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Office of Inspector General
Audit Report
Air
Idaho's Air Enforcement Program
E1GAF8-10-0018-8100249
September 30,1998
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Inspector General Division Western Audit Division
Conducting the Audit Seattle Branch Office
Region covered Region 10
Program Office Involved Office of Air Quality
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
tc/ OFFICE OF THE INSPECTOR GENERAL FOR AUDITS
WESTERN DIVISION
75 HAWTHORNE STREET
19TH FLOOR, MAIL CODE M
SAN FRANCISCO, CA 94105-3901
September 30, 1998
MEMORANDUM
SUBJECT: Idaho's Air Enforcement Program
Audit Report No. E1GAF8-10-0018-8100249
FROM: Truman R.
Divisional Inspector General for Audits
Western Audit Division
TO: Chuck Clarke
Regional Administrator
EPA Region 10
Attached is our final report titled Idaho's Air Enforcement Program. The overall purpose of the
audit was to evaluate the effectiveness of the State of Idaho's administration and EPA
Region 10's oversight of the stationary source air enforcement program in Idaho.
We concluded that the State's administration and the Region's oversight of the stationary source
air enforcement program for Idaho's significant violators were not sufficient to ensure
compliance with federal and State laws and regulations. We believe that improvements are
necessary to prevent threats to public health and the environment.
This audit report contains findings that describe problems the Office of Inspector General has
identified and corrective actions the OIG recommends. This audit report represents the opinion
of the OIG and the findings contained in this audit report do not necessarily represent the final
EPA position. Final determinations on matters in this audit report will be made by EPA
managers in accordance with established EPA audit resolution procedures. Accordingly, the
findings described in this audit report are not binding upon EPA in any enforcement proceeding
brought by EPA or the Department of Justice.
ACTION REQUIRED
In accordance with EPA Order 2750, you, as the Action Official, are required to provide our
office with a written response to the audit report within 90 days of the report date. The response
should address all recommendations. For corrective actions planned but not completed by the
response date, reference to specific milestone dates will assist us in deciding whether to close this
Printed on Recycled Paper
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report.
We have no objection to the release of this report to the public.
We appreciate the cooperation from your staff and the Idaho Division of Environmental Quality
staff during this audit. Should you or your staff have any questions about this report, please call
me at (415) 744-2445, or Charles Reisig of our Seattle Office at (206) 553-4032.
Attachment
Distribution: APPENDIX D
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EXECUTIVE SUMMARY
INTRODUCTION
The Clean Air Act, as amended in 1990, gives EPA authority to set and enforce national
standards to protect human health and the environment from emissions that pollute the air. EPA
Region 10 (the Region) has granted authority to the State of Idaho (the State) to implement and
enforce the stationary source air program through approval of the State Implementation Plan for
the Control of Air Pollution in the State of Idaho. The audit focused on enforcement activities
related to stationary source significant violators (SVs) in the State.
OBJECTIVES
The overall purpose of the audit was to evaluate the effectiveness of the State's administration
and the Region's oversight of the stationary source air enforcement program. The specific
objectives were to evaluate whether the State's:
• Enforcement actions were appropriate and penalties were of sufficient magnitude to have
a credible deterrent effect on major air pollution sources;
• Enforcement activities resulted in timely return of sources to compliance; and
• Inspection procedures ensure that all significant air pollution violations were identified.
RESULTS IN BRIEF
The State's administration and the Region's oversight of the stationary source air enforcement
program for SVs were not sufficient to ensure compliance with federal and State laws and
regulations. We believe that significant improvements are necessary to prevent threats to public
health and the environment.
The Idaho Division of Environmental Quality (DEQ) needs to make significant improvements in
its air enforcement program because: (i) enforcement actions were not appropriate and penalties
were not of sufficient magnitude to have a credible deterrent effect on major air pollution
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sources; (ii) enforcement activities did not result in timely return of sources to compliance; and
(iii) inspection procedures did not ensure that all significant air pollution violators were
identified. We also found that: (i) emission reports were not reviewed timely to ensure sources
were in compliance with applicable emission limits; and (ii) SV data was not reported accurately.
The Region's oversight of DEQ's enforcement program also needs significant improvement
because the Region did not: (i) establish enforcement criteria for assessing the State's program;
(ii) perform any program reviews of the State's air enforcement program after April 1993; and
(iii) use its enforcement authority effectively when the State was unwilling or unable to take
timely and appropriate enforcement action in response to violations. In addition, the Region's
Federal Manager's Financial Integrity Act (FMFIA) assurance letter to the Administrator did not
report the weaknesses in the administration and oversight of the State's air enforcement program
as a material deficiency in management controls.
Lack Of Enforcement Against Many Stationary Source Significant Violators
Enforcement actions, including the use of penalties, were often insufficient to bring SVs into
compliance with federally enforceable air regulations and the Rules and Regulations for the
Control of Air Pollution in Idaho. Enforcement actions were neither made nor escalated to deter
SVs from gaining an economic advantage as a result of their violations. Of the few penalties that
had been assessed, none included amounts for the economic benefit gained from noncompliance.
Also, the penalties that we reviewed were significantly lower than the amounts under the
guidelines of EPA's Clean Air Act Stationary Source Civil Penalty Policy.
In addition, DEQ was not meeting EPA's Timely and Appropriate Enforcement Response to
Significant Air Pollution Violators guidance for timely resolution of the violations.
An adequate enforcement program had not been implemented in the State mainly because DEQ
focused on compliance assistance rather than enforcement to bring sources back into compliance.
However, when compliance assistance failed to timely bring the sources into compliance,
appropriate enforcement actions were not taken. Also, a contributing factor to DEQ's
insufficient emphasis on enforcement was the Compliance Assurance Agreement between DEQ
and the Region. This enforcement agreement did not require DEQ to follow EPA enforcement
guidance.
Insufficient Inspections
DEQ's inspection activity did not provide adequate coverage to ensure that all SVs were
identified and reported timely. DEQ did not inspect sources as frequently as required by EPA
guidance which states that all major sources shall be inspected annually and all potential major
sources shall be inspected biennially. In addition, reports of inspections were not prepared
timely in accordance with DEQ's guidance. As a result, there is increased risk that significant air
pollution violations will not be identified and resolved within a reasonable period of time, which
can adversely impact human health and the environment. These conditions occurred because the
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Region had not required DEQ to meet EPA's Inspection Frequency Guidance, and DEQ's
guidance for timely finalization of inspection reports was not adequately communicated to DEQ
inspectors.
Reviews Of Source Emissions Reports Were Not Timely
DEQ did not review source emissions reports timely, resulting in a significant backlog of
emissions reports that were pending review. These reports are required by permits and consent
orders and provide important emissions information that should be reviewed timely to determine
source compliance with applicable emission limits. A lack of review can lead to violations going
undetected for long periods of time and enforcement action not being taken timely. This
condition occurred because DEQ did not provide sufficient resources needed to eliminate this
backlog.
Significant Violator List Inaccurate
The Region did not ensure that data reported on the SV lists for the State was accurate and
complete. A review of 37 sources reported on SV lists for DEQ disclosed inaccurate data for
half of those sources. EPA uses the SV list as an oversight tool to ensure that SVs are addressed
and resolved timely and appropriately. EPA's guidance provides definitions of an SV and
criteria for the various action dates reported on the SV list. Inaccurate SV reporting hinders the
Region's ability to monitor the timeliness and appropriateness of enforcement actions and
resolution of SVs. This condition occurred because the Region did not establish adequate
procedures to ensure that the data reported on the SV lists conformed to the reporting criteria
specified by EPA's guidance.
Insufficient Oversight By The Region
The Region did not perform sufficient oversight of the State's air enforcement program. This
contributed to the weaknesses in the State's enforcement program which did not meet Clean Air
Act requirements. Specifically, the Region did not: (i) establish criteria for assessing the State's
enforcement program; (ii) perform any program reviews of DEQ's air enforcement program after
April 1993; (iii) use its enforcement authority effectively when the State was either unable or
unwilling to pursue timely and appropriate enforcement action in response to violations; or
(iv) report the weaknesses in the State's enforcement program as management control
deficiencies to the EPA Administrator as required by the Federal Mangers Financial Integrity
Act.
The Region attributed the conditions to three main causes: (i) a loss of positions and experienced
staff because of two recent reorganizations; (ii) difficulty in determining the level of oversight to
provide because the states have requested more autonomy and flexibility under performance
partnership agreements; and (iii) a lack of clear criteria defining oversight under performance
partnership agreements.
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RECOMMENDATIONS
Principal recommendations to the Regional Administrator are to:
• Require DEQ to develop and implement enforcement policies and procedures which are
consistent with EPA enforcement guidance.
• Ensure major and potential major source inspection coverage is in accordance with EPA's
Inspection Frequency Guidance.
• Implement procedures that ensure SV data is accurately reported on the Region's SV
lists.
• Revise the Compliance Assurance Agreement with DEQ to include EPA enforcement
guidance as criteria for assessment of the State's stationary air enforcement program.
• Conduct, at least annually, evaluations of the State's air enforcement program for SVs for
consistency with EPA guidance.
• Report the weaknesses in the administration and oversight of the stationary source air
enforcement program for SVs in the State as a management control deficiency in the next
FMFIA assurance letter to the EPA Administrator.
• Withhold final approval of the State's Title V operating permit program until the State
establishes procedures for enforcement which are consistent with EPA's enforcement
guidance.
• Assume responsibility for enforcement of the stationary source air program if the State is
unable or unwilling to implement an enforcement program consistent with EPA guidance
and the Clean Air Act.
Auditee Comments and OIG Evaluation
A draft report was provided to the Region and DEQ on July 31, 1998 for their comments. Both
the Region and DEQ responded to the draft report on August 31, 1998 and their responses are
included as APPENDIX C to this report. The Region concurred with the recommendations and
described corrective actions that have been taken or will be taken. It also commented that it has
already taken a number of actions to begin addressing some of the major findings reported.
These actions included frank and open discussions at the highest levels of management in both
agencies to jointly work through the steps to improve DEQ's air enforcement program.
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DEQ did not concur with the findings and recommendations. It stated that its programs have
performed according to established agreements and in a manner protective of public health and
the environment at all times. It commented that the report inappropriately emphasized
differences in DEQ's administration and implementation of its program compared to a
preestablished set of national criteria that DEQ had never agreed to strictly comply with. In
addition, DEQ stated that strict adherence to national policy as opposed to the operating
principles DEQ agreed to operate its program under in no way points to poor performance or
ineffectiveness in meeting its goals.
The corrective actions taken or planned by the Region will significantly improve the stationary
source air enforcement program in Idaho. We agree with those actions. In regard to DEQ's
response, we believe the conditions described in this report clearly demonstrate a need for major
improvements. DEQ's enforcement actions were not consistent with EPA enforcement guidance
and often were insufficient to bring SVs into compliance with federally enforceable air
regulations and the Rules and Regulations for the Control of Air Pollution in Idaho. While the
Compliance Assurance Agreement between the Region and DEQ did not specifically require
DEQ to follow EPA enforcement guidance, it did state that it is DEQ's goal to build an adequate
and balanced compliance program which will result in enforcement processing consistent with
EPA's SV guidance.
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vi Report No. 8100249
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TABLE OF CONTENTS
EXECUTIVE SUMMARY i
ABBREVIATIONS ix
CHAPTERS
1 -INTRODUCTION 1
PURPOSE 1
BACKGROUND 1
SCOPE AND METHODOLOGY 4
PRIOR AUDIT COVERAGE 5
2 LACK OF ENFORCEMENT AGAINST MANY STATIONARY
SOURCE SIGNIFICANT VIOLATORS 7
BACKGROUND 8
ENFORCEMENT ACTIONS NEITHER MADE NOR ESCALATED 10
DEQ FOCUSED ON COMPLIANCE ASSISTANCE 13
MINIMAL PENALTIES 15
DEQ'S PENALTY POLICY INCONSISTENT WITH EPA'S
PENALTY POLICY AND THE STATE'S EPHA 16
UNTIMELY ENFORCEMENT ACTIONS 17
CONCLUSION 19
RECOMMENDATION 19
REGION COMMENTS AND OIG EVALUATION 20
3 - INSUFFICIENT INSPECTIONS 21
BACKGROUND 21
INADEQUATE INSPECTION COVERAGE 22
INSPECTION REPORTS NOT TIMELY 23
VIOLATIONS NOT IDENTIFIED AND RESOLVED TIMELY 23
DEQ NOT REQUIRED TO MEET EPA'S INSPECTION GUIDANCE 24
GUIDANCE RECENTLY FINALIZED 25
RECOMMENDATIONS 25
REGION COMMENTS AND OIG EVALUATION 26
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4 - REVIEWS OF SOURCE EMISSIONS REPORTS WERE NOT TIMELY 27
BACKGROUND 27
BACKLOG OF EMISSIONS REPORTS 27
RECOMMENDATION 30
REGION COMMENTS AND OIG EVALUATION 30
5 - SIGNIFICANT VIOLATOR LIST INACCURATE 31
BACKGROUND 31
DATA NOT ACCURATE OR COMPLETE 31
RECOMMENDATIONS . 33
REGION COMMENTS AND OIG EVALUATION .33
6 - INSUFFICIENT OVERSIGHT BY THE REGION 35
BACKGROUND 36
ENFORCEMENT CRITERIA NOT ESTABLISHED . 37
PROGRAM REVIEWS NOT PERFORMED 38
REGIONAL ENFORCEMENT AUTHORITY NOT USED EFFECTIVELY 38
FAILURE TO REPORT DEFICIENCY IN MANAGEMENT CONTROLS 39
REGION ACKNOWLEDGES ADDITIONAL OVERSIGHT NEEDED 39
COMPLIANCE ASSURANCE AGREEMENT TO BE REVISED 40
PROGRAM EVALUATIONS UNDER DEVELOPMENT 41
REASONS ENFORCEMENT AUTHORITY NOT USED EFFECTIVELY 41
CONCLUSION 42
RECOMMENDATIONS 43
REGION COMMENTS AND OIG EVALUATION 44
EXHIBITS
1 - DEQ'S ADMINISTRATIVE ENFORCEMENT PROCESS 45
2 - IDAHO DEQ - LIST OF 24 SIGNIFICANT VIOLATORS AUDITED 47
3 EPA REGION 10 - LIST OF 10 SIGNIFICANT VIOLATORS AUDITED 49
APPENDICES
A - AUDIT SCOPE AND METHODOLOGY 51
B - OTHER MATTERS 55
C - AUDITEES' RESPONSE TO DRAFT REPORT 59
D - REPORT DISTRIBUTION 69
viii Report No. 8100249
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ABBREVIATIONS
AFS
CAA
CAR
GEMS
CFR
DEQ
EO
EPA
EPHA
FMFIA
NOV
OECA
OIG
PTC
SIP
SV
EPA's Aerometric Information Retrieval System Facility Subsystem
Clean Air Act, as amended in 1990
Compliance Action Referral
Continuous Emissions Monitoring Systems
Code of Federal Regulations
Idaho's Division of Environmental Quality
Ethylene Oxide
Environmental Protection Agency
Idaho Environmental Protection and Health Act
Federal Managers' Financial Integrity Act
Notice of Violation
EPA's Office of Enforcement and Compliance Assurance
Office of Inspector General
Permit to Construct
State Implementation Plan
Significant Violator
IX
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X Report No. 8100249
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CHAPTER 1
INTRODUCTION
PURPOSE
BACKGROUND
The overall purpose of the audit was to evaluate the effectiveness
of the State of Idaho's administration and EPA Region 10's
oversight of the stationary source air enforcement program. The
specific objectives were to evaluate whether Idaho's:
• Enforcement actions were appropriate and penalties were of
sufficient magnitude to have a credible deterrent effect on
major air pollution sources;
• Enforcement activities resulted in timely return of sources
to compliance; and
• Inspection procedures ensure that all significant air
pollution violations were identified.
The Clean Air Act (CAA), as amended in 1990, gives EPA
authority to set and enforce national standards to protect human
health and the environment from emissions that pollute the air.
The CAA assigns primary responsibility to the states for ensuring
adequate air quality. EPA is responsible for issuing regulations to
implement the CAA.
The CAA requires EPA to identify and set national standards for
air pollutants which might endanger public health. EPA has set
national standards for six criteria pollutants: (i) ozone; (ii) carbon
monoxide; (iii) sulfur dioxide; (iv) nitrogen dioxide; (v) lead; and
(vi) particulate matter. The standards specify acceptable air
pollution concentrations for a geographic area, and the states must
take action to ensure facilities meet these standards. Geographic
areas which persistently exceed the national standards may be
designated "nonattainment" areas. Idaho has five nonattainment
areas: Sandpoint, Pinehurst, northern Ada County, and a portion of
Power and Bannock counties.
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Authority for
Idaho's Air
Enforcement
Program
The Region's enforcement principles and expectations are outlined
in the Region's Enforcement and Compliance Strategy (Working
Draft for fiscal 1997) and the EPA Strategic Plan (September
1997). According to EPA strategy, one of the purposes of the
Agency is to ensure that federal laws protecting human health and
the environment are enforced fairly and effectively. Traditional
enforcement is one of the most powerful and effective tools EPA
has to ensure the protection of human health and the environment.
The public expects EPA to ensure that minimum federal
environmental standards are maintained across State boundaries, to
prevent the development of pollution havens, and to take
appropriate enforcement action. EPA works to help the regulated
community understand and fully comply with environmental
requirements, punish violators and deter future violations, and
level the economic playing field for law-abiding companies. EPA
requires penalty assessments to include gravity and economic
benefit components to establish a deterrence to noncompliance.
Accomplishment of EPA's environmental goals depends on a
strong enforcement and compliance assurance program, with active
involvement of State partners to encourage appropriate behavior by
the regulated community.
EPA's Timely and Appropriate Enforcement Response to
Significant Air Pollution Violators provides guidance for EPA and
State enforcement of significant air pollution violators. An SV is
any "major" (as defined by the CAA) or "synthetic minor"1
stationary source of air pollution which is in violation of a
federally enforceable regulation. The guidance establishes time
frames for identifying, addressing, and resolving SVs. EPA has a
program to track and report on SVs in its national database known
as the Aerometric Information Retrieval System Facility
Subsystem (AFS).
The Region granted authority to the State for implementation and
enforcement of the stationary source air program through approval
of the State Implementation Plan (SIP) for the Control of Air
Pollution in Idaho. The plan was approved by EPA during 1974
and has been periodically revised in response to federal
requirements and State and local needs. The Rules and
Regulations for the Control of Air Pollution in Idaho establish air
1. Synthetic minor sources are sources whose potential emissions have been restricted to below major source
emissions thresholds through accepting voluntary emission limits in their construction or operating permits.
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DEQ's
Organizational
Structure
quality rules that must be followed by sources located in the State.
Most of these rules have been incorporated into the SIP, and as a
result, are federally enforceable.
The fiscal 1993 Compliance Assurance Agreement for Air between
the Region and DEQ defines the respective roles and
responsibilities of the two agencies for the air pollution control
program. This agreement covers areas such as inspections,
enforcement, and recording compliance activity at facilities in
AFS. The agreement states that DEQ has primary responsibility
for enforcement of the Idaho Environmental Protection Health Act
and the Rules and Regulations for the Control of Air Pollution in
Idaho. Under the agreement EPA may take unilateral enforcement
action when it determines that DEQ has not taken timely or
appropriate action concerning a violation or alleged violation
which is federally enforceable.
DEQ takes the initial lead on SV enforcement cases which
represent violations of the State's air pollution rules. DEQ's goal
is to build an adequate and balanced program resulting in
enforcement processing consistent with EPA's timely and
appropriate guidance for SVs. EPA has authority to assume the
enforcement lead in cases when it becomes apparent that the State
is unable or unwilling to resolve a violation in a timely and
appropriate manner.
DEQ is the environmental protection unit under the Idaho
Department of Health and Welfare. DEQ's Air and Hazardous
Waste Division is responsible for administering permit and
compliance/enforcement programs for both air quality and
hazardous waste, and is comprised of four bureaus. The Air
Quality Permitting Bureau is responsible for the air quality
permitting program. The air quality section within the Compliance
Assurance Bureau is responsible for the air
compliance/enforcement program. Besides DEQ's central office,
air staff are located in six regional offices. The State of Idaho's
Office of the Attorney General provides legal counsel to
management and technical staff at DEQ and assists with formal
enforcement actions.
DEQ's Enforcement
Process and Tools
EXHIBIT 1 illustrates the administrative enforcement process used
by DEQ. DEQ identifies violations primarily through inspections.
It also identifies violations by reviewing self-monitoring emissions
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Status of Title V
Operating Permit
Program Delegation
SCOPE AND
METHODOLOGY
reports and investigating citizen complaints. Once a violation has
been identified, DEQ's procedures are to issue a warning letter
which notifies the source of the violation and requests a response
or corrective measures to be implemented within a given time
frame. If the source fails to cooperate or inadequately responds to
the warning letter, a Notice of Violation (NOV) may be issued. A
NOV is a formal document which assesses penalties for the
violations cited in the warning letter. After a NOV is issued, the
source has 15 days to contact DEQ to request and schedule a
compliance conference. The purpose of the compliance conference
is to discuss and negotiate terms and conditions of a voluntary
consent order which will result in resolution of the alleged
violations cited in the NOV.
Besides the administrative enforcement process described above,
DEQ can also use civil enforcement as necessary. Civil
enforcement is commenced through a referral to the State's Office
of the Attorney General. As an alternative to formal enforcement
actions, DEQ often uses compliance assistance tools, such as
permit modifications and technical assistance, to bring sources into
compliance with permits and with State and federal regulations.
Under Title V of the CAA, states are required to develop operating
permit programs that meet certain federal criteria. DEQ does not
yet have full approval by EPA for a Title V operating permit
program, although it does have interim approval. Under the
interim approval, DEQ has the authority to issue Title V operating
permits. During our audit period (October 1996 through December
1997) DEQ had not yet issued any Title V operating permits. As a
result, sources in Idaho generally operated under permits to
construct (PTC). 40 CFR Parts 70.4 and 70.10 require an adequate
inspection program and demonstration that the State can
adequately implement an enhanced compliance assurance program
prior to approving a Title V operating permit program.
We performed this audit in accordance with the Government
Auditing Standards (1994 Revision) issued by the Comptroller
General of the United States as they apply to performance audits.
Our review included tests of program records and other auditing
procedures we considered necessary for the purposes of expressing
an opinion based on our audit objectives. We also reviewed the
Federal Managers' Financial Integrity Act report for 1997. The
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report did not identify any material weaknesses, or vulnerabilities,
relating to the issues discussed in this report. See APPENDIX A
for scope and methodology details.
PRIOR AUDIT There have been no prior audits performed on the Region's
COVERAGE oversight or Idaho's administration of the stationary source air
enforcement program. However, on March 30, 1998, the EPA OIG
issued an audit report (Report No. E1KAF7-10-0015-8100094)
entitled Region 10's Oversight of Washington's Air Compliance
and Enforcement Program. The report concluded that the Region
could improve its oversight activities to ensure more accurate
reporting of S Vs by the local and State of Washington air pollution
agencies.
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CHAPTER 2
LACK OF ENFORCEMENT AGAINST MANY STATIONARY
SOURCE SIGNIFICANT VIOLATORS
DEQ did not have an effective enforcement program to ensure
compliance with federal and State laws and regulations, and to
prevent threats to public health and the environment. Enforcement
actions, including the use of penalties, were often insufficient to
bring significant violators into compliance with federally
enforceable air regulations and the Rules and Regulations for the
Control of Air Pollution in Idaho. We reviewed DEQ's
enforcement actions for 24 SVs (39 percent of the SVs that DEQ
had enforcement responsibility for during the 15-month period
ended December 31,1997) and concluded that:
• Enforcement actions were either not made or were not
escalated against 18 of the 24 SVs to deter them from
gaining an economic advantage as a result of their
violations. In many instances, the sources had a history of
repeated and continuous violations of permit conditions
that lasted for years.
• Of the few penalties that had been assessed, none included
amounts as penalties for the economic benefit gained from
noncompliance. Also, the three penalties that we reviewed
(98 percent of the dollar amount of penalty assessments
during the 15-month period) were significantly lower than
the amounts under the guidelines of EPA's Clean Air Act
Stationary Source Civil Penalty Policy.
• DEQ was not meeting EPA's Timely and Appropriate
Enforcement Response to Significant Air Pollution
Violators guidance for timely resolution of the violations.
Violations for 22 of the 24 SVs were either not addressed
or not resolved within 150 days of the SV designation.
There were 18 SVs that remained unaddressed for periods
from 175 days to 1,636 days.
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An adequate enforcement program had not been implemented in
the State because DEQ mainly focused on compliance assistance
rather than enforcement to bring sources back into compliance.
However, when compliance assistance failed to timely bring the
sources into compliance, appropriate enforcement actions were not
taken. Also, a contributing factor to DEQ's insufficient emphasis
on enforcement was the Compliance Assurance Agreement
between DEQ and the Region. This enforcement agreement did
not require DEQ to follow EPA enforcement guidance (see
Chapter 6 for additional comments on this issue).
DEQ's lack of enforcement, and small or no penalties, gave SVs a
financial incentive to continue polluting rather than bringing their
facilities into compliance.
BACKGROUND EPA's Compliance and Enforcement Manual (1986) provides for
essentially two enforcement options to bring continuous and repeat
violators into compliance and deter future violations. Escalating
the type of enforcement action is one option. Actions for
escalating enforcement include, in order of increasing significance:
(i) issuing notices of violation (NOV); (ii) entering into consent or
compliance orders; and (iii) obtaining court-ordered injunctions.
The second enforcement option is to escalate monetary penalties.
EPA's Timely and Appropriate Enforcement Response to
Significant Air Pollution Violators (the SV guidance) (1992)
requires that a NOV be issued within 45 days of designation as an
SV. Furthermore, if the violation cannot be resolved within 150
days of the SV designation, the SV guidance requires that the
violation be addressed within the 150-day period either through:
(i) a legally enforceable order; or (ii) a referral to the State attorney
general or Federal Department of Justice for an adjudicatory
enforcement hearing or judicial action.
According to the SV guidance, EPA's national goal with respect to
violations of the Clean Air Act is to have all federal, State, and
local enforcement actions assess penalties sufficient to achieve
effective deterrence, both for the actual subject of the enforcement
action and for the regulated community as a whole. Furthermore,
the guidance states that EPA expects that when SVs are resolved
agencies will obtain an appropriate penalty, including one to offset
the violator's economic gain.
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EPA's Clean Air Act Stationary Source Civil Penalty Policy
(EPA's Penalty Policy) (1991) requires penalty assessment
calculations to include gravity and economic benefit components
to establish a deterrence. The gravity of violation component
considers three factors in establishing a penalty amount: (i) actual
or possible harm; (ii) importance to the regulatory scheme; and
(iii) size of the violator. The gravity component is designed to
equalize violations so that equally serious violations are treated the
same way. The economic benefit of noncompliance component
includes both delayed and avoided costs. This element is intended
to prevent violators from benefitting economically from their
noncompliance so that they do not have an unfair advantage over
competitors who complied with environmental requirements.
EPA's Penalty Policy includes guidelines on acceptable reasons for
mitigating penalties during settlement negotiations with the
violator. It suggests appropriate limits on reductions during these
negotiations. The gravity amount may be mitigated by up to 30
percent if criteria specified by the guidance are met by the violator.
Generally, the economic benefit component may not be mitigated.
The Region entered into a Compliance Assurance Agreement for
Air with DEQ during fiscal 1993 which establishes roles and
responsibilities of each of the parties for administration of the
stationary air pollution control program in Idaho. The agreement
states that DEQ must address all violations of the Idaho
Environmental Protection Health Act and Rules and Regulations
for the Control of Air Pollution in Idaho. However, the agreement
does not require DEQ to follow EPA's enforcement guidance (i.e.,
EPA 's Compliance and Enforcement Manual, S V guidance, and
Penalty Policy). Instead, the agreement states that the Region
recognizes that DEQ does not currently have sufficient resources to
consistently process cases in accordance with EPA's SV guidance.
However, the agreement also states that it is DEQ's goal to build
an adequate and balanced compliance program which will result in
enforcement processing consistent with the EPA's SV guidance.
DEQ regulates air pollution stationary sources under the Idaho
Department of Health and Welfare Rules and Regulations, Title 1,
Chapter I, Rules and Regulations for the Control of Air Pollution
in Idaho. The Idaho Environmental Protection and Health Act
(EPHA) provides DEQ with the authority to assess civil penalties
against air pollution violators. The EPHA gives DEQ the authority
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ENFORCEMENT
ACTIONS
NEITHER MADE
NOR ESCALATED
to assess a civil penalty of $10,000 for each separate air violation
or $10,000 for each day of a continuing violation. The Act also
establishes a 2-year statute of limitations for the pursuit of air
pollution violations.
DEQ had enforcement responsibility for 62 SVs during the
15-month period ended December 1997. According to DEQ's
records, 18 of the SVs were brought back into compliance during
the 15-month period.
Enforcement actions were neither made nor escalated against 18 of
the 24 SVs reviewed to deter them from gaining an economic
advantage as a result of their violations and to ensure protection of
public health and the environment. Of the 18 SVs, enforcement
actions were not initiated against 5 violators, enforcement was not
escalated to penalty assessments for 12 violators, and penalty
assessments for 1 other SV were waived. In many instances, the
sources had a history of repeated and continuous violations of
permit conditions that lasted for years.
Furthermore, only 5 of the 24 SVs reviewed had been addressed or
resolved during the 15-month period ending December 1997. As a
result, we concluded that DEQ's enforcement activities had not
been effective in achieving and maintaining compliance.
EXHIBIT 2 summarizes the results of our evaluation of the 24
SVs2, and the following 7 examples illustrate the types of
violations where sufficient enforcement was not pursued by DEQ.
SV-5, a toxics storage and disposal facility. This stationary source
was designated as an SV in November 1994 for failure in 1993 to
obtain a PTC for a cement batch plant and screening operations. In
1996 this SV was out of compliance with the State's Title V
Operating Permit requirements because it had not submitted a Title
V Application for any of its emission points: cement plant;
screening operations; facilities containing hazardous wastes;
stabilization facility; and rail transfer facility. Although the source
had been in violation of Idaho's permitting requirements since
1993, no enforcement actions had been taken as of
2. For purposes of this report, we have identified SVs with a number in lieu of the violator's name because
enforcement actions might not have been completed and the information could be considered enforcement sensitive.
10
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December 1997.
SV-6, a manufacturing facility. This major stationary source was
designated an SV in July 1997. The 1997 violation resulting in the
SV designation was a repeat of a violation identified in 1995. As
of December 1997, enforcement actions were not escalated beyond
a warning letter even though the facility had repeatedly violated
emission limits specified by its PTC since 1995. These violations
included failing to conduct a performance test for particulate
matter emissions and exceeding, by six times, the particulate
matter emission limit. This source had a history of prior violations
and citizen complaints about its air emissions since the early
1980's.
SV-11, a mining and processing facility. This major stationary
source had a long history of air quality violations and was
identified as an SV in July 1996. DEQ made numerous attempts
through the administrative process to get this facility into
compliance, but those actions were not escalated enough to prevent
the owner from operating the plant and violating air quality
standards.
In a letter dated August 30, 1996, the current owner stated that
despite improvements that had been made, the facility was old and
would never be able to be brought into compliance. The owner,
however, stated that it had a compelling business requirement to
sustain production and stated that it would continue to
intermittently operate the facility until a new facility was in
operation.
In a August 25, 1997 memorandum to the Special Assistant to the
Governor, DEQ stated that it had been unsuccessful in achieving
resolution of both past and ongoing violations by SV-11 and that
the case was referred to the Office of the Attorney General for
commencement of civil action. It stated that the owner continued
to operate the mill knowingly and willfully violating Idaho's air
quality rules and the terms of a consent order.
That same day, the Office of the Attorney General wrote a letter to
the SV stating that based upon conversations with the owner:
(i) the mill could not be operated in conformance with either the
consent order or the Rules and Regulations for the Control of Air
11 Report No. 8100249
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Pollution in Idaho and; (ii) the owner agreed to cease operations of
the mill until it could demonstrate that the mill can be operated in
conformance with requirements. The letter also advised that as a
good faith gesture, and to encourage compliance, the DEQ was
conditionally returning a check from the SV in the amount of
$3,250. The check was tendered as a partial payment for numerous
penalties incurred for violations of the consent order. In addition
to returning the $3,250, other penalties in 1996 and 1997 ($3,250)
had not been paid as of December 1997.
As a result, the owner achieved the economic benefit of
intermittently operating the mill while avoiding any financial
penalty for violating air quality standards over a period of about
1 !/2 years. In October 1997 the facility failed performance tests
because it still could not operate in compliance with requirements.
An additional test was planned in 1998.
SV-17, a sawmill. This synthetic minor stationary source was
designated as an SV in June 1996 for exceeding the visible
emission limit and noncompliance with construction notification
requirements of the facility's PTC. DEQ issued warning letters for
this violation and subsequent violations during a 1 !/2-year period,
but it did not escalate its enforcement actions to bring the facility
into compliance. Instead, DEQ brought the facility into
compliance during February 1998 by establishing less stringent
emission limits through a modification of the facility's PTC.
SV-20. a State facility. This major stationary source was
designated as an SV in July 1995 for boiler emissions that
exceeded Idaho's 20 percent visible emissions limit. At the time of
this violation, the SV was under its second consent order. The first
consent order was established in December 1986 to address the
facility's failure to obtain a PTC for a boiler and the second order
was established in March 1995 to address a 2-year history of
emissions violations. Although the facility continued to exceed
emission limits established under the second consent order in 1995
and 1996, DEQ did not assess any penalties. Instead, DEQ issued
a warning letter and established a third consent order in November
1996. Subsequent data reports from the source showed periodic
excess emissions, but DEQ had not made an evaluation to
determine whether those emissions were violations of the third
consent order.
12 Report No. 8100249
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DEQ FOCUSED
ON COMPLIANCE
ASSISTANCE
SV-21, a portable rock crusher plant. This synthetic minor source
was designated as an SV in October 1995 for exceeding visible
emissions limits established by the plant's PTC. Although the
source was found to have similar significant PTC violations in
subsequent years, DEQ did not escalate enforcement actions
beyond warning letters. As of December 1997, the plant was still
out of compliance.
SV-24. a manufacturing facility. This synthetic minor stationary
source was identified as an SV in September 1996 for failing to
comply with several requirements of a January 1995 PTC,
including a requirement to conduct a source test on an acid
scrubber. DEQ did not proceed with an enforcement action in
response to the violations. Instead, it issued an operating permit in
March 1997 which superseded the PTC and eliminated the
requirement to conduct the source test.
The main reason for DEQ's lack of enforcement was that the
Division had implemented an air pollution prevention program that
focused on compliance assistance rather than enforcement to bring
sources back into compliance. A contributing factor to DEQ's
insufficient emphasis on enforcement was the Compliance
Assurance Agreement with the Region. This enforcement
agreement did not require DEQ to follow EPA's Compliance and
Enforcement Manual, SV guidance, and Penalty Policy. In its
comments to our position papers3, DEQ stated:
... DEQ by virtue of its Compliant Assurance
Agreement entered into with EPA in 1993,
maintains that the terms of the agreement describe
the efforts that will be taken to ensure compliance.
The fact the DEQ has complied with those terms
and USEPA has not sought revision of the
agreement since it was drafted, would tend to
support an argument that DEQ's program is, and
has been, acceptable to EPA.
3. Position papers which described our tentative findings and recommendations were issued to DEQ and the
Region during June 1998. DEQ and the Region were requested to provide written comments on the accuracy and
fairness of our findings. We received comments from both DEQ and the Region.
13
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DEQ views enforcement as a last resort to be used only when other
avenues, such as compliance assistance and maximum flexibility in
regulatory and permit interpretation, have been exhausted. For
example, in a written response to an inquiry from a representative
in Idaho's State Legislature, dated January 1996, the DEQ
Administrator stated:
Although DEQ can impose penalties as indicated
above, we would put forth significant guidance and
additional energies to help sources avoid penalties.
Penalties and fines are imposed as a last resort in an
attempt to bring a source into complying with
Idaho's air rules when all other efforts have failed.
As part of its compliance assistance focus, DEQ escalated
enforcement actions beyond a warning letter only for cases that
were perceived by the Division to be recalcitrant, egregious, and
harmful to the environment. Furthermore, in some instances DEQ
avoided initiating or escalating enforcement actions for PTC
compliance violations by issuing permit modifications that
provided less restrictive compliance requirements and increased
emission limits.
In response to our position papers, DEQ also stated:
... DEQ's investment into compliance assistance
was made with Region X's knowledge and has been
considered to be following the lead set by EPA, and
as being consistent with what is being similarly
adopted by state regulatory agencies all across the
country.
We agree that compliance assistance can be an effective tool for
educating sources on air pollution requirements and promoting
compliance. However, DEQ's approach to enforcement of air
pollution requirements is not consistent with EPA guidance.
Although EPA's Operating Principles for an Integrated EPA
Enforcement and Compliance Assurance Program (1996)
recognizes compliance assistance, the operating principles state:
14 Report No. 8100249
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Compliance assistance is not a substitute for the
regulated industries' responsibility to learn and
comply with laws and regulations. It complements
but does not replace appropriate enforcement.
DEQ's focus on compliance assistance has not been effective in
bringing SVs back into compliance. As discussed earlier, only 5 of
24 SVs reviewed were either addressed or resolved during the
15-month period ended December 1997. Many of those SVs were
out of compliance for extended periods. Allowing SVs to remain
out of compliance for extended periods could adversely affect
public health and the environment.
MINIMAL DEQ's penalty assessments did not provide a deterrence to
PENALTIES noncompliance with the Rules and Regulations for the Control of
Air Pollution in Idaho. DEQ assessed penalties against four SVs
during the 15-month period covered by our review. None included
amounts as penalties for the economic benefit gained from
noncompliance.
We reviewed the penalties for three of the four SVs (98 percent of
the dollar amount of penalty assessments during the 15-month
period) and found that the penalties were significantly lower than
the amounts under the guidelines of EPA's Clean Air Act
Stationary Source Civil Penalty Policy. The three penalty cases we
reviewed are discussed below.
SV-2 and SV-3, portable rock crushing plants. Two of the cases
where penalties were assessed were SV-2 and SV-3, which were
designated as SVs in August 1996 for being out of compliance
with their PTCs. DEQ assessed penalties totaling $89,400 for the
gravity portion of the violations which was about 57 percent of the
$158,000 in penalties that could have been assessed under EPA's
Penalty Policy.
As of the end of 1997, DEQ was pursuing settlement negotiations
with the SVs and proposing to reduce the penalties to less than
$15,000. At this time, the SVs had been out of compliance for
almost 500 days. Under EPA's Penalty Policy, penalties may be
reduced under certain circumstances such as the subject's degree of
cooperation. The policy also requires that the justification for
penalty reductions be adequately documented. DEQ's penalty
15 Report No. 8100249
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DEQ'S PENALTY
POLICY
INCONSISTENT
WITH EPA'S
PENALTY POLICY
AND THE STATE'S
EPHA
reductions were not based on EPA's Penalty Policy and the
justification for the proposed reductions was not documented.
SV-7. a sawmill. This major stationary source was designated as
an SV during September 1996 for failing to submit a Title V
operating permit application to DEQ. DEQ issued a NOV during
January 1997 which assessed a penalty of $10,000 for the gravity
portion of the violation which was less than one-third of the
$32,000 that could have been assessed under EPA's Penalty
Policy.
DEQ settled the enforcement action in April 1997, with the SV
agreeing to pay a $250 penalty. According to the DEQ, the penalty
was mitigated because the SV: (i) submitted its permit application
to DEQ in February 1997; (ii) claimed that it could not afford the
$10,000 penalty; and (iii) offered to pay a $250 penalty. With
respect to the significant reduction in the penalty due to the
company's claim of financial hardship, DEQ did not evaluate the
company's ability to pay.
There were two major causes to DEQ's low penalty amounts.
First, the Compliance Assurance Agreement between the Region
and DEQ did not require the State to have a penalty policy which
was consistent with EPA's Penalty Policy.
Specifically, DEQ's policy establishes a gravity component which
is significantly below EPA's Penalty Policy and does not include
an economic benefit component. Furthermore, DEQ's policy does
not establish sufficient guidelines for reducing or increasing the
gravity component.
Second, DEQ's penalty policy is not consistent with the State's
EPHA. The EPHA grants DEQ the authority to assess a civil
penalty of $10,000 for each separate air violation or $10,000 for
each day of a continuing violation. DEQ's policy is inconsistent
because it authorizes the assessment of a civil penalty of $10,000
for each separate violation, but restricts penalties for continuing
violations to no more than $1,000 per day.
During the audit, a representative of the State's Office of the
Attorney General advised us that the State's statutes do not prevent
DEQ from establishing a policy to include an economic benefit
16
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UNTIMELY
ENFORCEMENT
ACTIONS
component in its penalties. Therefore, DEQ does have the
authority to include the economic benefit obtained from
noncompliance in penalty assessments.
In its comments to our position papers, DEQ stated:
... However, as policy, and because DEQ never
stated its intent to comply with federal policy, DEQ
assumed EPA found the state's penalty assessments
were acceptable.
In order to provide an effective deterrence to noncompliance, DEQ
needs to develop and implement a penalty policy that is consistent
with the Rules and Regulations for the Control of Air Pollution in
Idaho and EPA's Penalty Policy. This will require a penalty policy
that includes significant assessments for both the gravity of
violations and the economic benefit gained for noncompliance. As
discussed above, DEQ has the statutory authority to assess up to
$10,000 for each violation or $10,000 for each day of a continuing
violation. Therefore, DEQ has the legal authority to implement a
penalty policy which is consistent with EPA's Penalty Policy.
DEQ's penalty policy should also include specific criteria for
reducing or increasing the gravity component.
DEQ was not meeting EPA's SV guidance and often it was not
meeting its own time frames for resolution of the violations.
Violations for 224 of the 24 SVs were either not addressed or not
resolved within 150 days of the SV designation. There were 18
SVs that remained unaddressed for periods from 175 days to 1,636
days. In order to provide adequate protection to public health and
the environment, SVs need to be brought back into compliance as
soon as possible. Furthermore, Idaho's 2-year statute of limitations
necessitates that enforcement actions in response to significant
violations be pursued timely.
The following example illustrates the need for more timely
enforcement actions in response to significant violations.
4. Of the 24 SVs, one SV was resolved within the 150-day time frame specified by EPA guidance and one other SV
was less than 150 days old.
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DEQ Enforcement
Time Frames not
Consistent with EPA
Guidance
SV-19. a manufacturer. This synthetic minor stationary source
was designated as an SV in October 1996. In April 1997, almost 6
months later, DEQ issued a warning letter to the SV for those
violations. Although the SV did not respond to the letter, DEQ did
not escalate the enforcement action. Another inspection in
August 1997 found that the facility was still violating its PTC. As
of the end of December 1997, over 3 months later, enforcement
had not been escalated beyond a warning letter. Therefore, the
SV's violations have remained unresolved for approximately 14
months. This is well beyond the 150-day time frame goal
established by EPA's SV guidance.
A major cause for DEQ's untimely responses to SVs was that the
Compliance Assurance Agreement between the Region and DEQ
did not require the State to follow EPA's SV guidance. Therefore,
EPA had not established a requirement for DEQ to address or
resolve SVs within 150 days of designation as an SV.
Because DEQ was not required to follow EPA's SV guidance,
DEQ's Enforcement Procedures Manual established enforcement
time frames that significantly exceeded the SV guidance. The
manual established a time frame of up to 120 days from the initial
compliance review to initiate a warning letter or NOV and up to
another 200 days to address the violation through a consent order
or referral for a civil action.
We also found that DEQ had a policy in effect from 1996 to mid-
1997 which contributed to untimely enforcement actions. During
this approximate 1-year period, DEQ had a policy which required
the inspectors in its Compliance Assurance Bureau to refer draft
inspection reports to its Permitting Bureau for compliance
determinations. When an inspection revealed potential permit
violations, the compliance status would be considered "pending"
until the Permitting Bureau determined whether, in fact, there were
actual permit violations. According to Compliance Assurance
Bureau staff, the Permitting Bureau's compliance determinations
often were not necessary and slowed down the enforcement
process. Therefore, this policy resulted in delayed enforcement
actions against sources who violated permitting requirements.
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CONCLUSION
RECOMMENDATION
The State of Idaho has not brought S Vs into compliance in a timely
manner, resulting in increased threats to public health and the
environment. Our review of 24 SVs showed that only 1 of the
violating facilities had been either addressed or resolved within the
150-day time frame specified by EPA guidance as of the end of
1997. In fact, DEQ allowed many of the SVs to continue to violate
permit conditions and the Rules and Regulations for the Control of
Air Pollution in Idaho for years without initiating enforcement
actions or penalties. A lack of adequate enforcement and small or
no penalties gave SVs a financial incentive to continue polluting
rather than bringing their facilities into compliance. Furthermore,
insufficient enforcement responses to SVs may result in DEQ's
inability to pursue penalties for the violations because of Idaho's 2-
year statute of limitations.
In its comments to our position papers DEQ stated:
... Our resources have continually been assigned to
doing whatever is necessary to protect public health
and the environment according to the provisions of
state law.... DEQ does not necessarily agree that
adding staff strictly to achieve the requirements
within federal policy is a sound approach to the
perceived problems brought to light in the audit.
Federal policy of the type being argued herein is
presently being challenged by many states at the
national level.
In our opinion, DEQ's focus on compliance assistance in lieu of
enforcement has not been effective in achieving and maintaining
compliance with Idaho's air pollution requirements. DEQ needs to
implement an enforcement program that provides a deterrence and
eliminates any economic benefits gained from noncompliance.
recommend that the Regional Administrator:
2-1 . Require DEQ to develop and implement
enforcement policies and procedures which are
consistent with EPA's Compliance and
Enforcement Manual, Timely and Appropriate
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Enforcement Response to Significant Violators, and
Clean Air Act Stationary Source Civil Penalty Policy.
REGION COMMENTS The Region concurred with the recommendation and described
AND OIG corrective actions that it planned to take in early fiscal 1999. The
EVALUATION Region commented that while it did not have unilateral authority to
require DEQ to strictly and formally adhere to EPA enforcement
policies and procedures, it will expect future State performance and
outcomes to reflect EPA policies and procedures.
Furthermore, the Region stated that it will take whatever actions
are necessary, including carrying out independent inspections and
assuming responsibility for enforcement actions, should the State
fail to secure results in line with EPA expectations.
We consider the proposed corrective actions to be satisfactory.
20 Report No. 8100249
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CHAPTER 3
INSUFFICIENT INSPECTIONS
DEQ's inspection activity did not provide adequate coverage to
ensure that all SVs were identified and reported timely. DEQ did
not inspect sources as frequently as required by EPA guidance
which states that all major sources shall be inspected annually and
all potential major sources shall be inspected biennially. In
addition, reports of inspections were not prepared timely in
accordance with DEQ's guidance. As a result, there is increased
risk that significant air pollution violations will not be identified
and resolved within a reasonable period of time, which can
adversely impact human health and the environment. These
conditions occurred because the Region had not required DEQ to
meet EPA's Inspection Frequency Guidance, and DEQ's guidance
for timely finalization of inspection reports was not adequately
communicated to DEQ inspectors.
BACKGROUND The a^r Duality section within DEQ's Compliance Assurance
Bureau is responsible for oversight of facility compliance with
State rules and federal regulations and for enforcement of permit
compliance. DEQ assures compliance with air quality rules and
regulations primarily through routine inspections of facilities
which emit or have the potential to emit air pollutants. Inspections
provide credible evidence to determine whether a particular source
is operating in compliance with the CAA. EPA's Inspection
Frequency Guidance requires periodic onsite inspections (generally
once a year for major sources) to determine whether a source is
complying with emission limits and whether emission control
systems are working properly. Inspections provide an effective
mechanism for identifying SVs.
DEQ inspectors are located within DEQ's central office, as well as
within various regional offices throughout the State. Once the
inspection has been completed, the inspector is responsible for
writing the inspection report, which documents all visual
observations and information obtained during the inspection. The
21 Report No. 8100249
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primary purpose for the written inspection report is to document
the facility's compliance with permits and/or specific
environmental laws. The inspection report is used to support
noncompliance determinations which may result in a
recommendation for administrative, civil, or criminal enforcement
action. The inspection report is usually the first step of the
enforcement process; without it, enforcement cannot proceed.
INADEQUATE
INSPECTION
COVERAGE
Idaho's inspection activity did not provide adequate coverage to
ensure that all SVs were identified. Although it appears that DEQ
substantially met its annual inspection commitments to the Region,
it did not commit to an adequate number of inspections based on
its universe of sources and EPA's Inspection Frequency Guidance.
Not all major sources were inspected annually and not all potential
major sources5 were inspected biennially.
• Of the 120 major sources as of December 1997, only 47
(39 percent) were scheduled for inspection during 1997 and
43 (36 percent) were inspected during that year. Only 43
(36 percent) were scheduled for inspection during 1998.
• Of the 228 potential major sources as of December 1997,
only 58 (25 percent) were scheduled for inspection during
1997 and only 72 (32 percent) were inspected during either
1996 or 1997. Only 47 (21 percent) were scheduled for
inspection during 1998.
According to the Inspection Frequency Guidance contained in
EPA's Compliance Monitoring Strategy, generally all major
sources regulated under the CAA are to be inspected annually, and
all potential major sources regulated under the CAA are to be
inspected biennially.
The fiscal 1993 Compliance Assurance Agreement between the
Region and DEQ stipulates that in developing the annual
inspection schedule, DEQ begins with the entire universe of
sources and lists those which must be inspected during the coming
5. Potential major sources are sources with potential uncontrolled emissions of a criteria pollutant or pollutants
that exceed the major source threshold. These sources have emissions that are below the major source threshold
when operating under physical or operational limitations on their emissions capacities.
22
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INSPECTION
REPORTS NOT
TIMELY
VIOLATIONS NOT
IDENTIFIED AND
RESOLVED
TIMELY
year. If a source is not scheduled for inspection, justification for
the omission shall be provided to EPA. By November 1 of each
year, the Region and DEQ will negotiate a final inspection
schedule.
Reports of inspections were not prepared timely. From our sample
of 25 inspections performed during our audit period
(October 1, 1996 through December 31, 1997), 15 inspection
reports (60 percent) were not finalized within 60 days. Of those 15
inspection reports, 10 were not finalized within 90 days. The
average number of days from the inspection to finalization of the
report for these 10 inspections was 205 days.
DEQ's Enforcement Procedures Manual requires: (i) inspectors to
complete inspection reports within 45 days from either the first day
of inspection, or from the date requested information is received;
and (ii) management review and finalization to not exceed 15 days.
Thus the norm for finalizing reports is 60 days. In extenuating
circumstances, the manual provides an extension of up to 30 days.
Inspections are an important tool for DEQ to detect violations.
Therefore, not inspecting sources as frequently as EPA's guidance
indicates increases the risk that significant air pollution violations
will not be identified and remain unresolved. Failure to complete
timely inspection reports can delay violation determinations and
associated enforcement processes. Delaying the enforcement
process may result in decreased opportunities for resolving the
violations and may increase the risk of exceeding the State's 2-year
statute of limitations.
Our sample of inspections consisted mostly of SVs. Timely
inspections of SVs is especially important because enforcement
action cannot be taken until the inspection report is completed.
The following is an example where DEQ did not inspect a major
source annually and did not complete an inspection report timely,
contributing to the source's continued noncompliance over several
years.
SV-4, a manufacturer. This major stationary source was
inspected on February 2,1994, revealing that the source
23
Report No.8100249
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was out of compliance with Rules and Regulations for the
Control of Air Pollution in Idaho because it had failed to
register with DEQ and pay registration fees. This source
also had a history of air emissions noncompliance since
1991.
DEQ sent the facility a letter on March 11, 1994 requesting
emission information for registration fee purposes. We
were unable to find any evidence at DEQ that the company
responded to DEQ's request.
The source was not inspected again until
September 4, 1997 and October 21, 1997. These
inspections were in response to a citizen's complaint
alleging the source was emitting a pollutant which was
accumulating on vehicles near the facility. These
inspections revealed a number of violations, including
excess opacity emissions and operating without PTCs for
four emission points. As a result, the source was
designated as an SV during October 1997.
The September and October inspection reports were not
finalized until January 1998, or over 80 days
(October 21, 1997 to January 13, 1998) after the last
inspection. This contributed directly to the delay in an
enforcement action until February 1998.
DEQ NOT
REQUIRED TO
MEET ERA'S
INSPECTION
GUIDANCE
Inadequate inspection coverage of air pollution sources in the State
occurred because the Region had not required DEQ to meet EPA's
Inspection Frequency Guidance. During fiscal 1992, DEQ
developed a modified inspection list because of a reduction in
inspection resources (DEQ had only three inspectors), and the
Region approved this strategy in August 1992. Although DEQ has
subsequently increased its inspection resources, the Region has not
reevaluated DEQ's inspection commitments since 1992. This is
because the Region has not performed any air program reviews at
the State since fiscal 1993.
Additionally, DEQ did not believe that it was always necessary or
efficient to inspect each major source annually and each potential
major source biennially. For example, DEQ noted that there were
some sources which were always in compliance. DEQ's approach
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GUIDANCE
RECENTLY
FINALIZED
RECOMMENDATIONS
to determining facilities for inspection was to ask each of its six
regional offices to come up with about 15 (major, potential major,
and minor) sources for inspection each year. The inspectors were
to consider factors such as compliance status and history, facility
size, and citizen complaints. This list was compiled and submitted
as the inspection schedule to the Region every year for approval.
This process did not ensure that all significant air pollution
violations were identified. Only 36 percent of major sources were
inspected during 1997 and 32 percent of potential major sources
were inspected during 1996 or 1997. Using only 15 sources for
each region as a baseline number for planning purposes was not
sufficient, based on Idaho's universe of sources and EPA's
Inspection Frequency Guidance.
Regarding timely finalization of inspection reports, DEQ staff
advised that the criteria stipulated in DEQ's Enforcement
Procedures Manual was not finalized and communicated to DEQ
inspectors until January 29, 1998. However, in its response to our
position papers, DEQ stated that this criteria was made available to
DEQ inspectors in draft form nearly 8 months prior to its
finalization. DEQ further stated that its files include a 1991 policy
memo regarding inspection report timeliness. In our opinion, this
timeliness criteria apparently was not adequately communicated to
staff and DEQ had not implemented adequate procedures to ensure
that these policies were consistently followed.
recommend that the Regional Administrator:
3-1 . Assess the level of inspection resources available to
DEQ and negotiate with DEQ to inspect major and
potential major sources in accordance with EPA's
Inspection Frequency Guidance. In the event it is
determined that DEQ cannot meet EPA's guidance,
the Region should assess DEQ's criteria for
selecting sources for inspection, including
determining that the criteria does, in fact, result in
the most high risk (for noncompliance) sources
being inspected annually.
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3-2. Supplement DEQ's inspection resources with
regional staff if DEQ is unable to meet EPA's
Inspection Frequency Guidance.
3-3. Ensure that DEQ implements adequate procedures
to ensure timely finalization of inspection reports.
REGION COMMENTS The Region concurred with the recommendations and stated that it
AND OIG planned to implement corrective actions during the fall of 1998.
EVALUATION We consider the proposed corrective actions to be satisfactory.
26 Report No. 8100249
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CHAPTER 4
REVIEWS OF SOURCE EMISSIONS REPORTS
WERE NOT TIMELY
DEQ did not review source emissions reports timely, resulting in a
significant backlog of emissions reports that were pending review.
These reports are required by permits and consent orders, and
provide important emissions information that should be reviewed
timely to determine source compliance with applicable emission
limits. A lack of review can lead to violations going undetected for
long periods of time and enforcement action not being taken
timely. This condition occurred because DEQ did not provide
sufficient resources for review of emissions reports needed to
eliminate this backlog.
BACKGROUND
BACKLOG OF
EMISSIONS
REPORTS
In addition to performing routine inspections of facilities, DEQ
also identifies violations through review of self-monitoring
emissions reports required by permits and consent orders. Source
and emissions testing is a compliance assurance activity which
directly measures emissions from a source. Two methods are stack
tests and continuous emissions monitoring systems (CEMS). DEQ
staff review test protocols and test reports, confer with facilities
concerning test conditions and procedures, witness tests, validate
emission monitoring data from stack test and CEMS reports, and
ultimately use this data to determine source compliance with
applicable emission limits. Violations discovered through these
compliance reviews can result in a recommendation for initiation
of an enforcement action against the violating facility.
DEQ had a significant backlog of unreviewed stack test and CEMS
reports for both major and minor sources. Of the total backlog,
about 42 percent were for major sources. As of April 1998:
• Ninety seven stack test reports out of 142 reports received
(68 percent) had not been reviewed. Of the backlogged
reports, 33 (34 percent) were received from 2 to 6 years
ago.
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Reports Required by
Permits and Consent
Orders
Violations Go
Undetected
• Eighteen CEMS reports out of 19 (95 percent) had not been
reviewed. Of the backlogged reports, 8 (44 percent) were
received over 2 years ago.
Stack tests and CEMS reports provide emissions information that
are essential parts of a compliance assurance program, and should
be reviewed timely. A stack test consists of sampling a source's
stacks to determine average levels of air pollutants. With CEMS,
instruments continuously measure the level of pollutants in the
exhaust gas. DEQ should validate emission monitoring data from
stack tests and CEMS reports, and use this data to determine
source compliance with applicable emission limits.
DEQ establishes stack test and CEMS requirements in PTCs,
consent orders, or operating permits6, in accordance with Rules and
Regulations for the Control of Air Pollution in Idaho.
DEQ cannot determine source compliance with applicable
emission limits when stack test and CEMS reports are not
reviewed. This lack of review can lead to violations going
undetected for long periods of time and enforcement action not
being taken timely. A number of the reports that had not been
reviewed were for facilities with a history of noncompliance and
which are currently on the SV list.
The following are examples where DEQ did not review timely
stack test reports which either identified significant emission limit
violations or were from facilities that had a history of violations:
• A processing plant7. This stationary source had PTCs
requiring stack tests for Ethylene Oxide (EO). The
company performed a stack test on April 29, 1997 and
DEQ received the test results on July 31,1997. DEQ did
not review the report until December 1997. The stack test
results revealed that the source: (i) failed to submit the test
report within 30 days of conducting the stack test;
(ii) significantly exceeded the average hourly EO emission
6. DEQ has issued operating permits to some synthetic minor sources.
7. Although this source was designated as an SV on EPA's SV list, the facility was not included in EXHIBIT 2
because our evaluation of DEQ's documentation identified that the facility was a minor source, and as a result, did
not meet EPA's SV definition. The serious violations by this minor source, however, illustrate a need for timely
reviews of reports from minor as well as major sources.
28
Report No. 8100249
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rate limit during the test; and (iii) exceeded the pounds of
EO per batch process input limit during the test.
Specifically, the PTC allowed an hourly EO emission rate
of 0.021 Ib/hr, and the recorded value in the test report was
0.49 Ib/hr (over 22 times higher than the permitted limit).
DEQ's review of the stack test in December 1997 was
precipitated by a citizen's complaint regarding particulate
matter settling on nearby homes, yards, and cars. Also in
December, a notice of intent to bring a civil suit against the
company was filed by a community located across a road
from the facility for violations related to this stack test, as
well as for other violations. The notice alleged that the
source's emission levels were outside the range of
acceptable risk, and that the residents and owners in the
community had endured property damage and health
problems related to the company's actions. The community
has also filed a notice of intent to bring a civil suit against
DEQ for failing to take enforcement action against the
source for the alleged violations.
• SV-13, a rock crushing operation. This stationary source
had significant "fugitive" emissions violations that were
discovered during inspections performed in 1994, 1995,
and 1996. The opacity ranged from 30 to 60 percent at a
number of different emission points, constituting violations
of both Idaho's Rules and Regulations for the Control of
Air Pollution in Idaho and the source's PTC. The SV
conducted two source tests and submitted the results to
DEQ in January 1997. Although this source had a
significant history of noncompliance and had been on the
SV list since August 1995, as of April 1998 DEQ still had
not formally reviewed these source tests to determine
compliance with emission limits.
Insufficient The significant backlog of unreviewed emissions reports occurred
Resources for because DEQ did not provide sufficient resources for review of
Review of Emissions emissions reports. During our audit period (October 1, 1996
Reports through December 31,1997) only one full-time position was
provided for reviews of stack test and CEMS data and reports,
approvals of test protocols, and test observations to determine
compliance with applicable emission limits. In its response to our
29 Report No. 8100249
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position papers, DEQ stated that it has received legislative
approval to add an additional full-time position to assist with this
workload.
RECOMMENDATION We recommend that the Regional Administrator:
4-1. Ensure that DEQ performs its reviews of stack test
and CEMS reports timely.
REGION COMMENTS The Region concurred with the recommendation and stated that it
AND OIG wiU make the objective of the recommendation a priority during
EVALUATION the renegotiation of the Compliance Assurance Agreement in early
fiscal 1999. We consider the proposed corrective action to be
satisfactory.
30 Report No. 8100249
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CHAPTER 5
SIGNIFICANT VIOLATOR LIST INACCURATE
BACKGROUND
DATA NOT
ACCURATE OR
COMPLETE
The Region did not ensure that data reported on the SV lists for the
State were accurate and complete. A review of 37 sources reported
on SV lists for DEQ disclosed inaccurate data for half of those
sources. EPA uses the SV list as an oversight tool to ensure that
SVs are addressed and resolved timely and appropriately. EPA's
SV guidance provides definitions of an SV and criteria for the
various action dates reported on the SV list. Inaccurate SV
reporting hinders the Region's ability to monitor the timeliness and
appropriateness of enforcement actions and resolution of SVs.
This condition occurred because the Region did not establish
adequate procedures to ensure that the data reported on the SV lists
conformed to the reporting criteria specified by EPA's SV
guidance.
EPA reports and tracks SVs in its national database known as the
Aerometric Information Retrieval System Facility Subsystem
(AFS). AFS is used to track emissions and compliance data from
air pollution sources. Based on monthly SV conference calls with
DEQ air compliance management and staff, the Region inputs
information regarding SVs into AFS. The Region uses the
resulting SV lists as an oversight tool to monitor the SVs to ensure
that enforcement actions taken by DEQ are appropriate and result
in timely resolution of SVs.
The SV lists during our audit period (October 1, 1996 through
December 31,1997) were not accurate and complete. A review of
37 sources reported on the SV lists disclosed that data for 20
(54 percent) was not reported accurately. The lists included 24
errors in the data reported for these 20 sources.
• Three sources were reported on the SV lists with violations
that did not meet EPA's SV definition;
31
Report No. 8100249
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Important Oversight
Tool
No Assurance of
Timely and
Appropriate
Enforcement
• Nine sources were erroneously reported on the SV lists as
addressed and/or resolved when they had not been
addressed and/or resolved;
• Seven sources were reported on the SV lists with erroneous
"SV Day O"8 dates;
• Two sources were inappropriately dropped from the SV
lists without being resolved;
• Two sources had an additional SV that was not reported;
and
• One source was not reported as resolved when, in fact, it
was resolved.
EPA reports and tracks SVs to assist in ensuring that the violations
are addressed and resolved timely and appropriately. EPA's SV
guidance provides the definition of an S V and also provides
criteria for the dates reported on the SV list: (i) SV Day 0;
(ii) addressed date; and (iii) resolved date. This guidance defines
an SV as any "major" (as defined by the Clean Air Act) stationary
source of air pollution which is violating a federally enforceable
regulation. States are required to report SVs to EPA within 1
month of discovery of the violation (SV Day 0). An SV is
appropriately addressed when: (i) a legally enforceable and
expeditious administrative or judicial order is issued; or (ii) the
violation is subject to a referral to the State attorney general or
Federal Department of Justice. An SV is resolved when the source
is returned to compliance.
The Region and DEQ cannot effectively use SV lists to monitor the
timeliness and appropriateness of enforcement actions and
resolution of SVs because the data is inaccurate. Consequently,
the Region cannot be assured that all SVs are addressed and
resolved timely and appropriately.
The Region had insufficient procedures to ensure the accuracy and
completeness of the SV list. The Region retains the ultimate
8. SV day zero represents the date the source is designated as an SV. Day zero starts the clock for measuring the
timeliness of enforcement activities. Generally, the day zero starts no later than 30 days after the discovering agency
first receives information concerning the violation.
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RECOMMENDATIONS
responsibility for determining whether a violator is an SV and for
updating the SV list based on monthly calls between the Region
and DEQ. The Region had not established adequate procedures to
ensure that: (i) violations added to the SV list met EPA's SV
definition; (ii) staff from both DEQ and the Region were aware of
and consistently used EPA's SV definition and criteria for the SV
Day 0, addressed, and resolved dates; and (iii) SVs are deleted
from the SV list only for appropriate reasons. Furthermore, DEQ
in its response to our position papers stated that it was not aware of
updated EPA SV guidance and had therefore not incorporated this
guidance into its current method of designating SVs.
We recommend that the Regional Administrator implement
procedures to ensure that:
5-1. Violations on the SV list meet EPA's SV definition.
5-2. Staff from both DEQ and the Region are aware of,
and consistently use, EPA's SV definition and
criteria for the SV Day 0, addressed, and resolved
dates.
5-3. SVs are deleted from the SV list for appropriate
reasons.
REGION COMMENTS
AND OIG
EVALUATION
The Region concurred with the recommendations and described
corrective actions that it is in the process of implementing. We
consider the proposed corrective actions to be satisfactory.
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34 Report No. 8100249
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CHAPTER 6
INSUFFICIENT OVERSIGHT BY THE REGION
The Region did not perform sufficient oversight of the State's air
enforcement program to ensure compliance with federal laws and
regulations, and to prevent threats to public health and the
environment. Specifically, the Region did not:
• Establish criteria for assessing the State's enforcement
program.
• Perform any program reviews of DEQ's air enforcement
program after April 1993.
• Use its enforcement authority effectively when the State
was either unable or unwilling to pursue timely and
appropriate enforcement action in response to violations.
• Report the weaknesses in the State's enforcement program
as management control deficiencies to the EPA
Administrator as required by the Federal Managers'
Financial Integrity Act (FMFIA).
The Region attributed the conditions to three main causes: (i) a
loss of positions and experienced staff because of two recent
reorganizations; (ii) difficulty in determining the level of oversight
to provide because the states have requested more autonomy and
flexibility under performance partnership agreements; and (iii) a
lack of clear criteria defining oversight under performance
partnership agreements.
This lack of regional oversight contributed to the State's
ineffective enforcement program which did not meet CAA
requirements. Under the State's enforcement program, SVs were
allowed to remain out of compliance for unreasonable periods of
time and were not assessed financial penalties or denied economic
benefits of noncompliance.
35 Report No. 8100249
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BACKGROUND EPA's Revised Policy Framework for State/EPA Enforcement
Agreements (1986) provides that while delegated states have
primary responsibility for compliance and enforcement actions,
EPA retains responsibility for ensuring fair and effective
enforcement of federal requirements, and a credible national
deterrence to noncompliance. The policy provides guidance for
negotiating and implementing enforcement agreements with the
states. The agreements are to include clear oversight criteria for
EPA to assess State compliance and enforcement program
performance. The policy also addresses how EPA should conduct
its oversight function to achieve the goal of building and
improving the State compliance and enforcement program and
overall national performance. Oversight procedures such as mid-
year reviews, periodic audits, and oversight inspections should be
used.
The fiscal 1993 Compliance Assurance Agreement for Air between
the Region and DEQ defines the respective roles and
responsibilities of EPA and DEQ for the stationary source air
pollution control program. The agreement requires DEQ to
address all violations of the Idaho Environmental Protection Health
Act and Rules and Regulations for the Control of Air Pollution in
Idaho, but does not require DEQ to follow EPA enforcement
guidance. The agreement also states that the Region and DEQ will
review the document annually, identify provisions requiring
change, and commit to negotiating new terms. The agreement has
not been updated since fiscal 1993.
EPA's SV guidance states the CAA vests responsibility for
enforcement of the law with EPA. The SV guidance also states
that EPA shall assume the enforcement lead when it becomes
apparent that the State is unable or unwilling to act in accordance
with the guidance to resolve a violation in a timely and appropriate
manner. The SV guidance requires states to address or resolve an
SV within 150 days of the SV designation. An SV is considered
addressed when the violator is on a legally enforceable
administrative or judicial order or subject to a referral to the State
attorney general for an adjudicatory enforcement action or judicial
hearing. An SV is considered resolved when the facility is
returned to compliance. The guidance provides EPA up to 100
additional days to address an SV after it assumes the lead from a
State.
36 Report No. 8100249
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ENFORCEMENT
CRITERIA NOT
ESTABLISHED
EPA's Penalty Policy requires penalty calculations to include
economic benefit and gravity components to establish a deterrence.
The Penalty Policy also establishes criteria for mitigating and
aggravating the gravity component in order to promote flexibility
while maintaining national consistency. The Penalty Policy states
that it is essential that each case file contain a complete description
of how the preliminary penalty was developed as well as the facts
and reasons for adjustments made to the preliminary deterrence
amount.
The FMFIA requires the Regional Administrator to annually make
a systemic assessment of regional management controls that
protect programs and resources from fraud, waste, and
mismanagement, and help control programs to achieve intended
outcomes. After the assessment is made, the Regional
Administrator is required to provide personal assurance that
management controls are reasonable to ensure protection of
programs, operations, and functions and to notify the EPA
Administrator of any deficiencies in management controls.
The Region did not establish specific enforcement criteria for
assessing the State's air enforcement program. The most recent
Compliance Assurance Agreement between the Region and DEQ
defines the respective roles and responsibilities of EPA and DEQ
for the stationary source air pollution control program. However,
the agreement does not require DEQ to follow EPA's Compliance
and Enforcement Manual, SV guidance, and Penalty Policy.
Instead, the agreement states:
It is recognized by EPA that DEQ currently does
not have sufficient resources to consistently process
cases in accordance with EPA Timely and
Appropriate Guidance. DEQ's goal is to build an
adequate and balanced compliance program which
will result in enforcement processing consistent
with the Timely and Appropriate guidelines.
Due to the absence of established enforcement criteria in the
agreement, the Region was not able to evaluate DEQ's progress
toward its stated goal of establishing an adequate enforcement
program.
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Report No.8100249
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PROGRAM
REVIEWS NOT
PERFORMED
REGIONAL
ENFORCEMENT
AUTHORITY NOT
USED
EFFECTIVELY
The Region did not perform any program reviews of DEQ's air
enforcement program after April 1993. During fiscal 1993, the
Region conducted a review of DEQ's air compliance and
permitting programs and identified a number of areas needing
improvement. The areas needing improvement included:
(i) timeliness of enforcement actions; (ii) foliowup of non-
responses to warning letters; (iii) frequency and sufficiency of
penalty assessments; and (iv) completeness of compliance
inspections and reports. Although the Region provided DEQ with
recommendations to correct the weaknesses, the Region had not
conducted any followup reviews during the subsequent 5 years.
In responding to the announcement of our audit, the Regional
Administrator advised:
Because Region 10 has not conducted an audit or
assessment of IDEQ's Air Program subsequent to
the FY 1993 agreement, we don't have adequate
information to determine IDEQ's ability to
consistently meet the timely and appropriate
guidance or its progress in that regard.
The Region did not use its enforcement authority effectively when
the State was either unable or unwilling to take timely and
appropriate enforcement actions. The Region assumed the
enforcement lead for only 10 SVs, even though DEQ reported
another 42 that had not been addressed for an average of 1 year.
Also, the Region did not address or resolve 8 of the 99 SVs that it
assumed responsibility for within thel00-day time frame specified
in EPA guidance. Examples of SVs not addressed or resolved
timely include:
• SV 25 and 34. These two SVs were not addressed or
resolved by the Region even though it had the enforcement
lead for 3 years and the violations were over 3 years old.
9. While the Region assumed the enforcement lead for 10 SVs, one was on hold pending completion of a criminal
investigation.
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Report No. 8100249
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• SV-33. The Region took 9 months to address the SV even
though the facility had a history of non-compliance dating
back to 1991.
• SV-28 through SV-32. It took the Region between 3 and
29 months after assuming the enforcement lead to refer the
cases to the EPA's Headquarters Office of Enforcement and
Compliance and Assurance (OECA). These five SVs had
not been addressed by EPA as of the end of 1997.
In addition, the Region did not sufficiently document its
justifications for mitigating penalties for the one SV (SV-26) that
was resolved during the 15-month period ended December 1997.
Consequently, we were unable to determine whether the Region's
actions were consistent with EPA's Clean Air Act Stationary
Source Civil Penalty Policy. The SV was resolved in February
1997 through an administrative complaint and consent order. The
administrative complaint proposed $206,480 in penalties.
However, the penalties were subsequently reduced to $39,000
through the dispute resolution process.
EXHIBIT 3 summarizes our evaluation of the 10 SVs.
FAILURE TO
REPORT
DEFICIENCY IN
MANAGEMENT
CONTROLS
For fiscal 1997, the Regional Administrator did not report the
Region's lack of oversight and DEQ's ineffective administration of
the air enforcement program as a management control deficiency
in the Region's annual FMFIA assurance letter to the EPA
Administrator. In our opinion, these weaknesses are material
deficiencies which should be reported in the Region's next annual
FMFIA assurance letter.
REGION
ACKNOWLEDGES
ADDITIONAL
OVERSIGHT
NEEDED
In discussing the weaknesses in oversight with managers in the
Region's Office of Air Quality, they acknowledged that additional
oversight was needed over Idaho's enforcement program. They
also stated that the office has provided some oversight over Idaho's
program through monthly SV conference calls with DEQ air
compliance management and staff. They cited three causes for the
lack of additional oversight:
39
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COMPLIANCE
ASSURANCE
AGREEMENT TO
BE REVISED
Two reorganizations within the office during the last 2
years resulted in the loss of some positions and senior staff
expertise in the Region's air program.
Performance partnership agreement negotiations with the
states have made it difficult for the Office of Air Quality, as
well as the other media programs within the Region, to
determine the level of oversight to provide. This is because
the states have requested more flexibility and autonomy
over their programs under the performance partnership
agreements.
EPA has not established clear criteria on what oversight
should consist of under performance partnership
agreements.
The Office of Air Quality has recognized the need to revise
Compliance Assurance Agreements for all four states in the region.
In response to our position papers, the Region stated:
In retrospect, we believe the Compliance Assurance
Agreement (CAA) has turned out not to be
particularly effective in terms of achieving federal
enforcement objectives, and we intend to negotiate
a new CAA which will bring about much more
consistency with EPA guidance.
The Office of Air Quality recently completed a revised agreement
with the State of Washington and is now working on revising the
State of Oregon's agreement. After the Oregon agreement is
revised, the office plans to work on revisions to Idaho's agreement.
According to the Office of Air Quality, the negotiations on
revisions to State Compliance Assurance Agreements are
extremely time consuming. The manager responsible for revising
Washington's agreement stated that it took about a year to
complete the agreement.
We agree that the Compliance Assurance Agreement with Idaho
needs to be revised. In order to ensure that an effective air
enforcement program is implemented in Idaho, the Region's
revisions to the Compliance Assurance Agreement need to include
specific criteria for evaluating the State's program. This criteria
40
Report No. 8100249
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should include EPA's Compliance and Enforcement Manual, SV
guidance, and Penalty Policy.
PROGRAM
EVALUATIONS
UNDER
DEVELOPMENT
REASONS
ENFORCEMENT
AUTHORITY NOT
USED
EFFECTIVELY
The Region agreed that periodic program reviews are needed as
part of its oversight responsibilities and is currently planning the
scope and methodology for future program reviews. Office of Air
Quality managers stated that regional management has recognized
the need to conduct reviews of the States' enforcement programs
for all media. As a result, both the Office of Air Quality and the
Region's Office of Enforcement and Compliance have been
developing detailed evaluation programs that will be used to
review the States' enforcement programs. In comments to our
position papers, the Region stated:
... we have been actively working with the state
through monthly compliance status calls to improve
program performance. We have long recognized
the need to improve our oversight of state
enforcement programs....To address the kind of
problem you have identified in Idaho, some months
ago, we and the states undertook an effort to
develop a framework for evaluating states'
compliance and enforcement programs. In
accordance with that framework, we will undertake
a number of program reviews in the months ahead.
With regard to the Idaho air program, we have
begun an enforcement initiative to take immediate
corrective action.
The Region's implementation of its framework and enforcement
initiative should improve its oversight over Idaho's air
enforcement program. In our opinion, the Region should evaluate
Idaho's air program at least annually.
The Office of Air Quality managers explained that staff turnover as
well as insufficient staffing for enforcement prevented the Region
from assuming the lead on additional SVs. The staff turnover and
staffing limitations also prevented the Office of Air Quality from
addressing in a more timely manner EPA lead SVs that were
assumed from Idaho. They also explained that OECA had not
41
Report No. 8100249
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been able to address the five SVs that had been referred by the
Region because of a shortage in technical and legal staff.
However, according to the managers, OECA recently obtained
additional resources and is now working on the cases.
According to Office of Regional Counsel Staff, the justification
for the reduction in proposed penalties from $206,480 to $39,000
was not sufficiently documented because of an oversight error.
The Region's comments about staffing constraints limiting its
ability to effectively take the enforcement lead for all SVs where
Idaho was either unwilling or unable to take sufficient enforcement
actions are noted. However, SVs represent violators which EPA
believes are environmentally most important. Therefore, the
Region needs to develop and implement a plan to ensure that EPA
enforcement actions taken in response to SVs are consistent with
EPA enforcement guidance.
CONCLUSION The lack of regional oversight of the State's stationary air
enforcement program and lack of effective use of its own
enforcement authority against SVs in the State has allowed SVs to
remain out of compliance for unreasonable periods of time. Such
noncompliance contributes to increased risks to public health and
the environment. In addition, SVs have not received financial
penalties or been denied the economic benefits of noncompliance.
As discussed in the other chapters of this report, DEQ's:
(i) enforcement actions were not appropriate and penalties were not
of sufficient magnitude to have a credible deterrent effect on major
air pollution sources; (ii) enforcement activities did not result in
timely return of sources to compliance; (iii) inspection procedures
did not ensure that all significant air pollution violations were
identified; (iv) emissions reports were not reviewed timely to
ensure that sources were in compliance with applicable emissions
limits; and (v) SV data was not reported accurately.
Title V of the CAA and implementing regulations (40 CFR
Part 70) provide authority for states to operate a permit program
for stationary air sources that meet certain federal criteria. The
purpose of the operating permits program is to improve
enforcement by issuing each major source (as defined by the Act) a
42 Report No. 8100249
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permit that consolidates all CAA requirements into a federally
enforceable document.
40 CFR Part 70 outlines the minimum requirements that states
must meet in their Title V operating permit programs. The
regulations define the minimum elements required by the Act for
State operating permits programs and corresponding standards and
procedures by which the EPA Administrator will approve, oversee,
and withdraw approval of the State programs. State programs that
"substantially" meet regulatory requirements may be granted
interim approval for up to 2 years. EPA granted an interim
approval of Idaho's program in January 1997. The approval
expires in January 1999. In order to obtain final approval, Idaho
must correct deficiencies in its program and submit the corrections
to EPA at least 6 months prior to expiration of the interim
approval.
According to 40 CFR Part 70, EPA may withdraw approval of a
State's Title V Program in whole or in part whenever the program
no longer is in compliance with the requirements of Title V and
the State fails to take corrective action. Criteria for withdrawal of
the program include: (i) failure to act on violations of permits or
other program requirements; (ii) failure to seek adequate
enforcement penalties and fines and collect all assessed penalties
and fines; and (iii) failure to inspect and monitor activities subject
to regulation.
In our opinion, the significant weaknesses in the State's air
enforcement program show that it has not implemented an
enforcement program that meets the requirements of Title V of the
Clean Air Act. Therefore, the Regional Administrator should
withhold final approval of the State's Title V Program if the State
is unable to correct the weaknesses by December 1998.
Furthermore, if the State is unable to implement an enforcement
program that is consistent with EPA guidance and the Clean Air
Act, the Regional Administrator needs to assume responsibility for
enforcement of the stationary source air program in the State.
RECOMMENDATIONS We recommend that the Regional Administrator:
6-1. Revise the Compliance Assurance Agreement with
DEQ to include EPA enforcement guidance as
43 Report No. 8100249
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criteria for assessment of the State's stationary air
enforcement program.
6-2. Conduct, at least annually, evaluations of the State's
air enforcement program for SVs for consistency
with EPA guidance.
6-3. Develop and implement a plan to ensure that EPA
enforcement actions taken in response to SVs are
consistent with EPA enforcement guidance. Also,
ensure that justifications for mitigated penalties
meet EPA Penalty Policy criteria and are adequately
documented.
6-4. Report the weaknesses in the State's stationary air
enforcement program for SVs as a management
control deficiency in the next annual FMFIA
assurance letter to the EPA Administrator.
6-5. Withhold final approval of the State's Title V
program until the State establishes policies and
procedures for enforcement which are consistent
with EPA's enforcement guidance. Specifically, the
Region should assess Idaho's Title V program
against the criteria for an approvable program under
40 CFR Part 70.
6-6. Assume responsibility for enforcement of the
stationary source air enforcement program in the
State for major and synthetic minor sources if the
State is unable to implement an enforcement
program that is consistent with EPA guidance and
the CAA.
REGION COMMENTS The Region concurred with the recommendations and described
AND OIG corrective actions that it planned to take during fiscal 1999. We
EVALUATION consider the proposed corrective actions to be satisfactory.
44 Report No. 8100249
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EXHIBIT1
DEQ's Administrative Enforcement Process
Inspection
Compliance
Non-compliance
Notification
Letter
Warning
Letter
(see Note below)
NOV
Civil Action
End
j
Reinspection
^_ J
Consent Order
Civil Action
End
Compliance
Non-compliance
^ J
End
X^
End
Notification
Letter
NOV
Civil Action
Note:
DEQ's enforcement of many SV's did
not extend beyond a warning letter.
End
Consent Order
End
End
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46 Report No. 8100249
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EXHIBIT 2
IDAHO DEQ
LIST OF 24 SIGNIFICANT VIOLATORS AUDITED
SOURCE
SV-1
SV-2
SV-3
SV-4
SV-5
SV-6
SV-7
SV-8
SV-9
SV-10
SV-11
SV-1 2
SV-1 3
SV-14
SV-1 5
SV-1 6
SV-1 7
SV-1 8
SV-1 9
SV-20
SV-21
SV-22
DATE OF SV
DESIGNATION
07/96
08/96
08/96
10/97
11/94
07/97
09/96
05/96
01/95
12/94
07/96
11/94
08/95
09/96
07/96
10/97
06/96
07/96
10/96
07/95
10/95
11/94
COMPLIANCE
STATUS AT
12/97
Unaddressed1
Unaddressed
Unaddressed
Unaddressed
Unaddressed
Unaddressed
Resolved 04/97
Unaddressed
Resolved 10/97
Resolved 12/96
Unaddressed
Unaddressed
Unaddressed
Unaddressed
Unaddressed
Unaddressed
Unaddressed
Resolved 10/97
Unaddressed
Unaddressed
Unaddressed
Addressed 1 1/96
Unaddressed
Unaddressed
DATE OF
PROPOSED
PENALTY
06/97
06/97
01/97
08/96
03/97
06/97
05/96
PENALTY
AMOUNT
$ 0
$ 44,700
$ 44,700
$ 0
$ 0
$ 0
$ 10,000
$ 0
$ 0
$ 0
$ 4,500
500
1,500
$ 24,000
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
DATE OF
PENALTY
PAYMENT
04/97
04/97
AMOUNT
PAID
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 250
$ 0
$ 0
$ 0
$ 0
0
0
$ 24,000
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
NOTES2
NE
IP, 3
IP, 3
NE
NE
ENE
IP
ENE
EA
ENE
ENE
ENE, 4
ENE
NE
ENE
EA
ENE
ENE
EU
ENE
ENE
ENE
47
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EXHIBIT 2
IDAHO DEQ
LIST OF 24 SIGNIFICANT VIOLATORS AUDITED
SOURCE
SV-23
SV-24
Notes
DATE OF SV
DESIGNATION
05/97
06/97
09/96
COMPLIANCE
STATUS AT
12/97
Unaddressed
Resolved 06/97
Unaddressed
DATE OF
PROPOSED
PENALTY
PENALTY
AMOUNT
$ 0
0
$ 0
DATE OF
PENALTY
PAYMENT
AMOUNT
PAID
$ 0
0
$ 0
NOTES2
ENE
NE
1 . Unaddressed means that an enforcement action imposing a compliance schedule or requiring immediate
2.
3.
4.
compliance has not been taken.
"NE" indicates no enforcement action initiated, "IP" indicates insufficient penalty was assessed, "ENE" indicates
enforcement action was not escalated, "EU" indicates enforcement action was untimely, and "EA" indicates
enforcement activities were appropriate during 15-month period.
The proposed penalty was in the process of being reduced to below $15,000.
Company also paid $80,000 to a city for a supplemental environmental project. However, violations that occurred
during 1997 were unaddressed by DEQ.
48
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EXHIBIT 3
EPA REGION 10
LIST OF 10 SIGNIFICANT VIOLATORS AUDITED
SOURCE
SV-25
SV-26
SV-27
SV-28
SV-29
SV-30
SV-31
SV-32
SV-33
SV-34
Notes
DATE OF SV
DESIGNATION
06/93
06/94
06/93
08/94
11/94
09/95
09/96
09/96
12/96
07/94
DATE
ASSUMED
BY REGION
01/95
01/95
01/97
01/95
02/97
02/97
03/97
03/97
12/96
12/94
DATE
REFERRED
TO OECA
N/A
N/A
N/A
06/97
06/97
06/97
06/97
06/97
N/A
N/A
COMPLIANCE
STATUS AT
12/97
Unaddressed
Resolved 02/97
On Hold
Unaddressed
Unaddressed
Unaddressed
Unaddressed
Unaddressed
Addressed 09/97
Unaddressed
PENALTY
AMOUNT
$ 0
$ 206,480
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$2,395,000
$ 0
AMOUNT
PAID
$ 0
$ 39,000
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
NOTES'
EU
DI
AA, 2
EU
EU
EU
EU
EU
EU
EU
1 . "EU" indicates enforcement action was untimely, and "DI" indicates documentation supporting the justifications for
the reduction in penalties was incomplete, and "AA" indicates appropriate action was taken.
2 . Enforcement actions in response to the SV were on hold until completion of a criminal investigation involving the
facility.
49
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50 Report No. 8100249
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APPENDIX A
AUDIT SCOPE AND METHODOLOGY
This section describes the audit scope and methodology, including sample selection for our review of
enforcement activities and inspection procedures.
We performed our audit in accordance with Government Auditing Standards issued by the Comptroller
General of the United States. Audit fieldwork was performed between December 1997 and July 1998.
The audit covered the DEQ's and the Region's management controls in effect for the period from October
1996 through December 1997.
With the Region's concurrence, the following criteria were used to evaluate the effectiveness of the State
of Idaho's stationary source air enforcement program:
• EPA's Compliance and Enforcement Manual (1986);
• EPA's Guidance on the Timely and Appropriate Enforcement Response to Significant Air
Pollution Violators (1992);
• Memo from OEC A titled, Oversight of State and Local Penalty Assessment: Revisions to the
Policy Frame-work for State/EPA Enforcement Agreements (1993);
• EPA's Clean Air Act Stationary Source Civil Penalty Policy (1991); and
• Fiscal 1993 Compliance Assurance Agreement For Air, Idaho Division of Environmental Quality
and U.S. Environmental Protection Agency.
We interviewed officials in the DEQ's Air and Hazardous Waste Division, DEQ's Coeur d'Alene, Boise,
and Pocatello regional offices, and the State's Office of Attorney General. We also interviewed officials
in the Region's Office of Air Quality, Idaho Operations Office, Office of Enforcement and Compliance,
and Office of Regional Counsel. In addition, we reviewed applicable laws, regulations, and records
maintained by DEQ and the Region.
The scope included a review of management controls for DEQ and the Region associated with:
(i) enforcement actions and penalties; (ii) resolution of violations; and (iii) inspections. We obtained an
understanding of management controls through inquiries, observations, and inspections of documents and
records. We assessed the control environment, policies and procedures, and risk for the three areas listed
above.
51 Report No. 8100249
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Although not originally included in the scope of the audit, we evaluated DEQ's management controls for
reviewing source emissions reports and DEQ's and the Region's management controls for SV reporting.
We added these areas to the scope of the audit because significant weaknesses in the controls came to our
attention.
During the audit, enforcement related documentation that the DEQ and the State's Office of the Attorney
General considered to be attorney client privileged was withheld from us. Since DEQ had not escalated
most enforcement actions beyond a warning letter, the withheld information did not represent a significant
scope limitation. However, as discussed in Appendix B, entitled Other Matters, this issue could adversely
effect the Region's ability to oversee DEQ's enforcement program.
The management control deficiencies that were identified in the audit are described in the report, along
with recommendations for corrective actions. We also reviewed the Region's 1997 annual FMFIA
assurance letter to the Administrator.
Enforcement Actions
Our review of DEQ's enforcement actions and penalties included a judgment sample of 24'° of 62 SVs
that DEQ had responsibility for and were unresolved during at least part of the 15-month period ended
December 31, 1997. The sample included a mix of unaddressed, addressed and resolved SVs; and
included approximately 98 percent of the dollar amount of penalty assessments made during the 15-month
period. The sample covered SVs located in each of the six regional areas of the State.
We also evaluated the Region's enforcement actions during the 15-month period ended
December 31, 1997 for all 10 EPA enforcement lead SVs that had been assumed from DEQ.
Resolution of Violations
We used the same judgment sample of 24 SVs described above to evaluate the timeliness of DEQ's
enforcement activities that occurred during the 15-month period ended December 31, 1997.
Inspection Procedures
To evaluate the adequacy of DEQ's inspections, we selected a judgment sample of 25 of 120 sources
classified as major, potential major, or unknown which were scheduled for an EPA level 2 inspection
during fiscal 1997.
We used a judgment sample of 23" of the 62 SVs that DEQ had responsibility for during the 15-month
period ended December 31, 1997 to evaluate the timeliness of completed inspection reports. The sample
10. The judgment sample originally included 27 SVs reported to EPA. However, three of the SVs were dropped from the
sample because they did not meet EPA's SV definition.
11. 25 inspections were conducted on these 23 SVs by DEQ during the 15-month period ended December 31, 1997 were
evaluated.
52 Report No. 8100249
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included 19 of the SVs originally selected for our enforcement actions evaluation discussed above.
We also reviewed major and potential major source inspection information obtained from AFS and DEQ's
inspection schedules for fiscals 1997 and 1998 to evaluate the frequency of inspections. The review
included all 120 major and all 228 potential major sources maintained in AFS as of December 1997.
Reviews of Emissions Reports
We reviewed the control record used for tracking DEQ's receipt and review of source emissions reports to
evaluate the timeliness of the report reviews. Our evaluation included all reports for major, synthetic
minor, and minor sources received by DEQ as of April 1998.
SV Reporting
We used the two12 samples described under the above Enforcement Actions section to evaluate the
accuracy of SV reporting.
12. The two samples consisted of the original judgment sample of 27 SVs that DEQ had responsibility for and the 10 SVs that
had been assumed from DEQ by the Region.
53 Report No. 8100249
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54 Report No. 8100249
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APPENDIX B
OTHER MATTERS
During the audit, enforcement related documentation that the DEQ and the State's Office of the Attorney
General considered to be attorney client privileged was withheld from us. The following page contains a
letter from the Office of the Attorney General to the OIG confirming that attorney client privileged
documents would be withheld from the audit. The documentation was withheld under Rule 502 of the
Idaho Rules of Evidence and the Idaho Public Records Act, Idaho Code Section 9-340(1) which exempts
attorney client privileged documents from disclosure. Since DEQ had not escalated most enforcement
actions beyond a warning letter, withheld attorney client privileged information did not represent a
significant scope limitation for this audit. However, we believe the Region needs access to all relevant
enforcement documentation developed by the State to effectively oversee the State's enforcement
program.
According to the Office of the Attorney General, attorney client privileged documentation includes the
compliance action referral (CAR) document, which provides a factual chronology of a source's
compliance history and the basis for initiating the appropriate enforcement response, including penalty
assessments. The CAR may also include any necessary documents as attachments, including inspection
reports and associated evidence, penalty calculations, justifications, written correspondence, phone logs,
e-mails, and memorandums. Therefore, the CAR represents an important part of DEQ's enforcement
process when enforcement is escalated beyond the warning letter stage.
Without access to those important enforcement documents, the Region will not be able to obtain a
complete understanding of DEQ's enforcement decisions. Therefore, the Region needs to have access to
the CARs as well as other essential records documenting enforcement decisions in order to conduct a
complete evaluation of the effectiveness of Idaho's air enforcement program. This is an extremely
important issue which the Region needs to resolve with the State of Idaho prior to conducting any review
of the State's air enforcement program.
55 Report No. 8100249
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56 Report No. 8100249
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STATE OF IDAHO
OFFICE OF THE ATTORNEY GENERAL
ALAN Q. LANCE
March 5, 1998
Ron Beeler
Division Inspector General for Audits
U.S. EPA Office of Inspector General
Western Audit Division
75 Hawthorne St., 19th Floor
Mail Code I-1
San Francisco, CA 94105-3901
Dear Mr. Beeler:
Per your request, this letter is written to confirm that the Idaho Division of Environmental
Quality (LDEQ) does intend to withhold certain attorney client privileged documents from the
audit the U.S. Environmental Protection Agency, Office of Inspector General intends to conduct
of iDEQ's air quality programs. Attorney client privileged documents are exempt from disclosure
under Rule 502 of the Idaho Rules of Evidence and the Idaho Public Records Act, Idaho Code
Section 9-340(1). Neither LDEQ nor the Attorney General's Office are necessarily concerned that
the I.G.'s office view such documents; however, once released, arguably the attorney client
privilege has been waived and any third party may obtain the documents. Obviously, this could
detrimentally effect an enforcement action.
For example, LDEQ is presently pursing an enforcement action against Penford Products
In addition a notice of tort claim has been filed against the State of Idaho by residents living
adjacent to Penford's facility, and a 60 day notice of intent to sue under the Clean Air Act has
been issued against Penford Certainly, it would be extremely disadvantageous for LDEQ to be
forced to reveal its attorney client privileged documents to the parties, especially those containing
analysis of the strengths and weaknesses of the various matters at issue.
In most cases, there probably won't be many attorney client privileged documents to
withhold. However, in cases where a Notice of Violation is issued, LDEQ submits to the Attorney
General's Office a document entitled Compliance Action Referral. This document provides a
narrative summary of the violations listed in the NOV and additional background information
Further, it provides the Attorney General's Office with a factual chronology of significant facility
events. Although the I.G.'s office could probably construct the chronology information upon
k*tur»( R«3ourc«« DtvicJon, Environmental Quality Section,
1410 N. H«oa 2nd Poor, Bates, Idaho 83706-1255
Telephone: (203) 373-CW94. FAX- (208) 373-O451
57
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Ron Beeler
March 5, 1998
Page 2
review of the file, CDEQ may be able to separate this information from the Referral document and
release it to the I.G.'s office.
Please be assured that EDEQ and the Attorney General's Office desire to cooperate as
fully as possible in the audit process. Please do not hesitate to ask questions such as why certain
actions were or were not taken. We will make every attempt to give you a full and complete
picture of each matter at issue. If you have any questions regarding this letter, please do not
hesitate to contact me or Doug Conde, Supervisor of Deputy Attorneys General assigned to
EDEQ, at (208)373-0494.
Sir/cerely
Lisa J. Kronberg
Deputy Attorney General
LJK/lvh
cc. Wallace N. Cory
Charles Resis
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APPENDIX C
AUDITEES' RESPONSE TO DRAFT REPORT
Attached are the Region's and the DEQ's comments to the draft report.
59 Report No. 8100249
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60 Report No. 8100249
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION 10
1200 Sixth Avenue
Seattle, Washington 98101
Reply To
AttnOf: OAQ-107
MEMORANDUM
SUBJECT: Region 10 Response to Draft Report on Idaho's Air Enforcement Program,
Draft Report No.
FROM: Chuck Clarke
Regional Administrator
EPA Region 10
TO: Truman R. Beeler
Divisional Inspector General for Audits
Western Audit Division
This is in response to your July 3 1 , 1998, memo to me and its attached Draft Report.
As requested, we are providing a separate statement with respect to each recommendation. As
regards your request for a separate statement of concurrence or nonconcurrence with the facts
presented in each finding, to the best of our knowledge the facts reported are accurate. We have
not, however, mounted our own audit of all of the facts to be able to absolutely confirm every
one. However, we believe the facts and the findings are generally consistent with our
experiences involving the Idaho Air Enforcement Program. There are, though, a few instances in
the following response where we have expanded on the context or have a differing view on the
findings.
In your memo you asked us to "consolidate DEQ's responses with those of the Region."
The State's responses are enclosed herewith; however, since we did not receive the State's
response until mid-day today, we were unable to do anything further with it and still meet your
deadline.
Before I get to the specific responses to your findings and recommendations, I want to
provide you some background on activities we started working on with all four Region 10 States
- even before the Idaho audit began ~ which should have a significant impact on enforcement in
all of our media programs. I am enclosing copies of two documents: 1) a letter we sent 2/1 8/98
to each Deputy Director of the State Environmental Agencies in Region 10 confirming a
framework which had been negotiated and agreed to by the Agency Directors for a process to
identify and resolve issues related to enforcement in State programs; and 2) a memo we sent
2/1 8/98 which memorializes an agreement by the four Region 10 States and EPA Region 10 on a
set of principles governing State program evaluations, including identification of broad areas of
enforcement program expectations. We believe these processes and agreements, along with the
Printed on Recycled Paper
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audit findings, will provide strong support in our efforts to improve Idaho's enforcement
program and, particularly, to develop a new and strengthened Compliance Assurance Agreement.
I also want you to know that EPA Region 10 has already taken a number of actions in the
last several weeks to begin addressing some of the major deficiencies identified in this audit.
This has included frank and open discussions at the highest levels of management in both
agencies to jointly work through steps to improve DEQ's Air enforcement program; and, the
convening of an ad hoc EPA task force which is reviewing cases examined by the audit and
determining what types of action are needed on an expedited basis to appropriately address
existing SV problems. We will shortly be taking enforcement action on a number of these cases.
In addition, I am pleased to report that DEQ has begun to make significant progress with several
cases on which there had previously been little apparent action.
Our hope and intent is to work cooperatively with Idaho to secure the necessary program
improvements. However, we will not hesitate to exercise our Federal authorities should that be
necessary to get results.
Chapter 2 Findings and Recommendations
Findings
There are several places (particularly pages 13,14, and 16) where the State is quoted as
saying in effect that they assumed EPA was satisfied with the existing Compliance Assurance
Agreement, with the State's support of compliance assistance instead of enforcement, and with
the level of State penalty collection. We do not agree that those assumptions reflect the full
situation. There have been innumerable in person and telephone conversations — involving staff
and management of both agencies — of the most direct nature in which EPA expressed its
dissatisfaction with the situation. In addition, the monthly Significant Violator (SV) calls
inevitably involved EPA pressure for more aggressive State performance, but with only grudging
progress occurring. EPA staff who negotiated the existing Compliance Assurance Agreement
were told that it was "politically infeasible" for DEQ to include any stronger language in the
agreement and said that, while they would work toward EPA objectives, they could not formally
commit to them. The advent of Performance Partnership Agreements has also created a context
in which there is little guidance for how much leeway a State has in conducting its unique
compliance and enforcement program. Now that we have the rather complete picture provided
by the audit results, we are prepared to take the necessary actions to remedy the situation.
Recommendation 2-1
Require DEQ to develop and implement enforcement policies and procedures which are
consistent with EPA's Compliance and Enforcement Manual, Timely and Appropriate
Enforcement Response to Significant Violators, and Clean Air Act Stationary Source Civil
Penalty Policy.
EPA Response
Concur, with comment. Early in FY99 we will begin negotiations with Idaho DEQ to
substantially revise the State-EPA Compliance Assurance Agreement. While we do not have the
unilateral authority to require that DEQ strictly and formally adhere to our compliance and
enforcement policies and procedures, it will be a major goal that this agreement reflects them as
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well as possible and, in any event, we will expect future State performance and outcomes to
reflect that. Should the State fail to secure results that are in line with EPA expectations, we will
take whatever actions are necessary ~ including carrying out independent inspections and
assuming responsibility for enforcement actions — to ensure that there is an adequate Air
enforcement program hi Idaho.
Chapter 3 Findings and Recommendations
Recommendation 3-1
Assess the level of inspection resources available to DEQ and negotiate with DEQ to
inspect major and potential sources in accordance with EPA's Inspection Frequency guidance.
In the event it is determined that DEQ cannot meet EPA's guidance, the Region should assess
DEQ's criteria for selecting sources for inspection, including determining that the criteria do, in
fact, result in the most high risk (for noncompliance) sources being inspected annually.
EPA Response
Concur, with comment. During the fall of 1998 we will establish with the State the
numbers of inspections to be accomplished by DEQ during FY99. We are not sure whether the
State has sufficient inspector resources assigned for their inspection program to satisfy EPA's
Inspection Frequency Guidance. We will, however, assess the State's selection criteria and
encourage them to better target high risk sources.
Recommendation 3-2
Supplement DEQ's inspection resources with Regional staff if DEQ is unable to meet
EPA's Inspection Frequency Guidance.
EPA Response
Concur, with comment. We will work closely with the State during the next few
months on inspection targeting to ensure that the collective (i.e., Federal + State) set of
inspection targets is optimized and will review their inspection plan for FY99 with the guidance
in mind. Our ability to supplement State efforts beyond the amount we already do will be
contingent on the need for such resources ~ and their availability - when we make an
assessment in FY99 of the State's follow through and success in achieving the goals of the
guidance.
Recommendation 3-3
Ensure that DEQ implements adequate procedures to ensure timely finalization of
inspection reports.
EPA Response
Concur, with comment. We will work with the State to establish such procedures
during revision of the Compliance Assurance Agreement in FY99.
Chapter 4 Findings and Recommendations
Recommendation 4-1
Ensure that DEQ performs its review of stack test and CEMS reports timely.
EPA Response
Concur, with comment. This is an important objective to work toward, and we will
make it a priority as we renegotiate the Compliance Assurance Agreement. We believe this
situation will improve when DEQ applies the additional resources it is reported to have received
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to address this backlog of tests and reports.
Chapter 5 Findings and Recommendations
Recommendation 5-1
Ensure that violations on the SV list meet EPA's SV definition.
EPA Response
Concur, with comment. We have made this a continuing issue hi our monthly, detailed
SV calls with the State. As the audit demonstrates, discrepancies can creep in. This is a concern
for us and we will give it renewed attention in our monthly calls.
Recommendation 5-2
Ensure that staff from both DEQ and the Region are aware of, and consistently use,
EPA's SV definition and criteria for the SV Day 0, addressed, and resolved dates.
EPA Response
Concur, with comment. We believe most State and Regional staff are aware of these
definitions and criteria, but that the reality of implementing them is a continuing struggle. Part
of this is the nature of compliance and enforcement work, where there is often missing or
incomplete information that can take some time to procure. Timelines are also sometimes
difficult to meet because EPA staff must often negotiate with State staff to persuade them to
follow a particular course of action consistent with our requirements, policies, or guidance. Also,
there is the issue of inadequate resources to move along actions so that they are always within the
boundaries of EPA policy and guidance. However, both State and EPA staff can clearly improve
their performance, and we will make this a high priority in the future.
Recommendation 5-3
Ensure that SVs are deleted from the SV list for appropriate reasons.
EPA Response
Concur, with comment. Again, we have continually raised such issues in our monthly
SV calls with State staff. We will continue to monitor the situation and promptly address
deviations which we discover.
Chapter 6 Findings and Recommendations
Recommendation 6-1
Revise the Compliance Assurance Agreement with DEQ to include EPA enforcement
guidance as criteria for assessment of the State's stationary air enforcement program.
EPA Response
Concur, with comment. As mentioned above, this goal will be the highest priority in
our Compliance Assurance Agreement renegotiations.
Recommendation 6-2
Conduct, at least annually, evaluations of the State's air enforcement program for SVs for
consistency with EPA guidance.
EPA Response
Concur, with comment. By the end of 1999 we will conduct a review and assessment of
the State's air enforcement program to determine its consistency with EPA guidance. We will
also make a determination at that tune as to the feasibility of doing this annually.
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Recommendation 6-3
Develop and implement a plan to ensure that EPA enforcement actions taken in response
to SVs are consistent with EPA enforcement guidance. Also, ensure that justifications for
mitigated penalties meet EPA Penalty Policy criteria and are adequately documented.
EPA Response
Concur, with comment. We believe that EPA failure to always ensure that enforcement
actions taken in response to SVs are consistent with our guidance is primarily a resource
dependent problem. We generally agree that SVs are violators which EPA believes are
environmentally most important, but this is tempered by the fact that we are trying to balance SV
priorities among four States and are not able to give all SVs in a particular state our highest
attention. In any case, we will develop a plan during the coming year to figure out how best to
achieve consistency with our enforcement guidance. In addition, EPA Air Program staff have
had discussions with our Office of Regional Counsel to reinforce the need for adequate
documentation of the justifications for any mitigated penalties.
Recommendation 6-4
Report the weaknesses in the State's stationary air enforcement program for SVs as a
management control deficiency in the next annual FMFIA assurance letter to the EPA
Administrator.
EPA Response
Concur, with comment. We will report on any remaining State air enforcement
program deficiencies in the next annual FMFIA letter.
Recommendation 6-5
Withhold final approval of the State's Title V program until the State establishes policies
and procedures for enforcement which are consistent with EPA's enforcement guidance.
Specifically, the Region should assess Idaho's Title V program against the criteria for an
approvable program under 40 CFR Part 70.
EPA Response
Concur, with comment. While it is unclear whether we can withhold approval of the
State's Title V program solely on the basis of the State not adhering to all of EPA's enforcement
guidance, we will make such approval contingent on negotiation of a revised Compliance
Assurance Agreement which is satisfactory to EPA and which is aligned with these compliance
and enforcement objectives.
Recommendation 6-6
Assume responsibility for enforcement of the stationary source air enforcement program
in the State for major and synthetic minor sources if the State is unable to implement an
enforcement program that is consistent with EPA guidance and the Clean Air Act.
EPA Response
Concur, with comment. We recognize this as a legitimate approach if the State is
unable or unwilling to implement an enforcement program consistent with EPA objectives.
Given that the State needs to remedy a number of serious deficiencies (many of which have
become institutionalized over a period of years), we expect that it could be several months before
such revisions are fully negotiated and become integrated into DEQ's program implementation
and follow through. Thus, we will refrain from making a decision to assume responsibility from
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the State until DEQ has had an adequate period in which to demonstrate whether it can deliver
acceptable performance.
Enclosures: Idaho Response
EPA letter to States, 2/18/98
EPA memo to HQ, 7/9/98
Wallace Cory, Administrator, IDEQ
Anita Frankel, Director, Office of Air Quality
Gil Haselberger, Manager, Air Enforcement and Program Support, EPA RIO
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STATE OF IDAHO
DIVISION OF
ENVIRONMENTAL QUALITY
1410 North Hilton, Boise, ID 83706-1255, (208) 373-0502 Philip E. Batt, Governor
August 31, 1998
Transmitted by facsimile transmission to (206) 553-4038 and via Certified Mail
CERTIFIED MAIL # P 102 113 968
RETURN RECEIPT REQUESTED
Charles Reisig
United States Environmental Protection Agency
Office of the Inspector General, Western Division
1200 Sixth Avenue
Seattle, Washington 98101-3123
Re: Response to OIG draft audit report.
Dear Mr. Resig:
The Idaho Division of Environmental Quality (DEQ) has completed its review of the Draft Report on Idaho's
Air Enforcement Program dated July 31, 1998. Unfortunately, the report continues to imply wrongdoing on
the part of DEQ in the execution of its duties. To the contrary, we steadfastly maintain that our programs have
performed according to established agreements and in a manner protective of public health and the
environment at all times. The data show, in fact, that all of Idaho's airsheds currently meet air quality health
standards, the sole exception being one which remains under USEPA jurisdiction. This overall improvement
in air quality can be attributed to the effectiveness of the permitting and enforcement programs operated by
DEQ. Today, while in the midst of an expanding economy and population, we are extremely proud of these
results.
The report continues to inappropriately emphasize differences in DEQ's administration and implementation
of its program when compared to a preestablished set of national criteria that DEQ had never agreed to strictly
comply with. The specifics of this argument were previously addressed in our letter to you dated July 6, 1998.
While each individual criticism in the report could be soundly argued on its own merit, we have elected to
forsake doing so at this time. This approach would likely be unproductive, since the fundamental argument
centers on the need for DEQ to fully comply with national policy and guidance as opposed to the numerous
agreements we had entered into in good faith with USEPA. It remains our understanding that these agreements
contain the standards for which DEQ should be held to when evaluated for any purpose. These agreements,
your office has maintained, were in effect invalid since they did not consistently prescribe the terms and
conditions brought forth in national policy. This in itself is hard for DEQ to fathom, since the very agreements
in question stem from national policy, and were prompted and openly negotiated with our federal counterparts
at USEPA. To be vilified in a national audit for largely complying with the terms of such agreements is a
considerable injustice. DEQ's trust in ongoing and future agreements will be significantly compromised if
such an injustice is allowed to occur. We assume this will not be the case.
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Response to OIG Inspection Report
Page 2
The audit report, by-and-large, condemns DEQ's performance. Since performance must be evaluated on a pre-
determined set of criteria, DEQ maintains to have performed remarkably well when appropriately evaluated.
Strict adherence to national policy as opposed to the operating principles DEQ has agreed to operate its
programs under in no way points to poor performance or ineffectiveness in meeting our goals.
As our previous response had indicated, we will work with USEPA in the coming year in an open and
cooperative manner to resolve perceived deficiencies in our program. It is critical, however, that through this
process USEPA recognize the differences in state policies and in the direction and manner our agency may
respond. Equally important, regardless of the outcome of any negotiations, will be recognition that any
actions we commit to take we do so with the mutual goal of protecting public health and the environment at
any cost.
Due to the fundamental arguments previously raised in this correspondence, DEQ rejects outright the
conclusions and recommendations brought forth in the draft report. We seek a retraction of all portions of the
report critical of DEQ for anything other than \vhat was understood by this agency to be legally binding and
approved operating guidance. Only in doing so can your office accurately represent the performance and
efficiencies of DEQ's programs. Release of the report in its present state will serve no purpose but to
undermine the good intentions and successes we have realized.
hi closing, we welcome continuing discussions on the valid issues you have raised in your report. We remain
committed to working with our partners at USEPA to determine and resolve those matters which are of truly
great importance to the effective operation of our programs in meeting our common goals.
Sincerely,
David J. Pisarskf
Chief
Compliance Assurance Bureau
Idaho Division of Environmental Quality
DJP/sd c:\..Adave\aud.l2.rsp
cc: W. Cory
0. Green
Gil Haselberger, (Via fax at: (206) 553-0110 or (206) 553-0404)
T. Trumbull
L. Kronberg
A. Frankel, USEPA
COF
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APPENDIX D
REPORT DISTRIBUTION
Office of Inspector General
Acting Inspector General (2410)
EPA Headquarters Office
Assistant Administrator for Office of Air and Radiation (6101)
Assistant Administrator for Office of Enforcement and Compliance Assurance (2201 A)
Agency Followup Official (2710)
Agency Followup Coordinator (2724)
Associate Administrator for Regional Operations and State/Local Relations (1501)
Associate Administrator for Congressional and Legislative Affairs (1301)
Associate Administrator for Communications, Education and Public Affairs (1701)
Comptroller (2731)
Region 10
Regional Administrator
Director, Office of Air Quality
Audit Followup Coordinator
Regional Library
DEO
Administrator for State of Idaho DEQ
69 Report No. 8100249
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