EPA-901/9-76-003e
ECONOMIC LAW
ENFORCEMENT
VOLUME I
ENSURING PROPER
OPERATION AND
MAINTENANCE:
THE ENVIRONMENT'S NEXT
REGULATORY PROBLEM
The Judges, (detail American woodcut, 19th Century
CONNECTICUT ENFORCEMENT PROJECT
DEPARTMENT OF ENVIRONMENTAL PROTECTION
HARTFORD, CONNECTICUT 06115
SEPTEMBER, 1975
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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.
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The Judges (detail)
John Andrew and Son (after W. H. Drake)
American, 19th Century
Wood engraving
Courtesy Museum of Fine Arts, Boston Ma.
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EPA-901/9-76-003e
ECONOMIC LAW
ENFORCEMENT
VOLUME I
ENSURING PROPER
OPERATION AND
MAINTENANCE:
THE ENVIRONMENT'S NEXT
REGULATORY PROBLEM
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
ttr
£30 SoutA Dearfcoacn
€060*
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VOLUME V
I
arL-TNISTRATIVE REMEDIES
AMD MAINTENANCE
AIR POLLUTION CONTROL EQUIPMENT
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INTRODUCTION
CONTENTS
PART I.
Chapter I
Chapter II
Conclusion
Appendix:
PART II.
Chapter I
Chapter II
Chapter III
Chapter IV
Chapter V
Chapter VI
Appendix:
PART III.
A PROGRAM TO ENSURE PROPER OPERATION AND
MAINTENANCE 1-1
O&M Enforcement Problems 1-3
A Proposed Enforcement Program for O&M:
Administrative Tools and Economic Remedies 1-15
Model Stipulation
CALCULATING ECONOMIC REMEDIES FOR IMPROPER
OPERATION AND MAINTENANCE AND FAILURE TO
MONITOR
Calculating Assessments
Determining the Costs of Compliance
Handling Inflation
Adjusting for Taxes
Using the Cost of Capital
Determining the Useful Life of Equipment
Cost Curves for Monitors
OPERATION AND MAINTENANCE REGULATIONS
Sections 19-508-100 to 19-508-105 - Operation and
Maintenance Standards
Section 22a-6b-611 - Failing to Operate and Maintain
Properly
x .'
Economic Appendix
Section 22a-6b-612 - Operating Without an Operation
and Maintenance Permit
Section 22a-6b~613 - Failing to Monitor
Section 22a-6b^-614 - Violating a Monitoring Timetable
1-31
1-33
II-l
II-2
II-4
11-12
11-13
11-16
11-20
11-22
III-l
III-3
111-30
111-52
111-61
111-75
111-91
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11
ECONOMIC ADMINISTRATIVE REMEDIES
TO ENSURE PROPER OPERATION AND MAINTENANCE
OF AIR POLLUTION CONTROL EQUIPMENT
INTRODUCTION
As increasing numbers of industrial sources of air
pollution complete the installation of control equipment,
the attention of regulatory agencies must shift to ensuring
proper operation and maintenance of this equipment. Polic-
ing O&M is considerably more difficult than mandating initial
investment in control equipment, however, because violations
are technically more difficult to detect, continuous viola-
tions more difficult to prove, and remedial action more
difficult to fashion. Unless regulatory agencies develop
enforcement tools to solve these problems, improper opera-
tion and maintenance could easily frustrate public expecta-
tions of clean air arising from industrial investment in
control equipment.
The Connecticut Enforcement Project (CEP) has designed
new administrative enforcement tools to ensure proper opera-
tion and maintenance of air pollution control equipment.
These tools — economic remedies the Department can use
administratively — are based on the savings to a source of
not operating or maintaining installed air pollution control
equipment. By eliminating the savings from improper O&M,
these economic remedies provide an economic incentive which
fully counterbalances the existing disincentives to operate
control equipment. Assessments are just large enough to
encourage proper O&M, no larger: by tying assessments to
the cost of compliance, these economic tools provide ad-
ministrative remedies that are equitable as well as effective,
and contain built-in objective standards to restrain adminis-
trative discretion.
This Volume describes a program for O&M enforcement
using economic assessments, designed for the Connecticut
Department of Environmental Protection by the CEP. Part I
describes how this enforcement program would work. It
outlines (1) the problems of enforcing full and proper O&M
and (2) the tools developed to address them. Part II
explains the economics on which the program is based. This
explanation includes a description of how the costs of
compliance are estimated and how assessments are calculated
with this information in individual cases. Part III contains
an annotated set of regulations that could be used as the
legal basis for such an O&M enforcement program.
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Ill
The approach to enforcing O&M requirements outlined in
this Volume is described in less detail than the enforcement
programs described in the other Volumes of this Report. The
general approach and the proposed regulations are complete,
but further refining, testing, evaluating, and re-refining
of specific elements remains to be done. Unlike the other
portions of CEP's work which deal almost exclusively with
the fashioning of tools to be used to enforce existing
programs, here a program to deal with operating and
maintenance - what standards should be created, how com-
pliance with these standards is to be detected and proved,
etc. - had to be built before enforcement tools could be
developed.
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PART I
A PROGRAM TO ENSURE
PROPER OPERATION AND MAINTENANCE
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1-2
PART I
A PROGRAM TO ENSURE
PROPER OPERATION AND MAINTENANCE
CHAPTER I
1.
2.
3.
CHAPTER II
1.
2.
3.
4.
CONCLUSION
APPENDIX.
O&M ENFORCEMENT PROBLEMS
The Importance of O&M Enforcement
O&M Enforcement Problems
Goals for an O&M Program
1-3
1-3
1-3
1-14
A PROPOSED ENFORCEMENT PROGRAM FOR O&M:
ADMINISTRATIVE TOOLS AND ECONOMIC REMEDIES 1-15
Overview of Major Components and Steps 1-15
Triggering the O&M Permit Requirement 1-19
Setting Standards for Proper O&M 1-20
Continuous Parameter Monitors for Detection 1-25
and Proof
Determining Economic Assessments
Model Stipulation
1-28
1-31
1-33
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1-3
CHAPTER I
O&M ENFORCEMENT PROBLEMS
The focus of environmental law enforcement is shifting
to ensuring proper operation and maintenance of installed
control equipment. This is not going to be an easy task.
THE IMPORTANCE
OF O&M ENFORCEMENT
Over 1170 industrial sources of air pollution in
Connecticut have installed control equipment, including
nearly two-thirds of the state's major sources.
Major Sources with Installed Control Equipment
450
60%
270
100-Ton
Sources
100-Ton
Sources With
Control
• Equipment
Source: Registration data from Department files.
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1-4
If Connecticut (and the other states) are to achieve
and maintain expected improvement in air quality from this
and other equipment to be installed in the future, the
equipment must be operated and maintained properly. How-
ever, the economic incentive to the owner of an air pollu-
tion source not to operate its control equipment is strong.
This conflict between a declared public goal and private
interests is the source of Connecticut's O&M enforcement
problem, and of the need for environmental enforcement
generally. If the Department of Environmental Protection is
to solve the problem, it needs an enforcement program which
is effective and fair, and one that can be implemented with
available resources.
Improper O&M
Causes Air Pollution
Improper operation and maintenance drastically reduces
the effectiveness of control equipment*. The ability of
baghouses and scrubbers, for example — the two most widely
used types of control equipment in Connecticut — to clean
pollutants from air flows can drop close to zero if the
*See generally, EPA, Control Techniques for Particulate
Air Pollutants, AP-51 (Dec. 1972); DREW, Control Techniques
for Carbon Monoxide Emissions from Stationary Sources, AP-65
(March 1970); PHEW, Control Techniques for Nitrogen Oxide
Emissions from Stationary Sources, AP-67(March 1970); DHEW,
Control Techniques for Hydrocarbon Emissions from Stationary
Sources, AP-68 (March 1970); Control Techniques for Sulfur
Oxide Pollutants, AP-52 (Jan. 1969).
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1-5
blower speed is reduced 50 percent and a bypass opened.
Loss of Collection Efficiency
With Poor OS.M
Baghouses
High Energy Scrubbers
95%
90%
. <• . •
Proper
O&M
1
"_ 50% rain loss
i
i 95-100% max
£••"•"."'. """ loss
50%
Blower
Reduction
,
.. .. • fi
Proper
O&M
i
t 45% min
"[ loss
1
i
j 95-100%
^ . .« ..1 .
50%
Blower
Reduction
max
loss
Source: Engineering Estimates, DEP Air Compliance Unit
Moreover, the control equipment on half of the controlled
sources in Connecticut must operate constantly at high
efficiency in order for the source to continue to meet
emissions standards. The Department estimates, based on
source registration data, that the equipment on these
sources has very little unused gas cleaning capacity or
"cushion" which might otherwise keep emissions from poorly
operated equipment within the standards.
Improper O&M Causes Emissions Violations
Possible -
Violation
With Poor
O&M
Likely to Exceed
Standards With
Poor OSM
Not Likely to
Violate With
Poor OSM
Source: DEP Air Compliance Files, Enforcement Unit,
April, 1975
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1-6
Thus, improper O&M seriously impairs the ability of many
sources to meet emissions standards, and could endanger or
preclude the State from achieving and maintaining some of
its ambient air quality standards.
Improper O&M
Is Profitable
While proper operation and maintenance is vital for
continued clean air, it is highly unprofitable for the owner
of a controlled source. Annual O&M costs for the five most
commonly used types of control equipment, for example, are
from two to sixty times more expensive than the annualized
costs for the control equipment itself.
O&M Costs More than Equipment
TYPES OF CONTROL
EQUIPMENT
Baghouse
Electrostatic
precipitator
High temp
afterburner (HC)
Catalytic
afterburner (HC)
Low energy
scrubber (part)
' carbon.
adsorption
COSTS & BENEFITS OF OiM AS PERCENT OF ANNOALIZED EQUIPMENT COSTS
ECONOMIC BENEFITS
OF CONTROL I
ZN oxide
Concrete
OPERATING AND
MAINTENANCE COSTS
150
Solvent recovery
* Estimates of annual operating and maintenance costs and of annaalized
e;?ui-r.ent costs are derived from EPA, Control Techniques for Particulate
Air Pollutants, AP-51, pp. 166-176 (Dec. 1972), updated to 1975 dollars.
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1-7
In addition, these savings come from easily made cutbacks
in operations and/or maintenance.
Areas for OSM Savings
Type of
Control Equipment
naghouse (Fabric Filter)
Electrostatic Precipitator
Afterburner
Catalytic Afterburner
Low Energy Scrubber
Venturi Scrubber
OSM Areas for
Money Saving Cutbacks
. Electricity
. Replacement
. Replacement
. Electricity
and blower
. Maintenance
. Replacement
. Electricity
. Fuel
. Replacement
. Electricity
. Fuel
. Replacement
. Replacement
tic bed
. Electricity
. Chemicals
, Replace and
. Replacement
. Replacement
. Electricity
: Replacement
for blower
of bags
of durable components
for charge across plates
and cleaning of plates
of durable components
for blower
of durable components
for blower
of durable components
and servicing of cataly-._
for blower
adjustment of spray heads
of durable components
and servicing of packing
for blower
of durable components
Sources Interviews with DEP Air Compliance Staff, Enforcement Unit.
Thus, the economic incentive not to operate and maintain
control equipment properly is much stronger than the incentive
not to install the equipment in the first place. If effective
enforcement tools were necessary to get the equipment in,
they will be even more critical to ensure full and proper
O&M.
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1-8
O&M ENFORCEMENT
PROBLEMS
To deal effectively with improper operation and mainte-
nance, the Department must be able to eliminate the economic
benefits from improper O&M. In effect, the Department must
be able to make proper O&M a worthwhile investment for a
source owner. To accomplish this goal, the Department needs
to establish useable O&M standards, to detect improper O&M
when it occurs, to prove how long the improper O&M continued,
and to fashion remedies which encourage better performance
by the source owner in the future. Achieving these four
objectives -- standard-setting, detection, proof, adequate
remedy — is more difficult for O&M enforcement than for
other areas of regulation. If enforcement is to be effective,
new tools are needed to deal with these four problems.
Standard-
Setting
For a source with control equipment to continue to meet
emissions standards, the control equipment must be properly
operated and maintained. Thus, emissions standards could
serve as a standard of O&M performance. Once control
equipment is installed, however, emissions standards are
more difficult to enforce effectively. Emissions mass
standards require expensive testing to determine compliance
on a regular basis. Emission opacity standards are easy and
inexpensive to apply; but they affect only a limited number
of Connecticut's controlled sources.
Mass standards define emission levels in terms of the
weight or mass of pollutants emitted from a process using a
given quantity of material. For example, the particulate
emission standard in Connecticut is 17.19 pounds of particulate
per hour for a general process source (e.g. a brass smelting
plant) which uses 25,000 pounds of input materials per
hour.* To see if a source is in compliance or not, the
Department compares the standard to its calculation of the
weight of pollutants being emitted. The Department makes
the calculation by taking the weight or mass of materials
introduced into the emitting process (pounds per hour of raw
materials used in the process) and plugging this number into
an equation which relate these manufacturing inputs to
*DEP, Regulations for the Abatement of Air Pollution,
Section 19-508-18(e)(1).
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1-9
emissions.* Continuing the example, EPA's emission factors
for brass smelting plants project that an uncontrolled plant
(with an electric induction furnace) which uses 25,000
pounds per hour of raw materials {copper, silicone, zinc,
aluminum) emits from 25 to 125 pounds of particulates per
hour, depending on the percent of zinc used and the operat-
ing temperature of the furnace.** The emissions exceed the
standard of 17.19 pounds per hour and need to be reduced,
usually by control equipment.
Once the owner of a source installs control equipment,
however, these emission projections no longer hold. Since
the control equipment traps a portion of the particulates
which otherwise would be discharged, the emission projections
for uncontrolled sources overstate the emissions from controlled
sources. To continue the brass smelter example, suppose the
owner installs a baghouse with a design efficiency of 98
percent for a 25,000 pounds per hour plant. When the bag-
house operates at design efficiency, the emissions should
contain only 0.5 to 2.5 pounds per hour of particulates.
The emission equation should be changed to reflect the
effect of the baghouse.
Adjusting emission equations to take account of control
equipment is tricky because it requires an assumption of how
effectively the equipment traps emissions. But effectiveness
can vary widely depending on whether or how the equipment is
used. Baghouses are generally designed to be 98 percent
effective, for example, for emissions typical of brass
smelters.*** If the owner turns off the baghouse and opens
bypasses, or raises the temperature in the furnace and
inadvertently burns out the filtering bags in the baghouse,
effectiveness drops to nearly zero. Thus, an assumption of
control equipment effectiveness requires a further assumption
about operation and maintenance practices.
The obvious difficulty with the Department making O&M
assumptions in order to revise emission equations is that
O&M practices are the very behavior it seeks to observe and
measure. Because of this problem, emissions standards are
difficult to enforce against controlled sources using the
mass standard approach.
*See EPA, Compilation of Air Pollutant Emission Factors,
AP-42, 2d ed. (March 1975).
**Ibid., Section 7.9; EPA, Air Pollution Engineering
Manual, AP-40, 2d. ed., p. 269 (May 1973).
***EPA, Compilation of Air Pollutant Emission Factors,
AP-42, 2d. ed., Section 7.9 (March 1975).
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1-10
An alternative method to determine emissions is to
measure them directly in a waste gas stream by installing
monitoring instruments in ducting or in stacks. While
direct emissions monitoring is technically feasible,* the
costs are too high for widespread use.**
Sample Monitoring Costs for Emissions
Opacity
Plus Oxygen
Plus Sulfur
Dioxide
Plus Nitrogen
Dioxide
69%
-31%
$27,990
•33%
$39,430
66%
34%
$72,750
-35%
$83,420
[_J -Equipment Cost (incl. installation)
Annual Operating Cost
Source: EPA Survey of Emission Monitoring Costs,
Feb., 1975
*See generally, "Requirements for Submittal of Implementation
Plans and Standards of Performance for New Stationary Sources;
Emission Monitoring," 40 Fed. Reg. 46239 (Oct. 6, 1975); EPA,
Field Operations and Enforcement Manual for Air Pollution Control,
Vol. Ill: Inspection Procedures for Specific Industries. APTD-
1102 (Aug. 1972).
**EPA has recognized the relatively high cost of emissions
monitoring by limiting the need for continuous emissions
monitors (other than opacity monitors) to fossil fuel-fired
generating plants, petroleum refineries, sulfuric acid plants,
and nitric acid plants. See "Requirements for Implementation
Plans," 40 Fed. Reg. 46239.
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1-11
Unless there is a significant breakthrough in the costs of
emissions monitoring, measuring directly the mass of pollutants
in a source's emissions will realistically be applied to
only a small number of large sources.
Opacity standards define emission levels in terms of
the relative opacity or smoke content of the emissions
plume. (The general opacity standard for stationary sources
in Connecticut is 20 percent.*) The opacity test enables
Department inspectors to determine compliance visually,
without costly emissions tests or monitors. An inspector,
can stand outside the plant grounds, and with modest training
in observation, compare the opacity of a smoke plume with a
series of shade gradients on a hand-held chart.** Since
this test can be used easily even after control equipment is
installed, opacity standards remain a useful standard for
testing emissions compliance. This usefulness is limited,
however, by the fact that they apply only to sources with
visible particulate emissions, which represent only 20
percent of the sources to which abatement orders have been
directed.
*DEP, Regulations for the Abatement of Air Pollution,
§19-508-18(a)(1)(i) .
**For a fuller description of this detection technique,
see "Reference Method 9-Visual Determination of the Opacity
of Emissions from Stationary Sources," 39 Fed. Reg.
39874-39875 (Nov. 12, 1974); see also "New Source Per-
formance Standards for Fossil Fuel-fired Steam Generators:
EPA Response to Remand," 40 Fed. Reg. 42045-42050 (Sept.
10, 1975).
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1-12
All
Orders
Opacity
Violations
Sources Issued Abatement Orders.
Oct., 1971 - June, 1974
323
20%
65
Source: DEP Air Compliance Files
Because of the difficulty of using emissions equations,
the high cost of emissions monitoring, and the limited
application of opacity standards, emissions standards have
only limited usefulness once a source owner installs control
equipment. Regulatory agencies need new standards that
apply directly to operation and maintenance of control
equipment.
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1-13
Detection
Improper O&M is easy to hide, creating a strong tempta-
tion for a source owner not to operate its control equipment.
Since most control equipment can be turned on or off easily,
sources can often evade detection by not operating the
control equipment until an inspector appears, then merely
flicking a switch. By the time the inspector walks from the
plant gate to the control equipment, the equipment is
operating properly.
Control Equipment can be
Turned On and Off Easily
^Control Equipment
Baghouse
Elec. Precipitator
Afterburner
Low Energy Scrubber
High Energy Scrubber
ON/OFF Control
Blower
Blower/Power to Collection Plates
Blower/Burner
Blower/Water Pump
Blower/Water Pump
Source: Interviews with DEP Air Compliance Staff, Enforcement Unit
Proof Of
Violation Period
Operation and maintenance costs are substantial only
when cumulated over time. To offset savings from cumulative
improper O&M, violations must be established and proved for
the full period over which they occurred. Yet regulatory
agencies cannot permanently station inspectors in plant
facilities; they need an alternative, manageable way to
prove continuous O&M violation in order to generate an
incentive large enough to match the savings from improper
O&M.
Remedy
Even assuming detection and proof of continuous improper
operation and maintenance, traditional remedies are inadequate
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1-14
to encourage proper O&M in the future:
* Injunctions against future violations rest on the
contempt power for enforcement, a device seldom
used by courts and available only after lengthy
and cumbersome litigation;
* Court-assessed fines, when imposed, follow no
objective standards and thus bear no relation to
the economics of the underlying O&M violation;
* Criminal sanctions are inapt and unlikely to be
imposed.
Agencies need an administrative remedy which removes
the economic benefits from improper O&M and makes proper
operation pay.
GOALS FOR AN
O&M PROGRAM
Against this enforcement setting, an effective program
to ensure proper operation and maintenance must include
tools:
* To establish performance levels for control equip-
ment;
* To detect O&M violations at manageable administra-
tive cost levels;
* To prove continuous O&M violation without extra-
ordinary investigative cost;
* To set and impose economic remedies just large
enough to make proper operation and maintenance
pay.
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1-15
CHAPTER II
A PROPOSED ENFORCEMENT PROGRAM FOR O&M;
ADMINISTRATIVE TOOLS AND ECONOMIC REMEDIES
OVERVIEW OF MAJOR
COMPONENTS AND STEPS
By using new, easily developed types of standards,
existing detection techniques, monitoring systems which are
cheaper but as reliable as emissions monitors, and economic
remedies, the Department can solve the major O&M enforcement
problems and effectively ensure proper operation and maintenance
of installed control equipment. Moreover, it can accomplish
this goal without additional cost to the owners of controlled
sources who operate and maintain them properly. This approach
should be both effective and economical.
The CEP proposes an O&M Enforcement Program for the
Department which relies on four major components:
A limited permit program applicable only to regulatees
who are found to be operating improperly after notice of
their O&M obligation.
Standards of control equipment performance based on
operating parameters of the equipment — parameters such as
pressure drop, air flow, water flow, water pressure, and
temperature.
Continuous monitors to measure and record emissions
and/or performance of operating parameters.
Economic assessments based on the cost savings from
improper operation and maintenance and/or monitoring.
The remaining sections of this chapter explain each of
the four key elements of this program and how they address
the enforcement problems described in Chapter I. Here is a
brief overview of how the O&M program would work as applied
to controlled sources:
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1-16
When a source owner installs control equipment, the
Department learns of the installation because it has either
issued an abatement order or a new source permit requiring
the equipment, or the owner registers the equipment with the
Department.* The Department advises the owner of his obligation
to operate and maintain properly; under the O&M program, the
Department will also advise the owner of the enforcement
consequences of improper O&M. Thereafter, if the owner
operates and maintains the source properly, he faces no
burdens or costs under the O&M enforcement program. If the
Department detects (1) an emissions violation by a con-
trolled source, or (2) control equipment being operated in
a manner inconsistent with the operating conditions of an
emissions test that demonstrated compliance with emissions
standards, it will issue an order which requires the regu-
latee to obtain an O&M permit. The permit will contain
three kinds of requirements:
* A timetable for developing O&M standards, expressed
as performance levels for a set of operating
parameters that reflect proper operation of the
control equipment. For high energy scrubbers, for
example, the parameters might be pressure drop
across the venturi, water flow, and water pressure.
The timetable will require the regulatee to propose
parameter standards based on manufacturers' specifi-
cations and emissions test results.
* A timetable for installing continuous monitors and
recorders either of emissions or of performance of
the operating parameters for which standards have
been set.
* A condition that the regulatee provide assurances
of future proper O&M by agreeing to accept the
burden of proving continuous proper O&M in the
event the Department detects another O&M violation
in the future.
The purpose of developing parameter standards and of
installing parameter monitors is to enable both the Department
and the source owner, at relatively little expense, to watch
source operations closely against precise, source-specific
performance standards. The purpose of requiring the regulatee
to accept the burden of proving compliance is to make it
possible to determine how long a future occurrence of improper
*See DEP, Regulations for the Abatement of Air Pollution,
§19-508-2(e).
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1-17
O&M continued before the Department learned of it.
A first offender who receives an O&M order can comply
with the standard-setting-and monitoring requirements in the
permit at relatively low cost — not more than $4200 in the
first year (including emission tests) and $1200 per year
thereafter for 98 percent of the sources in Connecticut.*
If the regulatee complies and continues to operate and main-
tain properly, he faces no assessment by the Department.
For regulatees who refuse to comply, however, economic
assessments eliminate the economic value of non-compliance.
Part of this economic value is avoiding the expense of de-
veloping standards and installing monitors. Of much greater
economic value is avoiding effective enforcement of these
standards, because better enforcement reduces the chance to
make large savings from shutting down control equipment.
Without some equalizing incentive, regulatees would quite
rationally refuse to comply.
The economic assessments proposed in this Report would
provide the necessary equalizing incentive. A regulatee who
operates a source without an O&M permit required by an order
faces assessment for each month of such operation. The
assessment is based on the cost of proper operation and
maintenance and the cost of monitoring. It represents the
monthly savings the regulatee could realize by not operating
the control equipment and by not monitoring. Once parameter
standards are established and monitors installed, assess-
ments for future violations would also be based on the cost
of proper operation and maintenance or the cost of proper
monitoring, as the case may be. Once again, the assessment
fully matches the cost savings from non-compliance.
*Compliance would require a set of emission tests and
the installation and operation of monitoring equipment for
certain operating parameters. The emission tests cost an
average of about $2000 and generally not more than $3000 for
98 percent of the cases, based on tests performed in Connecticut.
Monitoring equipment should not exceed an annualized cost of
$1200 at 15 percent for 10 years assuming 10 percent inflation.
The cost is likely to be much less for certain types of
monitors, and would go down further if inflation falls below
10 percent. See the Appendix to Part II of this Volume.
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1-18
Since it equalizes — and takes away — the incentive
not to comply, the economic assessment provides a fair and
effective enforcement remedy. It is fair to the regulatee
because it protects him from excessive, non-economic fines
or penalties. It is fair to the regulatee's competitors
because it protects them from the competitive advantage
scofflaws otherwise would enjoy. It is effective because it
makes compliance a profitable investment.
Five regulations provide the legal basis for the pro-
posed O&M program:
1. Substantive O&M Regulations define O&M violations
and describe the O&M permit requirement which detection of a
violation triggers.
2. Assessment Regulations for Failure to Operate
and Maintain Properly apply to violations of O&M standards
and define how assessments are calculated for O&M violations.
3. Assessment Regulations for Operating Without
an Operation and Maintenance Permit apply to operating
without an O&M permit and define how assessments are cal-
culated for such operations.
4- Assessment Regulations for Failure to Monitor
apply to violations of monitoring standards and define how
assessments are calculated for monitoring violations.
5. Assessments Regulations for Non-compliance With
a Monitoring Timetable apply to violations of monitoring
timetable requirements and define how assessments are
calculated for such delinquencies.
The O&M program would impose costs on regulatees only
after they had prior contact with the Department and ample
notice of their obligation to operate and maintain properly
and of the enforcement consequences of improper O&M. For
regulatees who operate properly, the O&M enforcement program
has no application and imposes no costs -- either on regulatees
or on the Department. The program affects the relatively
small number of regulatees who, after notice and warning,
are found to be operating control equipment improperly.
These regulatees are subject to specific O&M performance
standards for their control equipment, and to civil assessments
which equalize — and take away — the economic benefits
from improper O&M. Assessments are large enough to provide
an adequate incentive to comply, but are limited by the
costs of compliance and thus protect all regulatees from the
risk of administrative abuse.
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TRIGGERING THE O&M
PERMIT REQUIREMENT
Regulatees who operate controlled sources in a manner
consistent with (1) emissions standards and/or (2) operating
conditions of an emissions test which demonstrates compliance
with emissions standards are unaffected by the O&M program.
The requirement to obtain an O&M permit applies only when a
source exceeds these standards or conditions.
The Department can use four techniques to detect cases
of improper O&M:
1- General visual inspection of control equipment.
This approach consists of an inspector examining the control
equipment visually for obvious deviations from proper operating
procedures (e.g., non-operation of control equipment) or for
visible evidence of improper maintenance (e.g., holes in
ducting). Unless precise conditions of control equipment
operation and maintenance are set, general visual inspection
is useful to detect only the grossest violations. In.
cases where improper O&M is flagrant, visual inspection can
provide the evidence necessary for a Department engineer to
estimate the effectiveness of the control equipment and to
use emissions equations to calculate emission levels. For
example, if an inspector finds a source being operated with
bypass vents open and control equipment shut off, a Department
engineer can reasonably estimate that the control equipment
had nearly zero effectiveness, and could calculate emissions
based on input factors.
2. Opacity inspection and monitoring. As explained
in Chapter I, inspectors can usually detect opacity violations
visually using a hand-held chart, and often can perform the
inspection outside plant premises and without notice to the
regulatee. This detection method can be used with roughly
20 percent of the sources. In addition, about 20 percent of
all controlled sources have installed continuous monitors to
measure opacity. Observation of these instrument readings
can supplement visual inspection of opacity.
3. Inspection of the performance of operating parameters.
This method consists of examining the level of performance
of operating parameters (e.g., temperature, gas pressure,
water flow) which reflect the operations of process and
control equipment. Inspectors can observe readings on
installed gauges or use portable, hand-held gauges to test
operating conditions. For 78 percent of the state's 450 major
(100-ton) sources, the proper operating levels of such
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parameters are known from emissions tests already performed.
For other sources, ranges of proper performance are known
from emissions tests on similar equipment.
4. Require an emissions test. If the Department
acquires general evidence of an emissions violation, such as
visibly poor maintenance or wide variance of operating
parameter performance from accepted ranges, it can require
that the source be tested under conditions identical to
those existing at the time of inspection.* Such tests can
determine the source's ability to meet emissions standards
under such conditions. If the test shows the source cannot
meet standards if operated under the conditions existing
when it was inspected, the Department can reasonably conclude
an emissions violation occurred.**
Upon detecting a source operating in excess of emissions
standards or at variance with the conditions of an emissions
test which demonstrates compliance, the Department will
issue an order which requires the responsible regulatee to
obtain an operation and maintenance permit in order to
continue operating. The permit will contain timetables for
establishing specific O&M standards for the source and for
installing monitoring equipment.
SETTING STANDARDS
FOR PROPER O&M
Emissions standards provide one test of proper operation
and maintenance. As explained in Chapter I, however, their
direct application to controlled sources is limited by the
difficulty of using emissions equations, the high cost of
emissions monitoring, and the limited number of sources with
visible emissions. To supplement and in large measure
supplant the use of emissions standards for O&M enforcement,
regulatory agencies can develop and apply standards based on
the operating parameters of installed control equipment.
Parameter
Standards
Parameter standards are performance standards for
selected operating characteristics of control equipment, set
at levels which reflect effective pollution reduction. Just
as speed limits have been established in many states at
*Sec. 19-508-103 of the proposed O&M regulations, Part
III of this Volume.
**See generally the legal memorandum, "Evidentiary Status
of O&M Data" in Volume VI, p. 233 of this Report. Evidence of
poor O&M can also be used as indirect proof of an emissions
violation.
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levels designed to conserve fuel, operating standards for
control equipment can be set at levels designed to lower
emissions. In each case, a standard which directly affects
equipment operation (vehicle speed orMe.g., pressure drop)
indirectly reflects equipment performance (fuel economy or
emissions). If operating standards are developed by relat-
ing emissions to the performance of carefully selected
operating parameters, such standards can serve as direct
standards of proper operation and maintenance and indirect
indicators of emissions. For example, by measuring the
pressure drop across a high energy scrubber, the water flow
rate through the scrubber, and the water pressure through
the spray nozzle during an emission test that demonstrates
compliance, the operator and the Department can determine
what performance level of these three parameters corresponds
with desired emissions.
The City of Los Angeles and some states currently use
parameter standards to an extent. Los Angeles and at least
the states of Connecticut, Pennsylvania, and New York write
some operating standards into permits for new stationary
sources based on the results of emissions testing. Some
states also have included a few parameter standards among the
air pollution abatement regulations in their State Implemen-
tation Plans.* These developments should be encouraged and
expanded: parameter standards can be developed and enforced
precisely and inexpensively.**
*See, e.g., Conn. DEP, Regulations for the Abatement of
Air Pollution, Section 19-508-20(e)(1), which specifies
operating temperatures for incinerators.
**EPA may be moving in this direction. It now requires
monitoring of operating parameters for certain classes of
new sources. See, e.g., "Standards of Performance for New
Stationary Sources: Electric Arc Furnaces in the Steel
Industry," 40 Fed. Reg. 43850-43854 (Sept. 23, 1975). EPA
has not indicated whether it intends to develop standards
expressed as performance levels of monitored operating
parameters, however. In the absence of parameter standards,
monitoring results can be used to determine improper O&M
only indirectly, by trying to show an emissions violation
from operating data. If EPA developed parameter standards,
it could use monitoring results directly by comparing them
to enforceable parameter standards.
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While parameter standards can occasionally be developed
for classes of sources,* the specific operating procedures
which enable a controlled source to continue to meet emissions
standards often vary greatly among identical types of
control equipment. For example, the proper operating practices
for two identical baghouses may vary with the type, size,
and concentration of pollutants entering the device, and
with the temperature of the gas stream.
Identical Control Equipment
Requires Different O&M: Baghouses
Major
O&M Activity
Proper O&M
Varies With:
Blower Speed
Filter Bag
Material
Frequency of Bag
Replacement
. Pollutant concen-
trations entering
baghouse
. Temperature of gas
. entering baghouse
. Type of pollutant
. Size of pollutant
particles
. Pollutant concen-
trations entering
baghouse
. Temperature of gas
entering baghouse
. Number of bags
Source: EPA, Air Pollution Engineering Manual,
AP-40, 2d ed. (May 1973).
Because of this variation, parameter standards for manv
sources will need to be developed specifically for each
source.
Determining proper parameter standards for individual
sources is technically feasible for the Department to do.
Manufacturers' specifications can help provide the informa-
tion necessary to correlate operating practices with re-
sulting emissions. Moreover, once control equipment is
*See the Connecticut regulation cited above.
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installed, an emissions test can yield specific data on
operating conditions necessary to achieve desired emissions
levels. For example, a wet scrubber used to control par-
ticulate emissions from an asphalt batching plant may
require more water flow (a higher water-gas ratio) as the
quantity of fine mineral dust in the aggregate mix increases,
and more water pressure as the operating temperature in-
creases.* By observing these parameters during emissions
testing, the regulatee and the Department can set operating
standards which correspond to proper emission levels.
Since an emissions test can provide most of the data
necessary to develop parameter standards for a source, the
cost of setting standards is relatively low. The average
cost of an emissions test is $2000, and has not exceeded
$3000 for 98 percent of the sources tested in Connecticut.
Moreover, since owners of untested controlled sources will
normally be required to develop parameter standards only
after the Department detects an emissions violation, this
cost will fall only on those regulatees whose sources exhibit
evidence of poor O&M.
Most of Connecticut's major sources have collected the
data needed to set parameter standards from emissions tests
already performed.
Major Sources (10J} tgnsVyear) Stack-Tested
I Major
Sources
350
450
Stack Tested
78%
Not
Stack Tested
22%
*100 Tons or More per Year
of Emissions without Control Equipment
Source: DEP Air Compliance Files,
Aug., 1975
Enforcement Unit,
*See EPA, Air Pollution Engineering Manual, AP-40, 2d.
ed. pp. 325-333 (May 1973).
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1-24
For these sources, the operating and maintenance conditions
under which an emissions test was performed, if it demon-
strated compliance with emissions standards, can stand as
enforceable parameter standards. For other sources, the
Department can require submission of data and the results of
emissions tests to generate the necessary information in
accordance with a timetable prescribed as part of the O&M
permit.
Once proper operating conditions are determined, the
Department can impose them as specific operation and main-
tenance standards. Thereafter, operating a source in a
manner inconsistent with the parameter standards is an O&M
violation. By supplementing emissions standards with param-
eter standards, the Department avoids the difficult burden
of trying to detect and prove emissions violations, either
directly using emissions data or inferentially using evidence
of poor O&M. Instead, it has a set of equally reliable but
much more enforceable O&M standards.
Parameter standards will also serve to educate source
owners and their staff about proper equipment operation.
Parameter standards link operating conditions to emissions.
Since plant employees can observe and measure changes in
operating conditions more readily than changes in emissions,
they can acquire closer control over equipment performance.
A sudden drop in the air pressure differential across a
scrubber, for example, with water flow and water pressure
remaining constant, pinpoints an operating problem much more
directly than a recorded increase in emissions. At the
same time, plant employees should be more accustomed to
using parameter standards; they work with operating parameters
from day to day.
In sum, parameter standards:
* can be carefully tailored to each device to provide
definite and precise O&M standards. In the case
of the batching plant, the Department could require
that a specific water flow be maintained in the
scrubber based on the maximum fines content expected
in the aggregate mix at any time, a water pressure
based on maximum operating temperature, and a gas
pressure drop sufficient to achieve the desired
cleaning effectiveness.
* can be enforced much more easily and cheaply than
emissions standards. Inspectors can detect vio-
lations using inexpensive portable equipment (e.g.,
a portable monometer to measure the gas pressure
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in a baghouse) or by observing recorded data from
continuous monitors (e.g., differential pressure
gauges, water flow gauges, temperature gauges).
can be selected to focus on areas where cost
saving cutbacks are likely (e.g., blower speed or
pressure drop, energy usage), and where detection
is easiest (e.g., where pressure gauges, voltage
gauges or electric meters can be used).
avoid the need to show an emissions violation
inferentially using evidence of improper O&M.
Instead, operating in a manner inconsistent with
parameter standards is direct proof of an O&M
violation.
educate owners and employees on sources regarding
how to use their control equipment properly and
give them a practical means to evaluate equipment
performance.
CONTINUOUS PARAMETER MONITORS
FOR DETECTION AND PROOF
Once binding O&M standards are imposed, continuous
monitors can record and measure source performance against
the standards. Continuous monitoring and recording instruments
contribute greatly to the technical, administrative, and
legal workability of an O&M enforcement program. Technically,
continuous monitors and recorders can provide a constant
supply of reliable information on operating parameters and
emissions; administratively, monitors permit fewer inspections
and shift some of the costs of enforcement to the regulatees
themselves; legally, monitors and the records they provide
can provide reliable evidence of past O&M efforts.
Continuous monitors are available to measure and record
emissions of various pollutants and operating parameters of
process and/or control equipment, but costs differ sharply
between emissions monitors and parameter monitors. For
example, monitors for sulfur oxide emissions cost from five
to eight times more than monitors for operating parameters
of a scrubber used to control the emissions.
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so2
Monitor
Parameter
Monitors
Parameter Monitors Cost Much
than Emission Monitors
$20,000
$17,000 $1,0001 $2,000
- i
A
Instrument and Recorder
Basic Installation
$11,250
$8,250 $3,000
30 ft.
60 ft;.
Engineering
and Testing
Equipment - Indoor Installation
Scaffolding for
Outdoor Installation
$31,250
$1200
$600
$750
$1300
$3,850
Water
Flow
Meter
water
Pressure
Meter
Recorder
Differential
Pressure
Gauge
Sources: EPA Survey of Emission Monitoring Costs, Feb., 1975;
DEP Survey of Scrubber Parameter Monitoring Costs,
July, 1975
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Because of the high cost, emissions monitors can be justified
only for large sources. Instead, parameter monitors provide
an inexpensive, equally reliable record of the operating
performance of control equipment. Coupled with legally
binding parameter standards, parameter monitors can detect
O&M violations and provide direct proof of continuous im-
proper operation and maintenance. A monitor which measures
pressure drop across the venturi of a high energy scrubber,
for example, would indicate both the occurrence and the
duration of a pressure drop which fell below an applicable
pressure drop standard.
The Tampering
Problem
While continuous monitors and recorders will show
improper O&M caused by inattention or neglect, a source bent
on evading compliance can often distort monitoring records
without great difficulty.
Vulnerability of
Monitors to Tampering
Elements of
Monitoring System
Sensor
Measuring Device
Recorder
Power Source
Tamperabil i ty
Generally not easily tamper-
able without visible signs
Calibration controls gener-
ally vulnerable to tampering
Can be sealed to prevent tam-
pering, except periodic main-
tenance requires access
Easily turned off; detection
difficult unless power is
metered or switch sealed
Source: Interviews and manufacturers' representatives;
interviews with DEP Air Compliance staff, Moni-
toring Unit and Enforcement Unit.
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Altered monitoring data can mask improper O&M and
eliminate an important source of operating evidence. In the
absence of other legal controls, a scofflaw could distort or
fail to maintain monitoring records, shut down his control
equipment, reap large savings from the shutdown, and frustrate
the Department's ability to show a violation or its duration
once the shutdown or tampering were detected.
To discourage shutdown or tampering with monitoring
equipment, the O&M permit will contain a condition that the
regulatee provide assurances to the Department of future
proper O&M. Such assurances consist of the regulatee
agreeing, in the event the Department detects another O&M or
monitoring violation, to accept the burden of proving con-
tinuous proper operation and maintenance since the last
inspection, and to limit the types of evidence acceptable to
show proper O&M. The restriction would permit (1) monitor-
ing evidence and (2) evidence from third party suppliers —
electric bills for control equipment operation, fuel bills
for afterburners, vouchers for replacement of catalytic
elements, etc. If a regulatee who failed to monitor or who
tampered with monitoring equipment could not show otherwise
that he had complied with the applicable operating standards
during the period of the monitoring violation, he would be
subject to an assessment equal to the value of violating
operating standards over the same period.
A regulatee who has operated and maintained properly
runs very little risk of being assessed even if it has had a
monitoring failure. It will probably be able to show that
the equipment was being operated and maintained with other
evidence. However, the source that has failed to monitor or
that has tampered with the monitors will find it much more
difficult to carry this evidentiary burden.
DETERMINING
ECONOMIC ASSESSMENTS
Four civil assessments back up O&M enforcement by
eliminating the value of non-compliance. This section
summarizes the use of economic assessments in O&M cases.
Part II explains in more detail the derivation and method-
ology for calculating assessments.
1. A civil assessment for operating without an
operation and maintenance permit. A source owner who re-
ceives an order requiring him to obtain an O&M permit has a
strong economic incentive not to comply. Initial and con-
tinued compliance with the operating and maintenance and
monitoring requirements of the permit would require substantial
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annual expenditures with little or no return. By not com-
plying, a regulatee saves these expenses and obtains an
opportunity to invest the funds that should be spent on O&M
and monitoring in another more profitable project. Economic
civil assessments counterbalance the benefit the regulatee
could obtain by investing O&M and monitoring funds elsewhere.
By matching — and removing — the economic gain from non-
compliance, civil assessments provide enough economic in-
centive to make compliance worthwhile, yet avoid overkill by
limiting assessments to this economic gain.
A regulatee who operates without an operation and
maintenance permit can reinvest these cost savings of non-
compliance:
* the cost of developing parameter standards. This
cost is relatively small and one-time, consisting
largely of the costs of an emissions test.
* the cost of installing, operating, maintaining,
and periodically replacing monitoring equipment
for the operating parameters subject to operating
standards. This cost is also fairly low, but con-
tinues over time. (For example, the annualized
cost for a parameter monitoring system for a high
energy scrubber with recirculating water would be
about $1150 after taxes, assuming 10 percent
annual inflation and 15 percent cost of capital
for 10 years. See Part II, Chapter I and Appendix
to this Volume.)
* the cost of operating and maintaining installed
control equipment and replacing it as it wears
out. This cost is substantial and continues as
long as the process is being controlled. It is the \/
major incentive for non-compliance. (A high
energy scrubber which controls particulates from a
source with a gas flow of 25,000 CFM and operates
12 hours per day, for example, has annualized
equipment costs of about $6600 and annualized
operating costs of about $49,000, assuming 10
percent annual inflation and 15 percent cost of
capital for 10 years. See Volume II, Part V of
this Report).
The assessment for operating without an O&M permit is
designed to take away the benefits of not paying these costs
and spending the money somewhere else. The assessment
equals the monthly investment value of spending this money
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elsewhere, in investments which yield a return customary for
the regulatee's industry. By equalizing and eliminating the
benefits of non-compliance, the assessment makes compliance
just as profitable as any other normal investment.
2. A civil assessment for failure to operate and
maintain properly. This assessment applies to violations of
operating parameter standards in an O&M permit. A regulatee
who operates improperly saves the costs of proper O&M and
can realize the economic value of investing this money
elsewhere. To remove this benefit/ the assessment equals
the monthly value of not paying for proper O&M plus the
yield the regulatee could obtain by investing elsewhere. It
is almost identical to the assessment for operating without
an O&M permit. The only difference is the absence in this
assessment of a value for non-compliance with monitoring
requirements.
3. A civil assessment for failure to monitor. A
regulatee who fails to operate installed monitors does not
depreciate the equipment and saves the operating costs of
monitoring. It might also save the costs of proper opera-
tion and maintenance — an enormously larger saving — if it;
does not operate its control equipment because it knows it
is not monitored. To discourage improper operation and
maintenance of control equipment during periods of moni-
toring failure, and to discourage shutting down or tampering
with monitors in order to hide improper O&M, this assessment
is two-tiered. The assessment for monitoring violations is
initially identical to the assessment for failure to operate
and maintain properly. If the regulatee shows that it has
operated its control equipment properly during all or part
of the monitoring failure, then the assessment automatically
drops to a much lower level for those periods of time. The
lower assessment equals the benefits the regulatee could
obtain by investing the costs of proper monitoring else-
where. Since these costs are low, the assessments will be
quite small.
4. A civil assessment for non-compliance with a
monitoring timetable.This assessment applies to delin-
quency in complying with a timetable in an O&M permit to
install monitoring equipment. It is calculated in exactly
the same way as the assessment for failure to monitor.
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CONCLUSION
The tools of O&M enforcement -
* a limited permit program imposed only on violators
with prior notice;
* new O&M standards, especially parameter standards;
* parameter monitoring requirements and evidentiary
safeguards; and
* economic assessments which remove the benefits of
non-compliance;
combine together into an administrative program that:
* imposes no new administrative or legal require-
ments on regulatees which operate installed con-
trol equipment properly;
* imposes no assessments on violators who respond
promptly;
* imposes economic remedies when necessary that are
always just large enough to ensure that proper O&M
pays; and
* restrains administrative discretion through the
use of objective economic standards already familiar
to businessmen.
The proposed O&M program should permit the Department
to ensure proper operation and maintenance of air pollution
control equipment. It should do so effectively, economically,
and fairly. It focuses on regulatees who have clear notice
of their obligation to operate and maintain properly, and
even for them, imposes no assessments on those who respond
promptly and responsibly. For regulatees subject to assess-
ment, the program imposes assessments economically, matching
and removing the benefits of non-compliance.
Economic civil assessments provide a workable inter-
mediate response. They provide just the right level of
incentive, and they do so promptly. They are demonstrably
fair; they assess violators only what they have gained from
non-compliance. (In the process they protect law-abiding
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companies against unfair competition by scofflaw competitors.)
The regulations' safeguards ensure that those subject to
regulation will be treated fairly, and that they can always
obtain review if they feel aggrieved. The economic basis of
the regulations ensures an adequate but not excessive incentive,
protects against possible abuse of administration discretion,
and provides an objective standard for review and correction.
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MODEL STIPULATION
The operation and maintenance permits the Department
issues will contain a condition requiring the permittee to
provide satisfactory assurances of future proper operation
and maintenance. Since the regulatee has already violated
O&M standards, the Department is justified in requiring
tangible evidence of future proper performance. One type
of assurance which will be used commonly is an evidentiary
stipulation whereby the regulatee agrees to accept as a per-
mit condition certain burdens of proof in the future and
certain limitations of the types of evidence he may present
to meet these burdens.
What A
Stipulation Is
A stipulation is simply a legally binding agreement between
two or more people. It is most often used to settle in an
informal yet binding manner a dispute between two parties, such
as an administrative agency and a regulatee. In a legal sense
a stipulation is very much like a contract; the parties to the
agreement exchange mutual promises either to perform or to
refrain from performing certain actions. An example of a typical
stipulation would be a settlement in which a person injured in
an auto accident agreed to drop certain damage claims in exchange
for the insurance company's full payment of others.
Stipulations are enormously useful -- chiefly for two reasons.
First, they are effective yet very inexpensive. Once signed,
they are legally binding and fully enforceable. They are negotiated
privately and do not require the formalities of an order.
A second advantage of the stipulation is its flexibility.
Often an agreement will include clauses governing its enforceability,
both present and in the future, while also setting potential
remedies should a breach occur. Other provisions may guard against
fraud. For example, returning to the personal injury example, the
insurance company may agree to pay future medical expenses for
treatment, but may also want the right to have its doctors examine
the person periodically to guard against padding or fraud.
The Importance of Stipulations
To the 0 & M Enforcement Program
Economic remedies are calculated to counterbalance the value
a regulatee derives from every day of noncompliance. For this
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enforcement approach to work, the State must know and be
able to prove how long a regulatee has failed to comply. This
is difficult when the noncompliance is failure to operate and
maintain properly. A flick of a switch is often all that is
required to turn a control system on or off.
The Department's first response to this problem is to re-
quire continuous recorded monitoring. Section 19-508-3 of the
O&M regulations provides the Department with the authority to
require the installation and operation of continuous monitoring
equipment.
But monitoring equipment is subject to tampering. By re-
calibrating the instrument, by deceiving the sensitive probe
that actually "reads" the process being monitored, or by simply
turning off the power, a determined regulatee can falsify or
avoid making monitoring readings. For example, a small high
intensity light installed to shine on the temperature sensor
inside an incinerator could produce an overly high reading just
as holding a match under a home thermostat does. In this way
a scofflaw can present an apparent record of proper incinerator
performance while actually saving fuel by burning at lower temp-
eratures. To discourage tampering, the Department must be able
to create a special value for accurate monitoring information and
a special cost for doctored information. Stipulations can be
very useful in doing this.
The terms of the model stipulation provide that if the
regulatee is again found to be violating O&M standards govern-
ing the operation of his source, the regulatee must bear the
burden of proving that it has not been in continuous violation
between the date of the last Department inspection and this
violation. Thus the burden of proof of nonviolation for the
entire period since the last inspection falls on the source.
This burden makes monitoring evidence very valuable, for it
will show a performance record since the last inspection. If
the regulatee tampers with the monitor, he assumes the risk
that the Department might discover the tampering and consider
the monitoring evidence unreliable. If this happens, the reg-
ulatee is faced with the prospects of proving proper operation
with other evidence or losing the case.
Once again, a determined regulatee could manufacture other
evidence that appeared to show proper O&M, even though the reg-
ulatee had not operated its control equipment. For example, the
owner could have one of his supervisors testify that his workers
regularly replaced worn-out filter bags in his baghouse when in
fact many bags had been burned out for months. Or the owner
could show fuel records supposedly showing fuel purchases for
his afterburner, even though the fuel was actually used to heat
the office. The problem for the Department is that the regulatee
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controls this information, and the Department cannot effect-
ively verify it.
Here again stipulations can serve a useful function. The
stipulation would limit the types of evidence the regulatee
could present to show proper O&M after a second violation was
found. The stipulation would exclude evidence which cannot be
independently verified, e.g. by third parties. If a question
of shutting down control equipment existed, electric meter
readings for the equipment could be presented, for example.
Or repair bills could be presented for service work performed.
While not eliminating the possibility of fraud, these limita-
tions on evidence make fraud harder and riskier. At the same
time, the stipulation puts few burdens on other, law-abiding
permittees. These owners should have both monitoring evidence
and vendor receipts to meet the stipulation burdens easily.
Using The
Model Stipulation
The model stipulation is written to be inserted as a condi-
tion in an O&M permit. It also could be used in an escrow (or
other surety) agreement with the same effect as a permit condition:
the regulatee would be liable to forfeiture of the surety amount
unless it could prove proper O&M in accordance with the stipula-
tion.
The model stipulation can be used exactly as it is, or it
can be modified to list the exact kinds of evidence admissible
under its terms. In cases where the regulatee has cooperated
and responded promptly to the Department, for example, the
Department and the regulatee may agree to expand the types of
admissible evidence to include internal business records of the
regulatee. In short, the model stipulation is only a model,
usable as i-s' but adaptable to the needs of any particular case.
Text of The
Stipulation
The following condition can be inserted into an O&M permit:
"As a condition of accepting this permit, the permittee
agrees and accepts that in any future civil action, including
any administrative proceeding, brought by the Department against
the permittee for violation of operation and maintenance stand-
ards in Section 19-508-3 of the Regulations or in this Operation
and Maintenance Permit for the same source(s) which is (are)
the subject of this permit, evidence of such violation by any
such source shall constitute evidence of continuous failure by
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the permittee to operate and maintain the source properly
between the date of the most recent inspection of the source
by the Department and the date of such violation, and proof of
such violation shall constitute proof of continuous failure
by the permittee to operate and maintain the source properly
between such dates. Upon a showing of such violation, the permittee
shall bear the burden of producing evidence that it did continuously
operate and maintain the source properly, and the risk of non-
persuasion by a preponderance of the evidence shall be born
by the permittee. The permittee may meet these burdens solely
by producingj
(a) business records of the purchase of commodities
or services used to operate and maintain air
pollution control equipment which processes
emissions from the source(s) in violation, and/or
(b) readings from monitoring instruments approved by the
Department installed in such source(s) or in such air
pollution control equipment."
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II-2
CHAPTER I
THE ASSESSMENT FORMULA
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. Economic assessments will
ensure voluntary compliance because they simultaneously
remove the incentive to delay and guarantee those who comply
a commercially attractive "return" on their abatement in-
vestments — not having to pay the assessments. This
"return" will be sufficiently attractive to make source
owners feel that compliance pays because it is calculated
at the cost of capital rate appropriate for each industry,
i.e. because it is as large as the returns the source owner
is obtaining on investments he has recently chosen to make.
Economic assessments are based on a simple economic
calculus that is commonly used by businessmen in evaluating
investment alternatives. 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
compliance 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.
A mathematical summary expression of the assessment formula
proposed for use in O&M cases follows:
CA = (PVO + PVE) A
+ CC
PVO =
PVIE =
PVE =
CC -
AP
RI
CC
OP
(1-TC)
1 ~\1
1 -/I
L ^
T
(DL) (CC
RI\AP~
+ CC/
+ RI\EL
+ CC/
PVIE
(1)
(2)
CCE (3)
(4)
A =
(1/12)
(1 + CC) - 1
1 - 1
(5)
(1 + CC)
AP
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II-3
The Economic Appendix to proposed Section 22a-6b-611 of
the Civil Penalty Regulations for O&M explains the assessment
formula, how it is derived, and how it is used; it also includes
an example applying the formula in a specific case. Please
refer to this Appendix which is in Part III of this Volume for
these explanations.
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II-4
CHAPTER II
DETERMINING THE COSTS OF COMPLIANCE
Civil assessments for improper operation and maintenance
are designed to encourage continued compliance with emissions
standards by taking away the economic benefits of failing to
operate and maintain properly and of failing to monitor.
These benefits include (1) saving the expense of buying monit-
or ing^equipment (2) saving the costs of operating and maintain-
ing both control and monitoring equipment during the period of
noncompliance (3) avoiding or reducing the wear and tear on
these facilities and (4) avoiding the opportunity costs en-
tailed when a regulatee expends money on no-return compliance
projects rather than commercially profitable alternatives.
The most important single step in determining what benefits
a delinquent regulatee obtains from noncompliance is determining
how much the regulatee would have to pay out if it complied.
The Department must be able to make this determination easily
and reasonably accurately if an enforcement approach based on
economic remedies is to work in the O&M area.
ESTIMATING THE COSTS
OF O&M COMPLIANCE
The cost of compliance in O&M cases can be determined
using the same methods used in emission violation cases.
(See Volume II, Part II.) This is because the cost of con-
tinued compliance with O&M parameter standards is virtually
identical to the cost of initial compliance with emission
standards. In each case the owner of the source must anticipate
the same continuing expenditures over time to operate and main-
tain control equipment and to replace it as it wears out. The
only difference between the situation of the owner of a source
that already has control equipment and the owner of a source on
which equipment is yet to be installed is that the first owner
has already spent money on the past purchase and operation of
control equipment whereas the owner of the uncontrolled source
must make these expenditures in the future. This is not a
significant difference. Both owners will allocate their capital
costs (chiefly the purchase price of the equipment) over the
life of the equipment, and the resulting annualized charge will
be identical in both cases. Each year the equipment is not in
place or is not used (and therefore generally does not depreciate
significantly) represents a saving of this annual charge and a
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II-5
saving of operation and maintenance costs.*
* A simple example may clarify the point. Suppose the
owners of two asphalt batching plants face identical control
costs for the particulate emissions from their batching opera-
tions, say, $54,000 for the equipment, which will last 10
years, and $15,000 per year for operation and maintenance.
Suppose also that both owners use straight-line depreciation
over the useful life of the equipment, and that they also set
aside money into a "sinking fund" to replace worn-out equip-
ment at its replacement cost. For simplicity, assume that
both owners can finance their expenses without interest.
Finally, assume that equipment and O&M costs both increase
annually at a 10 percent inflation rate.
When Owner A invests in pollution control, he faces an
annual "expense" from then on of $20,400 (l/10th of the
$54,000 equipment cost plus $15,000 for O&M) times an inflation
factor of 1.10 (base price plus 10 percent) compounded every
year. In the fourth year of his investment, for example, his
cost of compliance will be $27,152 ($20,400 x 1.103 = $20,400 x
1.331 = $27,152). In the sixth year, his cost that year will
be $32,864 ($20,400 x 1.1Q5 = $20,400 x 1.611 = $32,864).
If owner B waits to buy a baghouse until three years
after owner A bought one, owner B will find the cost of buying
and operating the baghouse has inflated at the rate of 10 per-
cent each year. The cost he faces that year (owner A's fourth
year) is one-tenth of the price of a baghouse that now costs
$71,874, plus $19,965 for operation and maintenance — a total
of exactly the cost owner A faces in the same year. Similar-
ly, if owner B waits five years after owner A, owner B will
face a cost of one-tenth of $86,994 plus $24,165 for a total
of $32,864, again the same as owner A's cost of compliance for
the same year.
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II-6
In most air pollution 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 polluted 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 what control technique (baghouse,
scrubber, etc.) is installed on the source
* determine values for the key variables (gas flow rate,
type of pollutant) on which the curves are
based
* read the cost estimates off the appropriate
cost curves.
The CEP has developed a full set of cost curves to aid
the Department in estimating the cost of compliance in civil
assessment cases covering emissions violations by uncontrolled
sources. Since the cost of compliance is virtually the same
for O&M violations by controlled sources, the same cost curves
can be used in O&M cases. The chapter on "Determining the Cost
of Compliance" (Chapter VII) in the Operating Manual dealing
with emissions violations (Volume II, Part V) explains in
detail the derivation, testing, and use of these^cost curves.
Given the enormous variety of situations requiring con-
trol, 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 again Volume II,
Part V, Chapter VII.) The fact that such estimates will be
necessary for only a small 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.
An example will help clarify how cost curves would be
used in most cases.
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II-7
Using O&M Cost
Curves; An Example
Suppose a brass smelting plant releases particulates from
a reverbatory type furnace. The owner controls the emissions
with a baghouse. From information furnished on the Department's
registration form, the Department knows that the uncontrolled
process emission rate is 252 pounds per hour and that the pro-
cess weight rate is 7200 pounds per hour. Suppose the Depart-
ment also knows from previous inspections 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. Suppose the engineer visits
the plant one day, sees a visible smoke plume, and finds the
baghouse shut down and the emissions venting through an emerg-
ency bypass. With this information about operating parameters
and type of control equipment, the Department engineer turns
to the appropriate costing curves developed and maintained by
the Department. The relevant curves follow.
-------
Installed Cost g (Thousands of Dollars)
p-
iQ
c
n
OJ
o
p>
01
•2
01 CD
(U
y i_a
DJ tr
cn n
o
o c
o n
>Tj O
s M
(t>
o
rt
O
PI
H
rt
H-
O
P>
rt
(D
O
O
3
rt
M
O
-------
II-9
Annual Operating £ Maintenance Cost Of_ Baghouses
-Particulate Control-
loo
100
Gas Volume Through Collector
(Thousands of ACFM)
Figure 13
-------
11-10
Since the gas volume flow rate to be controlled is 22,000
ACFM, the cost curves indicate the equipment costs for the bag-
house are about $54,000 and that the annual operating costs
are about $15,000.
ESTIMATING THE COSTS
OF MONITORING COMPLIANCE
The Department is able to develop and use cost curves to
estimate the cost of compliance with monitoring requirements
much as it can use curves to estimate O&M compliance costs.
The Department has found that the costs of monitoring operating
parameters are fairly constant for any given set of parameters
(gas pressure drop, water pressure, etc.), and do not vary much
with changes in emission characteristics (e.g., gas flow,
pollutant concentration) or source size. Opacity monitoring
costs for particulates have also been generally constant, re-
gardless of changes in these same two types of factors. Conse-
quently, the Department has been able to simplify the job of
estimating monitoring costs by using single, typical cost
figures (instead of curves based on some technical variable
such as gas flow). For example, to estimate the cost of an
opacity monitor for an industrial boiler, all a Department
enforcement engineer has to do in 98 percent of the cases is to
look up the opacity monitoring cost table and read off the esti-
mates written there. In the rare event that the monitor cannot
be installed in the plant ductwork but must be placed in the
stack instead, he will also have to estimate on a case-by-case
basis the cost of installing the meter in the stack.
So far, the Department has developed cost estimates for
monitoring (1) the opacity of emissions and (2) operating
parameters for wet scrubbers. These estimates, together with
an explanation of their derivation and testing, are explained
in the Appendix to this Part.
Using Monitoring Cost
Curves; An Example
Suppose an insurance company heats its offices using a
boiler with a capacity of 25 million BTU per hour. Suppose
further that the company is under an operation and maintenance
permit but has not issued purchase orders for required opacity
monitors by the deadline in its monitoring timetable. In order
to estimate the costs of compliance, an enforcement officer
can look at the permit, or if necessary visit the plant, to
determine whether the monitor can be installed in ductwork or
must be installed in the stack, and (assuming indoor installation
is possible), turn to the appropriate cost estimates, reproduced
below.
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11-11
OPACITY MONITORING COSTS
Instrument $1327
Indoor Installation 374
Operation & Maintenance 530
Assuming installation in existing ducting is possible,
equipment costs for the opacity monitor are about $1327, indoor
installation costs about $374, and annual operating costs
about $530.
UPDATING
THE CURVES
Equipment and operating costs are subject to change due
to both inflation and technological advance. Accordingly,
the Department must update the curves used for estimating the
cost of compliance with O&M and monitoring requirements with
current cost information from time to time. This data will
come from actual Connecticut figures and from studies performed
by the U. S. Environmental Protection Agency and others.
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11-12
CHAPTER III
HANDLING INFLATION
Inflation affects both the purchase price of replacement
equipment and annual operating and maintenance costs. Plant
costs have increased almost 25 percent in 1972-74, for example,
and operating and maintenance costs, which reflect chiefly
labor and energy costs, have been even more volatile. Thus,
projection of future compliance costs requires constant up-
ward adjustment to reflect inflation.
INDEXING
INFLATION
The economic assessment formula adjusts the estimated
cost 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" fluctuations in
their "inflation expectations."
The civil assessment regulations allow the Commissioner
to peg the inflation rate used in the assessment calculus to
whatever index or indices of price change he finds is most
appropriate. The U. S. Bureau of Labor Statistics, although
it compiles cost indices for hundreds of products and commod-
ities, 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 it is currently used by the
U. S. Environmental Protection Agency to update Agency publi-
cations.
Using this index, the rate of inflation (RI) the Depart-
ment would use in its economic assessment calculus throughout
1975 would be 7.9 percent.
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11-13
CHAPTER IV
ADJUSTING FOR TAXES
Most regulatees that buy and operate pollution control
equipment obtain various tax benefits which lower the cost of
the investment. Equipment costs can be partially recouped
through depreciation allowances, which permit especially accel-
erated depreciation for pollution control equipment. Operating
and maintenance expenses are deductible as ordinary business
expenses. Equipment investments are also eligible for an
investment tax credit.
The civil assessment formula automatically takes these
tax benefits into account. (Depreciation is figured on a
straight-line basis over an accelerated depreciation period.
The assessment formula also assumes a 48 percent income tax
rate and a 10 percent investment tax credit.) These tax ad-
justments avoid what otherwise would be a large over-assessment
in most cases, because they adjust the cost of compliance
downward to reflect tax savings.
A 48 percent income tax rate is a workably accurate assump-
tion for about 80 percent of the corporate regulatees. A few
companies have lower tax rates. In addition, most individuals
and partnerships are taxed at a lower rate; municipalities and
non-profit institutions are not subject to tax at all. For
these cases the Department will want to adjust the formula's
tax assumption. Whether and how the Department adjusts for
differences in individual regulatees' tax rates depends on
whether it is dealing with a corporation, individual, partner-
ship, or municipality.
Corporations
The Department will not have to worry about adjusting for
individual income tax rates for most corporations. There are
only three types of corporations that may have income tax rates
below 48 percent: (1) companies operating at a loss, (2) com-
panies with extraordinary tax deductions or credits 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 eventually become
profitable, they will be able to take advantage of the tax
advantages that accumulated during the period when they were
not profitable. Consequently, these companies will not alter
very much their evaluation of what an abatement project will
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11-14
cost them. Moreover, their calculations take into account the
after-tax costs of abatement well into the future, and the normal
businessman is not likely to assume he will be operating con-
tinuously in the red for twenty years. In other words, the
Department need not worry about adjusting the formula for com-
panies operating temporarily at a loss.
Companies with low tax rates because of extensive deduction
and credits other than for operating losses are a more serious
problem.Special provisions in the tax laws, most notably
depletion allowances that benefit companies involved in extrac-
tive activities, can largely or entirely eliminate income tax
liability. U. S. Steel and Occidental Petroleum, for example,
pay negligible income taxes because of the tax cover such
provisions allow. Such companies will calculate their after
tax costs of an abatement investment differently from most
companies: they will perceive such investments to be signif-
icantly more costly than most companies. However, the situation
is likely to be relatively rare, especially given recent
Congressional action to reduce and eliminate the oil depletion
allowance. Therefore, unless the Department is dealing with
an extractive industry or an exceptionally difficult case,
Department staff probably need 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 $25,000 of taxable income,
22 percent for the second $25,000 of taxable income, and 48
percent for taxable income in excess of $50,000. This schedule
of rates is effective for 1975 only. If it is not extended or
otherwise 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 tax-
able income is sufficiently low that its overall tax rate
deviates substantially 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 part-
nerships, it should initially assume a tax rate of 19 percent
for individuals and 18 percent for partnerships, the averages
for such persons. In addition, given the wide range of effect-
ive tax rates paid by such persons, the Department will want to
adjust its tax assessment formula from case to case. How it
can do so at low cost is outlined in the next main section
below.
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11-15
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.
DETERMINING
INDIVIDUAL TAX RATES
When the Department decides it must determine individual
tax rates in order to set civil assessments accurately, it can
obtain this information 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 or (2) its most recent income
tax statement if the regulatee is an individual.
The civil assessment regulations specifically
provide that the Department can require such
information as it needs, specifically including
financial information, from regulatees.
* For companies, especially publicly held companies,
this information is a matter of public regard and
may be found routinely in financial and investment
publications such as Moody's Industrial Reports or
Standard and Poors. These works are available in
the Connecticut State Library and many others.
ADJUSTING THE FORMULA FOR
CHANGES IN THE TAX LAWS
From time to time the provisions of the tax laws are
changed. If, for example, the investment tax credit is
increased from 10 to 12 percent, the provisions in the form-
ula set at 10 percent should be increased accordingly.
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11-16
CHAPTER V
USING THE COST OF CAPITAL
The Connecticut Enforcement Program attempts to put the
regulatory agency into the shoes of the regulatee. Business-
men faced with environmental regulation focus immediately on
the cost of raising and using money to meet environmental
standards now and in the future. Similarly, 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 program) has been established, the economic assessment
calculus discounts it at the present average value cost of
capital rate of the regulatee"s industry. If the cost of cap-
ital is 10 percent, for example, expenditures of $1000 a year
from now would be discounted to a $909 value.
Such discounting is necessary because the $1000 expend-
iture a year from now costs less than the same expenditure now,
The reason is that the person who plans the expenditure could
invest $909 now at 10 percent and in a year would have the
necessary $1000. If the expenditure could be deferred longer,
the amount needed now to invest for the expenditure would be
even less. This amount is the present value of the future
expense.
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 $1000
spent three years in the future entails considerably less cost
than $1000 spent now. 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 is the right discount factor to use
in the economic assessment calculus because (1) it is the cost
business must pay for its money arid (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,
-------
11-17
The cost of capital is also a good measure of the oppor-
tunity costs of investing in pollution control. Not only are
the outlays required for such expenditures generally not recouped,
but they usually generate no net income. In the meantime the
regulatee must pay at its cost of capital rate to obtain the
funds necessary for such expenditures (taking into account
both debt and equity costs). By discounting both future ex-
penses and possible future assessments at the cost of capital
rate, economic remedies ensure that delinquent regulatees
are charged for the full economic value of such delay. The
resulting civil assessment 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
borrowing money, it is natural that different people and bus-
inesses have different costs of capital.
Industry-Wide
Costs of Capital
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 cap-
ital 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.
The civil assessment formula uses a marginal cost of
capital rate. Thus, the low interest on bonds sold twenty or
thirty years ago does not depress the rate so as to make it a
misleading measure of the current cost of money to the reg-
ulatee. 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 pollution control project.
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
because of the difficulty of measuring the cost of the equity
component. 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 valued at original cost. Using market value
avoids this difficulty; in fact, the market adjusts equity
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11-18
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 an individual regulatee's
cost of capital is almost always drawn out, expensive, and un-
helpful.
Connecticut's CEP regulations avoid this quagmire entirely
by using industry average cost of capital figures. This prac-
tice has several other, equally important advantages.
y.
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 a company's
condition.
Moreover, industry-wide data is an acceptably accurate sub-
stitute for individual cost of capital rates. The CEP cal-
culated 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 regula-
tion of individual companies.
The Department has now compiled industry-wide cost of
capital averages for each of the industrial groupings in
Connecticut. These averages were derived using the weighted
cost of capital methodology outlined above, using data drawn
from such readily available and reliable sources as Standard
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
Municipal Costs
of Capital
Like businesses, municipalities have a cost of capital.
Since bond sales are usually the only source of raising cap-
ital 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
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11-19
the costs of taking money out of the private sector and thus
should 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 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. Accord-
ingly, in instances where civil assessments are to be imposed
against individuals, the individual cost of capital will be
the current typical interest rate on generally available personal
loans.
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11-20
CHAPTER VI
DETERMINING THE USEFUL LIFE OF EQUIPMENT
The useful life of equipment generally dictates how often
the equipment should be replaced. This rate of replacement is
important to a businessman trying to determine the cost of a
long-term investment in pollution control, for it permits him
to project future compliance expenses at regular intervals.
After selecting a reasonable number of years for equipment life,
the businessman projects a regular pattern of equipment pur-
chases and discounts these future expenses to present value to
determine the current worth of future expenses for equipment.
(See Chapter V for a discussion of discounting to present
value.)
The useful life of control equipment has a major effect
on the present value of a long-term invesment in pollution
control. For example, suppose the owner of an asphalt batch-
ing plant prices baghouses. He finds two on the market for
$100,000 each, with the same operating costs, but one (bag-
house A) has a useful life of eight years and the other (bag-
house B) of twelve years. He will have to buy fewer B type
baghouses over time. And future replacements will be less
expensive in present value terms. If inflation is 10 percent
and the owner must pay 15 percent interest to finance the
purchase, he will quickly decide to invest in the second one:
the present value of the first replacement of baghouse A is
$70,074
10 8
'
(100,000 x U 151 = 100,000 x .700743 = 70,074.3)
while'that of baghouse B is $58,659.
(100,000 x (rrrl) = 100,000 x .535594 = 53,659.4)
Future replacements will compare similarly in present value.
In the same way that a business investor would use useful
life to help determine the present value of continuous invest-
ment in pollution control, the civil assessment formula antic-
ipates regular replacement of control equipment as it wears out,
and includes these replacement costs as part of the cost of
compliance. The assessment regulations for operation and main-
tenance and for monitoring violations assume a ten year useful
life for abatement equipment and monitoring equipment, subject
to change if the Commissioner finds in any case that a different
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11-21
period is more appropriate. The ten year value is an average
based on data from EPA cost studies and a Department survey
of Connecticut industries. If U. S. Internal Revenue Service
depreciation guides, manufacturers specifications, regulatee
tax records, or similarly reliable evidence demonstrates that
a different value is more accurate in any case, the Department
can simply introduce the substitute value into the assessment
calculation.
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11-22
APPENDIX
DERIVING COST CURVES FOR MONITORS
The Department can use cost curves to estimate the cost
of compliance with monitoring requirements. Using such curves
instead of estimating costs on a case-by-case basis will reduce
administrative costs without sacrificing accuracy. Comparative
tests of the curve and case-by-case approach were carried out
for estimating abatement costs. Using cost curves reduced the
time necessary for the Department's enforcement engineers to
estimate abatement costs in an average case from five hours to
twenty minutes.* In each test, the accuracy of the estimate
was within 20 percent of the actual cost of the equipment when
it was installed on the source. Thus, cost curves can be a re-
liable, time-saving tool.
The Department has so far developed two sets of monitoring
cost curves for the O&M enforcement program. One is for opacity
monitors, and was developed using 1974-75 cost data taken from
source registration statements. The other cost estimates are for
monitors of three operating parameters for wet scrubbers —
water flow rate, water pressure, and air pressure drop. Since
costs of installed monitoring systems of this type were not
available, these estimates were derived from surveys of equipment
vendors. These two sources of data — actual Connecticut cases
and vendor surveys — together with monitoring cost information
currently being developed by EPA,** should enable the Department
to develop similar curves for other monitoring systems.
OPACITY
MONITORS
Opacity monitors are by far the most widely used type of
monitor in Connecticut. Approximately 1850 sources are re-
quired to have opacity monitors installed by early 1976, but
virtually no sources are required to monitor other measurements
of emissions or operating parameters. Moreover, some 20
percent of the Department's abatement orders are for opacity
*See Volume II, Part V, Chapter VII (Determining the Cost of
Compliance in Emissions Violation Cases).
**See, e.g., Memorandum on Emissions Monitoring Costs, EPA
Office of Air Quality Planning and Standards, Feb. 27, 1975.
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11-23
violations. As sources subject to orders achieve initial com-
pliance, a similar portion of O & M enforcement cases can be
expected to involve opacity violations. Thus, opacity monitoring
has and will continue to have a significant role in the Department's
O & M program.
The Department has developed three cost curves for opacity
monitors: (1) instrument costs, (2) indoor installation costs,
and (3) operating and maintenance costs. Outdoor installation
is not included because costs vary widely and will therefore
have to be estimated case-by-case. Fortunately, the Department
estimates that outdoor installation is required in only 1-2
percent of the cases. In most cases, a single typical cost
can be used: $1327 for instrument costs, $374 for indoor
installation, and $530 for O & M costs — or $2231 altogether.
This fact further simplifies cost estimating.
Instrument
Costs
The typical cost for opacity monitoring instruments is
$1327. This cost does not vary much with changes in the size
of the facility. These results were derived using a linear
regression program to correlate boiler size with instrument
cost, calculated on a programmable computer. The sample con-
tained sixty-two sources with installed opacity monitors,
sources which had tighty-one monitors among them.
The cost curve correlating cost with facility size shows
that instrument costs are not sensitive to changes in source
size until sources become very large — over 700 million BTUs
per hour in the sample.*
*The equation which describes the curve is
y = 1327.07 + .000002 x,
where y = instrument costs
and x = boiler size»
The correlation coefficient, r, is .7954 and r2 is .6327,
indicating an acceptable correlation between the data.
The standard error of estimate is 654.434. The table
following the opacity monitor cost graph on the next page
lists the names and locations of the sources in the sample,
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11-24
Indoor
Installation Costs
Indoor installation of the equipment will cost, on average,
$374, roughly 25 percent of the cost of the equipment. However,
in some cases these costs vary significantly. Installation can
cost as little as 10 percent and as high as 90 percent of the
cost of the equipment. How large the installation costs will
be depends chiefly on how accessible or inaccessible a suitable
location for the equipment is in the ductwork. Costs do not vary
significantly with changes in either equipment costs or boiler
size.
Despite this variation in unusual cases, the Department
can rely on the $374 average cost figure without serious risk
because (1) its estimates will not be seriously inaccurate in
all but a few cases and (2) even then the error will not have
a serious impact on overall estimates since this cost is only
16 percent of the total.
Operation and
Maintenance Costs
The cost of operating and maintaining installed opacity
monitoring equipment averages $530 per year.
This average is based on cost estimates provided by six
of the seven vendors whose instruments appeared in the sample.
They provided cost information for the major components of O&M
expense: supplies, other routine servicing and maintenance
expenses, and repairs.
OPACITY MONITORS!
INSTRUMENT, INSTALLATION AND OSM COSTS
7000 -
6000 -
Cost
(dollars)
2000 -
1000 -
».'• «
Instrument Cost
(Y=1327+.000002x1
Average OSM Cost ($530)
Average Indoor Cost ($374)
50
100
150
200
250
750
1475
3500
Boiler Size (mil BTU/hr.)
Note: Plotted points represent instrument cost data.
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11-25
SAMPLE OF SOURCES WITH
INSTALLED OPACITY MONITORS
Aetaa Insurance Co., Hartford, Ct.
American Fabrics, Bridgeport, Ct.
C. J. Bates and Son, Inc., Chester, Ct.
Bridgeport Hospital, Bridgeport, Ct.
Bryant Electric Co., Bridgeport, Ct.
Capewell Manufacturing, Hartford, Ct.
Carpenter Tech. Corp.,- Bridgeport, Ct.
Cello Products Company, E. Hartford, Ct.
Chas. W. House & Son, Inc., Unionville, Ct.
Columbia Magnetics, Danbury, Ct.
Danbury Hospital, Danbury, Ct.
Detroit Strip Detrt, Steel, Hamden, Ct.
E. E. Dickinson Co., Essex, Ct.
Dictaphone Corp., Bridgeport, Ct.
E. Hartford Hospital, E. Hartford, Ct.
Fabricated Product Div., Bloomfield, Ct.
Factory Insurance Assoc., Hartford, Ct.
Fairfield University, Fairfield, Ct.
GAF Corp., Glenville, Ct.
Greenwich Lodge, Greenwich, Ct.
Greenwich YMCA, Greenwich, Ct.
Greenwich Hospital, Greenwich, Ct.
High Standard Sport Arm., Hamden, Ct.
Holt Assoc. Inc., Hartford, Ct.
Industrial Laundry, Bridgeport, Ct.
H. A. Leed Co., Hamden, Ct.
Mark-Henry Corp., Bridgeport, Ct,
McKesson Laboratories, Fairfield, Ct.
Moore Special Tool Co., Bridgeport, Ct.
J. M. Ney Co., Inc., Bloomfield, Ct.
Park City Hospital, Bridgeport, Ct.
Pioneer Steel Ball Co., Unionville, Ct.
Plastic Wire & Cable Co., Jewitt City, Ct.
D. M. Reed, Bridgeport, Ct.
Russel Clymer Willis Co., Bristol, Ct.
Safety Electrical Equip., Hamden, Ct.
Saint Francis Hospital, Hartford, Ct.
Sanitas Laundries of N.E., Hartford, Ct.
Stanley Chemical, Inc., E. Berlin, Ct.
Textron-Bostitch Div., Clinton, Ct.
Turbo Power & Marine, Farmington, Ct.
Underwood Commerce Assoc., Bridgeport, Ct.
Union Carbide-Linde Div., E. Hartford, Ct.
United Air Corp. Resch. Lab., E. Hartford, Ct.
United Illuminating Co., Bridgeport, Ct.
Veeder-Root Company, Hartford, Ct.
Wallace Barnes Steel, Forestville, Ct.
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11-26
PARAMETER MONITORS
FOR SCRUBBERS
Wet scrubbers are the most widely used type of control
equipment in Connecticut, constituting 42 percent of the control
equipment installed as of April, 1975. Moreover, the Department
estimates that the 486 scrubbers in use in the State generally
have little excess cleaning capacity — they must operate close
to their designed maximum cleaning efficiency in order to pre-
vent the source from exceeding emissions standards.* Any fall-
off in proper operation and maintenance could lower their effect-
iveness to the point of seriously risking emissions violations.
Because of their widespread use and this generally close oper-
ating margin, the Department must give close attention to sources
controlled by scrubbers. In all likelihood, a significant por-
tion -- up to 50 percent -- of the Department's monitoring en-
forcement efforts in the future will be directed at scrubber
monitoring.
To obtain useable monitoring data without imposing the high
costs of emissions monitoring on regulatees, the Department has
begun to develop a program to monitor control equipment perform-
ance by measuring the performance of select operating parameters.
For wet scrubbers, the parameters are air pressure drop, water
pressure, and water flow rate. By observing the performance
of these parameters during emission tests which demonstrate
compliance with emissions standards, the source managers and
the Department can determine operating standards for a scrubber
which will show whether it is being operated properly. Changes
in these operating parameters directly affect scrubber effect-
iveness; improper operation of the scrubber is likely to cause
change in at least one of the parameters. In addition, these
parameters are easy to measure.
The first step in developing cost curves was to specify
the range of parameter fluctuation a monitor would have to
measure and the necessary accuracy of measurement. The Depart-
ment developed the necessary ranges,shown below, from standard
engineering literature.**
*DEP Air Compliance Unit Memorandum, "Modification to the 100-
Ton Test Program," April, 1975.
**See, e.g., EPA Air Pollution Control Manual, AP-40, 2d ed.,
pp. 101-107 (May 1973).
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11-27
PERFORMANCE RANGES FOR
SCRUBBER OPERATING PARAMETERS
WATER WATER DIFFERENTIAL
FLOW RATE PRESSURE AIR PRESSURE
TYPE OF SCRUBBER (gpm/100 cfm) (psi) (in H2O)
Spray Chamber 3-8 100 - 150 NA
Cyclone Type 4-10 100 - 150 2-8
Orifice Type 20 100 - 150 2-8
High Pressure 5-10 • 300 - 600 NA
Venturi 3 100 - 150 10 - 30
Vendor surveys revealed that monitors for these parameters are
accurate to 1-2 percent of the actual condition being measured.
The second step was to canvass vendors to determine price
ranges and major price variables of monitoring equipment. To
develope these estimates, the Department contacted all six vendors
who actively market in Connecticut meters to record air pressure
drop, water pressure, and water flow rate; three responded. The
vendors who responded reported generally fixed costs, producing
cost curves which exhibit no significant change as the size of
the source increases. The major variable for the equipment cost
of the entire scrubber monitoring system — differential air
pressure gauge, water pressure gauge, water flow gauge, and
recorder — is the use of recirculating vs. clean water in the
scrubber. (Recirculating the water to lower operating costs of
the scrubber requires installation of additional equipment —
a magnetic tape converter — to prevent abrasive particles in
the water from damaging the flow meter.) This variable is also
insensitive to source size; recirculating water in the scrubber
requires a more expensive flow meter, but the same meter works
regardless of source size.
The Department has developed equipment and operating cost
estimates for parameter monitors for five types of scrubbers --
spray chamber, cyclone-type, orifice-type, high pressure spray,
and venturi. Equipment costs vary slightly among these scrubbers,
primarily because variation in water flow rates (3 gallons per
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11-28
minute (GPM), per 1000 cubic feet per minute of gas flow (CFM)
for venturi scrubbers vs. 20 GPM/1000CFM for orifice type
scrubbers) may dictate water flow meters with different cap-
acities. Since the cost variation is slight, however (see
Table 1, notes 2-5), a single curve is useable for all five
types of scrubbers. The curve below reflects average equip-
ment and O&M costs.
EQUIPMENT AND OPERATING COSTS
FOR SCRUBBER PARAMETER MONITORS
6000 -
5000 -
4000 -
Costs
(dollars)
3000 -
2000 -
1000 -
Recirculating
Water
System
($5210)
Clean
Water
System
($3854)
OSM
($300)
I—
10
—I—
20
—I—
30
—I—
40
—T~
50
—r~
60
70
~T~
80
—T—
100
110
Gas Flow Rate (ACFM x 1000)
Legend: Dotted lines indicate vendor cost estimates
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11-29
TABLE 1
COST SURVEY OF
MONITORING EQUIPMENT VENDORS
EQUIPMENT COSTS
differential pressure gauge
water pressure gauge
water flow meter
clean water
recirculated water
recorder (3-pen continuous)
installation
Fisher &
Porter
$ 750
600
1200
Foxboro
$ 725
684
847
Taylor
Instr.
$ 698
573
805
Total Equipment Costs
Clean Water System
Recirculating Water System
4075
5175
3802
5172
3687
5284
Average Equipment Cost
Clean Water System
Recirculating Water System
3854
5210
OPERATION AND MAINTENANCE COSTS
supplies & utilities 75
recalibration & other labor 225
Total annual O&M costs 300
75
225
300
75
225
300
Average Annual O&M Cost
300
vendors contacted were Fisher & Porter Co., Foxboro, Inc.,
Taylor Instruments, Inc., BIF Corp., ACCO-Bristol Div., and
Honeywell Corp. Only the first three responded.
2Meter flow capacity is 350 gallons per minute (GPM).
3Meter flow capacity is 60 GPM.
5.
Meter flow capacity is 255 GPM.
Meter flow capacity is 700 GPM.
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PART II
CALCULATING ECONOMIC REMEDIES
FOR IMPROPER OPERATION AND MAINTENANCE
AND FAILURE TO MONITOR
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PART III
OPERATION AND MAINTENANCE REGULATIONS
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III-2
NOTE
The CEP has proposed the following draft regulations
to the Connecticut Department of Environmental Pro-
tection as the basis for an O&M enforcement program.
The draft regulations were written to integrate with
the Department's existing air pollution abatement
regulations, §§ 19-508-1 ejb seq. of the Regulations of
Connecticut State Agencies, and existing air pollution
civil assessment regulations, §§ 22a-6b-602 et seq.
They also were drafted so that the Department could
adopt them pursuant to its existing statutory authority
in Chapters 360 and 439 of the Connecticut General
Statutes, as amended, and consistent with the Connect-
icut Administrative Procedures Act, §§ 4-169 et. seq.
These other regulations and statutes should be con-
sulted as necessary.
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III-3
OPERATION AND MAINTENANCE REGULATIONS:
SECTION 19-508-100 et seq.
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Text of Regulation
Comments on Regulations
Section 1. The Regulations of Connecticut State
Agencies are amended by adding Sections 19-508-100
to 19-508-105, inclusive, as follows:
Section 19-508-100. Title.
Sections 19-508-100 to 19-508-105, inclusive,
shall be known and may be cited as "Operation and
Maintenance Regulations for the Abatement of Air
Pollution."
Section 19-508-101. Definitions.
(a) Except as otherwise provided in this section,
the definitions in Section 19-508-1 shall apply to
the Operation and Maintenance Regulations for the
Abatement of Air Pollution.
(b) "Abatement strategy" means any modification,
reformulation or alteration of any process, in-
cluding but not limited to a change in process
rates, practices, materials, or equipment, to
prevent or control the release of any air pollu-
tant, or any air pollution control equipment.
(c) "Air pollution control equipment" means any
device which, as its primary function, decreases
the discharge of any air pollutant by processing
the effluent from a source.
Comment to Section 1
This is the enactment clause,
following Connecticut administrative
procedure.
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Comment- to Section 101(a)
Section 19-508-1 is the definition
section of the Regulations for the
Abatement of Air Pollution.
Comment to Section 101(b)
This definition covers all types of
actions which may be taken to decrease
air pollution. It therefore includes
"air pollution control equipment," and
the phrase "air pollution control
equipment and other abatement strate-
gies" as used in the regulations covers
all types of control strategies. The
difference between control equipment and
other abatement strategies is important
chiefly because of the distinction drawn
in Section 19-508-102(a), below.
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Text of Regulation
Comments on Regulations
(d) "Emission" means the act of discharging air
pollutants into the ambient air or releasing them
from a source.
(e) "Emission standards" means the set of limita-
tions established in Sections 19-508-9 and 19-508-
18 to 19-508-22, inclusive, of the Regulations for
the Abatement of Air Pollution on the discharging
into the ambient air or the releasing from a
source of air pollutants.
(f) "Emission test" means any testing method as
set forth in Sections 19-508-5(a) to 19-508-5(d),
inclusive or other testing method of equal or
superior reliability approved by the Commissioner,
for determining compliance with emissions standards
(g) "Final Operation and Maintenance Permit"
means a permit issued by the Commissioner pursuant
to Section 19-508 and/or 22a-6 of the General
Statutes, as amended, and to Section 19-508-105 of
the Operation and Maintenance Regulations for the
Abatement of Air Pollution, which has become final
and effective as prescribed in Section 19-508-
105(g). Any appeal shall stay the effectiveness
and finality in its entirety of an otherwise final
operation and maintenance permit until such appeal
is withdrawn or is finally adjudicated, including
adjudication of appeals from lower court decisions.
(h) "Final order" means an order of the Commissioner
issued pursuant to Section 19-508, 19-510, 19-51*1,
19-515, 19-517 and/or 22a-6 of the General Statutes,
Comment to Section 101(d)
This definition differs from the
one in the abatement regulations In that
it distinguishes "discharging" into the
ambient air from "releasing" pollutants
from a source, a distinction not present
in the "emission" definition in the
abatement regulation, but one which the
enforcement staff has adopted adminis-
tratively and wants to formalize.
Comment to Section IOI(K)
The importance of deferring the
effectiveness of an O&M permit arises
from the violation "operating without an
O&M permit" In Section 22a-6b-6ll. A
source which operates without a final
O&M permit is subject to civil assess-
ments, notwithstanding the pendency of
administrative adjudication or Judicial
review of an issued permit. Of course,
the hearing officer or the court may
stay the collection and/or the accumu-
lation of the assessment during litiga-
tion. The last sentence is unnecessary
but is Included for informational value,
Comment to Section 101(h)
This definition of "final order" is
slightly clearer than the definition in
Section 22a-6b-602 (see Volume II, Part D
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Text of Regulation
Comments on Regulations
as amended, which has become final by the consent of
the regulatee,or his failure to file a timely answer,
or has been issued after hearing.
(i) "Malfunction" means any sudden and unavoid-
able failure of process, production, fuel burning,
or incineration equipment or of air pollution control
equipment or other abatement strategy to operate
in a normal or usual manner. Failures that are
caused in whole or in part by poor maintenance,
careless operation or any other preventable upset
conditions or breakdown shall not be considered
malfunctions.
(j) "Operation and Maintenance Standards" means
operation and/or maintenance procedures, schedules,
requirements or conditions for air pollution con-
trol equipment or other abatement strategies pre-
scribed in Section 19-508-102, in a final order,
or in a final operation and maintenance permit
for the purpose of ensuring continued compliance
with emissions standards.
(k) "Operation and maintenance timetable" means
the date or series of dates of incremental steps
in a final order or a final operation and main-
tenance permit by which a person is to come into
compliance with operation and maintenance standards,
(1) "Technical evaluation" means any method of
testing or evaluation other than an emission test
Comment to .Sec11 o n_ 101
This definition is taken from EPA
regulations; see Section 60.2(q) of part
60 of title to, C.P.R.
Comment to Section
O&M standards are specific operating
and maintenance standards described
either in regulations or In orders or
O&M permits.
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Comment to Section 101(1)
The "interim" nature of a technical
evaluation (using emissions factors or
other guides) is to eliminate or answer
the argument by a regulatee that once
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Text of Regulation
Comments on Regulations
which the Commissioner deems sufficient to provide
an interim determination of compliance with
emissions standards.
Section 19-508-102.
Standards.
Operation and Maintenance
(a) General Standards
(a)(l) No person shall cause or permit the
emission of any air pollutant in excess of emis-
sions standards from any source which has air
pollution control equipment as its primary abate-
ment strategy and which the Department determines
in writing after an emission test or a technical
evaluation to have the ability, if properly
operated and maintained, to meet such emissions
standards.
any type of paper evaluation had been
done and he had passed, he could not be
required to perform an emission test
since an adequate determination of
compliance had already been made.
Comment to Section 102(a)(l)
The purposes of (a.)(l) are (1) to
use emissions standards as a measure of
proper OJM, and (2) to provide a backhand
defense for a controlled source to
assert against the application of civil
assessments for emissions violations
(see Section 22a-6b-602), on the grounds
that emissions violations by'controlled
sources should be treated differently
than emissions violations by uncontrolled
sources (to which 602'applies). The
department is not prevented by either
602 or the O&M assessment regulations
(611 to 6llt) from trying to use both;
any attempt to do so would appear quite
unreasonable, however. Similarly, an
attempt to impose 602 assessments on
controlled sources would appear un-
reasonable given the O&M violation
described here-.
An important definitional question
is, what is a controlled source? Four
choices exist:
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Text of Regulation
Comments on' Regulations
(1) sources who installed control
equipment pursuant to an order;
(2) sources who completed an
acceptable abatement strategy, whether
by control equipment or by process
change, pursuant to an order;
(3) all controlled sources (whether
ordered or self-controlled) who installed
control equipment;
CO all controlled sources with
control equipment or other abatement
strategies.
Among these choices, group (4) should be
eliminated immediately, for it could
become a loophole for 602 assessments
(all sources would claim they had adopted
"other abatement strategies").
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(a)(l) applies to group (3) sources
to the extent the department has satisfied
itself that the installed control equipment
enables the source to meet emissions
standards.
The inclusion of group (2) within
the scope of (a)(l) requires a weighing
between conflicting policies: on one
hand, sources which control their
emissions other than through control
equipment with the-department's concurrence,
and which expect to be able to meet
emissions standards (based on emissions
factors or stack tests) should not be
treated as uncontrolled sources; on the
other hand, group (2) sources have not
made the control investments that sour.ces
which installed control equipment have,
and should not have the (a)(l) defense
available against a 602 assessment based
on savings from deferred equipment
purchase. The department chose to omit
group (2) from the scope of (a)(l), in
order to retain 602 leverage over these
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Text of Regulation
Comments on' Regulations
(a)(2) No person shall cause or permit the
operation or maintenance of any air pollution
control equipment or other abatement strategy,
which is not governed by operation and maintenance
standards in a final order or a final operation
and maintenance permit, in a manner inconsistent
with operations during the most recent emission
test required to be performed, or approved in
writing by the Department, which demonstrated
compliance with emissions standards. However,
operation or maintenance in a manner inconsistent
with the operations during such emission test
shall not constitute a violation if the source
can demonstrate that the inconsistency produced
the emission of air pollutants for which the
test was conducted, at lower levels relative
to emissions standards than emitted during
such test.
sources if they violate emissions
standards.
Group (1) is a subset of (3), and
thus is within the scope of (a)(l).
Comment to Section 102(a)(2)
This paragraph establishes the O&M
parameters of the most recent stack test
as the OSM standards for that source
where it is not already covered by O&M
standards in a final order or final 04H
permit. The second sentence establishes
a defense to the 04M violation where
operation in a manner inconsistant with
stack test parameters would produce
lower emissions levels.
The phrase "required to be performed
or approved in writing by the Department"
is intended to provide some quality
control over stack tests whose test
parameters are to be considered O&M
standards. The quality control device
is a two-edged sword: making it tight
by restricting it to required tests
means that regulatees who conduct tests
voluntarily avoid having the test
parameters established as binding O&M
standards — an incentive to regulatees
to conduct tests voluntarily. On the
other hand, eliminating the control
device and establishing' test parameters
of unsupervised tests as O&M standards
invites manipulation'of the test (e.g.,
opening a bypass during the test). The
Department requires Section 19-508-4
stack tests of major sources (78? of the
state's ^50 hundred tonners have been
tested). Thus, the issue turns on how
to handle other sources. The written
approval standard is intended to enable
the Department to establish decisively,
on a case by case basis, whether test
parameters of non-required tests are to
be considered binding standards.
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Text of Regulation
Comments on Regulations
(a)(3) Operation and maintenance of air pollution
control equipment or other abatement strategy in a
manner consistent with operation and maintenance
standards shall not relieve any person of the
responsibility to comply with emissions standards,
unless the person can demonstrate that such
operation and maintenance standards substantially
prevented compliance with emissions standards, and
the person notified the Commissioner of this
conflict prior to the receipt of a notice based on
the failure to meet emissions standards.
(a)(4) During any period of malfunction of air
pollution control equipment or other abatement
strategy, no person shall cause or permit the
operation or maintenance of such air pollution
control equipment or other abatement strategy in a
manner inconsistent with good air pollution control
practice for minimizing the discharge of pollutants,
The requirements of this subsection apply in
addition to requirements set forth in Section 19-
508-7.
(a)(5) Upon the third operation and maintenance
violation by a source within a period of thirty-
six (36) months, the Commissioner may conclude on
the basis of the record of violation that the
source constitutes an "unabated activity" as
Comraetil to Section I(K'(»0 ( '>)
This paragraph is intended to make
absolutely clear that emissions standards
remain binding upon all sources even
though they are under ORM standards
which have been designed to ensure
compliance with emissions standards.
The only condition under which the
regulatee is relieved of responsibility
for not meeting emissions standards is
where the 08tM standards prevented com-
pliance and the regulatee rcaljx.tnl this
and evidenced that realization by
notifying the Commissioner of that fact.
This defense and its restrictions r.Lve
what fairness demands and at the same
time do not provide a defense which
every regulatee can use when found in
violation. The regulatee, under the
restrictions to the defense, must have
taken some earlier action which gives
the department an indication that he
would have produced fewer emissions had
the department not made a mistake in its
standards.
Comment to Section 102(a)Ct)
. This paragraph provides a general
standard for proper O&M during equipment
malfunction that does not in any way
limit the vigorous enforcement powers
available to the department under Section
19-508-7 of the abatement regulations.
Comment to Section 102(a)(5)
The purpose of this paragraph Is to
allow the department to treat a repeated
violator as if he were uncontrolled and
make a civil assessment accordingly.
The theory supporting such treatment is
that the regulatee made a bad investment
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Text of Regulation
Comments on1 Regulations
defined in Section 22a-6b-602 and that the owner
or operator has failed to make the control expendi-
tures necessary to bring such activity into compli-
ance, in spite of emission tests or technical
evaluations which indicated that the source had
the ability to comply with emissions standards.
Nothing in this paragraph in any way restricts the
Commissioner at the time of the first or any
subsequent violation of emisssions or operation
and maintenance standards from imposing such
assessments or taking such other steps as he deems
necessary to ensure immediate and continued
compliance with all applicable standards.
Section 19-508-103. Monitoring and testing.-
(a) General Provisions
(a)(l) For the purpose of determining if a person
is in continuous compliance with emissions and
operation and maintenance standards, the Commissioner
may require that such person take steps to facili-
tate inspection of any source and related air
pollution control strategies, conduct emission
tests, and monitor and record operating and/or
emissions data, including but not limited to the
following specific steps:
(A) Submission of manufacturer's design and
capability specifications and instruc-
tions for proper operation and mainte-
nance of any production, process, fuel
decision which produces repeated violations.
Given that situation, the department can
conclude that even though the source is
technically capable of meeting emissions
standards, as a practical matter a new
system of controls with new investment
is required. Note that the repeat
violation must occur on the same source,
not by the same person. Given the
theory of the violation, fairness requires
this restriction.
Comment to Section 103
The provisions of this section -for
facilitation of inspection, monitoring
and testing provide in general little in
the way of new authority. Most of the
requirements that the Commissioner may
impose here are contained within general
provisions elsewhere in the regulations,
especially Sections 19-508-4 and 19-508-
5 of the abatement regulations, and
Section 19-508-104 and 19-508-105 of the
O&M regulations. The primary function
of the section Is to make explicit the
types of requirements the department may
impose on a regulateeifor the purpose of
policing O&M. Generally speaking, the
requirements which may be imposed under
this section will not ba enforced
separately, but will be imposed at the
same time and using the same mechanisms
as are used to impose O&M standards in
orders and O&M permits.
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Text of Regulation
Comments on Regulations
burning, and incineration equipment and
air pollution control equipment and
other abatement strategies;
(B) Installation of sampling ports of a
size, number, and location as determined
by the Commissioner;
(C) Installation of breakable seals on all
air pollution control equipment by-
passes, variable speed motors, dampers
and similar devices, the use or varia-
tion of which has been determined by the
Commissioner to be inconsistent with
operation and maintenance standards
under normal conditions;
(D) Installation of devices to monitor and
record continuously operating levels of
process, production, fuel burning, and
incineration equipment and/or air pollu-
tion control equipment and other abate-
ment strategies;
(E) Installation of devices to monitor and
record continuously opacity and emissions;
(P) Maintenance of records and submission of
reports of the composition and amount of
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such solvents, chemicals, fuels, and
other components of production, fuel
burning, incineration, air pollution
control, or other processes as the
Commissioner shall specifiy.
(a)(2) The Commissioner may establish performance
specifications for monitoring and recording devices
installed under these regulations. Such specifi-
cations may include, but are not limited to,
requirements as to accuracy, durability, and
security of both monitoring and recording devices.
(a)(3) Where breakable seals have been required,
the person shall notify the Commissioner by
certified mail within twenty-four (24) hours of
the breaking of such seal.
(a)(4) Records and reports required by the Com-
missioner concerning air pollutants; fuels, sol-
vents, chemicals and other materials; and opera-
tion and maintenance information shall be recorded,
compiled, and submitted in units and on forms
prescribed or furnished by the Commissioner. SucTi
records and reports shall be signed or verified in
writing by the corporate president, or vice presi-
dent reporting directly to the president, or
highest ranking corporate officer or managing
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official with offices located in the state, or by
an equivalently responsible officer in the case of
organizations other than corporations. Such
signature shall constitute personal affirmation
that such officer has exercised due diligence in
verifying the accuracy of the record or report and
that, to the best of his knowledge and belief, the
record or report is true and complete, complying
fully with applicable state requirements. Any
person who signs or verifies a record or report
containing false or misleading information or
other claims shall be subject to criminal prose-
cution pursuant to Section 53^-157 of the General
Statutes, as amended.
(a)(5) Emission tests to ensure compliance with
operation and maintenance standards.
(A) If the Commissioner has reason to be-
lieve that any operation and maintenance
standard is being violated, he may
require such emission tests as he deems
necessary to demonstrate compliance.
(B) Such test shall be conducted in a manner
satisfactory to the Commissioner and
shall be conducted at the expense of the
owner or operator, and the Commissioner
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or his representative shall be entitled
to be present to observe the tests,
including on-site sampling, subsequent
laboratory analysis, or any other related
procedures.
(C) As part of the test, the Commissioner
may require the owner or operator to
furnish detailed information concerning
operating conditions and maintenance
status under which the test will be
conducted. This information may be
verified by enforcement personnel as
part of the testing procedures.
(D) The Commissioner may specify the level
of operation of any process, production,
fuel burning, or incineration equipment
at which the emission test will be
conducted.
(a)(6) Nothing in this section in any way dimin-
ishes the authority of the Commissioner to require
source monitoring, record keeping, reporting or
testing as prescribed in any other regulation.
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Section 19-508-104. Enforcement.
(a) Violations. No person shall violate or cause
the violation of any applicable regulation.
(b) Remedies for violations.
(b)(l) The Commissioner shall designate employees
of the Department to be known as enforcement
personnel, who shall, acting with or without
complaints, conduct investigations to determine
compliance or non-compliance with Department
regulations.
(b)(2) Whenever the enforcement personnel deter-
mine that an emissions.standard or an operation
and maintenance standard has been violated or
there_has_been a failure to comply therewith, they
may, in conjunction with or independent of an
order issued pursuant to Section l'9-508-12(b) (2),
make and serve upon the person or persons respon-
sible for the violation or failure a written order
requiring the person or persons to take all necessary
steps, on or before prescribed dates, to ensure
immediate and continued compliance with emissions
and operation and maintenance standards.
'Comment to Section 104 (a)
This section generally parallels
the enforcement section in t;he abatement
regulations, Section 19-508-12. 12(b)(2)
is not included here because it is of a
scope much broader than necessary for
the OtM regulations.
Comment to Section 104(b)(2)
It may be helpful at this point to
outline the four devices for imposing
OtM standards and monitoring and testing
(M&T) requirements on controlled sources:
(1) Regulations. Despite the
length and complication of the rule
making process, it deserves to be
available as an option for two reasons:
(a) once accomplished (including any
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legal challenge) it settles once and for
all the legality and appealability of
specific O&M and/or M&T requirements;
(b) EPA has and will require states to
revise their SIPs to adopt federal O&M
and/or M&T requirements. These future
O&M standards can be added to Section
102; M&T standards can be added to
Section 103; Sections IQi) and 105 of
these regulations and Sections 611 to
6ll) of the assessment regulations
provide the tools for enforcement.
(2) Orders to individual sources
triggered by emissions or 0&H violations.
This is the (b)(2) device, whose use
automatically triggers the O&M permit
requirement in 105(a). The primary
advantage of this device is that it
permits the department to impose specific
O&M and M&T requirements on individual
sources. Its chief disadvantages are
(a) the need to detect an O&M violation
in order to use it, which imposes both
inflexibility and significant adminis-
trative costs on the program, and (b) the
absence of a major assessment for a first
O&M violation (because the department will
not be able to prove how long the violation
went on), which gives the department little
leverage to Induce regulatees to accept
(b)(2) orders without appealing them. This
latter problem is the genesis of the auto-
matic permit requirement In Section 105.
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(3) Orders to classes of aourees
triggered by findings of widespread Im-
proper OSM. The purpose of this device
is to capturo a chief advnatage of rule
making (single appeal opportunity followed
by finality of a standard) and somewhat
more flexibility than (b)(2) provides.
The regulation authorizes the department,
upon finding a widespread risk of
emissions violations among a group of
controlled sources, to issue a classwide
order imposing O&M and/or M&T require-
ments on a specifically defined class of
sources according to pollutant, abate-
ment strategy, O&M parameter, or other
criterion. Once issued, the class order
could be appealed by any member of the
class, and the appeal would apply to the
entire class. Thus, only one hearing
would be necessary, although the order
would be stayed for all sources in the
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(b)(3) If the Commissioner finds that a class of
sources with substantially similar processes
and/or air pollution abatement strategies operate
in a manner which significantly risks or is likely
to cause emissions standards to be exceeded by the
sources in the class, he may make and serve upon
the persons who own or operate the sources in the
class by certified mail to each such person, a
written order defining the class and requiring
each member of the class to take all necessary
steps, on or before prescribed dates, to correct
such operations to ensure continued compliance
with emissions standards.
Unless the person or persons against whom
an order has been served files, in accordance with
the Rules of Practice of the Department, a written
answer thereto with the Commissioner within thirty
(30) days after the date of service of the order
class pending'hearing. (Individual
sources would nevertheless remain sub-
ject to violation triggered, (b)(2)
orders). Once final, the class order
would apply to all members of the
class, and non-compliance would give
rise to assessment liability under 611.
The chief problem underlying the
class order is a legal one: whether the
department has the authority to issue it
and whether it is a regulation with a
different label, and thus conflicts with
the APA. A legal memorandum in the file
addresses these issues.
(1) O&M permits.
Section 105.
See comment to
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Comment to Section 101(b)(4)
This provision is similar to
Section 19-508-12(b)(4) of the abatement
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and requests a hearing thereon, such order shall
become final and effective. The answer shall
contain a clear and concise statement of the
reason or reasons, if any, that the order is
claimed to be invalid or insufficient and/or the
manner in which the persons filing the answer deem
themselves aggrieved by the order. Upon receipt
of the answer and request for a hearing, the
Commissioner shall schedule the hearing as soon
thereafter as is practical before himself, a
Deputy Commissioner, or a duly appointed hearing
officer. In the case of an order issued under
paragraph (b)(3) of this subsection, the Com-
missioner shall give notice of the hearing to each
person to whom the order was served, and the order
shall not be final and effective as to any such
person until the Commissioner issues a final
decision under paragraph (b)(6). Any person
designated as hearing officer shall not have
participated in any way in the investigation or
other preliminary proceedings preceding the
issuance of the order. The hearing shall be open
to "the public and shall be conduct eel pursua'nt to
Sections 4-177 to 4-184 of the General Statutes,
as amended, and to the Rules of Practice of the
Department. During the course of a hearing, the
hearing officer may take appropriate measures to
preserve the confidentiality of trade secrets,
unless required to be made public by state or
federal statute.
(b)(5) Any applicant who receives a notice that a
permit has been denied, revoked, modified, or only
conditionally approved may deem the notice a
written order under paragraph (b)(2) and file a
written answer and request for a hearing under
paragraph (b)(4).
regulations, with appropriate revisions
reflecting the effectiveness of the APA
and adoption of the department's Rules
of Practice.
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Comment to Section 104 (b) (5)
This is identical to Section 12(b)(5)
in the abatement regulations, except
that the right to hearing is limited to
applicants.
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(b)(6) At the conclusion of the hearing and after
reviewing the hearing record and the recommenda-
tion and report of the hearing officer, if any,
the Commissioner shall determine, based on the
record, whether such order or permit should be
affirmed, modified, reversed or revoked, and shall
issue a final decision accordingly and serve a^
copy on such person or persons by certified mail.
Any information as to secret processes or methods
shall be kept confidential, unless required to be
made public by state or federal statute.
Section 19-508-105. Operation and maintenance permit
(a) Permit requirement.
(a)(l) No person in receipt of a final order of
the Commissioner establishing a violation of
operation and maintenance standards shall operate
the source or sources to which such final order
applies after a period of ninety days from the
effective date of such order without first obtaining
a final operation and maintenance permit from the
Commissioner. Such operation and maintenance
permit shall contain reasonable requirements to
ensure immediate and continued compliance with
emissions and operation and maintenance standards.
Comment to Section lM_lb) (6)
This provision serves the same
function as 12(b){6) with somewhat
simpler wording.
Comment to Section 105(a)
Name. This mechanism is called an
O&M permit to distinguish-it-from a
permit to operate. The major problem
with developing it as part of the permit
to operate process is thatjthe latter
permits have a series of requirements
other than the control of emissions. A
major problem occurs with "hot spots."
In areas where the ambient air quality
standards are being exceeded, a source
cannot be permitted even If It controls
emissions to the required levels under
emissions standards. At the same time,
the department needs to be able to place
O&M requirements in a permit like.device
even under those circumstances. One way
to distinguish the two mechanisms is to
give them different names and develop
them in separate sections, as Is done
here. An additional way Is to make a
specific disclaimer In the regulations,
as subsection (k) provides.
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Par-post;. The origin of the permit
device lies in a Judgment that the
department's enforcement leverage upon
detecting an OiM violation is not likely
to be strong enough to Induce a source
to accept an OIM order with enough
teeth. Enough teeth means three types
of requirements: (1) submission of OiM
data (which may require a stack test)
and/or proposed OiM and/or MtT require-
ments, (2) installation of sampling
ports and/or continuous monitoring
equipment, and (3) acceptance of surety
liability and/or stipulations shifting
burdens of proof and imposing evidentiary
restrictions in future cases of improper
OIM.
Without the permit device (and the
backup assessment for operating without
a permit), the department's only real
leverage upon detecting an OiM violation
is to force a stack test. It doesn't have
assessment leverage because It probably
cannot prove how long the violation
occurred. The stack test isn't much
leverage either because (a) a source can
try to impeach the department's evidence
of OiM violation (especially if the
department is trying to show an emissions
violation using parameter evidence) or
to rebut the department's case with
parameter evidence of its own (expert vs
expert) without even worrying about
stack tests, and (b) even if the source
knows it's going to lose, with or without
a stack test, no economic incentive
exists (except legal fees) to discourage
•it from refusing to test and appealing
an adverse final order: it gains delay
at low cost. By creating potential
substantial assessment liability, the
OIM permit requirement provides the
missing incentive.
Note that the permit requirement Is
NOT triggered by a lO'l(b) (4)'order. The
goal of the (b)C») order is to enable
the Department to Impose OiM standards
on small, clearly defined groups of
sources without new regulations. This
goal can be largely accomplished without
the permit requirement, because the
order process automatically avoids
several of the major bottlenecks of
rulemaking. The possibilities of
hearing and appeal remain, but these
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(a)(2) The Commissioner may in his discretion
delay the beginning of this ninety day period
until the scheduled date of completion of any step
specified in a compliance timetable contained in
such final order.
should be acceptable costs because the
order recipients are, after all, not •
violators. The Department gets what it
needs from (b)(4) without Imposing the
costs of O&M permits on order recipients.
Legislative authority. The authority
for these permitting provisions comes
from Section 22a-6 as amended in 1973.
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Comment to Section 105(a)(2)
For a source which accepts an OtM
order and is making orderly progress on
his timetables, the department may well
want to hold off on a permit proceeding
until the order process generates suf-
ficient data to establish OtM standards,
then simply issue a permit under 105(e)
which embodies these standards and other
terms in the order.
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(b) Application. Application for an operation
and maintenance permit shall be made by the owner
or operator of the source on forms furnished or in
a form prescribed by the Commissioner. The appli-
cation shall include such information, to the
extent not previously submitted, as the Commissioner
deems necessary to enable him to determine reason-
able conditions to ensure continued compliance by
the person with emissions and operation and main-
tenance standards, including but not limited to:
(1) specific description of the status of
compliance with the terms of the final
order, including a separate declaration
for each step of any compliance time-
table stating whether compliance is on
schedule or off schedule;
(2) manufacturer's design and capability
specifications and detailed instructions
for operation and maintenance of the
source and related air pollution control
equipment or other abatement strategies
to ensure continued compliance with
emissions and operation and maintenance
standards;
Comment to Section 105(b)
Those information requirements are
drawn largely from requirements else-
where in these regulations and the
progress report regulations (Section
22a-6b-601; see Volume II, Part ll).
The exception is paragraph CO, which
provides the basis for requiring accep-
tance of surety liability and/or stipu-
lations as to burdens of proof and
evidence for future violations. The
rationale for the requirements in (It) is
that the O&H permittee has already
violated O&M standards, and the depart-
ment is thereforr Justified in seeking
additional assurances that violations
will not recur. The legislative
authority is in Section 22a-6.
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(3)
results of emissions tests and specifi-
cation of operating conditions and
maintenance status under which such
tests were conducted;
evidence of financial or other binding
assurances of continued future compli-
ance with emissions and operation and
maintenance standards.
(c) Standards. The Commissioner shall grant an
operation and maintenance permit if he finds,
based on evidence submitted by the applicant or
otherwise made part of the record, that:
(1) the source can be operated in continued
compliance with emissions standards;
(2) specific operation and maintenance
standards which will ensure continued
compliance with emissions standards have
been established or will be established
in accordance with a specific timetable
acceptable to the Commissioner; and
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(3) specific monitoring devices which ac-
curately measure and record emissions
and/or operating parameters have been
installed or will be installed in ac-
cordance with a specific timetable
acceptable to the Commissioner.
(d) Conditions. The Commissioner may impose such
terms and conditions he determines are necessary
to ensure continued compliance with emissions and
operating and maintenance standards, including but
not limited to:
(1) timetables for the establishment of
operation, and maintenance standards and
the installation of monitoring and
recording devices;
(2) equipment modifications and installa-
tions as necessary to permit testing or
sampling to determine compliance with
emissions and operation and maintenance
standards;
(3) financial or other binding assurances
that the regulatee shall immediately and
continuously comply with emissions
standards, operation and maintenance
standards, and the terms and conditions
of the operation and maintenance permit.
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(e) Direct issuance. If the Commissioner deter-
mines that a person under a final order has com-
plied with the terms of operation and maintenance
and/or monitoring timetables in such order and
otherwise meets the requirements of subsection (c)
of this section, he may issue an operation and
maintenance permit to such person, notwithstanding
the absence of a formal permit application by such
person.
(f) Hearing. Any person who receives an opera-
tion and maintenance permit and is aggrieved by
its terms and conditions, or who is denied a
permit, may deem the permit or denial a written
order under Section 19-508-lOJKb)(2) and may
obtain a hearing by filing a written answer and
request for a hearing in accordance with Section
19-508-10Mb)(*0.
(g) Effective.date. An operation and maintenance
permit shall be final and effective (1) thirty
days after the date of receipt, unless a hearing
is requested within this period under subsection
(f), (2) fifteen days after the Commissioner
issues a final decision following' hearing, unless
an appeal is filed within this period, (3) upon
final adjudication of any appeal, including ad-
judication of appeals from lower court decisions -t
whichever is latest of the above three dates, or
(4) upon acceptance by the permittee and waiver of
hearing and appeal.
(h) Renewal. Operation and maintenance permits
shall be renewed every three years, unless issued
for a shorter time.'
Comment to Section 105(e)
In cases where the requirements of
an O&M permit simply substitute for
those in an order, this section author-
izes direct issuance of the permit
without a formal permit application. It
saves needless paperwork. It. parallels
a similar process for transforming water
pollution abatement orders Into NPDES
permits. See Section 25-54i(e), C.S.S.
Comment to Section 105
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(i) Modification.
(1)
A permittee may make application to
the Commissioner for a modification
of an operation and maintenance
permit at any time after it becomes
final and effective. This appli-
cation shall contain a clear and
concise statement of the change in
conditions or circumstances which
provide justification for such a
modification. The Commissioner may
in his discretion accept or deny
this application and may hold such
hearings as he determines will be
of assistance in reaching a de-
cision on the application. Hear-
ings held under this subsection
shall be conducted in accordance
with Sections 4-177 to 4-184,
inclusive, of the General Statutes
and the Rules of Practice of the
Department.
The Commissioner may modify an
operation and maintenance permit if
he determines that its terms and
conditions are inadequate to ensure
continued compliance with emissions
and operation and maintenance
standards. In that instance, he
shall establish such new reasonable
conditions as will accomplish
compliance with such standards.
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(B) Notice of modification shall set
forth the reasons for the action
taken and shall be effective thirty
(30) days after the date of service
of the notice, unless a hearing is
requested prior to the expiration
of the thirty (30) day period.
(j) Suspension and revocation.
(j)(l) An operation and maintenance permit may be
revoked for failure to comply with any of the
terms or conditions contained therein.
(j)(2) Notice of suspension or revocation shall
set forth the.reasons for the intended action and
shall be effective thirty (30) days after the date
of service of the notice, unless a hearing is
requested prior to the expiration of the thirty
(30) day period.
(j)(3) Any person aggrieved by the notice of
suspension or revocation may consider the* notice a
written order under Section 19-508-104(b)(2) and
may obtain a hearing thereon by filing a written
answer and request for a hearing in accordance
with Section 19-508-104(b)(4). Piling of the
answer and request for the hearing shall postpone
the effective date of the notice until conclusion
of hearing and issuance of the final decision of
the Commissioner.
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(k) Other regulations. Obtaining an operation
and maintenance permit in no way satisfies any
requirements Sections 19-508-2 and 19-508-3 may
place on any person with respect to registration
or permits to construct or to operate. Operation
and maintenance requirements stand in addition to
and do not replace or in any way modify other
registration and permitting regulations.
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CIVIL ASSESSMENT REGULATIONS:
FAILURE TO OPERATE AND MAINTAIN PROPERTY
SECTION 22a-6b-611
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Civil Assessment Regulations for Failure to Operate
and Maintain Properly
Section 2. The Regulations of Connecticut State
Agencies are amended by adding Sections 22a-6b-6ll
to 22a-6b-6l4, inclusive, as follows:
Section 22a-6b-6ll(a). Title. This section shall
be known and may be cited as "Civil Penalty Regulations
Failure to Operate and Maintain Properly."
Section 22a-6b-6ll(b). Definitions.
(1) Except as otherwise provided in this subsection,
the definitions in Section 22a-6b-602(b) shall apply
to. Sections 22a-6b-6ll to 22a-6b-6l4, inclusive.
(2) "Abatement strategy" means any modification,
reformulation, or alteration of any process,
including but not limited to a change in process
rates, practices, materials, or equipment, to
prevent or control the release of any air
pollutant, or any air pollution control equip-
ment.
(3) "Air pollution control equipment" means any
device which, as its primary function, decreases
the discharge of any air pollutant by processing
the effluent from a source.
Conmient to Section 6ll(a)
This set of civil assessment regula-
tions is designed to cover failures to
operate and maintain according to operation
and maintenance standards in the 04M
regulations, Sections 19-508-100 to 19-
508-105 or in O&M orders and permits.
They are not designed to cover failures
to comply with other conditions of orders
or permits which do not prescribe the
actual operating levels of control equip-
ment and abatement strategies. A major
example of the type of conditions of
orders or permits not covered is the
monitoring order. Violation of monitoring
requirements in regulations is covered'by
613; violation of monitoring orders is
covered by 6l4. 612 covers operating
without an O&M permit. *'
Comment to Section 6ll(b)
Note that all the definitions for
611-614 are in 6ll(b). This is to avoid
a multiplicity of separate^ section-
specific definitions. They are identical
with the definitions of the same terms in
Section 19-508-101.
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"Assessment period" means the period of time,
expressed in months or fractions thereof,
during which a person:
(A) has failed or continues to fail to take
all the actions or to incur all the expenses
necessary to ensure immediate and continued
compliance with operation and maintenance
standards, except the period during which
such person is subject to and in compliance
with (i) an operation and maintenance
timetable, and (ii) if such person is also
under a final operation and maintenance
permit, all other terms and conditions of
such permit;
(B) has failed or continues to fail to take
all the actions or to incur all the expenses
necessary to ensure immediate and continued
compliance with monitoring standards,
except the period during which such person
is subject to and in compliance with a
monitoring compliance timetable; and/or
(C) operates without an operation and maintenance
permit;
(D) except it does not include any period
before the effective dates of Sections
22a-6b-6ll to 22a-6b-6l4, inclusive,
respectively, or any period beginning more
than two years before discovery of the
violation.
Comment to Section 611(b)(fr)
In order to avoid a confusing.vocabu-
lary ("monitoring assessment period,"
"O&M assessment period" etc.), this para-
graph incorporates all meanings into one
definition. The definition Is structured
so that its parts can be used conjunc-
tively or disjunctively. Hopefully, the
definition will permit the DEP and regu-
latees to talk about "assessment periods"
without the need for a battery of quali-
fying adjectives.
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(5) "Civil penalties final order" means an order of
the Commissioner issued pursuant to Sections
22a-6b-101, 22a-6b-602, 22a-6b-603, and/or 22a-
6b-6ll to 22a-6b-6l4, inclusive, of the Civil
Penalty Regulations which has become final by
the consent of the regulatee or his failure to
file a timely answer, or has been issued after
hearing.
(6) "Cost of compliance" means the total net, after
tax, estimated present value of the sum of all
equipment costs, all operating costs, and all
other costs and savings the regulatee should
have experienced and will experience in order
to come into and remain in compliance, including
but not limited to inflation, depreciation,
such replacement costs as will be necessary to
replace capital equipment that has worn out or
become obsolete, and a discount rate equal to
the cost of capital. For the purposes of
Sections 22a-6b-6l2, 22a-6b-6l3, and 22a-6b-6l4,
the "cost of compliance" may also mean a total
net, after tax, estimated present value based
on monitoring equipment costs and monitoring
operating costs instead of equipment costs
and operating costs, respectively.
(7) "Depreciable life" means the time period of
useful life expectancy for capital plant and
equipment. This period shall be defined as
five (5) years until and unless the Commissioner
finds otherwise pursuant to Section 22a-6b-
6ll(g)(2), 22a-6b-6l2(g)(2), 22a-6b-6l3(g)(2)
or 22a-6b-6l4(g)(2), in which case he may con-
sider the depreciation periods allowed for tax
purposes by the U. S. Internal Revenue Service
and such other guides as he determines are
Comment to Section 6ll(b)(6)
The intent of this definition is to
define cost of compliance as the sum of
all (and only all) costs of proper O&M .
and/or monitoring. A corollary Intent is
to exclude any cost figure which repre-
sents less than all costs, in order to
foreclose the possibility of having to
calculate costs of partial improper 0*M.
See also the Comment to Section 611(e)(l).
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(8) "Equipment costs" means the installed capital
costs of all equipment that was, is, and may
continue to be required to bring the emissions
from a source into compliance and to ensure
continuous compliance with emissions standards.
Such costs shall include, but are not limited
to, the cost of equipment required to control
emissions effectively, auxilliary equipment,
technical and engineering services, and all
other development and start-up costs including
labor, materials and necessary testing. For
the purpose of estimating equipment costs, the
Commissioner may assume that (A) the most
environmentally effective and reliable equipment
of the type required was, is, and will continue
to be used, and (B) all such equipment has been
and will have to be replaced together, at a
constant frequency, with the length of each
cycle equal to the equipment life.
(9) "Failure to monitor" means the ownership or
operation by any person of any process or piece
of property, real or personal, which emits or
causes to be emitted any air pollutant and is
not equipped or is operated without the monitoring
controls required by a monitoring standard.
Ownership or operation of each such process or
piece of property is a separate failure to
monitor 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.
(10) "Failure to operate and maintain properly"
means the ownership or operation by any person
of air pollution control equipment or other
abatement strategy in a manner inconsistent
with operation and maintenance standards.
Comment to Section 6ll(b)(8)
Only sources which have a demon-
strated ability to meet emissions stan-
dards are capable of violating 04M
standards. (Other sources are covered'by
602/603.) Thus, equipment costs are
costs borne in the past, and the definition
reflects this backward look. Phrase (B)
enables the Department to assume that the
entire control system is replaced every
depreciable life (usually 10 years),
instead of having to estimate the costs
of separate equipment components that are
replaced with varying frequency.
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Comment to Section 6ll(b)(9)
The last sentence of both the '"Failure
to..." definitions la Intended, Ilk* the
definition of "Unabated activity" from
which It was borrowed, to have the effect
of raising the maximum penalties available
by defining each violation on each different
piece of equipment as a separate "Failure.'.."
Comment to Section 6ll(b)(10)
O&M standards include the requirements
in §19-508-102, together with specific
parametric standards written into 04M
orders and permits. Thus, "failure to
operate and maintain properly" includes
violating parameter requirements in
permits and orders, as we'll as in regulations.
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Ownership or operation of each such equipment
or other abatement strategy in such a manner is
a separate "failure to operate and maintain
properly" 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.
(11) "Final order" means an order of the Commissioner
issued pursuant to Sections 19-508, 19-510, 19-
514, 19-515, 19-517 and/or 22a-6 of the General
Statutes, as amended, which has become final by
the consent of the regulatee or his failure to
file a timely answer, or has been issued after
hearing.
(12) "Final Operation and Maintenance Permit" means
a permit issued by the Commissioner pursuant to
Section 19-508 and/or 22a-6 of the General
Statutes, as amended, and to Section 19-508-105
of the~0peration and Maintenance Regulations
for the Abatement of Air Pollution, which has
become final and effective as prescribed in
Section 19-508-105(g). Any appeal shall stay
the effectiveness and finality in its entirety
of an otherwise final operation and maintenance
permit until such appeal is withdrawn or is
finally adjudicated, including adjudication of
appeals from lower court decisions.
(13) "Monitoring compliance timetable" means the
date or series of dates of incremental steps in
a final order or a final operation and maintenance
permit by which a person is to come into compliance
with monitoring standards.
Comment to Section 6ll(b)(l2)
The definition defers the effectiveness
of an O&M permit until it is final,
including all appeals. Thus, a regulatee
who appeals one condition of an 04M
permit would still be "operating without
an OtM permit" and subject to 612 assessments.
See also definition (19).
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Comment to Section 6ll(b)(13)
The "timetable" definitions are used
as a shorthand way to identify separate
components of orders and permits, since
future orders and permits may include
abatement requirements, OtM requirements,
and monitoring requirements. See also
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(14) "Monitoring Equipment costs" means the installed
capital costs of such equipment as is or may be
required to bring a failure to monitor into
compliance with applicable monitoring standards.
Such costs shall include, but not be limited
to, the cost of equipment required to monitor
emissions or operating parameters 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
failure to monitor has been brought into com-
pliance with applicable monitoring standards,
the Commissioner may assume that what he finds
to be the most environmentally effective and
reliable equipment available will be used.
(15) "Monitoring standard" means any requirement set
forth in Section 19-508-4 or 19-508-103, or
prescribed pursuant to either section in a
final order or a final operation and main-
tenance permit.
(16) "Monitoring Operating costs" means the non-
depreciable annual costs for the operation and
"maintenance of equipment"and processes required
to monitor emissions or operating parameters
which will protect installed monitoring equip-
ment and ensure continuous compliance with
applicable monitoring standards.
(17) "Operation and maintenance standards" means
operation and/or maintenance procedures,
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schedules, requirements or conditions for air
pollution control equipment and other abatement
strategies prescribed in Section 19-508-102, in
a final order, or in a final operation and main-
tenance permit for the purpose of ensuring con-
tinued compliance with emissions standards.
(18) "Operation and maintenance timetable" means the
date or series of dates of incremental steps in
a final order or a final operation and maintenance
permit by which a person is to come into compliance
with operation and maintenance standards.
(19) "Operating without an operation and maintenance permit"
means the operation by any person of any source
(A) without a final operation and maintenance
permit required by Section 19-508-105 after
issuance of a final order by the Commissioner
establishing a violation of operation and
maintenance standards, or (B) during any period
- of suspension-or revocation of a final operation
and maintenance permit. Such operation constitutes
operating without an O&M permit notwithstanding
the pendency of any hearing or appeal concerning
such permit, except that the regulatee shall be
entitled to mitigation under Section 22a-6b-
6l2(g)(3) or to correction under Section 22a-
6b-6l2(g)(2), as applicable, of assessments
made for such operation.
(20) "Regulatee" means a person who owns, operates,
or maintains a source (A) which has been, is,
or may become an unabated activity, or (B) in a
manner which has constituted or may in the
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Comment to Section 6ll(b)(20)
This definition captures both the
602/603 use of the term, as well as the
0»M use. Eventually, 602(b) should be
changed also.
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future constitute a failure to operate and
maintain properly or a failure to monitor.
(21) "Scheduled deadline" means the date in a monitoring
compliance timetable or an operation and maintenance
timetable by which a compliance measure is
scheduled to be completed; such deadline may be
for any of the intermediate steps in such
timetable or for the final step at which compliance
is to be completed.
Section 22a-6b-6ll(c). Civil Assessments for Failure
to Operate and Maintain Properly. Any person who
fails to operate and maintain properly or fails to
comply with an operation and maintenance timetable
shall be liable for a civil assessment by the Commissioner
pursuant to Sections 22a-6b(2)(a)(2) or 22a-6b(2)(a)(3)
of the General Statutes, as amended, and in accordance
with the procedures prescribed in Section 22a-6b-100
to 22a-6b-102, inclusive of the Civil Penalty
Regulations.
Section 22a-6b-6ll(d). Schedule of Maximum Assessments.
(1) Any person subject to an assessment under
Section 22a-6b-6ll(c) may be assessed an amount
for each failure to operate and maintain properly
or failure to comply with an operation and
maintenance timetable no larger than the product
of (A) the monthly amount listed in the following
schedule for the combination of equipment costs
and operating costs which would be incurred to
Comment to Section 6ll(c)
Reference to both (a)(2) and (a)(3)
is necessary because OtM requirements
will exist in regulations and in orders
and permits.
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Comment to Section 6ll(d)(l)
Equipment costs and operating costs
in phrase (A) are tied to compliance with
emissions standards because these costs
represent the expenditures necessary for
continuous emissions compliance, hence
proper 04M. They also constitute the
basis for the amounts in the schedule.
The terms are used consistent with the
definitions in paragraphs 6ll(b)(8) and
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(2)
(3)
ensure continued compliance with emissions and
operation and maintenance standards and (B) the
number of months and/or fractions thereof the
Commissioner determines are in the assessment
period.
The maximum monthly amounts set forth in this
schedule represent the economic advantages a
person responsible for a failure to operate and
maintain properly could gain from one month's
noncompliance with operation and maintenance
standards, assuming operating, economic and tax
conditions all tending to increase the value to
the regulatee of such failure. These maximum
amounts have been calculated in three broad
steps: a gross cash flow for each set of
compliance expenditures, chiefly equipment
costs and operating costs, is defined; this
gross cash flow is discounted to present value;
and the maximum monthly assessment is calculated
as the amount which would, if paid monthly,
amortize the gross present value of continued
compliance. The Appendix to this section
explains these calculations.
The Commissioner shall impose lesser assess-
ments pursuant to Section 22a-6b-6ll(e) (1) if
he finds the cost of compliance is less than
indicated in this schedule, and he may further
lower these assessments pursuant to Sections
22a-6b-6ll(e)(3) and/or 22a-6b-6ll(g) .
In no case shall the assessment exceed $25,000
plus $1000 for each day that the failure to
operate and maintain properly continues after
the regulatee has received a civil penalties
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SCHEDULE OF MAXIMUM ALLOWABLE MONTHLY CIVIL ASSESSMENTS
FOR A FAILURE TO OPERATE AND MAINTAIN PROPERLY
JPERATIDG
COSTS
$0-
1000
$1001-
2500
$2501-
SOOO
$5001-
7500
$7501-
10,000
$10,001-
15,000
$15,001-
20,000
$20,001-
25,000
$25,001-
35,000
$35.001-
50,000
$50,001-
75,000
$75,001-
100,00
$100,001
200,00
$200,000
and above
EQUIPMENT COSTS
*0-
2500
314
(51
119*
173»
2210
3361
4442
5523
7(15
10121
1(391
21731
43355*
*
$2501-
5000
•451
776
1316
1857
2397
3478
41)1
5(40
7102
11045
1(451
21856
43477*
*
$5001-
10,000
(l(
1010
1551
2092
2(32
3713
4794
5175
1017
11210
!((((
22091
43712*
*
$10,001-
20,000
list
141*
202.1
25(2
3102
4113
52(4
(345
1507
11750
17156
225(1
41112*
*
$20,001-
15,00*
11(1
21(5
2726
32(7
1107
4111
5169
7050
9212
1245S
171(1
23266
44187*
*
$15. 001-
!0,W*
25M
2190
1431
3971
4512
5191
((74
77SS
9917
131(0
115(4
23971
4 5592 +
•
$50,000-
70,000
ISO*
MM
4171
4911
5452
(511
7(14
•(95
19057
14100
mot
24*11
4(512*
•
170,001-
100,000
49U
5240
57*1
(121
(M2
7*41
9024
10105
122(7
15510
M*1S
1(121
47*42*
•
$100,001-
150,000
72((
7S90
(111
•(71
(212
102*1
11174
124S5
14417
171(0
212(5
21(71*
502*1*
•
$150,001-
200,000
Ml(
9940
10411
11021
115(2
12*41
11724
14105
1(9(7
20210
25(15
11021*
52(41*
*
1200,001-
100.000
14316
14(40
15111
15721
1(2(2
17141
1*424
19505
21447
24910
30315*
35720*
*
*
$300,001-
500,000
21715
24040
24510
25121
2,3641
2(742
27(23
2(904*
310(6*
34310*
19715*
45120*
*
•
1300,001-
1,000,000
47214*
4753»*
4I079*
4M20*
ouo*
5024 f
51322*
52404*
545«t*
•
*
*
A
*
(1,000,001
•ad abov*
•
*
*
*
*
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*
*
*>
*
•
*
* Mo more than $25,000 plus $1000 for each day that the unabated activity continues after the regulatee has received
a civil penalties final order.
Comment to Schedule of Maxima
The Equipment Cost figure contributes
a present value of all future equipment
replacements (since a source which falls
to operate control equipment Indefinitely
defers its replacement). The Operating
Costs figure contributes a present value
of 04M costs.
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Once the $25,000 element of the naximm i« vied up, the ntucimai Monthly charge will be $1000 tine* the number of day •
in the month.
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(5) The Commissioner has .determined that the maxi-
mum remedies provided in this schedule will
ensure immediate and continued compliance and
will protect (A) the public health, safety, and
welfare; (B) the public trust in the air,
water, land and other natural resources of the
state; and (C) the reasonable use of property.
Section 22a-6b-6ll(e).
in Individual Cases.
Determination of the Amount
(1) The Commissioner shall determine the amount of
the monthly civil assessment he may levy for
each individual failure to operate and maintain
properly based on the total required cost of
compliance, without regard to expenditures for
partial compliance. 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 assessment is cal-
culated as the amount which would, if paid
monthly, amortize the net present value of
continued compliance.
Comment to Section 6ll(e)(l)
The problem of assessing for partial
compliance arises here, and requires
explanation of the problem and some
alternative approaches.
Cases will arise in which a regulatee
who violates OiM standards will claim his
noncompliance was only partial, i.e.,
that he took some but not all of the
actions and made many but not all the
expenditures necessary for continued
compliance. A regulatee who makes this
claim is likely to offer to prove it (by
offering the testimony of plant engineers,
purchasing agents, personnel managers,
etc.) and to seek an assessment based on
'the difference between what he should
have spent arid what he claims he spent.
. The problem is that the Department may
have very little way to verify important
portions of this evidence, at all or
without great expense. This is especially
true of labor costs: the plant engineer
will testify that all the necessary
people were on the job at all times and
the personnel manager will corroborate
this with personnel records and will
establish costs with wage information.
The Department has no effective way to
verify whether these labor resources were
actually allocated to 04M or elsewhere.
One way to avoid this problem is to
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(2) The Appendix to this section explains these
calculations. The Commissioner shall 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-6ll(h), upon written request
by an interested party or the affected regulafeee,
of total compliance costs over the
entire assessment period, i.e., to refuse
to take any account of and give any
credit for expenditures for partial
compliance. A consequence of this
approach is that a regulatee could be
over assessed significantly. For example,
a regulatee whose pressure drop is a
little low for his scrubber or whose
ductwork shows signs of poor maintenance
would be over assessed if the assessment
were based on the full cost of compliance.
In an attempt to strike some balance
between creating a loophole and prescrib-
ing over assessment, the regulations
provide in (e)(l) that initial assessment
Is to be based on the total cost of
compliance, subject to discretionary
mitigation under (g)(2) If the Commissioner
finds that the regulatee took action and
made expenditures specifically to comply
with 04M standards during the assessment
period. While not entirely satisfactory
because it does not really solve the veri-
fication problem, the provision flags an
evidentiary opportunity for the regulatee
without binding the Department to accept
a claim it cannot check. .,-
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(3) In setting a civil assessment in a particular
case, 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 and balancing these
factors, lower the civil assessment. The
factors he shall consider include:
(A) The amount of the assessment necessary to
ensure immediate and continued compliance;
(B) The character and degree of impact the
failure to operate and maintain properly
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;
(C) 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 failure to operate and
maintain properly;
(D) The conduct of the person incurring the
civil assessment in taking all feasible
steps or procedures necessary or appropriate
to comply or to correct the failure to
operate and maintain properly;
(E) Any prior violations by such person of
statutes, regulations, orders or permits
administered, adopted or issued by the
Commissioner;
Comment to Section 6ll(e)(31
This provision repeats the statute.
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(P) The economic and financial conditions of
such person;
(G) The character and degree of injury to, or
interference with reasonable use of property
which is caused or threatened to be
caused by such failure to operate and
maintain properly.
The Commissioner shall calculate the total
civil assessment by multiplying the monthly
civil assessment by the number of months or
fractions thereof in the assessment period.
(5) In no case shall an individual assessment
exceed either (A) the maximum civil assessment
Section 22a-6b-6ll(d) would allow per month for a
failure to operate and maintain properly with
the same equipment costs and operating costs,
or (B) for the total civil assessment due
during the entire assessment period, $25,000
plus $1000 for each day that the failure to
operate and maintain properly continues after
the regulatee has received a civil penalties
final order.
Section 22a-6b-6ll(f). Enforcement Proceedings.
(1) Hearings.
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(A) Any person in receipt of a notice issued
pursuant to Section 22a-6b-101(a) of the
Civil Penalty Regulations may apply to the
Commissioner for a hearing pursuant to
Section 22a-6b-101(b).
(B) Such hearing shall be conducted by the
Commissioner, a Deputy Commissioner, or a
hearing officer duly appointed by the
Commissioner or a Deputy Commissioner.
Such hearing shall be conducted pursuant
to Sections 4-177 to 4-184 of the General
Statutes, as amended, and to the Rules of
Practice of the Department.
(C) The Department shall have the burden of
producing evidence to prove the basis for
imposing the assessment and the reasonableness
of the proposed assessment, and the risk
of non-persuasion by a preponderance of
the evidence shall fall upon the Department.
(D) 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 assessment
amount is not available at the time of
the hearing but will become available
later, he may defer determining the
amount of the civil assessment due until
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Comment to 6ll(f)(C)
This sub-paragraph restates the
burdens on the Department'a.enforcement
staff as the "moving party." Of course,
factual findings by the Commissioner after
hearing are entitled to judicial
under the Connecticut APA.
Comment to 6ll(f?(D)_
The deferred hearing will be of far
less value for O&M violations than for
emissions violations. The control equip-
ment or other strategy will already have
been installed or adopted, hence its
costs already known.
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(2)
he establishes that the previously missing
information is available, at which time
he shall promptly hold a hearing regarding
the amount of the assessment due. He may
not collect any portion of the civil
assessment until this hearing is held and
a civil assessment final order issued.
Appeals. Any person may appeal a civil penal-
ties final order of the Commissioner issued
after a hearing, pursuant to Section 22a-6b(f)
of the General Statutes, as amended.
Section 22a-6b-6ll(g). Mitigation.
(1) General. The Commissioner may mitigate any
civil assessment upon such terms as he in his
discretion deems proper or necessary upon
consideration of the factors set forth in
Section 22a-6b(2)(b) of the General Statutes,
as amended.
(2)
Mitigation for partial compliance. If the
Commissioner finds that the regulatee has
taken action and incurred expenses specifically
to comply with operation and maintenance
standards throughout the assessment period or
during any parts thereof, he may in his dis-
cretion mitigate the assessment to reflect
such expenses.
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Comment to Section 6ll(g)(l)
This paragraph repeats the statute.
Comment to Section 6ll(g)(2)
See Comment to Section 6ll(e)(l).
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(3) Correction of assessment.
(A) A regulatee in receipt of a civil penalties
final order may petition the Commissioner
for correction of the assessment against him
at any time between the date of the civil
penalties final order and six months after
the Commissioner finds that the regulatee
has come into compliance. Such petition shall
set forth in writing any evidence that the
total required cost of compliance, without
regard to expenditures for partial compliance,
and/or the assessment period has been or will
be less than the Commissioner had initially
determined in calculating the assessment, and
it shall be sent by certified mail or personal
service to the Commissioner or the Director
of Air Compliance.
(B) The Commissioner may, in response to such
petition or at his own initiative, lower
an assessment if he determines that the
evidence in the petition establishes that
the total required costs of compliance on
which the monthly assessment was based
and/or the assessment period used to
calculate the total assessment 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
compliance or at any other time specified
in a final order or a civil penalty final
order. Following such a hearing the
Commissioner shall mitigate the civil
Comment to Section 6ll(g)(3)
The purpose of "correction", as
opposed to the burden on the Department
in the original hearing to establish the
"reasonableness" of any assessment, is an
automatic taking into account of evidence
developed by actual events that costs of
compliance were less than the projections
upon which the assessment was based.
Since O&M assessments of the 611/612 type
are almost exclusively backward looking
and costs should be as correctly known at
the time of the hearing on the reasonableness
of the assessment as they are later,
correction should not be a frequently
used proceeding.
The two types of situations for
which correction may be useful are (1) if
proper O&M requires some new equipment
whose costs are better known after it is
purchased, and (2) adjustment to the
assessment period.
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assessment if and to the extent that
the total required costs of compliance,
without regard to expenditures for
partial compliance, have been less than
he had initially determined, and/or the
regulatee has come into compliance with
less delay than the delay for which
assessments have previously been made.
(C) Refunds shall be made with interest
calculated from the time of payment and
at the cost of capital rate used to
determine the assessment.
(4) Reduction of the Assessment Period for Delays
Beyond the Regulatee's Control. The Commissioner
shall exclude from the assessment period such
periods of noncompliance as the regulatee
proves have been caused by strikes or lock-
outs; riots, wars, or other acts of violence;
floods, hurricanes, or other Acts of God; or
other equally severe, unforeseeable and uncor-
rectible 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 assessment period such periods of non-
compliance as were occasioned by delays attributable
to the Air Compliance Unit of the Department
in excess of reasonable processing times.
Nothing in this section shall prohibit a
regulatee from proposing, or the Department
from accepting, a compliance timetable which
excludes from the assessment period periods of
noncompliance caused by other acts or events
beyond the control of the regulatee, such as
contractors' or suppliers' delays.
Comment to Section
The force majeure provision excuses
delinquency for acts and events beyond
the regulatee's control which are independently
verifiable. Market dislocations (except
strikes and lockouts) do not trigger the
force maj eure provision, but any regulatee
who anticipates supply problems nay
negotiate with the Department in advance
for broader protection.
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(5) Notice of Lowering or Mitigation,
(A) The Commissioner shall report every case
in which he lowers a civil assessment
pursuant to Section 22a-6b-6ll(e)(3) or
in which he mitigates a civil assessment
pursuant to Section 22a-6b-6ll(g)(1-4),
if the monthly civil assessment without
such lowering or mitigation would be
greater than three hundred dollars. This
report shall state the name and address
of the regulatee, the amount of the
reduction, the amount of the civil
assessment still to be imposed, and the
grounds for such lowering or mitigation.
(B) The Commissioner shall also send written
notice of any hearings to be held regarding
cases where the amount of the civil
assessment may be an issue, at least ten
days prior to the hearings, to all persons
who have within the preceding twelve
months requested copies of such reports.
Section 22a-6b-6ll(h). Request for Information by
the Commissioner.
(1) The Commissioner may require the regulatee to
provide such additional information, including
information regarding costs, as he deems
necessary to effectuate the purposes of Section
22a-6b-6ll.
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(2) Any person who files any statement, record or
report with the Commissioner containing false
or misleading information or other claims will
be liable to criminal prosecution for a Class
A misdemeanor punishable 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
commercial 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 representatives of the state or
federal government concerned with carrying out
these regulations or when relevant in any
hearing conducted under the authority of these
regulations by the Department of Environmental
Protection, subject to such safeguards as the
hearing officer may impose,_and_such information
shall be disclosed when required by applicable
state or federal statute.
Section 22a-6b-6ll(i). Collection.
Comment to Section 6ll(h)(3)
The confidentiality provision is, of
course, subject to override by state and
federal right to know laws, as the last
phrase states.
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(1)
Payment of the civil assessment levied under
this section may be required monthly, or at
such time or time intervals as the Commissioner
determines will most effectively limit the
Department's administrative costs and further
the objectives defined in Section 22a-6b-
(2) The present value of the total civil assess-
ment imposed, calculated at the time the
notice of violation is issued, shall be held
constant regardless of the timing of its
collection.
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ECONOMIC APPENDIX
TO
SECTION 22a-6b-611
The Department of Environmental Protection Civil Penalty
Regulations for Failure to Operate and Maintain Properly,
Operating Without an Operation and Maintenance Permit, Failure
to Monitor, and Violation of a Monitoring Timetable remove the
financial benefit of improper operation and maintenance of air
pollution control equipment. The regulations provide for assess-
ments equal in value to the benefits of improper operation and
maintenance and/or improper monitoring of equipment performance.
These assessments are calculated using a capital budgeting form-
ula, a relatively simple economic calculus commonly used by
businessmen to evaluate investment alternatives. Assessments
are designed to influence patterns of O&M expenditure by assur-
ing a return on proper O&M equal to the return available on a
commercially attractive alternative project. A source which
properly operates and maintains its control equipment achieves
this return by avoiding an assessment which matches its expected
return on other expenditures.
This appendix explains the economic formula used to calculate
civil assessments under §§22a-6b-611 to 22a-6b-614, inclusive,
of the Civil Penalty Regulations. The explanation and examples
all refer to assessments for improper operation and maintenance,
and use cost figures which represent equipment and operating
costs for air pollution control equipment. Assessments based
on monitoring costs are calculated in exactly the same manner.
The only differences between the two types of assessments are
the equipment and operating costs figures used to generate them
(i.e., whether abatement costs or monitoring costs are used),
and possibly the depreciable life of the equipment involved.
ASSESSMENTS FOR IMPROPER
OPERATION AND MAINTENANCE
A source which has already invested in air pollution control
equipment but decides not to operate it saves
the operating cost of the existing equipment
and of all future replacements;
the equipment cost of all future replacements;
- the remaining useful life of the installed
equipment.
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The civil assessment for improper operation and maintenance
quantifies these savings into payments which, if made monthly
throughout a specified assessment period, would have the same
net economic impact on the source as the expenditures necessary
for proper operation and maintenance throughout the same assess-
ment period. In short, the assessment would equal the average
value over the assessment period of the net cash flow generated
by continued proper operation and maintenance of control equip-
ment.
CALCULATING ASSESSMENTS
The schedule of maximum assessments for failure to operate
and maintain properly in §22a-6b-611(d) is calculated in three
broad steps:
(1) A gross cash flow is specified of expend-
itures in each year which would be necessary
for continued proper operation anrt maintenance,
and replacement of installed control equipment.
These expenditures are operating costs and equipment
costs; the latter includes cost of future replacements and the
undepreciated value of installed equipment.
(2) This cash flow is converted to a present value
by discounting at a rate equal to the average
cost of capital for the industrial class of
which the source is a member;
(3) A monthly amount is calculated which amort-
izes the present value of continuous proper
operation and maintenance over an assessment
period.
To calculate assessments in individual cases, the gross
cash flow described in step (1) is reduced to a net cash flow
based on expected savings from federal income taxes. The net
cash flow is discounted to present value and amortized as in
steps (2) and (3). In other words, the maximum assessments
assume a zero income tax rate and no investment tax credit (a
situation in which some corporations and all governments find
themselves). Actual assessments reflect tax deductions and
credits for which the source is eligible, and are therefore
usually lower.
METHODOLOGY
COMPONENTS OF
CASH FLOW
Costs of operation include operating and maintenance costs
to ensure effective and dependable operation of the pollution
abatement equipment.
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Costs of equipment include:
(1) Capital costs for initial replacement
control equipment, considered as an ex-
penditure at time zero, the time of de-
tecting the violation;
(2) Capital costs of replacement control
equipment at the end of each period of
expected life within the assessment period;
(3) A credit for the salvage value of equipment
which is not fully depreciated at the end
of the assessment period. The value of
any undepreciated equipment existing in
year zero is included in the credit for
salvage value.
Reductions on U. S. income tax include:
(1) An investment tax credit for the purchase
of new equipment;
(2) The ability to deduct from taxable income
in each year
(a) depreciation on the capital
cost of equipment over its
useful life, and
(b) annual costs of operation.
ASSUMPTIONS
The schedule of maximum assessments reflects the following
assumptions:
(1) 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 real-
ized at the end of each year.
(2) Investment tax credit, if any, is obtained at
the time equipment is purchased.
(3) 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.
(The formula for salvage value is given in the
derivations section).
(4) Straight-line depreciation is used.
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NOTATION
Input variables:
AP = Assessment period in years.
CC = Annual cost of capital or discount rate,
as a decimal fraction.
CCE = Capital cost of initial replacement equipment
in year of detection, in dollars.
EL * Expected life of equipment, in years.
DL = Depreciable life of equipment, in years.
OP = Operating costs in year of detection, in dollars.
RI = Annual rate of inflation, as a decimal fraction.
T = Effective marginal U.S. income tax rate in the
year preceding detection, including tax credits
which can be carried over, (other than investment
credit), as a decimal fraction.
TC = Investment tax credit, as a decimal fraction.
Output variable:
CA = Civil assessment per month, in dollars.
Other variables:
PVO = Net present value of operating costs over
assessment period, net of any tax savings
arising from operating costs.
PVIE = Net present value of initial replacement
equipment, net of any tax credits and sav-
ings arising from the purchase and deprecia-
tion of this equipment.
PVE = Net present value of equipment cost over
entire assessment period. (Includes dis-
counted value of initial replacement and
future replacement equipment, less the
value of tax credits and deductions and of
any salvage value at the end of the assess-
ment period.)
A = Amortization factor, giving the amount of monthly
payment required per dollar of present value '
to be amortized.
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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
PVO =
/ KP\
\l /I + RI\ \
/l1 \1 + CC) I
PVIE
PVE =
(1-TC) -
1 -
(DL)(CC)
CCE
(1)
(2)
(3)
+ Ri
1 + CC/
PVIE
(4)
A =
(1/12)
(1 + CC) - 1
1 -
DERIVATIONS
(5)
(1 + CC)
AP
PVO;
Operating costs are assumed to be paid in the beginning of
the year. Each year operation costs increase by an inflation
factor of (1 + RI), regardless of the age of equipment then in
use. Operating costs for year I are brought to present value by
discounting by the factor I/ (I + CC).1"^ There is a tax savings
of T of operating costs each year, so net operating costs are
the proportion (1-T) of gross operating costs each year. Thus,
PVO
AP
E
1=1
( 1 - T ) (OP) ( 1 + RI )
1-1
(1 + CC)
Formula (2) above is an equivalent but explicit formula, derived
from the sum of a geometric series.
PVIE;
The initial replacement equipment costs CCE. Deducted from
this is a tax credit of TC x CCE obtained immediately, and tax
savings of T of allowable depreciation for each year of depreciable
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life of the equipment. Using straight-line depreciation, annual
depreciation is CCE/Dt. Depreciation in year I is discounted by
the factor I/ (1 + CC)1.
DL
Thus, PVIE = CCE - (TC) (CCE) - V
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This salvage value is such that the net present value of equip-
ment costs over any period does not depend on what combination
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.
The amortization factor is based on a standard formula.
It is the same formula as that for an annuity whose present
value is one (1) . Since the formula is for monthly payments,
the numerator in equation (5) is the monthly cost of capital.
ASSUMED VALUES FOR
MAXIMUM ASSESSMENTS
The schedule of maximum assessments assumes the following
values. (Note that CA increases with increases in CCE, OP, Rl, CC,DL
and AP, and decreases with increases in EL, T, and TC) .
RI = .15 (i.e., 15%)
While the rate of inflation over the past three decades
has generally been under 5%, it has been increasing in the last
few years and is currently around 12%. As there are not yet any
firm indications that inflation has been brought under control,
the estimate allows for some further modest increase.
CC - .20 (i.e. , 20%)
Generally, over the long run, the cost of capital has ex-
ceeded the inflation rate by about 5% to provide an adequate
return and to compensate investors for inflation.
T = 0
A few large, diversified corporations pay no U. S. corp-
orate income tax and thus do not realize savings on these taxes.
Moreover, government and other public or private non-profit
agencies pay no income tax.
TC = 0
The investment tax credit changes frequently and may be
eliminated entirely. Assuming a zero value reflects this pos-
sibility and avoids frequent changes in the schedule of maxima.
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In addition, public and private non-profit agencies obtain no
cost savings from any tax credit since they pay no income tax.
AP = 20 years.
This period was chosen because it is a common time frame
for evaluating many capital projects. In order to assure fair-
ness and comparability in assessing compliance costs in companies
with different expected equipment lives, a common assessment
period is necessary for computing all assessments.
EL = 5 years.
This life is the shortest typically encountered for air
pollution control and monitoring equipment.
DL = 5 years.
Federal Tax law permits that pollution abatement equipment
be depreciated over a five year period, or over the expected life-
time of the equipment, whichever is shorter.
CCE, OP = maximum of range.
To obtain the maximum assessment when CCE and OP may assume
any value over a specified range, CCE and OP are set to 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 the schedule of
maxima, i.e., cost of equipment, CCE = $2500 and annual operating
cost, OP = $1000. Other input variables are set at the values
spec i f ied above.
20 \
J1000 =13'754'26 [by (2)]
PVIE =
PVE
1 -
/I
l-(l
. (1
L v1
0 (
5(.20) >
+.15\20
+ .20/
+ .15\5
+ .20J
(1
+ .20)5j
2500 = 2500
(1+ .
(2500.00) = 7474.60
.015719
1 -
(1+20)20
CA = (13754,26 + 7474.60) .015719 = 333.70
[by (3)]
[by (4)1
[by (5)]
[by (i)]
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CIVIL ASSESSMENT REGULATIONS:
OPERATING WITHOUT AN 0 & M PERMIT
SECTION 22a-6b-612
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Civil Assessment Regulations for Operating Without
an O&M Permit
Section 22a-6b-6l2(a). Title. This section shall
be known and may be cited as "Civil Penalty Regulations
Operating Without an Operation and Maintenance
Permit."
Section 22a-6b-6l2(b). Definitions. The definitions
in Section 22a-6b-611(b) shall apply to this section.
Section 22a-6b-6l2(c). Assessment for Operating
Without an Operation and Maintenance Permit.
Any person who operates without an operation and
maintenance permit shall be liable to a civil
assessment by the Commissioner pursuant to Section
22a-6b(a)(2) of the General Statutes, as amended,
and in accordance with Sections 22a-6b-101 and 22a-
6b-102 of the Civil Penalty Regulations.
Section 22a-6b-6l2(d). Schedule of Maximum Assessments
(1) Any person subject to an assessment under
Section 22a-6b-6l2(c) may be assessed an
amount for each operation without an O&M
permit no larger than the sum of:
Comment to Section 612(a)
612 covers operating without an O&M
permit. The violation arises by operat-
ing prior to obtaining an O&M permit or
by continuing to operate after suspension
or revocation of an O&M permit.
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The 612 schedule of maxima is
identical to the sum of the 611 and 613
schedules. This requires explanation,
for the theories which underlie the use
of the 611 schedule here differ from
their justification in 611. 6ll imposes
assessments for improper O&M. Improper
O&M generates savings, and the assessment
is tied to all the savings from completely
improper O&M - i.e., from non-operation
of control equipment. In contrast, 612
liability arises from operating without
an O&M permit. Two theories .lustifv
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(A) the product of (i) the maximum monthly
amount the Commissioner may assess under
the schedule of maximum assessments in
Section 22a-6b-6ll(d) for the combination
of equipment costs and operating costs
which would be incurred to ensure continued
compliance with emissions and operation
and maintenance standards and (ii) the
number of months or fractions thereof the
Commissioner determines are in the assess-
ment period; and
(B) the product of (i) the maximum monthly
amount the Commissioner may assess under
Schedule B of maximum assessments in
Section 22a-6b-6l3(d) for the combination
of monitoring equipment costs and monitoring
operating costs which would be incurred
in complying with monitoring standards
and (ii) the number of months or fractions
thereof in the assessment period.
(2)
The maximum amounts set forth in these schedules
represent the economic advantages a person who
operates without an operation and maintenance
permit could gain from one month's noncompliance
with operation and maintenance standards and
monitoring standards in such permit, assuming
operating, economic and tax conditions all
(1) a regulatee Is supposed to
discontinue source operations without an
O&M permit. By operating, he saves the
costs of shutting down. Rather than
assessing the regulatee the value of
delaying shutdown (a large assessment,
since shutdowns are expensive), the
Department is, in effect, mitigating
this liability in the regulations by
limiting it to the value of not opera-
ting control equipment and not monitoring;
(2) a regulatee which operates
without an O&M permit saves the costs of
complying with permit conditions, which
may include parametric standards and
monitoring requirements. Thus, the
assessment is based on savings from
avoiding such compliance, viz., savings
from improper O&M and savings from
failure to monitor.
Of these, theory (2) is the stronger.
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tending to increase the value to the regulatee
of such operation.
(3) The Commissioner shall impose lesser assess-
ments pursuant to Section 22a-6b-6l2(e)(1) if
he finds the cost of compliance is less than
indicated in these schedules, and he may
further lower the assessment pursuant to
Sections 22a-6b-6l2(e)(3) and/or 22a-6b-
6l2(g).
(4) In no case shall the assessment exceed, for
each operation without an operation and main-
tenance permit, $25,000 plus $1000 for each day
that such operation continues after the regulatee
has received a civil penalties final order.
(5) The Commissioner has determined that the
maximum remedies provided in these schedules
will ensure 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 statej and (iii) the reasonable use of
property.
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Section 22a-6b-6l2(e).
Individual Cases.
Determination of Amount in
(1) The Commissioner shall determine the amount of
the monthly civil assessment he may levy for
each individual operation with an operation
and maintenance permit based on the total
required cost of compliance, without regard to
expenditures for partial compliance. Individual
assessments are calculated in four broad
steps: the gross cash flow of the required
compliance expenditures, chiefly equipment
costs, operating costs, monitoring equipment
costs and monitoring 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 assessment
is calculated as that amount which would, if
paid monthly, amortize the net present value
of continued compliance.
(2) The Appendix to Section 22a-6b-6ll explains
these calculations. The Commissioner shall
provide a written summary of the calculations
used to determine a particular assessment,
except to the extent he is required to main-
tain the confidentiality of certain informa-
tion pursuant to Section 22a-6b-6l2(g), upon
written request by an interested party or the
affected regulatee.
(3) In setting a civil assessment in a particular
case, the Commissioner shall consider all
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factors which he deems relevant, including but
not limited to those listed below; and he may,
as a result of considering and balancing these
factors, lower the civil assessment. The
factors he shall consider include:
(A) The amount of the assessment necessary to
ensure immediate and continued compliance;
(B) The character and degree of impact that
non-compliance 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;
(C) The character and degree of injury to, or
interference with, public health, safety
or welfare which is caused or threatened
to be caused by non-compliance;
(D) The conduct of the person incurring the
civil assessment in taking all feasible
steps or procedures necessary or appro-
priate to comply or to correct non-
compliance;
(E) Any prior violations by such person of
statutes, regulations, orders or permits
administered, adopted or issued by the
Commissioner;
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(P) The economic and financial conditions of
such person;
(G) The character and degree of injury to, or
interference with reasonable use of
property which is caused or threatened to
be caused by such non-compliance.
(4) The Commissioner shall calculate the total
assessment by mutiplying the monthly assess-
ment by the number of months or fractions
thereof in the assessment period.
(5) In no case shall an individual assessment for
each operation without an operation and main-
tenance permit exceed either (A) the maximum
amount Section 22a-6b-6l2(d)(1) would allow
per month for an operation with the same
equipment costs, operating costs, monitoring
equipment costs, and monitoring operating
costs, or (B) for the total assessment due
during the entire assessment period, $25,000
plus $1000 for each day that such operation
continues after the regulatee has received a
civil penalties final order.
Section 22a-6b-6l2(f). Enforcement Proceedings,
(1) Hearings.
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(A) Any person in receipt of a notice issued
pursuant to Section 22a-6b-101(a) of the
Civil Penalty Regulations may apply to
the Commissioner for a hearing pursuant
to Section 22a-6b-101(b) .
(B)
(C)
(D)
Such hearing shall be conducted by the
Commissioner3 a Deputy Commissioner, or a
hearing officer duly appointed by the
Commissioner or a Deputy Commissioner.
Such hearing be conducted pursuant to
Sections 4-177 to 4-184 of the General
Statutes, as amended, and to the Rules of
Practice of the Department.
The Department shall have the burden of
producing evidence to prove the basis for
imposing the assessment and the reason-
ableness of the proposed assessment, and
the risk of non-persuasion by a preponderance
of the evidence shall fall upon the
Department.
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 assessment
amount is not available at the time of
the hearing but will become available
later, he may defer determining the
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(2)
amount of the civil assessment due until
he establishes that the previously
missing information is available, at
which time he shall promptly hold a
hearing regarding the amount of the
assessment due. He may not collect any
portion of the civil assessment until
this hearing is held and a civil penalties
final order issued.
Appeals. Any person may appeal a civil
penalties final order of the Commissioner
issued after a hearing, pursuant to Section
22a-6b(f) of the General Statutes, as amended.
Section 22a-6b-6l2(g). Mitigation.
(1) General. The Commissioner may mitigate any
assessment upon such terms as he in his dis- •
cretion deems proper or necessary upon con-
sideration of the factors set forth in Section
22a-6b(b) of the General Statutes, as amended.
(2) Mitigation for Partial Compliance. If the
Commissioner finds that the regulatee has
taken action and incurred expenses specifically
to comply with operation and maintenance
standards and/or monitoring standards through-
out the assessment period or during any parts
thereof, he may mitigate the assessment to
reflect such expenses.
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(3) Correction of Assessments.
(A) A regulatee in receipt of a civil penal-
ties final order issued pursuant to
Section 22a-6b-101(a) of the Civil Penal-
ty Regulations may petition the Commis-
sioner for correction of the assessment
against him at any time between the date
of the civil penalties final order and
six months after the Commissioner finds
that the regulatee has come into com-
pliance. Such petition shall set forth
in writing any evidence that the total
required cost of compliance, and/or the
assessment period has been or will be
less than the Commissioner had initially
determined in calculating the assessment,
and it shall be sent by certified mail or
personal service to the Commissioner or
the Director of Air Compliance.
(B) The Commissioner may, in response to such
a petition or at his own initiative,
lower an assessment to the extent he
determines that the total required cost
of compliance on which the monthly
assessment was based, and/or the assess-
ment period used to calculate the total
assessment was excessive. If the Com-
missioner 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 compliance or at
any other time specified in a final order
or a civil penalties final order. Follow-
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ing such a hearing the Commissioner shall
mitigate the civil penalty if and to the
extent that the actual total required
cost of compliance has been less than he
initially determined, and/or that the
regulatee has come into compliance with
less delay than the total delay for which
assessments have previously been made.
(C) Refunds shall be made with interest
calculated from the time of payment and
at the cost of capital rate used to
determine the penalty.
(4) Reduction of the Assessment Period for Delays
Beyond the Regulatee's Control. The Commissioner
shall exclude from the assessment period such
periods of non-compliance as the regulatee
proves have been caused by strikes or lock-
outs; riots, wars, or other acts of violence;
floods, hurricanes, or other Acts of God; or
other equally severe, unforeseeable and uncor-
rectible 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 assessment period such periods of non-
compliance as were occasioned by delays attrib-
utable to the Air Compliance Unit of the
Department in excess of reasonable processing
times. Nothing in this section shall prohibit
a regulatee from proposing, or the Department
from accepting, a compliance timetable which
excludes from the assessment period periods of
non-compliance caused by other acts or events
beyond the control of the regulatee, such as
contractors' or suppliers' delays.
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(5) Notice.
(A) The Commissioner shall report every case
in which he lowers an assessment pursuant
to Section 22a-6b-6l2(e)(3) or in which
he mitigates an assessment pursuant to
Section 22a-6b-6l2(g)(1-4), if the monthly
assessment without such lowering or
mitigation would be greater than three
hundred dollars. This report shall state
the name and address of the regulatee,
the amount of the reduction, the amount
of the remaining assessment, and the
grounds for such lowering or mitigation.
(B) The Commissioner shall also send written
notice of any hearings to be held regarding
cases where the amount of the assessment
may be an issue, at least ten days prior
to the hearings, to all persons who have
within the preceding twelve months requested
copies of such reports.
Section 22a-6b-6l2(h).
the Commissioner.
Request for Information by
(1) The Commissioner may require the regulatee to
provide such additional information, including
information regarding costs, as he deems
necessary to effectuate the purposes of Section
22a-6b-6l2.
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(2) Any person who files any statement, record or
report with the Commissioner containing false
or misleading information or other claims will
be liable to criminal prosecution for a Class
A misdemeanor punishable 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
commercial or financial information provided
by a regulatee pursuant to this section will
remain confidential if the regulatee so re-
quests 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 representatives of
the state or federal government concerned with
carrying out these regulations or when relevant
in any hearing conducted under the authority
of these regulations by the Department of
Environmental Protection, subject to such
safeguards as the hearing officer may impose,
and such information shall be disclosed when
required by applicable state or federal statute,
Section 22a-6b-6l2(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
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determines will most effectively limit the
Department's administrative costs and further
the objectives defined in Section 22a-6b-
6l2(d).
(2) The present value of the total civil penalty
assessed, calculated at the time the notice of
violation is issued, shall be held constant
regardless of the timing of its collection.
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CIVIL ASSESSMENT REGULATIONS;
FAILURE TO MONITOR
SECTION 22a-6b-613
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Text of Regul-'.-rion
Comments on Regulations
Civil Assessment Regulations for Failure to Monitor
Section 22a-6b-6l3(a). Title. This section shall
be known and may be cited as "Civil Penalty Regula-
tions: Failure to Monitor."
Section 22a-6b-6l3(b). Definitions. The definitions
in Section 22a-6b-6ll(b) shall apply to this section.
Section 22a-6b-6l3(c). Civil Assessments for Failure
to Monitor. Any person who fails to monitor shall
be liable for a civil assessment by the Commissioner
pursuant to Section 22a-6b(a)(2) of the General
Statutes, as amended, and in accordance with the
procedures prescribed in Section 22a-6b-100 to 22a-
6b-102, inclusive, of the Civil Penalty Regulations.
Section 22a-6b-6l3(d). Schedule of Maximum Assessments,
(1) Any person subject to an assessment under
Section 22a-6b-6l3(c) may be assessed an amount for
each failure to monitor no larger than the product
of (A) the monthly amount listed in the following
Comment to Section 6l3(a)
This regulation applies to non-
compliance with monitoring standards in
Section 19-508-4 of the Abatement regu-
lations, Section 19-508-103 of the O&M
regulations, or in a final order or final
O&M permit. '
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Comment to Section 6l3(d)
A regulatee who fails to monitor has
a strong incentive also to operate im-
properly or shut down his control equip-
ment, since the Department's detection
system is severely hampered by the
absence of reliable monitoring data.
Thus, the assessment for failure to
monitor is based on the costs of O&M
unless and to the extent the regulatee
proves he properly operated and main-
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Schedule A for the combination of equipment costs
and operating costs which would be incurred to
ensure continued compliance with emissions and
operation and maintenance standards, and (B) the
number of months or fractions thereof the Commissioner
determines are in the assessment period.
(2) If the Commissioner finds that a person subject to
assessment under Section 22a-6b-6l3(c) has taken
such action and incurred all the expenses necessary
to ensure continued compliance throughout the assess-
ment period with emissions and operation and main-
tenance standards, he shall determine the maximum
monthly assessment from the following Schedule B,
instead of Schedule A, for the combination of moni-
toring equipment costs and monitoring operating costs
which would be incurred to ensure immediate and
continued compliance with monitoring standards.
(3) The maximum monthly amounts in Schedule A
represent the economic advantages a person re-
sponsible for a failure to monitor could gain from
one month's noncompliance with operation and
maintenance standards during the monitoring failure,
assuming operating, economic and tax conditions all
tending to increase the value to the person of such
noncompliance. The maximum monthly amounts in
Schedule B represent the economic advantages a
person responsible for a failure to monitor could
gain from one month's noncompliance with monitoring
standards, assuming the person had during the month
incurred all the expenses necessary for continued
compliance with emissions and operation and main-
tenance standards, and assuming economic and tax
conditions all tending to increase the value to
the person of such noncompliance. For both schedules,
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these maximum amounts have been calculated in three
broad steps: a gross cash flow for each set of compliance
expenditures, chiefly equipment costs and operating
costs or monitoring equipment costs and monitoring
operating costs, is defined; this gross cash flow
is discounted to present value; and the maximum
monthly assessment is calculated as that amount
which would, if paid monthly, amortize the gross
present value of continued compliance. The Ap-
pendix to Section 22a-6b-6ll explains these cal-
culations.
(*0 The Commissioner shall impose lesser assess-
ments pursuant to Section 22a-6b-6l3(e)(1-2) if he
finds the cost of compliance of each failure to
monitor is less than indicated in the appropriate
schedule, and he may further lower these assess-
ments pursuant to Sections 22a-6b-6l3(e)(5) and/or
22a-6b-6l3(g).
(5) In no case shall the assessment exceed $25,000
plus $1000 for each day that the failure to monitor
continues after the regulatee has received a civil
penalties final order.
(6) The Commissioner has determined that the
remedies provided by these schedules will ensure
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. The Commissioner has
also determined that the remedies in Schedule A
will encourage proper operation and maintenance of
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SCHEDULE A: SCHEDULE OF MAXIMUM MONTHLY CIVIL
ASSESSMENTS FOR FAILURE TO MONITOR
DERATING
COSTS
50-
1000
$1001-
2500
S2501-
5000
SS'lOi-
7500
$7501-
10,000
$10,001-
15,000
$15.001-
20,000
$20,001-
25,000
$25,001-
35,000
$35,001-
50,000
$50,001-
75,000
$75,001-
100,00
$100,001
200,00
$200,000
and above
EQUIPMENT COSTS
$0-
2500
394
658
1199
1739
2280
3361
4442
5523
7685
10928
16333
21738
43359*
•
$2501-
5000
451
776
1316
1S57
2397
3478
4559
5640
7802
11045
16451
21856
43477*
*
$5001-
10,000
686
1010
1551
2092
2632
3713
4794
5875
8037
11280
16686
22091
43712*
*
$10,001
20,000
1156
148ft
2021
25C2
3102
4183
5264
6345
8507
11750
17156
22561
44182*
*
520,001
35.000
1861
2115
2726
3267
3807
4888
5969
7050
9212
12455
17861
23266
44887*
*
$35,001
50,000
2566
2«»0
3431
3971
4512
5593
(674
7755
9917
13160
18566
23971
45592+
*
$50,000-
70,000
3506
3130
4371
4911
5452
6533
7«14
l«95
10657
14100
19506
24911
46532+
*
$70,001-
100,000
4916
5240
5781
6321
6862
7943
9024
10105
12267
15510
10915
26321
47942+
*
$100,001-
150,000
7266
7590
8131
1671
9212
10293
11374
12455
14617
17860
23265
28671+
50291+
*
$150,001-
200,000
9616
9940
10481
11021
11562
12643
13724
14805
16967
20210
25615
31021+
52641+
*
$200,001-
300,000
14316
14640
15181
15721
16262
17343
18424
19505
21667
24910
30315+
35720+
•
•
$300,001
500,000
23715
24040
24580
25121
1£661
26742
27823
28904+
31066+
34310+
39715+
45120+
*
*
$500,001-
1,000,000
47214+
47539*
48079*
48620*
49160*
5024f
51322+
52404+
54566+
*
*
*
•
*
$1,000,00'
and above
*
*
*
*
*
t
•
•
*
•
•
*
* No more than $25,000 plus $1000 for each day that the unabated activity continues after the regulatee has received
a civil penalties final order.
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Once the $25,000 element of the maximum is used up, the maximum monthly charge will be $1000 times the number ofdavs
in the month.
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SCHEDULE B; SCHEDULE OF MAXIMUM MONTHLY CIVIL ASSESSMENTS FOR
FAILURE TO MONITOR DURING PROPER OPERATION OF CONTROL EQUIPMENT
Costs
$0-500
S501-100C
51001-2000
£2001-4000
S4001-6000
S6001-8000
$8001-10,000
$10,001-15,000
$15,001-20,000
$20,001-25,000
$25,001-35,000
$35,001-50,000
$50,001-75,000
$75,001-100,000
$100,001-200,000
$200,001-750,000
Equipment Costs
$0-500
131.60
239.71
455.92
888.33
1320.75
1753.17
2185.58
3266.63
4347.67
5428.71
7590.80
10833.93
16239.15
216*4. 34
"•326S.22
ft
$501-1000
155.10
263.21
479. 42
911.83
1344.25
1776.67
2209.08
3290.13
4371.17
5452.21
7614.JO
10857.
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air pollution control equipment and other abatement
strategies during periods of failure to monitor.
Section 22a-6b-6l3(e). Determination of Amount in
Individual Cases.
(1) The Commissioner shall determine the monthly
amount he may assess for any individual failure to
monitor based on the total required cost of com-
pliance with emissions and operation and maintenance
standards, without regard to expenditures for partial
compliance, unless the regulatee proves pursuant to
paragraph (2) that he has incurred all the expenses
necessary to ensure continued compliance with emissions
and operation and maintenance standards.
(2) If the regulatee proves that he has incurred
all the expenses necessary to ensure continued com-
pliance with emissions and operation and maintenance
standards throughout the assessment period or during
any parts thereof, the Commissioner shall determine
the monthly amount he may assess for such period or
periods based on the actual or probable cost of
compliance with monitoring standards.
(3) Individual assessments are calculated in four
broad steps: the gross cash flow of the required
compliance expenditures, chiefly equipment costs
and operating cos1;s or monitoring equipment costs
and monitoring 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
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monthly assessment is calculated as that amount
which would, if paid monthly amortize the net
present value of continued compliance.
(4) The Appendix to Section 22a-6b-6ll explains
these calculations. The Commissioner shall 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-
613(h), upon written request by an interested party
or the affected regulatee.
(5) In determining an assessment in a particular
case, 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 and balancing these factors, lower the
assessment. The factors he shall consider include:
(A) The amount of the assessment necessary to
ensure immediate and continued compliance;
(B) The character and degree of impact the
failure to monitor 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;
(C) The character and degree of injury to, or
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interference with, public health, safety
or welfare which is caused or threatened
to be caused by the failure to monitor;
(D) The conduct of the person incurring the
assessment in taking all feasible steps
or procedures necessary or appropriate to
comply or to correct the failure to
monitor;
(E) Any prior violations by such person of
statutes, regulations, orders or permits
administered, adopted or issued by the
Commissioner;
(P) The economic and financial conditions of
such person;
(G) The character and degree of injury to, or
interference with reasonable use of
property which is caused or threatened to
be caused by such failure to monitor.
(6) The total assessment shall be equal to the
monthly assessment multiplied by the number of
months or fractions thereof in the assessment
period.
(7) In no case shall an individual assessment
exceed either (A) the maximum amount Schedule A in
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Section 22a-6b-6l3(d) would allow per month for a
failure to monitor with the same equipment costs
and operating costs or (B) for the total assessment
due during the entire assessment period, $25,000
plus $1000 for each day that the failure to monitor
continues after the regulatee has received a civil
penalties final order.
Section 22a-6b-6l3(f). Enforcement Proceedings.
(1) Hearings.
(A) Any person in receipt of a notice issued
pursuant to Section 22a-6b-101(a) of the Civil
Penalty Regulations may apply to the Commissioner
for a hearing pursuant to Section 22a-6b-
(B) Such hearing shall be conducted by the
Commissioner, a Deputy Commissioner, or a
hearing officer duly appointed by the Com-
missioner or a Deputy Commissioner. Such
hearing shall be conducted pursuant to Sections
4-177 to 4-184, inclusive, of the General
Statutes, as amended, and to the Rules of
Practice of the Department.
(C) The Department shall have the burden of
producing evidence to prove the basis for
imposing the assessment and the reasonableness
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of the proposed assessment, and the risk of
non-persuasion by a preponderance of the
evidence shall fall upon the Department.
(D) 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
assessment is not available at the time of the
hearing but will become available later, he
may defer determining the amount of the assess-
ment due until he establishes that the pre-
viously missing information is available, at
which time he shall promptly hold a hearing
regarding the amount of the assessment due.
He may not collect any portion of the assess-
ment until this hearing is held and a civil
penalties final order issued.
(3) Appeals. Any person may appeal a civil
penalty final order of the Commissioner issued
after a hearing, pursuant to Section 22a-6b(f) of
the General Statutes, as amended.
Section 22a-6b-6l3(g). Mitigation. (1) General.
The Commissioner may mitigate any assessment upon
such terms as he, in his discretion, deems proper or
necessary upon consideration of the factors set
forth in Section 22a-6b(b) of the General Statutes,
as amended.
(2) Mitigation for Partial Compliance. If the
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action and incurred expenses specifically to comply
with emissions and operation and maintenance standards
throughout the assessment period or during any parts
thereof, he may mitigate the assessment to reflect
these expenses.
(3) Correction of Assessments.
(A) A regulatee in receipt of a civil penalty
final order may petition the Commissioner for
correction of the assessment against him at
any time between the date of the civil penalty
final order and six months after the Commissioner
finds that the regulatee has come into compliance
Such petition shall set forth in writing any
evidence that the total required costs of
compliance and/or the assessment period has
been or will be less than the Commissioner had
initially determined in calculating the
assessment, and it shall be sent by certified
mail or personal service to the Commissioner
or the Director of Air Compliance.
(B) The Commissioner may, in response to such
a petition or at his own initiative, lower an
assessment if he determines that the evidence
in the petition establishes that the total
required costs of compliance on which the
monthly assessment was based and/or the
assessment period used to calculate the total
assessment 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
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of right once he has come into compliance 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 assessment if and to the extent that
the total required cost of compliance has been
less than he had initially determined, and/or
the regulatee has come into final compliance
with less delay than the delay for which
assessments have previously been made.
(C) Refunds shall be made with interest calculated
from the time of payment and at the cost of capital
rate used to determine the assessment.
(3) Reduction of the Assessment Period for Delays
Beyond the Regulatee's Control. The Commissioner
shall exclude from the 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; or other equally severe,
unforeseeable and uncorrectible 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 assessment period such periods of
non-compliance as were occasioned by delays attrib-
utable to the Air Compliance Unit of the Department
in excess of reasonable processing times. Nothing
in this section shall prohibit a regulatee from
proposing, or the Department from acceptingj a
compliance timetable which excludes from the
assessment period pBriods of non-compliance caused
by other acts or events beyond the control of the
regulatee, such as contractors' or suppliers'
delays.
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Notice.
(A) The Commissioner shall report every case
in which he lowers an assessment pursuant to
Section 22a-6b-6l3(e)(5) or in which he miti-
gates an assessment pursuant to Sections 22a-
6b-6l3(g)(1-4), if the monthly assessment
without such lowering or mitigation would be
greater than three hundred dollars. This
report shall state the name and address of the
regulatee, the amount of the reduction, the
amount still to be assessed, and the grounds
for such lowering or mitigation.
(B) The Commissioner shall also send written
notice of any hearings to be held regarding
cases where the amount of the assessment may
be an issue, at least ten days prior the
hearings, to all persons who have within the
preceeding twelve months requested copies of
such reports.
Section 22a-6b-6l3(h).
the Commissioner.
Request for Information by
(1) The Commissioner may require the regulatee to
provide such additional information, including
information regarding costs, as he deems necessary
to effectuate the purposes of Section 22a-6b-6l3-
(2) Any person who files any statement, record or
report with the Commissioner containing false or
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misleading information or other claims will be
liable to criminal prosecution for a Class A
misdemeanor punishable 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
commercial 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 Com-
pliance, except that such information may be
disclosed to other officers, employees, or author-
ized representatives of the state or federal
government 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, subject
to such safeguards as the hearing officer may
impose, and such information shall be disclosed
when required by applicable state or federal statute,
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Section 22a-6b-6l3(l). Collection.
(1) Payment of the assessments made under this
section may be required monthly, or at such time or
time intervals as the Commissioner determines will
most_effectively limit the Department's adminis-
trative costs and further the objectives defined in
Section 22a-6b-6l3(d).
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(2) The present value of the total assessment,
calculated at the time the notice of violation is
issued, shall be held constant regardless of the
timing of its collection.
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111-91
CIVIL ASSESSMENT REGULATIONS:
VIOLATION OF MONITORING TIMETABLES
SECTION 22a-6b-614
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Civil Assessment Regulations for Violation
of Monitoring Timetables
Section 22a-6b-6l4(a). Title. This section shall
be known and may be cited as "Civil'Penalty Regulations
Violation of Monitoring Timetables."
Section 22a-6b-6l4(b). Definitions. The definitions
in Section 22a-6b-6ll(b) shall apply to this section.
Section 22a-6b-6l1l( c). Civil Assessment for Non-
compliance with a Monitoring Compliance Timetable.
Any person subject to a final order or a final
operation and maintenance permit of the Commissioner
containing a monitoring compliance timetable who
fails to monitor and who is not in compliance with
the terms of the timetable shall be liable to a
civil assessment by the Commissioner pursuant to
Section 22a-6b(a)(3) of the General Statutes, as
amended, and in accordance with the procedures
prescribed in Section 22a-6b-101 to 22a-6b-102 of
the Civil Penalty Regulations, inclusive.
Section 22a-6b-6l1J(d). Schedule of Maximum Assessments,
(1) Any person subject to an assessment under
Section 22a-6b-6l4(c) may be assessed an amount for
each failure to monitor that is under a monitoring
compliance timetable but not in compliance with the
terms of the timetable no larger than the product
of (A) the monthly amount the Commissioner may
assess under Schedule A of maximum assessments in
Section 22a-6b-6l3(d) against a person for a
failure to monitor with the same equipment costs
and operating costs, and (B) the number of months
and/or fractions thereof the Commissioner deter-
mines are In the a.c;c(pc:c;mArtt- r\on-! ^H
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(2) If the Commissioner finds that a person sub-
ject to assessment under Section 22a-6b-6l1J )c) has
taken such action and incurred all the expenses
necessary to ensure continued compliance throughout
the assessment period with emissions and operation
and maintenance standards, he shall determine the
maximum monthly assessment from Schedule B, instead
of Schedule A, in Section 22a-6b-6l3(d) for the com-
bination of monitoring equipment costs and monitoring
operating costs which would be incurred to ensure
immediate and continued compliance with monitoring
standards.
(3) The maximum monthly amounts in Schedule A
represent the economic advantages a person re-
sponsible for a failure to monitor could gain from
one month's noncompliance with operation and
maintenance standards during the monitoring failure,
assuming operating, economic and tax conditions all
tending to increase the value to the person of such
noncompliance. The maximum monthly amounts in
Schedule B represent the economic advantages a
person responsible for a failure to monitor could
gain from one month's noncompliance with monitoring
standards, assuming the person had during the month
incurred all the expenses necessary for continued
compliance with operation and maintenance standards,
and assuming economic and tax conditions all tending
to increase the value to the person of such noncompliance,
For both schedules, these maximum amounts have been
calculated in three broad steps: a gross cash flow
for each set of compliance expenditures, chiefly
equipment costs and operating costs or monitoring
equipment costs and monitoring operating costs, is
defined; this gross cash flow is discounted to
present value; and the maximum monthly assessment
is calculated as that amount which would, if paid
monthly, amortize the gross present value of con-
tinued compliance. The Appendix to Section 22a-6b-
6ll explains these calculations.
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(4) The Commissioner shall impose lesser assess-
ments pursuant to Section 22a-6b-6l4(e)(1-2) if he
finds the cost of compliance of each failure to
monitor are smaller than indicated in the appropriate
schedule, and he may further lower these assess-
ments pursuant to Sections 22a-6b-6l4(e)(5) and/or
22a-6b-6l4(g).
(5) In no case shall the assessment exceed $253000
plus $1000 for each day that the failure to monitor
continues after the regulatee has received a civil
penalties final order.
Section 22a-6b-6l4(e).
Individual Cases.
Determination of Amount in
(1) The Commissioner shall determine the monthly
amount he may assess for each individual case of a
failure to monitor not conforming to or complying
with a monitoring compliance timetable based on the
total required cost of compliance with emissions and
operation and maintenance standards,, without regard
to expenditures for partial compliance, unless the
regulatee proves pursuant to paragraph (2) that he
has incurred all the expenses necessary to ensure
continued compliance with emissions and operation
and maintenance standards.
(2) If the regulatee proves that he has incurred
all the expenses necessary to ensure continued
compliance with emissions and operation and main-
tenance standards throughout the assessment period
or during any parts thereof, the Commissioner shall
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determine the monthly amount he may assess for such
period or periods based on the actual or probable
cost of compliance with monitoring standards.
(3) Individual assessments are calculated in four
broad steps: the gross cash flow of the required
compliance expenditures, chiefly equipment costs
and operating costs or monitoring equipment costs
and monitoring 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 assessment is calculated as that amount
which would, if paid monthly, amortize the net
present value of continued compliance.
The Appendix to Section 22a-6b-6ll explains
these calculations. The Commissioner shall provide
a written summary of the calculations used to
determine a particular assessment, except to the
extent he is required to maitain the confidentiality
of certain information pursuant to Section 22a-6b-
6l4(h), upon written request by an interested party
or the affected regulatee.
(5) In determining an assessment in a particular
case, 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 and balancing these factors, lower the
assessment. The factors he shall consider include:
(A) The amount of the assessment necessary to
ensure immediate and continued compliance;
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(B) The character and degree of impact the
failure to monitor 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;
(C) 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 failure to monitor;
(D) The conduct of the person incurring the
assessment in taking all feasible steps
or procedures necessary or appropriate to
comply or to correct the failure to
monitor;
(E) Any prior violations by such person of
statutes, regulations, orders or permits
administered, adopted or issued by the
Commissioner;
(F) The economic and financial conditions of
such person;
(G) The character and degree of injury to, or
interference with reasonable use of
property which is caused or threatened to
be caused by such failure to monitor.
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(6) The total assessment shall be equal to the
monthly assessment multiplied by the number of
months or fractions thereof in the assessment
period.
(7) In no case shall an individual assessment
exceed either (A) the maximum amount Schedule A in
Section 22a-6b-6l3(d) would allow per month for a
failure to monitor with the same equipment costs
and operating costs, or (B) for the total assess-
ment due during the entire assessment period,
$25,000 plus $1000 for each day that the failure to
monitor continues after the regulatee has received
a civil penalties final order.
Section 22a-6b-6l4(f)_. Enforcement Proceedings
(1) Hearings.
(A) Any person in receipt of a notice issued
pursuant to Section 22a-6b-101(a) of the Civil
Penalty Regulations may apply to the Commissioner
for a hearing pursuant to Section 22a-6b-
(B) Such hearing shall be conducted by the
Commissioner, a Deputy Commissioner, or a
hearing officer duly appointed by the Com-
missioner or a Deputy Commissioner. Such
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hearing shall be conducted pursuant to Sections
4-177 to ^4-184 of the General Statutes, as
amended, and to the Rules of Practice of the
Department.
(C) The Department shall have the burden of
producing evidence to prove the basis for
imposing the assessment and the reasonableness
of the proposed assessment, and the risk of
non-persuasion by a preponderance of the
evidence shall fall upon the Department.
(D) 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
assessment is not available at the time of the
hearing but will become available later, he
may defer determining the amount of the
assessment due until he establishes that the
previously missing information is available,
at which time he shall promptly hold a hearing
regarding the amount of the assessment due.
He may not collect any portion of the assess-
ment 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 22a-6b(f) of
the General Statutes, as amended.
Section 22a-6b-6l4(g). Mitigation.
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(1) General. The Commissioner may mitigate any
assessment upon such terms as he in his discretion
deems proper or necessary upon consideration of the
factors set forth in Sections 22a-6b(b) of the
General Statutes, as amended.
(2) Mitigation for Partial Compliance. If the
Commissioner finds that the regulatee has taken
action and incurred expenses specifically to comply
with emissions and operation and maintenance stan-
dards throughout the assessment period or during any
parts thereof, he may mitigate the assessment to
reflect such expenses.
(3) Correction of Assessments.
(A) A regulatee in receipt of a civil penalty
final order may petition the Commissioner for
correction of the assessment against him at
any time between the date of the civil penalty
final order and six months after the Commissioner
finds that the regulatee has come into compliance,
Such petition shall set forth in writing any
evidence that the total required cost of
compliance and/or the assessment period has
been or will be less than the Commissioner had
initially determined in calculating the assess-
ment, and it shall be sent by certified mail
or personal service to the Commissioner or the
Director of Air Compliance.
(B) The Commissioner may, in response to such
a petition or at his own initiative, lower an
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assessment to the extent that evidence in the
petition establishes that the total required
cost of compliance on which the monthly assess-
ment was based and/or the assessment period
used to calculate the total assessment was
excessive. If the Commissioner takes no
action in response to such a petition, or if
his response is not satisfactory to the regu-
latee, the regulatee may obtain a hearing of
right once he has come into compliance 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
assessment penalty if and to the extent that
the total required cost of compliance has been
less than he had initially determined and/or
the regulatee came into compliance with less
delay than the total delay for which assess-
ments have previously been made.
(C) Refunds shall be made with interest
calculated from the time of payment and at the
cost of capital rate used to determine the
assessment.
(4) Reduction of the Assessment Period for Delays
Beyond the Regulatee's Control. The Commissioner
shall exclude from the 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; or other equally severe,
unforeseeable and uncorrectible 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
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exclude from the assessment period such periods of
non-compliance as were occasioned by delays attributable
to the Air Compliance Unit of the Department in
excess of reasonable processing times. Nothing in
this section shall prohibit a regulatee from
proposing, or the Department from accepting, a
compliance timetable which excludes from the assess-
ment period periods of non-compliance caused by
other acts or events beyond the control of the
regulatee, such as contractors' or suppliers'
delays.
(5) Notice.
(A) The Commissioner shall report every case
in which he lowers an assessment pursuant to
Section 22a-6b-6l4(e)(5) or in which he miti-
gates an assessment pursuant to Section 22a-
6b-6l4(g)(1-4), if the monthly assessment
without such lowering or mitigation would be
greater than three hundred dollars. This
report shall state the name and address of the
regulatee, the amount of the reduction, the
amount still to be assessed, and the grounds
for such lowering or mitigation.
(B) The Commissioner shall also send written
notice of any hearings to be held regarding
cases where the amount of the assessment may
be an issue, at least ten days prior to the
hearings, to all persons who have within the
preceeding twelve months requested copies of
such reports.
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Section 22a-6b-6l4(h).
the Commissioner.
Request for Information by
(1) The Commissioner may require the regulatee to
provide such additional information, including
information regarding costs, as he deems necessary
to effectuate the purposes of Section 22a-6b-6l4.
(2) Any person who files any statement, record or
report with the Commissioner containing false or
misleading information or other claims will be
liable to criminal prosecution for a Class A
misdemeaner punishable by imprisonment for a
period up to one year and a fine of up to one
thousand dollars ($1000) for each violation pur-
suant to Section 53a-157 of the General Statutes.
(3) Any information disclosing trade secrets and
commercial 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 representa-
tives of the state or federal government concerned
with carrying out these regulations or when relevant
in any hearing conducted under the authority of
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these regulations by the Department of Environmental
Protection, subject to such safeguards as the
hearing officer may impose, and such information
shall be disclosed when required by applicable
state or federal statute.
Section 22a-6b-6l4(l). Collection.
(1) Payment of the assessments made under this
section may be required monthly, or at such time or
time intervals as the Commissioner determines will
most effectively limit the Department's administra-
tive costs and further the objectives defined In
Section 22a-6b-6l3(d).
(2) The present value of the total assessment,
calculated at the time the notice of violation is
issued, shall be held constant regardless of the
timing of its collection.
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