of these mandatory exclusions can become a loophole for
the relatively few willful, dishonest scofflaws with whom the
Department must deal. Every mandatory exclusion, if claimed,
can be easily verified by the Department. If a source claims
that a strike prevented him from complying, one or two phone
calls can confirm whether or not there was a strike.
Unverifiable grounds for exclusion are specifically not
covered by §603 (g) (3). In particular, THIRD PARTY SUPPLIER DELAY
IS A DISCRETIONARY GROUNDS FOR MITIGATION ONLY. Such grounds are
not covered because, if they were, they could be turned into a
major loophole by recalcitrant sources willing to lie because the
Department generally would not be able to disprove such claims.
-------
V-30
Although the regulation had to be drafted tightly to deny
such a loophole to these few sources, the Department will continue
to grant extensions for third party delay and other reasons not
covered by §603 (g) (3) when in its judgment such action is warranted.
If a source claims a reduction in its assessment period be-
cause of excessive processing delay by the Department, the Depart-
ment should compare the actual time taken in handling the case with
the routine times required for handling the average case reported
in Parts II (Baseline Profile) and VI (Administrative Costs) in this
Volume.
C-G. ASSESSING, REVIEWING,
AND COLLECTING A 603 FORFEITURE
Sections 602 and 603 are extensions one of the other. The
moment a source comes under a final order it exchanges §602 lia-
bility for potential §603 liability. They are both based on
identical economics, have closely similar safeguards, and operate
under almost the same procedures. Consequently, most of the oper-
ating guidelines outlined in the last Chapter for §602 also apply
to §603.
* A day's delay in compliance before a final order
has the same value to the source as a day's de-
lay after the order is final. The value of the
delay, and the amount of the assessment are
therefore calculated identically. The 602 and
603 calculations require exactly the same in-
formation regarding equipment costs, operating
costs, and industry cost of capital. They use
exactly the same assessment formula. See Chapter
II (E) above.
* The Enforcement Act requires the Department to
consider mitigation based on the same list of
criteria in both cases. See Chapter II (F).
* The procedures for imposing, reviewing, collect-
ing, and correcting assessments are all identi-
cal. See Chapter II (G, H, I, and J).
-------
V-31
D. FORMS AND LETTERS:
THE 603 REGULATIONS
Because §603 is so similar to §602, it is possible to use
identical forms and letters for most purposes. Commom forms and
letters carry the identification in the lower right-hand corner,
"CA-602/603- ." They are not reproduced here but will be found
in the earlier 602 "Forms and Letters" section of this manual.
The forms and letters needed to implement the 603 regulations are
listed below.
* 603 Assessment Checklist
* General Notice of Civil Assessment Letter
(CA-602/603-GN)
* Assessment Letter (CA-603-A)
* Collection Letter (CA-603-C)
* Letter Explaining Factors Used in Assessment
Calculation (CA-602/603-FAC)
* Correction Letter (CA-602/603-COR)
* Transfer Letter (CA-602/603-T)
* Refund/Denial Letter (CA-602/603-R)
-------
V-32
CIVIL ASSESSMENT CHECKLIST; SECTION 603
§ of
Manual Initials
Source:
State Order No.:
III (A) Step No. Scheduled For:
III (B) Period of Delay Up To Today:
Does Order Include A Warning? / / Yes / / No
Warning Letter CA-603-W Sent On:
III (B) Reduction in Period of Delay for
Delay Beyond Regulatee's Control? /~7 Yes /~7 No
III (C) Assessment Variables
Equipment Cost:
Annual 0 & M Cost:
Cost of Capital: _
Income Tax Rate:
III (C) Monthly Liability:
III (C) Assessment Equals:
III (C) Mitigating Circumstances, If Any:
III (C) Mitigation, If Any, Was Noted In The Monthly
Report of:
III (C) Assessment Letter CA-603-A Sent By Certified
Mail On:
III (C) Return Receipt Shows Receipt By Source On:
III (C) Twenty Days After Above Date Is:
III (C) Hearing Requested Within Above Period: /~7 Yes / / No
III (C) Payment Received On:
III (C) Collection Referred On:
III (C) Request for Correction Received On:
III (C) Correction / / Granted /~7 Refused On:
Payment Sent to the Bureau of Administration On-
-------
V-33
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING
HARTFORD, CONNECTICUT 06115
CIVIL ASSESSMENT
NOTICE
No. 3 -
TO:
RE: Premise Name
Premise Address
The Commissioner of Environmental Protection has determined that you are now in violation of the terras
of the above-named State Order. Pursuant to the Department Regulations 22a-6b-100 et. seq., this
constitutes notice of the violation, a statement of the amount of civil assessment(s) to be imposed
for this violation, and a statement of your right to a hearing:
VIOLATION:
Your State Order binds you to meet all scheduled dates of the compliance timetable
embodied in the Order. As of the date of this letter you are: •
months behind schedule for Step Number
are thus in violation of the terms of the Order."
of the compliance timetable and
ASSESSMENT: You are hereby notified that you have been assessed $ for this period of
- delinquency. Furthermore, for each incremental month that you fall behind schedule
after this date, the Commissioner will impose an additional assessment of $_
per month.
HEARING: You have a right to a hearing on this assessment. To request a hearing you must
deliver to the Commissioner or the Director of Air Compliance a written application
for hearing within twenty days of the receipt of this notice.
PAYMENT: Unless a hearing is requested, this notice- shall become a final order of the
Commissioner twenty-one days after the date of receipt. Payment of the civil
'assessment shall be due twenty-five days after receipt of this notice. Payment
should be made by check to the order of "Conn. Department of Environmental
Protection" and should be delivered to the:
Assistant Director of Air Compliance Enforcement
Department of Environmental Protection
165 Capitol Avenue -- Room 133
Hartford, Connecticut 06115
If you have any questions concerning this notice, please contact the Assistant Director at the above
address or, by phone, at 566-3160. All correspondence should be identified with the Civil Assessment
Notice Number (see top right-hand corner).
Signed (Assistant Director)
Date
Signed(Director)
Date
SERVICE
A copy of the foregoing Notice was submitted to the above-named as indicated below:
/ / Personally delivered to
Recipient's Signature
/ / Certified mail to the usual place of business or residence. Registration No
/ /
Date
/ /
RPD
Town
Premise
AQCR
NEDS County
EPA 100T Premise:
Reg. I
Copies: 1) Regulatee 2) Air Quality Enforcement
CA-603-A (FE1102 (6/13/75))
-------
V-34
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Subject: State Order No.
Violation Notice No.
Dear
The Department of Environmental Protection h?s determined
that you were not in compliance with the terms of a final order
of the Commissioner and has consequently imposed a civil assess-
ment on you pursuant to Department Regulation 22a-6b-603. No-
tice of this violation and the consequent civil assessment was
sent to you by certified mail on
/~7 Since you did not request a hearing, this notice
became a final order of the Commissioner on
/~~7 This notice became a final order of the Commissioner
after hearing on .
Payment of the assessment was due on and is
now over three weeks late.
The law provides that if the assessment is not promptly
paid, it may be enforced in the same manner as a judgment of
the Superior Court. Accordingly, if we do not receive your
payment, the Commissioner will file his final order with the
Clerk of the Superior Court. Upon such filing, the order will
have the same status as a judgment of the Superior Court and
will be enforced by the Sheriff accordingly.
We expect to receive your delinquent payment no later than
If we do not receive payment from you by that
time, we will be compelled to institute proceedings with the
Superior Court.
If you have any questions concerning this letter, please
feel free to contact me at 566-3160.
Sincerely,
Assistant Director,
Air Compliance,
Enforcement Section.
CA-603-C
-------
V-35
CHAPTER IV
HOW TO APPLY THE 601 ASSESSMENT
Section 601 authorizes the Department to impose civil assess-
ments in the event that an order recipient fails to submit progress
reports as required. The assessments are small and, unlike those
authorized by §§602 and 603, do not vary from case to case.
A. UNDERSTANDING THE SCOPE
OF THE REGULATION
DEP Regulation 19-508-12 (f) requires that any person against
whom a final order has been issued shall submit progress reports
on the status of such order, and it defines in detail what progress
reports must contain, what form they must take, what supporting evi-
dence they must provide, and when they must be submitted. These
standards will be further expanded in the terms of the order. (A
copy of this regulation is reprinted on the back of form CA-601-W
(FE-1106 (6/25/75)), which may be found in "Forms and Letters" sec-
tion which follows.)
A §601 civil assessment may be imposed in either of the two
following situations:
(1) If a source fails to submit a progress report
on time he has violated the regulation. For
the purposes of Department administration,
however, a grace period of one week after the
due date of a progress report will be permitted.
(2) If a source fails to submit a complete progress
report: e.g., if he fails to meet any of the re-
quirements stated in 19-508-12(f) (2)- (4), or in
his order, he has violated the regulation. How-
ever, since the Department's interest is to re-
ceive complete progress reports rather than to
apply civil assessments, every effort should be
made to educate a source as to the progress re-
port requirements before you seek sanctions.
Warning letter 601-W may be used for this purpose.
B. IMPOSING
AN ASSESSMENT
Section 22a-6b-601 provides for the imposition of 2 levels
of civil assessment for violation of the progress report re-
quirements:
-------
V-36
(1) for a first violation, an assessment of fifty
(50) dollars;
(2) for each successive violation, an assessment of
one hundred (100) dollars.
If you determine that a source has violated the progress re-
port requirement:
(1) Check its file to see if it has previously been
assessed under this regulation. If the source
has no previous history of delinquency, send it
a warning letter, CA-601-W.
(2) If the source has already received a warning
letter on this matter, and if this is a first-
time violator, send it assessment letter CA-601-A
by certified mail, return receipt requested.
and
Place a copy of the assessment letter and the
certified receipt in the "Assessment Notices
Outstanding" file, now kept by Mr./Ms. .
(3) If the source has not requested a hearing twenty
days after it received the letter, the letter
automatically becomes a final order of the Com-
missioner. If payment is not received by the
25th day after receipt, you should send the
source the letter of collection, CA-601-C.
C. MANAGING
HEARING PROCEDURES
The Regulations, (§22a-6b-101(b)) provide that a person may,
within twenty days after receipt of the assessment letter, de-
liver to the Commissioner a written application for a hearing.
Given the small size of the assessment, and the generally un-
disputed nature of a violation of this sort (either a progress
report was filed or it was not filed), the Department does not
expect to entertain many applications for hearings to contest
601 assessments.
However, if a source does request a hearing, you should
follow the hearing procedures that are outlined in Chapter V
of this operating manual.
If a hearing is held, and the Commissioner does not decide
to reverse the finding of a violation, you will be notified by
-------
V-37
the hearing officer that you can proceed with the collection
procedures outlined below.
D. COLLECTING
AN ASSESSMENT
Particularly when the amounts due are as small as 601 assess-
ments, the Department does riot anticipate having any trouble with
collection. Other agencies with similar enforcement programs have
not had any trouble, and none is expected here. However, for the
rare delinquent case, the Enforcement Act provides an easy collec-
tion procedure.
If a source does not pay his assessment by the date indicated
on his assessment notice, send him the collection letter, CA-601-C.
If payment is not received within three weeks of receipt by the
source of the collection letter, the case should be turned over to
Mr./Ms. who will refer the matter over to the Clerk
of the appropriate Superior Court which will enforce the assessment
through the Sheriff.
When an assessment is received, the check should be properly
logged and delivered to the Bureau of Administration's Office of
Financial Services under the transfer letter that is attached at
the end of this section. The Bureau will have the check deposited
in the proper account and will provide you with a receipt for the
assessment check which should be placed in the source's file.
-------
V-38
E. FORMS AND LETTERS:
THE 601 REGULATIONS
The following forms and letters should be used in applying
the civil assessments for violations of the progress report
regulations:
* 601 Assessment Checklist
* Assessment Warning Letter (CA-601-W)
* Assessment Letter (CA-601-A)
* Collection Letter (CA-601-C)
* Transfer Letter (CA-601-T)
Copies of these forms and letters may be found on the
following pages.
-------
V-39
CIVIL ASSESSMENT CHECKLIST: SECTION 601
§ of
Manual Initials
Name of Source: ^^___
State Order No.:
IV (B) Progress Report Due On:
Is Now More Than One Week Late /~7 Yes /~7 No
Progress Report Inadequate Because:
IV (B) This is a / / First /J7 Subsequent Violation
IV (B) Assessment Letter (CA-601-A) Sent By Certified
Mail On: ________
IV (B) Date Return Receipt Signed by Source:
IV (B) Twenty Days After Receipt Is:
IV (C) Request For Hearing Received By Above Date;/""/ Yes / / No
IV (D) Payment Recieved On:
IV (D) No Payment Received on Schedule
Collection Letter Sent On:
Collection Referred On:
IV (D) Payment Sent Bureau of Administration On:
-------
V-40
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING • HARTFORD, CONNECTICUT 06116
SUBJECT: Monetary Liabilities for Progress Report Deficiencies
Dear M
Progress Reports are required as an integral part of your State Air Compliance Order because they are essential
to monitoring progress. Tardiness and inadequacy of 1'ropress Reports are, therefore, detrimental to Connecticut's
air pollution abatement prop-am. For this reason, the Legislature has passed enabling legislation authorizing
the Department to impose monetary assessments to curb such deficiencies. A copy of the Deparlmont's applicable
regulations is printed on the reverse side (or enclosed).
In the case ol your State Order No.
I L
I / We have not received the Progress Report which was due on
]_ / We thank you for your Progress Report dated / / ; IOVKVER,
/ 7 Please use our Form FE306 for all future Progress Reports (copy enclosed).
/ / Please refer to the "Compliance Timetable". Each element of your Progress Ro]x>rt should lx^
identified with the pertinent "Step" number listed on the Timetable.
/ / Please refer to the "Compliance Timetable". When any "Step" of the Timetable has been completed
(entirely), your Progress Report should indicate "Step No. was completed on (Date) ".
On your next Report, please bring us up-to-date by reporting which "Steps" have been ccxnpleted
(ent irely completed) since the inception of this Order.
7 / You neglected to include a concise but comprehensive description of
J_ / the specific reasons for tardiness
/7 the current state of completion
/ / the special action which will be taken to return "on-schedule" by the date of the next Progress
Report
/~~7 YOU ARE REQUIRED TO SUBMIT A SPECIAL REPORT ON THIS SUBJECT BY / /
j_ / Please address Progress Reports preci.soly as indicated at the top of Progress Report Form FE3O6.
]_ / Please send copies of all Progress Reports to
We would appreciate your cooperation; but must caution you that any future deficiencies may cause the Department
to impose civil assessments in accordance with Section 22a-6b-601.
Sincerely,
IVmaid M. IIol for
AIR COMPLIANCE UNIT
Mtt'ORCMDOT CDNTROI, CliNTER
5(50-3160
Assessment Follow-up Program
CA-601-W
(H:-I inr, ((1/25/75))
-------
ADMINISTRATIVE REGULATIONS ^
AjBBMin«nt of Civil PenaJtit*
/legislations and nolim published herein art
printed exactly us submitted by tht forwarding
ftgrncits These, being official documents
submitted fcy tht responsible agencies, an
consequently not subject to editing by tke
Commission on Offlcwl Legal Publications
DEPARTMENT OF ENVIRONMENTAL PROTECTION
Submission of Progresi R«porU and Aa*eum«it
of Civil Peu<iw
Section 1 Section IH SOR-12 of the Retaliations of Con-
necticut State AC* nrirR is amended by adding a new sub-
section (f) AS follows.
S«c. 19 508-12 Violationi and enforcement
(f) Projrrea» report requirement!. (1) Requirement,
time, form Any person apiutiKt \\hotn A final order ban
been issued shall submit progress reports as required and
prescribed by thi1 terms of the order. Such progress
reports shall he submitted m such a form aa the ro mm li-
stener prescribes
(f) (2) Contents Progress reporti shall contain a
separate declaration for each required step of an order'i
compliance timetable, stating either thai compliance with
the step is on schedule, or that compliance with the Btep
i« off schedule Process reports declaring that compli-
ance in proceeding on schedule shall contain a conciae
but comprehensive description of (I) the action com-
pleted on ench and every step required by the order
during the time period cnvered b> the report, and (2)
th* dale or dates on which compliance with such step or
steps was completed Progress report* declaring that
compliance is proceeding off-schedule ahall contain a con-
cise but comprehensive description of (1) the specific rea-
sons for the tardiness, (2) the current state of completion,
and O) the special action which will be taken to return
"on h< hedulc" by the date of the next progress report
Progress reports shall contain sueh other information u
the commismoner may require by the terms of a final
order
(f) (3) Proof of compliance Priifmwi rrjNirUi ahall
include t>ie name ami uddreaa of any vendor whom1 goodfl
were ordered for com pi in nee purposes since the prior
progress report When1 the term* of an order reported
upon require the purchase of any material, service or
equipment, progress reports shall include copies of the
purchase order or orders The eomni winner may require
such other proof as he ik-uns necessary to determine the
progress and ili-yrcf of compliance
(f) (4) Verification of contracted work. Pro
ericaion o conrace wor. r
reports shall include the name and address of any con-
sultants, subcontractors, or other agents employed nnder
the terms of the order since the prior progress report
logether uith a concise hut comprehensive description of
the actions they are to take to asaist in compliance with
the orders Whenever any vendor, consultant, subcon-
tractor or other agent is undertaking any activity regard-
ing uny step in the order, the progress report shall include
a verification by the person under order that the vendor,
consultant, subcontractor, or other agent is proceeding
,
on-schrdule
(f) {&) Li Ability Any person required to submit
progress reports shall be liable for failure to meet any of
the n quirt incuts of this section notw ithntiuiding any
delegation of n sponsibihty to an agent to complete and
submit reports Any person who files a progress report
containing false or misleading information or other claims
shall be subject to criminal prosecution pursuant to sec-
tion 53a-157 of the General Statutes
;. Ma 6b 100. Title
Section 22a fib IfK) to 22a-6b-900, inclusive, ahall be
known and may hi- cited aa "Civil Penalty Regulation!."
Bee. 22a 6b 101. Enforcement proceeding*
(a) If the commissioner has rranon to believe that a
violation has occurred fur winch a civil penalty has been
t'Htahliflhed, he may send to the violator by certified mail,
return receipt requested, or by person* 1 service, a notice
which shwll include:
(1) A reference to the section of the statute, regulation
or order involved;
(2) A abort and plain statement of the matters aaaerted
or charged,
(3) A statement of the amount of the civil penalties to
be imposed upon finding after hearing that a violation
Raji occurred or upon a default;
(4) A statement of the party's right to a hearing.
(b) The person to whom the notice ta addressed shall
have twenty days from the date of receipt of the notice
in whieh to deliver to the commissioner written applica-
tion for a hearing If a hearing w requested then, after
a bearing and upon a finding that a violation has occurred,
the commissioner mny inane a final order nwnsmR a
civil penalty under this section which ia not greater than
the penalty stated in the notice. If such a hearing u not
so requested, or if such a request is later withdrawn, then
the notice shall, nn the first day after the expiration of
such twenty day period or on the first day after the with-
drawal of such request for hearing, whichever is Inter,
become a final order of the commissioner and the matters
asserted or charged in the notice shall he deemed admitted
unions modified by consent order, which shall V>e a final
order. Any civil penalty may be mitigated by the com-
missioner upon such terms as he m his deicretion deems
proper or necessary upon consideration of the factors
set forth in section 2 (b) of Public Act 73-665
(e) Final orders AMHISMIIK civil penalties not appealed
pursuant to section 2 (f) of Public Ac.t 73 665, aa
amended, shall be filed for execution pursuant to section
2 (h) of Public Act 73 665, as amended Such final order*
do not waive or forsikc any other reimdus or powers the
department may ha**- with regard t° the matter in ques-
tion
Sec. 22a 6b-102. Conflict and severance
(a) The provisions of this section are in addition to
and in no way Hrrog.ite from any other enforrt mem pro-
\isions contained in .my statute administi-n-d by tin- com-
missioner The powers, duties and remedies provided in
such other statutes, niui the existence of or exert isi- of anv
powers, duties rrmntirn hermndcr or thereunder shall
not prevent the commissioner from exercising any other
jmv.ers, OH-12
(f), a civil penalty of fifty (f>0) dollars,
(2) For each successive violation of any p.ut of section
19-508 12 (f),a eml penalty of one-hundred (1(H» dollars
I)f it kiinnn that thr »itton nniiM)t In Htrtmni IS fiOH
nn>! 2Cn (t of thr (inn rnl Htntut<>t nnii Pul.lir Art Nn fiC>5 of lhf>
1U73 I'ulilir Act* nfl.-r lh»- j-ul.t,, nlion in thr Conn-'.-lirirt I^w
In Uilnr^ Whcimf, I hn«<> hrrrunte
f of Hrptrml>cr, 1974
Appro\f(l Attor
jit, Orlnl-cr ,11, I07<, Htnn.linjf I
>ffwtiv«
-------
V-41
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING
HARTFORD, CONNECTICUT 06115
CIVIL ASSESSMENT
NOTICE
No. 1-
TO:
RE: Premise Name
Premise Address
State Order No.
Progress Report Due
The Commissioner of Environmental Protection has determined that you are now in violation of the progress
report requirements specified in §19-508-12 of the Department's Administrative Regulations for the
Abatement of Air Pollution (hereinafter "Regulations") and/or in the referenced State Order.Pursuant
to the provisions of Department Regulations 22a-6b-101 et. seq., this letter constitutes notice of the
violation, a statement of the amount of civil assessment(s) to be imposed for this violation, and a
statement of your right to a hearing:
VIOLATION:
The Progress Report Regulations provide that any person against whom an order has
been issued shall submit progress reports as required and prescribed by the terms
of the order. The referenced progress report
/ / has not been received on time.
/ / has been received, but does not meet the requirements of §19-508-12(f)
and/or the order because:
ASSESSMENT: since this is
HEARING:
/ '/ an initial violation, you are hereby assessed a civil assessment of
fifty dollars ($50). For any subsequent violation of this regulation,
you will'be assessed a civil assessment of one hundred dollars ($100).
/~~7 a repeat violation, you are hereby assessed a civil assessment of one
hundred dollars ($100). For any subsequent violation of this regula-
tion, you will be assessed additional assessments of one hundred dollars
($100).
You do have a right to a hearing on the issue of whether the violation has
occurred. To request a hearing, you must deliver to the Commissioner a
written application for hearing within twenty days of the receipt of this
notice.
PAYMENT: | Unless a hearing is requested, this notice shall become a final order of the
i Commissioner twenty-one days after the date of receipt. Payment of the civil
J assessment shall be due twenty-five days after receipt of this notice. Payment
* should be made by check to the order of "Conn. Department of Environmental
Protection" and should be delivered to the
• Assistant Director of Air Compliance Enforcement
Department of Environmental Protection
165 Capitol Avenue — Room 133
Hartford, Connecticut 06115
If you have any questions concerning this notice, please contact the Assistant Director at the above
address or, by phone, at 566-3160. All correspondence should be identified with the Civil Assessment
Notice Number (see top right-hand corner).
Signed (Assistant Director)
/ /
Date
Signed (Director)
Date
SERVICE
A copy of the foregoing Notice was submitted to the above-named as indicated below:
/7 Personally delivered to
Recipient's Signature
/ / Certified mail to the usual place of business or residence. Registration No.:
Date
Town
Premise
AQCR
NEDS County_
EPA 100T Premise //Yes //No
Reg .'* Yr. Day
Copiest 1) Regulatee 2) Air Quality Enforcement
CA-601-A (FE1102 (6/13/75))
-------
V-42
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Subject: State Order No.
Violation Notice No.
Dear
Pursuant to Department Regulations 22a-6b-601, the Depart-
ment has imposed upon you a civil assessment for violation of
the Progress Report Regulations set forth in 19-508-12(f). No-
tice of the violation and the assessment was sent you by certified
mail on .
/~7 Since you did not request a hearing, this notice
became a final order of the Commissioner on
/~7 This notice became a final order of the Commissioner
after hearing on .
Payment of the assessment was due on and is
now over three weeks late.
The law provides that if the assessment is not paid promptly,
it may be enforced in the same manner as a judgment of the Superior
Court. Accordingly, if we do not receive your payment, the Commis-
sioner will file his final order with the Clerk of the Superior
Court. Upon such filing, the Clerk will docket the order in the
same manner and with the same effect as a judgment of the Superior
Court. Upon such docketing, the order will be enforced by the
Sheriff as a judgment of the Superior Court.
We expect to receive your payment no later than .
If we do not receive payment from you by that time, we will be
compelled to institute proceedings with the Superior Court.
If you have any questions concerning this letter, please feel
free to contact me at 566-3160.
Sincerely,
Assistant Director ,
Air Compliance,
Enforcement Section.
CA-601-C
-------
V-43
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Source:
Civil Assessment Notice No.
Amount of Payment: $
Bureau of Administration, Financial Services
Department of Environmental Protection
Room
The attached check represents payment by the above-named
source for a civil assessment imposed pursuant to the Depart-
ment's Regulations 22a-6b-100 e_t seq.
Please deposit the check into the account of the State's
General Fund and return a receipt of such deposit to me.
Sincerely,
Assistant Director,
Air Compliance,
Enforcement Section.
CA-601-T
-------
V-44
CHAPTER V
HOW TO CONDUCT HEARINGS
IN CIVIL ASSESSMENT CASES
Sources who receive notices of violation imposing civil as-
sessments have 20 days from the date of receipt to request a hear-
ing on the proposed assessment. The scope of the hearing will of
course depend on the nature of the violation.
601 ASSESSMENTS
For the 601 Assessments (Progress Reports), a party request-
ing a hearing can contest:
(1) Whether, as alleged, the progress report in
question was delinquent or not received at
all; or
(2) Whether, as alleged, the progress report was
incomplete or otherwise failed to satisfy the
substantive requirements for progress reports
as set forth in Department Regulations 19-508-
12(f) or in the regulatee's order.
Since these are relatively clear-cut issues, and since the amounts
in question are small, hearings on the 601 assessments are not ex-
pected to occur very often. Nonetheless, when such hearings are
requested, the Department must demonstrate to the satisfaction of
the hearing officer that:
(1) The regulatee was at the time of the alleged
progress report violation subject to a state
order containing progress report requirements;
and
(2) The regulatee failed to submit a progress report
on time or failed to submit a complete progress
report on time.
In meeting these burdens of proof, the hearing officer can
reasonably expect the Department (probably a member of the En-
forcement Unit) to produce:
(1) The state order pursuant to which the progress
report in question was or was not submitted;
-------
V-45
(2) Any communications, or notations thereof, with
the source which discussed progress reports in-
cluding but not limited to:
(a) notes from telephone calls or
meetings at which progress report
requirements were discussed;
(b) copies of letters, including any
notice or warning letters, in
reference to progress report re-
quirements;
(3) A signed statement from the engineer in charge of
the progress reports either that no progress re-
port was received as required by the order or that
the progress report was incomplete. If the assess-
ment is being made for incompleteness, this state-
ment should include a detailed listing of the rea-
sons the progress report did not meet the require-
ments of the regulations. IN LIEU OF SUCH STATE-
MENT, THE RESPONSIBLE ENGINEER SHOULD HIMSELF BE
PREPARED TO TESTIFY AT THE HEARING.
Since this evidence is important to support the Department's case,
it is important that the responsible Department personnel carefully
keep all relevant notes and documents in the regulatee's file.
602 ASSESSMENTS
For the 602 Assessments (Emissions Violations), a party re-
questing a hearing can contest:
(1) Whether, as alleged, an emissions violation has
occurred;
(2) Whether the civil assessment to be imposed for
the alleged illegal emission is correct.
The threshold question on a 602 assessment is whether or not
the violation of the emission standards took place at all. This
issue is the same one that may be presented to the Department in
other contexts; e.g., a challenge to the legality of an abatement
order where the fact of the emissions violation is in dispute.
Since the question of the underlying emissions violation is identical
for both abatement order challenges and civil assessment challenges,
the hearing officer should either: (1) consolidate both challenges
so they can be heard together, or (2) advise the parties during the
first hearing that he will apply his finding on the underlying emis-
sions violation to the second hearing, thereby pre-empting it as an
issue in the second hearing.
-------
V-46
The first procedure is easier and simpler, and probably should
be used most often. If the hearing officer adopts the second
procedure, he must be sure in the second hearing to rule that
his finding on the emissions violations from the first hearing
is binding on the second hearing (even if there are additional
parties in the second hearing). Incidentally, if an attorney
uses the term res adjudicata or res judicata, he is referring
to the binding effect in the second hearing of a finding in the
first hearing concerning an identical issue of fact or law.
On the issue of whether an emissions violation has taken
place, the Department should be prepared to have the Engineer(s)
or Inspector(s) who noted the violation present to the hearing
officer, in person or in a written statement, a detailed descrip-
tion of the date of his inspection(s) and/or observation(s),
the method of his detection of the violation, the precise nature
of the violation (quantitative description if possible) and the
nature of his post-inspection report(s) to the Department.
With regard to the amount of the assessment, the Department
must demonstrate that the amount is reasonable. The Department
must establish:
(1) The number of separate processes or pieces
of equipment that contribute to the emissions
violation.This number establishes the number
of "unabated activities," which in part deter-
mines the maximum assessment. The hearing of-
ficer's task is to judge the reasonableness
of the Department's separation or aggregation
of processes and equipment into unabated
activities.
(The Department may choose to aggregate pro-
cesses and equipment into fewer unabated
activities, in order to avoid the task of
identifying separate ones. The Department
has the authority to do this (§22a-6b-
602(b)(17), and since the result will be
to lower the maximum assessment, the regu-
latee is not likely to object. If an inter-
venor objects to such aggregation, the
hearing officer should first determine
whether or not it makes any difference. As
long as the assessment does not run into a
ceiling no harm has been done and the aggre-
gation can be left undisturbed. However,
if equipment costs and operating costs for
an unabated activity drive the maximum
monthly assessment into one of the starred
boxes in the 602 schedule of maximum as-
sessments, and if the unabated activity has
been aggregated from separate processes and
equipment, the hearing officer should press
the Department to defend its position.
-------
V-47
The test is whether or not one or more of the
constituent processes or pieces of equipment
emits pollutants if operated alone.)
(2) The operating parameter(s) or other basis(es)
from which equipment and operating costs were
estimated.Here, the hearing officer must
judge the reasonableness of the Department's
cost-estimation by evaluating the Department's
determination of the operating level for each
unabated activity, and by checking that the
Department has properly used the appropriate
cost curve or other costing technique. (Usually,
the operating parameter will be gas flow in
CFMs. Since equipment and operating cost
estimates must be made for each unabated activ-
ity, a separate gas flow must be calculated for
each one. This may involve the Department's
allocating to separate unabated activities the
gas flow through a single stack, or aggregat-
ing gas flows from several stacks which vent
a single unabated activity).
(3) The inflation rate, cost of capital, and
equipment life figures used to calculate the
assessment.The hearing officer's task is
to judgefa) whether the inflation rate was
selected and calculated in accordance with
§602(b)(13), using either the Chemical Engi-
neering Index or another index, (b) whether
the regulatee is a member of the class cov-
ered by the cost of capital figure the Depart-
ment calculates, and (c) whether the average
equipment life of the control equipment, if the
Department has used a figure different from
the 10-year period specified in the regula-
tion, is reasonable.
(4) Accurate assessment calculations using the
above numbers. The Hearing officer's job
here is to judge whether the Department
properly calculated the monthly assessment.
(5) The length of the violation. The hearing
officer must determine whether the Department
has adequately demonstrated when the emissions
violations began. A showing that the source
was in operation at the time claimed and did
not have necessary control equipment in place
will generally be adequate.
-------
V-48
In meeting these burdens, the Department will probably pre-
sent as evidence:
(1) Testimony and documents (registration state-
ments, PIQs, inspection reports, etc.) ident-
ifying separate processes and pieces of equipment
and the pollutants and levels of polluted emis-
sions produced by each in order to establish
the number of unabated activities •
(2) The operating parameters from which the assess-
ments were calculated. This usually will include
the CFM rate, production per hour, and whatever
other parameter is used in the cost function.
This information is usually taken from the source's
registration statement and, when this is so, the
registration form itself should be produced and
included in the record. Similarly, if the infor-
mation is contained on a Pre-Inspection Question-
naire, the PIQ itself should be produced.
(3) A copy of the cost curves upon which the assess-
ment was based. This can usually be produced by
having a copy of the appropriate curves and back-
up materials from Chapter VII (Section A) of this
Volume, plus a file of any calculations that have
been done to update these curves, available for
inspection, with relevant portions copied and in-
troduced for the record. Special note should be
made of the sources from which the cost curves
were developed and how they were verified with
specific cases.
(4) A copy of the materials on the cost of capital, in-
flation, income tax rates, and equipment life found
in Chapter VII (and Part III of this Volume),
together with testimony explaining how they were
used in the particular case at issue.
(5) A copy of the Wang calculator print-out record-
ing the calculation of the assessment level. A
copy of the detailed explanation of the formula
used to determine assessments found in Chapter I
of Part III of this Volume should also be included
in the record.
(6) A showing of when the illegal emissions began
and were first assessable. Proof that a source
was in operation on the first day alleged, e.g.
by showing that it was listed in the preceding
year's Connecticut Directory of Manufacturers
or had been the subject of an earlier DEP in-
spection, should be enough. If the source
-------
V-49
alleges it had adequate control equipment in
place and consequently was not emitting illeg-
ally, the Department must show that the alleged
equipment either was not there or that it was
inadequate. It can require the company to show
purchase receipts for the alleged equipment if
necessary.
If the Department seeks to include a period of
noncompliance prior to its having detected the
violation directly, the Department must also
show that the source had, before the first
day for which it is to be assessed, notice
of its potential §602 liability or was a re-
peat violator. A file memo recording personal
service, the returned receipt from a notice
sent by certified mail, or other Departmental
records evidencing prior enforcement action(s)
of a similar nature would have to be intro-
duced into the record.
The Department may take the position at a hearing that not
enough information is available at that time to calculate the
monthly assessment with reasonable certainty, and it may accord-
ingly request that the question of assessment calculation be
deferred until more data becomes available (e.g., from an en-
gineering report). In this situation, the hearing officer may
make findings and a decision as to the other issues (such as
emissions violations) in the case, and postpone part of the hear-
ing under Section 602(f)(iv).
Deferring part of a hearing under 602 (f) (iv) postpones a
final decision by the Commissioner, and thus also postpones a
regulatee's right to appeal. Postponement provides valuable time
for the Department to gather cost information to demonstrate the
reasonableness of a proposed assessment. This extra time also
brings a cost: the Department cannot collect any assessment with-
out a final decision. These conflicting pressures — more time
at the cost of delayed collection — will probably work to keep
the Department's use of postponement in balance. Nevertheless,
excessive delay can seriously impair a regulatee's right to ap-
peal; the hearing officer, therefore, must be sensitive to undue
delay in each case. Generally, (1) waiting until an engineering
report is available is reasonable, (2) delays over a year are
suspect and require strong justification.
The hearing officer should also be aware of the correction
procedure in §602(g) (2). This enables a regulatee to obtain
adjustment of any final assessment if it can demonstrate that its
cost of compliance or the assessment period were less than the
Department had assumed in determining the assessment initially.
Once the source has come into compliance, it has a right to such
a correction. Any overassessment will be repaid with interest.
-------
V-50
This adjustment of an otherwise final assessment may take place
months after the assessment, indeed up to two years after final
compliance. The availability of this procedure allows the hear-
ing officer to give the Department more leeway in calculating
the monthly assessment and in determining the assessment period,
since both can be corrected later.
603 ASSESSMENTS
For the 603 Assessments (Order Violations), a party re-
questing a hearing can contest:
(1) Whether, as alleged, there has been a viola-
tion of the terms of the order, and/or
(2) Whether the civil assessment proposed by the
Department is correct.
The threshold question on a 603 violation is whether or not
a source has failed to comply with the terms of its order. The
usual context for a violation is a source failing to meet the
scheduled compliance deadlines embodied in the order. Such fail-
ures are easy to demonstrate: If the source has failed to meet
one of the compliance deadlines in its order, it is in violation.
Was the baghouse in place by June 13th as required or not?
(The regulations allow only a few, easily verifiable excuses
for missing a deadline available as defenses -- wars, strikes,
fires, floods — but not third party delay.) (See Section
603 (g) (3).)
To establish a violation, the Department must show:
(1) That the regulatee was at the time of
the alleged delinquency under an order;
(2) That the regulatee failed to meet a
scheduled deadline;
(3) That the regulatee has been delinquent
for at least as long a period as the
assessment period used to calculate the
civil assessment.
The Department will probably meet its burden by producing:
(1) The state order involved in the case;
(2) Any correspondence concerning the com-
pliance deadline in question, or any
other evidence of communications with
the source concerning the compliance
timetable. Such evidence may include
but need not be limited to:
-------
V-51
a. notes from telephone calls or
meetings with the source at
which the compliance deadline
was discussed,
b. copies of letters, including
any warning or notice letters
in reference to compliance with
scheduled order deadlines.
(3) The civil assessment regulation limiting the
acceptable excuses for delay;
(4) Evidence of the period of noncompliance, e.g.
the report of an inspector that he visited
the site 6 months after the deadline and did
not find the equipment in place as required.
This information is critical since the amount
of the assessment is directly proportional to
the period of delay. (This issue can be
especially troublesome in the first few months
of the program since the effective date of the
regulations occurs in the middle of some already
delinquent orders. In these cases the regulations
allow the Department to assess a regulatee for the
total number of days of overrun beyond any com-
pliance schedule deadline that falls due after
the regulations become effective — i.e. for all
accumulated delay. However, as a matter of policy,
the Department intends to assess only for incre-
mental delay beyond the regulation's effective date
See Chapter III Section B of this manual for direc-
tions on measuring the period of delay.)
Whether the amount of the civil assessment is correct or not
turns on exactly the same issues and should be handled in exactly
the same way as a challenge to the amount of a 602 assessment
would be. (See the last section of this Chapter.)
-------
V-52
CHAPTER VI
HOW TO USE SURETY DEVICES
AS PART OF THE OVERALL ENFORCEMENT PROGRAM
Section 22a-6(7) of the General Statutes gives the Depart-
ment the authority to require the posting of performance bonds
or other sureties as a means of ensuring prompt and effective
compliance with environmental regulations. The Department has
already had significant success with the use of penalty or for-
feiture bonds and anticipates expanding the application of these
devices. It is important to understand the nature of different
kinds of sureties since each can play a useful role in a total
enforcement program.
SURETY DEVICES: SOME
DEFINITIONS AND AN EXPLANATION
A performance bond is a bond posted by a surety company
which guarantees the performance of an agreed-upon action (e.g.
the installation of a piece of pollution control equipment) by
an agreed-upon date. If the bonded company or individual fails
to perform as required, the guarantor is responsible for the
performance. (The guarantor, of course, has recourse against
the failing company or individual.) Such guarantor responsi-
bility can take one of two forms:
(1) In some cases the surety company is itself
responsible to complete the required job.
Because of the complexities of installing
pollution control equipment, few if any
surety companies are willing to accept
liability on this basis.
(2) In the more usual case, performance bonds
guarantee that if performance is not com-
pleted as required, a set amount of money
necessary to achieve compliance will be
paid to the party owed the performance.
In such cases, however, the party owed the
performance must then complete the perform-
ance himself.
Obviously, the Department would not want to be put in the
position of being responsible for completing pollution control
installation. Accordingly, performance bonds will normally not
be appropriate for Department enforcement activity.
-------
V-53
A penalty or forfeiture bond is a bond posted by the regulatee
or a surety company which guarantees that a set sum of money will
be forfeited if an agreed-upon action is not performed. A typical
penalty bond in the environmental setting would provide that if
installation of a certain piece of pollution control equipment
is not completed by a certain date, a set amount of money in the
form of a "penalty" would be forfeited to the Department. Such
"penalty" or "forfeiture" does not extinguish the obligation of
the bonded party to complete performance; it does penalize him
for not complying as required on time. The Department has al-
ready had some notable successes with the use of penalty or
forfeiture bonds. Companies having a significant financial stake
in prompt compliance, even if previously afflicted with recurrent
extraordinary delays, have suddenly found the means to meet
deadlines.
An escrow is similar to a bond in that money is pledged
to guarantee an obligation to perform a duty. An escrow
agreement differs from other sureties in that no surety company
is involved, instead, the party guaranteeing the performance
is the party who must carry out the performance. Such guarantee
usually takes the form of the company placing assets (usually
cash, treasury notes, or other similarly liquid assets) in an
account managed by an escrow agent. The escrow agent merely
holds the assets and either (1) returns them to the pledging
party if performance is achieved, or (2) transfers them on de-
mand to the party owed the obligation if performance is not
achieved. An escrow account has particular advantages in cases
where bonding companies are unwilling to provide guarantees.
In addition, since the costs of retaining an escrow agent
(usually a bank) are significantly less than those for hiring
a surety company, the costs of such a guarantee are more easily
afforded by all types and sizes of regulatee.
A flexible reserve escrow is a variation of the escrow agree-
ment. It differs from the usual escrow arrangement in that the
party owed the performance has the option of allowing the per-
forming party to post only a portion of the total escrow amount
in the account at any one time. Thus, an escrow agreement
might call for placing $48,000 with an escrow agent. If the
agreement were for a flexible reserve escrow, the party owed
performance could allow a smaller amount to be posted. While
the party owed performance could require the full $48,000 to
be put in the account at any time, it could agree not to do so
if certain requirements were met or for as long as it felt that
the work owed it was proceeding well. Thus, v.-hile a company
might normally have to post $48,000, the Department could re-
quire that only, say, $4,800 be put in the account. This kind
of flexible reserve escrow leaves the regulatee liable to the
Department in full if it fails to perform, but cuts the cost
to the company by, in this example, 90 percent.
-------
V-54
USING SURETIES:
SOME EXAMPLES
Suppose polluting company A, found in violation of the
particulate emission standards, has been required by state order
to achieve compliance by April 1, 1976. If the Department is
concerned about its meeting the deadline because of schedule
lag, it could require the company to post any of the following
sureties:
(1) The Department could require a performance bond
for a face amount of up to $48,000 — the cost of
compliance. If compliance is not achieved on
April 1, 1976, the Department can demand as much
of the $48,000 amount as would be required for
the Department to complete the compliance. As
noted above, however, the Department does not
want to be responsible for this work. Conse-
quently, this bond option will normally not be
used.
(2) The Department could require a penalty or for-
feiture bond. The face amount of this bond
would also be for $48,000 —the total cost of
compliance. The terms of the bond, however,
could provide that it would be forfeited for
delays in compliance at a rate equal to the
civil assessment which would be imposed for
a similar period of delay or non-compliance.
Thus, if a source who fell behind schedule by
four weeks would normally be liable for an
assessment equal to $4000 according to the
terms of the Department's civil assessment
regulations, the bond could call for the
forfeiture of $4000 per four week period of
delay.
(3) The Department could require an escrow account
to be created. The amount of the escrow could
again be the $48,000 cost of compliance. The
company would then be required to place that
amount into an account held by the escrow agent
(usually a bank) under an agreement which calls
for forfeiture payments for delays in compliance.
Again, the amount of the forfeiture could be
tied to the civil assessment which would be
imposed in such a case. In our hypothetical
example, the amount forfeited from the escrow
account would be $4000. If no delay were in-
curred, the party would have the full amount
of the escrow account returned to him upon
-------
V-55
completion of the necessary work. Because an
escrow account held by a bank can continue to
earn interest for the party posting the escrow,
the cost of such a device can be very small —
the difference between the source's cost of
capital and the return on Federal notes
(roughly 3 percent to 6 percent) plus $200-3300
in service charges.
(4) The Department could require that a flexible
reserve escrow account be set up. Such an
account would rest upon an agreement which
(1) recognized that the company posting the
escrow could be required to post the full
amount of the escrow ($48,000) at any time,
but would be permitted to post such smaller
amounts as the Department required from time
to time, and (2) provided for the forfeiture
of such amounts in the escrow account at a
rate determined by the comparable civil
assessment which would be imposed for such
a source's delay. If the regulatee fell
further behind schedule, the Department
could require it to increase the proportion
of its total potential liability placed with the
escrow agent; if a regulatee made up lost
time, the Department could cut the amount
it had previously required be posted. This
device would allow the Department to commun-
icate warnings and encouragements to those
about whose performance it is concerned
with great flexibility and ease. (The
regulatee cannot contest any of these re-
quirements since it has already agreed to
post the full amount on demand.)
ECONOMIC
SURETIES
Sureties should be set according to the same economic logic
as civil assessments. Forfeitures should counterbalance the
benefits of noncompliance, and the amount of the surety the
Department may require should be large enough to cover such
forfeiture payments over the number of months they might reason-
ably be necessary. (Probably one year's worth of monthly
economic assessments will be enough.)
There are two chief reasons why sureties should follow the
same economic logic as economic assessments. First, by doing
so they obtain all the objectivity, fairness, and effectiveness
— and therefore useability — of economic civil assessments.
Second they can be made to mesh with economic assessments into
-------
V-56
a coordinated, multi-step enforcement process that will give
the Department greatly improved flexibility and enforcement
cost effectiveness.
This close fit between sureties and assessments is especially
critical since sureties are ultimately enforceable under the
Department's civil assessment powers. Regulatees will agree
to post sureties as the less costly of evils when offered the
choice of doing so or of paying a full assessment. Moreover,
if a regulatee is still not in compliance once the amount
placed with the escrow agent is exhausted, the Department can
impose a civil assessment for the period beginning the day that
escrow payments are no longer possible at the same rate as
before.
USING
SURETIES
Sureties work. Requiring regulatees to post sureties
induces immediate action. This has been the experience both
within and without the Department. In 1974, the Air Compliance
Unit imposed penalty bonds on several of its most troublesome
sources ; and, in every case, these sources either came promptly
into compliance or any further delay they, experienced was in-
significant compared with their past records.
Given that sureties are effective, it makes sense for the
Department to require one of the four types of surety outlined
above before imposing civil assessments in many cases. Requir-
ing a regulatee to accept that the Department can (1) require
it to freeze a portion of its assets in a low-yielding escrow
account at will until it is in full compliance, and (2) make it
forfeit some or all of this amount in the event of delay or
noncompliance — even if it costs the regulatee almost nothing
— is a step no regulatee can ignore. On the other hand, be-
cause it is clearly a much less severe step than others avail-
able to the Department, notably that of imposing a civil assess-
ment, the Department can require sureties without having to
face lengthy negotiations or much risk of a contest. In other
words, using sureties first will generally be less expensive
for the Department as well as for the regulatee.
There are, of course, cases where requiring a surety is
either not possible or unwise. Violations not discovered until
after the fact cannot be prevented by requiring that a surety
be posted in advance. Some offenses are too small to be worth
such preventive care, and the repeat offender may merit no
more "second chances."
The several types of surety offer a wide range of choice
of severity of response. Merely requiring a regulatee to accept
-------
V-57
surety liability costs the regulatee almost nothing economically,
Requiring it to post 10 percent reserve under a flexible reserve
escrow costs only symbolically more. However, requiring a per-
formance bond can be a significant expense.
These several types of surety fit together with the Depart-
ment's administrative civil assessments to provide a highly
flexible set of gradually escalating enforcement steps the
Department can take. They pick up at the point where request-
ing compliance proves inadequate and build up to the point
where drastic, penal sanctions that can only be imposed by a
court become necessary.
The following diagram illustrates how the Department can
use flexible reserve escrows and administrative civil assess-
ments together to obtain a wide choice of finely gradated
responses. Given these tools it can adjust the amount of
pressure it applies to a noncomplying regulatee as needed.
Monthly Cost to the Recalcitrant Regulatee of Possible
DEP Enforcement Actions (Assumes a $48,OOP Escrow)
$4000 $4000 $4000
$84
$24
$48
CUMULATIVE
DELAY (MONTHS)
DEP ACTION
1
2%
4
5
6*
5
9
14
24
30 !
_ 1
WARNING WARNING SURETSf REQUIRE' INCREASE LOWER PARTIAL FULL CIVIL CA AND
LETTER LETTER LIABILITY RESERVE RESERVE RESERVE CALL CALL ASSESSMENT COURT
(10Z) (35%) (20X)
-------
V-58
•In the hypothetical and unusually recalcitrant case shown
in the diagram, the Department could escalate its response
easily and very flexibly (see diagram). It could issue a
warning letter to the regulatee as soon as a problem was
detected, and, upon receiving no adequate response, it could
issue another one month to two months later. After the fourth
month of delay it might require the regulatee to accept a flex-
ible reserve escrow liability of, say, $48,000. Assuming another
month's delay, it could require that the regulatee post 10 per-
cent of that amount, i.e., $4,800. Assuming a difference of 6
percent between the cost of capital and the return on short-
term Federal paper, the source would incur an opportunity cost
of $24 per month ($4,800 X .06 X 1/12). In succeeding months,
the Department could increase or lower the reserve requirement
depending upon the regulatee's good faith and performance. If
delay persisted into, say, the ninth month, the Department could
demand partial (e.g., 50 percent) forfeiture, in which case the
source would incur a monthly cost of approximately $2,000.
Further delay would eventually result in full forfeiture, in
this example, $4,000 a month. If delays continued for more than
a year, the amount posted with the escrow agent would be ex-
hausted and the Department would have the option of either
negotiating a second surety arrangement or imposing an immediate
civil assessment. In the extraordinarily unlikely event that
the regulatee still refused to comply, the Department would
still be able to seek more extreme sanctions from the court.
It should be stressed that the above illustration is not
only hypothetical, but highly unlikely. The potency of the
surety device is such that only an unusual source would allow
his delay to persist after having signed a document acknowledging
liability to a possible surety forfeiture.
However, the Department must take care to avoid imposing
more than one surety requirement or a surety requirement and
a civil assessment simultaneously. Any such "double count-
ing" would risk an ultimate judicial characterization of the
Department's new tools as punitive, criminal, and invalid.
The Department will have to decide situation by sit-
uation which of the various forms of surety and whether
requiring a surety or using some other enforcement tool is
appropriate. Among the questions it will want to ask when
making this choice are the following:
* What has the source's past compliance record been?
"Bad actors" may merit more severe responses
earlier in the enforcement process than the
average case.
-------
V-59
* Is an urgent matter of public health or permanent
environmental damage at stake? If so, the Depart-
ment may want to use more drastic tools earlier
than otherwise.
* Why is this regulatee not complying as it should?
If the problem is uncooperative lower management,
requiring a surety from the firm will effectively
force top management to take notice of the problem.
* Can the regulatee easily obtain coverage by a
surety company — and at what price?
Surety companies are notoriously conservative,
especially in areas where performance involves
technologies with which they are unfamiliar —
very much including pollution abatement. Only
very large, well-financed companies can be sure
of obtaining coverage, and even some very large
firms will have to post one hundred percent secur-
ity with a bonding company and still pay a fee.
Smaller companies, let alone individuals or
partnerships, may not be able to obtain a bond
from a surety company — or if they are able to
do so, they will have to pay extraordinary
interest charges. For such a regulatee, it
may only be reasonable to require one of the
escrow forms of surety.
Much of the choice of option will, of course, ultimately turn
on the judgments Department administrators make while negotiat-
ing with regulatees. They will have to decide "What type and what
level of incentive will work best with this fellow?"— just as
they must decide how to handle each problem case now. However,
with the Department's new tools, there will henceforth be many
more responses possible.
WRITING
SURETY AGREEMENTS
A surety requirement is an extremely flexible enforcement
device. Although it can easily be routinized, it can also be
modified to fit individual cases if the unit so desires. When
the unit negotiates surety terms with a regulatee, it has all
the freedom of contract, and since the agreement is a contract,
all terms will be binding.
The Department can write any provisions it can negotiate
with the regulatee into its surety agreements. These provisions
will generally cover what is required of the regulatee (refer-
encing, e.g., the terms of an order), what events will allow
-------
V-60
the Department to require a forfeit, how much the total surety
amount should be and how much would be forfeited in what events,
when the surety liability will end (typically whenever the
regulatee is in full compliance, e.g. with the order), and who
the escrow agent will be.
When the Department requires an escrow, it will want to
define what types of assets are acceptable security. Although,
again, it is free to accept whatever security it feels approp-
riate case by case, it will almost always want to limit what
a regulatee can post with the escrow agent to:
(1) cash
(2) U. S. Treasury notes
(3) Connecticut State bonds.
Other assets, e.g. accounts receivable or corporate securities
are generally not acceptable because (1) they are less liquid,
and (2) their value is less certain and more likely to fluctuate
Individual surety companies and escrow agents typically
have their own forms. These are usually acceptable to the
Department.
*************
Sureties provide an extraordinarily flexible, low cost, and
effective first response to noncompliance when persuasion and
warnings do not prove adequate.
-------
V-61
CHAPTER VII
HOW TO USE AND UPDATE TOOLS
EMPLOYED IN LEVYING CIVIL ASSESSMENTS
Economic assessments -have to be reasonably accurate.
Getting the right assessment is critical to the assessment's
effectiveness, equity, and ability to withstand court challenge.
This chapter spells out how Department staff should go about
calculating assessments in order to get reliable results at
acceptable cost. (Part III of this Volume explains the eco-
nomics underlying these assessments — what the theory is, what
factors must be considered, and how these factors are to be
used.) The chapter is divided into five main sections, each
explaining how the Department would go about using or updating
tools employed in levying civil assessments.
* Section A explains how to determine the cost of
compliance in every type of case likely to be an
enforcement problem, it includes a series of cost
curves that can be used to provide acceptably ac-
curate cost estimates for most cases in minutes.
* Section B explains how to determine the cost of
capital for each case.
* Section C spells out how to update the inflation
factor in' the assessment formula from time to
time.
* Section D explains how to adjust the assessment
formula for sources with income tax rates less
than 48 percent.
* Finally, Section E outlines how to use the assess-
ment formula tape on a Wang desk calculator.
-------
V-62
SECTION A
CALCULATING THE COST OF
COMPLIANCE
The most critical single piece of information* needed to
set economically accurate civil assessments is a reliable estim-
ate of the cost of compliance (chiefly the costs of installed
capital equipment and of annual operating and maintenance).
This chapter explains and provides the tools DEP staff will need
to make good estimates quickly.
The Department must be able:
* to make reliable estimates of the cost
of compliance in order (1) to ensure
that civil assessments are large enough
to be effective but not excessive and
(2) as a result, to ensure a successful
legal defense in the event of a court
challenge;
* to do so in a visibly non-arbitrary
manner, both to ensure case-by-case
equity in fact and to protect the
Department against legal challenge;
and
* to do so quickly and with acceptably
limited administrative costs.
Department engineers could estimate the cost of compliance
case-by-case with information that is routinely available now.
In a test conducted in September of 1974, using actual Connec-
ticut case files, DEP Air Compliance Enforcement Section engineers
were able to obtain accurate estimates in 1 to 14 hours a case.
(The results varied with the complexity of the case and with the
stage of the enforcement proceedings at which the costing had to
be done. The earlier in the process it had to be done, e.g. after
the initial field inspection rather than after final compliance,
the more time the work required because less information was
available.) A survey of private consulting engineers using the
same cases confirmed the results of the test. (However, because
of their greater day-to-day experience with costing, the private
engineers took somewhat less time.)
A full explanation of the effect of taxes, depreciaiton,
cost of capital and inflation on the level of civil assess-
ment is set forth in Chapter I, "Calculating Civil Assess-
ments . "
-------
V-63
Although an average cost of 5 hours on a case of average
complexity with only an engineering report in hand would be
manageable given the significant impact on overall compliance
and the net reduction in administrative costs effective economic
remedies would make possible, it is still a major expense. The
technique outlined in this chapter saves 90 percent of that cost.
For most cases, Department staff will be able to determine
the costs of compliance simply by reading one of the cost curves
in this chapter. These curves relate the costs of compliance to
the number of cubic feet per minute (CFM) of polluted emissions
that must be processed by a given technology. Given the CFM
rate, which is almost always already available, and these curves,
the costs of compliance can be reliably estimated in minutes.
These cost curves come from two main sources: (1) a
series of EPA and private studies*, and (2) actual Connecticut
case experience. Most of the curves were developed initially
outside Connecticut, but most have been tested against and
confirmed by the Connecticut case data. The costs reported by
these curves are, by their nature, general or average costs.
They do not take into account the value of materials recovered
by pollution control devices. While this value may be signifi-
cant in a few cases, such valuation cannot be undertaken by other
than case-by-case study. These costs also exclude any special
specifications which may be required for extraordinary install-
ations (e.g., stainless steel scrubbers). Any further exclusions
are specifically noted.
This chapter first presents these cost curves along with
annotations by type of pollutant (i.e. particulates, organics,
carbon monoxide, nitrogen oxides, and sulfur oxides) and method
of control chosen (e.g. baghouse, scrubber). The Section pre-
senting the curves begins with equipment costs and then provides
annual operating and maintenance costs. The chapter's second
main section discusses enforcement cases not covered by the
curves presented in the first section. Several addenda to the
chapter provide supporting data.
The CEP staff wishes to express their appreciation for the
hard work and patience of James Vickery, Principal Engineer of
the Air Compliance Enforcement Unit. This Section is largely
a product of his efforts.
See the brief listing of the chief data sources used
that follows .
-------
V-64
COST OF COMPLIANCE
CURVES
The Department can use the cost curves that follow to find
the cost of compliance for almost 90 percent of all cases issued
orders. Moreover, many of the cases for which no curve is now
available could be covered by curves developed in the future.
Percent of Pollutants Covered
B^ Cost of_ Compliance Graphs
>««« of th. Class of Pollutants
PARTICUWTES - (71)
Fugitive Dust (1)
Non-Fugitive Dust** (70)
HYDROCARBONS*** (26)
Organic Solvents (18)
Volatile Organics (9)
Other (0)
CARBON MONOXIDE (0)
NITROGEN OXIDES (1)
Fuel Burning Sources
Non-Fuel Burning
Sources****
SULFUR OXIDES (1)
Fuel Burning Sources
Non-Fuel Burning Sources
75 88
|100
100
gioo
f"*^-g"v""
gioo
•elopable I I Unfeasible
Developabl
Source: Random sample of Air Compliance Orders,
Interviews with Air Staff.
* Because odor and procedural violations are not covered by civil
assessment requlations, orders for these violations are not in-
cluded here. Order breakdowns are based on random sample of Air
Compliance orders unless otherwise indicated.
** Includes visible emissions, particulate emissions from process
sources.
*** Breakdown of hydrocarbons into subcategories is based on estimates
of Air Compliance staff.
**** For this class of source, installed costs are covered, operational
costs are only partially developed.
Since such curves would benefit any environmental agency, Federal
or state, that decides to apply economic remedies, EPA should help
with (1) the development of supplemental curves and (2) periodic
updating of the curves that are available.
-------
V-65
Data Sources
This manual draws upon costing data compiled from a large num-
ber of sources, both Connecticut and Federal. Data sources are i-
dentified throughout this manual by the following key:
Code
DS-1 DEP tax relief records, DEP registration files,
DEP computer databank "Perstat", interviews with
individual companies
DS-2 Environmental Protection Agency AP-51: "Control
Techniques for Particulate Air Pollutants". Note
that this publication has been supplemented by
RTI project 41U-762-13, "Update and Improvement
of the Control Cost Segment of the Implementation
Planning Program": CEP staff was not able to evalu-
ate the theory and data contained in this newer
volume.
DS-3 Environmental Protection Agency Manual AP-65:
"Control Techniques for CO Emissions from Station-
ary Sources"
DS-4 Environmental Protection Agency Manual AP-68:
"Control Techniques: Hydrocarbons and Organics"
DS-5 Blecker, H.G. & T.W. Cadman, "Capital and Operat-
ing Costs of Pollution Control Modules, Vol. I"
EPA Manual R5-73-0232
DS-6 Federal Public Hearings of October 1973
DS-7 Connecticut Task Force on Coal Conversion
DS-8 Interviews with United Illuminating and Connecticut
Natural Gas, 10/74
DS-9 Basic Principles and Calculations in Chemical
Engineering, Himmelblau, Prentice-Hall
Data Adjustments
Because the data used comes from so many different sources,
it was collected in different time periods and often uses different
definitions. Consequently, a number of adjustments were necessary
to make all data commeasurable:
(1) To correct for the cost impact of inflation,
all costs were updated to July 1974 using the
Marshall and Swift and the Engineering News
Record economic indexes which are published
in the magazine, Chemical Engineering. The
method of updating follows the suggested cor-
rections outlined in EPA's publication, Capi-
tal and Operating costs of Pollution Control,
EPA-R5-73-023a, Volume I, pp. 74-77 ;
-------
V-66
(2) Where state costs included engineering costs,
costs were decreased by a factor of 10%,(the
average engineering cost in Connecticut) to
make them commeasurable with the Federal data
which excluded engineering costs
(3) Where costs were expressed as a function of
process weight, these costs were transposed
into costs per flow rate.
Unless otherwise indicated, the use of the symbol DE in the rest of
this chapter signifies that these adjustments were carried out.
Testing the
Cost Curves
To test the accuracy of these curves, where possible, a "root
mean square" analysis was performed on the data associated with each
curve. The formula for this analysis is:
IN Ai _ m.:
s 2 r TiT
1/2
Where
RMS = Root Mean Square of the data
N = Number of data points used for analysis
A = Cost of installing or operating a parti-
cular piece of equipment for a Connecti-
cut company
T = The cost of installing or operating a piece
of equipment predicted by the relevant cost
curve
In most cases the result of this analysis has been included
with the tabular data for each set of charts. In some cases, the
data used was insufficient to test the quality of the curve. In
these cases, the symbol "NA" appears in the accuracy column.
-------
V-67
Updating and Extending
Cost Curves
The cost curves that follow must be reviewed and updated
from time to time. The technology of pollution abatement is
developing rapidly, and costs reflect both these technological
changes and the economy's fluctuations. Furthermore, the Depart-
ment is developing a more complete base of Connecticut costing in-
formation that will allow the State to rely less on national data
in the future.
A few cases may fall above or below the CFM volumes that
define the upper and lower limits of the curves that are now avail-
able. Costs can still be estimated for most of these cases by
further extrapolating these curves. Although it is more accurate
to undertake such extrapolation mathematically, graphic extrapola-
tion is quicker and can be tolerably accurate if careful attention
is paid to inflection as well as to minima and maxima points.
Using the Cost
Curves
In order to make the best use of the Department's cost curves,
members of the Enforcement Section should take the following steps
when confronted with a case that may require a civil assessment:
(1) Inspect the source premise and collect the
following information:
type of process
hours of operation
nature and weight of input
nature and weight of output
rate of input
rate of output
current control mechanisms
- other data likely to effect costing
-------
V-68
(2) Prepare a summary report including:
the source's prior compliance record
an analysis of the inspection data (including
any calculations necessary to equate source
data with the parameters of DEP's cost curves)
(3) Choose a method of control which offers the
greatest probability of attaining compliance
without placing an unreasonable burden on the
source.
N.B. The choice of control equipment
for costing purposes is for cost esti-
mation only; it does not:
a) guarantee that installation of
this type of equipment will a-
chieve compliance, or
b) provide either approval or certi-
fication of the control system
prior to final installation and
testing.
(4) Read equipment and O&M costs from the appropriate
curves.
(5) Adjust these cost estimates
up 10 percent to account for engineering.*
Accounting for structural modifications
will be handled on a case-by-case basis.
adjust the cost estimate for any variation
in the average number of hours the control
equipment is operated per year compared to
the hours of operation assumed in and noted
on each of the curves.**
These costs are uniformly excluded from all DEP cost curves to
ensure uniform data definitions. Adding 10 percent to cover
these costs is a conservative estimate suggested by a survey
of Connecticut industry.
EPA sources suggest that this linear adjustment can be made
with little chance of serious distortion.
-------
V-69
An example will help explain exactly what must be done in each
of these steps. Assume a complaint has been received about parti-
culate emissions from a Connecticut brass manufacturer. DEP staff
would respond by taking the following steps:
(1) An engineer inspects the source and collects
the following information;
The brass manufacturer is melting brass con-
taining 15 percent zinc in an uncontrolled reverbatory
type furnace at an average rate of 55 tons per
20-hour operational day (maximum rate is 72 tons
per 20-hour day). The plant operates on a 5-day
work week, 50 weeks a year. Currently installed
hooding is sufficient to capture all emitted
particulates with the fan operating at 22,000
actual feet per minute during maximum loading
conditions.
(2) The engineer writes a summary report. It
notes that this is a first time violation,
and that, while there are numerous complaints
from a nearby residential neighborhood about
unsightly smoke, the environmental harm is
currently small. The engineer calculates
from the information collected in the inspec-
tion and from the known emission factor that
the emission of 70 pounds of particulate per
ton of material charged is in violation of
Department standards. The actual calculation
for a maximum standard emission level follows.
.. PROCESS RATE =72 TONS/DAY
= 72 TONS x DAY x 2000 POUNDS = 7200 POUNDS/HR.
DAY 20 HRS. TON
DEMISSION RATE =
72 TONS x 70 POUNDS X DAY = 252 POUNDS/HR.
DAY TON 20 HRS.
Under Department Regulation §19-508-18(e) the
emission rate limitation for a process having
a process weight rate of 7200 Ibs./hr. is 7.8
Ibs./hr. Therefore, this operation is in
violation of Department Regulations §19-508-18(e).
(3) The engineer chooses a method of control to be
used for costing. The engineer initially com-
pares the magnitude of the process emission rate
-------
V-70
(252 pounds per hour) to the Department regula-
tion allowing 7.8 pounds per hour. This tells
him that he needs a control strategy with 97 percent
efficiency. This efficiency requirement,
coupled with an industry preference to use a
dry collection system wherever possible, leads
the engineer to choose a baghouse as the control
strategy he will assume in costing.
(4) He consults his cost curves for particulates/bag-
houses and reads the cost of compliance estimates
he needs. Since the gas volume flow rate to be
controlled is 22,000 ACFM, the cost figures from
cost curves 1 and 13 (see pages V-76 and V-94) show
the following costs:
EQUIPMENT COSTS = $54,000
OPERATING COSTS = $15,000 per year
(5) The inspector increases equipment costs to in-
clude engineering costs and adjusts the operat-
ing costs for hours. Increasing equipment costs
by 10 percent makes the final EQUIPMENT COST =
$54,000 + $5400 = $59,400.
Since the operating costs in curve 13 have a base
of 8760 hours per year, and this process operates
for only 5000 hours per year, operating costs must
be reduced by a factor of (5000/8760),yielding a
final OPERATING COST of $8561 per year.
-------
V-71
COST CURVES
FOR INSTALLED EQUIPMENT COSTS
Unless otherwise noted, "installed equipment costs"
include the following components:
* control hardware, e.g., a scrubber
* auxiliary equipment, e.g., fans and ductwork
* engineering and design work
* installation costs, e.g., rigging
Annotated cost curves for installed equipment costs
covering the most common pollutants and types of control equip-
ment can be found on the following pages:
Cost Curve
Figure No. Title P<
1 Installed Costs of Particulate Control V-74
Equipment - Comparative Composite
2 Installed Cost of High Voltage Electrostatic V-75
Precipitators - Particulate Control
3 Installed Cost of Baghouses V-76
Particulate Control
4 Installed Cost of Wet Collectors v-77
• - Particulate Control
5 Installed Costs of Hydrocarbon Control v-79
Equipment - Comparative Composite
6 Installed Cost of Activated Carbon Adsorbers V-80
Hydrocarbon Control
7 Installed Cost of Direct Flame Afterburners V- 81
Hydrocarbon Control
8 Installed Cost of Afterburners V- 83
- Carbon Monoxide (CO) Control
9 Installed Cost of Wet Collectors v- 85
- Nitrogen Oxide (NOx) Control
10 Installed Cost of Limestone Wet Collectors V- 87
- Sulfur Oxide (SOx) Control of
Power Plants
-------
V-72
Cost Curve
Figure No. Title Page
11 Annual Operating and Maintenance Costs of v-90
Particulate Control Equipment
Comparative Composite
12 Annual Operating and Maintenance Costs of v-91
High Voltage Electrostatic Precipitators
- Particulate Control
13 Annual Operating and Maintenance Costs of v-92
Baghouses - Particulate Control
14 Annual Operating and Maintenance Costs of v-93
Wet Collectors - Particulate Control
15 Annual Operating and Maintenance Costs of v-95
Hydrocarbon Control Equipment
- Comparative Composite
16 Annual Operating and Maintenance Costs of v-96
Activated Carbon Adsorbers
- Hydrocarbon Control
17 Annual Operating and Maintenance Costs of V-97
Afterburners - Hydrocarbon Control
18 Annual Operating and Maintenance Costs of v-99
Afterburners - Carbon Monoxide (COJ Control
19 Annual Operating and Maintenance Costs of V-101
Wet Scrubbers - Nitrogen Oxide (NOx) Control
20 Annual Operating and Maintenance Costs of v- 103
Limestone Wet Scrubbers
Sulfur Oxide (SUx) Control of Power
Plants
-------
V-73
THE COST OF INSTALLED EQUIPMENT - PARTICIPATES
Each set of cost curves developed for a type of pollutant is introduced by a table
listing the sources of the data used, what adjustments have been made in developing each
curve, the closeness of the fit between the curve and actual Connecticut case experience,
and other comments important to a full understanding of the curves.
The first set of curves deals with particulate control problems. They account for
over 70 percent of all orders.
COST CURVE DATA, ADJUSTMENT, AND INTERPRETATION;
COSTING INSTALLED EQUIPMENT FOR
PARTICULATE CONTROL
Cost Curve
Figure No.
Precipitator Baghouse
Scrubber
Precipitator
Baghouse
Major Data
Source (s)
DS-1, 2
DS-1/ 2
Wet Collector
(Scrubber)
Adjustments
DE*
DE
Fit With
Conn. Cases
N.A.
+ 70.6%
DS-1, 2 DE + 64.9%
The EPA curve was ex-
trapolated downward to
200 acfm by making a
"least squares" fit of
the actual Conn, cost-
ing data below the
range of EPA data
DS-1, 2 DE + 21.6%
Comments
These curves show the re-
lationships between cost-i
and thousands of actual
cubic feet per riinute
of gas to be controlled.
These costs represent an
average between high
and medium efficiency
bands shown in EPA
data.
These costs represent the
costs of average high
and medium temperature
ranges depicted by
EPA data.
These costs represent an
average between high
and medium efficiency
ranges shown in EPA
data.
The term "DE" indicates what adjustments were made on the data for these curves.
For an explanation of these adjustments, see page V-67.
-------
LOGARITHMIC 46 732O
2X3 cvrt rr. VADI m u t n
INSTALLED COSTS OF PA.TTICULAIE CONTROL EQUIR-EfT
-COMPARATIVE COMPOSITE-
5 67891.
9 10 2 3 4 50 6 7
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
789
FIGURE 1
-------
V-75
INSTALLED COST OF HIGH VOLTAGE ELECTROSTATIC PRECIPITATORS
•^ARTICULATE CONTRDL-
tOO 3M 4 56789 IOOO
2OOO 3 4 5 6 7 8 9 1OOI
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
FIGURE 2
-------
V-76
INSTALLED COST OF BAGHOUSES
-PAKTICULAIE CCWTRDL-
"8
O
4-
j±i
$11
S
±t±J
±titi
USANDS OF DO
fJ> 0> t.
14
::frt
it
!
d:-; '"
31
JJi
nil
mi
-
-H-U+
X
CO 10
O 9
O o
te
^-HH-
-MT
1
t>r
€£E
:!U:
1 1 i
x
,x
C)
rrc
--744
iX-^
J<£Yj
1 -
^Etr
X
J '
3 x
Q^
H-ffr
TAP
TORE
TO
.5C
-------
V-77
INSTALLED COST OF WET COLLEQORS
-PARTICULATE CONTROL-
.2
.6 .7 .8 .» t 2 3 4- 6 6 7 0 9 10
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
S067691M
FIGURE
-------
V-78
THE COST OF INSTALLED EQUIPMENT - HYDROCARBONS
There are two kinds of equipment commonly used to control hydrocarbon emissions:
activated carbon adsorbers and fume incinerators (afterburners). The following table
summarizes the important information concerning the hydrocarbon emission control cost
data contained in cost curves 5-7.
COST CURVE DATA, ADJUSTMENT, AND INTERPRETATION:
COSTING INSTALLED EQUIPMENT FOR
HYDROCARBON EMISSION CONTROL
Cost Curve
Figure No.
Equipment
Adsorber
Afterburner
Activated Carbon
Adsorbers
Major Data
Source(s)
DS-1, 2, 4
DS-1, 2, 4
Fume Incinerators
(Direct Flame
Afterburners)
DS-1, .2, 4
Adjustments
DE
DE
Fit With
Conn. Cases
NA
- 30.5%
DE
Data here mult- -
iplied by factor
of 1.5 to trans-
form EPA purchase
costs to installed
costs. Correction
factor supplied by
EPA.
20.3%
Comments
Curve compares costs
per 1000's of actual
'cubic feet per minute
of gas to be controlled.
EPA data is based on
1969 pilot project
plant, and the valid-
ity of scaled-up
estimates is question-
able. The cost curve
is therefore drawn
.through actual Conn.
data points costs only.
Theoretical costs
represent average of
EPA ranges.
For catalytic
afterburners, increase
'costs by 15%,
-------
INSTALLED COSTS x
(THOUSANDS OF DOLLARS)
CO
m
o
o
3
—1--V-4-
.-MH-I
-U3
-r\
^
3-Lt
rr±
_I'i
I
I
Tit
mk
Is
O) -^1 00
rptt
i
! I
tfn
-tm"
1
m
rrr
•ft
TTTT
ttl
1
ttp
itf!
4
•+ft
|f
•ju
-rh
"-JT
tft
tHl
..t!
—H 5vi
»CO = u
:o ^o
6Z.-A
-------
INSTALLED COST x
(THOUSANDS OF DOLLARS)
CT *>J CO
1U1-L
_u 1
iIIT
144
+rt
tr .
±t
-t-t-;
; j -v-7
t~ -' ^T^
&
SJf Hfi
1
±M±;
m
Uti
ffM
tH
ill!
ilG
1
tffl
lift
i
fii
It*
ilt!'
1
g-r
S-Tl
I
ffl
~i=tn-n-
ffl
r?rt
rrr
itt
ttt
i: t
m
1
t
... ,-rr
61
5*
Liil
fl^£
i a* ^j oo
-------
LOGARITHMIC 46 732O
2X3 CYCLES HIDE IN u s «.
KEUFFEL A E5SER CO.
INSTALLED COSTS OF DIRECT FLfft AFTERBURNERS
CO^ROL- 8 7
I
00
GAS VOLUME THROUGH COLLECTOR
ITi ITM !/•* A nn-x*-* f^r- *%/^r-kji i
-------
V-82
THE COST OF INSTALLED EQUIPMENT - CARBON MONOXIDE
Fuel burning is the major source of carbon monoxide emissions in Connecticut. Depart-
ment estimates indicate that 98 percent* of all carbon monoxide in the State comes from this
source. However, the control of fuel burning emissions is more a problem of optimum
combustion parameters (fuel rate, excess air, retention time, mixing, etc.) than it is
a problem of needed control equipment. Accordingly, this costing manual focuses on
equipment costs for non fuel-burning sources of carbon monoxide.
The Department of .Environmental Protection has located only one major industrial
source of carbon monoxide in the State: grey iron cupolas. Since the only presently
available method of CO control is fume incineration, the cost curve for CO emission
control presents costs for both direct flame and catalytic afterburners.
COST CURVE DATA, ADJUSTMENT, AND INTERPRETATION:
COSTING INSTALLED EQUIPMENT FOR
CARBON MONOXIDE CONTROL
Cost Curve Major Data Fit With
Figure No. Equipment Source (s) Adjustments Conn. Cases Comments
8 Direct Flame and
Catalytic Afterburners DS-1, 2,3* DE N.A.
* Includes motor vehicle emissions.
-------
V-83
100-
INSTALLED COST OF AFTERBURNERS
-CARBON MONOXIDE (CO) COWTROL-
S
8
LL.
o
•s*
v/
3 30.
2.5
0
13-
O<
O -
CM =
LOGARITHM
2X2 CYCLES
-------
V-84
THE COST OF INSTALLED EQUIPMENT - NITROGEN OXIDES
Unfortunately, no useful EPA data on the cost of nitrogen oxide control was
available, and Connecticut sources have had little experience with installing equipment
for nitrogen oxide control. A curve utilizing the three Connecticut data points found
will be used until more data becomes available.
COST CURVE DATA, ADJUSTMENT, AND INTERPRETATION:
COSTING INSTALLED EQUIPMENT FOR
NITROGEN OXIDE CONTROL
Major Data
Equipment Source(s) Adjustments Accuracy Comments
Wet Scrubber DS-1 DE N A
-------
i ff^r-~ LOGARITHMIC 46 732O
i'V'tfLs 2X3 CVf Lf -5 MAOl IN U S ft
INSTALLED COST OF VH SCRUBBERS
.6 .7 .8 , X -NITROGEP °XIDE3 (NOX]
4 5 6 7 8 9 10
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF SCFM)
So 6 789
FIGURE 9
-------
V-86
THE COST OF INSTALLED EQUIPMENT - SULFUR DIOXIDES
The only available data for costing control equipment for sulfur dioxide emissions
is for limestone wet scrubbers. This control technique is usually appropriate for large
power utilities.
COST CURVE DATA, ADJUSTMENT, AND INTERPRETATION:
COSTING INSTALLED EQUIPMENT FOR
SULFUR DIOXIDE CONTROL
10
Equipment
Limestone wet scrubber
Major Data
Source(s)
DS-11
DS-12
Adjustments
DE
The curve is a
"least squares"
fit of all
available data.
Fit With
Conn. Cases
Comments
The curve shows a
relationship be-
tween power plant
capacity in mega-
watts and installed
NA capital costs in
terms of dollars
per kilowatt
capacity. Since
the curve is based
on all data avail-
able, a comparison
between Connecticut
data and projected
costs is not appli-
cable.
-------
LOGARITHMIC 46 7O8O
2 X 1 CYCLES MADE IN U.S.A.
KEUFFE1. & E3SER CO.
INSTALLED
(DOLLARS PER
a
COSTS
KILOWATT)
-Li-
M:
-r+h
T
xc
w
ret:
)OO
ail
fflffi
|
1*
•i-i
oo
ill
CT)
00
-------
V-88
COST CURVES
FOR OPERATING AND MAINTENANCE
Operating and maintenance expenses are cumulatively a
major component of control costs. Labor, routine operating
supplies, replacement parts, and energy can all be major ex-
penses .
As with installed equipment costs, the following curves
are based on an extensive review of the available costing liter-
ature and on Connecticut case experience. However, the data is
significantly less reliable than that used to derive the equipment
cost curves. Few sources keep detailed account of the cost of
operating and maintaining discreet pieces of control apparatus.
As with the installed equipment cost curves, the Department
has had to make a series of adjustments to the disparate cost
data used to construct its O&M curves to ensure that the bits of
information being used were comparable. All costs:
* were adjusted to either 8760 or 6000 hours
of operation per year as indicated
* were updated to reflect the current costs of
electrical power
* were adjusted to July 1974 for inflation
* were translated into a function of flow rates ,
Annotated O&M cost curves for operating and maintenance
expenses can be found on the following pages.
-------
V-89
THE COST OF OPERATING AND MAINTAINING EQUIPMENT
PARTICIPATE CONTROL
The following graphs detai] operating and maintenance costs for three methods
of particulate control - wet scrubbers, haghouses, and electrostatic precipitators .
COST jnjRVE DATA, ADJUSTMENT, AND INTERPRETATIOISI:
OPERATING AND MAINTAINING EQUIPMENT
PARTICULATE CONTROL
Graph
11
12
13
14
Equipment
Wet Scrubbers
Baghouses
Electrostatic
Precipitators
Electrostatic
Precipitator
Baghouses
Wet Scrubbers
Major Data
Source (s)
DS-1, 2, 5, 8
DS-1, 2, 5, 8
DS-1, 2, 5, 8
DS-1, 2, 5, 8
Adjustments
DE
DE
DE
DE
Pit
fonn
N.A.
± 33.
± 59.
± 44.
With
. Cases Comments
Compares costs of
O&M in thousands
of annual dollars
per unit of gas
controlled
.2%
,7%
3%
-------
I
o
t)
m
|l ;'„' -. LOGAi'i runic
ll Y'.'J 3 >. 3 Cil l.E-
46 74OO
ANNUAL OPERATING AND MAINTENANCE COSTS
CO
m
CD
ill-
\
l!!
L_L±t
i • (-do c*>
01 er» -j on o o
\
\
II
i-H-
I !
.1 i •
. ,-JJ
(THOUSANDS OF DOLLARS)
fl ~. -g m .0 g
C1 -1 06 '£> i
Irtl
\
\
\
rc:d±
Id!
.
i±r
I
vo
o
-------
V-91
ANNUAL OPERATING AND MAINTENANCE COST OF HIGH VOLTAGE ELECTROSTATIC PRECIPITATOR1
-PARTICULATE CONTROL-
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
FIGURE 12
"BASIS: 8760 OPER.HRS/YR
-------
V-92
ANNUAL OPERATING & MAINTENANCE COST OF BAGHOUSES*
-PARTICULAR CONTROL-
o «
o,
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
405067891J
FIGURE 13
"BASIS: 8760 OPER.HRS/YR
-------
V-93
ANNUAL OPERATING & MAINTENANCE COST OF WET COLLECTORS *
-PARTICULATE CONTROL-
IOO>
OX:
-t-t-H-
r:;
-H-f
Tt!
±
H4-
t±t
•Hi
i-n
tu
tn:
CO3
DC
rrtr.
t±tf
T i rt-
it
ffl
fHH
tit
::- ffl.
CO
te
8
Ul
o
o
o
U> ;
t
t u
P
J o
L'J
TJZ. -t-^m
ct!
.2 .3 .4 -8 .* .7 .8 .91
3 4 6 6789 1O
20
50 6 7 8 9
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
FIGURE
"BASIS: 8760 OPER.HRS/YR
-------
V-94
THE COST OF OPERATING AND.MAINTAINING EQUIPMENT
HYDROCARBONS
The following table summarizes information concerning the charts for operating and
maintaining equipment commonly used for hydrocarbon control.
COST CURVE DATA, ADJUSTMENTS, AND INTERPRETATION;
OPERATING AND MAINTAINING EQUIPMENT
HYDROCARBON CONTROL
16
17
Equipment
Activated Carbon
Adsorbers
Fume Incinerators
(Afterburners)
Activated Carbon
Fume Incinerators
(Afterburners)
Major Data
Source(s)
DS-1
DS-1
DS-1,9
Adjustments
Fit With
Conn. Cases
Comments
17.1%
N.A.
Curve compares costs of O&M
in thousands of dollars per
unit of gas controlled
The curve assumes
1. fuel costs exceed main-
tenance costs
2. fuel costs are proportional
to CFM and gas volume
3. natural gas is used for
afterburning
4. natural gas cost =
$2.40/1000 ft.
5. pollutant added no heat value
6. no heat recovery employed
7. operating year is 2000 hrs.
- Curves are shown for dif-
ferent inlet temperatures.
- No catalytic data is cur-
rently available
Since the gas inlet temperature
of Conn, data points was not
available, it is not possible to
test the accuracy of these curves
with the points available. The
data points are included to dem-
onstrate that, in general, as the
amount of gas to be controlled
rises, so does the cost of operat-
ing and maintaining that equip-
ment.
-------
V)
i—«
C/5
C/5
£
i| »,.' - LOuAPi niMIC AG 7S.OO
li \'V'-^ 0X3 C .'. LC'-. «^-. '•' >' •; «
OPERATING AND MAINTENANCE COSTS
M CO 4» (,1 (TV -vl CO 'O 5 W
(THOUSANDS OF DOLLARS)
ft •* 71 " -° ~f
•?> -J 3C -O I
CD
^O
m
vo
01
-------
ANNUAL OPERATING & MAINTENANCE COSTS
f (THOUSANDS OF DOLLARS)
"o & cp V op t-p X Is*
OO 4O •—•
96-A
-------
V-97
ANNUAL OPERATING & MAINTENANCE COSTS OF AFTERBURNERS*
-HYDROCARBON CONTROL-
j-l
f
-H-
See
— --*
-t-1-T 1
-H t
-L
S
S OF DOL
tO
f
'•
y
to/-.
\
T-f-,
if
tJ
*?
H4i
7"
O ,
C i.
05
co
o
O
LU
i
LU
^
x
+,-!--•
#
o x
-I n
3^
HHORRTirA
D-
0
-=P
=&'
^l/
CAfAtXL«:.b
id
t-yc
/S4
^OSTTf?G":DATA
TIlAM
It
E UN
i
.2 .3 .4 .6 .« .7 .«.* 1
3 4 S 6789 10
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
3 45067891
FIGURE 17
"BASIS: 2000 OPER.HRS/YR
-------
V-98
THE COST OF OPERATING AND MAINTAINING EQUIPMENT
CARBON MONOXIDE
No Connecticut data for operating and maintaining afterburners for carbon monoxide
control was available in the Department's files. Testing of this curve will take
place as costs become available.
COST CURVE DATA, ADJUSTMENTS, AND INTERPRETATIONS:
OPERATING AND MAINTAINING EQUIPMENT
CARBON MONOXIDE CONTROL
18
Equipment
Afterburners,
Direct and
Catalytic
Major Data
Source (s)
DS-7
Adjustments
DE
Fit With
Conn. Cases
N.A.
Comments
The curve assumes:
no heat value from
CO
no heat recovery
employed
natural gas cost =
$2.40/1000 cu. ft.
temperature range
for direct flame
afterburner is
380°F to 1400°F
temperature range
for catalytic after-
burners is 380°F to
900°F
-------
f^" LOGARITHMIC
^"^2 2 X 2 CYCLrs
46 72OO
"HOE IN II S A
°?
I
P
x
I
en
So
•no
1
CD
pa
m
i—*
oo
ANNUAL OPERATING AND WINTENANCE COSTS
(THOUSANDS OF DOLLARS)
fz co
VO
VO
-------
V-100
THE COST OF OPERATING AND MAINTAINING EQUIPMENT
NITROGEN OXIDES
Unforturately, the low number of both national and State data points makes it impossible to
construct a reliable cost curve for operating and maintenance costs for nitrogen oxide control
equipment. Two actual data points for Connecticut are available for comparative purposes, but
only serve to form the basis of a cost curve. The Department hopes to assemble a greater data
base in the near future.
COST CURVE DATA, ADJUSTMENTS, AND INTERPRETATIONS:
OPERATING AND MAINTAINING EQUIPMENT
NITROGEN OXIDE CONTROL
Major Data Fit With
Equipment Source(s) Adjustments Conn. Cases Comments
Wet Scrubbers DS-1 DE N.A.
-------
V-101
ANNUAL OPERATING & MAINTENANCE COSTS OF WET SCRUBBERS4
-NITROGEN OXIDE (NOx) CONTROL-
EI:
c/5
125
LU 7
^
< 6.
Ul
^3 5
U 2 2.5 3 4 At7t9IO
15 26 25 30 4« 50 6 7 8 9 KO
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF SCFM)
FIGURE 19
*BASIS: 20(D OPER.HRS/YR
-------
V-102
THE COST OF OPERATING AND MAINTAINING EQUIPMENT
SULFUR OXIDES
The following table summarizes information concerning the graph on operating and
maintaining sulfur oxide control equipment.
COST CURVE DATA, ADJUSTMENTS, AND INTERPRETATION
OPERATING AND MAINTAINING EQUIPMENT
SULFUR OXIDE CONTROL
Major Data Fit With
Graph Equipment Source Adjustments Conn. Cases Comments
19 Limestone Scubber DS-6, 7 DE N.A. The curve measures millions
of dollars of costs vs.
megawatts per hour plant
output
-------
I
o
-O
m
;o
;O
00
I
5
CD
ro
CD
(TVe= 2X2 CYCLES
ANNUAL OPERATING AND
DE IN u S A.
MAINTENANCE COSTS
(MILLIONS OF DOLLARS)
44
i !
T
I>1
lit
1
\
K
it
IrL
!
1k;-}
!$
'1
liJ!
ilR
lit!
18!
4-tt
in
la.
•Hi
-tr.
"rV
ill
Jti
S
CO
o
1
o
Ul
-------
V-104
COSTING WHEN CURVES
MAY NOT BE ENOUGH
Although the cost of compliance can be estimated using the
cost curves just outlined in most cases, there are a significant
number of cases for which no curve has yet been developed; where
the use of curves is complicated by the emission of several
different pollutants from one source; or where there may be a
choice between using an equipment-based curve or assuming another
approach to control (e.g. reformulation or a change in fuel
types). This section begins with a tabular discussion of the
types of enforcement situation likely to run into these problems.
It then goes on to a more thorough discussion of how best to
approach costing in cases that involve multiple pollutant emis-
sions or that propose control strategies other than the installa-
tion of control equipment.
SPECIAL COSTING
APPLICATIONS
The Department is responsible for enforcing a number of
emissions standards that may, at least in some situations, re-
quire other approaches to costing than the use of cost curves.
The following table discusses each of these situations in the
order in which they appear in the Department's Regulations.
The table identifies what proportion of the current enforce-
ment load each type of problem is and suggests how each can best
be approached. (The table discusses cases where there is a
violation of only one pollution standard; complex cases are >
covered 'immediately after the table.)
-------
V-105
Approaches to Special Costing Situations
Pollutant and
Violation
Percent of
Connecticut
Orders*
Special Application
Particulates
(§19-508-18)
Opacity
(§18 (a))
Fugitive Dust
(§18(b))
Incineration
(§18(c))
Less than
1 percent
Less than
1 percent
It is uncertain
how often alter-
native means of
control can be
contemplated
Most opacity violations are
found in conjunction with other
particulate violations which
require the installation of
control equipment. In such
cases the control costs for the
second particulate violations
will be adequate for the opa-
city violation as well. The
major exception is for motor
vehicles. While equipment
control costs for motor vehi-
cles have not yet been collected
by the Department, there are
currently plans for a coopera-
tive enforcement venture with
the Department of Transportation.
The Department is now in the
process of trying to establish
reliable costing figures for
motor vehicles.
Where the problem is due to a
mechanical process, general
treatment is applicable. But
where the problem is caused
indirectly (e.g. wind action on
stockpiles, uncovered trucks,
unkempt roads or parking lots)
the engineer should attempt to
estimate the costs of a more
appropriate means of achieving
compliance. Thus, for an un-
covered truck, the applicable
equipment cost would be the cost
of a dust cover.
The Department will generally
assume for costing purposes that
incinerators will be controlled
with wet scrubbers. However,
where the engineer has knowledge
*lncludes only orders for emissions violations covered by Civil Assess-
ment Regulations (e.g., violations of §§19-508-9 and 19-508-18 to 22).
-------
V-106
Approaches to Special Costing Situations
Pollutant and
Violation
Percent of
Connecticut
Orders
Special Application
Fuel Burning
Equipment
(§18 (d))
-
9
>
that an alternate means of waste
disposal such as compaction is
going to be used, he may either:
(1) estimate the costs on the
basis that a scrubber will
be installed and leave to
the correction process any
errors resulting from this
assumption, or
(2) estimate alternate disposal
costs.
However, since DEP experience
indicates that alternate dis-
posal plans are often not car-
ried out, the first costing
technique should usually be
carried out.
Since violations of the particu-
late standards by fuel burning
equipment can be corrected by
either control equipment or by
renovation, the method of' con-
trol chosen for costing purposes
can be either:
(1) an estimation of control
equipment costs, with any
errors stemming from this
assumption to be corrected
in the correction process, or
(2) an estimation of the reno-
vation costs.
However, since DEP experience
indicates that renovation is
often unsuccessful, the first
costing technique should usually
be followed.
-------
V-107
Pollutant and
Violation
Percent of
Connecticut
Orders
Special Application
Hydrocarbons
(§19-508-20)
Storage of Vola-
tile Organic
Compounds
(§20(a))
Volatile Organic
Compounds Loading
Facilities
(§20(b))
Volatile Organic
Compound Water
Separation
(§20(c) )
Pumps and
Compressors
(§20 (d))
Waste Gas Disposal
(§20(e))
Organic Solvents
(§20(f))
9 (sum of both sub-
categories)
Sections 20 (c),
(d) and (e)
account for less
than 1 percent of
Connecticut orders.
17 percent
The typical control equipment
employed at bulk wholesale oil
terminals (floating roofs, vapor
recovery systems, etc.) is not
covered by the costing graphs.
This omission reflects the fact
that recent enforcement activity
indicates that all bulk whole-
sale oil terminals are now in,
or coming into, compliance. If
any future violations are dis-
covered, a case-by-case costing
technique will be appropriate.
The Department has very limited
enforcement activity associated
with these regulations. Since
cost information is not now
readily available from either
Federal or State sources, the
Department will proceed on a
case-by-case costing basis until
a reliable data base is avail-
able.
Note the special applicability
of the portion of this Section
that explains non-equipment-
based approaches to control.
Note also three special charac-
teristics of operating costs
here:
(1) For administrative ease, the
cost curves do not include
any consideration of recla-
mation or re-use of collected
hydrocarbons. A source with
sugh reclamation facilities
can state its case in the
correction process.
(2) The predicted inlet tempera-
ture to the incinerator has
a great effect on fuel re-
quirements and thus costs.
Such temperature should be
carefully considered.
-------
V-108
Approaches to Special Costing Situations
Pollutant and
Violation
Percent of
Connecticut
Orders
Special Application
Architectural
Coatings
(§20(g»
Disposal and
Evaporation of
Solvents
<§20(j))
Carbon Monoxide
(§19-508-21)
Nitrogen Oxides
(§19-508-22)
Combustion
Sources
(§22(a))
Sections (g) and
(j) account for
less than 1 per-
cent of Conn-
ecticut orders.
Less than
1 percent
(3) For administrative ease, the
cost curves do not include
consideration of the costs
or benefits of heat recovery
in fume incineration. Once
again, a source with such
costs or benefits has ready
access to the correction pro-
cess for appropriate adjust-
ments .
The CO cost curve :
(1) assumes that an afterburner
installed to control cupola
emissions will be built as
a separate facility, -and
(2) does not reflect the costs
or benefits of heat recovery
systems. Adjustments for
this assumption or omission
should be taken care of in
the correction process.
The costs of reconditioning and
maintaining a combustion source
will usually be the only costs
needed to keep a source within
standards. However, at present
there is both uncertainty in
retrofit control technology and
a scarcity of reliable cost
data. Until better information
is available, DEP engineers will
make the best available estimate
and will use the deferred col-
lection device (See Section H of
Chapter II of this Part) frequent-
ly.
-------
V-109
Approaches to Special Costing Situations
Pollutant and
Violation
Percent of
Connecticut
Orders
Special Application
Sulfur Oxides
(§19-508-19)
Fuel Combustion
(§19(a))
(§19-508-19)
Sulfuric Acid
Plants
(S19(b))
Sulfur Recovery
Plants
(§19(c))
Nonferrous
Smelters
(Sl9(d))
Sulfite Pulp Mills
(§19(e))
Other Process
Sources
(S19(f))
Less than
1 percent
Less than
1 percent
In most cases, the cost of con-
trol for violation is simply the
cost of using low-sulfur fuel.
The difference between the cost
of high- and low- sulfur fuel
fluctuates rapidly; no specific
costs are noted here. Cost will
usually be calculated by multi-
plying the cost differential
times the number of gallons used.
Note however that in the appro-
priate case, cost curves 10 and
20 provide adequate costing
information where auxiliary
control equipment is contem-
plated as the means of control.
In such a case, the engineer
should be sure to ascertain the
power generation of the fuel
burning since this is the costing
parameter used in the curves.
Costing data on these processes
remains scarce and generally un-
reliable. Fortunately, such
sources are rare in Connecticut,
comprising only 2 percent of the
total SOX emission in the State.
When a case does arise involving
these regulations, the Department
will make a case-by-case costing
analysis and make use of the
deferred collection device.
**************
-------
V-110
COSTING MULTI-VIOLATION
CASES
There are two bases of cost estimation for those cases where
a source has been cited for violating more than one of the
emissions standards defined in §§19-508-18 through 19-508-22 of
the Regulations. The first is to estimate that the source can be
brought into compliance by one control system (a baghouse, a
scrubber, etc.). The second is to estimate that the multiple
violation will require installation of several control systems.
For example, consider a source which is cited for viola-
tions of "Visible Emissions", §19-508-18 (a) (1) , and "Organic
Solvents", §19-508-20 (f) (1), due to the emission of high molec-
ular weight hydrocarbons from a process such as a fabric tinter
frame. In this case, one piece of control equipment will correct
both violations (e.g. an electrostatic precipitator or a fume
incinerator). The engineer choosing the control technique should
be careful to ensure that the strategy chosen offers the greatest
assurance of achieving compliance for both violations.
On the other hand, consider a source which is cited for
violations of "Process Industries (Particulate Control)",
§19-508-18(f)(1), and "Control of Carbon Monoxide Emissions",
§19-508-21(2), for a grey iron cupola. For a case such as this,
control requires two separate abatement strategies (i.e. a high
energy scrubber to control particulate emissions and a fume in-
cinerator to control carbon monoxide emissions). The engineer
doing the costing should make the two costing estimates separ-
ately and then add them for a final figure. He should, however,
take care not to double count certain costs (e.g. start-up, '
engineering) that would not necessarily double because two
systems rather than one were being installed.
COSTING VIOLATIONS OF THE
GENERAL PROHIBITION OF AIR POLLUTION
Section 19-508-9 prohibits air pollution not otherwise
covered by explicit standards put forth elsewhere in the Regu-
lations. The language of the Section, "No person shall permit
or cause air pollution...," in effect requires that control
techniques eliminate 100 percent of any and all emissions.
Therefore, where a source is cited for a violation of this
Section, a civil assessment might plausibly be based upon the
profits realized from continued operation of the emission source
(i.e. the costs of not not operating). However, the information
required to make such an assessment would be very difficult to
obtain. For administrative ease in such cases, the Department
will usually attempt to use the cost curve which is most closely
applicable to the general emission problem. However, the choice
of a control technique for costing purposes does not negate
the clear language of §19-508-9 which requires 100 percent control,
-------
V-lll
COSTING ABATEMENT BY MEANS
OTHER THAN CONTROL EQUIPMENT
There are pollution problems which are often solved other
than through the use of control equipment. (Some of these cases
were specifically noted in the special applications table.)
When, as is usually the case, control can be achieved through
the use of equipment as well, costing should generally proceed
on the assumption that control will be achieved using control
equipment rather than through reformulation or other control
techniques.
This general rule rests on the following major considera-
tions:
* In the Department's enforcement experience,
abatement by means other than control equip-
ment is often unsuccessful. Despite a source's
initial expectations and hopes, control equip-
ment is still the usual solution to most pollu-
tion problems.
* It would be both difficult and expensive to
obtain accurate costing data for many non-
equipment approaches to control. For example,
costing individual reformulation efforts,
especially in the early research stages,
would be a tricky, time-consuming job.
* Use of the Department's equipment-based cost
curves ensures that cases with similar pollu-
tion problems are assessed equally, regard-
less of any difference in their approach to
coming into compliance.
* Even if cost estimates based on the assumption
that control is achieved with abatement equip-
ment later prove too high, regulatees are en-
tirely protected against loss by their right
of correction and refund of any overassessment
with interest.
**************
CONCLUSION
The Department can make quick, reliable estimates of the
costs of compliance for almost all violations of the substantive
emissions standards enforced by its civil assessment regulations,
(§§19-508-9 and 19-508-18 through 19-508-22 of The Regulations
For the Abatement of Air Pollution). It is able to do so chiefly
by using the cost curves it has developed and tested that des-
cribe the relationship that exists between costs and the volume
of air that must be processed and the type of pollutant involved.
The coverage and accuracy of these curves will increase as the
State and national data base improves.
-------
V-112
APPENDIX A
ADJUSTING COST DATA
FOR INFLATION
-------
V-113
APPENDIX A
ADJUSTING COST DATA FOR INFLATION
This Appendix explains the method used in this Section
of adjusting"costs for inflation. This adjustment ensures
that all cost estimates used in the previous Section reflect
July, 1974 values. The general equation has two cost com-
ponents: (1) a materials cost index (the Marshall and Swift
index), and (2) a labor cost index (the Engineering News
Record/Construction Cost Index). These two components were
averaged, using the labor/materials ratio appropriate to
each piece of equipment.
GENERAL EQUATION FOR COST ESCALATION :
1C = 1C, (1-0.5 (L/M)) MSX +0.5 (L/M) ENRx
x ° MSb
Where ICX = Estimated installed cost of equipment in Year X
ICb = Estimated installed cost of equipment in a
given base Year B
L/M = Labor to material ratio of equipment to be
costed, as given in Figure 7 of Blecker
& Cadman.
MS = Marshal & Swift Index, Process Industries
Average for Year X or Base Year B (found
in Table 8 of reference or in regular
reports "Economic Indicators" published
in Chemical Engineering).
ENR = Engineering News Record/Construction Cost
Index for Year X or Base Year B (found in
Table 8 of reference or in regular reports
"Economic Indicators" published in Chemical
Engineering).
Blecker, H. G. & T. W. Cadman,"Capital & Operating Cost
of Pollution Control Equipment Modules" Vol. 1, E.P.A.,
Office of Research & Monitoring, Washington, D. C.,
Publication No. EPA - R5 - 73 - 0232, pages 73-80.
-------
V-114
L/M RATIOS USED:
(1) PARTICULATE CONTROL - L/M = 0.796
(2) FUME INCINERATORS - L/M = 0.944
(3) SOX SCRUBBERS - L/M =0.5
(4) ACTIVATED CARBON
ADSORBERS - L/M =1.0
(5) NOX SCRUBBERS - L/M =0.5
AN EXAMPLE :
EXAMPLE PROBLEM = A source installed a scrubber in
1965 at a cost of $8,980 to control nitrogen oxide
emissions. Estimate the cost of installing that same
scrubber in July, 1974.
EXAMPLE SOLUTION
ICb = IC1965 = $8,980
L/M =0.5
MSX = MS7/1974 = 386
MSb = MS1965 = 244
ENRX = ENR?/1974 = 2075
ENRb = ENRiggs = 971
.*. ICX = IC7/74 = $3,980.. .1(1-0.5(0.5)) ||| +0.5(0.5)
, 8,980 [75(386 )+.25
= 8,980 Fl. 19 + . 53J
1C-, ^A = 8.980 f1-72]
'7/74
ICy/74 = $15,446
-------
V-115
APPENDIX B
CALCULATING
OPERATION AND MAINTENANCE COSTS
-------
V-116
APPENDIX B
CALCULATING OPERATING AND MAINTENANCE COSTS
This Appendix presents the methods used to calculate cost
estimates for the operation and maintenance of each kind of
pollution control equipment discussed in this Section. For
control of particulates and carbon monoxide, the Appendix
includes the general equations for each piece of equipment,
the variables used to simplify these equations, and the final
functions used in Graphs 11 through 20 in this Section. The
hydrocarbon and sulfur oxides sections include sample calcu-
lations. Since the Department will base cost estimates for
nitrogen oxide control equipment on actual Connecticut data,
calculations of these costs are not included.
PARTICULATE AND
CARBON MONOXIDE CONTROL
COLLECTOR GENERAL EQUATIONS1
1. Wet Scrubbers G=S [0.7457 HK Z+.^n + WHL + M]
iy 80 •*
2. Electrostatic Precipitators G=S [JHK + Mj
3. Fabric Filters G=s[l95.5 X 10~6 PHK + M]
4. Afterburners G=s[l95.5 X 10~6 PHK + HF + M]
WHERE:
G = Annual operating and maintenance cost (dollars)
S = Unit design capacity (ACFM)
P = Pressure drop (inches of water)
H = Annual hours of operation ( hours)
h = Elevation for pumping of liquid in circulation
system for collector (feet)
'Control techniques for Particulate Air Pollutants," EPA,
Office of Air Programs, Research Triangle Park,N.C.,
Publication No. AP-51, pages 162-166.
-------
V-117
K = Electricity cost (dollars per kilowatt hour)
M = Maintenance cost per ACFM (dollars per ACFM)
F = Fuel Costs (dollars per ACFM per hour)
W = Liquid make-up rate (gallons per hour per ACFM)
L = Liquid cost (dollars per gallon)
Z = Total power input required for a specified scrubbing
efficiency (horsepower per ACFM)
J = Kilowatts of electricity per ACFM
Q = Water circulation (gallons per ACFM)
ASSUMPTIONS:
1. H = 8760 hours/year = Annual hours of operation
2. K = $0.060/KW-hr = Electricity cost2
3. Afterburners use natural gas as fuel at cost of
$2.40/1000 Cu. Ft.3
4. Afterburners use 50 percent excess air with
operational temperature of 1400°F (Direct Flame)
and 900°F (Catalytic).
.'.FINAL ANNUAL OPERATING AND MAINTENANCE COST EQUATIONS USED
IN THE GRAPHS IN SECTION A ARE:
COLLECTOR EQUATION
1. Wet Collector G = S (3.78)
2. Electrostatic Precipitators G = S (0.198)
3. Fabric Filters G = S (0.682)
4. Afterburners
a. Direct Flame G = S (20.2)
b. Catalytic G = S (10.23)
2
United Illuminating cost information,October,1974.
3CNG cost information, 10/28/74..
-------
V-118
HYDROCARBON
CONTROL
1. CARBON ADSORBERS:
GIVEN: A) Operating cost for units of 1000 CFM
size range = $6.80 - $8.00/CFM4
B) Operating cost for units of 50,000 CFM
size range = $1.54 - $1.70/CFM4
C) Operating costs, have increased by a
factor of two between 1969 and July, 1974
due to inflated fuel and power costs.
EQUIPMENT SIZE
(ACFM) OPERATING COSTS
800 = 800 ($6.80)2 = $10,100
1000 = 1000 ($6.80)2 = $13,600
20,000 = 20,000 ($1.54)2 - $62,000
50,000 = 50,000 ($1.54)2 = $154,000
2. AFTERBURNERS:
GIVEN: A) Heating value of contaminants is negligible.
B) Fuel costs are proportional to CFM in-
cinerated.
C) Fuel costs are proportional to temperature
change.
D) Direct flame afterburner will require
140OOF exhaust.
E) Catalytic afterburner will require 700°F
exhaust.
F) Combustion air will be taken from gas
to be incinerated.
Control Techniques: "Hydrocarbons and Organics," EPA,
Office of Air Programs, Research Triangle Park, N.C.,
Publication No. AP-68, P. 6-4 (1969 Data).
-------
V-119
G) Natural gas has gross heating value of
of 1005 BTU/ft3.
"2
H) Combustion air required is 9.53ft air/ft3
gas.
I) Annual hours of operation are 2000
hours/year.
J) Natural gas cost is $2.40/1000 ft3.
SAMPLE CALCULATION:
BASIS: exhaust at 600°F to be incinerated in
direct flame afterburner (i.e. 1400°F
exhaust)
1) Calculate A H per Ib. MOLE to obtain heating
requirements .
AH = CP32_1400 (AT)- Cp32_600 (AT)
= 7.382 (1400 - 32) - 7.060 (600 - 32)
= 6088 BTU/lb. MOLE air
2) Calculate natural gas requirements
. . Gross heat value at 60°F = 1005BT^/'ft3
available heat at 1400°F = 649BTU/ft3 gas
•*• Gas req'd / Ib MOLE air = Heat reg'd
Heat avail.
= 6088gTU/ib MOLE air
649BTU/ftJ gas
= 9.38 ft3 gas/lb MOLE air
3) Calculate combustion air
-*-9.38 x 9153 = 89 ft3 combustion air
4) Calculate air volume incinerated
••> 379 ft3 / Ib MOLE air at 77°F
89 ft3 combustion air
468 ft3 air per 9.38 ft3 gas
5) Correct to 100 CFM basis
-4-53- x 9.38 = 20.04 ft3 gas/ 1000 CFM air
-------
V-120
6) Annual costs for inlet temperature to incinerator of 77°F
= 20/04 ^,ftg^3 . x 1000 CFM x $2-40 o x 60 5j!H
1000 ftj air 1000 ftj hr
x 2000 hr/yr
7) Annual cost of inlet temperature to incinerator of 600°F
-^$5772 x (77 + 459)°R
(600 + 459)OR
= $2909/1000 CFM gas volume
THEREFORE
TABLE 1 - DIRECT FLAME AFTERBURNER
ANNUAL COST PER 1000
TEMP. OF AIR CFM OF AIR (VOLUME MEASURED
TO AFTERBURNER AT TEMP. TO AFTERBURNER)
1000 °F $1,190
800 1,945
600 2,909
500 3,513
400 4,246
300 5,142
200 6,269
100 7,844
TABLE 2 - CATALYTIC AFTERBURNER
ANNUAL COST PER 1000
TEMP. OF AIR CFM OF AIR (VOLUME MEASURED
TO AFTERBURNER AT TEMP. TO AFTERBURNER)
600 °F $ 330
500 712
400 1,163
300 1,714
200 2,405
100 3,322
-------
V-121
SULFUR
OXIDE CONTROL
OPERATING COST RANGE
FEDERAL STUDY5 (P - 7) 2-4 MILLS/KW-HR
D.E.P. STUDY6 (P - 16) 4-8 MILLS/KW-HR
taking average of each range gives:
FEDERAL STUDY 3 MILLS/KW-HR
D.E.P. STUDY 6 MILLS/KW-HR
9 MILLS/KW-HR -f 2
•*• OVERALL AVERAGE = 5 MILLS/KW-HR
SAMPLE CALCULATION FOR DATA POINTS:
for 50 MW PLANT & 8760 HRS/YR
50,000 KW x 8760 hrs/yr x ($0.005/KW-HR)
I
. .ANNUAL COST = $2,190,000
National Public Hearings on Power Plant Compliance with
Sulfur Oxide Air Pollution Regulations, E.P.A., Public
Affairs Office, Washington, D.C., Jan. 1974.
6
Task Force Report on Coal Conversion, Conn. D.E.P., Aug.
1974.
-------
V-122
APPENDIX C
THE CONNECTICUT CASES;
COST CURVE ESTIMATES AND ACTUAL COSTS COMPARED
(INSTALLED EQUIPMENT
AND MAINTENANCE COSTS)
-------
V-123
THE CONNECTICUT CASES; ACTUAL AND ESTIMATED COSTS
COMPANY
Rogers Corp.
Rogers Corp.
U.S.M. Corp.
SCRUBBERS:
Emhart
Emhart
Emhart
Emhart
Emhart
Olin
Pfizer
Pfizer
Pfizer
Silliman Co.
Stewart Warner
Uniroyal
Uniroyal
Walter Kidde
Walter Kidde
Walter Kidde
II. HYDROCARBON CONTROL:
CARBON ADSORBERS:
American Cyanamid
American Cyanamid
Columbia Magnetics
Dexter Corp.
AFTERBURNERS (DIRECT
ASCO Wire
E.J. Gaisser Corp.
General Electric
Goodrich
Stafford Printers
LOCATION
Manchester
Manchester
Shelton
Berlin
Berlin
Berlin
Berlin
Berlin
New Haven
Groton
Groton
Groton
Bridgeport
Bridgeport
Naugatuck
Naugatuck
New Haven
New Haven
New Hsven
Wallingford
Wallingf ord
Danbury
Windsor Locks
FLAME) :
Bridgeport
Stamford
Bridgeport
Shelton
Stafford
ADJUSTED CO.
INSTALLED COSTS
ACFM (DOLLARS)
6,000
16,000
1,120
15,800
19,000
19,200
21,850
24,000
20,000
250
800
1,100
41,333
10,000
6,400
12,000
10,000
30,000
40,000
2,300
6,500
25,000
50,000
500
13,000
650
10,000
4,000
9,770
24,300
1,500
11,700
15,300
14,400
16,200
20,700
24,000
13,500
13,500
7,200
54,000,
9,630
7,470
11,970
11,700
26,100
28,800
130,000
240,000
700, OOO1
424,000
12,000
50,000
15,000
54,300
25,000
ESCALATED 7/74 ESTIMATE FROM
INSTALLED COSTS APPLICABLE GRAPHS
(DOLLARS) (DOLLARS)
13,400
28,400
1,940
18,300
23,900
22,500
25,300
32,300
30,960
17,400
17,400
13,600
70,700
18,200
15,800
23,500
21,650
48,300
53,280
143,000
255,000
700,000
466,400
14,000
58,500
16,600
63,000
28,000
20,500
43,000
4,900
30,000
34,000
34,050
37,500
40,000
35,200
12,000
11,500
12,400
58,500
23,200
18,400
25,600
23,200
46,000
58,000
155,000
228,000
480,000
750,000.
14,600
53,000
15,600
44,000
26,400
PERCENT DIFFERENCE
BETWEEN ESTIMATED
AND ACTUAL COSTS
+ 53
+ 51
+153
+84
+ 47
+ 51
+ 48
+ 24
+ 14
-31
-34
- 9
-18
+ 27
+ 16
+ 6
+ 7
- 4
+ 9
+ 8
-11
-31
+61
+ 4
- 9
- 2
-30
- 6
III. CARBON MONOXIDE CONTROL:
AFTERBURNERS:
Plainville Casting
Plainville
57,000
16,420
19,200
81,000
ilnstalled cost does not include estimated $330,000 for distillation still.
-------
V-124
THE CONNECTICUT CASES; ACTUAL AND ESTIMATED COSTS
ADJUSTED CO. ESCALATED 7/74 ESTIMATE FROM FERCENT DIFFERENCE
INSTALLED COSTS INSTALLED COSTS APPLICABLE GRAPHS BETWEEN ESTIMATED
COMPANY
1. PARTICULATE CONTROL
LOCATION
ACFM
(DOLLARS)
(DOLLARS)
(DOLLARS)
AND ACTUAL COSTS
ELECTROSTATIC PRECIPITATORS:
National Gypsum
tl.E. Utilities
United Illuminating
United Illuminating
BAGHOl'SES:
Amnrican Cyanamid
American Cyanamid
American Cyanamid
American Cyanamid
American Cyanamid
American Cyanamid
Ashland Oil
Bnlf
Half
3alf
Blakeslee
Blakeslee
Blal-.eslee
Blakeslee
Carpenter Tech.
Caroenter Tech.
Cerro Wire
Ccrro ,Vire
Dart Inc.
D. J. Carten
D. J. Carten
I^hart
ESB, Inc.
Ferro Corp.
General Electric
General Electric
~rn--ral Electric
ipnoral Electric
General Electric
MacDernud
Nutmeg Steel Casting
Ottawa Silica
Philbrick, Booth S,
Bridgeport
Middletown
Bridgeport
Bridgeport
Wallingford
Wai ling ford
Wai ling ford
Wallingford
Wallingford
Wallinqford
New Britain
Newington
Newington
Newington
Branford
Hamden
New Haven
New Haven
Bridgeport
Bridgeport
New Haven
New Haven
New Haven
Mllford
Milford
Berlin
Fairfield
Norwalk
Bridgeport
Bridgeport
Bridgeport
Bridgeport
Bridgeport
Waterbury
Branford
N.Stonington
Hartford
27,000
424,000
164,000
859,000
500
500
500
600
800
800
58,000
17 ,000
34,100
98,000
1,500
400
400
800
93,000
186,000
7,000
20,000
1,200
600
600
8,000
7,000
300
2,560
6,300
7,200
7 , 2 (1 0
12,500
1,000
20,000
24,000
22,000
82,000
459,900
432,900
1,119,000
3,600
3,600
5,400
2,250
2,700
3, SOO
112,500
33,620
82,602
177,980
8,883
1,300
900
2,800
108,650
214,130
14,200
30,600
1,732
3,202
3,373
35,350
A
22,770
1,200
4,530
26,230
16,150
17,100
56,700
3,600
51,120
32,085
29,700
173,000
887,600
800,900
1,779,000
6,050
6,230
8,050
3, 900
4, 670
4,640
189,000
39,300
94,200
202,900
11,460
1,520
1,050
3,300
182,500
370,500
16,600
35,800
2,900
3,600
4,000
48,100
39,400
1,700
5,670
34,360
24,100
22,400
62,900
4,900
65,900
53,900
38,300
129,000
680,000
360,000
1,160,000
2,450
2,450
2,450
2,900
3,700
3,700
124,000
45,000
79,000
195,000
6,300
2,050
2,050
3,700
183,000
1,600,000
28,500
51,750
5,250
2,900
2,900
26,500
24,500
1,600
9,800
21,500
25,000
25,000
36,500
4,450
51,750
59,000
55,000
-25
-23
-55
-35
-60
-61
-70
-26
-21
-20
-34
+ 15
-16
- 8
-45
+ 35
+ 95
+ 12
+ .3
+ 361
+72
+ 45
+ 81
-19
-28
-45
-38
- 6
+73
-37
+ 4
+ 12
-42
- 9
-21
+ 9
+44
Spencer
-------
V-125
THE CONNECTICUT CASES; ACTUAL AND ESTIMATED COSTS
COMPANY LOCATION ACFM
IV, NITROGEN OXIDE CONTROL:
SCRUBBERS:
Company X2 Waterbury 30,000
Company Y2 Wallingford 100
Handy & Harmon Fairfield 3,500
ADJUSTED CO, ESCALATED 7/7-4 ESTIMATE FROM PERCENT DIFFERENCE
INSTALLED COSTS INSTALLED COSTS APPLICABLE GRAPHS BETWEEN ESTIMATED
(DOLLARS) (DOLLARS) (DOLLARS) AND ACTUAL COSTS
100,000
8,980
100,000
6,000
12,600
100,000
6,000
12,000
V. SULrUR OXIDE CONTROL:
LOCATION
ESTIMATE FROM PERCENT DIFFERENCE
UNIT SIZE LISTED-* CAPITAL ESCALATED CAPITAL APPLICABLE GRAPHS BETWEEN ESTIMATE
(MEGAWATTS) COSTS i ?/KW)
COSTS ($/KWl
LIf'.C-LIMESTONE WET SCRUBBERS:
Commonwealth Edison
Detroit Edison
"mguesne Light
N. E. utilities
i). E. Utilities
Public Service Co.
of Indiana
Public Service Co.
of Indiana .
Illinois
Michigan
Conn.
Conn.
Indiana
Indiana
155
170
380
193
338
880
880
180
80
72.5
96.1
83.7
68
66
126
80
80
96
83
75
73
.36
.48
.1
.7
.48
.26
(S/KW)
177
102
82
96.5
83.5
75
75
AND ACTUAL COSTS
+40
+ 26
+ 2
+ .4
- .2
- .6
+ 2
Company requested that cost data be kept confidential.
Estimated costs
-------
V-126
APPENDIX D
THE CONNECTICUT CASES;
COST CURVE ESTIMATES AND ACTUAL COSTS COMPARED
(OPERATION & MAINTENANCE COSTS)
-------
V-127
THE CONNECTICUT CASES: ACTUAL AND ESTIMATED COSTS
COMPANY
I. PARTICULATE CONTROL
LOCATION
ACFM
ADJUSTED ANNUAL
OPERATING COSTS
(S) (8760 HRS/YR)
'ESTIMATE FROM PERCENT DIFFERENCE
APPLICABLE GRAPHS BETWEEN ESTIMATED
(DOLLARS) AND ACTUAL COSTS
A. ELECTROSTATIC PRECIPITATORS:
United Illuminating
United Illuminating
United Illuminating
B . BAGHOUSES :
D. J. Carten
Emhart
Stewart Warner
C. SCRUBBERS:
Keller Pottery
Silliman Co.
Walter Kidde
Walter Kidde
II. HYDROCARBON CONTROL
A. CARBON ADSORBERS
American Cyanamid
American Cyanamid
Columbia Magnetics
Dexter Corp.
B. AFTERBURNERS (DIRECT FLAME)
ASCO Wire
E. J. Gaisser Corp.
General Electric
Goodrich
Stafford Printers
R. R. Donnelly1
III. NITROGEN OXIDE CONTROL:
SCRUBBERS:
Company X2
Handy & Harmon
Bridgeport
Bridgeport
Bridgeport
Milford
Berlin
Bridgeport
Berlin
Bridgeport
New Haven
New Haven
Wallingford
Wallingford
Danbury
Windsor Locks
Bridgeport
Stamford
Bridgeport
She 1 ton
Stafford
Old Saybrook
Waterbury
Fairf leld
164,000
327,350
859,000
600
3,500
1,300
13,000
41,333
10,000
40,000
2,300
6,500
25,000
50,000
500
13,000
650
10,000
4,000
9,300
30,000
3,500
33,900
72,960
74,460
626
2,890
1,580
34,020
164,400
23,340
37,080
11,000
16,500
77,200
165,000
4,100
10,500
17,800
16,000
22,200
83,000
29,000
2,000
33,500
65,000
170,000
410
2,350
850
48,000
155,000
37,000
147,020
13,000
23,500
77,300
155,000
3,900
10,300
5,100
78,000
31,000
72,000
29,000
2,000
- 1
-11
+ 128
-35
-19
-46
+41
- 6
+ 59
+298
+18
+ 42
+ .1
- 6
-5
- 2
-71
-3d'
+ 40
-16
0
0
Catalytic Afterburner
Company's name withheld for confidentiality.
-------
EPA-901/9-76-003b
ECONOMIC LAW
ENFORCEMENT
VOLUME II
STRENGTHENING
ENVIRONMENTAL
LAW ENFORCEMENT:
AIR POLLUTION
The Judges, (detail American woodcut, 19th Century)
CONNECTICUT ENFORCEMENT PROJECT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
HARTFORD, CONNECTICUT 06115
SEPTEMBER, 1975
-------
This report has been reviewed by EPA and
approved for publication. Approval does
not signify that the contents necessarily
reflect the views and policies of the
Environmental Protection Agency, nor does
mention of trade names or commercial pro-
ducts constitute endorsement or recommen-
dation for use.
Copies of this document are available in
limited quantities through the Connecticut
Department of Environmental Protection,
State Office Building, 165 Capitol Avenue,
Hartford, Connecticut, 06115.
-------
The Judges (detail)
John Andrew and Son (after W H. Drake)
American, 19th Century
Wood engraving
Courtesy Museum of Fine Arts, Boston. Ma.
-------
EPA-901/9-76-003b
ECONOMIC LAW
ENFORCEMENT
VOLUME IE
STRENGTHENING
ENVIRONMENTAL
LAW ENFORCEMENT:
AIR POLLUTION
Final Report Submitted Under Contract #M00103910
by: The Connecticut Enforcement Project
Department of Environmental Protection
Hartford, Connecticut 06115
to: The U.S. Environmental Protection Agency
Region I
Boston, Massachusetts 02203
September 1975
Region V, Library
230 South Dearborn Street
9 minors 6oeoi>
-------
CONTENTS
PART I.
Chapter I
Chapter II
PART II.
Preface
Chapter I
Chapter II
Chapter III
Conclusion
Appendix
PART III.
Chapter I
Chapter II
Chapter III
Chapter IV
Chapter V
USING ECONOMIC CIVIL ASSESSMENTS 1-1
Using Economic Civil Assessments to Ensure 1-2
Compliance with Emissions Standards and
Abatement Orders
Using Economic Civil Assessments to Ensure 1-12
Compliance with Progress Report Requirements
BASELINE PROFILE
General Enforcement
Order Overruns
Most Difficult Cases
CALCULATING ECONOMIC REMEDIES
Calculating Assessments
Determining the Cost of Compliance
Handling Inflation
Adjusting for Individual Income Tax Rates
Using the Cost of Capital
PART IV. CIVIL ASSESSMENT REGULATIONS
Section 22a-6b-602 - Violating Emissions Standards
Section 22a-6b-603 - Violating the Terms of an Order
Section 22a-6b-601 - Violating Progress Report
Requirements
II-l
II-2
II-8
11-27
11-39
11-47
11-48
III-l
III-2
111-12
111-16
111-18
111-22
IV-1
IV-2
IV-6
IV-9
-------
11
PART V.
Chapter
Chapter
Chapter
Chapter
Chapter
OPERATING MANUAL FOR THE APPLICATION OF CIVIL
ASSESSMENTS
I The Connecticut Enforcement Program
II How to Apply Section 602 Assessments
III How to Apply Section 603 Assessments
IV How to Apply Section 601 Assessments
V
How to Conduct Hearings in Civil Assess-
ment Cases
VI
How to Use Surety Devices As Part of the
Total Enforcement Program
Chapter
Chapter VII How to Use and Update Tools Employed in
Levying Civil Assessments
A. Calculating the Cost of Compliance
B. Determining the Applicable Cost of Capital
C. Using Inflation Indexes
D. Estimating the Source's Income Tax Rate
E. Operating the Wang Calculator
V-l
V-5
V-7
V-27
V-35
V-44
V-52
V-61
V-62
V-128
V-149
V-151
V-153
PART VI.
Chapter I
Chapter II
Attachments
REDUCING THE ADMINISTRATIVE COST OF ENFORCEMENT VI-1
The Impact of the Emissions and Order
Compliance Regulations on Administrative
Costs
The Impact of the Progress Report Regu-
lations on Administrative Costs
VI-4
VI-12
VI-16
-------
PART 1
USING ECONOMIC CIVIL ASSESSMENTS
-------
1-2
CHAPTER I
USING ECONOMIC CIVIL ASSESSMENTS TO
ENSURE COMPLIANCE WITH EMISSIONS STANDARDS
In February, 1975, the Department sent several of its
most recalcitrant sources of air pollution a certified letter
notifying them that Connecticut's new economic approach to
environmental law enforcement had become legally operative.
The letter warned them that thenceforth they would be liable
to an assessment equal to the full value of any further delay
they experienced in complying with the terms of the order they
had up until then been flouting. The letter included copies
of the regulations authorizing the Department to impose economic
civil assessments on sources violating an emissions standard or
not complying with the terms of an order (Sections 602 and 603
of the Civil Assessment Regulations'. See Part IV of this Volume.)
These letters had a quick and certain impact. Companies
that had previously chronically experienced long overruns in
meeting compliance deadlines suddenly experienced no more delay.
This chapter briefly summarizes how these new tools work,
and the next chapter provides a similar brief profile of another,
simpler economic civil assessment now being used by the Air
Compliance Unit to induce sources to submit required progress
reports promptly. Both chapters are brief overviews of how
Connecticut's new economic approach to regulatory law enforce-
ment, briefly described in Volume I, has been adapted to the part-
icular problems of enforcing Connecticut's air pollution standards.
THE ENFORCEMENT
RECORD
Connecticut's exceptionally vigorous air compliance enforce-
ment program has been rewarded by a high level of voluntary com-
pliance. Sources are told exactly what is expected of them; they
are induced to propose their own compliance plans; and their
progress is monitored closely. However, the Air Compliance Unit
has not had the tools to deal effectively with a small number of
cases that have persistently failed to comply. These cases con-
sume a disproportionate and very large share of the Unit's ad-
ministrative effort. Moreover, they pose a constant threat to
the high level of voluntary compliance by others: "If competitor
X has been able to avoid having to pay for abatement measures
over the last several years, why should I rush to meet the State's
-------
1-3
deadline? Nothing will happen if I don't meet it, and, in any
case, it's not fair to impose these costs on me and not on X."
If the current level of voluntary compliance is undercut, ad-
ministrative costs will soar as more and more cases require
enforcement attention, and Connecticut's progress in cleaning
the air will be threatened.
Connecticut's air compliance enforcement record is an
excellent one. Of 4,000 registered sources of air pollution
in July, 1974, only 323 had to be issued orders, and, of these
cases, only 23 percent experienced cumulative delay longer than
a month. However, a hard core group of 27 cases experienced
more than 15 months' delay beyond scheduled (and often extended)
compliance deadlines.
Air Enforcement Actions and Results
(number of cases 1971-1974)
<
*
>
4000
^ «
/ In Compliance
1
> <
> <
1469
p.
Complied Quickly
Meet Deadline
323
171
1 27 1
Premises
Inspected
Notices o
Violation
Issued
Orders
Issued
\ Failures
Vleet Order
/Deadlines
Overruns
Greater Than
15 Months
Source: "Monthly Report of Activities, Air Compliance Unit"
June 1974, Air Compliance files.
This estimate is based on a random sample of Air Compliance
Unit files. It does not include those who meet amended
order deadlines.
This record contrasts not only with that of many other states
but with that of other Connecticut programs. For example,
because the Water Resources Unit has not had the staff or the
enforcement powers necessary to make the State's laws regarding
coastal filling credible, most such filling is done in complete
disregard of the law.
-------
1-4
The hard core of intractible cases that have not responded
to repeated reasonable persuasion, bluff, and threat are a
serious problem. Thirteen percent of all sources put under
order account for 75 percent of all accumulated delay in order
compliance. Eight percent account for 56 percent. These "worst
cases" overrun their compliance deadlines by an average 267
percent. They cost the Department 75 percent more to process
than the average case, 137 percent more than sources that comply
on schedule.
These are cases of willful noncompliance. It takes the
Department almost twice as long to get these sources into pre-
order conference as the average case, almost three times as
long as the average case that complies on schedule. They do
not come from a common industry. (If they did, one might sus-
pect that companies in that industry were faced with particularly
intractible technical problems; however, coming as they do from
industries where others have complied promptly, these sources
cannot rely on such an excuse.) Nor do they represent a similar
size of operation.
What these hard-core recalcitrants do share is the approp-
riation of significant economic savings from noncompliance to
themselves. For example, for every month an asphalt batching
plant delays installation of a baghouse capable of cleaning
20,000 actual cubic feet per minute of particulate-laden air, it
will save $1666.25. This sort of financial inducement to
noncompliance must be counterbalanced if these sources are to
be made to comply.
The Department has not had the tools necessary to provide
such incentives. It has had only two responses available to it
when faced with noncompliance.
* It could persuade, compromise what it required,
cajole, bluff, and threaten. The Air Compliance
Unit has used a skillful blend of these approaches
to achieve the results it has to date.
* It could go to court to seek an injunction and/or
any of a wide variety of penalties theoretically
available. However, this response is, at best,
slow, costly, and uncertain. To date the courts
have issued three injunctions and no penalties or
other sanctions in all Air enforcement cases sent
them. (See Part II, page 36.) Not surprisingly,
some businessmen have perceived the economic
benefits of noncompliance as being significantly
greater than the risk of serious enforcement
sanctions.
Most cases will always be handled by the first of these approaches,
However, it is not enough by itself; to be credible, persuasion
must be backed up by an effective "next step." The Department
has needed an adequate, more sure, quicker enforcement next step
than it has had to date.
-------
1-5
ADMINISTRATIVELY-IMPOSED
ECONOMIC ASSESSMENTS
The Department's new administratively-imposed, economic
civil assessments give it the tool it has needed. These assess-
ments are just large enough to make compliance pay, and they
are imposed quickly and easily by the Department, without
having first to wait for court action. These two benefits are
tightly linked: it is use of the economic standard that makes
administrative imposition philosophically and legally acceptable.
Administrative
Imposition
By allowing the Department to impose civil assessments
(and to require regulatees to post, and perhaps forfeit, sureties)
itself, the delay, cost, and uncertainty of relying on the
judicial process to provide enforcement back-up is simply
eliminated.
Once the Department determines that a source is not in
compliance and has been given the requisite notice, it can
calculate the appropriate assessment and send the source a
notice of violation informing it of the grounds for the assess-
ment, the amount assessed, and the source's right to request a
hearing within twenty days. If the source does not request a
hearing within this time period (or if the hearing and possible
subsequent judicial review fail to invalidate the assessment),
the assessment becomes a fully enforceable final order. If the
source does not pay what is required in such a final order, the
order will be enforced by the Sheriff exactly as if it were a
court judgement.
This delegation to the Department would be disturbing
philosophically were it not carefully limited. Without the
safeguards built into the regulations, most of which were
required by the legislature, such a delegation might well be
seen as giving too much power to the regulator, leaving the
citizen exposed to excessive executive discretion.
The regulations provide a long list of carefully drafted
substantive and procedural safeguards to protect the regulatee.
Except for repeat violators, no one may be assessed without
actual prior notice of what they are required to do and of their
potential liability under these regulations for failing to do
so. Every action of the Department is subject first to an
administrative hearing conforming to the requirements of the
Connecticut Administrative Procedure Act and to the Department's
own Rules of Practice and then to judicial review.
By far the most critical safeguard is the economic standard
used to determine the amount of each assessment. Each assessment
cannot be larger than the total benefit the regulatee has
realized by delaying compliance. Tying the assessment to this
standard:
-------
1-6
makes remedy-setting a ministerial task, not a
discretionary one (although the Department still
has the discretion not to impose an assessment or
to mitigate it.)
* ensures that the assessment is remedial and not
punitive, civil and not criminal. (This safe-
guard is critical because, if the assessment could
be larger than the amount needed to remove the in-
centive not to comply, a court might determine
that the assessment was punitive and therefore
criminal. Criminal penalties can only be imposed
by a court.)
* ensures that no regulatee can be assessed any more
than it has actually saved by not obeying the law.
The standard's accuracy is assured by a final, critical safe-
guard: the correction hearing. If a regulatee, once in com-
pliance, can demonstrate that actual costs were lower than the
estimates used in calculating the inital,assessment, it is
guaranteed that its assessment will be lowered. The Depart-
ment must return- with interest, the difference between what
was and what should have been paid.
Economic
Assessments
The heart of the Department's new enforcement approach,
then, is its economic standard. This standard (1) ensures
that those contemplating noncompliance are confronted with
just the right level of incentive and (2) makes prompt im-
position of this incentive possible.
Economic civil assessments counterbalance all the benefits
of delaying compliance:
* Avoiding whatever portion of the installed capital
costs of control facilities that would be attrib-
utable to the period of delay in accounting
for real (as versus tax) depreciation of the
facilities.
* Avoiding the costs of operating and maintaining
these facilities during this same period, and
* Avoiding the opportunity costs of investing
in a no-yield abatement project rather than in-
vesting the money at a profit.
Once the Department has determined what these three cost factors
are, it uses business's familiar capital budgeting formula to
determine what each month's delay is worth to the regulatee.
It then imposes an assessment in that amount for every month's
noncompliance.
-------
1-7
Because the basis for the assessments includes the reg-
ulatee's opportunity costs,these assessments make compliance
positively attractive. In effect, they allow the State to
guarantee that pollution abatement projects will yield the same
return as commercial investments: making the required abate-
ment investment absolutely guarantees the source that it will
not be assessed a monthly charge based on both the cash out-
lays required for the investment and a commercially attractive
yield it could earn on these outlays.
(These economics are explained more fully in Volume I and
in detail in Part III of this Volume.)
Administering
Economic Assessments
Economic civil assessments are easy to use. With the use
of available cost curves and tables, most of the necessary
data can be estimated reliably in a few minutes. Once this
information is available, a simple economic formula fed into
a desk calculator will adjust for tax, inflation, and other
variables and calculate the correct assessment in seconds.
The two most important pieces of information needed to
determine the correct assessment amount are (1) the installed
capital costs and (2) the annual operating and maintenance
costs. If these basic costs of compliance had to be estimated
case-by-case, the administrative cost of imposing each assess-
ment might well become a significant problem. However, in
almost all cases, cost curves linking these costs to the number
of actual cubic feet per minute (ACFM) of polluted air requiring
treatment, a readily available figure, have been developed.
They make the task of obtaining these two inputs quite simple.
Following through the case of the delinquent asphalt
batching company will demonstrate just how simple these cost
curves make the job of estimating capital and O&M costs. Assume
that a Department engineer detects a noncomplying asphalt batch-
ing company and that the Department decides to impose a civil
assessment. It must determine the capital and O&M costs the
company should have met to be in compliance. All the engineer
need do is (1) note the number of ACFM's requiring treatment
(2) look up the appropriate cost curves in Chapter VII of Part
V of this Volume ,and (3) read the appropriate cost estimates
off the curves.
-------
1-8
PARTICULATE CONTROL COSTS - BAGHOUSE
.1 .4 1.6 6.2 25.0 100.0
(CFMs in Thousands)
Source: EPA Publication AP-51, PP 164, 175.
Connecticut Tax and Registration Forms.
Using the capital and the O&M cost curves for baghouses used
to control particulates shown above, the Department engineer
would read up from the point on the bottom scale representing
20,000 ACFM's (the volume of air requiring treatment at the batch-
ing company's plant) to the point on the cost curves immediately
above --$50,000 for the installed capital costs and $13,500
for the annual operating and maintenance expense.
These cost curves, drawn chiefly from national data and
checked against actual Connecticut cases, are generally reliable.
In most cases, estimates based on these cost curves will prob-
ably not over/underestimate actual costs by a significantly
greater amount than will the much more time-consuming,case-by-
case estimates — and -- in any case, the regulations guarantee
of correction with interest once a source comes into compliance
makes total initial accuracy unnecessary.
Other variables are determined with even less trouble.
The cost of capital for a regulatee's industry is read off a
list. The inflation factor in the formula needs to be updated
only once a year -- and then it is merely a matter of averag-
ing the changes in an easily available price index over the
preceding three years.
-------
1-9
INDUCING COMPLIANCE WITH
EMISSIONS STANDARDS AND ORDERS
This new enforcement tool is being used to induce sources
of pollution to move to comply with the State's emissions stand-
ards promptly.
Sections 602 and 603 work closely together towards this
end. Section 602 imposes assessment liability if a source emits
more than the state standards permit — unless the source is
moving to control its emissions pursuant to an order. Section
603 authorizes assessments for delay in complying with the terms
of an order. In both cases, the assessment is designed to
counterbalance the benefits of deferring the cost of controlling
the polluting emissions, and a month's delay by a source would
give rise to exactly the same assessment under either regulation.
Emissions
Assessments
Polluting facilities that have not installed the equipment
necessary to control their emissions are liable to Section 602
assessments. Repeat offenders and those with actual prior
notice can be assessed for the value of up to two years of past
noncompliance. All sources are liable from the moment they are
detected and notified that they are not in compliance until they
either comply or are proceeding under an order to do so.
The most important purpose of these regulations is to
encourage sources that are not in compliance with applicable
emissions standards to come to the Department and agree to an
order setting forth a specific schedule of steps leading quickly
to full compliance. The regulation will encourage such coop-
eration because it makes continuing noncompliance risky and
because it rewards cooperation with the Department.
The Department will not impose a 602 assessment once the
regulatee has agreed to an order. (The Department, of course,
retains the right to issue an assessment before issuing an
order.) By signing an order before receiving an assessment,
the regulatee avoids all Section 602 liability, including up to
two years of predetection noncompliance, plus however many months
have passed since detection. The regulatee can only become liable
to civil assessment again if it falls behind schedule. Even then,
this new liability is not likely to become nearly as large as the
regulatee1s potential liability under Section 602 had been.
-------
1-10
Liability under Section 602 will also provide insurance
against regulatees contesting orders as a means of frustrating
the Department's effort to tighten the enforcement of order
terms. Without this insurance, regulatees may be influenced
by the existence of Section 603 to contest abatement orders
more frequently than they have in the past. Previously accept-
ing an order was painless; if its deadlines were not met nothing
would happen. With 603 in place, -however, accepting an order
means accepting some risk of assessment. This risk could,
however, be avoided for little cost simply by contesting the
abatement order. As long as an order remains contested, which
could be quite a long time given the pace of both administrative
hearings and judicial appeals (especially if there were suddenly
a great many contested cases to process), the order is not legally
binding and cannot be enforced by Section 603. The hard-core
recalcitrant would no doubt seize on such a loophole quickly.
Others might as well, thereby adding to the Department's adminis-
trative costs and slowing compliance significantly.
Having regulatees liable to Section 602 assessments protects
against such an outcome. It gives the Department a powerful
plea-bargaining lever. If a regulatee chooses to contest rather
than comply promptly, the Department can impose the 602 assessment.
The regulatee's rights are not threatened by this plea-
bargaining device. The regulatee cannot be charged more than
what it saved by not being in compliance. If it wins its appeal,
any portion of the assessment that was rejected at the hearing
or by a court on subsequent appeal would be returned to it with
interest. Thus, the assessment merely neutralizes the incentive
to use contests as a means of postponing compliance expenditures.
A regulatee that feels it has good grounds for contesting an
order will still do so: the benefits it can expect if it wins
will not be reduced in any way by the 602 assessment. Further, if
the regulatee can convince a judge of the need, a court can stay
either the collection and/or the cumulation of the assessments
during an appeal.
Assessments for
Order Noncompliance
Once Section 602 has induced noncomplying facilities to
move to comply and they are under order, Section 603 ensures
that they comply with the terms of the order by the deadlines
specified in its compliance schedule.
This incentive works very simply. For every month or portion
thereof that a source falls behind schedule, it becomes liable to an
economic assessment equal to the value of delay for that period.
-------
1-11
The Department will not impose these assessments im-
mediately, however. Its purpose is to induce rapid compliance,
not to collect assessments. It will first warn the regulatee
that it is liable, but that it can "catch up" and still meet
the final compliance deadline, in which case it will have
erased the liability. If such warning letters do not have the
desired effect, the Department can try to bring the regulatee
up short by imposing any of several surety requirements on it.
(These devices can provide a whole series of gradually escalating
responses to continuing delay. Volume I explains these devices
and how they can be used.) Ultimately, if these devices do not
work, the Department will have to impose the full civil assessment,
In some cases, e.g. repeat offenders, it may want to do so
immediately. In any case, the Department's ability to impose
such less severe incentives, e.g. surety requirements and
forfeitures, rests on its ability to impose the full civil assess-
ment if the regulatee balks at the alternative. However, the
Department's ability to impose economic civil assessments should
greatly improve its credibility. As a result it rarely should
have to do more than warn those who begin to fall behind. The
impact of the first set of 602/603 warning letters demonstrated
how effective a credible warning can be.
**************
The Department's new administratively-imposed economic
civil assessments gives it the ability to force even the hard-
core recalcitrants to comply promptly. Consequently, it can
expect an even higher level of voluntary compliance than it
has experienced to date. This will mean a 22-43 percent saving
in the Department's administrative costs and continued rapid
progress in cleaning Connecticut's air.
-------
1-12
CHAPTER II
USING ECONOMIC CIVIL ASSESSMENTS
TO INDUCE PROMPT FILING OF PROGRESS REPORTS
The Air Compliance Unit requires sources under order
to submit monthly reports indicating exactly what progress
towards compliance has and has not been made since the last
report. These progress reports (1) make it difficult for
regulatees to forget or let slide their commitments to come
into compliance and (2) allow the Department to track regul-
atee progress with fewer time-consuming phone calls and field
inspections than would otherwise be necessary.
However, if they are not submitted, or if they are in-
complete or very late, not only do they not serve these pur-
poses, they become an administrative burden to the Department.
Delinquent reports require follow-up.
In the early summer of 1974, 44 percent of all progress
reports due were missing or seriously late. After a concerted
follow-up campaign, 17 percent were still delinquent. And
25 percent of the reports submitted were incomplete.
Beyond such cajoling and reminding there was nothing the
Department could realistically do. In theory, it could ask
the Attorney General to go to court to seek an injunction
and/or up to $180,000 a week in various penalties. This is,
however, a silly theory. Even for those who flagrantly dis-
regard emissions standards, the Department has found seeking
a court remedy to be an expensive, ever-so slow, and uncertain
procedure. For a small, if useful, procedural requirement,
this option is simply too expensive: the careful procedures
and safeguards built into the process are designed to protect
citizens when a great deal is at stake; they render the pro-
cess unuseable for such small, procedural matters. The long
delays inherent in these procedures also make this response
laughably inappropriate as a means of enforcing the submission
of reports that become largely useless within a month when the
next report is due.
In late 1974, the Department introduced economic civil
assessment regulations that would allow it to enforce its
progress report requirements. These regulations (1) prescribe
the form, timing, and content of progress reports (Section 19-
508-12 (f) and (2) impose uniform financial liability for fail-
ure to meet any of these requirements (Section 22a-6b-601).
-------
1-13
Section 19-508-12(f) became necessary once enforcement
was to be tightened up. It makes clear exactly what is re-
quired, thereby protecting the regulatee from unforeseeable
liability and the Department from the arguments (1) that the
regulatee didn't know what was required and (2) that perhaps
no violation had taken place.
These economic civil assessments are fixed fee charges:
$50 for the first delinquent or incomplete progress report,
$100 for subsequent violations. Such fixed charges are
appropriate because (1) the costs to regulatees of complying
with the reporting requirements do not vary far from these
figures and (2) the size of the assessment does not warrant
case-by-case measurement.
The two assessment rates are based on a survey conducted
by CEP of the costs of gathering the information required for
a progress report, writing the report, and transmitting it
to the Department. The $50 initial charge is just above the
average cost to the regulatees sampled of reporting. The
second $100 charge is designed to provide an adequate incen-
tive for those regulatees whose reporting costs are above the
average. The sample indicated that these charges should be
adequate to counterbalance the economic incentive not to
comply.
These assessments should do more than remove the incentive
not to comply. Lower level staff likely to be responsible
for reporting will probably be mildly embarrassed explaining
why they need to have a check made out to the Department.
More important, the Department can use this small,
simple civil assessment as a warning demonstration, a shot
across the regulatee"s bow. Once a regulatee has paid its
first $50 check to the Department, it will have been made
fully aware of the Department's new power to impose assessments
administratively. Since, not surprisingly, sources that are
seriously behind on their compliance schedules are also quite
likely to have a record of progress report delinquency, the
Department will usually be able to use a progress report
civil assessment as a Section 602/603 warning device as well
as a Section 601 enforcement tool.
The Department's new regulations should improve the re-
sults of the progress report program while cutting costs.
These regulations should cut the existing delinquency rate
to roughly a quarter of what it is now. They should reduce
the number of incomplete reports by 55 percent. They should also
cut staff time devoted to enforcing the progress report re-
quirement by 40 percent. In short, the Department's new
regulations should have substantial program benefit while
conserving staff resources.
-------
PART II
BASELINE PROFILE OF THE ENFORCEMENT PROCESS
FOR PRIVATE AND INDUSTRIAL SOURCES
IN THE AIR COMPLIANCE ENFORCEMENT UNIT
-------
II-2
PREFACE
Designing - and later evaluating - a new enforcement program
for the Department of Environmental Protection requires an accurate
and comprehensive understanding of:
1) The enforcement problems currently posed by Connecticut
polluters, and
2) The existing administrative processes now used to handle
these problems.
This document summarizes the Connecticut Enforcement Project's
baseline analysis of the current enforcement practices of the
Department of Environmental Protection.
This analysis contains three chapters, each one focusing
successively on narrower and more difficult enforcement problems.
The first chapter describes the nature and scope of the
Department's "usual" enforcement effort. It examines
the efficacy of the two enforcement mechanisms, notices
of violation and state orders, as they are applied to
all regulatees. The Department's enforcement experience
with most sources indicates a general pattern of com-
pliance and cooperation. This chapter is divided into
3 sections: (1) inspections, the primary means by
which violations are detected; (2) notices of viola-
tion, the Department's preliminary enforcement mechan-
ism; and (3) orders, the Department's main enforcement
tool.
The second chapter examines Department experience with
polluters who delay their compliance with state orders.
Half of those sources issued orders fail to meet their
compliance deadlines and overruns in these cases aver-
age five months of delay - increasing the interval
between detection and compliance by 38%. These sources
also impose great costs on the Department since DEP
personnel spends about 64% more time on these cases
than it does on sources who comply with their orders.
The third chapter analyzes enforcement experience with
the small "hard-core" of violators who cost the Depart-
ment the most time and effort. This group of cases,
about 8% of all orders issued, account for 56% of all
compliance overruns. They tend to come from the same
industries as most order recipients and to have the
same number of employees, but they comprise an excep-
tional group in that they impose on the Department 137%
more costs per case than do sources which comply with
their orders.
-------
II-3
This study points to the specific problems of enforcement
which provided the framework for the Connecticut Enforcement
Project's design of an economic enforcement system. While the
baseline of enforcement problems is always changing, this study
should also provide a starting place from which the impact of
the new enforcement system can be measured.
-------
II-4
TABLE OF CONTENTS
Page
SUMMARY OF FINDINGS 6
INTRODUCTION: GENERAL ENFORCEMENT 7
Chapter I THE ENFORCEMENT PROCESS 8
INSPECTIONS
Types of Inspections 9
Results of Inspections 10
Origins of Detections 11
NOTICES OF VIOLATION 12
Types of Violations 13
Types of Violations (Excluding Motor Vehicle and 14
Procedural Violations)
ORDERS 15
Time Required to Issue Orders 16
Percent of All Violations Requiring Orders 17
Violations Commonly Requiring Orders 18
Orders by Type of Violation 19
Allocation of Time of Staff Responsible For
Issuing Orders 20
Distribution of Companies Receiving Orders
by Industry 21
Size of Companies Receiving Orders , 22
Administrative Hearings on Orders 23
Methods of Compliance with Orders 24
Average Length of Orders to Install Equipment 25
Time Required to Order and Install Equipment 26
-------
11-5
Page
CHAPTER II ORDER OVERRRUNS 27
Percent of Sources Failing to Meet Order Deadlines 29
Distribution of the Extent of Delay 30
Impact of Changes in Compliance Plans on On-Time
Performance 31
Impact of Third Party Delays on On-Time Performance 32
Progress Reports 33
Average Length of Overruns Past Compliance Deadlines 34
Average Length of Overruns of Companies Needing
Abatement Equipment 35
Impact of Delay on Department Staff 36
Referrals to the Attorney General 37
Costs of Delay 38
CHAPTER III MOST DIFFICULT CASES 39
Distribution of Delay 40
Distribution of Worst Cases by Industry 41
Size of Worst Case Sources 42
Average Delay of Worst Cases 43
Time Required to Issue an Order to a Worst
Case Source 44
Costs of Worst Cases 45
Impact of Delay: The Costs of Worst Cases and
of Cases Without Delay 46
CONCLUSION 47
APPENDIX 48
-------
II-6
SUMMARY OF FINDINGS
An analysis of a random sample of 48 Air Compliance
cases (7% of all cases) from October 1971 to July 1974 reveals
the following profile of the enforcement process:
I. In terms of usual enforcement experience:
— 4 weeks elapse between the time of detection and the
time when a notice of violation is issued.
3.7 months pass from the day of issuance of a notice
of violation until the day an order is signed.
7 months pass from the day an order is signed to the
day compliance is scheduled.
II. In terms of enforcement experience with order overruns:
Over 50% of the orders issued were not completed by
the time required in the compliance timetable.
Order recipients who delay overrun their compliance
deadlines by an average of 5.1 months.
Over 30% of the orders issued are completed by means
other than the plan originally proposed in the com-
pliance timetable,
-- Regulatees blamed third-party delay for over 65% of
all missed compliance deadlines.
— Over 17% of the progress reports required by the com-
pliance timetable are either never submitted or sub-
mitted late.
III. In terms of enforcement experience with the most difficult
cases:
8% of all orders issued account for 56% of all delay
and 13% of all orders issued account for 75% of all
delay,
— The "worst 8%" are not differentiated from the general
order group by industry although they do tend to be
either large or small in size.
— The "worst 8%" have delays which are 65% greater than
average orders and which impose 135% more cost on the
Department than the average order.
-------
II-7
INTRODUCTION: GENERAL ENFORCEMENT
MOST SOURCES INSPECTED BY DEP ARE ALREADY IN COMPLIANCE
OR COMPLY QUICKLY.
Ait1 Enforcement Actions and Rftnul t «*
(number of cases 1971-.1974)
In Compliance
323
\et Deadline
—
171
pi? — i
1469
Premi setFVxT No I Tec sT of~\ V Orders \ NT Fa i lures to\\ Over run s V
Inspected )\Violati.on ) \Issued \ )Mect Order ) KSreater than }
//Issued // / /Dendline9**//15 Month s /
— . , . .. ,. -,— - ' f , , . — ' * """' ' —"~ ** *"T""' — «- " *— "-) i — — —r
On each of the following pages, the five bar graphs shown above
will appear in the upper Jeft-hand corner. The shaded bar
graph indicates which of the above categories is under dis-
cussion.
Source: "Monthly Report of Activities, Air Compliance Unit",
Juno 1974, Air Compliance files.
* Enforcement actions taken between 10/1/71 and 5/31/74.
** This estimate is based on a random sample of air files.
It does not include those who meet amended order deadlines.
DISCUSSION: Connecticut's citizens have been extraordinarily
cooperative in working to clean the State's air. Since October
of 1971 (when the DEP assumed responsibility for coordinating
and enforcing this effort) less than 4% of the over 10,000
registered sources of air pollution had to be issued orders.
Only 47% of those issued orders were delayed in any way. In
other words, 98% of all Connecticut sources either complied on
their own or did so promptly after being contacted by the De-
partment.
On the other hand, a handful of sources have willfully sought
to evade or at least delay complying with Connecticut's standards,
The State's new economic enforcement approach is designed to
work equally well for both groups. It is intended to be a
tough, loophole-free system that will not let the willful
scofflaw through. On the other hand, and just as important,
it is intended to have no effect, to impose no new burdens,
on the law-abiding majority.
-------
II-8
Inspections
nn
El
CHAPTER I
THE ENFORCEMENT PROCESS
INSPECTIONS
The Department relies primarily on field inspections to
detect or confirm cases of noncompliance.
- Half of all inspections are annual, pre-
announced inspections of major sources.
- 25 percent of all field inspections find
violations of air standards.
- Most commonly, detections result from
citizen complaints.
-------
MII-9
^-,
Inspections
MOST INSPECTIONS"1" ARE ANNUAL, PRE-ANNOUNCED "PIQ" INSPEC-
TIONS MADE OF SOURCES KNOWN TO HAVE SERIOUS POLLUTION POTENTIAL,
Types of Inspections*
Field
Inspections
Complaint-
Inspections \ / \ "* / Special
Source
Inspections
Compliance**
Inspections
Source: Random sample of Air Compliance files, 1971-1974;
Interviews with Air Compliance Unit staff.
* Analysis of 3053 inspections conducted 6/1/73 to 5/31/74.
** Assumes one compliance inspection for each notice of
violation issued, excluding motor vehicle emissions
violations.
There are four types of inspections:
- Inspections made in response to citizen complaints.
If it is not possible to determine whether or not
there is a violation from checking the Department's
files, the DEP will conduct a field inspection.
- "PIQ" (Pre-Inspection Questionnaire) inspections.
The Department inspects sources with significant pol-
lution potential regularly, usually once a year. Be-
fore each inspection, the Department requests that the
source answer questions about its processes: hence the
term "Pre-Inspection Questionnaire".
- Special source inspections. From time to time the De-
partment decides to inspect certain types of sources
with particular pollution problems, such as gasoline
storage facilities.
- Compliance inspections. When a source is found in
violation, it is given a specified period of time to
achieve compliance. When the source reports that it
is in compliance, the Department will inspect the
site to verify the claim.
Inspectors also spot violations while on "area surveillance";
they sometimes patrol certain areas to watch for motor vehicle
exhaust violations, and may see stationary sources violating
visible emissions standards.
-------
Inspections
nn
11-10
EL
25 PERCENT OF ALL INSPECTIONS FIND VIOLATIONS OF AIR
STANDARDS.
Inspections Resulting in Notices of Violation*
In Compliance
When Inspected
Found in
Violation
Source: Air Compliance Files; Interviews with Air Com-
pliance Unit staff.
Data is based on all inspections, excluding compliance
inspections, and all notices of violation , excluding
motor vehicle violations, issued between July 1,1973
and May 31, 1974.
-------
Inspections '||
fln
11-11
EL
ALMOST HALF OF THESE DETECTIONS ORIGINATE FROM CITIZEN
COMPLAINTS.
Origins of Detections
Area
Surveillance
or "PIQ"
Inspections
Citizen
Complaints
Special Source
Inspections*
Source: Random sample of notices of violation issued
from October 1971 to May 1974.
* Inspections resulting from policy decision to inspect
particular type of source.
COMPLAINTS BY CITIZENS HAVE ALSO PROVEN TO BE QUITE RELIABLE—
NOTICES OF VIOLATIONS RESULTED IN 13 OF THE 15 CASES EXAMINED.
-------
ir-12
Notices of Violation 1
NOTICES OF VIOLATION
Sources found in violation are issued "notices of vio-
lation". These notices allow the source 30 days to achieve
compliance before an order is issued by the Department.
Easily correctable mobile source and pro-
cedural violations account for half of
notices issued.
Particulate violations account for two-
thirds of the rest of notices issued.
-------
Notices of Violation
11-13
MOBILE SOURCE AND PROCEDURAL VIOLATIONS ACCOUNTED FOR
HALF THE NOTICES OF VIOLATION ISSUED BETWEEN OCTOBER I, 1?71
AND MAY 31, 1974.+
Notices of Violation, by^ Type of Violation
(percent of all notices of violation)
o
-H
>
0)
a
Mobile
Source
Exhaust
Procedural
Violations
Visible
Emissions
Fugitive
Dust
Hydro-
carbons
Odors
Other
Particulate
Matter
Nitrogen
Oxides
Design
Violations*
Sulfur
Oxides
32
17
16
11
Source: "Monthly Report of Activities: Air Compliance Unit"
June 1974.
E.g. flue-fed incinerators.
The unit treats mobile source emissions differently than
other emissions violations, following up such violations
by letter rather than initiating expensive order proceed-
ings. Procedural violations are easily correctable vio-
lations of registration or permit requirements.
-------
Notices of Violation
11-14
OF THE NOTICES OF VIOLATION GIVEN FOR VIOLATIONS OF
EMISSIONS STANDARDS, 70 PERCENT ARE GIVEN FOR VIOLATIONS
OF PARTICULATE STANDARDS.
Notices o_f Violation, by_ Type of Violation
(percent of emission standards violations*)
Non-particulate Violations
Particulate Violations
Visible
Emissions
Fugitive
Dust
Hydro-
c carbons
o
H
4J
"> Odors
i— (
• H
? Other
"" Particulate
01
>< Nitrogen
Design
Violations
Sulfur
Oxides
23
18
10
10
4
•; 4
2
33
Source: "Monthly Report of Activities: Air Compliance Unit",
June 1974.
* Excludes mobile source and procedural violations.
-------
11-15
Orders
ORDERS
If" a source previously issued a notice of violation fails
to comply within the specified period of time, the Department
issues an order, usually after negotiations, requiring compliance,
and usually specifying dates by which incremental steps toward
compliance are to be achieved.
- 3.7 months typically pass between the issuance
of a notice of violation and of an order.
- 22% of those who receive notices of violation
are also issued orders.
- Some types of violation, like particulates and
odors, regularly require orders.
- As a result, half of all orders issued are for
abatement of particulate violations.
- Those members of the Air Unit most directly
responsible for enforcement actions spend 40%
of their time on particulate violations.
- Despite the predominance of one type of pol-
lutant in enforcement actions, no pattern in the
size of companies under order is apparent.
- Nor is there any obvious pattern in the in-
dustrial composition of companies under order.
- Only 3% of all order recipients seek to contest
their order, and only half of the hearings re-
quested ever have to be held. This low appeals
rate is one indication that the orders are wide-
ly accepted as reasonable.
- Violators achieve compliance in many different
ways. Most commonly, they must add abatement
equipment to meet air standards.
- Violators who must add abatement equipment are
allowed 57% more time than the average order
recipient to meet air standards.
- 36% of the time allowed in such abatement orders
is for equipment delivery.
-------
Orders
11-16
THE DEPARTMENT TYPICALLY ISSUES ORDERS TO NONCOMPLYING
REGULATEES 112 DAYS (3.7 MONTHS) AFTER THE ISSUANCE OF A NO-
TICE OF VIOLATION.
DEP order
review &
processing
Average Time Required for Steps between the Issuance
o_f a Notice of Violation and of_ an Order (in days)
Sending of Order
Approval by Commissioner
Approval by Director
Typing
Review by Assistant Director
Review of Order by General Counsel
Order Delivered to General Counsel
Order Drafting
Lapse between arrangement S conference date
Arrangement of conference
(Notification of DEP by APCA)
Assignment of case to engineer
Preliminary "package" prepared for engineer
responsible for the case
Grace period after notice of violation
Source: Random sample of Air Compliance Orders.
DISCUSSION: The first 78 days (70%) of the pre-order period
consists of (1) allowing a regulatee a reasonable period of
time to comply, (2) assembling materials relative to the case
and commencing informal communications with the regulatee/
and (3) arranging a conference between DEP personnel and com-
pany officials. In short, most of this time is devoted to
ensuring that the regulatee understands what is required of
him and has sufficient time to develop a concrete, realistic
compliance plan. The remaining 34 days, in which an order
reflecting discussions with the regulatee is drafted and re-
viewed, demonstrates a record of reasonably prompt review by
each DEP staff office that must approve an order before it is
promulgated.
Processing time includes weekends. Adjusting for a five
day week, orders are issued in 80 working days after the
issuance of a notice of violation.
-------
Orders
11-17
in
:•:•:•:•! I I i—i
22 PERCENT OF ALL VIOLATIONS ARE NOT CORRECTED (OR CAN
NOT BE CORRECTED) WITHIN 30 DAYS.
Percent of Cases Issued Notices of Violation in
Compliance at. the End of: 3_0 Days, 1971-1974
Complied
promptly
Not in Compliance
After 30 Days
Source: "Monthly Report of Activities: Air Compliance Unit",
June 1974.
THE DEPARTMENT COMMENCES THE ORDER PROCESS FOR THE 22 PERCENT
STILL NOT IN COMPLIANCE AT THE END OF 30 DAYS.
-------
11-19
Orders
CERTAIN TYPES OF VIOLATION GENERALLY LEAD TO ORDERS,
E.G. PARTICULATE AND ODOR VIOLATIONS; OTHER TYPES ARE TYPI-
CALLY CORRECTED QUICKLY AND DO NOT REQUIRE ORDERS.
Percent of N.V.'s Going to Order, 1971-1974
Particulate
Matter*
Odors
Design
Violations**
Hydrocarbons
Sulfur
Oxides
Visible
Emissions
Nitrogen
Oxides
Fugitive
Dust
Procedural
Violations
Mobile—Source
Exhaust
2.5
.2
'99
80
49
33
Source: "Monthly Report of Activities: Air Compliance Unit",
June 1974.
* Excludes visible emissions and fugitive dust.
** Flue-fed incinerators.
DISCUSSION: The percent of notices of violation (N.V.'s) that
go to order is a good indication of how difficult ana expensive
it will be for a class of cases to comply with the air standards
-------
Orders
11-19
OVER HALF OF ALL ORDERS ISSUED BETWEEN OCTOBER 1, 1971
AND MAY 31, 1974 WERE FOR ABATEMENT OF PARTICULATE VIOLATIONS.
Percent of All Orders by Type of_ Violation, 1971-1974
Particulate
Matter*
Odors
Hydrocarbons
Visible
Emissions
Procedural
Violations
Fugitive
Dust
Design
Violations
Nitrogen
Oxides
Sulfur
Oxides
31
23
20
20
2
1
]j Particulate
[ : Violations
— | Other
|l Violations
J
Source: "Monthly Report of Activities: Air Compliance Unit'
June 1974.
* Excludes visible emissions and fugitive dust.
Only 2% of orders issued were for procedural or motor vehicle
violations.
-------
Orders
11-20
THE ENFORCEMENT CONTROL CENTER SPENDS 40 PERCENT OF ITS
TIME ON PARTICULATE CONTROL CASES.
Allocation pf Enforcement Control Center
Staff Time by Class o_f Violation
Hydrocarbpns
Particulate
Violations
Other
Odors
Sourpe: Time Logs maintained from 6/1/74 to 7/31/74.
DISCUSSION; The staff of the Enforcement Control Center is the
element of the Air Compliance Unit responsible for the issuance
and follow-up of notices of violation and of orders.
-------
11-21
Orders
in
THE COMPANIES UNDER ORDER ALSO VARY GREATLY BY INDUSTRY"1",
Industry Percent of Orders
chemicals
electrical equipment
fabricated metal products
food manufacture [ ) 2
furniture and fixtures I 1
machinery [ j 6
misc. manufacturing I_J 1
ordnance ij 1
paper [ 1 2
petroleum loading S storage j
primary metal industries I ^J_JJ^______
printing and publishing j j1
products of coal & petroleum I j4
restaurants || i
rubber and plastics
stone, clay, glass S. concrete products ["
textiles []
transportation equipment I
apartment buildings I 10
all others [_ ^_ | 16
I
Source: DEP Air Compliance Unit Order files; Connecticut
Manufacturing Directory, 1973.
+ All 1971-1974 orders were classified by SIC.
-------
Orders :
i
Hi
fir-
11-22
ORDER RECIPIENTS ARE LIKELY TO BE RELATIVELY LARGE COMPANIES,
Distribution of Order Recipients by Size of Establishment
w
0-9
10-49
50-249
250-499
500-999
1,000+
50
31
17
12
31
14
10
1
Percent of all
Conn, companies
Percent of all
Conn, companies
receiving orders
19
Source: Connecticut industry analysis is based on a random
sample of Connecticut Manufacturing Directory, 1973.
Air order listings include all orders completed~oF~
in process in July, 1974.
DISCUSSION; That order recipients tend to be relatively
large establishments is not surprising. Small firms are
likely to be in service industries or in other industries
with low pollution potential. Moreover, if small firms
do pollute, their problems are usually technically less
complex than those of larger firms, especially those large
firms with major capital investments. Consequently, small
firms are more likely to be able to come into compliance
promptly and not require the issuance of an order. Final-
ly, the DEP naturally tends to allocate its limited staff
resources to the most serious sources of pollution first.
-------
Orders
Hi
11-23
A VIOLATOR WHO WISHES TO CHALLENGE THE REASONABLENESS
OF HIS ORDER, OR WHO CLAIMS NO VIOLATION HAS OCCURRED, MAY
CHALLENGE THE ORDER IN AN ADMINISTRATIVE HEARING.
BUT, AS OF NOVEMBER 1974,
ONLY THREE PERCENT OF
VIOLATORS WITH ORDERS
HAVE ASKED FOR ORDER
HEARINGS ...
... AND MOST OF THESE
CASES WERE SETTLED BE-
FORE THE HEARING WAS
HELD.
55%
Hearing
Held
Settled
Before
Hearing
Source: "Monthly Report of Activities, Air Compliance Unit",
December 1974; Air Compliance files.
DISCUSSION; That so few orders are challenged could be be-
cause the Department's orders are generally accepted as
reasonable and/or regulatees are reluctant to undertake the
expensive, time-consuming legislative fight,especially as
long as they feel they can ignore the order or at least its
compliance deadlines with relative impunity. The second of
these factors has unquestionably been important. But the
exceptionally low contest rate seems also to reflect the first
factor significantly. In interviews the Air Complince En-
forcement Unit staff uniformly stated that their objective
was to establish a reasonable compliance schedule with the
source — and then to try to hold the source to this schedule.
The Unit in fact expends considerable effort trying to get the
source to propose its own schedule and to negotiate the order
directly with the source based on the source's proposal. Un-
til recently the Water Compliance Unit did not negotiate with
the source prior to issuing its orders; and, although the
engineers there also tried to establish reasonable orders,
that Unit experienced a 14% request-for-hearing rate in its
initial years and a 5% rate over the last several years. How-
ever, now that the Water Compliance staff negotiates with its
sources, its rate of actual hearings has dropped to roughly
the same level as that of the Air Unit.
-------
Orders '
11-24
in
MOST SOURCES ISSUED ORDERS COMPLY BY ADDING ABATEMENT
EQUIPMENT.
Type of Corrective Action Taken by Persons Subject to Order
(in percent of all such persons)
42
18
16
14
12
Add Change
Abatement Inputs*
Equipment
Minor Alter Close Part
Changes in Production of Operations
Existing Process in Violation
Equipment
Source: Random sample of Air Orders.
* For example: shifting to low sulfur fuel, changing solvents
used.
-------
11-25
Orders :
; t
(ll
n,-,
VIOLATORS REQUIRED TO INSTALL EQUIPMENT ARE ALLOWED
AN AVERAGE OF 52 PERCENT MORE TIME TO ACHIEVE COMPLIANCE
THAN IS NORMALLY ALLOWED.
Average Order Schedule
(in months)
All cases
11
, 57%
Cases
Requiring the
Purchase of
Abatement
Equipment
Source: Random sample of Air Orders.
-------
11-26
Orders '
in
THE GREATEST PART — 36 PERCENT — OF THE TIME ALLOWED
IN ORDER COMPLIANCE SCHEDULES ISSUED TO SOURCES THAT MUST
ADD CONTROL EQUIPMENT IS AN ALLOWANCE FOR OBTAINING DELIVERY
OF THE EQUIPMENT.
Times Allowed for Completing Required
Steps i_n the Average Compliance Timetable
(in months)
Test equipment and be in compliance
*with all regulations
-Install equipment
Receive equipment
• Order equipment
Let bids for equipment
• Review report and choose strategy
for compliance
•» Obtain consulting engineer report
Source: Random sample of Air Orders.
DISCUSSION: Obtaining delivery of equipment is sometimes
difficult for regulatees to control, especially during a
period of rapidly expanding demand for pollution abatement
equipment such as the early 1970's. However, regulatees
have little incentive to exert the sort of effort they
would in normal commercial dealings to insure prompt deli-
very. Early delivery only means early installation and
operating and maintenance costs.
-------
11-27
Order Overruns
CHAPTER II
ORDER OVERRUNS
The following chapter details the problems the
Department has had with delay, and explores the impact
that these delays have had on DEP costs.
56% of order recipients overrun their com-
pliance deadlines.
However, only 23% of order recipients
overrun their compliance deadlines by
more than one month.
Regulatees claim that most overruns—65%
—are caused by third-party delays.
20% of regulatees with overruns claimed
changes in their compliance plans as
the primary reason for delay. In fact,
however, such changes do not affect
on-time performance.
Progress reports are a key tool used by
the DEP to police order delay. As of
February, 1975, 17% of all required
progress reports are either submitted over
two weeks late or are not submitted at all.
When regulatees overrun their compliance
schedules, they do, so, on average, by
5.1 months, increasing the length of
order timetables by 81%.
Cases with compliance delay are also
slower in negotiating their orders with
the State than the average case.
-------
11-28
Order Overruns :
Continued
Overruns are also significant for those who
are ordered to purchase and install equip-
ment. Overruns for these cases average 9
months, increasing order timetables by 81%.
One effect of overruns is that over 40% of
Enforcement Control Center time is spent
policing delay.
Cases that the Air Unit cannot prod into
compliance by exerting moral pressure and
legal threats are referred to the Attorney
General. This procedure has been undertaken
in 5% of orders issued to date.
Because delay is difficult to discourage,
the Department spends 63% more staff resources
on recalcitrant cases than on those in which
no delay occurs.
-------
11-29
Order Overruns '
On«_
56 PERCENT OF ALL ORDE-R RECIPIENTS ILLEGALLY OVERRUN
THEIR COMPLIANCE DEADLINES.
Percent of All Orders Issued 1971-1974
Overrun
Amended
Compliance
Deadline
Meet Amended
Compliance
Deadline
Overrun
Original
Compliance
Deadline
Comply on
Schedule
Source: Random sample of Air Orders, 1971-1974;
views with Air Compliance Unit staff.
Inter-
DISCUSSION; Some delays, such as strikes or unavoidable sup-
pliers' delays, are legitimate. Other delays occur for want
of proper planning or motivation and could be avoided. This
study does not distinguish between these two areas because
such judgements are subjective and difficult to make. Some
sources granted amendments could also have avoided compliance
overruns. Amendments are sometimes granted in recognition
that previous delay was unavoidable and sometimes to stimu-
late future activity from the violator, regardless of past
history.
-------
Order Overruns
11-30
MOST ORDERS WITH DELAY OVERRUN THEIR COMPLIANCE DEADLINES
BY LESS THAN ONE MONTH. ONLY 23 PERCENT OF ALL ORDERS FAIL TO
COMPLY WITHIN ONE MONTH OF AN ORIGINAL OR AMENDED DEADLINE.
Orders by_ Length of Overrun
(overruns as a percent of scheduled time)
44
33
16
On Time
0-1
Month
Late
1-15
Months
Late
Comply on time, or less
than one month late
Comply more than
one month late
15+
Months
Late
Source: Random sample of Air Orders, 1971-1974.
DISCUSSION; This compliance record is significantly superior
to those of the Water Compliance and Water Resource Units.
The average Water Compliance order is delayed over 15 months.
Of 12 recent Water Resources encroachment line violations that
have been issued orders to remove, none have been removed. In
other words, the Air Compliance Enforcement Unit's approach of
first negotiating an order that seems reasonable to the company
and then paying close, persistent attention to the progress be-
ing made by the source under the order, has paid off.
-------
Order Overruns
I jl |[i _
11-31
20 PERCENT OF REGULATEES WITH OVERRUNS CLAIM CHANGES
IN COMPLIANCE PLANS AS THE PRIMARY REASON FOR DELAY. YET
THESE CHANGES DO NOT AFFECT ON-TIME PERFORMANCE.
OF THE 65 PERCENT OF ALL ORDER
RECIPIENTS WHO FOLLOW THE COM-
PLIANCE PLANS SUGGESTED IN THEIR
ORDER, 46 PERCENT COMPLY ON
SCHEDULE.
OF THE 35 PERCENT OF ALL ORDER
RECIPIENTS WHO CHANGE COMPLIANCE
PLANS, 50 PERCENT COMPLY ON
SCHEDULE.
50%
35%
19%
' -
35%
I
15*
1
On Delayed Met On Delayed Mot
Schedule Revised Schedule Revised
Deadline* Deadline**
Source: Random sample of Air Compliance Orders, 1971-1974.
* Met amended order deadline, or granted extension.
** 58% of this group cited "change in compliance plans" as the reason for
delay.
-------
Order Overruns '
Dn
11-32
REGULATEES CLAIM THAT MOST OVERRUNS — 65 PERCENT — ARE
CAUSED BY THIRD-PARTY DELAYS.
Reasons Given by Reguldtees for Overruns I
•Third
Party
Delays
fhanqo in
Compliance
Plans
uato
Modifications*
Source: Random sample of Air Orders, 1971-1974.
* Modifications made that were later found to bo in-
sufficient to achieve compliance.
DISCUSSION; Much third-party delay has been legitimate,
especially during the last year or so when pollution control
equipment manufacturers have had large backlogs. However,
this excuse has also been an all-to-easy haven for companies
not intent on prompt compliance — and sources clearly have
no economic incentive to press suppliers for early delivery.
It is an easy excuse in large part because it is extremely
difficult for the Department to verify such claims — espe-
cially when dealing with the small hard-core of those active-
ly and sometimes unscrupulously trying to avoid compliance.
Companies that had previously experienced chronic "third-
party delay" have demonstrated a remarkable ability to achieve
prompt delivery from their suppliers once put under a bond they
might lose if they fell behind schedule again.
-------
11-33
Order Overruns
Dn
SUPPLEMENTARY NOTE: PROGRESS REPORTS
One of the conditions of almost all orders is that the
source will submit a monthly progress report to the Depart-
ment summarizing its progress towards compliance over the
last month. If the source is behind schedule, it must ex-
plain the salient details of the delay. This procedure al-
lows the Enforcement Unit to pinpoint and react to developing
problems quickly. It also saves the Department a great many
expensive field inspections.
The success of this device depends entirely on the
prompt and dependable submission of progress reports. The
Enforcement Unit, at low cost, has been able to improve reg-
ulatees1 records in this respect. As of July, 1974, 44% of
all progress reports were missing or more than two weeks
late. In January, 1975 , only 17% of progress reports were
missing or late.
But many of the most difficult violators continue to
ignore this requirement. Of the 23 cases delayed most in
1974, 30% submitted at least two progress reports late or
did not submit them at all.
-------
Order Overruns :
(Inn-
11-34
CASES WITH DELAY TYPICALLY OVERRUN THEIR COMPLIANCE DEAD-
LINES BY 5.1 MONTHS (81 PERCENT OF SCHEDULED TIME).
Average Time from Order Issuance to Compliance
(in months)*
11.4
6.3
81%
Scheduled
Actual
Source: Random sample of Air Compliance Orders, 1971-74.
* Average overrun for all Air Compliance Orders, includ-
inq those without delay, is 2.3 months, or 33% of the
average scheduled time of 7 months.
-------
Order Overruns '
flu
11-35
WHEN CASES REQUIRING ABATEMENT EQUIPMENT OVERRUN, COM-
PLIANCE IS TYPICALLY DELAYED FOR 9 MONTHS (81 PERCENT BEYOND
SCHEDULED TIME).
Average Time from Order to Compliance
SCHEDULED
11
(in months)
Receive Equipment
x (4 months delay) ^,
Let Bids;
Place Orders
(3 months delay)
Develop Plans
(1 month delay)
Consulting Report
ACTUAL
20
Source: Random sample of Air Orders, 1971-1974.
DISCUSSION; Although the longest absolute delay comes in the
"receive equipment" step, the largest percentage overrun comes
in placing the orders. This is understandable because this is
the point at which the source must make its heaviest financial
commitment.
-------
Order Overruns
On
11-36
MORE THAN 40 PERCENT OF ENFORCEMENT CONTROL CENTER TIME
IS SPENT TRYING TO REDUCE DELAY.
Allocation of_ ECC* Staff by_ Major Tasks
(percent of total EEC time)
Follow-up
on Orders
Follow-up
On Notices
of Violation
Inspection
Report
Order
Conferences
Progress
Reports
Complaints
Drafting Notices
of Violation
Amendments
to Orders
Drafting
Orders
All Other
Activities
16
12
10
Combating
Delay
Other
Duties
23
Source: Time Logs maintained July 1974 to September 1974.
* ECC: Enforcement Control Center.
DISCUSSION; The Air Compliance Enforcement staff successfully
limits delay by staying in close contact with the sources un-
der order, especially once trouble develops. Monthly progress
reports from the source let the Department learn quickly of the
existence, extent, and cause of much delay. (They also keep
reminding the source of a duty some managers would be quite con-
tent to put out of mind for a month or so.) "Follow-up" in-
cludes evaluating the problems the regulatee has encountered,
deciding what response is appropriate, and communicating with
the regulatee. Amendments are granted if the delay was for a
legitimate cause and/or if the grant will encourage new efforts
from the source. It is noteworthy that most of this enforcement
time is spent on "follow-up" provisions, suggesting the import-
ance of cajoling and moral suasion in stimulating further activ-
ity from the violator.
-------
Order Overruns •••
11-37
ONLY 4 PERCENT OF ALL ORDERS HAVE BEEN REFERRED TO THE
ATTORNEY GENERAL FOR ENFORCEMENT.
Percent of Air Orders.
10/71-11/75"
percent ef Referrals to. the
Attorney General. 10/71-11/74
100
19
13
31
19
Status uncertain
DEP lost legal challenge
EPA enforcement action
Responded to further Air
Compliance negotiations*
Responded to AG negotiat-
ing efforts/legal threats*
Now in court
Injunctions
^ource: Air Compliance files.
* Based on discussion of cases with Air Compliance staff.
IN ONLY THREE CASES HAS THE ATTORNEY GENERAL OBTAINED A
COURT REMEDY.
Number Number of Court
of Cases Remedies Obtained
AH Referrals Injunction
Source: Air Compliance tiles.
Fines and
Other Penalties
of all Types
DISCUSSION: The low rate of referrals to the Attorney General
is explained by (1) the usually good records of Air Compliance
regulatees and (2) The perceptions of the Air Compliance staff that
the utility of referral is low. The members of the Air Compli-
ance Section refer cases only when they feel all benefit from
negotiations has ended and that legal action is the only avail-
able recourse. This procedure has not led to results satisfac-
tory to the Air Compliance staff: court proceedings are slow,
cumbersome, and uncertain.
The AG attempts to avoid these delays and uncertainties by try-
ing first to bluff and negotiate a satisfactory settlement be-
fore going to court. This is, however, a difficult task since
(1) the cases referred have been referred because negotiations
with the State have already broken down and (2) the AG has no
additional leverage he can bring to bear on the recalcitrant
source save the threat to go to court. And, on the record,
such a threat is unlikely to greatly impress such sources.
-------
11-38
Order Overruns
THE COSTS OF DELAY TO THE DEPARTMENT ARE ENORMOUS. A
CASE WHICH DELAYS COMPLIANCE COSTS THE DEP 64 PERCENT MORE
THAN A CASE WHICH COMPLIES WITH AN ORIGINAL OR AMENDED DEAD-
LINE.
Average per Case Costs to PEP of Handling Cases Under
Orders Issued between October, 1971 and July, 1974
Case Without Delay Case With Delay
$583
Verify Compliance
Issue Amendments
Evaluate
Progress Reports
Order Follow-up
Sr . Staff Review*
Order, Drafting
Order Conference
Notice of Violation
Inspection
Verify Compliance
Refer to AG
Issue
Amendments
Evaluate
Progress Reports
$355
32
21
16
93
38
29
58
14
48
Order Follow-up
Admin. Hearing
—6
Sr. Staff Review*
Order Drafting'
Order Conference
Notice of Violation
Inspection
32
13
79
85
162
42
38
60
14
48
A
64
i
i
- — 10
Processing Costs,
in Dollars
Processing Costs,
in Dollars
Source: Time logs maintained from July 1 to August 31, 1974;
interviews with Air Compliance staff. Calculations of
costs with and without delay assume that the costs of a
step increase proportionately with the time needed for
that step. Since DEP costs mount less quickly before
a source has encountered delay than after it has missed
one or more deadlines, this approach probably greatly
underestimates the cost of delay.
"Senior Staff Review" includes review by the Director of
Air Compliance, legal counsel, and top DEP staff.
-------
11-39
Most Difficult Cases '
CHAPTER III
i
DEALING WITH THE MOS^T DIFFICULT CASES
A small number of cases account for the bulk of the De-
partment 's enforcement problems.
- 8% of all orders account for 56% of all
delay.
- The industrial distribution of these 8%
worst cases is not sttikingly different
from that of all air orders issued.
- These worst cases are relatively evenly
distributed by size of source under order.
- The worst 8% overrun their compliance
deadlines by an average of 18.4 months.
- The worst cases typically require 6.9
months to agree to an order — 64% more
than those sources that comply on time.
- These most difficult cases typically
cost 74% more in staff resources than
an average case.
- On average they cost 135% more than do
cases in which no delay occurs.
-------
Most Difficult Cases '
II 40
8 PERCENT OF ALL ORDERS ISSUED ACCOUNT FOR 56 PERCENT
OF ALL DELAY; 13 PERCENT FOR 75 PERCENT.
Concentration of
i nna ,, . i no*
1 "%
8%
y
X
x
^ ^
X ^f
*
-------
Most Difficult Cases
flfln
11-41
THE DISTRIBUTION OF WORST CASES BY INDUSTRY IS NOT
GREATLY DIFFERENT FROM THAT OF ALL ORDER RECIPIENTS.
Industry
Restaurants
Textiles
Coal Products
Chemicals
Stone, Clay, & Glass Products
Rubber & Plastics
Machinery
Fabricated Metals
Apartments*
Petroleum Loading
Primary Metals
All Others
Percent qf Cases by Industry
1971-1974
[k
14
14
10
10
14
Orders Issued.
Worst Cases
25
Source: Random sample of Air Compliance orders issued 1971-
1974; Connecticut Manufacturing Directory, 1973.
* Seven apartment houses in Stamford have overrun their
compliance deadlines sufficiently to qualify as "worst
cases". Thpy have been treated here as one case. They
claim that they are prevented from achieving compliance by
the City of Stamford's refusal to pick up compacted waste,
and have jointly hired .a lawyer to represent them.
-------
11-42
Most Difficult Cases '
flnn_
THE DISTRIBUTION OF WORST-CASE SOURCES BY SIZE IS NOT
SIGNIFICANTLY DIFFERENT FROM THAT OF ALL ORDER RECIPIENTS.
Distribution of Order Recipients by Size
g
w
0)
a
3
0-9
10-49
50-249
250-499
500-999
1000+
9%
9%
Worst Cases
All Orders
17*
17%
17%
31%
17%
14%
264
10%
8%
19%
Source: Connecticut Manufacturing Directory, 1973; Random
sample ofDEP Air Compliance orders, 1971-1974.
* All seven apartment buildings have been treated as one caso,'
for reasons explained on the previous page.
-------
Most Difficult Cases '
^MB
1
11-43
(Inn™
THE WORST 8 PERCENT OF ALL CASES OVERRUN THEIR COMPLIANCE
DEADLINES BY AN AVERAGE OF 18.4 MONTHS (INCREASING THEIR ORDER
TIMETABLES BY 267 PERCENT).
Average Time From Order Issuance to Compliance
(in months)
25.3
6 .9
267%
Scheduled*
Actual
Source: Air Compliance files.
* Scheduled time for these sources is 1.4% less than the
7 months allowed on average.
-------
Most Difficult Cases
r—. 11-44
Dfln
THE WORST CASE SOURCES TYPICALLY REQUIRE 6.9 MONTHS TO
AGREE TO AN ORDER — 64 PERCENT MORE THAN THOSE SOURCES THAT
COMPLY ON TIME.
Average Time from Detection to Order Issuance
(in months)
Staff Reviews Order
Prepare Order .10
Arrange Conference
Issue Notice
of Violation*
4.2 ,-''
.76
1.3
2.0
,, •"
""
5.2
1.0
1
1.9
2.0
/ i
s s
/ s •
s '
s
6.9
.9
.43
3.6
2.0
Cases Average Average
Without Cases Worst-
Delay With Delay 8% Cases
Percent Increase
23
64
Source: Random sample of Air Compliance orders, 1971-1974.
No data was available on differences in the time interval
between detection and notice of violation issuance Cor
these kinds of cases. This step includes a one month in-
terval for the issuance of the notice of violation and a
one month "grace period".
DISCUSSION: The worst cases take more time at virtually every
stage of the pre-order period than do other cases. This pat-
tern is especially noticeable in the interval before a confer-
ence is held, the "arrange conference" step. Cases with delay
require .6 month more time at this stage than do cases without
delay, an increase of 46%. The most difficult cases require
much more time than do even those cases with delay — 1.7
months, or an 89% increase.
This early pattern of delay, when third-party difficulties are
clearly not a factor, provides strong support for the percep-
tion of the enforcement staff that these cases do not comply
promptly as a matter of choice. A company reluctant to install
expensive compliance equipment is also likely to be slow to
come to a conference in which it is expected to commit itself
to a binding order timetable.
-------
11-45
Most Difficult Cases
]nrin_
THE WORST CASES EACH COST AN AVERAGE OF 75 PERCENT MORE
IN STAFF RESOURCES THAN THE AVERAGE CASE.
Per Case Administrative Costs to DEP
Averag
Verify Compliance
Refer to AG
Issue Amendment
Evaluate
Progress Reports
Order Follow-up
Sr. Staff Review
Order Qrafting
Order Conference
Notice of Violation
Inspection
a Case*
$480
32
53
54
131
40
34
59
14
46
DifficuJ
Verify Compliance
Refer to AG
Issue Amendments
Evaluate
Progress Reports
— 7
Admin. Hearing
0 Sr. Staff Review
Order Drafting
Order Conference
Notice of Violation
Inspection
_t Case
$842
32
57
120
109
265
51
41
89
14
' 48
— 1
75*
Source: Time logs maintained from 7/74 to 9/74; Interviews
with Air Compliance staff; Random sample of Air
Compliance Orders, 1971-1974.
* Average case costs reflect total costs spent on each step
divided among total number of orders.
-------
11-46
Most Difficult Cases '
a
(Inn-
AND THESE CASES HAVE COST THE DEP 137 PERCENT MORE,THAN DO
CASES IN WHICH NO DELAY OCCURS.
i
Per Case Administrative Costs to DEP
Average Case Without Delay
Difficult Case
$842
Verify Compliance
Issue Amendments
Evalute Progress Report
Order Foli,ow-up
Sr. Staff Review
Order Drafting
Order Conference
Inspection
$355
32
21
; §
93
38
29
58
J-*
48
Verify Compliance
Refer , to AG
Issue Amendments
Evaluate
Progress Reports
Order Follow-up
Admin. Hearing
Sr. Staff Review
— 6
Order Drafting
Order Conference
Inspection
32
57
120
109
265
51
41
89
48
A
16
137%
Source: Time logs maintained from 7/74-9/74; Interviews with
Air Compliance staff.
-------
11-47
CONCLUSION
The baseline shows about two-thirds of all sources in-
spected are currently in compliance and that the great major-
ity not in compliance can and do correct their violations
quickly and effectively. The Department's twin enforcement
devices, the notice of violation and the state order, provide
adequate enforcement in the great majority of cases.
As in other enforcement settings, however, a small group
of violators poses inordinate burdens on the enforcement agen-
cy. As important, their ability to delay or avoid compliance
undercuts voluntary cooperation by others and holds back the
gradual environmental improvement sought by the Department.
Over half of the sources issued orders experience some
delay in meeting compliance deadlines. Of this half/ 8% incur
delays that average over 1.3 years per case. This handful of
sources is distinguished neither by type of industry nor by
size of operation. They are marked, however, by their ability
to delay compliance, despite vigorous and expensive efforts by
the Department.
The new enforcement tools developed by the Connecticut
Enforcement Project and the Department are designed to give
the Department the tools it needs to deal effectively with
this recalcitrant minority.
-------
11-48
APPENDIX: RANDOM SAMPLE OF AIR ORDERS
The information used in these analyses is based on a random
sample of Air Compliance orders. All data was taken from the
form "Check List for Orders." The orders actually included in
this sample are listed below by company name;
~\ *
A.G.I*
American Chemical & Refining
American Standard
American Wire
Art Metal
Barnum Hotel*
Berol Co.
Borg Textiles
Bridgeport Brass
Bryant Electric
Bullard*
Capital Tire
Carpenter Technology
Chase Brass & Copper
Cities Service Oil
Columbia Magnetics
Commercial Foundaries*
Conn. Galvanizing
Diversified Industries*
D. M. Reed, Inc.
Tl. I. duPont
Elco Industry, Inc.
Eyelet Specialty
Fabric Fire Hose*
Fairmont Corp.
Feldspar
Fern Apts.
Fleming Rutledge Oil
Gade Farm*
General Dynamics
Greenbacker-Schwink
Guilford Gravure
Hartford Finance
Hoffman Fuel
Eoyt Bedford Apts.
Hudson*
IdleWild Farm
Independent Oi]
Keratene
King's Dept. Store
Knights of Columbus Printing Plant*
-------
11-49
Lorraine Industries
Meriden Foundary
Natural Can *
North-Judd Manufacturing
O.F. Mossberg
Peckhara Materials
Phizer, Inc.*
Plainville Casting*
Pioneer Metal Products
Porce-Len/ Inc.
Rocco Becce Pig Farm
Rostand Mfg.
Scoville*
Shell Oil
Sommers Thin Strip Brass*
Suisman and Blumenthal
Sun Chief Electrics
Sun Oil Co.
Technical Rubber*
Thames Valley Steel*
United Illuminating
Upjohn
Vulcan Radiator*
Wiremold Co.
Win. Prym. Co.*
These orders form the basis for (and were used only for) the
charts found on pp. 11-16 and 11-43.
-------
PART III
CALCULATING ECONOMIC REMEDIES
-------
Ill-2
CHAPTER I
CALCULATING ASSESSMENTS
Economic remedies must be just large enough to make
compliance economically attractive: they must take away
the entire benefit of noncompliance — including whatever
return the noncomplying person may be able to earn on the
use of the money it has not spent on pollution control for
however long the delay continues. Such economic assessments
should ensure voluntary compliance because they simultaneously
remove the incentive to delay and guarantee those who do
comply a commercially attractive "return" on their abate-
ment investments — not having to pay the assessments.
This "return" will be sufficiently attractive to make citizens
feel that compliance "pays" because it is calculated at the
cost of capital rate appropriate for each source, i.e. because
it is as large as the returns the source is obtaining on in-
vestments it has recently chosen to make.
An economic assessment is defined to be that payment
which would, if made at the end of each month throughout a
specified assessment period, have the same net economic
impact on a company as the expenditures necessary for com-
pliance with Department requirements throughout that assess-
ment period. In other words, the present value of the stream
of assessment payments made over the assessment period would
equal the present value of the net flow of compliance costs
over the same period.
Economic assessments are based on a simple economic
calculus that is commonly used by businessmen in evaluating
investment alternatives. This calculus requires four main
steps:
(1) Identify the gross cash flow of all expenditures
necessary for the source to comply with the law
during each year of the assessment period and
adjust for anticipated inflation (deflation).
Both initial and replacement installed capital
costs and operating and maintenance expenses must
be considered.
(2) Obtain net cash flow by adjusting the figures in
(1) for the effect of tax deductions and credits,
chiefly for depreciation of capital equipment and
for operating and maintenance expenses.
(3) Discount this net cash flow to a present value
(using a cost of capital rate if the source is a
business).
-------
Ill-3
(4) Calculate the final civil assessment as that
amount which would, if paid monthly over the
assessment period, create a stream of payments
whose present value (using the same discount
rate as in (3)) would equal the present value
of the cost of compliance.
The rest of this chapter outlines this methodology in greater
detail. It explains what information is needed, how this
information must be adjusted to take the impact of taxes
into account, how the calculations are handled by the assess-
ment formula, and how this formula is derived. It then ex-
plains how this formula was used to establish the schedules
of maximum civil assessments found in the regulations, and,
finally, it briefly explains how it is used to calculate
individual assessments.
DETERMINING THE COSTS
OF COMPLIANCE
CASH FLOW
The first step in determining the proper amount of an
economic assessment is to identify what costs will be in-
curred in each year of the period during which control activ-
ities can be presumed to continue. (How these costs are
determined, the most difficult step in making individual
assessments, is explained briefly in Chapter II of this Part
and, in detail, in Chapter VII of Part V.) These costs, and
how they will be handled in the assessment formula, are out-
lined below briefly:
(1) Initial capital costs for pollution control equip-
ment facilities considered as an expenditure in
year zero.
(2) Replacement costs for this abatement equipment.
It is assumed that the equipment will be replaced
at the end of each depreciation period within the
assessment period and that the cash outlay is
increased (decreased) by the average of the infla-
tion (deflation) experienced over the three years
prior to the date of the assessment. (The assess-
ment period is 20 years for reasons discussed
below; in individual assessment cases the
depreciation period is presumed to be 10 years
unless the Commissioner finds otherwise. The
10 year figure is based on a CEP survey of the
typical life expectancy of commonly used air
pollution control equipment.)
-------
Ill- 4
(3) The salvage value of any equipment to the extent
that it is not fully depreciated at the end of the
assessment period. This factor is, of course,
a credit that reduces the net cost. Salvage
value is also adjusted for inflation (deflation).
(4) Annual operating and maintenance costs, i.e. such
costs as are required to ensure the continuous
effective operation of the pollution abatement
equipment over its full depreciable life. These
costs are increased (decreased) each year to
account for inflation (deflation).
All of these expenses are affected importantly by the
impact of various tax provisions. The assessment formula must
consider the effects on a source's U. S. income tax of:
(1) An investment tax credit for the purchase of
new abatement equipment.
(2) The ability to deduct from taxable income each
year
(a) Depreciation on the capital cost of
equipment over its useful life (or at
accelerated rates approved for such
equipment), and
(b) Annual costs of operation.
In developing assessments from the net cash flow of the
costs of compliance created from these cost estimates and tax
considerations, the following assumptions apply:
* Tax savings are calculated as if the violator
is in a tax bracket with a known effective rate
(the variable T in the assessment formula) in
all years.
* Regulatees either have or will have sufficient
taxable income to take full advantage of any
tax credits or deductions to which they are
entitled by virtue of required control expend-
itures, or their effective U. S. income tax rate
(T) will be 0. (See Chapter 5.)
* An investment tax credit is in effect, and is
obtained at the time equipment is purchased.
* For purposes of discounting, operating costs
are considered to be paid and corresponding
tax savings realized at the beginning of each
year. Tax savings from depreciation are realized
at the end of each year.
-------
Ill-5
If equipment is not fully depreciated at the
end of the assessment period, it can be sold
at a salvage value equal to its economic worth.
In that case a portion of the tax credit must
be refunded, pro-rated according to the pro-
portion of useful life remaining. (The formula
for salvage value is given in the derivations
section below.)
For all purposes other than calculating the
depreciation tax deduction, where realistically
accelerated depreciation in case by case assessment
is used, straight-line depreciation is used.
THE ASSESSMENT
FORMULA
Department staff do not have to push their way through
the host of calculations required to set out the costs of
compliance cash flow, adjust it for tax and inflation, dis-
count to present value, etc. All these calculations are
handled automatically by the assessment formula. All the
staff need do is put a tape casette with the formula into a
desk calculator and type in a few variables and all this work
will be done in seconds.
This section explains the formula and its derivation.
Notation
Input variables:
AP = Assessment period in years.
CC = Annual cost of capital or discount rate, as a
decimal fraction.
EL = Expected life of equipment, in years.
DL = Depreciable life of equipment, in years.
CCE = Capital cost of equipment for initial equipment,
in dollars.
OP = Operating costs in the first year, in dollars.
RI = Annual rate of inflation, as a decimal fraction.
T = Effective marginal corporate income tax rate, as a
decimal fraction. £f there is a state corporate
income tax, T would be the total effective tax
rate. It would be given by the formula:
T = Ts + (1 - Ts) Tf, where T is the state
corporate income tax rate and TJ the federal
one) .
-------
III-6
TC = Investment tax credit rate, as a decimal fraction.
Output variable:
CA = Civil assessment per month, in dollars.
Other variables:
PVO = Net present value of operating costs over assess-
ment period, net of any tax savings arising from
operating costs.
PVIE = Net present value of initial equipment, net of any
tax credits and savings arising from the purchase
and depreciation of this equipment.
PVE = Net present value of equipment cost over entire
assessment period. (Includes discounted value
of initial and replacement equipment, less the
value of tax credits and deductions and of any
salvage value at the end of the assessment period.)
A = Amortization factor, giving amount of monthly pay-
ment required per dollar of present value to be
amortized.
Formula
The civil assessment is given by formula (1) below, with
the additional variables defined by equations (2) through (5).
(These formulae are derived in the following section.)
CA = (PVO + PVE) A
AP
PVIE =
PVE =
(1 T) 1
(l-TC)
1 -I ^
1-/1
L ^
'1 + CC \l fl + RI\ \
r*1/1"1 — "D T ilVi ^_ r*f* i 1 ^
,cc Riyy \i+.cc) J
- > vT ^ - 1
•(DL) (CC
+ R!\AP~
+ CC/
+ RI\EL
+ ccy
;; V (1 + CCpL
PVIE
)P
CCE
(1 + CO
1 -
(1 + CC)
AP
(1)
(2)
(3)
(4)
(5)
-------
Ill- 7
Derivations
CA:
The total present value of compliance costs is the sum
of PVO and PVE* The economic assessment is the monthly payment
which amortizes this sum over AP years. Hence, the sum is
multiplied by the amortization factor A.
PVO:
We assume that operating costs are paid in the beginning
of the year. Each year operating costs increase by an infla-
tion factor of (1 + RI), regardless of the age of equipment
then in use. We convert operating costs for year I to present
value by discounting by the factor I/ (1 + CC) I~1. Assuming
T is the current maximum rate of .48, there is a tax savings
of 48 percent of operating costs each year, so net operating costs
are .52 of gross operating costs each year. In general,
PVO =
AP
1 = 1
(1 - T) (OP) (1 + RI)
1-1
(1 + CO1"1
Formula (2) above is an equivalent but explicit formula,
derived from the sum of a geometric series.
PVIE:
The cost of initial equipment is CCE. Deducted from this
is the tax credit (the variable TC) obtained immediately, and
tax savings of the fraction T of allowable depreciation for
each year of depreciable life of the equipment. Using straight-
line depreciation, annual depreciation is CCE/DL. Depreciation
in year I is discounted by the factor I/ (1 + CC)1. Thus
DL
PVIE = CCE - (TC) (CCE) -
/CCE \
I EL )
(1 + CC)
Formula (3) above is equivalent.
PVE:
.th
The equipment cost of the K " set of replacement equip-
ment (where K = 0 for initial equipment) is equal to the pur-
chase price of the initial equipment times a cumulative infla-
tion factor of (i + RI) K x EL.
-------
III-8
The savings due to the tax credit on replacement equipment
and to deductions for depreciation are proportional to equipment
cost, and are thus also inflated by the same cumulative inflation
factor. Note that all expenditures and savings on this piece of
replacement equipment occur (EL) x (K) years further in the
future than the corresponding cash flows for the initial equipment
purchase. Provided that the entire useful life of the Kfch replace-
ment equipment lies within the assessment period, its contribution
to net present value is
(EL)(K) , .
1 + RI \ (PVIE
1 + CC ) \ I
If the assessment period AP is an integral multiple of the
equipment life EL, then the useful life of all replacement
equipment will be within the assessment period. In that case,
(AP/EL) -1 (EL)(K) , ,
PVE = V /I + RI \ PVIE
K = 0 \1 + CC j V /
Formula (4) is equivalent but simpler.
If AP is not an integral multiple of EL, then the last
piece of replacement equipment still has a salvage value at
the end of the assessment period. We assume that the salvage
value is equal to the economic value of the equipment, which
is the present value of remaining "services" of this equipment
plus the tax savings from any remaining allowable depreciation.
If the equipment was purchased in year J and has a remaining
lifetime of I years (where I is less than EL) its salvage value is
CCE (1 + RI)
J
--
1- +
Vi- 11 + Ri V
_X1 (i + ccj
(l-TC) +-± (TC)
This salvage value is such that the net present value of
equipment costs over any period does not depend on what com-
bination of new and used equipment is owned during that period.
As a result, equation (4) for PVE holds regardless of whether
AP is an integral multiple of EL.
A:
The amortization factor is based on the standard formula
for a monthly annuity of unit amount for AP years at an annual
interest rate of CC. Since the formula is for monthly payments,
the numerator is the monthly cost of capital.
DETERMINING
MAXIMUM ASSESSMENTS
For purposes of calculating maximum assessments, we assume
the follov/ing values: (Note that CA increases with increases
in DL, CCE, OP, RI, CC AND AP, and decreases with increases in
EL, T and TC).
-------
Ill- 9
* RI = .15 (i.e., 15%). The typical rate of inflation
has increased markedly over the last several decades
and reached levels not far from 15 percent in 1974.
* CC = .20 (i.e., 20%). Over the long run, the cost of
capital has generally exceeded the inflation rate by
about 5 percent to provide an adequate return and to
compensate investors for inflation.
* AP = 20 years. Twenty years is a common time frame for
evaluating many capital projects. Since abatement equip-
ment is an auxiliary to production facilities, such
equipment or replacements will have to be used for the
lifetime of the underlying plant requiring control, if
the source is to remain in compliance with the law.
Consequently it is reasonable to assume that sources
evaluating a commitment to abatement will think in terms
of the common 20-year period. Moreover, a common
assessment period helps ensure that assessments are
comparable and therefore fair.
* EL = 5 years. Very few significant types of air pollu-
tion control equipment have useful lives less than five
years long.
* PL = 5 years. Federal tax law permits that pollution
abatement equipment be depreciated over a five-year
period, or over the expected lifetime of the equip-
ment, whichever is shorter.
* T = .48 (i.e., 48%). Although a zero tax rate is possi-
ble, and assuming a rate lower than the maximum corpor-
ate rate could be defended easily and would increase
the assessment maximum significantly, the schedule of
maxima used in §§602 and 603 assumes the 48 percent
rate because it is the rate likely to apply in all but
a small minority of cases in which assessments are
likely.
* TC = .07 (i.e., 7%). This is the current rate of the
U. S. investment tax credit.
* CCE, OP - maximum figure in range. To obtain the
maximum assessment when CCE and OP may assume any
value over a specified range, CCE and OP are set
at the upper limits of their respective ranges.
An Example: Derivation
of a Maximum Assessment
The following computations illustrate the calculation of
the civil assessment for the upper left cell in Schedule A of
§602(d) of the Air Compliance Civil Assessment Regulations.
(This cell is for cases with cost of equipment, CCE=$2500 and
annual operating cost, OP=$1000. Other input variables are
set at the values specified above.)
-------
111-10
PVO . .52 (&*»)
20
PVIE
PVE =
.93 -
/I
1 -ll
, /I
L v1
.48
5(.20)
+ .15\2° "
+ .20/
+ .15\5
+ .2oy
(1
(1607.25)
- 7152.23
2500 = 1607.25
4806.26
.015719
•i _
(1+20)20
CA = (7152.23 +4806.26) .015719 = 187.98
For this example the civil assessment would be $187,
for each month in which the polluter failed to comply with
sions standards.
[by (2)]
[by (3)]
[by (4)J
[by (5)]
[by (1)]
,98
emis-'
SETTING
INDIVIDUAL ASSESSMENTS
Individual assessments are determined using the same
economics and assessment formula as were used to fix the maximum
assessment schedules. However, the Department will utilize cur-
rent, real values for CCE, OP, EL, DL, RI , T, TC and CC.
* Equipment Costs (CCE) will be based on Department
estimates of the installed equipment costs re-
quired to bring an uncontrolled source into com-
pliance or on evidence of the actual cost.
(See Chapter II.)
* Operating and Maintenance Expenses (OP) will be
based on Department estimates of the annual cost
of operating and maintaining this equipment prop-
erly. (See Chapter II.)
* Equipment Life (EL) is 10 years unless the
Commissioner determines otherwise in a correc-
tion hearing. He will use reliable tables from,
e.g. the U. S. EPA and/or IRS, in doing so.
Depreciable Life (PL) is 5 years unless Federal
tax law changes or unless the Commissioner de-
termines that the lifetime of a particular piece
of equipment (and therefore its depreciable life)
is less than five years.
-------
III-ll
* The Rate of Inflation (Deflation)(RI) will be
valued as an average of recent annual rates based
on an appropriate price index. (See Chapter III.)
* The U. S. Income Tax Rate (T) applicable to the
source will be assumed to be 48 percent if the
source is a corporation (with very limited excep-
tions) and zero percent if it is a public body or
a nonprofit institution. The rate will vary if
the source is an individual or partnership. (See
Chapter IV.)
* The Investment Tax Credit (1C) will be the rate
set in the current tax law.Tit is now 7 percent.)
* The Cost of Capital (CC) will be set in most cases
as the marginal rate obtaining in the industry at
the time. (See Chapter V.)
The following chapters explain how to estimate installed
capital and annual O&M costs, how to adjust for inflation, how
to take different individual tax rates into account, and how to
obtain the cost of capital so critical to the formula.
-------
111-12
CHAPTER II
ESTIMATING EQUIPMENT AND OPERATING COSTS
The most important variables in the assessment calculation
are the installed equipment costs and the annual expense of
operating and maintaining the equipment. To impose civil assess-
ments at the appropriate level, the Department must be able to
estimate what the equipment and operating costs for a source
will be easily and accurately.
HOW THE COSTS OF
COMPLIANCE ARE ESTIMATED
In roughly 88 percent of the Air Compliance Unit's enforcement
cases, the costs of compliance can be estimated with the help of
cost curves. These curves measure the relationship between one
or two readily available facts, primarily the volume of air that
must be treated and the type of pollutant involved, and the cost
of the necessary control measures. Thus, for example, for any
particulate emission, the control costs (for either a baghouse,
a wet scrubber, or an electrostatic precipitator) can be
related to the flue gas flow rate of the process emitting the
particulates. With these curves available, all a Department
staff member need do to obtain reliable cost estimates is to
* determine the key variables (flow, type of
pollutant) necessary to use the curves;
* decide what control technique (baghouse,
scrubber, etc.) is most likely to achieve
compliance with the State's environmental
standards;
* read the cost estimates off the appropriate
cost curves.
The full set of curves that have been developed to date, along
with a discussion of how they were derived and tested, and of
how they should be used, follows in Chapter VII of Part V of
this Volume.
Given the enormous variety of situations requiring control,
there will inevitably be cases for which curves have not been
developed. In these cases tests of Department staff indicate
that estimates, accurate within 20 percent, can be obtained in
one to sixteen hours a case. (See Chapter VII of Part V again)
The fact that such estimates will be necessary for only a few
percent (because most sources will not require assessments)
of a small minority of all cases (because cost curves are
available for the majority) makes the time required for making
such case-by-case estimates an easily managed administrative
cost.
-------
Ill-13
An example will help clarify how cost curves would be used
in most cases.
Using Cost
Curves; An Example
Let's see what the Department would have to do to estimate
the costs of compliance in the following case: a brass manu-
facturer who emits particulates from an uncontrolled reverbatory-
type furnace used to melt zinc containing brass. From informa-
tion furnished on the Department's registration form (or from an
on-site inspection) a Department engineer determines that the
process emission rate is 252 pounds per hour, and that the pro-
cess weight rate is 7200 pounds per hour. He also determines
that the currently installed hooding captures virtually all
emitted particulates with the fan operating at 22,000 actual feet
per minute (ACFM) during maximum loading conditions. Since the
Department's regulations permit an emission rate of only 7.8
pounds per hour for a plant of this size, the brass manufacturer
is in clear violation of the Department's regulations.
In comparing the magnitude of the process emission rate
(252 pounds per hour) to the Department regulation allowing 7.8
pounds per hour, the Department engineer ascertains that compli-
ance will require a control strategy with 97 percent efficiency.
This required efficiency, coupled with an industry preference
for the use of dry collection systems wherever possible, leads
the engineer to choose a baghouse as the method of control for
which he must develop cost estimates.
With this information about operating parameters and type
of control equipment, the Department engineer turns to the appro-
priate costing curves developed and maintained by the Department.
The relevant curves are reproduced below.
Since the gas volume flow rate to be controlled is 22,000
ACFM, the cost curves indicate that equipment costs for the bag-
house will be $54,000 and that the annual operating costs will
be $15,000.
The curves for equipment costs (CCE in the assessment for-
mula) and operating and maintenance costs (OP) follow:
-------
111-14
Installed Cost Of Baghouses
-Particulate Control-
1000
100
tn
O
Q
O
en
CQ
O
EH
10
-p
en
O
CJ
-------
111-15
Annual Operating i& Maintenance Cost Of Baghouses
-Particulate Control-
100
CO
V-l
(0
o
Q
O
W
•O
c
(0
W
10
-P
CO
O
U
(1)
O
c
(U
-p
c
•H
(0
s
•H
-P
OJ
04
O
ffl
c
.5
.1
.1
Example O&M Cost =
$15,000/yr.
- - ,- L-'-j
t" ftcltuai ^Conn. !
Coisting Data
Gas Volume Through Collector
(Thousands of ACFM)
Figure 13
-------
II1-16
CHAPTER III
HANDLING INFLATION
Inflation affects both the purchase price of replacement
equipment and the annual operating and maintenance costs. The
significance of taking inflation into account in estimating
the cash flow of the costs of compliance over a period of years
hardly needs to be underlined after the experience of the last
several years. Plant costs have increased almost 25 percent
in 1972-74, and operating and maintenance costs, which reflect
chiefly labor and energy costs, have been even more volatile.
INDEXING
INFLATION
The economic assessment formula adjusts the estimated costs
of compliance cash flow for inflation. All the Department need
do is adjust the figure used as the assumed inflation (deflation)
rate each year to reflect the average experience of the previous
three years. A three-year rolling average is used to flatten
out sudden sharp shifts in the rate both to reduce sudden shifts
in assessment levels and because people making capital decisions
similarly "smooth" adjustments in their "inflation expectations".
The civil assessment regulations allow the Commissioner to
peg the inflation rate used in the assessment calculus to what-
ever index or indexes of price change he finds most appropri-
ate. The U. S. Bureau of Labor Statistics, although it com-
piles cost indexes for hundreds of products and commodities,
does not yet prepare a pollution control index.
The best available index is the CE Plant Cost Index pub-
lished by the trade journal, Chemical Engineering. It contains
four major components: (1) equipment machinery and supports,
(2) construction labor, (3) building materials and labor, and
(4) engineering supervision and manpower. This weighted index
is generally accepted in the engineering profession as a highly
accurate and reliable guide, and is currently used by the U. S.
Environmental Protection Agency to update Agency publications.
-------
111-17
Using this index, the rate of inflation (RI) the Department
would use in its economic assessment calculus throughout 1975
would be 7.9 percent:
CALCULATING THE RATE OF INFLATION
CE Plant Cost Xndex (1957-59 = 100)
19b
188
180
172
164
156
148
i
1
1
a:
37
L>
3_
/
'
.rf
/
/
/
/
s
^
4*
**
>i -U
c u >( ^ a >
(0 <3 (0 3 0) O
•3 S S "n w 2
Annual Index
1969 = 119.0
1970 = 125.7
1971 = 132.2
1972 = 137.2
1973 = 144.1
1974 = 165.4
Inflation Rate 3 Year Average
3.8%
} 5.0%
14.8%
7.9%
-------
111-18
CHAPTER IV
ADJUSTING FOR INDIVIDUAL
INCOME TAX RATES
The civil assessment formula (explained in Chapter I)
assumes that the person subject to assessment is in a 48 percent
income tax bracket. This is a workably accurate assumption for
over 80 percent of all companies. However, there are a few com-
panies that will have lower tax rates. Moreover, most individuals
and partnerships will be taxed at a lower rate, and municipalities
and nonprofit institutions are not subject to tax at all. For
these cases the Department may wish to adjust the formula's tax
assumption.
A source that does not pay income tax would be subject to
a civil assessment roughly twice that of persons who are taxed
at the 48 percent rate, assuming that the Department decides to
adjust the formula for differences in tax rate. This is so be-
cause investing in and operating abatement facilities generates
a series of tax deductions and credits. These tax benefits be-
come more significant the higher the source's income tax is.
The entire capital cost of the facility becomes a series of de-
ductions through the tax laws' depreciation provisions, and these
provisions allow especially accelerated depreciation on pollution
control investments. The costs of operating and maintaining the
facility are deductible in exactly the same manner as other
business expenses. Further, pollution abatement investments
are eligible for an investment tax credit. Without adjustment,
the formula takes all these tax benefits into account automatic-
ally, at the 48 percent income tax rate.
Whether and how the Department wants to go about adjusting
for differences in individual regulatees tax rates depends on
whether it is dealing with corporations, individuals/partner-
ships, or municipalities.
Corporations
Generally the Department will not have to worry about adjust-
ing for individual income tax rates where corporations are con-
cerned. There are three types of corporations that may have
low income tax rates: (1) companies operating at a loss, (2)
companies that benefit from extraordinary tax deductions or
credits, notably depletion allowances, even though they are
operating profitably and (3) very small companies.
Companies operating at a loss generally do not expect to
continue profitless for long. When they do become profitable,
-------
111-19
they will be able to use the tax advantages that accumulated
during the period during which they were operating at a loss.
Consequently, such companies will not alter their evaluation of
of what an abatement project will cost them after tax signifi-
cantly. Moreover, their calculations and the CEP formula take
into account the after-tax costs of any commitment well into the
future, and the normal businessman is most unlikely to assume
that he will be operating unprofitably continuously for twenty
years. In other words, the Department need not worry about
adjusting the formula for companies operating temporarily at a
loss.
Companies with low tax rates because of extensive deduction
and credits other than for operating losses are, however, a more
serious problem. Special provisions in the tax laws, most not-
ably depletion allowances that benefit companies involved in
extractive activities, can largely or entirely eliminate a com-
pany's income tax liability. U. S. Steel and Occidental Petrol-
eum, for example, pay negligible income taxes because of the
tax cover such provisions allow. For such companies the after
tax cost of an abatement investment is much higher than for
most other businesses. However, the situation is likely to be
relatively rare, especially given recent Congressional action
to reduce and eliminate the oil depletion allowances. Therefore,
unless the Department is dealing with an extractive industry,
the Department staff should probably not worry about such cases.
Very small companies will be taxed at significantly lower
rates, because the tax on corporations _is graduated. This year
the rate is 20 percent for the' first $2*5,000 of taxable income,
22 percent for the second $25,000 of taxable income, and 48 per-
cent for taxable income in excess of $50,000. This schedule of
rates is effective for 1975 only. If it is not extended or other-
wise changed, the former schedule will apply. Those rates are 22
percent for the first $25,000, 26 percent for the second $25,000,
and 48 percent thereafter. Where a corporation's taxable income
is sufficiently low that its overall tax rate deviates substan-
tially from 48 percent, the Department may well want to modify
the formula's income tax rate assumptions to fit the specific
facts of the case.
Individuals
and Partnerships
When the Department is dealing with individuals or partner-
ships, it should initially assume a tax rate of 19 percent for
individuals (the approximate Connecticut average for household
heads in 1972) and 18 percent for partnerships (the approximate
Connecticut average for manufacturing partners in 1969). In
addition, given the wide range of effective tax rates paid by
such persons, the Department will want to adjust its tax assess-
ment formula from case to case. How it can do so at low cost is
outlined in the section immediately after the brief discussion
of municipalities.
"T
-------
111-20
Municipalities and
Non-Profit Institutions
Municipalities and non-profit institutions do not pay income
tax and therefore derive no tax benefits from whatever capital
or operating and maintenance expenses they incur in order to
abate pollution. When dealing with such institutions, the
Department should adjust its civil assessment formula to assume
a zero tax rate.
OBTAINING INDIVIDUAL
TAX RATES
When the Department decides it must obtain individual tax
rates in order to set accurate civil assessments, it can do so
in two relatively simple ways:
* It can ask the regulatee to submit (1) its most
recent balance sheets and income statements if it
is a business and (2) its most recent income tax
statement if the regulatee is an individual. This
statement is private information, and can be ob-
tained from the IRS only by a state tax agency.
However, the civil assessment regulations specific-
ally provide that the Department can require such
information, including financial data, as it needs
from the regulatee. Moreover, since individuals
who are likely to be subject to civil assessments
are also likely to be taxed at above average rates,
the information will probably be provided voluntarily.
* For companies, especially publicly-held companies,
this information is a matter of public record and
may be found routinely in financial and investment
publications such as Moody"s Industrial Manual or
the Value Line Investment Survey.(The first of
these works is available in the Connecticut State
Library.)
ADJUSTING THE FORMULA FOR
CHANGES IN THE TAX LAWS
In applying civil assessments in individual cases, Depart-
ment staff will not have to research or work through the impact
-------
Ill-21
of specific tax provisions. All this is handled automatically
by the formula.
However, from time to time the provisions of the tax laws
are changed. The investment tax credit is especially likely
to be changed with cyclical change in the economy. The pro-
visions in the formula should be changed accordingly. Chapter
I identifies exactly where such adjustments should be made in
the formula for each of the taxes that may have to be adjusted.
-------
111-22
CHAPTER V
USING THE COST OF CAPITAL
One of the innovations of the Connecticut Enforcement Project
is the attempt to put the regulatory agency into the shoes of the
regulatee. Just as businessmen faced with environmental regulation
focus immediately on the cost of raising and using money to meet
environmental standards now and in the future, so must economic
civil assessments take the current and continuing costs of using
money into account.
Once the cost of compliance cash flow (which describes the
cash outlays that will be required in each year of a control pro-
gram) has been established, the economic assessment formula dis-
counts it at the cost of capital rate appropriate to the particu-
lar regulatee to a present value. If the cost of capital is 10
percent, expenditures of a year from now ©f $1,100 would be dis-
counted to a present value of $1000 (i.e., 1100/(1 + .10)).
Such discounting is necessary because ten dollars of expense
three years from now is less painful than ten dollars due now.
It is less painful because, over the three years one retains those
ten dollars one can use them. If, for example, one could obtain
a ten percent yield on one's resources in each of the three years,
one would be justified in feeling that the net reduction in one's
current worth attributable to this future ten dollar expense is
$7.51([
Businessmen evaluating the costs of different investment
projects, including abatement projects, have to take the time
value of money into account. They are keenly aware that $10 spent
three years in the future entails considerably less cost than $10
spent now. Similarly, $10 received (or saved in taxes) three
years hence is less valuable than such a saying received immedi-
ately. They consider the total present value of a project as its
immediate costs plus future costs, reduced by a discount factor
equal to the time value of money.
USING THE
COST OF CAPITAL
The cost of capital to a regulatee is its marginal cost
per year of obtaining additional capital funds.
For most businesses, the cost of capital is the weighted
average of the costs of debt (e.g. bond issues or bank debt)
and equity (e.g. sales of common stock). If a company's capi-
tal is 50 percent debt with a marginal cost of 10 percent, and
50 percent equity with a current cost of 20 percent, the com-
pany's cost of capital will be 15 percent.
-------
111-23
The CEP formula uses a marginal cost of capital rate so that
the low interest costs on bonds sold twenty or thirty years ago
do not depress the rate so as to make it a misleading measure of
the current cost of money to the regulatee. The marginal cost
of capital rate also effectively reflects changes in the market
price of money of all sorts. When interest rates go up (and
common stock prices down), the marginal cost of capital will go
up, accurately reflecting the increased cost a regulatee will
have to pay for the resources required for the control project.
The cost of capital is the right discount factor to use in
the economic assessment calculus because (1) it is the cost
business must pay for its money and (2) it therefore represents
a minimum rate of return businessmen must obtain on their in-
vestments. A business will be able to earn at least this rate
of return on any resources available to it, which makes it the
proper discount rate for bringing future costs to present value.
The cost of capital is also a good measure of the opportun-
ity costs of investing in pollution control. Not only are the
outlays required for such expenditures not recouped, but they
clearly generate no income above expenses. In the meantime,
the regulatee must pay its cost of capital rate to obtain the
money needed to pay for the expenditures. The civil assessment
formula discounts future costs by the cost of capital and in-
cludes opportunity costs by using the cost of capital as the
interest rate in the amortization formula. The flat, monthly
rate which is thereby derived represents not only the dollar
cost of control but also an interest component which equals the
minimum rate of return available on the investment. The re-
sulting civil assessment thus offsets not only equipment and
operating cost savings due to noncompliance but also the return
on capital which would be made by investment of these savings
in a profitable venture.
COMPONENTS OF THE
COST OF CAPITAL
Since the cost of capital is the cost of raising or borrow-
ing money, it is natural that different people and businesses
have different costs of capital.
Industry-wide
Costs of Capital
Although the cost of capital is a key tool used all the
time by businessmen and economists, it is hard to pin down
exactly, especially on a company-by-company basis, chiefly be-
cause of the difficulty of measuring the cost of the equity com-
ponent. If equity is based on book value, distortions are
possible for a variety of accounting reasons, e.g. because assets
purchased long ago that have appreciated substantially may still
be carried at book value. Using market value avoids this
-------
111-24
difficulty; in fact, the market adjusts equity values taking
future as well as current value into account. However, market
values (1) are not available for many potential regulatees, and
(2) are subject to sharp swings not always entirely caused by
facts relevant to the particular case. Consequently, litigation
to determine a company's cost of capital is almost always drawn
out, expensive, and unhelpful.
Connecticut's CEP regulations avoid these difficulties
entirely by using industry average cost of capital figures. This
practice has several other, equally important advantages.
* The Department's staff will not have to gather
financial data about each company and go through
a series of financial calculations (with which
most engineers are unfamiliar). Instead, the
staff will only have to decide to which industry
group the regulatee belongs and look up that
industry's cost of capital on a one-page table
maintained by the Department.
* The Department will not have to worry about
adjusting for temporary changes in the strength
of a company's financial condition.
Moreover, the use of industry average data seems an acceptably
accurate surrogate measure of company cost of capital rates.
The CEP calculated the cost of capital for a large number of
Connecticut companies and found relatively small deviations
from the industry average, figures. The courts have long
approved the use of industry average cost of capital figures
in the regulation of individual companies.
The Department has now compiled industry-wide cost of
capital averages for each of the industrial groupings in Connec-
ticut. These averages were derived using the weighted cost of
capital methodology outline above, using data drawn from such
readily available and reliable sources as Standards and Poors,
Financial Dynamics, the Federal Trade Commission's Quarterly
Reports of Financial Data for Manufacturing Companies, and the
Internal Revenue Service's Corporation Income Tax Returns. This
table may be found in Section B in Chapter VII of Part V below.
Municipal Costs
of Capital
Like businesses, municipalities have a cost of capital.
Since bond revenue is usually the only source of raising capital
for most cities, towns, and villages, the municipal cost of
capital is usually equal to the bond rate which must be paid on
newly issued municipal bonds. (While some economists believe
that the governmental cost of capital should reflect the costs
of taking money out of the private sector (and should thus be
equal at least to the average private sector cost of debt), this
theory has not yet achieved general acceptance — at least not
in the governmental community.) Accordingly, the municipal
-------
111-25
cost of capital will be the most recent average municipal bond
rate in Connecticut.
Individual Costs
of Capital
Individuals too have costs of capital, most frequently the
interest rate they must pay on money they borrow. Accordingly,
in instances where civil assessments are to be imposed against
individuals, the individual cost of capital will be the current
average interest rate on generally available personal loans.
-------
PART IV
CIVIL ASSESSMENT REGULATIONS
-------
IV-2
VIOLATING EMISSIONS STANDARDS
ADMINISTRATIVE REGULATIONS
Regulations and notices published herein are
printed exactly as submitted by the forwarding
agencies. These, being official documents
submitted by the responsible agencies, are
consequently not subject to editing by the
Commission on Official Legal Publications.
DEPARTMENT OF ENVIRONMENTAL PROTECTION
Assessment of Civil Penalties for Violation of Air
Emissions Standards and Orders of the
Commissioner
Section 1. The Regulations of Connecticut State
Agencies are amended by adding sections 22a-6b-602 and
22a-6b-603, inclusive, as follows:
Sec. 22a-6b-602(a). Title
This section shall be known and may be cited as "Civil
Penalty Regulations: Emission Violations."
Sec. 22a 6b-602(b). Definitions
(1) "Assessment period" means the period of time,
expressed in months or portions thereof, during which
a regulatce has failed to incur all the expenses necessary
to insure immediate and continued compliance with ap-
plicnblc emission standards except that it does not in-
clude the time that a person is under a final order of the
Commissioner, or the "order assessment period" defined
in Section 22a-6b-603(b), or any period before the date on
which Sections 22a-6b-G02 and 22a-6b-603 of the Civil
Penalty regulations become effective.
(2) "Civil penalties final order" means an order of
the Commissioner issued pursuant to Sections 22a-6b-101,
2l!;i-Gb-G02, and 22a-Gb-603 of the Civil Penalty Regula-
tions which has become final by the passage of time or
by the consent of the regulatce or after hearing.
(3) "Commissioner" means the Commissioner of the
Department of Environmental Protection or his lawfully
designated agent.
(4) "Compliance timetable" means the schedule of
dates by which a person under a final order is to come
into compliance with Department regulations.
(5) "Cost of capital" means cither: (i) the weighted
average of the marginal rates the Commissioner finds a
person or class of persons typically must pay per year
for debt and owner's equity or (ii) the annual rate of
return or of savings that the Commissioner finds a per-
son or class of persons could achieve with a sum of
money equal to the cost of compliance; as determined
by the Commissioner for a person or class of persons.
'6) "Cost of compliance" means the net, after tax,
estimated present value of the sum of equipment costs,
operating costs, and all other costs and savings the reg-
nlatee will experience in order to come into compliance
inclndins, but not limited to inflation, depreciation, such
replacement costs as will later be necessary to replace
capital equipment that has either worn out or become
obsolete, ami a discount rate equal to the cost, of capital.
(7) "Department" means the Department of Environ-
mental Protection.
(8) "Depreciable life" means the time period of useful
life expectancy for capital plant and equipment. This
period shall be defined as 10 years until and unless the
Commissioner finds otherwise pursuant to Section 22a-6b-
602(g) (2) in which case he may consider the depreciation
periods allowed for tax purposes by the U. S. Internal
Revenue Service and such other guides as he determines
are similarly reliable.
(9) "Depreciation" means the amortization of equip-
ment costs over their depreciable life.
(10) "Emit" means the act of releasing or discharg-
ing or causing to be released or discharged any air pol-
lutant in violation of the terms of Sections 19-508-9 and
19-508-18 to 19-508-22, inclusive, of the Regulations for
the Abatement of Air Pollution. An "emissions standard"
is any requirement set forth in Sections 19-508-9 and
19-508-18 to 19-508-22, inclusive, and an "emissions viola-
tion" is a violation of an emissions standard.
(11) "Equipment costs" means the installed capital
costs of such equipment as is or may be required to bring
an unabated activity into compliance with applicable
emission standards. Such costs shall include, but not be
limited to, the cost of equipment required to control
emissions effectively, auxilliary equipment, technical and
engineering services, and all development and start-up
costs including labor, materials and necessary testing.
For the purpose of estimating the cost of compliance
prior to the date that the unabated activity has been
brought into compliance with applicable emissions stand-
ards, the Commissioner may assume that what he finds
to be the most environmentally effective and reliable
equipment available will be used. The Commissioner
shall, upon petition by the regulatce once the regulatee
has come into compliance, correct the penalty due using
actual equipment costs pursuant to Section 22a-6b-602(g)
(2).
(12) "Final order" means an order of the Commis-
sioner issued pursuant to Title 19, Chapter 360, Sections
19-508, 19-510, 19-514, 19-51,r> and/or 19-517 of the Con-
necticut General Statutes which has become final by the
passage of time or by the consent of the regulatee or
after hearing.
(13) "Inflation" means the average annual rate of in-
flation as measured by the changes in the Wholesale Price
Index prepared by the United States Department of
Labor or such other index of inflation as the Commis-
sioner may determine is most appropriate over the 3 years
prior to the year in which the civil penalty is to be
assessed.
(14) "Operating costs" means the non-depreciable
annual costs for the operation and maintenance of equip-
ment and processes required for the abatement, of air
pollution which will protect installed control equipment
and insure continuous compliance with applicable emis-
sion standards.
(15) "Person" includes every individual, firm, part-
nership, association, syndicate, company, trust, corpora-
tion, municipality, and any other legal entity.
(16) "Regulatee" means a person who owns or operates
a process or piece of property that has been, is, or may
become an unabated activity.
(17) "Unabated activity" means the ownership or
operation of any process or piece of property, real or
personal, which (i) emits or causes to be emitted, any
air pollutant in excess of the emission standards pre-
scribed in Section 19-508-9 and 19-508-18 to 19-508-22,
inclusive, of the Regulations for the Abatement of Air
Pollution or (ii) is not equipped or operated with the
emission controls required by Sections 39-508-18 to 19-
508-22 Ownership or operation of each such process or
piece of property is a separate "unabated activity" re-
gardless of the number of identical or closely simila^
processes or pieces of property owned by the same per-
son or located on the same premises.
-------
IV-3
Sec. 22a-6b-602(c). Civil penalties for violating emis-
sion standards
Any person carrying on an unabated activity shall be
liable for a civil penalty assessed by the Commissioner
pursuant to Public Act 73-665, Section 2(a)(2), and in
accordance with the procedures prescribed in Section
22a-6b-100 to 22a-6b-102, inclusive, of the Civil Penalty
Regulations.
Sec. 22a-6b-C02(d). Schedule of maximum assessments
(1) Persons maintaining unabated activities may be
assessed monthly amounts for each snch activity no
greater than the amount listed in the following schedule
for the combination of equipment costs and operating
costs wliicli will be or has been required to bring the
unabated activity into compliance with applicable emis-
sions standards.
(2) The maximum monthly amounts set forth in this
schedule represent the economic advantages a person
responsible for an unabated activity could gain from one
month's delay in bringing that activity into compliance
assuming economic and tax conditions all tending to in-
crease the value to the rcgulatec of such delay. These
maximum amounts have been calculated in three broad
steps, a gross cash flow for each set of compliance ex-
penditures, chiefly equipment costs and operating costs,
is defined, this gross cash flow is discounted to present
value; and tlie maximum monthly civil penalty is cal-
culated as that amount which would, if paid monthly,
amortize the gross present value of the proje.ct. The
Commissioner shall provide a written explanation of
these calculations upon request.
(3) The Commissioner shall impose lesser penalties
pursuant to Section 22a-Cb-602(e)(l-2) if he finds the
probable advantages of delay are smaller than indicated
in this schedule, and he may further lower these penal-
ties puisuant to Sections 22a-6b-602(e)(5) and/or 22a-
6b-G02(g).
(4) In no ease shall the assessment exceed $25,000 plus
$1000 for caeli day that the unabated activity continues
after the regulatee has received a civil penalties final
order.
(5) The Commissioner has determined that the reme-
dies provided by this schedule will insure immediate and
continued compliance and will protect (i) the public
health, safety, and welfare; (ii) the public trust in the
air, water, land and other natural resources of the state;
and (iii) the reasonable use of property.
Sec. 22a-6b-602(e). Determination of amount in individ-
ual cases
(1) The Commissioner shall determine the amount of
the monthly civil penalty he may assess for any individ-
ual unabated activity based on the actual or probable
cost of compliance required of that particular activity.
Individual assessments are calculated in four broad
steps: the gross cash flow of the required compliance
expenditures, chiefly equipment costs and operating
costs, is determined; the net cash flow is established by
taking tax and other savings into account; this net cash
flow is discounted to present value; and the individual
monthly civil penalty is calculated as that amount which
would, if paid monthly, amortize the net present value
of the project.
(2) The Commissioner shall calculate the total civil
penalty by multiplying the monthly civil penalty by the
number of months or fractions thereof in the assessment
period.
(3) The Commissioner shall provide a written explana-
tion of this methodology upon request. lie shall also
provide a written summary of the calculations used,to
determine a particular assessment, except to the extent
he is required to maintain the confidentiality of certain
information pursuant to Section 22a-6b-602(i), upon
written request by an interested party or the affected
regulatee.
(4) In no case shall an individual assessment exceed
cither (i) the maximum civil penalty Section 22a-Cb-
602(d) would allow per month for an unabated activity
with the same equipment costs and operating costs or
(ii) for the total civil penalty due during the entire
assessment period, $25,000 plus $JOOO for each day that
the unabated activity continues after the regulateo has
received a civil penalties final order.
Schedule at Maximum Allowable Monthly Civil Fcnnlties lor an Unobnted Activity with Specified Coats.
Operating
Costs
$0-1000
$1001 2."iOO
$25111 5000
$5001-7500
$7501-10,000
$10,001-15,000
$15,001-20,000
$20,001-25,000
$2,"i, 00 1-35,000
$35,001-.r>0,000
$50,001-75,000
$75,001-100,000
$100,001-200,000
$200,001-350,000
Equipment Costs
,§
188.
357.
638.
919.
1200.
1762.
2324.
2886.
4011.
5697.
8508.
11318.
22561.
39425.
11
win
263.
432.
713.
994.
1275.
1837.
2400.
2962.
4086.
5772.
8583.
11394.
22837.
39501.
it
as
415.
583.
864.
1145.
1426.
1989.
2551.
3113.
4237.
5924.
8734.
11545.
22788.
39652.
§S
II
717.
885.
1166.
1448.
1729.
2299.
2853.
3415.
4539.
6226.
9036.
11847.
23090.
39954.
o o
00
It
1170.
1339.
1620.
1901.
2182.
2744.
3306.
3868.
4993.
6679.
9490.
12300.
23543.
40407.
||
1623.
1792.
2073.
2354.
2635.
3197.
3759.
4321.
5446.
7132.
9943.
12754.
23996.
40861.
||
2227.
2396.
2677.
2958.
3239.
3801.
4364.
4926.
6050.
7736.
10547.
13358.
24601.
4146o.
rH O
S8
Iff
3134.
3303.
3584.
3865.
4146.
4708.
5270.
5832.
6957.
8643.
11454.
14264.
25507.
42371.
$100,001-
150,000
4645.
4813.
5094.
5375.
5857.
6219.
6781.
7343.
8467.
10154.
12964.
15775.
27018.
43882.
$150,001-
200,000
6155.
6324.
6605.
6886.
7167.
7729.
8292.
8854.
9978.
11664.
14475.
17286.
28528.
45393.
$200,001-
300,000
9177.
9346.
9627.
9908.
10189.
10751.
11313.
11875.
13000.
14686.
17497.
20307.
31550.
48415.
$300,001-
500,000
15220.
15389.
15670.
15951.
16232.
16794.
17356.
17918.
19043.
20729.
23540.
26350.
37593.
54458.
§1 11
I! 51
30328. •
30496. *
30777. "
31038. *
31340. *
31902. "
32464. *
33026.
34150. •
35837. *
38647. *
41458. •
52701. *
* *
$350,001-nnd nbove ••««••••••"
a civil penalties final order.
-------
IV-4
(5) In setting a civil penalty in a particular ease, the
Commissioner shall consider all factors which he deems
relevant, including, but not limited to those listed below;
and he may, as a result of considering ami balancing
these factors, lower the civil penalty. The factors he
shall consider include:
(i) The amount of the assessment necessary to insure
immediate and continued compliance;
(ii) The character and degree of impact the, unabated
activity has on the public trust in the air, water, and
land and on the natural resources of the state, especially
any rare or unique natural phenomena;
(iii) The character and degree of injury to, or inter-
ference with, public health, safety or welfare which is
caused or threatened to be caused by the unabated
activity;
(iv) The conduct of the person incurring the civil
penally in taking all feasible steps or procedures neces-
sary nr appropriate to comply or to correct the unabated
activity;
(v) Any prior violations by such person of statutes,
regulations, orders or permits administered, adopted or
issued by the Commissioner;
(vi) The economic and financial conditions of such
person;
(vii) The character and degree of injury to, or inter-
ference with reasonable use of property which is caused
or threatened to be caused by such unabated activity.
Sec. 22a-6b-602(f). Enforcement proceedings
(1) Warning letter. If the Commissioner finds that
an emissions violation has probably occurred, he shall
send the responsible regulatee a civil penalties warning
letter by certified mail or by personal delivery or service.
This letter shall notify the regulatee that the Commis-
sioner hns reason to believe a violation has occurred. For
those cases to which Sections 22a-6b-G02(g)(4)(i) and
22a-Cb-G02(g)(4)(ii) apply, this warning letter shall also
notify the regulatee that it may be able to avoid the
imposition of civil penalties under Section 22a-Gb-G02 if
it takes prompt and effective action pursuant to the
terms of Section 22a-6b-602(g) (4).
(2) Hearings, (i) Any person in receipt of a notice
of violation issued pursuant to Section 22a-6b-i01(a) of
the Civil Penalty Regulations may apply to the Commis-
sioner for a hearing pursuant to Section 22a-6o-101(b).
(ii) Such hearing shall be conducted by the Commis-
sioner, a Deputy Commissioner, or a hearing officer from
the Office of Adjudication of the Department. Such hear-
ing shall be conducted pursuant to Sections 4-177 to
4-185, inclusive, of the General Statutes and to the Rules
of Practice of the Department.
(iii) The Department shall have the burden of pro-
ducing evidence to prove the emissions violation that
provides the basis for imposing the penalty and the rea-
sonableness of the proposed assessment, and the risk of
non-persuasion by a preponderance of the evidence shall
fall upon the Department.
(iv) If the Commissioner, Deputy Commissioner, or
hearing officer presiding at the hearing determines that
information important to an accurate determination of
.•ill or part of the civil penalty amount is not available
at the time of the hearing but will become available
later, he may defer determining the amount of the civil
penalty due until he establishes that the previously miss-
ing information is availnble, Jit which time he shall
promptly hold a hearing pursuant to Section 22a-6b-G02
((,')(2) regarding the amount of the civil penalty due.
lie may not collect any portion of the civil penalty until
this hearing is held and a eivil penalties final order issued.
(I!) Appeals. Any person may appeal a eivil penalty
final order of the Commissioner issued after a hearing
pursuant to Section 2(f) of Public Act 73-GG5.
Sec. 22a-6b-602(g). Mitigation
(1) General. The Commissioner may mitigate any eivil
penalty upon such terms as he in his discretion deems
proper or necessary upon consideration of the factors
set forth in Sections 2(b) and 2(c) of Public Act 73-665.
(2) Correction of penalties, (i) A regulatee in receipt
of a notice of violation issued pursuant to Section 22a-
6b-10i(a) of the Civil Penalty Regulations may petition
the Commissioner for correction of the civil penalty as-
sessed against him at any time up to two years after
the Commissioner finds that the regulatee has come into
compliance. Such petition shall set forth in writing any
evidence that the cost of compliance has been or will be
less than the Commissioner had initially determined in
assessing the civil penalty, and it shall be sent by cer-
tified mail or personal service to the Commissioner or
the Director of Air Compliance.
(ii) The Commissioner may, in response to such a
petition or at his own initiative, lower an assessment he
determines was excessive. If the Commissioner takes no
action in response to such a petition, or if his response
is not satisfactory to the regulatee, the regulatee may
obtain a hearing of right once it has come into compli-
ance or at any other time specified in a final order or a
civil penalties final order. Following such a hearing the
Commissioner shall mitigate the civil penalty if and to
the extent that the actual cost of compliance has been
less than he had initially determined.
(iii) Refunds shall be made with interest calculated
from the time of payment and at the cost of capital rate
used to assess the civil penalty.
(3) Reduction of the assessment period for delays
beyond the regulatee's control. The Commissioner shall
exclude from tlie assessment period such periods of non-
compliance as the regulatee proves have been caused by
strikes or lockouts; riots, wars, or other acts of violence;
floods, hurricanes, or other Acts of God j or other equally
severe, unforeseeable and uncorrectible accidents; where
such acts or events were occasioned directly upon the
rcgulatce or a person under contract to the regulatee.
In addition, the Commissioner shall exclude from the
assessment period such periods of non-compliance as
were occasioned by delays attributable to the Air Com-
pliance Unit of the Department in excess of routine proc-
essing times. Nothing in this section shall prohibit a
regulatee from proposing, or the Department from ac-
cepting, a compliance timetable which excludes from the
assessment period periods of non-compliance caused by
other acts cr events beyond the control of the regulatee,
such as contractors' or suppliers' delays.
(4) Nonimposition during prompt compliance, (i) If,
vipon receipt of a warning letter defined in Section 22a-
6b-602(f)(l) and continuously thereafter until (a) the
end of ninety days or such longer period as the Com-
missioner may allow or (b) at the end of the assessment
period, whichever occurs first, the regulatee takes all
steps necessary to bring the unabated activity promptly
and effectively into continuing compliance with appli-
cable emissions standards, the Commissioner shall not im-
pose the civil penalty assessable under section 22a-6b-
602 before (a) the end of the ninety day period or such
longer period as the Commissioner may allow or (b) the
end of the assessment period, whichever occurs first.
(ii) If the warning letter requests preparation of a
compliance plan, the regulatee shall be deemed to have
ta'ken prompt and effective action during the period
between receipt of such a request and submission of the
requested plan if (a) the plan is a detailed written plan
of action including a timetable which, once implemented,
will achieve compliance as promptly and effectively as
possible and if (b) it is submitted no later than forty
days after receipt of such a request. The regulatee shall
also be deemed to have taken prompt and effective action,
-------
IV-5
even though it takes no further steps, during the sub-
sequent period between its submission of such a satis-
factory plan of action and five days after it has been
notified that the Department has completed its review
of the plan and/or has issued a compliance order!
Thereafter — and, if the warning letter does not request
the preparation of a compliance plan, from the time the
regulatee receives the warning letter — the rcgulatee
must take all steps necessary to achieve continuing com-
pliance as promptly and effectively as possible if it is to
meet the standard of performance required in Section
22a-6b-602(g)(4)(i).
(hi) Sections 22a-6b-602(g)(4)(i) and 22a-6b-602(g)
(4) (ii) shall not apply to persons to whom the Depart-
ment has, within the preceding 5 years, issued a written
order under Section 19-508-12 (b) (2) of the Regulations
for the Abatement of Air Pollution; or a warning letter
under Section 22a-6b-602(f)(l) of this regulation; or
actual written notice that that person has been found
in violation of one or more emissions standards; or
actual written notice both of the duty to comply with
the relevant requirements of Sections 19-508-9 and 19-
508-18 to 19-508-22, inclusive, and of the potential lia-
bility to civil penalties for failure to do so; provided
that such prior order, warning letter, or actual notice
(1) refers to the same section(s) of the Department's
Regulations for the Abatement of Air Pollution that are
the subject of the current action and (2) was given by
certified mail or by personal delivery or service.
(5) Notice, (i) The Commissioner shall report every
case in which he lowers a civil penalty pursuant to Sec-
tion 22a-6b-602(e) or in which he mitigates a civil pen-
alty pursuant to Sections 22a-6b-602(g) (1-3), if the
monthly civil penalty without such lowering or mitiga-
tion would be greater than three hundred dollars, in the
Monthly Report of Activities of the Air Compliance Unit.
This report shall state the name and address of the
regulatee, the amount of the reduction, the amount of
the civil penalty still to be assessed, and the grounds for
such lowering or mitigation.
(ii) The Commissioner shall also send written notice
to all persons who have, within the proceeding twelve
months, requested copies of this Monthly Report, cither
thiough the Monthly Report or otherwise, of any hear-
ings to be held regarding such cases where the amount
of the civil penalty may be an issue at least ten days prior
to the hearing.
Sec. 22a-6b-602(h). Limited inclusion of past failure to
abate in the assessment period
If the Commissioner finds that it is reasonable to infer
that the emissions violation(s) for which a civil penalty
is being assessed arc the result of a regulatce's past
failure to make the control expenditures necessary to
bring the similar activities into compliance with appli-
cable emissions standards, and if the regulatee is not
protected from the imposition of civil penalties pursuant
to Section 22a-6b-602(g)(4), the Commissioner may in-
clude the period of such pro-violation failure in the as-
sessment period used to calculate the civil penalty as
prescribed in Section 22a-6b-602(e) subject to the fol-
lowing limitations:
(1) No assessment period shall begin before the date
on which this regulation becomes effective;
(2) No assessment period shall include a pre-detection
period greater than two years.
Sec. 22a-6b-602(i). Request for information by the
commissioner
(1) The Commissioner may require the regulatee to
provide such additional information, including informa-
tion regarding costs, as he deems necessary to effectuate
the purposes of Section 22a-6b-602.
(2) Any person who files any statement, record or
report with the Commissioner containing false or mis-
leading information or other claims will be liable to
criminal prosecution for a Class A misdemeanor punish-
able by imprisonment for a period of up to one year and
a fine of up to one thousand dollars ($1000) for each
violation pursuant to Section 53a-157 of the Connecticut
General Statutes.
(3) Any information disclosing trade secrets and com-
mercial or financial information provided by a regulatee
pursuant to this section will remain confidential if the
rcgulatee so requests in a letter sent by certified mail or
personal service to the Commissioner or the Director of
Air Compliance, except that such information may be
disclosed to other officers, employees, or authorized rep-
resentatives of the state concerned with carrying out
these regulations or when relevant in any hearing con-
ducted under the authority of these regulations by the
Department of Environmental Protection or in any judi-
cial proceeding, subject to such safeguards as the hear-
ing officer or presiding judge may impose.
Sec. 22a-6b-602(j). Collection
(1) Payment of the civil penalties assessed under this
section may be required monthly, or at such time or time
intervals as the Commissioner determines will most effec-
tively limit the Department's administrative costs and
further the objectives defined in Section 22a-6b-602(d).
(2) The present value of the total civil penalty as-
sessed, calculated at the time the notice of violation is
issued, shall be held constant regardless of the timing
of its collection.
-------
IV-6
VIOLATING THE TERMS OF AN ORDER
ADMINISTRATIVE REGULATIONS
Regulation! and notice* published herein art
printed exactly us submitted by the forwarding
agencies. These, being official documents
submitted by the responsible agencies, art
consequently not subject to editing by the
Commission on Official Legal Publications.
DEPAETMENT 07 EKVTHONMENTAL FKOTBCTIOir
Sec. 22a-6b-603(a). Title
This section shall be known and may be cited as "Civil
Penalty Regulations: Violation of the Terms of an Order
to Abate an Emissions Violation."
Sec. 22a-6b-603(b). Definitions
Except for the following terms, the definitions of Sec-
tion 22a-Gh-602(b) will apply to these regulations:
(1) "Order assessment period" means the period of
time, expressed in months or portions thereof, that a
person under a final order is behind in conforming to
that order's compliance timetable as measured by the
time that has elapsed between the date of a scheduled
deadline and the date that the abatement, control or com-
pliance measures called for in the scheduled deadline are
actually completed.
(2) "Scheduled deadline" means the date in a compli-
ance timetable by which an abatement, control, or com-
pliance measure is scheduled to be completed; such dead-
line may be for any of the intermediate steps in the
compliance timetable or for the final step at which com-
pliance is to be completed.
Sec. 22a-6b-603(c). Civil penalties for violating the
terms of an order
Any person subject to a final order of the Commissioner
to abate an emissions violation who is not in compliance
with the terms of that order shall be liable to a civil
penalty assessed by the Commissioner pursuant to Public
Act 73-665, Section 2(a)(3), in accordance with the pro-
cedures prescribed in Section 22a-6b-101 to 22a-6b-102 of
the Civil Penalty Regulations, inclusive.
Sec. 22a-6b-G03(d). Schedule of maximum assessments
(1) Persons responsible for an unabated activity that
is under but not in compliance with the terms of a final
order may be assessed a civil penalty no larger than the
produet of (a) the maximum monthly civil penalty the
Commissioner may assess under the schedule of maximum
assessments of Section 22a-6b-602(d) against a person
-------
IV-7
for an unabated activity with the same equipment costs
and operating costs and (h) the number of months and/
or fractions thereof the Commissioner determines are in
the order assessment period.
(2) The Commissioner shall provide a written explana-
tion of how these maximum assessments are calculated
to any regulatee upon request.
(3) The Commissioner shall impose lesser penalties
pursuant to Section 22a-6b-603(e)(l-2) if he finds the
probable advantages of delay arc smaller than indicated
in this schedule, and he may further lower these penal-
ties pursuant to Sections 22a-6b-603(e)(5) and/or 22a-
6b-e03(g).
(4) In no case shall the assessment exceed $25,000 plus
$1000 for each day that the unabated activity continues
after the regulatee has received a civil penalties final
order.
(5) The Commissioner has determined that the maxi-
mum remedies provided in this schedule will insure im-
mediate and continued compliance and will protect (i)
the public health, safety, and welfare; (ii) the public
trust in the air, water, land and other natural resources
of the state; and (iii) the reasonable use of property.
Sec. 22a-Gb-CC3(e). Determination of amount in individ-
ual cases
(1) The Commissioner shall determine the amount of
the monthly civil penalty he may assess for each individ-
ual caso of ;m unabated activity not conforming to or
complying with the terms of a final order based on the
achuil or probable cost of compliance required of that
particular activity. Individual assessments are calcu-
lated in four broad steps: the gross cash flow of the re-
quired compliance expenditures, chiefly equipment costs
and operating costs, is determined; the net cash flow is
established by taking tax and other savings into account;
this net casli flow is discounted to present value; and the
individual monthly civil penalty is calculated ns that
amount which would, if paid monthly, amortize the net
present value of the project.
(2) The Commissioner shall calculate the total civil
penalty by multiplying the monthly civil penalty by the
number of months or fractions thereof in the order
assessment period.
(3) The Commissioner shall provide a written explana-
tion of tliis methodology upon request. He shall also
provide a written summary of the calculations used to
determine a particular assessment, except to the extent
ho is required to maintain the confidentiality of certain
information pursuant to Section 22a-6b-603(h), upon
written request by an interested party OT the affected
regulatoo.
(4) Tu no case shall an individual assessment exceed
eitlior (\^ the maximum civil penalty Section 22a-6b-
602(d) would allow per month for an unabated activity
with the same equipment costs and operating costs, or
(ii) for the total civil penalty due during the entire order
assessment period, $25,000 plus $1000 for each day that
the unabated activity continues after the regulatee has
received n civil penalties final order.
(5) In setting a civil penalty in a particular case, the
Commissioner shall consider all factors which he deems
rdrvant, including but not limited to those listed below;
and hr may, as a result of considering and balancing
these factors, lower the civil penalty. The factors he
shall consider include:
(i) The amount of the assessment necessary to insure
immediate and continued compliance;
(ii) The character and degree of impact the unabated
activity has on the public trust in the air, water, and
land and on the natural resources of the state, especially
any rare or unique natural phenomena;
(iii) The character and degree of injury to, or inter-
ference with, public health, safety or welfare which is
caused or threatened to be caused by the unabated ac-
tivity ;
(iv) The conduct of the person incurring the civil pen-
alty in taking all feasible steps or procedures necessary
or appropriate to comply or to correct the unabated ac-
tivity ;
(v) Any prior violations by such person of statutes,
regulations, orders or permits administered, adopted or
issued by the Commissioner;
(vi) The economic and financial conditions of such
person;
(vii) The character and degree of injury to, or inter-
ference with reasonable use of property which is caused
or threatened to be caused by such unabated activity.
Sec. 22a-6b-603(f). Enforcement proceedings
(1) Hearings, (i) Any person in receipt of a notice of
violation issued pursuant to Section 22a-6b-101(a) of
the Civil Penalty Regulations may apply to the Com-
missioner for a hearing pursuant to Section 22a-6b-
101 (b). -
(ii) Such hearing shall be conducted by the Commis-
sioner, a Deputy Commissioner, or a hearing officer from
the Office of Adjudication of the Department! Such hear-
ing shall be conducted pursuant to Sections 4-177 to 4-185
of the General Statutes and to the Bules of Practice of
the Department.
(iii) The Department shall have the burden of pro-
ducing evidence to prove the basis for imposing the pen-
alty and the reasonableness of the proposed assessment,
and the risk of non-persuasion by a preponderance of the
evidence shall fall upon the Department.
(iv) If the Commissioner, Deputy Commissioner, or
hearing officer presiding at the hearing determines that
information important to an accurate determination of
all or part of the civil penalty amount is not available
at the time of the hearing but will become available
later, he may defer determining the amount of the civil
penalty due until he establishes that the previously miss-
ing information is available, at which time he shall
promptly hold a hearing pursuant to Section 22a-6b-
603(g) (2) regarding the amount of the civil penalty due
He may not collect any portion of the civil penalty until
this hearing is held and a civil penalties final order issued.
(2) Appeals. Any person may appeal a civil penalties
final order of the Commissioner issued after a hearing
pursuant to Section 2(f) of Public Act 73-665.
Sec. 22a-6b-603(g). Mitigation
(1) General. The Commissioner may mitigate any
civil penalty upon such terms as he in his discretion
deems proper or necessary upon consideration of the
factors set forth in Sections 2(b) and 2(c) of Public Act
73-665.
(2) Correction of penalties, (i) A regulatee in receipt
of a notice of violation issued pursuant to Section 22a-
6b-101(a) of the Civil Penalty Regulations may petition
the Commissioner for correction of the civil penalty as-
sessed against him at any time up to two years after the
Commissioner finds that the regulatee has come into
compliance. Such petition shall set forth in writing any
evidence that the cost of compliance has been or will be
less than the Commissioner had initially determined in
assessing the civil penalty, and it shall be sent by certi-
fied mail or personal service to the Commissioner or the
Director of Air Compliance.
(ii) The Commissioner may, in response to such a
petition or at his own initiative, lower an assessment he
-------
IV-8
determines was excessive. If the Commissioner takes
no action in response to such a petition, or if his response
is not satisfactory to the regulatee, the regulatec may
obtain a hearing of right once it has come into compli-
ance or at any other time specified in a final order or R
civil penalties final order. Following such a hearing the
Commissioner shall mitigate the civil penalty if and to
the extent that the actual cost of compliance has been
less than he had initially determined.
(iii) The Commissioner shall also mitigate the civil
penalty if and to the extent that the regulatee comes
into actual final compliance with less delay than the total
number of days of delay for which assessments have
previously been made while the regulatee was under a
final order.
(iv) Refunds shall be made with interest calculated
from the time of payment and at the cost of capital rate
used to assess the civil penalty.
(3) Reduction of the order assessment period for de-
lays beyond the regulatee's control. The Commissioner
shall exclude from the order assessment period such
periods of non-compliance as the regulatee proves (i)
have been caused by strikes or lockouts; riots, wars, or
other acts of violence; floods, hurricanes, or other Acts
of God; or other equally severe, unforeseeable and un-
correctible accidents; where such acts or events were
occasioned directly upon the regulatee or a person under
contract to the regulatee. In addition, the Commissioner
shall exclude from the order assessment period such
periods of non-compliance as were occasioned by delays
attributable to the Air Compliance Unit of the Depart-
ment in excess of routine processing times. Nothing in
this section shall prohibit a regulatee from proposing, or
the Department from accepting, a compliance timetable
which excludes from the order assessment period periods
of non-compliance caused by other acts or events beyond
the control of the regulatee, such as contractors' or sup-
pliers' delays.
(4) Notice, (i) The Commissioner shail report every
case in which he lowers a civil penalty pursuant to Sec-
tion 22a-6b-603(e) or in which he mitigates a civil pen-
alty pursuant to Section 22a-6b-603(g) (1-3), i£ the
monthly civil penalty without such lowering or mitiga-
tion would be greater than three hundred dollars, in the
Monthly Report of Activities of the Air Compliance Unit.
This report shall state the name and address of the reg-
ulatee, the amount of the reduction, the amount of the
civil penalty still to be assessed, and the grounds for
such lowering or mitigation.
(li) The Commissioner shall also send written notice
to all persons who have, within the preceding twelve
months requested copies of this Monthly Report, either
through the Monthly Report or otherwise, of any hear-
ings to be held regarding such cases where the amount
of the civil penalty may be an issue at least ten days
prior to the hearing.
Sec. 22a-6b-603(h). Request for information by the
commissioner
(1) The Comm;ssioncr may require the regulatee to
provide such additional information, including informa-
tion regarding costs, as he deems necessary Jo effectuate
•the purposes of Section 22a-6b-603.
(2) Any person who files any statement, record or
report with the Commissioner containing false or mis-
leading information or other claims will be liable to
criminal prosecution for a Class A misdemeanor punish-
able by imprisonment for a period up to one year and
a fine of up to one thousand dollars ($1000) for each
violation pursuant to Section 53a-157 of the General
Statutes.
(3) Any information disclosing trade secrets and com-
mercial or financial information provided by a regulatee
pursuant to this section will remain confidential if the
regulatee so requests in a letter sent by certified mail
or personal service to the Commissioner or the Director
of Air Compliance, except that such information may be
disclosed to other officers, employees, or authorized rep-
resentatives of the state concerned with carrying out
these regulations or when relevant in any hearing con-
ducted under the authority of these regulations by the
Department of Environmental Protection or in any judi-
cial proceeding, subject to such safeguards as the hear-
ing officer or presiding judge may impose.
Sec. 22a-6b-603(i). Collection
(1) Payment of the civil penalties assessed under this
section may be required monthly, or at such time or time
intervals as the Commissioner determines will most effec-
tively limit the Department's administrative costs and
further the objectives defined in Section 22a-Gb-G03(d).
(2) The present value of the total civil penalty as-
sessed, calculated at the time the notice of violation is
issued, shall be held constant regardless of the timing of
its collection.
Be it known that the foregoing regulations are made, adopted
and promulgated by the undersigned pursuant to Sections 22n-6 and
19-508 of the General Statutes and Section 2 of Public Act No.
665 of the 1973 Public Acts, after the publication in the Connecticut
Law Journal on September 24, 1974, of the notice of the proposal
to adopt, them, the holding of advertised public hearings on Novem-
ber 12, 13, and 14, 1974, and after consideration of all relevant mat-
ter presented, pertaining to Assessment of Civil Penalties for Viola-
tion of Air Emissions Standards and Orders of the Commissioner.
In Witness Whereof, I have hereunto set my hand and seal this
27th day of November, 1974.
DOUGLAS M. COSTLE
Commissioner
Approved: Attorney General, December 20, 1974; Standing Legis-
lative Regulations Review Committee, December 16, 1974. Received
and filed: Secretary of the State, January 2, 1975. Effective Jan-
uary 2, 1976.
-------
IV-9
VIOLATING PROGRESS REPORT REQUIREMENTS
ADMINISTRATIVE REGULATIONS
Regulation! and nolicti ptiMi«f\«rf herein art
printed exactly us nibmidtJ by (He forwarding
agencies. Tkete, being official documenii
tubtntlted by tk» rupansibli agenda, art
consequently not tubject to editing by Ike
Commiuton on Official Legal Publicationi.
DEPARTMENT OF ENVIRONMENTAL PROTECTION
Submission of Progress- B«porti and Assessment
of Civil Penalties
Section 1. Section 19-508-12 of the Regulations of Con-
necticut State Agencies ia amended by adding a new sub-
«ection (f) as follows:
Sec. 19-608-13. Violation! and enforcement
(f) Progress report requirements. (1) Requirement,
time, form. Any person against whom a final order ha*
been issued shall submit progress reports as required and
prescribed by the terms of the order. Such progress
reports shall be submitted in such a form as the commis-
sioner prescribes.
(f) (2) Contents. Progress reports shall contain a
separate declaration for each required step of an order's
compliance timetable, stating either that compliance with
the step is on schedule, or that compliance with the step
is off-schedule. Progress reports declaring that compli-
ance is proceeding on-schedule shall contain a concise
but comprehensive description of (1) the action com-
pleted on each and every step required by the order
during the time period covered by the report, and (2)
the date or dates on which compliance with such step or
steps was completed. Progress reports declaring that
compliance is proceeding off-schedule shall contain a con-
cise but comprehensive description of (1) the specific rea-
sons for the tardiness, (2) the current state of completion,
and (3) the special action which will be taken to return
"on-schedule" by the date of the next progress report.
Progress reports shall contain such other information as
the commissioner may require by the terms of a final
order.
(f) (3) Proof of compliance. Progress reports shall
include the name and address of any vendor whose gooda
were ordered for compliance purposes since the prior
progress report. Where the terms of an order reported
upon require the purchase of any material, service or
equipment, progress reports shall include copies of the
purchase order or orders. The commissioner may require
such other proof as he deems necessary to determine the
progress and degree of compliance.
(f) (-4) Verification of contracted work. Progress
reports shall include the name and address of any con-
sultants, subcontractors, or other agents employed under
the terms of the order since the prior progress report
together with a concise but comprehensive description of
the actions they are to take to assist in compliance with
the orders. Whenever any vendor, consultant, subcon-
tractor or other agent is undertaking any activity regard-
ing any step in the order, the progress report shall include
a verification by the person under order that the vendor,
consultant, subcontractor, or other agent is proceeding
on-schedule.
(f) (5) Liability. Any person required to submit
progress reports shall be liable for failure to meet any of
the requirements of this section notwithstanding any
delegation of responsibility to an agent to complete and
submit reports. Any person who files a progress report
containing false or misleading information or other claims
shall be subject to criminal prosecution pursuant to sec-
tion 53a-157 of the General Statutes.
Civil Penalty Regulations for Air Compliance
Sec. 22a 6b 600. Title
Sections 22a-6b-600 to 22&-6b-900 inclusive, shall be
known and may be cited as "Civil Penalty Regulations:
Air Compliance."
Sec. 22a-6b-601. Violation of progress report require-
ments
When, following hearing or default, the commissioner
determines that a person has failed to submit a progress
report in compliance with the requirements of section
10-508-12 (f), and that mitigating circumstances do not
justify waiver or reduction of penalties, the commissioner
may issue or make finnl an order, assessing a civil penalty
according to the following schedule:
(1) For a first violation of any part of section 19-508-12
(f), a civil penalty of fifty (50) dollars;
(2) For each successive violation of any part of section
19-508-12 (f), a civil penalty of one-hundred (100) dollars
Ba it known that the within and foregoing regulations are adopted
and promulgated by the uodcmigned pursuant to Boettoni IB SOS
and 22a « of the General Statutes and Public Act No. 66!i of the
1973 Public Acta after the publication m the Connecticut LAW
Journal on July 9, 1974, of the notice of the pro[>o«ia,] to adopt them,
the holding of advertised public hearmgg on August 8, 1974, on the
issuance thereof and after consideration of all relevant matter
pre»cnted pertaining to Submiftaion of Progreaa Report! and Aaten-
ment of Civil FenaUiea.
In Witness Whereof, I hare hereunto aet my Imnd and seal thlj 3th
dajr of September, 1974.
ECKARDT C. BECK
Deputy Commijuvjntr
Approved Attorney General, Oclohrr 31, 1974; Bunding I
-------
PART V
OPERATING MANUAL
FOR THE APPLICATION
OF CIVIL ASSESSMENTS
Covering Department Regulations:
22a-6b-602 - Violation of Air
Emissions Standards
22a-6b-603 - Violation of the Terms
of an Order to Abate
an Emissions Violation
22a-6b-601 - Violation of Progress
Report Requirements
-------
V-2
ABSTRACT
This manual contains:
* a short description of the Connecticut Enforcement
Program
* a step-by-step guide to the application of the Air
Compliance civil assessments
* a program guide for civil assessment hearings
officers
* a description of how to use surety devices as part
of the total enforcement program
* an explanation of how to use and update tools em-
ployed in levying civil assessments
IMPORTANT NOTE
This Operating Manual is an Internal Document
of the Department of Environmental Protection. It is
intended to help DEP staff implement and operate the
Department's Civil Assessment Regulations. It can be
bound separately from this volume and distributed to
operating staff members for easy reference.
NOTHING CONTAINED HEREIN, IN WHOLE OR IN PART,
HAS THE FORCE OF LAW. THE APPLICABLE LAW GOVERNING
THE ASSESSMENT OF CIVIL PENALTIES IS TO BE FOUND IN
THE DEPARTMENT'S REGULATIONS, 22a-6b-100 et seq.
-------
V-3
TABLE OF CONTENTS
.Page
I. The Connecticut Enforcement Program V-5
II. How to Apply Section 602 Assessments V-7
A. Understanding the Scope of the Regulation V-7
B. Determining a Violation V-8
C. Applying the Waiver Provision of 602 (g) (4) V-8
D. Including Past Failure to Abate V-9
E. Calculating an Assessment V-10
F. Mitigating an Assessment V-ll
G. Imposing an Assessment V-12
H. Managing the Hearing Procedures V-13
I. Collecting an Assessment V-14
J. Correcting an Assessment V-15
K. Forms and Letters V-16
III. How to Apply Section 603 Assessments V-27
A. Understanding the Scope of the Regulation V-27
B. Measuring the Period of Delay V-28
C. Assessing, Reviewing, and Collecting a
603 Forfeiture V-30
D. Forms and Letters V-31
IV. How to Apply Section 601 Assessments V-35
A. Understanding the Scope of the Regulation V-35
B. Imposing an Assessment V-35
C. Managing the Hearing Procedures V-36
D. Collecting the Assessment V-37
E. Forms and Letters V-38
V. How to Conduct Hearings in Civil Assessment Cases V-44
-------
V-4
Page
VI. How To Use Surety Devices As Part of the Total
Enforcement Program V-52
VII. How To Use and Update Tools Employed in Levying
Civil Assessments V-61
A. Calculating the Cost of Compliance V-62
B. Determining The Applicable Cost of Capital V-128
C. Using Inflation Indexes V-149
D. Estimating the Source's Income Tax Rate V-151
E. Operating the Wang Calculator V-153
-------
V-5
CHAPTER I
THE CONNECTICUT ENFORCEMENT PROGRAM
Over the last decade environmental law and regulation have
expanded dramatically. The effectiveness of environmental law
enforcement has not kept pace.
Connecticut responded to the need for stronger enforcement
with the Enforcement Act of 1973, P.A. 73-665. This law gives the
Department of Environmental Protection a wide range of new enforce-
ment powers. Most notably, it authorizes the Commissioner to
impose civil assessments in such amounts as will ensure immediate,
continued compliance with applicable laws, regulations, orders
and permits.
The Department may impose these assessments directly, without
first going through the courts. (Everything the Department does
under this authority is, however, subject to subsequent court
review.) This fact makes the tool practical, credible.
To achieve these ends, the Enforcement Act has entrusted the
Department with exceptional power. The Department is charged both
with deciding to bring a case and with determining what to do with
it. It must exercise this power with great care: it is not a
judge and does not have judicial discretion. It must adhere care-
fully, closely, and in every case both to the specific limitations
defined by the Legislature, and to its clear intent to limit the
Department's discretion as much as possible consistent with achiev-
ing its primary enforcement objective.
The most important of these limitations is the use of economic
standards to determine the amount of the assessment in every case.
These standards ensure that no person can be charged more than that
person has saved from noncompliance. This standard also ensures
that the assessment's incentive will be large enough to make com-
pliance pay (and to protect companies that have complied from un-
fair competition from those that have not.)
The Department's civil assessment regulations provide for
assessments equal to the economic benefit a source realizes during
each incremental period that it delays or avoids coming into com-
pliance. In effect, they tax away the financial advantages of
noncompliance. (Volume I of the Connecticut Enforcement Project's
final report, "An Introduction to Connecticut's Economic Approach
to Environmental Law Enforcement" gives a broad overview of this
economic approach, and Part III of this Volume explains the eco-
nomics as they apply in Air enforcement in detail.)
-------
V-6
In the Air Compliance area, the Department has so far promul-
gated civil assessment regulations that apply to violations of
the requirement that those under order submit progress reports
(§601) to violations of existing emission standards (§602), and
to failures to comply with the terms of orders to abate illegal
emissions (§603).
This Operating Manual is designed to help Department personnel
apply these regulations. Chapters II to IV:
* discuss how various operating issues, from warning
those who may be liable to collecting unpaid assess-
ments from recalcitrant sources, should be handled
for each of the 601-603 regulations;
* provide a series of forms and letters for use in
administering each regulation.
Later Chapters cover how to conduct hearings, how to use the
Department's power to require sureties, and how to use and update
the tools needed for setting accurate economic civil assessments
easily.
Volume I of the Enforcement Project's report provides a brief
overview of the Department's new economic enforcement approach,
including a summary description of how it is applied in all the
Department's other program areas. Part I of this Volume provides
a fuller description of how this approach is applied in the Air
program.
A copy of the Enforcement Act can be found in Volume I, and
copies of the Air Compliance civil assessment regulations covered
by this Manual are reproduced in Part IV of this Volume.
-------
V-7
CHAPTER II
HOW TO APPLY THE 602 REGULATIONS
Section 602 authorizes the Department to impose economic civil
assessments on any person who violates Connecticut's particulate,
hydrocarbon, carbon monoxide, nitrogen oxides, and sulphur oxides
emissions standards. However, the Department will not impose a
civil assessment under this regulation as long as the source is mov-
ing promptly and effectively to bring its illegal emissions into
compliance. Its primary purpose is to enable the Department to make
sure, quickly and inexpensively, that noncomplying sources take what-
ever remedial steps are required without delay.
A. UNDERSTANDING THE SCOPE
OF THE REGULATIONS
Any company or premise can have many 602 infractions simulta-
neously: every machine that emits one of the pollutants covered by
the regulation is a separate "unabated activity," and each "unabated
activity" is liable for a separate civil assessment, each with sep-
arate maxima. The regulations, §22a-6b-602(b) (17) , define "unabated
activity" as any process or piece of property which
(i) emits or causes to be emitted, any air pollutant
in excess of the emission standards prescribed in
§19-508-9 and 19-508-18 to 19-508-22, inclusive
of the Regulations for the Abatement of Air Pollu-
tion; this includes emissions of particulates,
carbon monoxide, hydrocarbons, sulfur oxides,
and nitrogen oxides;
(ii) is not equipped or operated with the emission
controls required by §§19-508-18 to 19-508-22.
Each such process or piece of property is a separate "unabated ac-
tivity" regardless of the number of identical or closely similar
processes or pieces of property owned by the same person or located
on the same premises.
Liability under this regulation includes all periods in which
a regulatee has failed to incur all the necessary expenses to in-
sure immediate and continued compliance with applicable emission
standards. It excludes, however,
(1) The time that a person is under a final order
of the Commissioner
-------
V-8
(2) the time before these regulations took effect
(February 18, 1975)
(3) any time more than two years before a violation
is detected.
B. DETERMINING
A VIOLATION
The processes of detecting and proving equipment violations of
illegal emissions does not vary from current Department practice.
A violation of any equipment or emissions standard set forth in
§§19-508-18 to 19-508-22 of the Department's Regulations is a 602
violation.
C. APPLYING THE WAIVER
PROVISION OF 602(g)(4)
Unless a person responsible for an emissions violation had
prior notice of its duty to abate such a violation, it may hot be
assessed a 602 civil penalty as long as it moves promptly and ef-
fectively to come into compliance after it has been detected and
put on notice. Section 22a-6b-602(g)(4) defines what constitutes
notice and what actions satisfy the "prompt and effective" stand-
ard in some detail.
Section 22a-6b-602(g)(4)(iii) provides that the waiver pro-
vision does not apply and that a 602 civil penalty may be assessed
if any notice has, within 5 years of the date of the detection of
the violation, been given the violator in any of the following
forms:
(1) a written order, or
(2) a warning letter under §19-508-12 (b) (2), or
(3) actual written notice that he has been found in
violation of one or more emission standards, or
(4) actual written notice of both the duty to comply
with the relevant requirements of the Air Regula-
tions, §§19-508-9 and 19-508-18 to 19-508-22 and
of the potential liability to civil assessments
for failure to do so.
Note, however, that for such notice to be valid, it must:
(1) be sent by certified mail or personal delivery
or service and
(2) have referred to the same regulations that are
the subject of the current action.
-------
V-9
To be sure, once the Department has undertaken a significant mail-
ing and education campaign, there will be relatively few cases in
which this non-imposition or waiver section will apply. In the
interim, however, the following procedures should be followed in
dealing with a source that can claim coverage by the waiver provi-
sion of §22a-6b-602(g)(4)(i) and (ii) because it has not received
such notice.
No civil assessment will be imposed on such a source if it
takes all steps necessary to bring the unabated activity "promptly
and effectively" into continuing compliance with applicable emis-
sion standards. Such prompt and effective action must continue
either (a) until the source comes under a final order of the Depart-
ment setting out a binding schedule of compliance steps enforceable
by civil assessments authorized by §603, or (b) until actual, full
compliance is achieved. Prompt and effective action is specific-
ally defined for the period immediately after detection as follows:
(1) The regulatee must submit an acceptable, detailed
written plan of action including a compliance
schedule within 40 days of receipt of a warning
letter in which the Department requests such a
plan.
(2) It need do nothing from the time it submits such
an acceptable compliance plan until 5 days after
it has been notified of the results of the Depart-
ment1 s review of this plan, typically the time it
received a DEP order.
(3) Thereafter the source either comes under a DEP
order (which, once it is final, ends 602 liabil-
ity) or it must take whatever steps are approp-
riate in the circumstances to achieve compliance
as quickly and completely as possible. If the
source is doing less than what a DEP order would
have required of another similarly-situated source,
it is very probably not meeting this standard.
If a source qualifies for the waiver provision, the Depart-
ment should send him warning letter CA-602-W in lieu of an assess-
ment letter.
D. INCLUDING PAST
FAILURE TO ABATE
Usually civil assessments run prospectively from the date of
detection to the date of compliance. However, the regulation spec-
ifically provides that the Department may, under certain circum-
stances, impose 602 civil assessments that cover past periods of
noncompliance which occurred before formal detection. Section
22a-6b-602(h) defines these circumstances as those where:
-------
V-10
(1) it is reasonable to assume that the emission
violation is the result of a regulatee's past
failure to make the control expenditures nec-
essary for compliance, and
(2) the regulatee is not protected by the waiver
provisions of (g)(4).
Since there are serious problems in proving past violations,
the Department must have a good basis for alleging that a source
has not been complying in the period before detection. For example,
if the Department finds no control equipment on a rotary kiln, e.g.
no scrubber, baghouse, or other control device, there is a clear
inference of past violation. On the other hand, if an incinerator's
particulate emission is in violation of Department standards because
of a bad air mix, .the current violation is not adequate proof of
past noncompliance. The Department must proceed cautiously in as-
sessing for past delay.
The regulations also impose two restrictions on assessments
made for past delay:
(1) No assessment period shall include any time before
these regulations.became effective,
(2) No assessment period shall include a predetection
period greater than two years.
E. CALCULATING
AN ASSESSMENT
Civil assessments, which are calculated using the familiar
businessman's capital budgeting process, are just large enough
to make compliance attractive. Specifically, the civil assess-
ment is calculated to be that payment which, if made at the end
of each month throughout a specified period, would have the same
net economic impact on a company as the expenditures necessary
for compliance with emission standards. While the formula for
this calculation is relatively complex (See "Part III - Economics"
above), Department staff do not have to understand it to use it.
It has been programmed on a Wang Calculator and is easy to use.
For most assessments, only four variables must be determined
in order to calculate the amount due. These are:
(1) Equipment costs
(2) Operating costs
(3) The cost of capital for the source's industry, and
(4) In some cases the source's applicable income tax rate.
-------
V-ll
The precise components of these variables are spelled out in
greater detail in the "Definitions" section of the Regulations
(see §22a-6b-602(b)). For the purposes of ascertaining these vari-
ables for assessment purposes:
(1) Obtain the equipment and operating costs using
Chapter VII (A) of this manual, "Calculating the
Cost of Compliance."
(2) Obtain the cost of capital for the appropriate
industry using Chapter VII (B) of this manual,
"Determining the Applicable Cost of Capital."
(3) If the source is a medium or large business (not
in an extractive industry) assume a 48 percent effective
tax rate; if it is a govenment body or a non-profit
institution assume a zero percent rate. Otherwise
see Chapter VII (C) of this manual.
To calculate an assessment, write these variables onto the
calculation worksheet which follows this section and calculate
the assessment by using these variables in the Wang Calculator
(See Chapter VII (E) of this manual, "Operating the Wang Calcu-
lator. ")
THE MONTHLY ASSESSMENT CALCULATED ON THE WANG SHOULD BE MULTIPLIED
BY THE PERIOD OF DELAY IN THE ASSESSMENT PERIOD TO ASCERTAIN THE
TOTAL AMOUNT OF THE ASSESSMENT THAT WILL BE IMPOSED UNDER THESE
REGULATIONS. IF NONCOMPLIANCE CONTINUES, THE FINAL CIVIL ASSESS-
MENT SHOULD BE DETERMINED BY MULTIPLYING THE MONTHLY ASSESSMENT BY
THE ADDITIONAL PERIOD OF NONCOMPLIANCE AND ADDING THIS AMOUNT TO
THE AMOUNT ALREADY ASSESSED.
F. MITIGATING
AN ASSESSMENT
These economics-based civil assessments are just large enough
to ensure immediate and continued compliance with Connecticut's en-
vironmental standards. However, there may be specific instances
where additional factors may be relevant in determining how large
the assessments should be in individual cases. Sections 603(g)(l)
and (3) instruct the Commissioner to take any such factor into ac-
count and to mitigate any civil assessment upon such terms as he in
his discretion deems necessary and proper.
In imposing an assessment under this regulation, attention
should be given to determining whether any one or combination of
the following facts, on balance, is noteworthy enough to miti-
gate the assessment amount:
(i) The character and degree of impact the un-
abated activity has had on the public trust
in the air of the State, especially on any
rare or unique natural phenomena
-------
V-12
(ii) The character and degree of injury to, or
interference with, public health, safety, or
welfare which is caused or threatened to be
caused by the unabated activity
(iii) The conduct of the person incurring the civil
penalty in taking all feasible steps or pro-
cedures necessary or appropriate to comply or
to correct the unabated activity
(iv) Any prior violations by such person of statutes,
regulations, orders or permits administered,
adopted, or issued by the Commissioner
(v) The economic and financial conditions of such
person
(vi) The character and degree of injury to, or inter-
ference with reasonable use of property which is
caused or threatened to be caused by such unabated
activities.
Any mitigating circumstances should be noted in the regulatee's
file and brought to the attention of the Director of the Enforcement
Section of the Air Compliance Unit who will recommend to the Commis-
sioner the appropriate action to be taken in view of these circum-
stances. Both the formula assessement and the mitigating circum-
stances should be formally noted on the "Civil Assessment Checklist",
a copy of which follows on page V-17.
G. IMPOSING
AN ASSESSMENT
The decision on whether to impose an assessment in an indi-
vidual case is made at the discretion of the Commissioner, although
he may delegate this authority. In any case, the decision to make
such an assessment must begin with a recommendation from the As-
sistant Director for Enforcement. Once this decision has been made,
the procedure for imposition is a simple one.
The Department's first step will be to send Assessment Letter
CA-602-2 to the violator, CERTIFIED MAIL, RETURN RECEIPT REQUESTED.
The date the letter is sent out should be logged on the Civil As-
sessment Checklist.
As these letters indicate, once the regulatee receives the
letter, it has twenty days in which to request a hearing. If the
regulatee does not request a hearing within this period, the as-
sessment letter automatically becomes a final order of the Commis-
sioner. The assessment is then payable on the date specified in
the assessment letter. The Civil Assessment Checklist can be used
to keep track of this 20 day deadline.
-------
V-13
H. MANAGING THE
HEARING PROCEDURES
Section 22a-6b-101 of the Civil Penalty Regulations defines
when a hearing is required, how it must be conducted, and when
it may be appealed. Before a hearing is held, be sure to read
the guide to conducting hearings, Chapter V of this manual.
The Department should generally be able to avoid hearings by
using one of the following devices:
* When a source objects that an assessment is too high,
the Department can agree to collect a smaller amount
than that assessed that is agreeable to the source.
(Civil assessments are due and payable at the time
that the order by which they are imposed becomes a
final order of the Commissioner. However, the Depart-
ment can schedule (or postpone) collection over as
long a period as it thinks most beneficial — as long
as it charges interest for the value of the deferral
to those who receive the benefit.) Postponing the
collection of part of the amount assessed does not
lower thesource's liability, but it is a gesture of
reasonableness likely to be rewarded by a gentleman's
agreement to avoid a hearing. In negotiating such an
agreement, Department staff should make clear that re-
duced collection (1) does not mean that the assessment
has been lowered and(2) that the final amount due will
be determined later when adequate information is avail-
able. This option entails minimum expense to the De-
partment, allows it to seem reasonable to the regula-
tee, and still allows it to collect some money immedi-
ately.
* If the regulatee forces a hearing, the Department may
defer a hearing on the accuracy of the amount of civil
assessment if it finds that necessary information is
missing but will become available later. (See §22a-
6b-602(f)(iv).) Deferral in no way limits the source's
ultimate liability.
* The correction procedure can and should be used as an
attractive alternative to the hearing process. If a
source questions the accuracy of a civil assessment
calculation, the Department should make clear that
there is a correction-as-of-right procedure which can
be followed in .lieu of the hearing process.
Any action regarding variable collection or deferral should
be clearly noted in the regulatee's file with the reasons the De-
partment took such action.
For a further discussion of variable collection and deferral
see Chapter VI.
-------
V-14
I. COLLECTING
AN ASSESSMENT
The Department does not anticipate having any trouble in
collecting civil assessments. Other agencies with similar en-
forcement programs have not had any trouble in collection and
none is expected here. However, for the rare delinquent case,
the Enforcement Act provides an easy collection procedure.
If a source does not pay his assessment by the date indicated
on his assessment notice, send him the collection letter, CA-602-
C, which follows at the end of this section. If payment is not
received within three weeks of receipt by the source of the collec-
tion letter, the case should be turned over to Mr./Ms.
who will refer the matter over to the Clerk of the appropriate
Superior Court which will enforce the assessment.
When an assessment is received, the check should be properly
logged and delivered to the Department's Bureau of Administration
under transfer letter, CA-602-T. The Bureau will have the check
deposited in the proper account and will provide you with a re-
ceipt for the assessment check which should be placed in the source's
file.
J. CORRECTING
AN ASSESSMENT
One of the key safeguards built into the regulations is a guar-
antee that a source can have any assessment lowered if it was based
on excessive cost estimates. The source has a right to a reviewable
hearing on this issue as soon as it comes into compliance, and the
Department may hold such a hearing earlier if it feels this appro-
priate, given the regulatee's cooperation and the availability of the
necessary evidence. Overassessments are returned with interest.
This safeguard goes a long way to ensure that assessments are never
excessive or uneconomic . It is important to understand that the
scope of this correction procedure is fair but narrow:
(1) The only elements of the civil assessment calculus
subject to correction are the figures for:
(a) equipment cost
(b) operating and maintenance cost
(c) the assessment period (e.g., if the period
of delay turns out to be shorter than that
for which an assessment was made)
(d) depreciable life of the equipment (if a fig-
ure other than the 10-year figure authorized
in the Regulation is used). The other ele-
ments of the assessment calculus, e.g., the
rate of inflation, are not subject to the
correction procedure.
-------
V-15
(2) Only "hard evidence" will be accepted to substantiate
claims for correction. This means that in most cases
actual purchase vouchers or similar invoices will be
required as evidence that actual compliance costs were
less than those estimated by the Department for the
purpose of making an assessment. Since purchasers can
easily obtain proof of purchase from vendors such evi-
dence should be required. The reviewing engineer
should carefully scrutinize correction applications to
make sure that they include all elements of cost that
were considered in making the initial assessment.
(See Chapter VII (A) of this manual.)
-------
V-16
K. FORMS AND LETTERS:
THE 602 REGULATIONS
The following forms and letters should be used for applying
civil assessments for violations of emission standards:.
* 602 Assessment Checklist
* General Notice of Civil Assessment Letter
(CA-602/603-GN)
* Assessment Warning Letter (CA-602-W)
* Assessment Letter (CA-602-A)
* Collection Letter (CA-602-C)
* Letter Explaining Factors Used in Assessment
Calculation (CA-602/503-FAC)
* Correction Letter (CA-602/603-COR)
* Transfer Letter (CA-602/603-T)
* Refund/Denial Letter (CA-602/603-R)
Copies of these forms and letters may be found on the
following pages.
-------
V-17
CIVIL ASSESSMENT CHECKLIST; SECTION 602
§ of
Manual Initia
Name of Source:
Violation Detected By:
Violation Detected On:
II (C) Waiver Provisions Applicable? /~7 Yes /~7 No
II (C) Warning Letter (CA-602-W) Sent On:
II (C) If Waiver Provisions Apply, Date on Which Source Fails to Meet
Compliance Obligations of 602(g)(4):
Note Reason:
II (D) Period of Violation in Months:
II (E) Assessment Variables
Equipment Cost:
Operating Cost:
Cost of Capital:
Income Tax Rate:
II (E) Monthly Liability:
II (E) Assessment Equals:
II (F) Mitigating Circumstances, if any:
II (F) If Mitigation Occurs, It Was Noted in the Monthly
Report of:
II (G) Assessment Letter (CA-602-A) Sent Certified Mail On:
II (G) Return Receipt Shows Receipt By Source On:
II (G) Twenty Days After Receipt Is:
II (H) Request for Hearing Received by Above Date: /~7 Yes / / No
II (I) Payment Received On:
II (I) Collection Letter Sent On:
II (I) Collection Referred On:
II (J) Request for Correction Received On:
II (J) Correction / / Granted / / Refused On:
Payment Sent to the Bureau of Administration On:
-------
V-18
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
SUBJECT: Liability for Monetary
Assessments
Dear
The Department of Environmental Protection has been enforc-
ing Connecticut's air quality emissions standards since 1972.
These standards attempt to strike the most effective balance in
protecting the health, safety, and economic well-being of Connect-
icut "s citizens.
Over 96 percent of Connecticut's known sources of air pollu-
tion are now in compliance. In fairness to those who are in com-
pliance, and in order to ensure that Connecticut's environmental
laws are respected, the Commissioner of Environmental Protection
has been authorized to make money assessments against those that
are not in compliance with applicable emissions standards or abate-
ment orders. So that these assessments will be large enough to en-
sure "immediate and continued compliance," they have been designed
to remove any economic incentive to delay coming into compliance.
As the owner of a source of air pollution, you are liable for
any violations of emission standards or for any delinquency in
meeting the terms of a state order that develop after the effective
date of this new assessment authority, February 18, 1975. This
liability is in addition to the Commissioner's other enforcement
powers: to require and cause the forfeiture of sureties and to re-
fer violators to a prosecutor or the Attorney General for criminal
and/or civil action.
We are enclosing copies of the state regulations that
(1) define what you must do to avoid liability for
such assessments. (Regulations for the Abatement
of Air Pollution, §§19-508-9 and 19-508-18 to
19-508-22, including amendments to §19-508-12 (f).)
(2) explain your potential assessment liability for
violating any of these standards. (Enforcement
Regulations, §§22a-6b-100 to 22a-6b-102 (proced-
ure) and 22a-6b-601 to 22a-6b-603 (failure to file
required progress reports, violations of emissions
standards, and failure to comply with the terms of
an order). The maximum amount you may be assessed
for each month of emission or order violations is
listed in the table in §22a-6b-602(d).)
-------
V-19
If you wish to discuss these regulations or have any ques-
tions, please do not hesitate to call the Air Compliance Enforce-
ment Section at 566-3160.
Thank you for your help in creating and maintaining a better
environment for Connecticut.
Sincerely,
Henry Beal
Director of Air Compliance
Enc.
CA-602/603-GN
-------
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
NOTICE OF EMISSIONS VIOLATION; WARNING LETTER
NOTICE NO.
VIOLATION: §19-508-
Dear
The Commissioner of Environmental Protection has determined
that you are now in violation of the above-mentioned regulation
governing emission standards. For this violation you are liable
to civil penalties to be assessed pursuant to Department Regula-
tions 22a-6b-100 et seq. However, under the terms of the De-
partment's Regulations, you may be able to avoid imposition of
the penalties if you take prompt and effective action to bring
your currently unabated activity into compliance with applicable
standards.
Specifically, you will be deemed to have taken prompt and
effective action if you
(a) submit a detailed written plan of action includ-
ing a timetable which, once implemented, will
achieve compliance as promptly and effectively
as possible, and
(b) submit this plan within 40 days of receipt of
this letter, and
(c) either consent to a compliance order issued by
the Department, or independently take all steps
necessary to achieve prompt,continuing, effect-
ive compliance.
If you do not meet these standards of performance, the
"second chance" waiver provisions of the Department's Regula-
tions will not apply and the Commissioner will proceed to
impose an assessment against you.
If you have any question concerning this notice, please
contact M of the Air Compliance Unit Enforcement
Section at 566-3160.
Sincerely,
Henry Beal
Director of Air Compliance
CA-602-W
-------
V-21
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING
HARTFORD, CONNECTICUT 06115
CIVIL ASSESSMENT
NOTICE
No. 2-
TO:
RE:
Premise Name
Premise Address
The Commissioner of Environmental Protection has determined that you are now in violation of the below-
mentioned Regulation governing emission standards. Therefore, pursuant to the provisions of Department
Regulations 22a-6b-100 et. seg., this letter constitutes notice of the violation, a statement of the
amount of civil assessment(s) to be imposed for-this violation, and a statement of your right to a hearing.
VIOLATION:
The Commissioner has determined that you have now been in violation of S
of the Department's Administrative Regulations for the Abatement of Air Pollution for a
period of months.
ASSESSMENT: You are hereby notified that yoQ have been assessed S
violation. Furthermore, for each additional month until you are either in"compliance
for this period of
or operating under the terms of a State Order, the Commissioner will impose an additional
assessment of $ per month.
HEARING: You have a right to a hearing on this assessment. To request a hearing you must deliver
to the Commissioner or the Director of Air Compliance a written application for hearing
within twenty days of the receipt of this notice.
PAYMENT: Unless a hearing is requested, this notice shall become a final order of the Commissioner
twenty-one days after the date of receipt. Payment of the civil assessment shall be due
twenty-five days after receipt of this notice. Payment should be made by check to the
order of "Conn. Department of Environmental Protection" and should be delivered to the:
"Assistant Director of Air Compliance Enforcement
Department of Environmental Protection
165 Capitol Avenue — Room 133
Hartford, Connecticut 06115
If you have any questions concerning this notice, please contact the Assistant Director at the above
address or, by phone, at 566-3160. All correspondence should be identified with the Civil Assessment
Notice Number (see top right-hand corner).
Signed(Assistant Director)
Date Signed(Director)
Date
SERVICE
A copy of the foregoing Notice was submitted to. the above-named as indicated below:
/ / Personally delivered to
Recipient's Signature
/ / Certified mail to the usual place of business or residence. Registration No.:
Date
RPD
Town
Premise
AQCR
NEDS County EPA 100T Premise: / 7 Yes
7""7 No
Reg.#
Yr
Day
CA-602-A (FE1102 ^6/13/75))
-------
V-22
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Subject: State Order No.
Violation Notice No,
Dear
The Department of Environmental Protection has found that you
were violating the State's emissions standards and has consequently
imposed a civil assessment on you pursuant to Department Regulation
22a-6b-602. Notice of the violation and the consequent civil as-
sessment was sent to you by certified mail on .
/ / Since you did not request a hearing, this notice
became a final order of the Commissioner on
/ / This notice became a final order of the Commissioner
after hearing on .
Payment of the assessment was due on and is
now over three weeks late. ~~
The law provides that, if the assessment is not paid promptly,
it may be enforced in the same manner as a judgment of the Superior
Court. Accordingly,if we do not receive your payment, the Commis-
sioner will file his final order with the Clerk of the Superior
Court, whereupon his civil assessment order will have the same
status as a judgment of the Superior Court and will be enforced by
the Sheriff accordingly.
We expect to receive your delinquent payment no later than
. If we do not receive payment from you by
that time, we will be compelled to institute proceedings with
the Superior Court.
If you have any questions concerning this letter, please
feel free to contact me at 566-3160.
Sincerely,
Assistant Director,
Air Compliance Unit,
Enforcement Section.
CA-602-C
-------
V-23
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Subject: State Order No.
Reference: Your Request of / /
Assessment Notice No.
Dear
In response to your request pursuant to §22a-6b-602(e)(3)
or 603(e) for a written explanation of the methodology used to
determine your assessment, we enclose the Department's "Calcu-
lating Economic Remedies".
The variables used to calculate your assessment in the
manner described in this document are as follows. (Please
refer to Enforcement Regulations §22a-6b-602(b) for defini-
tions of these variables):
"Equipment Costs":
"Operating Costs":
"Inflation":
"Depreciable Life":
"Cost of Capital":
If you have any further questions concering the assessment
calculation, please do not hesitate to contact M
of the Enforcement Section at 566-316CK
Sincerely,
Assistant Director,
Air Compliance Unit,
Enforcement Section.
CA-602/603-FAC
-------
V-24
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
/ Your Ref.:
Notice of Violation No.:
Dear
This letter is written in response to your inquiry regard-
ing possible correction of the amount of the civil assessment
imposed upon you.
Department Regulations 22a-6b-602(g) (2) and 603(g) (2) pro-
vide that a regulatee in receipt of a civil penalty notice of
violation may petition the Commissioner for correction of a
civil assessment imposed upon him any time up to two years after
the Commissioner finds the regulatee has come into compliance.
The regulation requires that your petition be in writing,
setting forth any evidence that the cost of compliance has been
or will be less than the Commissioner had initially determined
in imposing the civil assessment. Such a petition must be sent
by certified mail or by personal service to the Commissioner or
the Director of Air Compliance.
The Commissioner may, in response to the petition, or on his
own behalf, lower an assessment he determines was excessive. If
the Commissioner takes no action in response to such a petition,
or if his response is not satisfactory to you, you may obtain a
hearing of right once you come into compliance or at any other
time specified in a final order. Following such a hearing, the
Commissioner must correct the civil assessment if and to the
extent that the actual cost of compliance has been less than he
had initially determined. If you are not satisfied with this
decision, you may then appeal it to the courts.
Any refunds to be made to you under this regulation shall
be made with interest calculated at the same cost of capital
rate used to make the civil assessment.
If you have any questions concerning this letter or the
nature of the correction procedures under the Regulations,
please contact me at 566-3160.
Sincerely,
Assistant Director,
Air Compliance Unit,
Enforcement Section-
CA-602/603-COR
-------
V-25
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Source:
Civil Assessment Notice No.
Amount of Payment: $
Bureau of Administration, Financial Services
Department of Environmental Protection
Room
The attached check represents payment by the above-named
source for a civil assessment imposed pursuant to the Depart-
ment's regulations 22a-6b-100 et seq.
/ / There remains a possibility that all or part
of this check may have to be paid back to the
issuer with interest. Therefore, please de-
posit this check into the civil assessment
pending receipts fund and return a receipt of
such deposit to me.
/~7 The issuer of this check has no further oppor-
tunity to appeal or seek correction of the as-
sessment that gives rise to this payment.
Please deposit the check into the General Fund
and return a receipt of such deposit to me.
Sincerely,
Air Compliance Unit,
Enforcement Section .
CA-602/603-T
-------
V-26
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Your Ref.:
Notice of Violation No.:
Dear
Pursuant to the correction procedures provided by Department
Regulations 22a-6b-602(g) (2) and 603 (g) (2), the Commissioner has
considered the evidence you have presented in your written peti-
tion for correction.
The Commissioner has
/ / determined that your assessment will be lowered
by the amount of $ . A check for this
amount, with interest,is enclosed with this
letter.
/~7 determined that your assessment for each month
of continuing violation shall be reduced from
to .
/ / determined that the initial civil assessment
imposed upon you is correct and that your
petition for correction is hereby denied for
the reason(s) here described:
If you have any questions concerning this letter or the
correction proceedings, please contact me at 566-3160.
Sincerely,
Assistant Director,
Air Compliance Unit/
Enforcement Section.
CA-602/603-R
-------
V-27
CHAPTER III
HOW TO APPLY THE 603 REGULATIONS
Section 603 authorizes the Department to impose civil
assessments on those who fail to comply with the terms of an
order.
A. UNDERSTANDING THE SCOPE
OF THE REGULATION
All orders issued pursuant to §§19-508-9 and 19-508-18
to 19-508-22 of the Department's Regulations, inclusive, which
have become final either by the passage of time or by the con-
sent of the regulatee or after hearing, can be enforced under
this regulation.
Most violations will be defined in terms of failing to
comply with a deadline established in the order's compliance
schedule, be it the final date for meeting emissions standards
or one of the intermediate steps. Within reasonable limits,
partial nonperformance is a full violation. However, as the
following example indicates, falling behind in an order's com-
pliance schedule is a single violation.
Example:
Consider the case of a source with the following compliance
timetable and actual compliance dates:
Step
1:
2:
3:
4:
Action
Hire Engineer
Order Equipment
Scheduled Actual
Compliance Compliance
Date
Date
Month 2
Month 3
Receive Equipment Month 9
Install and
Operate Equipment
Month 12
Month 4
Month 5
Month 14
Month 17
Civil
Assessment
Imposed
Yes
No
Yes
No
A civil assessment imposed for noncompliance
with Step 1 covers a two month violation. While
Step 2 is also completed two months behind sched-
ule, this is not a new violation for it is the
same two months delay incurred in meeting Step 1,
-------
V-28
However, when Step 3 is completed five months
late, a new violation (an additional delay of
three months) has occured and a new civil as-
sessment can be imposed. Similarly, if final
compliance occurs with this same five months
delay, there is no new violation. Thus, the
603 regulations impose assessments only for
the total cumulative delay in meeting a com-
pliance timetable.
B. MEASURING THE
PERIOD OF DELAY
The amount a source has saved by not complying with the terms
of an order is a direct function of how long the source has delayed
and therefore so is its civil assessment liability. This makes de-
termination of the time a source is behind schedule critical to cal-
culating civil assessments.
The period of delay is measured as the length of time between
the date of scheduled compliance and actual compliance. It can be
measured for interim steps in the order schedule and/or for the fi-
nal compliance deadline. If civil assessments are tied to the final
deadline only, the Department does not have to worry about calculat-
ing cumulative delay step by step or about having to make refunds
with interest in the event the source catches up some of the time it
lost in earlier steps. (If the source has been assessed early in
its schedule and then "catches up" all or part of the delay before
the final compliance deadline, the Department is required to repay
a proportionate share of the assessment with interest.) However,
especially for recalcitrant sources that do not react to warning
letters, imposing an assessment on an intermediate step may be useful,
Since the regulations speak in terms of maximum MONTHLY as-
sessments, time periods of delay should be measured in months or
fractions of months. For ease of calculation, monthly periods of
delay should be expressed in fractional equivalents, e.g., 10 days
= 10/30 = .33 months.
Excluding Delay Before
February 18, 1975
The Department is not including delay accrued before the
effective date of the 603 regulation, February 18, 1975, in the
assessment period used in calculating civil assessments. This
poses special problems during the first year or two of the regu-
lation's use.
To measure the assessment (or violation) period for sources
that were under order before February 18, 1975, EXCLUDE THE CUMU-
LATIVE DELAY THAT OCCURRED PRIOR TO THIS EFFECTIVE DATE. For
such sources,civil assessments will apply only to any incremental
delinquency that develops after February 18, 1975. For example:
-------
V-29
Source A is on a compliance timetable which
commenced on January 1, 1974. Step 6 of the
order, requiring the issuance of purchase
orders, was due on September 1, 1974, but was
not completed until December 1, 1974 (3 months
behind schedule). When the source reaches step
10 of the order, requiring the installation of
equipment on May 1, 1975, he is still 3 months
behind schedule. He does not install the equip-
ment until August 1, 1975 and thus completes
his compliance timetable three months late.
However, since this source was under order be-
fore the effective date of the regulation, his
cumulative delay which occurred before that date
is to be subtracted from the total period of de-
lay. Here, since there was no increment of delay
after February 18, 1975, there will be no civil
assessment applied to this source.
Delays Verifiably Beyond
The Source's Control
The regulations's purpose is to ensure that order recipients
exercise diligence, competency, and urgency in complying with the
Department's orders. Delays that the source could not have fore-
seen or avoided and that can be verified if claimed are therefore
excluded from the period of delay that defines civil assessment
liability by §603 (g) (3). This Section, provides that the Commis-
sioner must exclude from the assessment period any delay which is
caused:
* by strikes or lockouts; riots, wars, or other acts
of violence; floods, hurricanes, or other Acts of
God; or other equally severe, unforeseeable and
uncorrectable accidents; or,
* by delays attributable to the Air Compliance Unit
of the Department in excess of routine processing
times.
None of these mandatory exclusions can become a loophole for
the relatively few willful, dishonest scofflaws with whom the
Department must deal. Every mandatory exclusion, if claimed,
can be easily verified by the Department. If a source claims
that a strike prevented him from complying, one or two phone
calls can confirm whether or not there was a strike.
Unverifiable grounds for exclusion are specifically not
covered by §603 (g) (3). In particular, THIRD PARTY SUPPLIER DELAY
IS A DISCRETIONARY GROUNDS FOR MITIGATION ONLY. Such grounds are
not covered because, if they were, they could be turned into a
major loophole by recalcitrant sources willing to lie because the
Department generally would not be able to disprove such claims.
-------
V-30
Although the regulation had to be drafted tightly to deny
such a loophole to these few sources, the Department will continue
to grant extensions for third party delay and other reasons not
covered by §603 (g) (3) when in its judgment such action is warranted.
If a source claims a reduction in its assessment period be-
cause of excessive processing delay by the Department, the Depart-
ment should compare the actual time taken in handling the case with
the routine times required for handling the average case reported
in Parts II (Baseline Profile) and VI (Administrative Costs) in this
Volume.
C-G. ASSESSING, REVIEWING,
AND COLLECTING A 603 FORFEITURE
Sections 602 and 603 are extensions one of the other. The
moment a source comes under a final order it exchanges §602 lia-
bility for potential §603 liability. They are both based on
identical economics, have closely similar safeguards, and operate
under almost the same procedures. Consequently, most of the oper-
ating guidelines outlined in the last Chapter for §602 also apply
to §603.
* A day's delay in compliance before a final order
has the same value to the source as a day's de-
lay after the order is final. The value of the
delay, and the amount of the assessment are
therefore calculated identically. The 602 and
603 calculations require exactly the same in-
formation regarding equipment costs, operating
costs, and industry cost of capital. They use
exactly the same assessment formula. See Chapter
II (E) above.
* The Enforcement Act requires the Department to
consider mitigation based on the same list of
criteria in both cases. See Chapter II (F).
* The procedures for imposing, reviewing, collect-
ing, and correcting assessments are all identi-
cal. See Chapter II (G, H, I, and J).
-------
V-31
D. FORMS AND LETTERS:
THE 603 REGULATIONS
Because §603 is so similar to §602, it is possible to use
identical forms and letters for most purposes. Commom forms and
letters carry the identification in the lower right-hand corner,
"CA-602/603- ." They are not reproduced here but will be found
in the earlier 602 "Forms and Letters" section of this manual.
The forms and letters needed to implement the 603 regulations are
listed below.
* 603 Assessment Checklist
* General Notice of Civil Assessment Letter
(CA-602/603-GN)
* Assessment Letter (CA-603-A)
* Collection Letter (CA-603-C)
* Letter Explaining Factors Used in Assessment
Calculation (CA-602/603-FAC)
* Correction Letter (CA-602/603-COR)
* Transfer Letter (CA-602/603-T)
* Refund/Denial Letter (CA-602/603-R)
-------
V-32
CIVIL ASSESSMENT CHECKLIST; SECTION 603
§ of
Manual Initials
Source:
State Order No.:
III (A) Step No. Scheduled For:
III (B) Period of Delay Up To Today:
Does Order Include A Warning? / / Yes / / No
Warning Letter CA-603-W Sent On:
III (B) Reduction in Period of Delay for
Delay Beyond Regulatee's Control? /~7 Yes /~7 No
III (C) Assessment Variables
Equipment Cost:
Annual 0 & M Cost:
Cost of Capital: _
Income Tax Rate:
III (C) Monthly Liability:
III (C) Assessment Equals:
III (C) Mitigating Circumstances, If Any:
III (C) Mitigation, If Any, Was Noted In The Monthly
Report of:
III (C) Assessment Letter CA-603-A Sent By Certified
Mail On:
III (C) Return Receipt Shows Receipt By Source On:
III (C) Twenty Days After Above Date Is:
III (C) Hearing Requested Within Above Period: /~7 Yes / / No
III (C) Payment Received On:
III (C) Collection Referred On:
III (C) Request for Correction Received On:
III (C) Correction / / Granted /~7 Refused On:
Payment Sent to the Bureau of Administration On-
-------
V-33
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING
HARTFORD, CONNECTICUT 06115
CIVIL ASSESSMENT
NOTICE
No. 3 -
TO:
RE: Premise Name
Premise Address
The Commissioner of Environmental Protection has determined that you are now in violation of the terras
of the above-named State Order. Pursuant to the Department Regulations 22a-6b-100 et. seq., this
constitutes notice of the violation, a statement of the amount of civil assessment(s) to be imposed
for this violation, and a statement of your right to a hearing:
VIOLATION:
Your State Order binds you to meet all scheduled dates of the compliance timetable
embodied in the Order. As of the date of this letter you are: •
months behind schedule for Step Number
are thus in violation of the terms of the Order."
of the compliance timetable and
ASSESSMENT: You are hereby notified that you have been assessed $ for this period of
- delinquency. Furthermore, for each incremental month that you fall behind schedule
after this date, the Commissioner will impose an additional assessment of $_
per month.
HEARING: You have a right to a hearing on this assessment. To request a hearing you must
deliver to the Commissioner or the Director of Air Compliance a written application
for hearing within twenty days of the receipt of this notice.
PAYMENT: Unless a hearing is requested, this notice- shall become a final order of the
Commissioner twenty-one days after the date of receipt. Payment of the civil
'assessment shall be due twenty-five days after receipt of this notice. Payment
should be made by check to the order of "Conn. Department of Environmental
Protection" and should be delivered to the:
Assistant Director of Air Compliance Enforcement
Department of Environmental Protection
165 Capitol Avenue -- Room 133
Hartford, Connecticut 06115
If you have any questions concerning this notice, please contact the Assistant Director at the above
address or, by phone, at 566-3160. All correspondence should be identified with the Civil Assessment
Notice Number (see top right-hand corner).
Signed (Assistant Director)
Date
Signed(Director)
Date
SERVICE
A copy of the foregoing Notice was submitted to the above-named as indicated below:
/ / Personally delivered to
Recipient's Signature
/ / Certified mail to the usual place of business or residence. Registration No
/ /
Date
/ /
RPD
Town
Premise
AQCR
NEDS County
EPA 100T Premise:
Reg. I
Copies: 1) Regulatee 2) Air Quality Enforcement
CA-603-A (FE1102 (6/13/75))
-------
V-34
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Subject: State Order No.
Violation Notice No.
Dear
The Department of Environmental Protection h?s determined
that you were not in compliance with the terms of a final order
of the Commissioner and has consequently imposed a civil assess-
ment on you pursuant to Department Regulation 22a-6b-603. No-
tice of this violation and the consequent civil assessment was
sent to you by certified mail on
/~7 Since you did not request a hearing, this notice
became a final order of the Commissioner on
/~~7 This notice became a final order of the Commissioner
after hearing on .
Payment of the assessment was due on and is
now over three weeks late.
The law provides that if the assessment is not promptly
paid, it may be enforced in the same manner as a judgment of
the Superior Court. Accordingly, if we do not receive your
payment, the Commissioner will file his final order with the
Clerk of the Superior Court. Upon such filing, the order will
have the same status as a judgment of the Superior Court and
will be enforced by the Sheriff accordingly.
We expect to receive your delinquent payment no later than
If we do not receive payment from you by that
time, we will be compelled to institute proceedings with the
Superior Court.
If you have any questions concerning this letter, please
feel free to contact me at 566-3160.
Sincerely,
Assistant Director,
Air Compliance,
Enforcement Section.
CA-603-C
-------
V-35
CHAPTER IV
HOW TO APPLY THE 601 ASSESSMENT
Section 601 authorizes the Department to impose civil assess-
ments in the event that an order recipient fails to submit progress
reports as required. The assessments are small and, unlike those
authorized by §§602 and 603, do not vary from case to case.
A. UNDERSTANDING THE SCOPE
OF THE REGULATION
DEP Regulation 19-508-12 (f) requires that any person against
whom a final order has been issued shall submit progress reports
on the status of such order, and it defines in detail what progress
reports must contain, what form they must take, what supporting evi-
dence they must provide, and when they must be submitted. These
standards will be further expanded in the terms of the order. (A
copy of this regulation is reprinted on the back of form CA-601-W
(FE-1106 (6/25/75)), which may be found in "Forms and Letters" sec-
tion which follows.)
A §601 civil assessment may be imposed in either of the two
following situations:
(1) If a source fails to submit a progress report
on time he has violated the regulation. For
the purposes of Department administration,
however, a grace period of one week after the
due date of a progress report will be permitted.
(2) If a source fails to submit a complete progress
report: e.g., if he fails to meet any of the re-
quirements stated in 19-508-12(f) (2)- (4), or in
his order, he has violated the regulation. How-
ever, since the Department's interest is to re-
ceive complete progress reports rather than to
apply civil assessments, every effort should be
made to educate a source as to the progress re-
port requirements before you seek sanctions.
Warning letter 601-W may be used for this purpose.
B. IMPOSING
AN ASSESSMENT
Section 22a-6b-601 provides for the imposition of 2 levels
of civil assessment for violation of the progress report re-
quirements:
-------
V-36
(1) for a first violation, an assessment of fifty
(50) dollars;
(2) for each successive violation, an assessment of
one hundred (100) dollars.
If you determine that a source has violated the progress re-
port requirement:
(1) Check its file to see if it has previously been
assessed under this regulation. If the source
has no previous history of delinquency, send it
a warning letter, CA-601-W.
(2) If the source has already received a warning
letter on this matter, and if this is a first-
time violator, send it assessment letter CA-601-A
by certified mail, return receipt requested.
and
Place a copy of the assessment letter and the
certified receipt in the "Assessment Notices
Outstanding" file, now kept by Mr./Ms. .
(3) If the source has not requested a hearing twenty
days after it received the letter, the letter
automatically becomes a final order of the Com-
missioner. If payment is not received by the
25th day after receipt, you should send the
source the letter of collection, CA-601-C.
C. MANAGING
HEARING PROCEDURES
The Regulations, (§22a-6b-101(b)) provide that a person may,
within twenty days after receipt of the assessment letter, de-
liver to the Commissioner a written application for a hearing.
Given the small size of the assessment, and the generally un-
disputed nature of a violation of this sort (either a progress
report was filed or it was not filed), the Department does not
expect to entertain many applications for hearings to contest
601 assessments.
However, if a source does request a hearing, you should
follow the hearing procedures that are outlined in Chapter V
of this operating manual.
If a hearing is held, and the Commissioner does not decide
to reverse the finding of a violation, you will be notified by
-------
V-37
the hearing officer that you can proceed with the collection
procedures outlined below.
D. COLLECTING
AN ASSESSMENT
Particularly when the amounts due are as small as 601 assess-
ments, the Department does riot anticipate having any trouble with
collection. Other agencies with similar enforcement programs have
not had any trouble, and none is expected here. However, for the
rare delinquent case, the Enforcement Act provides an easy collec-
tion procedure.
If a source does not pay his assessment by the date indicated
on his assessment notice, send him the collection letter, CA-601-C.
If payment is not received within three weeks of receipt by the
source of the collection letter, the case should be turned over to
Mr./Ms. who will refer the matter over to the Clerk
of the appropriate Superior Court which will enforce the assessment
through the Sheriff.
When an assessment is received, the check should be properly
logged and delivered to the Bureau of Administration's Office of
Financial Services under the transfer letter that is attached at
the end of this section. The Bureau will have the check deposited
in the proper account and will provide you with a receipt for the
assessment check which should be placed in the source's file.
-------
V-38
E. FORMS AND LETTERS:
THE 601 REGULATIONS
The following forms and letters should be used in applying
the civil assessments for violations of the progress report
regulations:
* 601 Assessment Checklist
* Assessment Warning Letter (CA-601-W)
* Assessment Letter (CA-601-A)
* Collection Letter (CA-601-C)
* Transfer Letter (CA-601-T)
Copies of these forms and letters may be found on the
following pages.
-------
V-39
CIVIL ASSESSMENT CHECKLIST: SECTION 601
§ of
Manual Initials
Name of Source: ^^___
State Order No.:
IV (B) Progress Report Due On:
Is Now More Than One Week Late /~7 Yes /~7 No
Progress Report Inadequate Because:
IV (B) This is a / / First /J7 Subsequent Violation
IV (B) Assessment Letter (CA-601-A) Sent By Certified
Mail On: ________
IV (B) Date Return Receipt Signed by Source:
IV (B) Twenty Days After Receipt Is:
IV (C) Request For Hearing Received By Above Date;/""/ Yes / / No
IV (D) Payment Recieved On:
IV (D) No Payment Received on Schedule
Collection Letter Sent On:
Collection Referred On:
IV (D) Payment Sent Bureau of Administration On:
-------
V-40
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING • HARTFORD, CONNECTICUT 06116
SUBJECT: Monetary Liabilities for Progress Report Deficiencies
Dear M
Progress Reports are required as an integral part of your State Air Compliance Order because they are essential
to monitoring progress. Tardiness and inadequacy of 1'ropress Reports are, therefore, detrimental to Connecticut's
air pollution abatement prop-am. For this reason, the Legislature has passed enabling legislation authorizing
the Department to impose monetary assessments to curb such deficiencies. A copy of the Deparlmont's applicable
regulations is printed on the reverse side (or enclosed).
In the case ol your State Order No.
I L
I / We have not received the Progress Report which was due on
]_ / We thank you for your Progress Report dated / / ; IOVKVER,
/ 7 Please use our Form FE306 for all future Progress Reports (copy enclosed).
/ / Please refer to the "Compliance Timetable". Each element of your Progress Ro]x>rt should lx^
identified with the pertinent "Step" number listed on the Timetable.
/ / Please refer to the "Compliance Timetable". When any "Step" of the Timetable has been completed
(entirely), your Progress Report should indicate "Step No. was completed on (Date) ".
On your next Report, please bring us up-to-date by reporting which "Steps" have been ccxnpleted
(ent irely completed) since the inception of this Order.
7 / You neglected to include a concise but comprehensive description of
J_ / the specific reasons for tardiness
/7 the current state of completion
/ / the special action which will be taken to return "on-schedule" by the date of the next Progress
Report
/~~7 YOU ARE REQUIRED TO SUBMIT A SPECIAL REPORT ON THIS SUBJECT BY / /
j_ / Please address Progress Reports preci.soly as indicated at the top of Progress Report Form FE3O6.
]_ / Please send copies of all Progress Reports to
We would appreciate your cooperation; but must caution you that any future deficiencies may cause the Department
to impose civil assessments in accordance with Section 22a-6b-601.
Sincerely,
IVmaid M. IIol for
AIR COMPLIANCE UNIT
Mtt'ORCMDOT CDNTROI, CliNTER
5(50-3160
Assessment Follow-up Program
CA-601-W
(H:-I inr, ((1/25/75))
-------
ADMINISTRATIVE REGULATIONS ^
AjBBMin«nt of Civil PenaJtit*
/legislations and nolim published herein art
printed exactly us submitted by tht forwarding
ftgrncits These, being official documents
submitted fcy tht responsible agencies, an
consequently not subject to editing by tke
Commission on Offlcwl Legal Publications
DEPARTMENT OF ENVIRONMENTAL PROTECTION
Submission of Progresi R«porU and Aa*eum«it
of Civil Peu<iw
Section 1 Section IH SOR-12 of the Retaliations of Con-
necticut State AC* nrirR is amended by adding a new sub-
section (f) AS follows.
S«c. 19 508-12 Violationi and enforcement
(f) Projrrea» report requirement!. (1) Requirement,
time, form Any person apiutiKt \\hotn A final order ban
been issued shall submit progress reports as required and
prescribed by thi1 terms of the order. Such progress
reports shall he submitted m such a form aa the ro mm li-
stener prescribes
(f) (2) Contents Progress reporti shall contain a
separate declaration for each required step of an order'i
compliance timetable, stating either thai compliance with
the step is on schedule, or that compliance with the Btep
i« off schedule Process reports declaring that compli-
ance in proceeding on schedule shall contain a conciae
but comprehensive description of (I) the action com-
pleted on ench and every step required by the order
during the time period cnvered b> the report, and (2)
th* dale or dates on which compliance with such step or
steps was completed Progress report* declaring that
compliance is proceeding off-schedule ahall contain a con-
cise but comprehensive description of (1) the specific rea-
sons for the tardiness, (2) the current state of completion,
and O) the special action which will be taken to return
"on h< hedulc" by the date of the next progress report
Progress reports shall contain sueh other information u
the commismoner may require by the terms of a final
order
(f) (3) Proof of compliance Priifmwi rrjNirUi ahall
include t>ie name ami uddreaa of any vendor whom1 goodfl
were ordered for com pi in nee purposes since the prior
progress report When1 the term* of an order reported
upon require the purchase of any material, service or
equipment, progress reports shall include copies of the
purchase order or orders The eomni winner may require
such other proof as he ik-uns necessary to determine the
progress and ili-yrcf of compliance
(f) (4) Verification of contracted work. Pro
ericaion o conrace wor. r
reports shall include the name and address of any con-
sultants, subcontractors, or other agents employed nnder
the terms of the order since the prior progress report
logether uith a concise hut comprehensive description of
the actions they are to take to asaist in compliance with
the orders Whenever any vendor, consultant, subcon-
tractor or other agent is undertaking any activity regard-
ing uny step in the order, the progress report shall include
a verification by the person under order that the vendor,
consultant, subcontractor, or other agent is proceeding
,
on-schrdule
(f) {&) Li Ability Any person required to submit
progress reports shall be liable for failure to meet any of
the n quirt incuts of this section notw ithntiuiding any
delegation of n sponsibihty to an agent to complete and
submit reports Any person who files a progress report
containing false or misleading information or other claims
shall be subject to criminal prosecution pursuant to sec-
tion 53a-157 of the General Statutes
;. Ma 6b 100. Title
Section 22a fib IfK) to 22a-6b-900, inclusive, ahall be
known and may hi- cited aa "Civil Penalty Regulation!."
Bee. 22a 6b 101. Enforcement proceeding*
(a) If the commissioner has rranon to believe that a
violation has occurred fur winch a civil penalty has been
t'Htahliflhed, he may send to the violator by certified mail,
return receipt requested, or by person* 1 service, a notice
which shwll include:
(1) A reference to the section of the statute, regulation
or order involved;
(2) A abort and plain statement of the matters aaaerted
or charged,
(3) A statement of the amount of the civil penalties to
be imposed upon finding after hearing that a violation
Raji occurred or upon a default;
(4) A statement of the party's right to a hearing.
(b) The person to whom the notice ta addressed shall
have twenty days from the date of receipt of the notice
in whieh to deliver to the commissioner written applica-
tion for a hearing If a hearing w requested then, after
a bearing and upon a finding that a violation has occurred,
the commissioner mny inane a final order nwnsmR a
civil penalty under this section which ia not greater than
the penalty stated in the notice. If such a hearing u not
so requested, or if such a request is later withdrawn, then
the notice shall, nn the first day after the expiration of
such twenty day period or on the first day after the with-
drawal of such request for hearing, whichever is Inter,
become a final order of the commissioner and the matters
asserted or charged in the notice shall he deemed admitted
unions modified by consent order, which shall V>e a final
order. Any civil penalty may be mitigated by the com-
missioner upon such terms as he m his deicretion deems
proper or necessary upon consideration of the factors
set forth in section 2 (b) of Public Act 73-665
(e) Final orders AMHISMIIK civil penalties not appealed
pursuant to section 2 (f) of Public Ac.t 73 665, aa
amended, shall be filed for execution pursuant to section
2 (h) of Public Act 73 665, as amended Such final order*
do not waive or forsikc any other reimdus or powers the
department may ha**- with regard t° the matter in ques-
tion
Sec. 22a 6b-102. Conflict and severance
(a) The provisions of this section are in addition to
and in no way Hrrog.ite from any other enforrt mem pro-
\isions contained in .my statute administi-n-d by tin- com-
missioner The powers, duties and remedies provided in
such other statutes, niui the existence of or exert isi- of anv
powers, duties rrmntirn hermndcr or thereunder shall
not prevent the commissioner from exercising any other
jmv.ers, OH-12
(f), a civil penalty of fifty (f>0) dollars,
(2) For each successive violation of any p.ut of section
19-508 12 (f),a eml penalty of one-hundred (1(H» dollars
I)f it kiinnn that thr »itton nniiM)t In Htrtmni IS fiOH
nn>! 2Cn (t of thr (inn rnl Htntut<>t nnii Pul.lir Art Nn fiC>5 of lhf>
1U73 I'ulilir Act* nfl.-r lh»- j-ul.t,, nlion in thr Conn-'.-lirirt I^w
In Uilnr^ Whcimf, I hn«<> hrrrunte
f of Hrptrml>cr, 1974
Appro\f(l Attor
jit, Orlnl-cr ,11, I07<, Htnn.linjf I
>ffwtiv«
-------
V-41
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING
HARTFORD, CONNECTICUT 06115
CIVIL ASSESSMENT
NOTICE
No. 1-
TO:
RE: Premise Name
Premise Address
State Order No.
Progress Report Due
The Commissioner of Environmental Protection has determined that you are now in violation of the progress
report requirements specified in §19-508-12 of the Department's Administrative Regulations for the
Abatement of Air Pollution (hereinafter "Regulations") and/or in the referenced State Order.Pursuant
to the provisions of Department Regulations 22a-6b-101 et. seq., this letter constitutes notice of the
violation, a statement of the amount of civil assessment(s) to be imposed for this violation, and a
statement of your right to a hearing:
VIOLATION:
The Progress Report Regulations provide that any person against whom an order has
been issued shall submit progress reports as required and prescribed by the terms
of the order. The referenced progress report
/ / has not been received on time.
/ / has been received, but does not meet the requirements of §19-508-12(f)
and/or the order because:
ASSESSMENT: since this is
HEARING:
/ '/ an initial violation, you are hereby assessed a civil assessment of
fifty dollars ($50). For any subsequent violation of this regulation,
you will'be assessed a civil assessment of one hundred dollars ($100).
/~~7 a repeat violation, you are hereby assessed a civil assessment of one
hundred dollars ($100). For any subsequent violation of this regula-
tion, you will be assessed additional assessments of one hundred dollars
($100).
You do have a right to a hearing on the issue of whether the violation has
occurred. To request a hearing, you must deliver to the Commissioner a
written application for hearing within twenty days of the receipt of this
notice.
PAYMENT: | Unless a hearing is requested, this notice shall become a final order of the
i Commissioner twenty-one days after the date of receipt. Payment of the civil
J assessment shall be due twenty-five days after receipt of this notice. Payment
* should be made by check to the order of "Conn. Department of Environmental
Protection" and should be delivered to the
• Assistant Director of Air Compliance Enforcement
Department of Environmental Protection
165 Capitol Avenue — Room 133
Hartford, Connecticut 06115
If you have any questions concerning this notice, please contact the Assistant Director at the above
address or, by phone, at 566-3160. All correspondence should be identified with the Civil Assessment
Notice Number (see top right-hand corner).
Signed (Assistant Director)
/ /
Date
Signed (Director)
Date
SERVICE
A copy of the foregoing Notice was submitted to the above-named as indicated below:
/7 Personally delivered to
Recipient's Signature
/ / Certified mail to the usual place of business or residence. Registration No.:
Date
Town
Premise
AQCR
NEDS County_
EPA 100T Premise //Yes //No
Reg .'* Yr. Day
Copiest 1) Regulatee 2) Air Quality Enforcement
CA-601-A (FE1102 (6/13/75))
-------
V-42
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Subject: State Order No.
Violation Notice No.
Dear
Pursuant to Department Regulations 22a-6b-601, the Depart-
ment has imposed upon you a civil assessment for violation of
the Progress Report Regulations set forth in 19-508-12(f). No-
tice of the violation and the assessment was sent you by certified
mail on .
/~7 Since you did not request a hearing, this notice
became a final order of the Commissioner on
/~7 This notice became a final order of the Commissioner
after hearing on .
Payment of the assessment was due on and is
now over three weeks late.
The law provides that if the assessment is not paid promptly,
it may be enforced in the same manner as a judgment of the Superior
Court. Accordingly, if we do not receive your payment, the Commis-
sioner will file his final order with the Clerk of the Superior
Court. Upon such filing, the Clerk will docket the order in the
same manner and with the same effect as a judgment of the Superior
Court. Upon such docketing, the order will be enforced by the
Sheriff as a judgment of the Superior Court.
We expect to receive your payment no later than .
If we do not receive payment from you by that time, we will be
compelled to institute proceedings with the Superior Court.
If you have any questions concerning this letter, please feel
free to contact me at 566-3160.
Sincerely,
Assistant Director ,
Air Compliance,
Enforcement Section.
CA-601-C
-------
V-43
STATE OF CONNECTICUT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Source:
Civil Assessment Notice No.
Amount of Payment: $
Bureau of Administration, Financial Services
Department of Environmental Protection
Room
The attached check represents payment by the above-named
source for a civil assessment imposed pursuant to the Depart-
ment's Regulations 22a-6b-100 e_t seq.
Please deposit the check into the account of the State's
General Fund and return a receipt of such deposit to me.
Sincerely,
Assistant Director,
Air Compliance,
Enforcement Section.
CA-601-T
-------
V-44
CHAPTER V
HOW TO CONDUCT HEARINGS
IN CIVIL ASSESSMENT CASES
Sources who receive notices of violation imposing civil as-
sessments have 20 days from the date of receipt to request a hear-
ing on the proposed assessment. The scope of the hearing will of
course depend on the nature of the violation.
601 ASSESSMENTS
For the 601 Assessments (Progress Reports), a party request-
ing a hearing can contest:
(1) Whether, as alleged, the progress report in
question was delinquent or not received at
all; or
(2) Whether, as alleged, the progress report was
incomplete or otherwise failed to satisfy the
substantive requirements for progress reports
as set forth in Department Regulations 19-508-
12(f) or in the regulatee's order.
Since these are relatively clear-cut issues, and since the amounts
in question are small, hearings on the 601 assessments are not ex-
pected to occur very often. Nonetheless, when such hearings are
requested, the Department must demonstrate to the satisfaction of
the hearing officer that:
(1) The regulatee was at the time of the alleged
progress report violation subject to a state
order containing progress report requirements;
and
(2) The regulatee failed to submit a progress report
on time or failed to submit a complete progress
report on time.
In meeting these burdens of proof, the hearing officer can
reasonably expect the Department (probably a member of the En-
forcement Unit) to produce:
(1) The state order pursuant to which the progress
report in question was or was not submitted;
-------
V-45
(2) Any communications, or notations thereof, with
the source which discussed progress reports in-
cluding but not limited to:
(a) notes from telephone calls or
meetings at which progress report
requirements were discussed;
(b) copies of letters, including any
notice or warning letters, in
reference to progress report re-
quirements;
(3) A signed statement from the engineer in charge of
the progress reports either that no progress re-
port was received as required by the order or that
the progress report was incomplete. If the assess-
ment is being made for incompleteness, this state-
ment should include a detailed listing of the rea-
sons the progress report did not meet the require-
ments of the regulations. IN LIEU OF SUCH STATE-
MENT, THE RESPONSIBLE ENGINEER SHOULD HIMSELF BE
PREPARED TO TESTIFY AT THE HEARING.
Since this evidence is important to support the Department's case,
it is important that the responsible Department personnel carefully
keep all relevant notes and documents in the regulatee's file.
602 ASSESSMENTS
For the 602 Assessments (Emissions Violations), a party re-
questing a hearing can contest:
(1) Whether, as alleged, an emissions violation has
occurred;
(2) Whether the civil assessment to be imposed for
the alleged illegal emission is correct.
The threshold question on a 602 assessment is whether or not
the violation of the emission standards took place at all. This
issue is the same one that may be presented to the Department in
other contexts; e.g., a challenge to the legality of an abatement
order where the fact of the emissions violation is in dispute.
Since the question of the underlying emissions violation is identical
for both abatement order challenges and civil assessment challenges,
the hearing officer should either: (1) consolidate both challenges
so they can be heard together, or (2) advise the parties during the
first hearing that he will apply his finding on the underlying emis-
sions violation to the second hearing, thereby pre-empting it as an
issue in the second hearing.
-------
V-46
The first procedure is easier and simpler, and probably should
be used most often. If the hearing officer adopts the second
procedure, he must be sure in the second hearing to rule that
his finding on the emissions violations from the first hearing
is binding on the second hearing (even if there are additional
parties in the second hearing). Incidentally, if an attorney
uses the term res adjudicata or res judicata, he is referring
to the binding effect in the second hearing of a finding in the
first hearing concerning an identical issue of fact or law.
On the issue of whether an emissions violation has taken
place, the Department should be prepared to have the Engineer(s)
or Inspector(s) who noted the violation present to the hearing
officer, in person or in a written statement, a detailed descrip-
tion of the date of his inspection(s) and/or observation(s),
the method of his detection of the violation, the precise nature
of the violation (quantitative description if possible) and the
nature of his post-inspection report(s) to the Department.
With regard to the amount of the assessment, the Department
must demonstrate that the amount is reasonable. The Department
must establish:
(1) The number of separate processes or pieces
of equipment that contribute to the emissions
violation.This number establishes the number
of "unabated activities," which in part deter-
mines the maximum assessment. The hearing of-
ficer's task is to judge the reasonableness
of the Department's separation or aggregation
of processes and equipment into unabated
activities.
(The Department may choose to aggregate pro-
cesses and equipment into fewer unabated
activities, in order to avoid the task of
identifying separate ones. The Department
has the authority to do this (§22a-6b-
602(b)(17), and since the result will be
to lower the maximum assessment, the regu-
latee is not likely to object. If an inter-
venor objects to such aggregation, the
hearing officer should first determine
whether or not it makes any difference. As
long as the assessment does not run into a
ceiling no harm has been done and the aggre-
gation can be left undisturbed. However,
if equipment costs and operating costs for
an unabated activity drive the maximum
monthly assessment into one of the starred
boxes in the 602 schedule of maximum as-
sessments, and if the unabated activity has
been aggregated from separate processes and
equipment, the hearing officer should press
the Department to defend its position.
-------
V-47
The test is whether or not one or more of the
constituent processes or pieces of equipment
emits pollutants if operated alone.)
(2) The operating parameter(s) or other basis(es)
from which equipment and operating costs were
estimated.Here, the hearing officer must
judge the reasonableness of the Department's
cost-estimation by evaluating the Department's
determination of the operating level for each
unabated activity, and by checking that the
Department has properly used the appropriate
cost curve or other costing technique. (Usually,
the operating parameter will be gas flow in
CFMs. Since equipment and operating cost
estimates must be made for each unabated activ-
ity, a separate gas flow must be calculated for
each one. This may involve the Department's
allocating to separate unabated activities the
gas flow through a single stack, or aggregat-
ing gas flows from several stacks which vent
a single unabated activity).
(3) The inflation rate, cost of capital, and
equipment life figures used to calculate the
assessment.The hearing officer's task is
to judgefa) whether the inflation rate was
selected and calculated in accordance with
§602(b)(13), using either the Chemical Engi-
neering Index or another index, (b) whether
the regulatee is a member of the class cov-
ered by the cost of capital figure the Depart-
ment calculates, and (c) whether the average
equipment life of the control equipment, if the
Department has used a figure different from
the 10-year period specified in the regula-
tion, is reasonable.
(4) Accurate assessment calculations using the
above numbers. The Hearing officer's job
here is to judge whether the Department
properly calculated the monthly assessment.
(5) The length of the violation. The hearing
officer must determine whether the Department
has adequately demonstrated when the emissions
violations began. A showing that the source
was in operation at the time claimed and did
not have necessary control equipment in place
will generally be adequate.
-------
V-48
In meeting these burdens, the Department will probably pre-
sent as evidence:
(1) Testimony and documents (registration state-
ments, PIQs, inspection reports, etc.) ident-
ifying separate processes and pieces of equipment
and the pollutants and levels of polluted emis-
sions produced by each in order to establish
the number of unabated activities •
(2) The operating parameters from which the assess-
ments were calculated. This usually will include
the CFM rate, production per hour, and whatever
other parameter is used in the cost function.
This information is usually taken from the source's
registration statement and, when this is so, the
registration form itself should be produced and
included in the record. Similarly, if the infor-
mation is contained on a Pre-Inspection Question-
naire, the PIQ itself should be produced.
(3) A copy of the cost curves upon which the assess-
ment was based. This can usually be produced by
having a copy of the appropriate curves and back-
up materials from Chapter VII (Section A) of this
Volume, plus a file of any calculations that have
been done to update these curves, available for
inspection, with relevant portions copied and in-
troduced for the record. Special note should be
made of the sources from which the cost curves
were developed and how they were verified with
specific cases.
(4) A copy of the materials on the cost of capital, in-
flation, income tax rates, and equipment life found
in Chapter VII (and Part III of this Volume),
together with testimony explaining how they were
used in the particular case at issue.
(5) A copy of the Wang calculator print-out record-
ing the calculation of the assessment level. A
copy of the detailed explanation of the formula
used to determine assessments found in Chapter I
of Part III of this Volume should also be included
in the record.
(6) A showing of when the illegal emissions began
and were first assessable. Proof that a source
was in operation on the first day alleged, e.g.
by showing that it was listed in the preceding
year's Connecticut Directory of Manufacturers
or had been the subject of an earlier DEP in-
spection, should be enough. If the source
-------
V-49
alleges it had adequate control equipment in
place and consequently was not emitting illeg-
ally, the Department must show that the alleged
equipment either was not there or that it was
inadequate. It can require the company to show
purchase receipts for the alleged equipment if
necessary.
If the Department seeks to include a period of
noncompliance prior to its having detected the
violation directly, the Department must also
show that the source had, before the first
day for which it is to be assessed, notice
of its potential §602 liability or was a re-
peat violator. A file memo recording personal
service, the returned receipt from a notice
sent by certified mail, or other Departmental
records evidencing prior enforcement action(s)
of a similar nature would have to be intro-
duced into the record.
The Department may take the position at a hearing that not
enough information is available at that time to calculate the
monthly assessment with reasonable certainty, and it may accord-
ingly request that the question of assessment calculation be
deferred until more data becomes available (e.g., from an en-
gineering report). In this situation, the hearing officer may
make findings and a decision as to the other issues (such as
emissions violations) in the case, and postpone part of the hear-
ing under Section 602(f)(iv).
Deferring part of a hearing under 602 (f) (iv) postpones a
final decision by the Commissioner, and thus also postpones a
regulatee's right to appeal. Postponement provides valuable time
for the Department to gather cost information to demonstrate the
reasonableness of a proposed assessment. This extra time also
brings a cost: the Department cannot collect any assessment with-
out a final decision. These conflicting pressures — more time
at the cost of delayed collection — will probably work to keep
the Department's use of postponement in balance. Nevertheless,
excessive delay can seriously impair a regulatee's right to ap-
peal; the hearing officer, therefore, must be sensitive to undue
delay in each case. Generally, (1) waiting until an engineering
report is available is reasonable, (2) delays over a year are
suspect and require strong justification.
The hearing officer should also be aware of the correction
procedure in §602(g) (2). This enables a regulatee to obtain
adjustment of any final assessment if it can demonstrate that its
cost of compliance or the assessment period were less than the
Department had assumed in determining the assessment initially.
Once the source has come into compliance, it has a right to such
a correction. Any overassessment will be repaid with interest.
-------
V-50
This adjustment of an otherwise final assessment may take place
months after the assessment, indeed up to two years after final
compliance. The availability of this procedure allows the hear-
ing officer to give the Department more leeway in calculating
the monthly assessment and in determining the assessment period,
since both can be corrected later.
603 ASSESSMENTS
For the 603 Assessments (Order Violations), a party re-
questing a hearing can contest:
(1) Whether, as alleged, there has been a viola-
tion of the terms of the order, and/or
(2) Whether the civil assessment proposed by the
Department is correct.
The threshold question on a 603 violation is whether or not
a source has failed to comply with the terms of its order. The
usual context for a violation is a source failing to meet the
scheduled compliance deadlines embodied in the order. Such fail-
ures are easy to demonstrate: If the source has failed to meet
one of the compliance deadlines in its order, it is in violation.
Was the baghouse in place by June 13th as required or not?
(The regulations allow only a few, easily verifiable excuses
for missing a deadline available as defenses -- wars, strikes,
fires, floods — but not third party delay.) (See Section
603 (g) (3).)
To establish a violation, the Department must show:
(1) That the regulatee was at the time of
the alleged delinquency under an order;
(2) That the regulatee failed to meet a
scheduled deadline;
(3) That the regulatee has been delinquent
for at least as long a period as the
assessment period used to calculate the
civil assessment.
The Department will probably meet its burden by producing:
(1) The state order involved in the case;
(2) Any correspondence concerning the com-
pliance deadline in question, or any
other evidence of communications with
the source concerning the compliance
timetable. Such evidence may include
but need not be limited to:
-------
V-51
a. notes from telephone calls or
meetings with the source at
which the compliance deadline
was discussed,
b. copies of letters, including
any warning or notice letters
in reference to compliance with
scheduled order deadlines.
(3) The civil assessment regulation limiting the
acceptable excuses for delay;
(4) Evidence of the period of noncompliance, e.g.
the report of an inspector that he visited
the site 6 months after the deadline and did
not find the equipment in place as required.
This information is critical since the amount
of the assessment is directly proportional to
the period of delay. (This issue can be
especially troublesome in the first few months
of the program since the effective date of the
regulations occurs in the middle of some already
delinquent orders. In these cases the regulations
allow the Department to assess a regulatee for the
total number of days of overrun beyond any com-
pliance schedule deadline that falls due after
the regulations become effective — i.e. for all
accumulated delay. However, as a matter of policy,
the Department intends to assess only for incre-
mental delay beyond the regulation's effective date
See Chapter III Section B of this manual for direc-
tions on measuring the period of delay.)
Whether the amount of the civil assessment is correct or not
turns on exactly the same issues and should be handled in exactly
the same way as a challenge to the amount of a 602 assessment
would be. (See the last section of this Chapter.)
-------
V-52
CHAPTER VI
HOW TO USE SURETY DEVICES
AS PART OF THE OVERALL ENFORCEMENT PROGRAM
Section 22a-6(7) of the General Statutes gives the Depart-
ment the authority to require the posting of performance bonds
or other sureties as a means of ensuring prompt and effective
compliance with environmental regulations. The Department has
already had significant success with the use of penalty or for-
feiture bonds and anticipates expanding the application of these
devices. It is important to understand the nature of different
kinds of sureties since each can play a useful role in a total
enforcement program.
SURETY DEVICES: SOME
DEFINITIONS AND AN EXPLANATION
A performance bond is a bond posted by a surety company
which guarantees the performance of an agreed-upon action (e.g.
the installation of a piece of pollution control equipment) by
an agreed-upon date. If the bonded company or individual fails
to perform as required, the guarantor is responsible for the
performance. (The guarantor, of course, has recourse against
the failing company or individual.) Such guarantor responsi-
bility can take one of two forms:
(1) In some cases the surety company is itself
responsible to complete the required job.
Because of the complexities of installing
pollution control equipment, few if any
surety companies are willing to accept
liability on this basis.
(2) In the more usual case, performance bonds
guarantee that if performance is not com-
pleted as required, a set amount of money
necessary to achieve compliance will be
paid to the party owed the performance.
In such cases, however, the party owed the
performance must then complete the perform-
ance himself.
Obviously, the Department would not want to be put in the
position of being responsible for completing pollution control
installation. Accordingly, performance bonds will normally not
be appropriate for Department enforcement activity.
-------
V-53
A penalty or forfeiture bond is a bond posted by the regulatee
or a surety company which guarantees that a set sum of money will
be forfeited if an agreed-upon action is not performed. A typical
penalty bond in the environmental setting would provide that if
installation of a certain piece of pollution control equipment
is not completed by a certain date, a set amount of money in the
form of a "penalty" would be forfeited to the Department. Such
"penalty" or "forfeiture" does not extinguish the obligation of
the bonded party to complete performance; it does penalize him
for not complying as required on time. The Department has al-
ready had some notable successes with the use of penalty or
forfeiture bonds. Companies having a significant financial stake
in prompt compliance, even if previously afflicted with recurrent
extraordinary delays, have suddenly found the means to meet
deadlines.
An escrow is similar to a bond in that money is pledged
to guarantee an obligation to perform a duty. An escrow
agreement differs from other sureties in that no surety company
is involved, instead, the party guaranteeing the performance
is the party who must carry out the performance. Such guarantee
usually takes the form of the company placing assets (usually
cash, treasury notes, or other similarly liquid assets) in an
account managed by an escrow agent. The escrow agent merely
holds the assets and either (1) returns them to the pledging
party if performance is achieved, or (2) transfers them on de-
mand to the party owed the obligation if performance is not
achieved. An escrow account has particular advantages in cases
where bonding companies are unwilling to provide guarantees.
In addition, since the costs of retaining an escrow agent
(usually a bank) are significantly less than those for hiring
a surety company, the costs of such a guarantee are more easily
afforded by all types and sizes of regulatee.
A flexible reserve escrow is a variation of the escrow agree-
ment. It differs from the usual escrow arrangement in that the
party owed the performance has the option of allowing the per-
forming party to post only a portion of the total escrow amount
in the account at any one time. Thus, an escrow agreement
might call for placing $48,000 with an escrow agent. If the
agreement were for a flexible reserve escrow, the party owed
performance could allow a smaller amount to be posted. While
the party owed performance could require the full $48,000 to
be put in the account at any time, it could agree not to do so
if certain requirements were met or for as long as it felt that
the work owed it was proceeding well. Thus, v.-hile a company
might normally have to post $48,000, the Department could re-
quire that only, say, $4,800 be put in the account. This kind
of flexible reserve escrow leaves the regulatee liable to the
Department in full if it fails to perform, but cuts the cost
to the company by, in this example, 90 percent.
-------
V-54
USING SURETIES:
SOME EXAMPLES
Suppose polluting company A, found in violation of the
particulate emission standards, has been required by state order
to achieve compliance by April 1, 1976. If the Department is
concerned about its meeting the deadline because of schedule
lag, it could require the company to post any of the following
sureties:
(1) The Department could require a performance bond
for a face amount of up to $48,000 — the cost of
compliance. If compliance is not achieved on
April 1, 1976, the Department can demand as much
of the $48,000 amount as would be required for
the Department to complete the compliance. As
noted above, however, the Department does not
want to be responsible for this work. Conse-
quently, this bond option will normally not be
used.
(2) The Department could require a penalty or for-
feiture bond. The face amount of this bond
would also be for $48,000 —the total cost of
compliance. The terms of the bond, however,
could provide that it would be forfeited for
delays in compliance at a rate equal to the
civil assessment which would be imposed for
a similar period of delay or non-compliance.
Thus, if a source who fell behind schedule by
four weeks would normally be liable for an
assessment equal to $4000 according to the
terms of the Department's civil assessment
regulations, the bond could call for the
forfeiture of $4000 per four week period of
delay.
(3) The Department could require an escrow account
to be created. The amount of the escrow could
again be the $48,000 cost of compliance. The
company would then be required to place that
amount into an account held by the escrow agent
(usually a bank) under an agreement which calls
for forfeiture payments for delays in compliance.
Again, the amount of the forfeiture could be
tied to the civil assessment which would be
imposed in such a case. In our hypothetical
example, the amount forfeited from the escrow
account would be $4000. If no delay were in-
curred, the party would have the full amount
of the escrow account returned to him upon
-------
V-55
completion of the necessary work. Because an
escrow account held by a bank can continue to
earn interest for the party posting the escrow,
the cost of such a device can be very small —
the difference between the source's cost of
capital and the return on Federal notes
(roughly 3 percent to 6 percent) plus $200-3300
in service charges.
(4) The Department could require that a flexible
reserve escrow account be set up. Such an
account would rest upon an agreement which
(1) recognized that the company posting the
escrow could be required to post the full
amount of the escrow ($48,000) at any time,
but would be permitted to post such smaller
amounts as the Department required from time
to time, and (2) provided for the forfeiture
of such amounts in the escrow account at a
rate determined by the comparable civil
assessment which would be imposed for such
a source's delay. If the regulatee fell
further behind schedule, the Department
could require it to increase the proportion
of its total potential liability placed with the
escrow agent; if a regulatee made up lost
time, the Department could cut the amount
it had previously required be posted. This
device would allow the Department to commun-
icate warnings and encouragements to those
about whose performance it is concerned
with great flexibility and ease. (The
regulatee cannot contest any of these re-
quirements since it has already agreed to
post the full amount on demand.)
ECONOMIC
SURETIES
Sureties should be set according to the same economic logic
as civil assessments. Forfeitures should counterbalance the
benefits of noncompliance, and the amount of the surety the
Department may require should be large enough to cover such
forfeiture payments over the number of months they might reason-
ably be necessary. (Probably one year's worth of monthly
economic assessments will be enough.)
There are two chief reasons why sureties should follow the
same economic logic as economic assessments. First, by doing
so they obtain all the objectivity, fairness, and effectiveness
— and therefore useability — of economic civil assessments.
Second they can be made to mesh with economic assessments into
-------
V-56
a coordinated, multi-step enforcement process that will give
the Department greatly improved flexibility and enforcement
cost effectiveness.
This close fit between sureties and assessments is especially
critical since sureties are ultimately enforceable under the
Department's civil assessment powers. Regulatees will agree
to post sureties as the less costly of evils when offered the
choice of doing so or of paying a full assessment. Moreover,
if a regulatee is still not in compliance once the amount
placed with the escrow agent is exhausted, the Department can
impose a civil assessment for the period beginning the day that
escrow payments are no longer possible at the same rate as
before.
USING
SURETIES
Sureties work. Requiring regulatees to post sureties
induces immediate action. This has been the experience both
within and without the Department. In 1974, the Air Compliance
Unit imposed penalty bonds on several of its most troublesome
sources ; and, in every case, these sources either came promptly
into compliance or any further delay they, experienced was in-
significant compared with their past records.
Given that sureties are effective, it makes sense for the
Department to require one of the four types of surety outlined
above before imposing civil assessments in many cases. Requir-
ing a regulatee to accept that the Department can (1) require
it to freeze a portion of its assets in a low-yielding escrow
account at will until it is in full compliance, and (2) make it
forfeit some or all of this amount in the event of delay or
noncompliance — even if it costs the regulatee almost nothing
— is a step no regulatee can ignore. On the other hand, be-
cause it is clearly a much less severe step than others avail-
able to the Department, notably that of imposing a civil assess-
ment, the Department can require sureties without having to
face lengthy negotiations or much risk of a contest. In other
words, using sureties first will generally be less expensive
for the Department as well as for the regulatee.
There are, of course, cases where requiring a surety is
either not possible or unwise. Violations not discovered until
after the fact cannot be prevented by requiring that a surety
be posted in advance. Some offenses are too small to be worth
such preventive care, and the repeat offender may merit no
more "second chances."
The several types of surety offer a wide range of choice
of severity of response. Merely requiring a regulatee to accept
-------
V-57
surety liability costs the regulatee almost nothing economically,
Requiring it to post 10 percent reserve under a flexible reserve
escrow costs only symbolically more. However, requiring a per-
formance bond can be a significant expense.
These several types of surety fit together with the Depart-
ment's administrative civil assessments to provide a highly
flexible set of gradually escalating enforcement steps the
Department can take. They pick up at the point where request-
ing compliance proves inadequate and build up to the point
where drastic, penal sanctions that can only be imposed by a
court become necessary.
The following diagram illustrates how the Department can
use flexible reserve escrows and administrative civil assess-
ments together to obtain a wide choice of finely gradated
responses. Given these tools it can adjust the amount of
pressure it applies to a noncomplying regulatee as needed.
Monthly Cost to the Recalcitrant Regulatee of Possible
DEP Enforcement Actions (Assumes a $48,OOP Escrow)
$4000 $4000 $4000
$84
$24
$48
CUMULATIVE
DELAY (MONTHS)
DEP ACTION
1
2%
4
5
6*
5
9
14
24
30 !
_ 1
WARNING WARNING SURETSf REQUIRE' INCREASE LOWER PARTIAL FULL CIVIL CA AND
LETTER LETTER LIABILITY RESERVE RESERVE RESERVE CALL CALL ASSESSMENT COURT
(10Z) (35%) (20X)
-------
V-58
•In the hypothetical and unusually recalcitrant case shown
in the diagram, the Department could escalate its response
easily and very flexibly (see diagram). It could issue a
warning letter to the regulatee as soon as a problem was
detected, and, upon receiving no adequate response, it could
issue another one month to two months later. After the fourth
month of delay it might require the regulatee to accept a flex-
ible reserve escrow liability of, say, $48,000. Assuming another
month's delay, it could require that the regulatee post 10 per-
cent of that amount, i.e., $4,800. Assuming a difference of 6
percent between the cost of capital and the return on short-
term Federal paper, the source would incur an opportunity cost
of $24 per month ($4,800 X .06 X 1/12). In succeeding months,
the Department could increase or lower the reserve requirement
depending upon the regulatee's good faith and performance. If
delay persisted into, say, the ninth month, the Department could
demand partial (e.g., 50 percent) forfeiture, in which case the
source would incur a monthly cost of approximately $2,000.
Further delay would eventually result in full forfeiture, in
this example, $4,000 a month. If delays continued for more than
a year, the amount posted with the escrow agent would be ex-
hausted and the Department would have the option of either
negotiating a second surety arrangement or imposing an immediate
civil assessment. In the extraordinarily unlikely event that
the regulatee still refused to comply, the Department would
still be able to seek more extreme sanctions from the court.
It should be stressed that the above illustration is not
only hypothetical, but highly unlikely. The potency of the
surety device is such that only an unusual source would allow
his delay to persist after having signed a document acknowledging
liability to a possible surety forfeiture.
However, the Department must take care to avoid imposing
more than one surety requirement or a surety requirement and
a civil assessment simultaneously. Any such "double count-
ing" would risk an ultimate judicial characterization of the
Department's new tools as punitive, criminal, and invalid.
The Department will have to decide situation by sit-
uation which of the various forms of surety and whether
requiring a surety or using some other enforcement tool is
appropriate. Among the questions it will want to ask when
making this choice are the following:
* What has the source's past compliance record been?
"Bad actors" may merit more severe responses
earlier in the enforcement process than the
average case.
-------
V-59
* Is an urgent matter of public health or permanent
environmental damage at stake? If so, the Depart-
ment may want to use more drastic tools earlier
than otherwise.
* Why is this regulatee not complying as it should?
If the problem is uncooperative lower management,
requiring a surety from the firm will effectively
force top management to take notice of the problem.
* Can the regulatee easily obtain coverage by a
surety company — and at what price?
Surety companies are notoriously conservative,
especially in areas where performance involves
technologies with which they are unfamiliar —
very much including pollution abatement. Only
very large, well-financed companies can be sure
of obtaining coverage, and even some very large
firms will have to post one hundred percent secur-
ity with a bonding company and still pay a fee.
Smaller companies, let alone individuals or
partnerships, may not be able to obtain a bond
from a surety company — or if they are able to
do so, they will have to pay extraordinary
interest charges. For such a regulatee, it
may only be reasonable to require one of the
escrow forms of surety.
Much of the choice of option will, of course, ultimately turn
on the judgments Department administrators make while negotiat-
ing with regulatees. They will have to decide "What type and what
level of incentive will work best with this fellow?"— just as
they must decide how to handle each problem case now. However,
with the Department's new tools, there will henceforth be many
more responses possible.
WRITING
SURETY AGREEMENTS
A surety requirement is an extremely flexible enforcement
device. Although it can easily be routinized, it can also be
modified to fit individual cases if the unit so desires. When
the unit negotiates surety terms with a regulatee, it has all
the freedom of contract, and since the agreement is a contract,
all terms will be binding.
The Department can write any provisions it can negotiate
with the regulatee into its surety agreements. These provisions
will generally cover what is required of the regulatee (refer-
encing, e.g., the terms of an order), what events will allow
-------
V-60
the Department to require a forfeit, how much the total surety
amount should be and how much would be forfeited in what events,
when the surety liability will end (typically whenever the
regulatee is in full compliance, e.g. with the order), and who
the escrow agent will be.
When the Department requires an escrow, it will want to
define what types of assets are acceptable security. Although,
again, it is free to accept whatever security it feels approp-
riate case by case, it will almost always want to limit what
a regulatee can post with the escrow agent to:
(1) cash
(2) U. S. Treasury notes
(3) Connecticut State bonds.
Other assets, e.g. accounts receivable or corporate securities
are generally not acceptable because (1) they are less liquid,
and (2) their value is less certain and more likely to fluctuate
Individual surety companies and escrow agents typically
have their own forms. These are usually acceptable to the
Department.
*************
Sureties provide an extraordinarily flexible, low cost, and
effective first response to noncompliance when persuasion and
warnings do not prove adequate.
-------
V-61
CHAPTER VII
HOW TO USE AND UPDATE TOOLS
EMPLOYED IN LEVYING CIVIL ASSESSMENTS
Economic assessments -have to be reasonably accurate.
Getting the right assessment is critical to the assessment's
effectiveness, equity, and ability to withstand court challenge.
This chapter spells out how Department staff should go about
calculating assessments in order to get reliable results at
acceptable cost. (Part III of this Volume explains the eco-
nomics underlying these assessments — what the theory is, what
factors must be considered, and how these factors are to be
used.) The chapter is divided into five main sections, each
explaining how the Department would go about using or updating
tools employed in levying civil assessments.
* Section A explains how to determine the cost of
compliance in every type of case likely to be an
enforcement problem, it includes a series of cost
curves that can be used to provide acceptably ac-
curate cost estimates for most cases in minutes.
* Section B explains how to determine the cost of
capital for each case.
* Section C spells out how to update the inflation
factor in' the assessment formula from time to
time.
* Section D explains how to adjust the assessment
formula for sources with income tax rates less
than 48 percent.
* Finally, Section E outlines how to use the assess-
ment formula tape on a Wang desk calculator.
-------
V-62
SECTION A
CALCULATING THE COST OF
COMPLIANCE
The most critical single piece of information* needed to
set economically accurate civil assessments is a reliable estim-
ate of the cost of compliance (chiefly the costs of installed
capital equipment and of annual operating and maintenance).
This chapter explains and provides the tools DEP staff will need
to make good estimates quickly.
The Department must be able:
* to make reliable estimates of the cost
of compliance in order (1) to ensure
that civil assessments are large enough
to be effective but not excessive and
(2) as a result, to ensure a successful
legal defense in the event of a court
challenge;
* to do so in a visibly non-arbitrary
manner, both to ensure case-by-case
equity in fact and to protect the
Department against legal challenge;
and
* to do so quickly and with acceptably
limited administrative costs.
Department engineers could estimate the cost of compliance
case-by-case with information that is routinely available now.
In a test conducted in September of 1974, using actual Connec-
ticut case files, DEP Air Compliance Enforcement Section engineers
were able to obtain accurate estimates in 1 to 14 hours a case.
(The results varied with the complexity of the case and with the
stage of the enforcement proceedings at which the costing had to
be done. The earlier in the process it had to be done, e.g. after
the initial field inspection rather than after final compliance,
the more time the work required because less information was
available.) A survey of private consulting engineers using the
same cases confirmed the results of the test. (However, because
of their greater day-to-day experience with costing, the private
engineers took somewhat less time.)
A full explanation of the effect of taxes, depreciaiton,
cost of capital and inflation on the level of civil assess-
ment is set forth in Chapter I, "Calculating Civil Assess-
ments . "
-------
V-63
Although an average cost of 5 hours on a case of average
complexity with only an engineering report in hand would be
manageable given the significant impact on overall compliance
and the net reduction in administrative costs effective economic
remedies would make possible, it is still a major expense. The
technique outlined in this chapter saves 90 percent of that cost.
For most cases, Department staff will be able to determine
the costs of compliance simply by reading one of the cost curves
in this chapter. These curves relate the costs of compliance to
the number of cubic feet per minute (CFM) of polluted emissions
that must be processed by a given technology. Given the CFM
rate, which is almost always already available, and these curves,
the costs of compliance can be reliably estimated in minutes.
These cost curves come from two main sources: (1) a
series of EPA and private studies*, and (2) actual Connecticut
case experience. Most of the curves were developed initially
outside Connecticut, but most have been tested against and
confirmed by the Connecticut case data. The costs reported by
these curves are, by their nature, general or average costs.
They do not take into account the value of materials recovered
by pollution control devices. While this value may be signifi-
cant in a few cases, such valuation cannot be undertaken by other
than case-by-case study. These costs also exclude any special
specifications which may be required for extraordinary install-
ations (e.g., stainless steel scrubbers). Any further exclusions
are specifically noted.
This chapter first presents these cost curves along with
annotations by type of pollutant (i.e. particulates, organics,
carbon monoxide, nitrogen oxides, and sulfur oxides) and method
of control chosen (e.g. baghouse, scrubber). The Section pre-
senting the curves begins with equipment costs and then provides
annual operating and maintenance costs. The chapter's second
main section discusses enforcement cases not covered by the
curves presented in the first section. Several addenda to the
chapter provide supporting data.
The CEP staff wishes to express their appreciation for the
hard work and patience of James Vickery, Principal Engineer of
the Air Compliance Enforcement Unit. This Section is largely
a product of his efforts.
See the brief listing of the chief data sources used
that follows .
-------
V-64
COST OF COMPLIANCE
CURVES
The Department can use the cost curves that follow to find
the cost of compliance for almost 90 percent of all cases issued
orders. Moreover, many of the cases for which no curve is now
available could be covered by curves developed in the future.
Percent of Pollutants Covered
B^ Cost of_ Compliance Graphs
>««« of th. Class of Pollutants
PARTICUWTES - (71)
Fugitive Dust (1)
Non-Fugitive Dust** (70)
HYDROCARBONS*** (26)
Organic Solvents (18)
Volatile Organics (9)
Other (0)
CARBON MONOXIDE (0)
NITROGEN OXIDES (1)
Fuel Burning Sources
Non-Fuel Burning
Sources****
SULFUR OXIDES (1)
Fuel Burning Sources
Non-Fuel Burning Sources
75 88
|100
100
gioo
f"*^-g"v""
gioo
•elopable I I Unfeasible
Developabl
Source: Random sample of Air Compliance Orders,
Interviews with Air Staff.
* Because odor and procedural violations are not covered by civil
assessment requlations, orders for these violations are not in-
cluded here. Order breakdowns are based on random sample of Air
Compliance orders unless otherwise indicated.
** Includes visible emissions, particulate emissions from process
sources.
*** Breakdown of hydrocarbons into subcategories is based on estimates
of Air Compliance staff.
**** For this class of source, installed costs are covered, operational
costs are only partially developed.
Since such curves would benefit any environmental agency, Federal
or state, that decides to apply economic remedies, EPA should help
with (1) the development of supplemental curves and (2) periodic
updating of the curves that are available.
-------
V-65
Data Sources
This manual draws upon costing data compiled from a large num-
ber of sources, both Connecticut and Federal. Data sources are i-
dentified throughout this manual by the following key:
Code
DS-1 DEP tax relief records, DEP registration files,
DEP computer databank "Perstat", interviews with
individual companies
DS-2 Environmental Protection Agency AP-51: "Control
Techniques for Particulate Air Pollutants". Note
that this publication has been supplemented by
RTI project 41U-762-13, "Update and Improvement
of the Control Cost Segment of the Implementation
Planning Program": CEP staff was not able to evalu-
ate the theory and data contained in this newer
volume.
DS-3 Environmental Protection Agency Manual AP-65:
"Control Techniques for CO Emissions from Station-
ary Sources"
DS-4 Environmental Protection Agency Manual AP-68:
"Control Techniques: Hydrocarbons and Organics"
DS-5 Blecker, H.G. & T.W. Cadman, "Capital and Operat-
ing Costs of Pollution Control Modules, Vol. I"
EPA Manual R5-73-0232
DS-6 Federal Public Hearings of October 1973
DS-7 Connecticut Task Force on Coal Conversion
DS-8 Interviews with United Illuminating and Connecticut
Natural Gas, 10/74
DS-9 Basic Principles and Calculations in Chemical
Engineering, Himmelblau, Prentice-Hall
Data Adjustments
Because the data used comes from so many different sources,
it was collected in different time periods and often uses different
definitions. Consequently, a number of adjustments were necessary
to make all data commeasurable:
(1) To correct for the cost impact of inflation,
all costs were updated to July 1974 using the
Marshall and Swift and the Engineering News
Record economic indexes which are published
in the magazine, Chemical Engineering. The
method of updating follows the suggested cor-
rections outlined in EPA's publication, Capi-
tal and Operating costs of Pollution Control,
EPA-R5-73-023a, Volume I, pp. 74-77 ;
-------
V-66
(2) Where state costs included engineering costs,
costs were decreased by a factor of 10%,(the
average engineering cost in Connecticut) to
make them commeasurable with the Federal data
which excluded engineering costs
(3) Where costs were expressed as a function of
process weight, these costs were transposed
into costs per flow rate.
Unless otherwise indicated, the use of the symbol DE in the rest of
this chapter signifies that these adjustments were carried out.
Testing the
Cost Curves
To test the accuracy of these curves, where possible, a "root
mean square" analysis was performed on the data associated with each
curve. The formula for this analysis is:
IN Ai _ m.:
s 2 r TiT
1/2
Where
RMS = Root Mean Square of the data
N = Number of data points used for analysis
A = Cost of installing or operating a parti-
cular piece of equipment for a Connecti-
cut company
T = The cost of installing or operating a piece
of equipment predicted by the relevant cost
curve
In most cases the result of this analysis has been included
with the tabular data for each set of charts. In some cases, the
data used was insufficient to test the quality of the curve. In
these cases, the symbol "NA" appears in the accuracy column.
-------
V-67
Updating and Extending
Cost Curves
The cost curves that follow must be reviewed and updated
from time to time. The technology of pollution abatement is
developing rapidly, and costs reflect both these technological
changes and the economy's fluctuations. Furthermore, the Depart-
ment is developing a more complete base of Connecticut costing in-
formation that will allow the State to rely less on national data
in the future.
A few cases may fall above or below the CFM volumes that
define the upper and lower limits of the curves that are now avail-
able. Costs can still be estimated for most of these cases by
further extrapolating these curves. Although it is more accurate
to undertake such extrapolation mathematically, graphic extrapola-
tion is quicker and can be tolerably accurate if careful attention
is paid to inflection as well as to minima and maxima points.
Using the Cost
Curves
In order to make the best use of the Department's cost curves,
members of the Enforcement Section should take the following steps
when confronted with a case that may require a civil assessment:
(1) Inspect the source premise and collect the
following information:
type of process
hours of operation
nature and weight of input
nature and weight of output
rate of input
rate of output
current control mechanisms
- other data likely to effect costing
-------
V-68
(2) Prepare a summary report including:
the source's prior compliance record
an analysis of the inspection data (including
any calculations necessary to equate source
data with the parameters of DEP's cost curves)
(3) Choose a method of control which offers the
greatest probability of attaining compliance
without placing an unreasonable burden on the
source.
N.B. The choice of control equipment
for costing purposes is for cost esti-
mation only; it does not:
a) guarantee that installation of
this type of equipment will a-
chieve compliance, or
b) provide either approval or certi-
fication of the control system
prior to final installation and
testing.
(4) Read equipment and O&M costs from the appropriate
curves.
(5) Adjust these cost estimates
up 10 percent to account for engineering.*
Accounting for structural modifications
will be handled on a case-by-case basis.
adjust the cost estimate for any variation
in the average number of hours the control
equipment is operated per year compared to
the hours of operation assumed in and noted
on each of the curves.**
These costs are uniformly excluded from all DEP cost curves to
ensure uniform data definitions. Adding 10 percent to cover
these costs is a conservative estimate suggested by a survey
of Connecticut industry.
EPA sources suggest that this linear adjustment can be made
with little chance of serious distortion.
-------
V-69
An example will help explain exactly what must be done in each
of these steps. Assume a complaint has been received about parti-
culate emissions from a Connecticut brass manufacturer. DEP staff
would respond by taking the following steps:
(1) An engineer inspects the source and collects
the following information;
The brass manufacturer is melting brass con-
taining 15 percent zinc in an uncontrolled reverbatory
type furnace at an average rate of 55 tons per
20-hour operational day (maximum rate is 72 tons
per 20-hour day). The plant operates on a 5-day
work week, 50 weeks a year. Currently installed
hooding is sufficient to capture all emitted
particulates with the fan operating at 22,000
actual feet per minute during maximum loading
conditions.
(2) The engineer writes a summary report. It
notes that this is a first time violation,
and that, while there are numerous complaints
from a nearby residential neighborhood about
unsightly smoke, the environmental harm is
currently small. The engineer calculates
from the information collected in the inspec-
tion and from the known emission factor that
the emission of 70 pounds of particulate per
ton of material charged is in violation of
Department standards. The actual calculation
for a maximum standard emission level follows.
.. PROCESS RATE =72 TONS/DAY
= 72 TONS x DAY x 2000 POUNDS = 7200 POUNDS/HR.
DAY 20 HRS. TON
DEMISSION RATE =
72 TONS x 70 POUNDS X DAY = 252 POUNDS/HR.
DAY TON 20 HRS.
Under Department Regulation §19-508-18(e) the
emission rate limitation for a process having
a process weight rate of 7200 Ibs./hr. is 7.8
Ibs./hr. Therefore, this operation is in
violation of Department Regulations §19-508-18(e).
(3) The engineer chooses a method of control to be
used for costing. The engineer initially com-
pares the magnitude of the process emission rate
-------
V-70
(252 pounds per hour) to the Department regula-
tion allowing 7.8 pounds per hour. This tells
him that he needs a control strategy with 97 percent
efficiency. This efficiency requirement,
coupled with an industry preference to use a
dry collection system wherever possible, leads
the engineer to choose a baghouse as the control
strategy he will assume in costing.
(4) He consults his cost curves for particulates/bag-
houses and reads the cost of compliance estimates
he needs. Since the gas volume flow rate to be
controlled is 22,000 ACFM, the cost figures from
cost curves 1 and 13 (see pages V-76 and V-94) show
the following costs:
EQUIPMENT COSTS = $54,000
OPERATING COSTS = $15,000 per year
(5) The inspector increases equipment costs to in-
clude engineering costs and adjusts the operat-
ing costs for hours. Increasing equipment costs
by 10 percent makes the final EQUIPMENT COST =
$54,000 + $5400 = $59,400.
Since the operating costs in curve 13 have a base
of 8760 hours per year, and this process operates
for only 5000 hours per year, operating costs must
be reduced by a factor of (5000/8760),yielding a
final OPERATING COST of $8561 per year.
-------
V-71
COST CURVES
FOR INSTALLED EQUIPMENT COSTS
Unless otherwise noted, "installed equipment costs"
include the following components:
* control hardware, e.g., a scrubber
* auxiliary equipment, e.g., fans and ductwork
* engineering and design work
* installation costs, e.g., rigging
Annotated cost curves for installed equipment costs
covering the most common pollutants and types of control equip-
ment can be found on the following pages:
Cost Curve
Figure No. Title P<
1 Installed Costs of Particulate Control V-74
Equipment - Comparative Composite
2 Installed Cost of High Voltage Electrostatic V-75
Precipitators - Particulate Control
3 Installed Cost of Baghouses V-76
Particulate Control
4 Installed Cost of Wet Collectors v-77
• - Particulate Control
5 Installed Costs of Hydrocarbon Control v-79
Equipment - Comparative Composite
6 Installed Cost of Activated Carbon Adsorbers V-80
Hydrocarbon Control
7 Installed Cost of Direct Flame Afterburners V- 81
Hydrocarbon Control
8 Installed Cost of Afterburners V- 83
- Carbon Monoxide (CO) Control
9 Installed Cost of Wet Collectors v- 85
- Nitrogen Oxide (NOx) Control
10 Installed Cost of Limestone Wet Collectors V- 87
- Sulfur Oxide (SOx) Control of
Power Plants
-------
V-72
Cost Curve
Figure No. Title Page
11 Annual Operating and Maintenance Costs of v-90
Particulate Control Equipment
Comparative Composite
12 Annual Operating and Maintenance Costs of v-91
High Voltage Electrostatic Precipitators
- Particulate Control
13 Annual Operating and Maintenance Costs of v-92
Baghouses - Particulate Control
14 Annual Operating and Maintenance Costs of v-93
Wet Collectors - Particulate Control
15 Annual Operating and Maintenance Costs of v-95
Hydrocarbon Control Equipment
- Comparative Composite
16 Annual Operating and Maintenance Costs of v-96
Activated Carbon Adsorbers
- Hydrocarbon Control
17 Annual Operating and Maintenance Costs of V-97
Afterburners - Hydrocarbon Control
18 Annual Operating and Maintenance Costs of v-99
Afterburners - Carbon Monoxide (COJ Control
19 Annual Operating and Maintenance Costs of V-101
Wet Scrubbers - Nitrogen Oxide (NOx) Control
20 Annual Operating and Maintenance Costs of v- 103
Limestone Wet Scrubbers
Sulfur Oxide (SUx) Control of Power
Plants
-------
V-73
THE COST OF INSTALLED EQUIPMENT - PARTICIPATES
Each set of cost curves developed for a type of pollutant is introduced by a table
listing the sources of the data used, what adjustments have been made in developing each
curve, the closeness of the fit between the curve and actual Connecticut case experience,
and other comments important to a full understanding of the curves.
The first set of curves deals with particulate control problems. They account for
over 70 percent of all orders.
COST CURVE DATA, ADJUSTMENT, AND INTERPRETATION;
COSTING INSTALLED EQUIPMENT FOR
PARTICULATE CONTROL
Cost Curve
Figure No.
Precipitator Baghouse
Scrubber
Precipitator
Baghouse
Major Data
Source (s)
DS-1, 2
DS-1/ 2
Wet Collector
(Scrubber)
Adjustments
DE*
DE
Fit With
Conn. Cases
N.A.
+ 70.6%
DS-1, 2 DE + 64.9%
The EPA curve was ex-
trapolated downward to
200 acfm by making a
"least squares" fit of
the actual Conn, cost-
ing data below the
range of EPA data
DS-1, 2 DE + 21.6%
Comments
These curves show the re-
lationships between cost-i
and thousands of actual
cubic feet per riinute
of gas to be controlled.
These costs represent an
average between high
and medium efficiency
bands shown in EPA
data.
These costs represent the
costs of average high
and medium temperature
ranges depicted by
EPA data.
These costs represent an
average between high
and medium efficiency
ranges shown in EPA
data.
The term "DE" indicates what adjustments were made on the data for these curves.
For an explanation of these adjustments, see page V-67.
-------
LOGARITHMIC 46 732O
2X3 cvrt rr. VADI m u t n
INSTALLED COSTS OF PA.TTICULAIE CONTROL EQUIR-EfT
-COMPARATIVE COMPOSITE-
5 67891.
9 10 2 3 4 50 6 7
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
789
FIGURE 1
-------
V-75
INSTALLED COST OF HIGH VOLTAGE ELECTROSTATIC PRECIPITATORS
•^ARTICULATE CONTRDL-
tOO 3M 4 56789 IOOO
2OOO 3 4 5 6 7 8 9 1OOI
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
FIGURE 2
-------
V-76
INSTALLED COST OF BAGHOUSES
-PAKTICULAIE CCWTRDL-
"8
O
4-
j±i
$11
S
±t±J
±titi
USANDS OF DO
fJ> 0> t.
14
::frt
it
!
d:-; '"
31
JJi
nil
mi
-
-H-U+
X
CO 10
O 9
O o
te
^-HH-
-MT
1
t>r
€£E
:!U:
1 1 i
x
,x
C)
rrc
--744
iX-^
J<£Yj
1 -
^Etr
X
J '
3 x
Q^
H-ffr
TAP
TORE
TO
.5C
-------
V-77
INSTALLED COST OF WET COLLEQORS
-PARTICULATE CONTROL-
.2
.6 .7 .8 .» t 2 3 4- 6 6 7 0 9 10
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
S067691M
FIGURE
-------
V-78
THE COST OF INSTALLED EQUIPMENT - HYDROCARBONS
There are two kinds of equipment commonly used to control hydrocarbon emissions:
activated carbon adsorbers and fume incinerators (afterburners). The following table
summarizes the important information concerning the hydrocarbon emission control cost
data contained in cost curves 5-7.
COST CURVE DATA, ADJUSTMENT, AND INTERPRETATION:
COSTING INSTALLED EQUIPMENT FOR
HYDROCARBON EMISSION CONTROL
Cost Curve
Figure No.
Equipment
Adsorber
Afterburner
Activated Carbon
Adsorbers
Major Data
Source(s)
DS-1, 2, 4
DS-1, 2, 4
Fume Incinerators
(Direct Flame
Afterburners)
DS-1, .2, 4
Adjustments
DE
DE
Fit With
Conn. Cases
NA
- 30.5%
DE
Data here mult- -
iplied by factor
of 1.5 to trans-
form EPA purchase
costs to installed
costs. Correction
factor supplied by
EPA.
20.3%
Comments
Curve compares costs
per 1000's of actual
'cubic feet per minute
of gas to be controlled.
EPA data is based on
1969 pilot project
plant, and the valid-
ity of scaled-up
estimates is question-
able. The cost curve
is therefore drawn
.through actual Conn.
data points costs only.
Theoretical costs
represent average of
EPA ranges.
For catalytic
afterburners, increase
'costs by 15%,
-------
INSTALLED COSTS x
(THOUSANDS OF DOLLARS)
CO
m
o
o
3
—1--V-4-
.-MH-I
-U3
-r\
^
3-Lt
rr±
_I'i
I
I
Tit
mk
Is
O) -^1 00
rptt
i
! I
tfn
-tm"
1
m
rrr
•ft
TTTT
ttl
1
ttp
itf!
4
•+ft
|f
•ju
-rh
"-JT
tft
tHl
..t!
—H 5vi
»CO = u
:o ^o
6Z.-A
-------
INSTALLED COST x
(THOUSANDS OF DOLLARS)
CT *>J CO
1U1-L
_u 1
iIIT
144
+rt
tr .
±t
-t-t-;
; j -v-7
t~ -' ^T^
&
SJf Hfi
1
±M±;
m
Uti
ffM
tH
ill!
ilG
1
tffl
lift
i
fii
It*
ilt!'
1
g-r
S-Tl
I
ffl
~i=tn-n-
ffl
r?rt
rrr
itt
ttt
i: t
m
1
t
... ,-rr
61
5*
Liil
fl^£
i a* ^j oo
-------
LOGARITHMIC 46 732O
2X3 CYCLES HIDE IN u s «.
KEUFFEL A E5SER CO.
INSTALLED COSTS OF DIRECT FLfft AFTERBURNERS
CO^ROL- 8 7
I
00
GAS VOLUME THROUGH COLLECTOR
ITi ITM !/•* A nn-x*-* f^r- *%/^r-kji i
-------
V-82
THE COST OF INSTALLED EQUIPMENT - CARBON MONOXIDE
Fuel burning is the major source of carbon monoxide emissions in Connecticut. Depart-
ment estimates indicate that 98 percent* of all carbon monoxide in the State comes from this
source. However, the control of fuel burning emissions is more a problem of optimum
combustion parameters (fuel rate, excess air, retention time, mixing, etc.) than it is
a problem of needed control equipment. Accordingly, this costing manual focuses on
equipment costs for non fuel-burning sources of carbon monoxide.
The Department of .Environmental Protection has located only one major industrial
source of carbon monoxide in the State: grey iron cupolas. Since the only presently
available method of CO control is fume incineration, the cost curve for CO emission
control presents costs for both direct flame and catalytic afterburners.
COST CURVE DATA, ADJUSTMENT, AND INTERPRETATION:
COSTING INSTALLED EQUIPMENT FOR
CARBON MONOXIDE CONTROL
Cost Curve Major Data Fit With
Figure No. Equipment Source (s) Adjustments Conn. Cases Comments
8 Direct Flame and
Catalytic Afterburners DS-1, 2,3* DE N.A.
* Includes motor vehicle emissions.
-------
V-83
100-
INSTALLED COST OF AFTERBURNERS
-CARBON MONOXIDE (CO) COWTROL-
S
8
LL.
o
•s*
v/
3 30.
2.5
0
13-
O<
O -
CM =
LOGARITHM
2X2 CYCLES
-------
V-84
THE COST OF INSTALLED EQUIPMENT - NITROGEN OXIDES
Unfortunately, no useful EPA data on the cost of nitrogen oxide control was
available, and Connecticut sources have had little experience with installing equipment
for nitrogen oxide control. A curve utilizing the three Connecticut data points found
will be used until more data becomes available.
COST CURVE DATA, ADJUSTMENT, AND INTERPRETATION:
COSTING INSTALLED EQUIPMENT FOR
NITROGEN OXIDE CONTROL
Major Data
Equipment Source(s) Adjustments Accuracy Comments
Wet Scrubber DS-1 DE N A
-------
i ff^r-~ LOGARITHMIC 46 732O
i'V'tfLs 2X3 CVf Lf -5 MAOl IN U S ft
INSTALLED COST OF VH SCRUBBERS
.6 .7 .8 , X -NITROGEP °XIDE3 (NOX]
4 5 6 7 8 9 10
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF SCFM)
So 6 789
FIGURE 9
-------
V-86
THE COST OF INSTALLED EQUIPMENT - SULFUR DIOXIDES
The only available data for costing control equipment for sulfur dioxide emissions
is for limestone wet scrubbers. This control technique is usually appropriate for large
power utilities.
COST CURVE DATA, ADJUSTMENT, AND INTERPRETATION:
COSTING INSTALLED EQUIPMENT FOR
SULFUR DIOXIDE CONTROL
10
Equipment
Limestone wet scrubber
Major Data
Source(s)
DS-11
DS-12
Adjustments
DE
The curve is a
"least squares"
fit of all
available data.
Fit With
Conn. Cases
Comments
The curve shows a
relationship be-
tween power plant
capacity in mega-
watts and installed
NA capital costs in
terms of dollars
per kilowatt
capacity. Since
the curve is based
on all data avail-
able, a comparison
between Connecticut
data and projected
costs is not appli-
cable.
-------
LOGARITHMIC 46 7O8O
2 X 1 CYCLES MADE IN U.S.A.
KEUFFE1. & E3SER CO.
INSTALLED
(DOLLARS PER
a
COSTS
KILOWATT)
-Li-
M:
-r+h
T
xc
w
ret:
)OO
ail
fflffi
|
1*
•i-i
oo
ill
CT)
00
-------
V-88
COST CURVES
FOR OPERATING AND MAINTENANCE
Operating and maintenance expenses are cumulatively a
major component of control costs. Labor, routine operating
supplies, replacement parts, and energy can all be major ex-
penses .
As with installed equipment costs, the following curves
are based on an extensive review of the available costing liter-
ature and on Connecticut case experience. However, the data is
significantly less reliable than that used to derive the equipment
cost curves. Few sources keep detailed account of the cost of
operating and maintaining discreet pieces of control apparatus.
As with the installed equipment cost curves, the Department
has had to make a series of adjustments to the disparate cost
data used to construct its O&M curves to ensure that the bits of
information being used were comparable. All costs:
* were adjusted to either 8760 or 6000 hours
of operation per year as indicated
* were updated to reflect the current costs of
electrical power
* were adjusted to July 1974 for inflation
* were translated into a function of flow rates ,
Annotated O&M cost curves for operating and maintenance
expenses can be found on the following pages.
-------
V-89
THE COST OF OPERATING AND MAINTAINING EQUIPMENT
PARTICIPATE CONTROL
The following graphs detai] operating and maintenance costs for three methods
of particulate control - wet scrubbers, haghouses, and electrostatic precipitators .
COST jnjRVE DATA, ADJUSTMENT, AND INTERPRETATIOISI:
OPERATING AND MAINTAINING EQUIPMENT
PARTICULATE CONTROL
Graph
11
12
13
14
Equipment
Wet Scrubbers
Baghouses
Electrostatic
Precipitators
Electrostatic
Precipitator
Baghouses
Wet Scrubbers
Major Data
Source (s)
DS-1, 2, 5, 8
DS-1, 2, 5, 8
DS-1, 2, 5, 8
DS-1, 2, 5, 8
Adjustments
DE
DE
DE
DE
Pit
fonn
N.A.
± 33.
± 59.
± 44.
With
. Cases Comments
Compares costs of
O&M in thousands
of annual dollars
per unit of gas
controlled
.2%
,7%
3%
-------
I
o
t)
m
|l ;'„' -. LOGAi'i runic
ll Y'.'J 3 >. 3 Cil l.E-
46 74OO
ANNUAL OPERATING AND MAINTENANCE COSTS
CO
m
CD
ill-
\
l!!
L_L±t
i • (-do c*>
01 er» -j on o o
\
\
II
i-H-
I !
.1 i •
. ,-JJ
(THOUSANDS OF DOLLARS)
fl ~. -g m .0 g
C1 -1 06 '£> i
Irtl
\
\
\
rc:d±
Id!
.
i±r
I
vo
o
-------
V-91
ANNUAL OPERATING AND MAINTENANCE COST OF HIGH VOLTAGE ELECTROSTATIC PRECIPITATOR1
-PARTICULATE CONTROL-
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
FIGURE 12
"BASIS: 8760 OPER.HRS/YR
-------
V-92
ANNUAL OPERATING & MAINTENANCE COST OF BAGHOUSES*
-PARTICULAR CONTROL-
o «
o,
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
405067891J
FIGURE 13
"BASIS: 8760 OPER.HRS/YR
-------
V-93
ANNUAL OPERATING & MAINTENANCE COST OF WET COLLECTORS *
-PARTICULATE CONTROL-
IOO>
OX:
-t-t-H-
r:;
-H-f
Tt!
±
H4-
t±t
•Hi
i-n
tu
tn:
CO3
DC
rrtr.
t±tf
T i rt-
it
ffl
fHH
tit
::- ffl.
CO
te
8
Ul
o
o
o
U> ;
t
t u
P
J o
L'J
TJZ. -t-^m
ct!
.2 .3 .4 -8 .* .7 .8 .91
3 4 6 6789 1O
20
50 6 7 8 9
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
FIGURE
"BASIS: 8760 OPER.HRS/YR
-------
V-94
THE COST OF OPERATING AND.MAINTAINING EQUIPMENT
HYDROCARBONS
The following table summarizes information concerning the charts for operating and
maintaining equipment commonly used for hydrocarbon control.
COST CURVE DATA, ADJUSTMENTS, AND INTERPRETATION;
OPERATING AND MAINTAINING EQUIPMENT
HYDROCARBON CONTROL
16
17
Equipment
Activated Carbon
Adsorbers
Fume Incinerators
(Afterburners)
Activated Carbon
Fume Incinerators
(Afterburners)
Major Data
Source(s)
DS-1
DS-1
DS-1,9
Adjustments
Fit With
Conn. Cases
Comments
17.1%
N.A.
Curve compares costs of O&M
in thousands of dollars per
unit of gas controlled
The curve assumes
1. fuel costs exceed main-
tenance costs
2. fuel costs are proportional
to CFM and gas volume
3. natural gas is used for
afterburning
4. natural gas cost =
$2.40/1000 ft.
5. pollutant added no heat value
6. no heat recovery employed
7. operating year is 2000 hrs.
- Curves are shown for dif-
ferent inlet temperatures.
- No catalytic data is cur-
rently available
Since the gas inlet temperature
of Conn, data points was not
available, it is not possible to
test the accuracy of these curves
with the points available. The
data points are included to dem-
onstrate that, in general, as the
amount of gas to be controlled
rises, so does the cost of operat-
ing and maintaining that equip-
ment.
-------
V)
i—«
C/5
C/5
£
i| »,.' - LOuAPi niMIC AG 7S.OO
li \'V'-^ 0X3 C .'. LC'-. «^-. '•' >' •; «
OPERATING AND MAINTENANCE COSTS
M CO 4» (,1 (TV -vl CO 'O 5 W
(THOUSANDS OF DOLLARS)
ft •* 71 " -° ~f
•?> -J 3C -O I
CD
^O
m
vo
01
-------
ANNUAL OPERATING & MAINTENANCE COSTS
f (THOUSANDS OF DOLLARS)
"o & cp V op t-p X Is*
OO 4O •—•
96-A
-------
V-97
ANNUAL OPERATING & MAINTENANCE COSTS OF AFTERBURNERS*
-HYDROCARBON CONTROL-
j-l
f
-H-
See
— --*
-t-1-T 1
-H t
-L
S
S OF DOL
tO
f
'•
y
to/-.
\
T-f-,
if
tJ
*?
H4i
7"
O ,
C i.
05
co
o
O
LU
i
LU
^
x
+,-!--•
#
o x
-I n
3^
HHORRTirA
D-
0
-=P
=&'
^l/
CAfAtXL«:.b
id
t-yc
/S4
^OSTTf?G":DATA
TIlAM
It
E UN
i
.2 .3 .4 .6 .« .7 .«.* 1
3 4 S 6789 10
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF ACFM)
3 45067891
FIGURE 17
"BASIS: 2000 OPER.HRS/YR
-------
V-98
THE COST OF OPERATING AND MAINTAINING EQUIPMENT
CARBON MONOXIDE
No Connecticut data for operating and maintaining afterburners for carbon monoxide
control was available in the Department's files. Testing of this curve will take
place as costs become available.
COST CURVE DATA, ADJUSTMENTS, AND INTERPRETATIONS:
OPERATING AND MAINTAINING EQUIPMENT
CARBON MONOXIDE CONTROL
18
Equipment
Afterburners,
Direct and
Catalytic
Major Data
Source (s)
DS-7
Adjustments
DE
Fit With
Conn. Cases
N.A.
Comments
The curve assumes:
no heat value from
CO
no heat recovery
employed
natural gas cost =
$2.40/1000 cu. ft.
temperature range
for direct flame
afterburner is
380°F to 1400°F
temperature range
for catalytic after-
burners is 380°F to
900°F
-------
f^" LOGARITHMIC
^"^2 2 X 2 CYCLrs
46 72OO
"HOE IN II S A
°?
I
P
x
I
en
So
•no
1
CD
pa
m
i—*
oo
ANNUAL OPERATING AND WINTENANCE COSTS
(THOUSANDS OF DOLLARS)
fz co
VO
VO
-------
V-100
THE COST OF OPERATING AND MAINTAINING EQUIPMENT
NITROGEN OXIDES
Unforturately, the low number of both national and State data points makes it impossible to
construct a reliable cost curve for operating and maintenance costs for nitrogen oxide control
equipment. Two actual data points for Connecticut are available for comparative purposes, but
only serve to form the basis of a cost curve. The Department hopes to assemble a greater data
base in the near future.
COST CURVE DATA, ADJUSTMENTS, AND INTERPRETATIONS:
OPERATING AND MAINTAINING EQUIPMENT
NITROGEN OXIDE CONTROL
Major Data Fit With
Equipment Source(s) Adjustments Conn. Cases Comments
Wet Scrubbers DS-1 DE N.A.
-------
V-101
ANNUAL OPERATING & MAINTENANCE COSTS OF WET SCRUBBERS4
-NITROGEN OXIDE (NOx) CONTROL-
EI:
c/5
125
LU 7
^
< 6.
Ul
^3 5
U 2 2.5 3 4 At7t9IO
15 26 25 30 4« 50 6 7 8 9 KO
GAS VOLUME THROUGH COLLECTOR
(THOUSANDS OF SCFM)
FIGURE 19
*BASIS: 20(D OPER.HRS/YR
-------
V-102
THE COST OF OPERATING AND MAINTAINING EQUIPMENT
SULFUR OXIDES
The following table summarizes information concerning the graph on operating and
maintaining sulfur oxide control equipment.
COST CURVE DATA, ADJUSTMENTS, AND INTERPRETATION
OPERATING AND MAINTAINING EQUIPMENT
SULFUR OXIDE CONTROL
Major Data Fit With
Graph Equipment Source Adjustments Conn. Cases Comments
19 Limestone Scubber DS-6, 7 DE N.A. The curve measures millions
of dollars of costs vs.
megawatts per hour plant
output
-------
I
o
-O
m
;o
;O
00
I
5
CD
ro
CD
(TVe= 2X2 CYCLES
ANNUAL OPERATING AND
DE IN u S A.
MAINTENANCE COSTS
(MILLIONS OF DOLLARS)
44
i !
T
I>1
lit
1
\
K
it
IrL
!
1k;-}
!$
'1
liJ!
ilR
lit!
18!
4-tt
in
la.
•Hi
-tr.
"rV
ill
Jti
S
CO
o
1
o
Ul
-------
V-104
COSTING WHEN CURVES
MAY NOT BE ENOUGH
Although the cost of compliance can be estimated using the
cost curves just outlined in most cases, there are a significant
number of cases for which no curve has yet been developed; where
the use of curves is complicated by the emission of several
different pollutants from one source; or where there may be a
choice between using an equipment-based curve or assuming another
approach to control (e.g. reformulation or a change in fuel
types). This section begins with a tabular discussion of the
types of enforcement situation likely to run into these problems.
It then goes on to a more thorough discussion of how best to
approach costing in cases that involve multiple pollutant emis-
sions or that propose control strategies other than the installa-
tion of control equipment.
SPECIAL COSTING
APPLICATIONS
The Department is responsible for enforcing a number of
emissions standards that may, at least in some situations, re-
quire other approaches to costing than the use of cost curves.
The following table discusses each of these situations in the
order in which they appear in the Department's Regulations.
The table identifies what proportion of the current enforce-
ment load each type of problem is and suggests how each can best
be approached. (The table discusses cases where there is a
violation of only one pollution standard; complex cases are >
covered 'immediately after the table.)
-------
V-105
Approaches to Special Costing Situations
Pollutant and
Violation
Percent of
Connecticut
Orders*
Special Application
Particulates
(§19-508-18)
Opacity
(§18 (a))
Fugitive Dust
(§18(b))
Incineration
(§18(c))
Less than
1 percent
Less than
1 percent
It is uncertain
how often alter-
native means of
control can be
contemplated
Most opacity violations are
found in conjunction with other
particulate violations which
require the installation of
control equipment. In such
cases the control costs for the
second particulate violations
will be adequate for the opa-
city violation as well. The
major exception is for motor
vehicles. While equipment
control costs for motor vehi-
cles have not yet been collected
by the Department, there are
currently plans for a coopera-
tive enforcement venture with
the Department of Transportation.
The Department is now in the
process of trying to establish
reliable costing figures for
motor vehicles.
Where the problem is due to a
mechanical process, general
treatment is applicable. But
where the problem is caused
indirectly (e.g. wind action on
stockpiles, uncovered trucks,
unkempt roads or parking lots)
the engineer should attempt to
estimate the costs of a more
appropriate means of achieving
compliance. Thus, for an un-
covered truck, the applicable
equipment cost would be the cost
of a dust cover.
The Department will generally
assume for costing purposes that
incinerators will be controlled
with wet scrubbers. However,
where the engineer has knowledge
*lncludes only orders for emissions violations covered by Civil Assess-
ment Regulations (e.g., violations of §§19-508-9 and 19-508-18 to 22).
-------
V-106
Approaches to Special Costing Situations
Pollutant and
Violation
Percent of
Connecticut
Orders
Special Application
Fuel Burning
Equipment
(§18 (d))
-
9
>
that an alternate means of waste
disposal such as compaction is
going to be used, he may either:
(1) estimate the costs on the
basis that a scrubber will
be installed and leave to
the correction process any
errors resulting from this
assumption, or
(2) estimate alternate disposal
costs.
However, since DEP experience
indicates that alternate dis-
posal plans are often not car-
ried out, the first costing
technique should usually be
carried out.
Since violations of the particu-
late standards by fuel burning
equipment can be corrected by
either control equipment or by
renovation, the method of' con-
trol chosen for costing purposes
can be either:
(1) an estimation of control
equipment costs, with any
errors stemming from this
assumption to be corrected
in the correction process, or
(2) an estimation of the reno-
vation costs.
However, since DEP experience
indicates that renovation is
often unsuccessful, the first
costing technique should usually
be followed.
-------
V-107
Pollutant and
Violation
Percent of
Connecticut
Orders
Special Application
Hydrocarbons
(§19-508-20)
Storage of Vola-
tile Organic
Compounds
(§20(a))
Volatile Organic
Compounds Loading
Facilities
(§20(b))
Volatile Organic
Compound Water
Separation
(§20(c) )
Pumps and
Compressors
(§20 (d))
Waste Gas Disposal
(§20(e))
Organic Solvents
(§20(f))
9 (sum of both sub-
categories)
Sections 20 (c),
(d) and (e)
account for less
than 1 percent of
Connecticut orders.
17 percent
The typical control equipment
employed at bulk wholesale oil
terminals (floating roofs, vapor
recovery systems, etc.) is not
covered by the costing graphs.
This omission reflects the fact
that recent enforcement activity
indicates that all bulk whole-
sale oil terminals are now in,
or coming into, compliance. If
any future violations are dis-
covered, a case-by-case costing
technique will be appropriate.
The Department has very limited
enforcement activity associated
with these regulations. Since
cost information is not now
readily available from either
Federal or State sources, the
Department will proceed on a
case-by-case costing basis until
a reliable data base is avail-
able.
Note the special applicability
of the portion of this Section
that explains non-equipment-
based approaches to control.
Note also three special charac-
teristics of operating costs
here:
(1) For administrative ease, the
cost curves do not include
any consideration of recla-
mation or re-use of collected
hydrocarbons. A source with
sugh reclamation facilities
can state its case in the
correction process.
(2) The predicted inlet tempera-
ture to the incinerator has
a great effect on fuel re-
quirements and thus costs.
Such temperature should be
carefully considered.
-------
V-108
Approaches to Special Costing Situations
Pollutant and
Violation
Percent of
Connecticut
Orders
Special Application
Architectural
Coatings
(§20(g»
Disposal and
Evaporation of
Solvents
<§20(j))
Carbon Monoxide
(§19-508-21)
Nitrogen Oxides
(§19-508-22)
Combustion
Sources
(§22(a))
Sections (g) and
(j) account for
less than 1 per-
cent of Conn-
ecticut orders.
Less than
1 percent
(3) For administrative ease, the
cost curves do not include
consideration of the costs
or benefits of heat recovery
in fume incineration. Once
again, a source with such
costs or benefits has ready
access to the correction pro-
cess for appropriate adjust-
ments .
The CO cost curve :
(1) assumes that an afterburner
installed to control cupola
emissions will be built as
a separate facility, -and
(2) does not reflect the costs
or benefits of heat recovery
systems. Adjustments for
this assumption or omission
should be taken care of in
the correction process.
The costs of reconditioning and
maintaining a combustion source
will usually be the only costs
needed to keep a source within
standards. However, at present
there is both uncertainty in
retrofit control technology and
a scarcity of reliable cost
data. Until better information
is available, DEP engineers will
make the best available estimate
and will use the deferred col-
lection device (See Section H of
Chapter II of this Part) frequent-
ly.
-------
V-109
Approaches to Special Costing Situations
Pollutant and
Violation
Percent of
Connecticut
Orders
Special Application
Sulfur Oxides
(§19-508-19)
Fuel Combustion
(§19(a))
(§19-508-19)
Sulfuric Acid
Plants
(S19(b))
Sulfur Recovery
Plants
(§19(c))
Nonferrous
Smelters
(Sl9(d))
Sulfite Pulp Mills
(§19(e))
Other Process
Sources
(S19(f))
Less than
1 percent
Less than
1 percent
In most cases, the cost of con-
trol for violation is simply the
cost of using low-sulfur fuel.
The difference between the cost
of high- and low- sulfur fuel
fluctuates rapidly; no specific
costs are noted here. Cost will
usually be calculated by multi-
plying the cost differential
times the number of gallons used.
Note however that in the appro-
priate case, cost curves 10 and
20 provide adequate costing
information where auxiliary
control equipment is contem-
plated as the means of control.
In such a case, the engineer
should be sure to ascertain the
power generation of the fuel
burning since this is the costing
parameter used in the curves.
Costing data on these processes
remains scarce and generally un-
reliable. Fortunately, such
sources are rare in Connecticut,
comprising only 2 percent of the
total SOX emission in the State.
When a case does arise involving
these regulations, the Department
will make a case-by-case costing
analysis and make use of the
deferred collection device.
**************
-------
V-110
COSTING MULTI-VIOLATION
CASES
There are two bases of cost estimation for those cases where
a source has been cited for violating more than one of the
emissions standards defined in §§19-508-18 through 19-508-22 of
the Regulations. The first is to estimate that the source can be
brought into compliance by one control system (a baghouse, a
scrubber, etc.). The second is to estimate that the multiple
violation will require installation of several control systems.
For example, consider a source which is cited for viola-
tions of "Visible Emissions", §19-508-18 (a) (1) , and "Organic
Solvents", §19-508-20 (f) (1), due to the emission of high molec-
ular weight hydrocarbons from a process such as a fabric tinter
frame. In this case, one piece of control equipment will correct
both violations (e.g. an electrostatic precipitator or a fume
incinerator). The engineer choosing the control technique should
be careful to ensure that the strategy chosen offers the greatest
assurance of achieving compliance for both violations.
On the other hand, consider a source which is cited for
violations of "Process Industries (Particulate Control)",
§19-508-18(f)(1), and "Control of Carbon Monoxide Emissions",
§19-508-21(2), for a grey iron cupola. For a case such as this,
control requires two separate abatement strategies (i.e. a high
energy scrubber to control particulate emissions and a fume in-
cinerator to control carbon monoxide emissions). The engineer
doing the costing should make the two costing estimates separ-
ately and then add them for a final figure. He should, however,
take care not to double count certain costs (e.g. start-up, '
engineering) that would not necessarily double because two
systems rather than one were being installed.
COSTING VIOLATIONS OF THE
GENERAL PROHIBITION OF AIR POLLUTION
Section 19-508-9 prohibits air pollution not otherwise
covered by explicit standards put forth elsewhere in the Regu-
lations. The language of the Section, "No person shall permit
or cause air pollution...," in effect requires that control
techniques eliminate 100 percent of any and all emissions.
Therefore, where a source is cited for a violation of this
Section, a civil assessment might plausibly be based upon the
profits realized from continued operation of the emission source
(i.e. the costs of not not operating). However, the information
required to make such an assessment would be very difficult to
obtain. For administrative ease in such cases, the Department
will usually attempt to use the cost curve which is most closely
applicable to the general emission problem. However, the choice
of a control technique for costing purposes does not negate
the clear language of §19-508-9 which requires 100 percent control,
-------
V-lll
COSTING ABATEMENT BY MEANS
OTHER THAN CONTROL EQUIPMENT
There are pollution problems which are often solved other
than through the use of control equipment. (Some of these cases
were specifically noted in the special applications table.)
When, as is usually the case, control can be achieved through
the use of equipment as well, costing should generally proceed
on the assumption that control will be achieved using control
equipment rather than through reformulation or other control
techniques.
This general rule rests on the following major considera-
tions:
* In the Department's enforcement experience,
abatement by means other than control equip-
ment is often unsuccessful. Despite a source's
initial expectations and hopes, control equip-
ment is still the usual solution to most pollu-
tion problems.
* It would be both difficult and expensive to
obtain accurate costing data for many non-
equipment approaches to control. For example,
costing individual reformulation efforts,
especially in the early research stages,
would be a tricky, time-consuming job.
* Use of the Department's equipment-based cost
curves ensures that cases with similar pollu-
tion problems are assessed equally, regard-
less of any difference in their approach to
coming into compliance.
* Even if cost estimates based on the assumption
that control is achieved with abatement equip-
ment later prove too high, regulatees are en-
tirely protected against loss by their right
of correction and refund of any overassessment
with interest.
**************
CONCLUSION
The Department can make quick, reliable estimates of the
costs of compliance for almost all violations of the substantive
emissions standards enforced by its civil assessment regulations,
(§§19-508-9 and 19-508-18 through 19-508-22 of The Regulations
For the Abatement of Air Pollution). It is able to do so chiefly
by using the cost curves it has developed and tested that des-
cribe the relationship that exists between costs and the volume
of air that must be processed and the type of pollutant involved.
The coverage and accuracy of these curves will increase as the
State and national data base improves.
-------
V-112
APPENDIX A
ADJUSTING COST DATA
FOR INFLATION
-------
V-113
APPENDIX A
ADJUSTING COST DATA FOR INFLATION
This Appendix explains the method used in this Section
of adjusting"costs for inflation. This adjustment ensures
that all cost estimates used in the previous Section reflect
July, 1974 values. The general equation has two cost com-
ponents: (1) a materials cost index (the Marshall and Swift
index), and (2) a labor cost index (the Engineering News
Record/Construction Cost Index). These two components were
averaged, using the labor/materials ratio appropriate to
each piece of equipment.
GENERAL EQUATION FOR COST ESCALATION :
1C = 1C, (1-0.5 (L/M)) MSX +0.5 (L/M) ENRx
x ° MSb
Where ICX = Estimated installed cost of equipment in Year X
ICb = Estimated installed cost of equipment in a
given base Year B
L/M = Labor to material ratio of equipment to be
costed, as given in Figure 7 of Blecker
& Cadman.
MS = Marshal & Swift Index, Process Industries
Average for Year X or Base Year B (found
in Table 8 of reference or in regular
reports "Economic Indicators" published
in Chemical Engineering).
ENR = Engineering News Record/Construction Cost
Index for Year X or Base Year B (found in
Table 8 of reference or in regular reports
"Economic Indicators" published in Chemical
Engineering).
Blecker, H. G. & T. W. Cadman,"Capital & Operating Cost
of Pollution Control Equipment Modules" Vol. 1, E.P.A.,
Office of Research & Monitoring, Washington, D. C.,
Publication No. EPA - R5 - 73 - 0232, pages 73-80.
-------
V-114
L/M RATIOS USED:
(1) PARTICULATE CONTROL - L/M = 0.796
(2) FUME INCINERATORS - L/M = 0.944
(3) SOX SCRUBBERS - L/M =0.5
(4) ACTIVATED CARBON
ADSORBERS - L/M =1.0
(5) NOX SCRUBBERS - L/M =0.5
AN EXAMPLE :
EXAMPLE PROBLEM = A source installed a scrubber in
1965 at a cost of $8,980 to control nitrogen oxide
emissions. Estimate the cost of installing that same
scrubber in July, 1974.
EXAMPLE SOLUTION
ICb = IC1965 = $8,980
L/M =0.5
MSX = MS7/1974 = 386
MSb = MS1965 = 244
ENRX = ENR?/1974 = 2075
ENRb = ENRiggs = 971
.*. ICX = IC7/74 = $3,980.. .1(1-0.5(0.5)) ||| +0.5(0.5)
, 8,980 [75(386 )+.25
= 8,980 Fl. 19 + . 53J
1C-, ^A = 8.980 f1-72]
'7/74
ICy/74 = $15,446
-------
V-115
APPENDIX B
CALCULATING
OPERATION AND MAINTENANCE COSTS
-------
V-116
APPENDIX B
CALCULATING OPERATING AND MAINTENANCE COSTS
This Appendix presents the methods used to calculate cost
estimates for the operation and maintenance of each kind of
pollution control equipment discussed in this Section. For
control of particulates and carbon monoxide, the Appendix
includes the general equations for each piece of equipment,
the variables used to simplify these equations, and the final
functions used in Graphs 11 through 20 in this Section. The
hydrocarbon and sulfur oxides sections include sample calcu-
lations. Since the Department will base cost estimates for
nitrogen oxide control equipment on actual Connecticut data,
calculations of these costs are not included.
PARTICULATE AND
CARBON MONOXIDE CONTROL
COLLECTOR GENERAL EQUATIONS1
1. Wet Scrubbers G=S [0.7457 HK Z+.^n + WHL + M]
iy 80 •*
2. Electrostatic Precipitators G=S [JHK + Mj
3. Fabric Filters G=s[l95.5 X 10~6 PHK + M]
4. Afterburners G=s[l95.5 X 10~6 PHK + HF + M]
WHERE:
G = Annual operating and maintenance cost (dollars)
S = Unit design capacity (ACFM)
P = Pressure drop (inches of water)
H = Annual hours of operation ( hours)
h = Elevation for pumping of liquid in circulation
system for collector (feet)
'Control techniques for Particulate Air Pollutants," EPA,
Office of Air Programs, Research Triangle Park,N.C.,
Publication No. AP-51, pages 162-166.
-------
V-117
K = Electricity cost (dollars per kilowatt hour)
M = Maintenance cost per ACFM (dollars per ACFM)
F = Fuel Costs (dollars per ACFM per hour)
W = Liquid make-up rate (gallons per hour per ACFM)
L = Liquid cost (dollars per gallon)
Z = Total power input required for a specified scrubbing
efficiency (horsepower per ACFM)
J = Kilowatts of electricity per ACFM
Q = Water circulation (gallons per ACFM)
ASSUMPTIONS:
1. H = 8760 hours/year = Annual hours of operation
2. K = $0.060/KW-hr = Electricity cost2
3. Afterburners use natural gas as fuel at cost of
$2.40/1000 Cu. Ft.3
4. Afterburners use 50 percent excess air with
operational temperature of 1400°F (Direct Flame)
and 900°F (Catalytic).
.'.FINAL ANNUAL OPERATING AND MAINTENANCE COST EQUATIONS USED
IN THE GRAPHS IN SECTION A ARE:
COLLECTOR EQUATION
1. Wet Collector G = S (3.78)
2. Electrostatic Precipitators G = S (0.198)
3. Fabric Filters G = S (0.682)
4. Afterburners
a. Direct Flame G = S (20.2)
b. Catalytic G = S (10.23)
2
United Illuminating cost information,October,1974.
3CNG cost information, 10/28/74..
-------
V-118
HYDROCARBON
CONTROL
1. CARBON ADSORBERS:
GIVEN: A) Operating cost for units of 1000 CFM
size range = $6.80 - $8.00/CFM4
B) Operating cost for units of 50,000 CFM
size range = $1.54 - $1.70/CFM4
C) Operating costs, have increased by a
factor of two between 1969 and July, 1974
due to inflated fuel and power costs.
EQUIPMENT SIZE
(ACFM) OPERATING COSTS
800 = 800 ($6.80)2 = $10,100
1000 = 1000 ($6.80)2 = $13,600
20,000 = 20,000 ($1.54)2 - $62,000
50,000 = 50,000 ($1.54)2 = $154,000
2. AFTERBURNERS:
GIVEN: A) Heating value of contaminants is negligible.
B) Fuel costs are proportional to CFM in-
cinerated.
C) Fuel costs are proportional to temperature
change.
D) Direct flame afterburner will require
140OOF exhaust.
E) Catalytic afterburner will require 700°F
exhaust.
F) Combustion air will be taken from gas
to be incinerated.
Control Techniques: "Hydrocarbons and Organics," EPA,
Office of Air Programs, Research Triangle Park, N.C.,
Publication No. AP-68, P. 6-4 (1969 Data).
-------
V-119
G) Natural gas has gross heating value of
of 1005 BTU/ft3.
"2
H) Combustion air required is 9.53ft air/ft3
gas.
I) Annual hours of operation are 2000
hours/year.
J) Natural gas cost is $2.40/1000 ft3.
SAMPLE CALCULATION:
BASIS: exhaust at 600°F to be incinerated in
direct flame afterburner (i.e. 1400°F
exhaust)
1) Calculate A H per Ib. MOLE to obtain heating
requirements .
AH = CP32_1400 (AT)- Cp32_600 (AT)
= 7.382 (1400 - 32) - 7.060 (600 - 32)
= 6088 BTU/lb. MOLE air
2) Calculate natural gas requirements
. . Gross heat value at 60°F = 1005BT^/'ft3
available heat at 1400°F = 649BTU/ft3 gas
•*• Gas req'd / Ib MOLE air = Heat reg'd
Heat avail.
= 6088gTU/ib MOLE air
649BTU/ftJ gas
= 9.38 ft3 gas/lb MOLE air
3) Calculate combustion air
-*-9.38 x 9153 = 89 ft3 combustion air
4) Calculate air volume incinerated
••> 379 ft3 / Ib MOLE air at 77°F
89 ft3 combustion air
468 ft3 air per 9.38 ft3 gas
5) Correct to 100 CFM basis
-4-53- x 9.38 = 20.04 ft3 gas/ 1000 CFM air
-------
V-120
6) Annual costs for inlet temperature to incinerator of 77°F
= 20/04 ^,ftg^3 . x 1000 CFM x $2-40 o x 60 5j!H
1000 ftj air 1000 ftj hr
x 2000 hr/yr
7) Annual cost of inlet temperature to incinerator of 600°F
-^$5772 x (77 + 459)°R
(600 + 459)OR
= $2909/1000 CFM gas volume
THEREFORE
TABLE 1 - DIRECT FLAME AFTERBURNER
ANNUAL COST PER 1000
TEMP. OF AIR CFM OF AIR (VOLUME MEASURED
TO AFTERBURNER AT TEMP. TO AFTERBURNER)
1000 °F $1,190
800 1,945
600 2,909
500 3,513
400 4,246
300 5,142
200 6,269
100 7,844
TABLE 2 - CATALYTIC AFTERBURNER
ANNUAL COST PER 1000
TEMP. OF AIR CFM OF AIR (VOLUME MEASURED
TO AFTERBURNER AT TEMP. TO AFTERBURNER)
600 °F $ 330
500 712
400 1,163
300 1,714
200 2,405
100 3,322
-------
V-121
SULFUR
OXIDE CONTROL
OPERATING COST RANGE
FEDERAL STUDY5 (P - 7) 2-4 MILLS/KW-HR
D.E.P. STUDY6 (P - 16) 4-8 MILLS/KW-HR
taking average of each range gives:
FEDERAL STUDY 3 MILLS/KW-HR
D.E.P. STUDY 6 MILLS/KW-HR
9 MILLS/KW-HR -f 2
•*• OVERALL AVERAGE = 5 MILLS/KW-HR
SAMPLE CALCULATION FOR DATA POINTS:
for 50 MW PLANT & 8760 HRS/YR
50,000 KW x 8760 hrs/yr x ($0.005/KW-HR)
I
. .ANNUAL COST = $2,190,000
National Public Hearings on Power Plant Compliance with
Sulfur Oxide Air Pollution Regulations, E.P.A., Public
Affairs Office, Washington, D.C., Jan. 1974.
6
Task Force Report on Coal Conversion, Conn. D.E.P., Aug.
1974.
-------
V-122
APPENDIX C
THE CONNECTICUT CASES;
COST CURVE ESTIMATES AND ACTUAL COSTS COMPARED
(INSTALLED EQUIPMENT
AND MAINTENANCE COSTS)
-------
V-123
THE CONNECTICUT CASES; ACTUAL AND ESTIMATED COSTS
COMPANY
Rogers Corp.
Rogers Corp.
U.S.M. Corp.
SCRUBBERS:
Emhart
Emhart
Emhart
Emhart
Emhart
Olin
Pfizer
Pfizer
Pfizer
Silliman Co.
Stewart Warner
Uniroyal
Uniroyal
Walter Kidde
Walter Kidde
Walter Kidde
II. HYDROCARBON CONTROL:
CARBON ADSORBERS:
American Cyanamid
American Cyanamid
Columbia Magnetics
Dexter Corp.
AFTERBURNERS (DIRECT
ASCO Wire
E.J. Gaisser Corp.
General Electric
Goodrich
Stafford Printers
LOCATION
Manchester
Manchester
Shelton
Berlin
Berlin
Berlin
Berlin
Berlin
New Haven
Groton
Groton
Groton
Bridgeport
Bridgeport
Naugatuck
Naugatuck
New Haven
New Haven
New Hsven
Wallingford
Wallingf ord
Danbury
Windsor Locks
FLAME) :
Bridgeport
Stamford
Bridgeport
Shelton
Stafford
ADJUSTED CO.
INSTALLED COSTS
ACFM (DOLLARS)
6,000
16,000
1,120
15,800
19,000
19,200
21,850
24,000
20,000
250
800
1,100
41,333
10,000
6,400
12,000
10,000
30,000
40,000
2,300
6,500
25,000
50,000
500
13,000
650
10,000
4,000
9,770
24,300
1,500
11,700
15,300
14,400
16,200
20,700
24,000
13,500
13,500
7,200
54,000,
9,630
7,470
11,970
11,700
26,100
28,800
130,000
240,000
700, OOO1
424,000
12,000
50,000
15,000
54,300
25,000
ESCALATED 7/74 ESTIMATE FROM
INSTALLED COSTS APPLICABLE GRAPHS
(DOLLARS) (DOLLARS)
13,400
28,400
1,940
18,300
23,900
22,500
25,300
32,300
30,960
17,400
17,400
13,600
70,700
18,200
15,800
23,500
21,650
48,300
53,280
143,000
255,000
700,000
466,400
14,000
58,500
16,600
63,000
28,000
20,500
43,000
4,900
30,000
34,000
34,050
37,500
40,000
35,200
12,000
11,500
12,400
58,500
23,200
18,400
25,600
23,200
46,000
58,000
155,000
228,000
480,000
750,000.
14,600
53,000
15,600
44,000
26,400
PERCENT DIFFERENCE
BETWEEN ESTIMATED
AND ACTUAL COSTS
+ 53
+ 51
+153
+84
+ 47
+ 51
+ 48
+ 24
+ 14
-31
-34
- 9
-18
+ 27
+ 16
+ 6
+ 7
- 4
+ 9
+ 8
-11
-31
+61
+ 4
- 9
- 2
-30
- 6
III. CARBON MONOXIDE CONTROL:
AFTERBURNERS:
Plainville Casting
Plainville
57,000
16,420
19,200
81,000
ilnstalled cost does not include estimated $330,000 for distillation still.
-------
V-124
THE CONNECTICUT CASES; ACTUAL AND ESTIMATED COSTS
ADJUSTED CO. ESCALATED 7/74 ESTIMATE FROM FERCENT DIFFERENCE
INSTALLED COSTS INSTALLED COSTS APPLICABLE GRAPHS BETWEEN ESTIMATED
COMPANY
1. PARTICULATE CONTROL
LOCATION
ACFM
(DOLLARS)
(DOLLARS)
(DOLLARS)
AND ACTUAL COSTS
ELECTROSTATIC PRECIPITATORS:
National Gypsum
tl.E. Utilities
United Illuminating
United Illuminating
BAGHOl'SES:
Amnrican Cyanamid
American Cyanamid
American Cyanamid
American Cyanamid
American Cyanamid
American Cyanamid
Ashland Oil
Bnlf
Half
3alf
Blakeslee
Blakeslee
Blal-.eslee
Blakeslee
Carpenter Tech.
Caroenter Tech.
Cerro Wire
Ccrro ,Vire
Dart Inc.
D. J. Carten
D. J. Carten
I^hart
ESB, Inc.
Ferro Corp.
General Electric
General Electric
~rn--ral Electric
ipnoral Electric
General Electric
MacDernud
Nutmeg Steel Casting
Ottawa Silica
Philbrick, Booth S,
Bridgeport
Middletown
Bridgeport
Bridgeport
Wallingford
Wai ling ford
Wai ling ford
Wallingford
Wallingford
Wallinqford
New Britain
Newington
Newington
Newington
Branford
Hamden
New Haven
New Haven
Bridgeport
Bridgeport
New Haven
New Haven
New Haven
Mllford
Milford
Berlin
Fairfield
Norwalk
Bridgeport
Bridgeport
Bridgeport
Bridgeport
Bridgeport
Waterbury
Branford
N.Stonington
Hartford
27,000
424,000
164,000
859,000
500
500
500
600
800
800
58,000
17 ,000
34,100
98,000
1,500
400
400
800
93,000
186,000
7,000
20,000
1,200
600
600
8,000
7,000
300
2,560
6,300
7,200
7 , 2 (1 0
12,500
1,000
20,000
24,000
22,000
82,000
459,900
432,900
1,119,000
3,600
3,600
5,400
2,250
2,700
3, SOO
112,500
33,620
82,602
177,980
8,883
1,300
900
2,800
108,650
214,130
14,200
30,600
1,732
3,202
3,373
35,350
A
22,770
1,200
4,530
26,230
16,150
17,100
56,700
3,600
51,120
32,085
29,700
173,000
887,600
800,900
1,779,000
6,050
6,230
8,050
3, 900
4, 670
4,640
189,000
39,300
94,200
202,900
11,460
1,520
1,050
3,300
182,500
370,500
16,600
35,800
2,900
3,600
4,000
48,100
39,400
1,700
5,670
34,360
24,100
22,400
62,900
4,900
65,900
53,900
38,300
129,000
680,000
360,000
1,160,000
2,450
2,450
2,450
2,900
3,700
3,700
124,000
45,000
79,000
195,000
6,300
2,050
2,050
3,700
183,000
1,600,000
28,500
51,750
5,250
2,900
2,900
26,500
24,500
1,600
9,800
21,500
25,000
25,000
36,500
4,450
51,750
59,000
55,000
-25
-23
-55
-35
-60
-61
-70
-26
-21
-20
-34
+ 15
-16
- 8
-45
+ 35
+ 95
+ 12
+ .3
+ 361
+72
+ 45
+ 81
-19
-28
-45
-38
- 6
+73
-37
+ 4
+ 12
-42
- 9
-21
+ 9
+44
Spencer
-------
V-125
THE CONNECTICUT CASES; ACTUAL AND ESTIMATED COSTS
COMPANY LOCATION ACFM
IV, NITROGEN OXIDE CONTROL:
SCRUBBERS:
Company X2 Waterbury 30,000
Company Y2 Wallingford 100
Handy & Harmon Fairfield 3,500
ADJUSTED CO, ESCALATED 7/7-4 ESTIMATE FROM PERCENT DIFFERENCE
INSTALLED COSTS INSTALLED COSTS APPLICABLE GRAPHS BETWEEN ESTIMATED
(DOLLARS) (DOLLARS) (DOLLARS) AND ACTUAL COSTS
100,000
8,980
100,000
6,000
12,600
100,000
6,000
12,000
V. SULrUR OXIDE CONTROL:
LOCATION
ESTIMATE FROM PERCENT DIFFERENCE
UNIT SIZE LISTED-* CAPITAL ESCALATED CAPITAL APPLICABLE GRAPHS BETWEEN ESTIMATE
(MEGAWATTS) COSTS i ?/KW)
COSTS ($/KWl
LIf'.C-LIMESTONE WET SCRUBBERS:
Commonwealth Edison
Detroit Edison
"mguesne Light
N. E. utilities
i). E. Utilities
Public Service Co.
of Indiana
Public Service Co.
of Indiana .
Illinois
Michigan
Conn.
Conn.
Indiana
Indiana
155
170
380
193
338
880
880
180
80
72.5
96.1
83.7
68
66
126
80
80
96
83
75
73
.36
.48
.1
.7
.48
.26
(S/KW)
177
102
82
96.5
83.5
75
75
AND ACTUAL COSTS
+40
+ 26
+ 2
+ .4
- .2
- .6
+ 2
Company requested that cost data be kept confidential.
Estimated costs
-------
V-126
APPENDIX D
THE CONNECTICUT CASES;
COST CURVE ESTIMATES AND ACTUAL COSTS COMPARED
(OPERATION & MAINTENANCE COSTS)
-------
V-127
THE CONNECTICUT CASES: ACTUAL AND ESTIMATED COSTS
COMPANY
I. PARTICULATE CONTROL
LOCATION
ACFM
ADJUSTED ANNUAL
OPERATING COSTS
(S) (8760 HRS/YR)
'ESTIMATE FROM PERCENT DIFFERENCE
APPLICABLE GRAPHS BETWEEN ESTIMATED
(DOLLARS) AND ACTUAL COSTS
A. ELECTROSTATIC PRECIPITATORS:
United Illuminating
United Illuminating
United Illuminating
B . BAGHOUSES :
D. J. Carten
Emhart
Stewart Warner
C. SCRUBBERS:
Keller Pottery
Silliman Co.
Walter Kidde
Walter Kidde
II. HYDROCARBON CONTROL
A. CARBON ADSORBERS
American Cyanamid
American Cyanamid
Columbia Magnetics
Dexter Corp.
B. AFTERBURNERS (DIRECT FLAME)
ASCO Wire
E. J. Gaisser Corp.
General Electric
Goodrich
Stafford Printers
R. R. Donnelly1
III. NITROGEN OXIDE CONTROL:
SCRUBBERS:
Company X2
Handy & Harmon
Bridgeport
Bridgeport
Bridgeport
Milford
Berlin
Bridgeport
Berlin
Bridgeport
New Haven
New Haven
Wallingford
Wallingford
Danbury
Windsor Locks
Bridgeport
Stamford
Bridgeport
She 1 ton
Stafford
Old Saybrook
Waterbury
Fairf leld
164,000
327,350
859,000
600
3,500
1,300
13,000
41,333
10,000
40,000
2,300
6,500
25,000
50,000
500
13,000
650
10,000
4,000
9,300
30,000
3,500
33,900
72,960
74,460
626
2,890
1,580
34,020
164,400
23,340
37,080
11,000
16,500
77,200
165,000
4,100
10,500
17,800
16,000
22,200
83,000
29,000
2,000
33,500
65,000
170,000
410
2,350
850
48,000
155,000
37,000
147,020
13,000
23,500
77,300
155,000
3,900
10,300
5,100
78,000
31,000
72,000
29,000
2,000
- 1
-11
+ 128
-35
-19
-46
+41
- 6
+ 59
+298
+18
+ 42
+ .1
- 6
-5
- 2
-71
-3d'
+ 40
-16
0
0
Catalytic Afterburner
Company's name withheld for confidentiality.
------- |